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Agricultural Marketing Service, USDA.
Direct final rule.
The Agricultural Marketing Service (AMS) is amending the Cotton Board Rules and Regulations, increasing the value assigned to imported cotton for the purposes of calculating supplemental assessments collected for use by the Cotton Research and Promotion Program. This amendment is required each year to ensure that assessments collected on imported cotton and the cotton content of imported products will be the same as those paid on domestically produced cotton. In addition, AMS is updating the Harmonized Tariff Schedule (HTS) statistical reporting numbers that were amended since the last assessment adjustment in 2017.
This direct rule is effective October 16, 2018, without further action or notice, unless significant adverse comment is received by September 17, 2018. If significant adverse comment is received, AMS will publish a timely withdrawal of the amendment in the
Written comments may be submitted to the addresses specified below. All comments will be made available to the public. Please do not include personally identifiable information (such as name, address, or other contact information) or confidential business information that you do not want publically disclosed. All comments may be posted on the internet and can be retrieved by most internet search engines. Comments may be submitted anonymously.
Comments, identified by AMS-CN-18-0013, may be submitted electronically through the
Shethir M. Riva, Director, Research and Promotion, Cotton and Tobacco Program, AMS, USDA, 100 Riverside Parkway, Suite 101, Fredericksburg, Virginia, 22406, telephone (540) 361-2726, facsimile (540) 361-1199, or email at
Amendments to the Cotton Research and Promotion Act (7 U.S.C. 2101-2118) (Act) were enacted by Congress under Subtitle G of Title XIX of the Food, Agriculture, Conservation, and Trade Act of 1990 (Pub. L. 101-624, 104 Stat. 3909, November 28, 1990). These amendments contained two provisions that authorize changes in the funding procedures for the Cotton Research and Promotion Program. These provisions provide for: (1) The assessment of imported cotton and cotton products; and (2) termination of refunds to cotton producers. (Prior to the 1990 amendments to the Act, producers could request assessment refunds.)
As amended, the Cotton Research and Promotion Order (7 CFR part 1205) (Order) was approved by producers and importers voting in a referendum held July 17-26, 1991, and the amended Order was published in the
This direct final rule would amend the value assigned to imported cotton in the Cotton Board Rules and Regulations (7 CFR 1205.510(b)(2)) that is used to determine the Cotton Research and Promotion assessment on imported cotton and cotton products. The total value of assessment levied on cotton imports is the sum of two parts. The first part of the assessment is based on the weight of cotton imported—levied at a rate of $1 per bale of cotton, which is equivalent to 500 pounds, or $1 per 226.8 kilograms of cotton. The second part of the import assessment (referred to as the supplemental assessment) is based on the value of imported cotton lint or the cotton contained in imported cotton products—levied at a rate of five-tenths of one percent of the value of domestically produced cotton.
Section 1205.510(b)(2) of the Cotton Research and Promotion Rules and Regulations provides for assigning the calendar year weighted average price received by U.S. farmers for Upland cotton to represent the value of imported cotton. This is so that the assessment on domestically produced cotton and the assessment on imported cotton and the cotton content of imported products is the same. The source for the average price statistic is
The current value of imported cotton as published in 2017 in the
An example of the complete assessment formula and how the figures are obtained is as follows:
The total assessment per kilogram of raw cotton is obtained by adding the $1 per bale equivalent assessment of $0.004409 per kg. and the supplemental assessment $0.007496 per kg., which equals $0.011905 per kg.
The current assessment on imported cotton is $0.011510 per kilogram of imported cotton. The revised assessment in this direct final rule is $0.011905, an increase of $0.000395 per kilogram. This increase reflects the increase in the average weighted price of Upland cotton received by U.S. farmers during the period January through December 2017.
Import Assessment Table in section 1205.510(b)(3) indicates the total assessment rate ($ per kilogram) due for each Harmonized Tariff Schedule (HTS) number that is subject to assessment. This table must be revised each year to reflect changes in supplemental assessment rates and any changes to the HTS numbers. In this direct final rule, AMS is amending the Import Assessment Table.
AMS believes that these amendments are necessary to ensure that assessments collected on imported cotton and the cotton content of imported products are the same as those paid on domestically produced cotton. Accordingly, changes reflected in this rule should be adopted and implemented as soon as possible since it is required by regulation.
As described in this
Also, this direct-final rulemaking furthers the objectives of Executive Order 13563, which requires that the regulatory process “promote predictability and reduce uncertainty” and “identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends.”
AMS has used the direct rule rulemaking process since 2013 and has not received any adverse comments; however, if AMS does receives significant adverse comment during the comment period, it will publish, in a timely manner, a document in the
This action has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation would not have substantial and direct effects on Tribal governments and would not have significant Tribal implications.
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this rule does not meet the definition of a significant regulatory action it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017 titled `Reducing Regulation and Controlling Regulatory Costs' ” (February 2, 2017).
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect.
The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 12 of the Act, any person subject to an order may file with the Secretary of Agriculture (Secretary) a petition stating that the order, any provision of the plan, or any obligation imposed in connection with the order is not in accordance with law and requesting a modification of the order or to be exempted therefrom. Such person is afforded the opportunity for a hearing on the petition. After the hearing, the Secretary would rule on the petition. The Act provides that the District Court of the United States in any district in which the person is an inhabitant, or has his principal place of business, has jurisdiction to review the Secretary's ruling, provided a complaint is filed within 20 days from the date of the entry of the Secretary's ruling.
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has examined the economic impact of this rule on small entities. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such action so that small businesses will not be unduly or disproportionately burdened. The Small Business Administration defines, in 13 CFR part 121, small agricultural producers as those having annual receipts of no more than $750,000 and small agricultural service firms (importers) as having receipts of no more than $7,500,000. In 2017, an estimated 20,000 importers are subject to the rules and regulations issued pursuant to the Cotton Research and Promotion Order. Most are considered small entities as defined by the Small Business Administration.
This rule would only affect importers of cotton and cotton-containing products and would increase the assessments paid by the importers under the Cotton Research and Promotion Order. The current assessment on imported cotton is $0.011510 per kilogram of imported cotton. The amended assessment would be $0.011905, which was calculated based on the 12-month weighted average of price received by U.S. cotton farmers. Section 1205.510, “Levy of assessments”, provides “The rate of the supplemental assessment on imported cotton will be the same as that levied on cotton produced within the United States.” In addition, section 1205.510 provides that the 12-month weighted average of prices received by U.S.
Under the Cotton Research and Promotion Program, assessments are used by the Cotton Board to finance research and promotion programs designed to increase consumer demand for Upland cotton in the United States and international markets. In 2016 (the last audited year), producer assessments totaled $36.5 million and importer assessments totaled $36.51 million. According to the Cotton Board, should the volume of cotton products imported into the U.S. remain at the same level in 2018, one could expect an increase of assessments by approximately $1,278,951.
Imported organic cotton and products may be exempt from assessment if eligible under section 1205.519 of the Order.
There are no Federal rules that duplicate, overlap, or conflict with this rule.
In compliance with Office of Management and Budget (OMB) regulations (5 CFR part 1320) which implement the Paperwork Reduction Act (PRA) (44 U.S.C. Chapter 35) the information collection requirements contained in the regulation to be amended have been previously approved by OMB and were assigned control number 0581-0093, National Research, Promotion, and Consumer Information Programs. This rule does not result in a change to the information collection and recordkeeping requirements previously approved.
A 30-day comment period is provided to comment on the changes to the Cotton Board Rules and Regulations proposed herein. This period is deemed appropriate because an amendment is required to adjust the assessments collected on imported cotton and the cotton content of imported products to be the same as those paid on domestically produced cotton. Accordingly, the change in this rule, if adopted, should be implemented as soon as possible.
Advertising, Agricultural research, Cotton, Marketing agreements, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, AMS amends 7 CFR part 1205 as follows:
7 U.S.C. 2101-2118; 7 U.S.C 7401.
(b) * * *
(2) The 12-month average of monthly weighted average prices received by U.S. farmers will be calculated annually. Such weighted average will be used as the value of imported cotton for the purpose of levying the supplemental assessment on imported cotton and will be expressed in kilograms. The value of imported cotton for the purpose of levying this supplemental assessment is $1.1905 cents per kilogram.
(3) * * *
Bureau of Consumer Financial Protection.
Final rule.
The Bureau of Consumer Financial Protection (Bureau) is amending Regulation P, which requires, among other things, that financial institutions provide an annual notice describing their privacy policies and practices to their customers. The amendment implements a December 2015 statutory amendment to the Gramm-Leach-Bliley Act providing an exception to this annual notice requirement for financial institutions that meet certain conditions.
The amendments to Regulation P in this final rule will become effective on September 17, 2018.
Monique Chenault, Paralegal Specialist; Joseph Devlin, Senior Counsel; Office of Regulations, at (202) 435-7700.
Title V, Subtitle A of the Gramm-Leach-Bliley Act (GLBA)
On December 4, 2015, Congress amended the GLBA as part of the Fixing America's Surface Transportation Act (FAST Act). This amendment, titled Eliminate Privacy Notice Confusion,
Section 503(f) took effect upon enactment in December 2015. In July 2016 the Bureau proposed to update Regulation P to reflect the change in the underlying law. As part of its implementation, the Bureau is also amending Regulation P to provide timing requirements for delivery of annual privacy notices in the event that a financial institution that qualified for this annual notice exception later changes its policies or practices in such a way that it no longer qualifies for the exception. The Bureau is further
The GLBA was enacted into law in 1999 and governs the privacy practices of a broad range of financial institutions.
In 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)
The Bureau has the authority to promulgate GLBA privacy rules for depository institutions and many non-depository institutions. However, rulewriting authority with regard to securities and futures-related companies is vested in the SEC and CFTC, respectively, and rulewriting authority with respect to certain motor vehicle dealers is vested in the FTC.
The GLBA and Regulation P require that financial institutions provide consumers with certain notices describing their privacy policies.
GLBA Section 502 and Regulation P also require that initial, annual, and revised notices provide information about the right to opt out of certain financial institution sharing of nonpublic personal information with some types of nonaffiliated third parties. For example, a mortgage customer has the right to opt out of a financial institution disclosing his or her name and address to an unaffiliated home insurance company. On the other hand, a financial institution is not required to allow a consumer to opt out of the institution's disclosure of his or her nonpublic personal information to third party service providers and pursuant to joint marketing arrangements subject to certain requirements; disclosures relating to maintaining and servicing accounts, securitization, law enforcement and compliance, and consumer reporting; and certain other disclosures described in the GLBA and Regulation P as exceptions to the opt-out requirement.
In addition to opt-out rights under the GLBA, annual privacy notices also may include information about certain consumer opt-out rights under the Fair Credit Reporting Act (FCRA). The privacy notices under the GLBA/Regulation P and affiliate disclosures under the FCRA/Regulation V interact in two ways. First, section 603(d)(2)(A)(iii) of the FCRA excludes from that statute's definition of a consumer report
Second, section 624 of the FCRA and Regulation V's Affiliate Marketing Rule provide that an affiliate of a financial institution that receives certain information (
In pursuit of the Bureau's goal of reducing unnecessary or unduly burdensome regulations, the Bureau in December 2011 issued a Request for Information (RFI) seeking specific suggestions from the public for streamlining regulations the Bureau had inherited from other Federal agencies. In that RFI, the Bureau specifically identified the annual privacy notice as a potential opportunity for streamlining and solicited comment on possible alternatives to delivering the annual privacy notice.
Financial institutions historically have provided annual notices generally by U.S. postal mail.
In addition, to assist customers with limited or no access to the internet, an institution using the alternative delivery method was required to mail annual notices to customers who requested them by telephone. To make customers aware that its annual privacy notice was available through the website or by phone, the institution was required to include a clear and conspicuous statement of availability at least once per year on an account statement, coupon book, or a notice or disclosure the institution issued under any provision of law.
On December 4, 2015, Congress amended the GLBA as part of the FAST Act. This amendment, titled Eliminate Privacy Notice Confusion,
On July 15, 2016, the Bureau published a proposed rule to implement the FAST Act statutory amendment to the GLBA. The Bureau has considered the comments received on that proposed rule, and now issues this final rule based on it.
As discussed above, the statutory exception to the annual notice requirement is already effective. The amendments to Regulation P in this final rule will be effective 30 days from the date of publication in the
In developing this final rule, the Bureau considered its potential impact on consumer privacy. The rule will not affect the collection or use of consumers' nonpublic personal information by financial institutions. The rule implements a new statutory exception to limit the circumstances under which financial institutions subject to Regulation P will be required to deliver annual privacy notices to their customers. Delivery of annual privacy notices is required under the rule if financial institutions make certain types of changes to their privacy policies or if the statute and Regulation P afford customers the right to opt out of financial institutions' sharing of customers' nonpublic personal information with nonaffiliated third parties. The statutory exception and this final rule do not affect the requirement to deliver an initial privacy notice, and all consumers will continue to receive such notices describing the privacy policies of any financial institutions with which they do business to the extent currently required.
The Bureau is issuing this final rule pursuant to its authority under section 504 of the GLBA, as amended by section 1093 of the Dodd-Frank Act.
Regulation P's substantive requirements, including the requirement to deliver privacy notices, are generally
The Bureau received no comments on this technical amendment, and adopts it now as proposed.
As explained above, Regulation P's substantive requirements, including the requirement to deliver privacy notices, are generally imposed upon entities that meet the definition of “You” in § 1016.3(s)(1). The Bureau has rulemaking authority over entities other than financial institutions pursuant to GLBA section 504(a)(1)(A).
The Bureau proposed to amend the general requirement in § 1016.5(a)(1) that financial institutions provide annual notices, to clarify that the Bureau has added an exception to this requirement in § 1016.5(e) to incorporate the amendment to GLBA section 503.
No commenters specifically discussed the conforming change to the general rule in § 1016.5(a). One commenter suggested that the Bureau remove any GLBA privacy notice requirement and instead require financial institutions to post their privacy notices online, allow all consumers to choose whether to receive any privacy notices, make electronic notices the default for any consumers who opt to receive any privacy notices, and allow financial institutions to charge fees for any paper privacy notices they provide.
The Bureau now adopts the conforming amendment to the general requirement in § 1016.5(a)(1) that financial institutions provide annual notices, to clarify that the Bureau has added an exception to this requirement in § 1016.5(e) to incorporate the amendment to GLBA section 503. The Bureau does not believe that the comment is relevant to the proposal and it does not provide a basis to change the approach proposed by the Bureau. Congress did not include revisions along the lines the commenter suggested in the statutory provision that the Bureau is implementing in this rulemaking.
New GLBA § 503(f) provides that a financial institution is excepted from providing an annual notice if it meets the two conditions described below. The Bureau proposed to add new § 1016.5(e) to incorporate into Regulation P the exception created by new § 503(f). Under proposed § 1016.5(e), as in section 503(f), a financial institution would be excepted from providing an annual notice if it meets the two conditions discussed below.
The commenters overwhelmingly supported proposed § 1016.5(e). Although some commenters asked that the exception be broadened, no commenters who discussed the proposed exception objected to it. The commenters stated that the exception would reduce burden and would not harm consumers, and was less complicated and burdensome than the previous alternative delivery method. Some suggested that the provision would benefit consumers. The comments that specifically discussed either of the two requirements for the exception, in § 1016.5(e)(1)(i) and (ii), are discussed below in relation to those provisions.
A trade association representing credit unions requested that to eliminate confusion and protect institutions from citations, the rule should be effective retroactive to December 4, 2015, the date the statutory GLBA amendments took effect. In addition, an attorney suggested that the Bureau preempt State privacy statutes that might require institutions to continue providing annual privacy notices in spite of the Federal exception. The attorney recommended the Bureau modify § 1016.17 to expressly preempt contrary State law, and instead require that an institution make its privacy notice continually available online.
After considering the comments and for the reasons discussed below, the Bureau now adopts the exception to the annual notice requirement largely as proposed, with certain changes to the timing provisions in § 1016.5(e)(2), as discussed below.
In regard to the comment recommending that § 1016.17 be modified, § 1016.17 implements GLBA § 507,
In regard to the comment on retroactivity, the Bureau has made clear in the proposed rule and this final rule that new GLBA § 503(f) became effective upon enactment in December 2015.
New GLBA section 503(f)(1) states the first condition for the annual privacy notice exception: that a financial institution provide nonpublic personal information only in accordance with the provisions of subsection (b)(2) or (e) of section 502 of the GLBA. The Bureau proposed § 1016.5(e)(1)(i) to incorporate this condition by requiring that to qualify for the annual notice exception, any nonpublic personal information that financial institutions provide to nonaffiliated third parties must be provided only in accordance with § 1016.13, § 1016.14 or § 1016.15 of Regulation P.
Almost no commenters specifically discussed the first of the two requirements of the new statutory exception. One credit union explained that it does not share nonpublic personal information beyond the exceptions provided in § 1016.13,
The Bureau now adopts § 1016.5(e)(1)(i) as proposed. Section 1016.5(e)(1)(i) will incorporate the first requirement of GLBA § 503(f) by requiring that to qualify for the annual notice exception, any nonpublic personal information that financial institutions provide to nonaffiliated third parties must be provided only in accordance with § 1016.13, § 1016.14 or § 1016.15 of Regulation P; these regulatory sections implement subsections (b)(2) and (e) of section 502.
The Bureau notes that § 1016.6(a)(7) requires that annual privacy notices incorporate any disclosures made under FCRA section 603(d)(2)(A)(iii) regarding the consumer's ability to opt out of sharing of information among affiliates. Further, the notices may incorporate any opt-out disclosures provided under FCRA section 624.
Given the structure of the statute, the Bureau does not interpret GLBA section 503(f)(1) to preclude financial institutions that provide nonpublic personal information in accordance with FCRA sections 603(d)(2)(A)(iii) or 624 from qualifying for the exception. Thus, as the Bureau stated in its proposal, the presence or absence of these FCRA disclosures on a financial institution's privacy notice will not affect whether the institution satisfies GLBA section 503(f)(1) and § 1016.5(e)(1)(i). As the Bureau noted, however, financial institutions that choose to take advantage of the annual notice exception must still provide any opt-out disclosures required under FCRA sections 603(d)(2)(A)(iii) and 624, if applicable. Under the FCRA, neither of these opt-outs is required to be provided annually.
New GLBA section 503(f)(2) states the second condition for the annual notice exception: that a financial institution not have changed its “policies and practices with regard to disclosing nonpublic personal information” from the policies and practices that were disclosed in the most recent notice sent to consumers in accordance with GLBA section 503. Because the Bureau determined that the statutory language was ambiguous as to the exact types of sharing intended, the Bureau proposed § 1016.5(e)(1)(ii) to resolve this ambiguity by requiring that, to qualify for the annual notice exception, a financial institution must not have changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed to the customer under § 1016.6(a)(2) through (5) and (9) in the most recent privacy notice the financial institution provided.
As with the first requirement for the annual notice exception at § 1016.5(e)(1)(i), few commenters specifically discussed the second requirement at § 1016.5(e)(1)(ii). However, the commenters overwhelmingly signaled their support for these provisions by supporting the Bureau's implementation of the statutory exception. Two trade associations representing credit unions did specifically express support for the proposed interpretation of the statutory language as referring only to a change to a disclosure under § 1016.6(a)(2) through (5) and (9).
The Bureau now adopts § 1016.5(e)(1)(ii) as proposed, providing that, to qualify for the annual notice exception, a financial institution must not have changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed to the customer under § 1016.6(a)(2) through (5) and (9) in the most recent privacy notice the financial institution provided.
Paragraphs (1) through (9) of § 1016.6(a) list the specific information that must be included in privacy notices. Section 1016.6(a)(2) through (5) and (9) require a financial institution to include information related to its policies and practices with regard to disclosing nonpublic personal information, but § 1016.6(a)(1) (information collection) and § 1016.6(a)(8) (confidentiality and security) do not.
Section 1016.6(a)(7) requires that any disclosure an institution makes under FCRA section 603(d)(2)(A)(iii), which describes a consumer's ability to opt out of disclosures of information among affiliates, be included on the privacy notice. The Bureau believes that the statute is ambiguous as to whether a financial institution that changes the disclosure required under § 1016.6(a)(7) from the most recent notice sent to consumers would satisfy GLBA section 503(f)(2). In the proposed rule, the Bureau sought comment on whether proposed § 1016.5(e)(1)(ii) should include changes to disclosures required by § 1016.6(a)(7) and on how frequently institutions change that disclosure. The Bureau further sought comment on whether institutions would prefer to inform customers of these changes
All the commenters who addressed these issues stated that changes to the disclosures required by FCRA section 603(d)(2)(A)(iii) should not affect the availability of the annual notice exception. A State-wide trade association representing credit unions indicated that the presence or absence of FCRA disclosures on a credit union's privacy notice, and subsequent changes to those FCRA sharing practices, should not impact whether an institution qualifies for the annual notice exception. This trade association stated, without providing data, that it believed that changes by credit unions in its State to FCRA section 603(d)(2)(A)(iii) information disclosures are infrequent, and that few such credit unions share data in a way that trigger a FCRA opt-out in the first place. Other commenters who discussed the 603(d)(2)(A)(iii) information disclosures stated that allowing changes to disqualify financial institutions from the annual notice exception would interfere with the burden reduction intended, and that FCRA has its own disclosure requirements.
Given the structure of the statute, the Bureau does not interpret GLBA section 503(f)(2) to preclude financial institutions that make changes to disclosures required by § 1016.6(a)(7) from qualifying for the exception. The Bureau also notes that a change in the 603(d)(2)(A)(iii) information disclosures only requires a one-time notice and opt out. The Bureau does not believe that consumers would be materially benefited by requiring this one-time notice to be included in a privacy notice under Regulation P, especially where it is required in a separate notice required by the FCRA.
In addition to the discussion of 603(d)(2)(A)(iii) information disclosures, the Bureau noted in the proposed rule that a financial institution would satisfy § 1016.5(e)(1)(ii) if it changes its disclosures describing policies and practices with regard to disclosing nonpublic personal information that are included in the institution's privacy notice without being required by the GLBA or § 1016.6 (
The Bureau received few comments on this issue. A trade association representing credit unions stated that later changes to initial voluntary disclosures should not trigger the need to send annual privacy notices. The commenter suggested that imposing such a requirement would dissuade institutions from making voluntary disclosures. A banking and insurance trade association stated that affiliate marketing policy changes should not impact the availability of the exception. A trade association representing banks stated that changes to disclosures that are not required to be included in privacy notices should not trigger non-compliance. The trade association believed it would be costly and burdensome to add additional disclosures.
As indicated in the preamble to the proposed rule, the Bureau has determined that disclosures describing sharing with affiliates under FCRA section 624 or voluntary disclosures and opt-outs will not affect a financial institution's eligibility for the annual privacy notice exception under GLBA § 503(f). The Bureau believes that the alternative interpretation could discourage the use of voluntary disclosures while adding unnecessary burden.
New GLBA section 503(f) states that a financial institution that meets the requirements for the annual notice exception will not be required to provide annual notices “until such time” as the financial institution fails to comply with the criteria described in section 503(f)(1) and 503(f)(2), which are now implemented in § 1016.5(e)(1)(i) and (ii). A financial institution will no longer meet the requirements for the exception either by beginning to share nonpublic personal information in ways that trigger rights to opt-out notices under the GLBA and Regulation P, or by otherwise changing its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed to the customer under § 1016.6(a)(2) through (5) and (9) in the most recent privacy notice the financial institution provided.
Financial institutions that no longer meet the conditions for the exception must provide customers with annual privacy notices. However, the GLBA, including new GLBA section 503(f), does not clearly specify when institutions must provide these notices. Thus, the statute is ambiguous on the point. It could be read to require the financial institution to provide an annual privacy notice by the time it changes its policies or practices in such a way that it no longer qualifies for the exception. Alternatively, it could be read to subject the financial institution, at the time it changes its policies or practices in such a way that it no longer qualifies for the exception, to the requirement to provide an annual privacy notice while being silent as to the timing for providing that notice.
Pursuant to its authority in GLBA section 504 to issue rules to implement the GLBA, the Bureau proposed to resolve this ambiguity by adopting this second reading and issuing standards for when institutions must provide these notices. Specifically, in proposed § 1016.5(e)(2)(i) and (ii), the Bureau proposed to use its rulemaking authority under GLBA section 504(a) to establish timing requirements for providing an annual notice in these circumstances. The Bureau proposed to establish these requirements to ensure that delivery of the annual privacy notice in these circumstances is consistent with the existing timing requirements for privacy notices in the regulation, where applicable, and to provide clarity to financial institutions regarding these requirements.
In developing the proposed framework, the Bureau looked to existing requirements under the statute and regulation because they already address circumstances in which a financial institution might change its policies and procedures in a way that affects the content of the notices. Specifically, § 1016.8 requires that the financial institution provide a revised notice to consumers
Accordingly, the timing requirements in proposed § 1016.5(e)(2)(i) and (ii) would differ depending on whether the change that causes the financial institution to no longer satisfy the conditions for the annual notice
Three-fifths of all industry commenters on the proposed rule specifically addressed the proposed timing requirements. The comments on the timing requirements viewed the requirement in § 1016.5(e)(2)(i) and that in § 1016.5(e)(2)(ii) very differently, as will be discussed below in regard to those sections. In regard to the overall timing requirements, one trade association representing credit unions expressed appreciation for the Bureau's proposal, stating that such clarification will eliminate confusion surrounding delivery requirements after a financial institution no longer meets the requirements for the exception. A trade association representing banks supported the proposed timing requirements, asserting that institutions will not find it difficult to comply with the suggested conditions. This commenter also requested clarification that once notices are sent and there are no further privacy changes, an institution will be able to again qualify for the exception, thus excepting them from having to send further annual notices.
The Bureau is adopting the timing provisions largely as proposed, with a change to the duration of the timing requirement in § 1016.5(e)(2)(ii), as discussed below. The Bureau is also adding another example to § 1016.5(e)(2)(iii) to clarify whether a financial institution again qualifies for the annual notice exception after delivering an annual notice under § 1016.5(e)(2).
For changes to a financial institution's policies or practices that cause it to no longer satisfy the conditions for the exception and also trigger an obligation to send a revised notice prior to the change, the Bureau proposed in § 1016.5(e)(2)(i) that financial institutions would be required to resume delivery of their subsequent regular annual notices pursuant to the existing timing requirements that govern delivery of annual notices generally. Because the revised notice would inform the customer of the institution's changed policies and practices before any new sharing occurs, the Bureau believed that there is no clear urgency regarding delivery of the first annual notice subsequent to implementation of the new policies and procedures.
Specifically, § 1016.4(a)(1) generally requires a financial institution to provide an initial notice to an individual who becomes the institution's customer no later than when it establishes a customer relationship. Section 1016.5(a) requires a financial institution to provide a privacy notice to its customers “not less than annually” during the continuation of any customer relationship. Section 1016.5(a)(1) defines annually to mean “at least once in any period of 12 consecutive months.” It further provides that a financial institution “may define the 12-consecutive-month period, but [] must apply it to the customer on a consistent basis.” Section 1016.5(a)(2) provides an example of the meaning of “annually” in relation to the delivery of the first annual notice after the initial notice:
You provide a notice annually if you define the 12-consecutive-month period as a calendar year and provide the annual notice to the customer once in each calendar year following the calendar year in which you provided the initial notice. For example, if a customer opens an account on any day of year 1, you must provide an annual notice to that customer by December 31 of year 2.
The example in § 1016.5(a)(2) provides financial institutions with the flexibility to select a specific date during the year to provide annual notices to all customers, regardless of when a particular customer relationship began. This flexibility avoids burdening institutions with either having to provide annual notices on the anniversary of initial notices, or alternatively providing two notices in the first year of the customer relationship to get all accounts originated in a given calendar year on the same cycle for delivering subsequent annual notices.
The Bureau proposed that the approach to timing of the annual notice in § 1016.5(a)(2) be applied if a financial institution makes a change that causes it to lose the exception and triggers the requirement to deliver a revised notice prior to the change. Under the proposed approach, if a financial institution provides a revised notice on any day of year 1 in advance of changing its policies or practices such that it loses the exception, that revised notice would be treated as analogous to an initial notice in § 1016.5(a)(2). Assuming that the financial institution defines the 12-month period as the calendar year, the financial institution would have to provide the first annual notice after losing the exception by December 31 of year 2.
The Bureau invited comment on the timing conditions proposed in § 1016.5(e)(2)(i). Few commenters separately discussed § 1016.5(e)(2)(i). All commenters who explicitly addressed the proposed timing requirements under § 1016.5(e)(2)(i) agreed with the Bureau's proposed approach. No industry commenters suggested alternative timing conditions. One credit union asserted that the proposed timing condition would incentivize credit unions to plan and notify their members in advance of making changes to privacy policies. Two trade associations representing banks and credit unions supported the timing requirement because it would prevent institutions from having to send out multiple notices within the same year. The trade association representing credit unions asserted that redundant notices provide no benefit to consumers and pose a burden and expense on credit unions.
The Bureau now adopts § 1016.5(e)(2)(i) as proposed. The Bureau believes that using the same approach in § 1016.5(e)(2)(i) as in existing § 1016.5(a)(2) is appropriate for two reasons. First, customers will receive a revised notice informing them of the change in the financial institution's policies or practices before the change occurs, and thus customers will not be harmed by the financial institution taking a longer period of time in which to deliver the first annual notice after the annual notice exception has been lost. Second, this approach will preserve flexibility for financial institutions and avoid requiring them to deliver a revised notice and an annual notice in the same year, and allowing them to use a convenient delivery date for annual notices for all customers. The Bureau believes this flexibility is justified because a financial institution that is required to deliver a revised privacy notice pursuant to § 1016.8 may have continuing annual notice obligations after the exception is lost. Such an institution could be sharing other than as described in the Regulation P exceptions and thus fail to satisfy § 1016.5(e)(1)(i), making the annual notice exception unavailable in future years.
For financial institutions that change their policies and practices in such a way as to lose the § 503(f) exception, but do not share information in a way that triggers the requirement under § 1016.8 to deliver a revised notice prior to the change, the Bureau proposed that a financial institution must deliver the annual notice within 60 days after the change that caused the institution to lose the exception. The Bureau proposed this 60-day period for providing the annual notice in this situation because customers would not receive a revised notice from the financial institution prior to the institution's change in policies or practices.
The Bureau requested comment on whether 60 days is an appropriate period for delivering annual notices in these circumstances or if another period would be more appropriate. Approximately half of all commenters specifically addressed the timing conditions proposed under § 1016.5(e)(2)(ii). These commenters generally opposed the 60-day requirement, advocating instead for an increased amount of time for institutions to deliver the revised notice. The majority of these commenters requested at least 90 days to deliver the notice.
Trade associations representing credit unions cited cost concerns with the 60-day requirement, asserting that because they send quarterly statements to many consumers, the timing requirement would require institutions to send out an additional notice. Some of these commenters suggested that 90 days was a more appropriate timeframe, as it would allow institutions to minimize costs by sending the revised notice with the next quarterly statement. One of these trade associations representing credit unions also asserted that 60 days was too brief, particularly for small credit unions addressing inadvertent changes. This commenter suggested 90 to 120 days to allow credit unions the opportunity to include the notice with the quarterly periodic statement, and noted that while all members may not receive monthly statements, most receive account statements quarterly.
Other industry commenters suggested 120 days as an appropriate time to deliver the annual notice. A few of these commenters cited the same above-mentioned cost concerns that are associated with separate mailers. These commenters asserted that 120 days would allow the notice to be included with regularly scheduled member statements, therefore eliminating the need for an additional mailer. One industry commenter representing credit unions noted that a separate mailer would be especially costly for smaller credit unions with fewer resources.
Industry commenters who suggested 120 days also stated, without specific explanation, that the proposed 60-day requirement did not provide institutions enough time to perform. A few of these industry commenters asserted that smaller credit unions, particularly those with fewer resources, would find the 60-day time frame too short. Some of those same commenters thought that larger credit unions with numerous departments working to consolidate information would also struggle to meet the 60-day requirement. Several trade associations representing credit unions stated that a longer time frame would allow credit unions time to organize logistics, educate staff, and command the resources necessary to draft and send the required notice. One industry commenter stated that an extension would not negatively impact consumers because prior notice is still required when changes allow sharing with third parties of non-public personal information and the option to opt out in advance.
One trade association commenter representing credit unions suggested at least 180 days, citing the fact that § 1016.8 does not require a revised privacy notice under the circumstances described in § 1016.5(e)(2)(ii). This commenter also suggested that to combat costs, financial institutions should have the option to include a message on periodic statements or mailers that there has been a change to the privacy notice, and direct the recipient to the financial institution's website to view and download an electronic copy of the revised notice.
The Bureau now adopts the timing provision in § 1016.5(e)(2)(ii) with a 100 calendar day period during which the financial institution must provide the annual privacy notice. The unanimous industry objection to the 60-day period suggests that the proposal likely would have imposed costs that the Bureau had not anticipated. The 100-day period will accommodate the inclusion of the notice with quarterly statements. The Bureau believes that providing 10 days in addition to the 90 days many commenters requested is appropriate because most calendar quarters are slightly longer than 90 days, and a short additional period should be allowed for administrative activities and to provide flexibility if the end date falls on a weekend or holiday. The Bureau does not believe that consumers will be harmed by this extension of the time period from the proposal.
However, the Bureau notes that the commenters requesting 120 or 180 days provided no specific reason why allowing such additional time would contribute to cost savings beyond allowing the notice to be included in quarterly statements. The Bureau is not aware of any other reason, and therefore declines to adopt a longer period.
The Bureau believes that the 100-day deadline will not impose undue or unreasonable costs on financial institutions, particularly since the delivery requirement is effectively a one-time burden absent additional changes to a financial institution's policies and practices. Specifically, after providing the one annual notice, the financial institution will likely once again meet both of the conditions for the exception—it will not be sharing nonpublic personal information with nonaffiliates other than as described in a Regulation P exception to the opt-out requirements and its policies and practices will not have changed since it provided the annual notice. Because the financial institution likely will once again meet the conditions for the exception, it likely will not be required to provide future annual notices. In other words, these financial institutions will likely lose the exception for only a single year. The Bureau is including an additional example in § 1016.5(e)(2)(iii)(B) for clarity. Given that financial institutions delivering notices pursuant to § 1016.5(e)(2)(ii) will likely have no continuing obligation to send annual notices, they likely will not need flexibility in choosing a convenient delivery date for future annual notices, beyond the 100 days of flexibility being provided for a single privacy notice.
In regard to the comment that the regulation should allow financial institutions to include a message on periodic statements or mailers directing customers to an electronic copy of the annual notice, the Bureau believes that any reduction in costs would be minimal because the financial institution is likely not required to provide more than one notice. In addition, the Bureau did not propose or request comment on such an option.
The Bureau also notes that financial institutions have substantial flexibility in managing the burden involved in sending the one annual notice because institutions can generally choose when
In order to facilitate compliance with proposed § 1016.5(e)(2), the Bureau proposed § 1016.5(e)(2)(iii) to provide an example for when an institution must provide an annual notice after changing its policies or practices such that it no longer meets the requirements for the annual notice exception set forth in proposed § 1016.5(e)(1).
The Bureau did not receive any comments specifically discussing the example provided in § 1016.5(e)(2)(iii). Because the Bureau believes that the example will provide clarity and facilitate compliance, it is now being made final in § 1016.5(e)(2)(iii)(A), with a minor change due to the alteration of the time frame in § 1016.5(e)(2)(ii). In addition, the Bureau is providing a second example, in § 1016.5(e)(2)(iii)(B), to facilitate compliance when a financial institution must only provide one annual notice before it again qualifies for the § 1016.5(e)(1) exception.
Section 1016.5(e)(2)(iii)(A) provides an example for when an institution must provide an annual notice after changing its policies or practices such that it no longer meets the requirements for the annual notice exception in § 1016.5(e)(1). The Bureau believes this example will facilitate compliance with § 1016.5(e)(2). The example assumes that an institution changes its policies or practices effective April 1 of year 1 and defines the 12-consecutive-month period pursuant to § 1016.5(a)(1) as a calendar year. Section 1016.5(e)(2)(iii)(A) states that the institution must provide an annual notice by December 31 of year 2 if the institution was required to provide a revised notice prior to the change and provided that revised notice on March 1 of year 1 in advance of the change. Section 1016.5(e)(2)(iii)(A) further states that the institution must provide an annual notice by July 9 of year 1 if the institution was not required to provide a revised notice prior to the change.
The Bureau is also providing a second example, in § 1016.5(e)(2)(iii)(B), to facilitate compliance when a financial institution must provide only one annual notice before it again qualifies for the § 1016.5(e)(1) exception, as discussed above in relation to § 1016.5(e)(2)(ii). The example assumes that a financial institution changes its policies and practices in such a way that it no longer meets the requirements of § 1016.5(e)(1), and so provides an annual notice to its customers. The example further assumes that after providing the annual notice to its customers, the financial institution once again meets the requirements of § 1016.5(e)(1) for an exception to the annual notice requirement. The example explains that the financial institution does not need to provide additional annual notices to its customers until such time as it no longer meets the requirements of § 1016.5(e)(1).
As discussed in Part II, the Bureau amended Regulation P in October 2014 to allow financial institutions that met certain criteria to deliver annual notices pursuant to the “alternative delivery method.” Because financial institutions that met the conditions in Regulation P to use the alternative delivery method will also meet the conditions for the statutory exception in section 503(f), the Bureau proposed to remove the alternative delivery method from Regulation P by removing § 1016.9(c)(2) and renumbering existing § 1016.9(c)(1) as § 1016.9(c).
Commenters generally expressed support for the proposed removal of the alternative delivery method. Ten commenters addressed the issue, with eight supporting the proposal and two opposing it.
Some commenters welcomed elimination of the alternative delivery method, asserting that the conditions associated with the 2014 provision deterred institutions from taking advantage of the intended relief. A debt collector organization stated that the alternative delivery method did not provide a solution for many debt collectors and consumers. This commenter asserted that the alternative delivery required model form created a significant risk of class action litigation because of claims that the language conflicts with the Fair Debt Collection Practices Act's prohibitions on third-party disclosure. A commenter representing several trade associations stated that the alternative delivery method requirement to post the notice online eliminated any benefits from the 2014 rule.
Two trade associations agreed that the alternative delivery method would no longer be useful in light of the statutory exception to the annual notice requirement, and one of these trade associations stated that it was unlikely that financial institutions would continue to use a complex means of compliance when a simpler one was available.
Several commenters discussed benefits associated with eliminating the alternative delivery method. One trade association stated that removing the alternative delivery method would eliminate confusion between the rule and the statute. Another trade association representing banks expressed appreciation of the elimination of the alternative delivery method, arguing that it would remove the confusion of having both an exception from the annual privacy notice and an alternative to the delivery requirement. One trade association stated that consumers will benefit from the elimination of the method, as they will experience decreasing information overload.
One trade association representing banks requested clarification that institutions that qualify for the exception but still keep a copy of the privacy policy on their websites will not be criticized or penalized.
Two trade association commenters representing the consumer credit industry and credit unions did not support removal of the alternative delivery method. These commenters stated that their customers or members prefer to receive communications electronically. Both commenters cited cost burdens associated with mailing privacy notices.
The trade association representing the consumer credit industry stated that several of their member financial institutions, particularly those that provide indirect auto loans, do not qualify for the statutory exception to the annual notice requirement because the institutions share consumer information with nonaffiliated third parties other than as described in §§ 1016.13, 14 and 15. These institutions are required under § 1016.10 of Regulation P to inform consumers through the institution's annual privacy notice that the consumer has a right to opt out of that information sharing. The trade association representing the consumer credit industry encouraged expansion of the alternative delivery method, highlighting the cost effectiveness of electronic delivery and stating that many institutions upgraded systems to implement the alternative delivery method under the 2014 rule. This commenter also urged the Bureau to consider allowing institutions that share with nonaffiliated third parties to deliver their privacy notices electronically, such as via website
After considering the comments, the Bureau now adopts the proposed change, removing the alternative delivery method from Regulation P by removing § 1016.9(c)(2) and renumbering former § 1016.9(c)(1) as § 1016.9(c).
Any financial institution that met the conditions to use the alternative delivery method will also meet the conditions to be excepted from delivering an annual privacy notice pursuant to new GLBA section 503(f). First, new GLBA section 503(f)(1) is substantively identical to the first requirement for using the alternative delivery method:
The Bureau believes that a financial institution that has both options available to it would choose not to send the annual privacy notice at all, rather than to deliver it pursuant to the alternative delivery method, so that it can eliminate rather than merely reduce the cost of providing annual notices. Given that any financial institution that qualifies to use the alternative delivery method for its annual notices also meets the qualifications for the new annual notice exception, the Bureau believes that including the alternative delivery method in Regulation P is no longer useful.
The Bureau notes that financial institutions that delivered annual notices using the alternative delivery method while it was in effect delivered those notices using a method that was in compliance with Regulation P, notwithstanding that the alternative delivery method provision is now being removed from the regulation. The Bureau further notes that financial institutions that qualify for the new annual notice exception may still choose to post privacy notices on their websites, deliver privacy notices to consumers who request them, and notify consumers of the notices' availability. Such activities will not affect a financial institution's eligibility for the new 503(f) exception.
The Bureau has considered the comments suggesting that it retain and expand the alternative delivery method for providing annual privacy notices. In this rulemaking, the Bureau is implementing the FAST Act amendments to the GLBA, which eliminate the requirement that financial institutions provide an annual privacy notice if certain conditions are met. In making these amendments to the GLBA, Congress did not address the delivery method financial institutions must or may use if they continue to be required to provide an annual privacy notice, including where financial institutions have not changed their privacy policies since their last privacy notice and they share information with nonaffiliated third parties other than as described in §§ 1016.13, .14, and .15. Because Congress did not address these issues in the FAST Act amendments to the GLBA, the Bureau declines to address them in this rulemaking to implement those amendments.
In developing the final rule, the Bureau has considered the potential benefits, costs, and impacts as required by section 1022(b)(2) of the Dodd-Frank Act.
This final rule implements the December 2015 amendment to the GLBA by amending § 1016.5 of Regulation P to provide that a financial institution is not required to deliver an annual privacy notice if it:
(1) Provides nonpublic personal information to nonaffiliated third parties only in accordance with the provisions of § 1016.13, § 1016.14, or § 1016.15; and
(2) Has not changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed to the customer under § 1016.6(a)(2) through (5) and (9) in the most recent privacy notice provided.
In considering the potential benefits, costs, and impacts of the rule, the Bureau takes as the baseline for the analysis the legal regime that existed prior to the FAST Act's amendment of the GLBA.
The impact on consumers of § 1016.5(e) depends on whether the particular consumer prefers or would otherwise benefit from receiving an annual privacy notice that does not offer the consumer an opt-out under the GLBA and is largely unchanged
For other consumers who would prefer or otherwise benefit from receiving the annual notices, there will be some cost because many institutions that previously delivered notices—whether through the standard delivery methods or through the alternative delivery method that includes posting on the institution's website—will no longer deliver annual notices. Consumers may be less informed about opportunities to limit a financial institution's information sharing practices if the financial institution meets the requirements for the annual notice exception and chooses not to provide annual notices. For example, some consumers will receive fewer notices in which a financial institution offers
If financial institutions choose not to provide notices pursuant to the annual notice exception, consumers may also be less informed of their opt-out rights under the FCRA. Section 503(c)(4) of the GLBA and Regulation P require financial institutions providing initial and annual privacy notices to incorporate into them any notification and opt-out disclosures provided pursuant to section 603(d)(2)(A)(iii) of the FCRA.
Regarding benefits and costs to covered persons, the primary effect of the rule will be burden reduction achieved by lowering the costs to industry of providing annual privacy notices. Section 1016.5(e) imposes no new compliance requirements on any financial institution. Any institution that could use the alternative delivery method will meet the requirements for the annual notice exception pursuant to § 1016.5(e).
The expected cost savings to financial institutions from the revisions to § 1016.5(e) depend on whether the financial institution uses the alternative delivery method under the baseline. Financial institutions that currently use the alternative delivery method will likely cease complying with the requirements in current § 1016.9(c)(2) since they necessarily meet the requirements of the exception to the annual notice requirement and thus will no longer be required to deliver an annual notice.
For the 2014 Annual Privacy Notice Rule, the Bureau collected a sample of privacy policies from banks and credit unions and estimated both the number of financial institutions that would adopt the alternative delivery method and the aggregate cost savings that would result.
The Bureau also previously examined the privacy policies of the four credit unions with assets over $10 billion as well as the privacy policies of 50 additional credit unions selected through random sampling. The Bureau previously concluded that 46% of credit unions could use the alternative delivery method. The information evaluated in the re-analysis shows that none of the credit unions that could not use the alternative delivery method will be able to use the exception to the annual notice requirement. Credit unions that clearly could not use the alternative delivery method generally shared information with nonaffiliated third parties other than as specified in the exceptions in §§ 1016.13, 1016.14, and 1016.15. However, there are a number of cases in which the Bureau could not readily evaluate the information sharing practices of the sampled credit union because it did not have a website, did not post the privacy notice on its website, or did not use the model form.
Regarding the number of non-depository financial institutions that will benefit from the exception to the annual notice requirement, the Bureau uses the same basic methodology as in its prior analysis. Specifically, the Bureau assumes that the fraction of non-depository financial institutions that cannot use the alternative delivery method but can use the new annual notice exception is the same for non-depository institutions as for banks (9.5%).
Having identified the financial institutions that will benefit from the exception to the annual notice requirement, the Bureau estimates the benefit using the same basic methodology as in its prior analysis.
The Bureau requested comment on the preliminary presentation of this analysis as well as the submission of additional data that could inform the Bureau's consideration of the cost savings to financial institutions. No comments addressed this request.
The Regulation P exception to the annual notice requirement implements a December 2015 statutory amendment to the GLBA. The Bureau considered alternatives to the timeline for delivery of annual notices when a financial institution that qualified for the annual exception changes its policies or practices such that it no longer qualifies. Because the estimates of costs and benefits to consumers and covered persons take institutions' sharing policies and practices as given, the alternatives with respect to the timeline for delivery of annual notices do not impact those estimates. Further, even if the estimates allowed for changes in sharing policies and practices that can cause institutions to meet or fail to meet the requirements for the annual notice exception, the aggregate annual benefits and costs of delivery will not likely be significantly impacted by the timeline for delivery of annual notices. The Bureau does note, however, that changing from 60 to 100 days for delivery of the annual privacy notice under § 1016.5(e)(2)(ii) should result in a small burden reduction from the proposal, as financial institutions will be able to send the notice with quarterly statements as they requested.
The Bureau currently estimates that approximately 600 banks with $10 billion or less in assets cannot use the alternative delivery method but can use the annual notice exception. This constitutes 47% of banks with $10 billion or less in assets that do not use the alternative delivery method and 8.8% of all banks with $10 billion or less in assets. As reported above, 70% of banks with more than $10 billion in assets that do not use the alternative delivery method can use the proposed exception to the annual notice requirement. This is 55% of all banks with more than $10 billion in assets. Thus, the rule may have different impacts on federally insured depository institutions with $10 billion or less in assets as described in section 1026 of the Dodd-Frank Act. The Bureau currently believes that no credit unions of any size that could not use the alternative delivery method will be able to use the exception to the annual notice requirement.
The Bureau does not believe that the rule will reduce consumers' access to consumer financial products or services or have a unique impact on rural consumers.
The Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires each agency to consider the potential impact of its regulations on small entities, including small businesses, small governmental units, and small not-for-profit organizations. The RFA defines a “small business” as a business that meets the size standard developed by the Small Business Administration pursuant to the Small Business Act. The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.
At the proposed rule stage, the Bureau determined that an IRFA was not required because the proposal, if adopted, would not have a significant economic impact on a substantial number of small entities. For this final rule, the Bureau continues to believe that that determination is accurate. The Bureau does not expect the rule to impose costs on small entities. All methods of compliance under current law will remain available to small entities when this rule is adopted. Thus, a small entity that is in compliance with current law need not take any different or additional action under the new rule. In addition, based on the data analysis described previously, the Bureau believes that the annual notice exception will allow some small institutions to stop sending the annual notice and to thereby reduce costs.
Accordingly, the undersigned certifies that this rule will not have a significant economic impact on a substantial number of small entities.
Under the Paperwork Reduction Act of 1995 (PRA),
As explained below, the Bureau has determined that this rule does not contain any new or substantively revised information collection requirements other than those previously approved by OMB. The rule will implement the December 2015 amendment to the GLBA and amend § 1016.5 of Regulation P to provide that a financial institution is not required to deliver an annual privacy notice if it:
(1) Provides nonpublic personal information to nonaffiliated third parties only in accordance with the provisions of § 1016.13, § 1016.14, or § 1016.15 and;
(2) Has not changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed to the customer under § 1016.6(a)(2) through (5) and (9) in the most recent privacy notice provided.
Under Regulation P, the Bureau generally accounts for the paperwork burden for the following respondents pursuant to its enforcement/supervisory authority: Federally insured depository institutions with more than $10 billion in total assets, their depository institution affiliates, and certain non-depository institutions. The Bureau and the FTC generally both have enforcement authority over non-depository institutions subject to Regulation P. Accordingly, the Bureau has allocated to itself half of the final rule's estimated reduction in burden on non-depository financial institutions subject to Regulation P. Other Federal agencies, including the FTC, are responsible for estimating and reporting to OMB the paperwork burden for the institutions for which they have enforcement and/or supervision authority. They may use the Bureau's burden estimation methodology, but need not do so.
The Bureau does not believe that this final rule will impose any new or substantively revised collections of information as defined by the PRA, and instead believes that it will have the overall effect of reducing the previously approved estimated burden on industry for the information collections
The Bureau believes that the one-time cost of adopting the annual notice exception for financial institutions that adopt it will be
The Bureau takes all of the reduction in ongoing burden from banks and credit unions with assets $10 billion and above and half the reduction in ongoing burden from the non-depository institutions subject to the FTC enforcement authority that are subject to the Bureau's Regulation P. The total reduction in ongoing burden taken by the Bureau is 53,216 hours or $3.058 million annually.
The Bureau has determined that the final rule does not contain any new or substantively revised information collection requirements as defined by the PRA and that the burden estimate for the previously approved information collections should be revised as explained above. The Bureau requested comments on these determinations or any other aspect of the proposal for purposes of the PRA, but received none.
Pursuant to the Congressional Review Act (5 U.S.C. 801
Banks, Banking, Consumer protection, Credit, Credit unions, Foreign banking, Holding companies, National banks, Privacy, Reporting and recordkeeping requirements, Savings associations, Trade practices.
For the reasons set forth in the preamble, the Bureau amends Regulation P, 12 CFR part 1016, as set forth below:
12 U.S.C. 5512, 5581; 15 U.S.C. 6804.
(s)(1)
(a)(1) * * * Except as provided by paragraph (e) of this section, you must provide a clear and conspicuous notice to customers that accurately reflects your privacy policies and practices not less than annually during the continuation of the customer relationship. * * *
(e)
(i) Provide nonpublic personal information to nonaffiliated third parties only in accordance with the provisions of § 1016.13, § 1016.14, or § 1016.15; and
(ii) Have not changed your policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed to the customer under § 1016.6(a)(2) through (5) and (9) in the most recent privacy notice provided pursuant to this part.
(2)
(i)
(ii)
(iii)
(B) You change your policies and practices in such a way that you no longer meet the requirements of paragraph (e)(1) of this section, and so provide an annual notice to your customers. After providing the annual notice to your customers, you once again meet the requirements of paragraph (e)(1) of this section for an exception to the annual notice requirement. You do not need to provide additional annual notices to your customers until such time as you no longer meet the requirements of paragraph (e)(1) of this section.
(c)
(1) The customer uses your website to access financial products and services electronically and agrees to receive notices at the website, and you post your current privacy notice continuously in a clear and conspicuous manner on the website; or
(2) The customer has requested that you refrain from sending any information regarding the customer relationship, and your current privacy notice remains available to the customer upon request.
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are adopting a new airworthiness directive (AD) for certain Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes. This AD was prompted by a report that the retraction actuator eye-end of a Goodrich main landing gear (MLG) failed. This AD requires a one-time general visual inspection of the left-hand (LH) and right-hand (RH) MLG retraction actuators and replacement if necessary. We are issuing this AD to address the unsafe condition on these products.
This AD is effective September 21, 2018.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of September 21, 2018.
For service information identified in this final rule, contact Fokker Services B.V., Technical Services Dept., P.O. Box 1357, 2130 EL Hoofddorp, the Netherlands; telephone +31 (0)88-6280-350; fax +31 (0)88-6280-111; email
You may examine the AD docket on the internet at
Tom Rodriguez, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3226.
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes. The NPRM published in the
We are issuing this AD to address failure of the retraction actuator eye-end of a Goodrich MLG, which could prevent retraction of the MLG and/or its complete extension, possibly resulting in damage to the airplane during landing, and consequent injury to occupants.
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2018-0001, dated January 4, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes. The MCAI states:
An occurrence was reported where, following take-off after gear up selection, the retraction actuator eye-end (P/N [part number] 41518-3) of a Goodrich MLG failed. After the LG UNSAFE indication, the flight crew successfully selected gear down and locked by applying the alternate extension
This condition, if not detected and corrected, could prevent retraction of the MLG and/or its complete extension, possibly resulting in damage to the aeroplane during landing, and consequent injury to occupants.
To address this potential unsafe condition, Fokker Services published SBF100-32-168 to provide inspection and replacement instructions.
For the reasons described above, this AD requires a one-time [general visual] inspection [for deficiencies] (check the eye-end for presence of interference/damage and for orientation of the greasing nipple) of the MLG retraction actuators, left-hand (LH) and right-hand (RH) sides, and, depending on findings, replacement.
You may examine the MCAI in the AD docket on the internet at
We gave the public the opportunity to participate in developing this final rule. We received no comments on the NPRM or on the determination of the cost to the public.
We reviewed the relevant data and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM.
Fokker Services B.V. has issued Fokker Service Bulletin SBF100-32-168, dated May 22, 2017. This service information describes procedures for a one-time general visual inspection for deficiencies of the Goodrich MLG retraction actuators and replacement of the actuator if necessary (
We estimate that this AD affects 5 airplanes of U.S. registry.
We estimate the following costs to comply with this AD:
We estimate the following costs to do any necessary replacements that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need these replacements:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.
This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective September 21, 2018.
None.
This AD applies to Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes, certificated in any category, all serial numbers, if equipped with Goodrich main landing gear (MLG), part number (P/N) 41050-x (all dashes) or P/N 41060-x (all dashes).
Air Transport Association (ATA) of America Code 32, Landing gear.
This AD was prompted by a report that the retraction actuator eye-end of a Goodrich MLG failed. We are issuing this AD to address failure of the retraction actuator eye-end of a Goodrich MLG, which could prevent retraction of the MLG and/or its complete extension, possibly resulting in damage to the airplane during landing, and consequent injury to occupants.
Comply with this AD within the compliance times specified, unless already done.
For the purposes of this AD, a “serviceable part” is a serviceable retraction actuator with an eye-end that does not have any indication of interference or damage, as specified in the Accomplishment Instructions of Fokker Service Bulletin SBF100-32-168, dated May 22, 2017.
Within 12 months after the effective date of this AD, perform a general visual inspection of the left-hand (LH) and right-hand (RH) MLG retraction actuators for deficiencies (
The following provisions also apply to this AD:
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA AD 2018-0001, dated January 4, 2018, for related information. This MCAI may be found in the AD docket on the internet at
(2) For more information about this AD, contact Tom Rodriguez, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3226.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Fokker Service Bulletin SBF100-32-168, dated May 22, 2017.
(ii) Reserved.
(3) For service information identified in this AD, contact Fokker Services B.V., Technical Services Dept., P.O. Box 1357, 2130 EL Hoofddorp, the Netherlands; telephone +31 (0)88-6280-350; fax +31 (0)88-6280-111; email
(4) You may view this service information at the FAA, Transport Standards Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
Federal Aviation Administration (FAA), DOT.
Final rule.
We are adopting a new airworthiness directive (AD) for certain Rolls-Royce Corporation (RRC) AE 2100D2A and AE 2100D3 model turboprop engines and AE 3007A2 model turbofan engines. This AD was prompted by the possibility of a low-cycle fatigue failure on certain turbine wheels. This AD requires removing the affected turbine wheels at the next engine shop visit or before reaching the new reduced life limit, whichever occurs first, and replacing them with parts eligible for installation. We are issuing this AD to address the unsafe condition on these products.
This AD is effective September 21, 2018.
The Director of the Federal Register approved the incorporation by reference
For service information identified in this final rule, contact Rolls-Royce Corporation, 450 South Meridian Street, Indianapolis, IN 46225; phone: 317-230-3774. You may view this service information at the FAA, Engine and Propeller Standards Branch, 1200 District Avenue, Burlington, MA 01803. For information on the availability of this material at the FAA, call 781-238-7759. It is also available on the internet at
You may examine the AD docket on the internet at
Kyri Zaroyiannis, Aerospace Engineer, Chicago ACO Branch, FAA, 2300 E. Devon Ave., Des Plaines, IL 60018; phone: 847-294-7836; fax: 847-294-7834; email:
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain RRC AE 2100D2A and AE 2100D3 model turboprop engines and AE 3007A2 model turbofan engines. The NPRM published in the
We gave the public the opportunity to participate in developing this final rule. We have considered the comment received. RRC supported the NPRM.
We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule as proposed.
We reviewed RRC Alert Service Bulletin (ASB) AE 2100D2-A-72-090, Revision 1, dated July 11, 2014, and RRC ASB AE 2100D3-A-72-286, Revision 1, dated July 11, 2014 (one document, referred to herein as “RRC ASB AE 2100D2-A-72-090/AE 2100D3-A-72-286”), and RRC ASB AE 3007A-A-72-419, Revision 2, dated December 4, 2017. RRC ASB AE 2100D2-A-72-090/AE 2100D3-A-72-286 provides removal and replacement instructions and a new life limit for the affected 1st-stage gas generator turbine wheels installed on RRC AE 2100D2A and AE 2100D3 model turboprop engines. ASB AE 3007A-A-72-419 provides removal and replacement instructions and a new life limit for 1st-stage HPT wheels installed on RRC AE 3007A2 model turbofan engines. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We estimate that this AD affects nine engines installed on airplanes of U.S. registry.
We estimate the following costs to comply with this AD:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to engines, propellers, and associated appliances to the Manager, Engine and Propeller Standards Branch, Policy and Innovation Division.
This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective September 21, 2018.
None.
This AD applies to:
(1) Rolls-Royce Corporation (RRC) AE 2100D2A turboprop engines with 1st-stage gas generator turbine wheels, part number (P/N) 23089692, with serial numbers (S/Ns) MW65898 or MW68310, installed.
(2) RRC AE 2100D3 turboprop engines with 1st-stage gas generator turbine wheels, P/N 23088906, with S/Ns MW65895, MW65896, MW65900, MW65901, MW65903, MW68305, MW68306, MW68307, MW68312, MW68314, MW68316, MW68318, or MW68319, installed.
(3) RRC AE 3007A2 turbofan engines with 1st-stage high-pressure turbine (HPT) wheels, P/N 23088906, with S/Ns MW65894, MW68303, or MW68315, installed.
Joint Aircraft System Component (JASC) Code 7250, Turbine section.
This AD was prompted by the possibility of steel inclusions in the turbine wheel forging. We are proposing this AD to prevent a low-cycle fatigue failure of a 1st-stage gas generator turbine wheel or 1st-stage HPT wheel. The unsafe condition, if not addressed, could result in uncontained turbine wheel release, damage to the engine, and damage to the airplane.
Comply with this AD within the compliance times specified, unless already done.
(1) Remove the affected 1st-stage gas generator turbine wheel and replace with a part eligible for installation at the next engine shop visit or before exceeding the life limit of 4,800 engine cycles, whichever occurs first, in accordance with the Accomplishment Instructions, Paragraph 2, of RRC Alert Service Bulletin (ASB) AE 2100D2-A-72-090, Revision 1, dated July 11, 2014, and RRC ASB AE 2100D3-A-72-286, Revision 1, dated July 11, 2014 (co-published as one document).
(2) Remove the affected 1st-stage HPT wheel and replace with a part eligible for installation at the next engine shop visit or before exceeding the life limit of 5,600 engine cycles, whichever occurs first, in accordance with the Accomplishment Instructions, Paragraph 2, of RRC ASB AE 3007A-A-72-419, Revision 2, dated December 4, 2017.
For the purpose of this AD, an “engine shop visit” is the induction of an engine into the shop for maintenance involving the separation of pairs of major mating engine flanges, except that the separation of engine flanges solely for the purposes of transportation without subsequent engine maintenance is not an engine shop visit.
(1) The Manager, Chicago ACO Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the certification office, send it to the attention of the person identified in paragraph (j) of this AD.
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
For more information about this AD, contact Kyri Zaroyiannis, Aerospace Engineer, Chicago ACO Branch, FAA, 2300 E. Devon Ave., Des Plaines, IL, 60018; phone: 847-294-7836; fax: 847-294-7834; email:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) Rolls-Royce Corporation (RRC) Alert Service Bulletin (ASB) AE 2100D2-A-72-090, Revision 1, dated July 11, 2014, and RRC ASB AE 2100D3-A-72-286, Revision 1, dated July 11, 2014 (co-published as one document).
(ii) RRC ASB AE 3007A-A-72-419, Revision 2, dated December 4, 2017.
(3) For RRC service information identified in this AD, contact Rolls-Royce Corporation, 450 South Meridian Street, Indianapolis, IN, 46225; phone: 317-230-3774.
(4) You may view this service information at FAA, Engine and Propeller Standards Branch, 1200 District Avenue, Burlington, MA, 01803. For information on the availability of this material at the FAA, call 781-238-7759.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule; request for comments.
We are superseding Airworthiness Directive (AD) 2017-24-01, which applied to certain ATR—GIE Avions de Transport Régional Model ATR42-500 airplanes and Model ATR72-212A airplanes. AD 2017-24-01 required an inspection for routing attachments of electrical harness bundles and for wire damage, and corrective actions if necessary. This new AD adds additional airplanes to the applicability. This AD was prompted by a determination that additional airplanes are affected by the unsafe condition. We are issuing this AD to address the unsafe condition on these products.
This AD is effective September 4, 2018.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of September 4, 2018 .
We must receive comments on this AD by October 1, 2018.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this final rule, contact ATR—GIE Avions de Transport Régional, 1 Allée Pierre Nadot, 31712 Blagnac Cedex, France; telephone +33 (0) 5 62 21 62 21; fax +33 (0) 5 62 21 67 18; email
You may examine the AD docket on the internet at
Shahram Daneshmandi, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-321-3220.
We issued AD 2017-24-01, Amendment 39-19105 (82 FR 55755, November 24, 2017) (“AD 2017-24-01”), which applied to certain Model ATR42-500 airplanes and Model ATR72-212A airplanes. AD 2017-24-01 was prompted by reports of electrical harness bundle chafing with a window blinding panel in the fuselage due to missing routing attachments. AD 2017-24-01 required an inspection for routing attachments (
Since we issued AD 2017-24-01, we have determined that additional airplanes are affected by the unsafe condition.
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2018-0105, dated May 08, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Model ATR42-500 airplanes and Model ATR72-212A airplanes. The MCAI states:
An event was reported of several spurious alarms on a recently delivered ATR 72 aeroplane. During subsequent trouble-shooting, damage was found on the electrical harness wire bundle (Route 1M), due to chafing with a window blinding panel located on the left-hand (LH) side of the fuselage, zone 231. A bracket, necessary to maintain the harness wire bundle close to the structure of the fuselage and avoid chafing, was missing. The same bracket was also found missing on the right-hand (RH) side of the fuselage, zone 232, Route 2M, although without damage on the harness wire bundle. A quality investigation revealed another aeroplane on the production line where same brackets were not installed.
This condition, if not detected and corrected, may lead to wire failure (cut or shorted) and, in case of several failures in combination, to loss of systems, possibly resulting in reduced control of the aeroplane.
To address this potential unsafe condition, ATR published the applicable SB [service bulletin] to provide inspection instructions. Consequently, EASA issued AD 2017-0118 [which corresponds to FAA AD 2017-24-01] to require verification of the installation of the brackets, a one-time inspection of the wire bundles, and depending on findings, accomplishment of applicable corrective action(s).
Since that [EASA] AD was issued, an occurrence was reported of engine intermittent auto-feather, caused by damage on the electrical harness bundle Route 1M. The affected aeroplane MSN [manufacturer serial number] was not identified in the Applicability of EASA AD 2017-0118.
For the reason described above, this [EASA] AD retains the requirements of EASA AD 2017-0118, which is superseded, and expands the Applicability to include additional aeroplanes, identified by MSN in Group 2 as specified in section `Definitions' of this [EASA] AD.
The MCAI includes MSNs 1071, 1141, 1341, 1367, and 1377 in its applicability, but those MSNs are not identified in the definitions for the affected groups. Those MSNs are not affected by the identified unsafe condition. Therefore, we have not included those MSNs in our applicability. You may examine the MCAI on the internet at
ATR has issued Service Bulletin ATR42-92-0033, Revision 02, dated April 12, 2018; and Service Bulletin ATR72-92-1044, Revision 02, dated April 12, 2018. This service information describes procedures for an inspection of routing attachments (
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.
There are currently no domestic operators of this product. Therefore, we good cause find that notice and opportunity for prior public comment are unnecessary and that, for the same reason, good cause exists for making this amendment effective in less than 30 days.
This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
Currently, there are no affected U.S.-registered airplanes. If an affected airplane is imported and placed on the U.S. Register in the future, we provide the following cost estimates to comply with this AD:
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes to the Director of the System Oversight Division.
We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective September 4, 2018.
This AD replaces AD 2017-24-01, Amendment 39-19105 (82 FR 55755, November 24, 2017) (“AD 2017-24-01”).
This AD applies to the ATR—GIE Avions de Transport Régional airplanes identified in paragraphs (c)(1) and (c)(2) of this AD, certificated in any category.
(1) Model ATR42-500 airplanes, manufacturer serial numbers (MSNs) 1001 through 1014 inclusive, 1016 through 1019 inclusive, and 1201 through 1212 inclusive.
(2) Model ATR72-212A airplanes, MSNs 1048 through 1070 inclusive, 1072 through 1140 inclusive, 1142 through 1200 inclusive, 1220 through 1340 inclusive, 1342 through 1353 inclusive, 1355 through 1366 inclusive, 1368 through 1376 inclusive, 1378 through 1380 inclusive, 1382, 1385, and 1388.
Air Transport Association (ATA) of America Code 92, Electric.
This AD was prompted by reports of electrical harness bundle chafing with a window blinding panel in the fuselage due to missing routing attachments and by a determination that additional airplanes that were not identified in AD 2017-24-01 are affected by the unsafe condition. We are issuing this AD to detect and correct missing
Comply with this AD within the compliance times specified, unless already done.
(1) For the purposes of this AD, Group 1 airplanes are identified as the following: MSNs 1014, 1016 through 1019 inclusive, 1165 through 1212 inclusive, 1220 through 1340 inclusive, 1342 through 1353 inclusive, 1355 through 1366 inclusive, 1368 through 1376 inclusive, 1378 through 1380 inclusive, 1382, 1385 and 1388.
(2) For the purposes of this AD, Group 2 airplanes are identified as the following: MSNs 1001 through 1013 inclusive, 1048 through 1070 inclusive, 1072 to 1140 inclusive 1142 through 1164 inclusive.
This paragraph restates the requirements of paragraph (g) of AD 2017-24-01, with new service information and revised compliance language. For Group 1 airplanes: Within 6 months or 500 flight hours after December 11, 2017 (the effective date of AD 2017-24-01), whichever occurs first, do a detailed inspection for missing brackets and damage (including but not limited to chafing and electrical shorting) to wire bundles of the Route 1M and Route 2M electrical harness, in accordance with the flowchart in paragraph 1.C., “Description,” and the Accomplishment Instructions of ATR Service Bulletin ATR42-92-0033, Revision 02, dated April 12, 2018 (for Model ATR42-500 airplanes); or ATR Service Bulletin ATR72-92-1044, Revision 02, dated April 12, 2018 (for Model ATR72-212A airplanes); as applicable. Although ATR Service Bulletin ATR42-92-0033, Revision 02, dated April 12, 2018; and ATR Service Bulletin ATR72-92-1044, Revision 02, dated April 12, 2018; specify reporting, this AD does not include that requirement.
For Group 2 airplanes: Within 6 months or 500 flight hours after the effective date of this AD, whichever occurs first, do a detailed inspection for missing brackets and damage (including but not limited to chafing and electrical shorting) to wire bundles of the Route 1M and Route 2M electrical harness, in accordance with the flowchart in paragraph 1.C., “Description,” and the Accomplishment Instructions of ATR Service Bulletin ATR42-92-0033, Revision 02, dated April 12, 2018 (for Model ATR42-500 airplanes); or ATR Service Bulletin ATR72-92-1044, Revision 02, dated April 12, 2018 (for Model ATR72-212A airplanes); as applicable. Although ATR Service Bulletin ATR42-92-0033, Revision 02, dated April 12, 2018; and ATR Service Bulletin ATR72-92-1044, Revision 02, dated April 12, 2018; specify reporting, this AD does not include that requirement.
If the inspection required by paragraph (h) or (i) of this AD reveals that any bracket is missing or any wire is damaged, before further flight, do applicable corrective actions, in accordance with the flowchart in paragraph 1.C., “Description,” and the Accomplishment Instructions of ATR Service Bulletin ATR42-92-0033, Revision 02, dated April 12, 2018 (for Model ATR42-500 airplanes); or ATR Service Bulletin ATR72-92-1044, Revision 02, dated April 12, 2018 (for Model ATR72-212A airplanes); as applicable. Where ATR Service Bulletin ATR42-92-0033, Revision 02, dated April 12, 2018; and ATR Service Bulletin ATR72-92-1044, Revision 02, dated April 12, 2018; specify to contact ATR-GIE Avions de Transport Régional for appropriate action, before further flight, accomplish corrective actions in accordance with the procedures specified in paragraph (l)(2) of this AD.
This paragraph provides credit for actions required by paragraphs (h), (i), and (j) of this AD, if those actions were performed before the effective date of this AD using ATR Service Bulletin ATR42-92-0033, dated May 3, 2017, or Revision 01, dated July 20, 2017; or ATR Service Bulletin ATR72-92-1044, dated May 3, 2017, or Revision 01, dated July 20, 2017, as applicable. ATR Service Bulletin ATR42-92-0033, dated May 3, 2017; and ATR72-92-1044, dated May 3, 2017, were previously incorporated by reference in AD 2017-24-01. ATR Service Bulletin ATR42-92-0033 Revision 01, dated July 20, 2017; and ATR72-92-1044, Revision 01, dated July 20, 2017, were not previously incorporated by reference.
The following provisions also apply to this AD:
(1) Alternative Methods of Compliance (AMOCs): The Manager, International Section, Transport Standards Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Section, send it to the attention of the person identified in paragraph (m)(2) of this AD. Information may be emailed to:
(2) Contacting the Manufacturer: As of the effective date of this AD, for any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Section, Transport Standards Branch, FAA; or, the European Aviation Safety Agency (EASA); or, ATR—GIE Avions de Transport Régional's EASA Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2018-0105, dated May 08, 2018, for related information. This MCAI may be found in the AD docket on the internet at
(2) For more information about this AD, contact Shahram Daneshmandi, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-321-3220.
(3) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (n)(3) and (n)(4) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) ATR Service Bulletin ATR42- 92-0033, Revision 02, dated April 12, 2018.
(ii) ATR Service Bulletin ATR72-92-1044, Revision 02, dated April 12, 2018.
(3) For service information identified in this AD, contact ATR—GIE Avions de Transport Régional, 1 Allée Pierre Nadot, 31712 Blagnac Cedex, France; telephone +33 (0) 5 62 21 62 21; fax +33 (0) 5 62 21 67 18; email
(4) You may view this service information at the FAA, Transport Standards Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
Federal Aviation Administration (FAA), DOT.
Final rule; technical amendment.
This action makes minor adjustments to the boundary descriptions of restricted areas R-2905A and R-2905B, Tyndall AFB, FL; R-2914B, and R-2919B, Valparaiso, FL; R-2915A and R-2915C, Eglin AFB, FL. The changes are needed because the FAA has adopted updated digital data that more precisely define maritime limits and other geophysical features used in the boundary descriptions. This requires minor changes to certain latitude/longitude points in the boundary descriptions of the above restricted areas in order to match the updated data and ensure accurate boundary depiction on aeronautical charts.
Paul Gallant, Airspace Policy Group, AJV-11, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.
This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it supports updating certain boundary coordinates for restricted areas Tyndall AFB, FL, Valparaiso, FL, and, Eglin AFB, FL.
Some restricted area boundary descriptions use maritime limits, such as references to the shoreline of the U.S., to identify the shape of the area (
For a variety of reasons, maritime limits change over time. The FAA has received updated digital data for maritime limits from the National Oceanic and Atmospheric Administration (NOAA). Digital data are more precise than measurements used in the past. The FAA, through the implementation of its data-driven charting process, was able to utilize this new data to accurately update the U.S. maritime limit boundaries used for aeronautical charting. Prior to the update, the maritime limit boundary data used for charting were over 25 years old. In applying the updated data, FAA found that some restricted area boundary descriptions that were based on the maritime limits, did not correspond to the updated shoreline data. Consequently, there are minor mismatches between some restricted area latitude/longitude coordinates and the actual shoreline position. Similarly, more accurate digital data is available for railroads and highways and the FAA is applying that information as well.
This rulemaking action updates the affected boundary coordinates of restricted areas R-2905A, R-2905B, R-2914B, R-2915C, and R-2919B, in Florida to ensure that the published boundaries match the actual relation to the U.S. shoreline, and maintain aeronautical chart accuracy. R-2915A is amended to reflect digital positional data for the L and N Railroad and the Navarre-Milton Highway, which form part of that restricted area's boundary.
This action amends Title 14 Code of Federal Regulations (14 CFR) part 73 by making minor updates to certain latitude/longitude coordinates in the descriptions of restricted areas R-2905A, R-2905B, R-2914B, R-2915A, R-2915C, and R-2919B, in Florida. The changes are needed because the FAA has adopted the use of digital data for aeronautical charting. This more precise digital plotting of points revealed minor mismatches between some current restricted area boundary coordinates and the updated digital data for those points. The specific restricted area boundary updates are shown below:
These minor editorial changes update existing restricted area boundaries with more precise digital information. It does not affect the location, designated altitudes, or activities conducted within the restricted areas; therefore, notice and public procedure under 5 U.S.C. 553(b) are unnecessary.
The FAA has determined that this action only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under
The FAA has determined that this action of making minor adjustments to the boundary descriptions of restricted areas R-2905A and R-2905B, Tyndall AFB, FL; R-2914B, Valparaiso, FL; R-2915A and R-2915C, Eglin AFB, FL; and R-2919B, Valparaiso, FL qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5.d, Modification of the technical description of special use airspace (SUA) that does not alter the dimension, altitudes, or times of designation of the airspace. This airspace action makes minor updates to certain boundary coordinates of restricted areas R-2905A and R-2905B, Tyndall AFB, FL; R-2914B, Valparaiso, FL; R-2915C, Eglin AFB, FL; and R-2919B, Valparaiso, FL, to match the more precise digital shoreline data received from the National Oceanic and Atmospheric Administration (NOAA). This ensures that the affected boundaries continue to match the NOAA-defined position of the U.S. shoreline, and more accurate digital data for geophysical references. It does not alter the location, altitudes, or activities conducted within the airspace; therefore, it is not expected to cause any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.
Airspace, Prohibited areas, Restricted areas.
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 73, as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
By removing the current boundaries and adding in its place the following:
By removing the current boundaries and adding in its place the following:
By removing the current boundaries and adding in its place the following:
By removing the current boundaries and adding in its place the following:
By removing the current boundaries and adding in its place the following:
By removing the current boundaries and adding in its place the following:
Federal Aviation Administration (FAA), DOT.
Final rule.
This rule amends, suspends, or removes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide for the safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.
This rule is effective August 17, 2018. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of August 17, 2018.
Availability of matter incorporated by reference in the amendment is as follows:
1. U.S. Department of Transportation, Docket Ops-M30, 1200 New Jersey
2. The FAA Air Traffic Organization Service Area in which the affected airport is located;
3. The office of Aeronautical Navigation Products, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,
4. The National Archives and Records Administration (NARA).
For information on the availability of this material at NARA, call 202-741-6030, or go to:
All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit the National Flight Data Center online at
Thomas J. Nichols, Flight Procedure Standards Branch (AFS-420) Flight Technologies and Procedures Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 (Mail Address: P.O. Box 25082 Oklahoma City, OK. 73125) telephone: (405) 954-4164.
This rule amends Title 14, Code of Federal Regulations, part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the
This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.
The material incorporated by reference is publicly available as listed in the
The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.
This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.
The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.
The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.
Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air Traffic Control, Airports, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:
49 U.S.C. 106(f), 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722.
By amending: § 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; § 97.27 NDB, NDB/DME; § 97.29 ILS, ILS/DME, MLS, MLS/DME, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; and § 97.35 COPTER SIAPs, Identified as follows:
Federal Aviation Administration (FAA), DOT.
Final rule.
This rule establishes, amends, suspends, or removes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures (ODPs) for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.
This rule is effective August 17, 2018. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of August 17, 2018.
Availability of matters incorporated by reference in the amendment is as follows:
1. U.S. Department of Transportation, Docket Ops-M30, 1200 New Jersey Avenue SE, West Bldg., Ground Floor, Washington, DC 20590-0001.
2. The FAA Air Traffic Organization Service Area in which the affected airport is located;
3. The office of Aeronautical Navigation Products, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,
4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit the National Flight Data Center at
Thomas J. Nichols, Flight Procedure Standards Branch (AFS-420), Flight Technologies and Programs Divisions, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 (Mail Address: P.O. Box 25082, Oklahoma City, OK 73125) Telephone: (405) 954-4164.
This rule amends Title 14 of the Code of Federal Regulations, part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA forms are FAA Forms 8260-3, 8260-4,
The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the
The material incorporated by reference is publicly available as listed in the
The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPS as identified in the amendatory language for part 97 of this final rule.
This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.
The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.
Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making some SIAPs effective in less than 30 days.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air traffic control, Airports, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:
49 U.S.C. 106(f), 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722.
Food and Drug Administration, HHS.
Notification; order granting alternative.
The Food and Drug Administration's (FDA, Agency, or we) Center for Devices and Radiological Health and Center for Biologics Evaluation and Research are announcing that the Agency is granting an alternative that permits manufacturer reporting of certain device malfunction medical device reports (MDRs) in summary form on a quarterly basis. We refer to this alternative as the “Voluntary Malfunction Summary Reporting Program.” This voluntary program reflects goals for streamlining malfunction reporting outlined in the commitment letter agreed to by FDA and industry and submitted to Congress, as referenced in the Medical Device User Fee Amendments of 2017 (MDUFA IV Commitment Letter).
This voluntary program applies only to reportable malfunction events that manufacturers become aware of on or after August 17, 2018. See further discussion in section IV.F. “Submission Schedule and Logistics.”
Michelle Rios, Center for Devices and Radiological Health (CDRH), Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 3222, Silver Spring, MD 20993, 301-796-6107,
Every year, FDA receives hundreds of thousands of MDRs of suspected device-associated deaths, serious injuries, and malfunctions. The Agency's MDR program is one of the postmarket surveillance tools FDA uses to monitor device performance, detect potential device-related safety issues, and contribute to benefit-risk assessments. Malfunction reports represent a substantial fraction of the MDRs FDA receives on an annual basis.
Medical device reporting requirements for manufacturers are set forth in section 519 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 360i) and the regulations contained in part 803 (21 CFR part 803). Among other things, part 803 requires the submission of an individual MDR when a manufacturer becomes aware of information, from any source, which reasonably suggests that one of its marketed devices malfunctioned and the malfunction of the device or a similar device marketed by the manufacturer would be likely to cause or contribute to a death or serious injury if the malfunction were to recur (§§ 803.10(c)(1) and 803.50(a)(2). Throughout this document, we refer to such malfunctions as “reportable malfunctions” or “reportable malfunction events.”
The Food and Drug Administration Amendments Act of 2007 (FDAAA)
In the
In response to the 2017 Proposal, FDA received 24 comments from industry, professional societies, trade organizations, and individual consumers by the close of the comment period, each containing one or more comments on one or more issues. A summary of the comments to the docket and our responses follow. To make it easier to identify comments and our responses, the word “Comment” appears in parentheses before the comment's description, and the word “Response” in parentheses precedes the response. The comments are grouped based on common themes and numbered sequentially.
(Comment 1) Three comments suggested that the proposal was inconsistent with amendments made by section 227 of FDAAA to section 519(a) of the FD&C Act regarding malfunction reporting requirements. Two of these comments specifically recommended that FDA immediately implement summary, quarterly malfunction reporting under section 519(a)(1)(B)(ii) of the FD&C Act for all class I devices and those class II devices that are not permanently implantable, life supporting, or life sustaining.
(Response 1) FDA disagrees with these comments. As discussed in the 2017 Proposal, currently, there are still reportable malfunctions for which submission of individual malfunction reports on a prompter basis than quarterly is necessary to protect the public health—for example, when remedial action is needed to prevent an unreasonable risk of substantial harm to the public health. Those situations may involve class I devices and class II devices that are not permanently implantable, life supporting, or life sustaining, and it is not feasible for FDA to provide notice in the
(Comment 2) Several comments raised concerns that the proposed program would be unable to provide FDA with critical information on adverse event reporting. Many of the comments from individual consumers also raised concerns that the proposed program would limit transparency of malfunction event data that is publicly available to patients and physicians, including transparency regarding the number of reported malfunctions. However, another comment indicated that the proposed program would minimize burden while maintaining patient safety. That same comment further indicated that the proposed malfunction summary reporting format would enhance public visibility into the events and associated investigation compared to a format previously used for the Alternative Summary Reporting (ASR) program.
(Response 2) FDA disagrees with the comments suggesting that the Voluntary Malfunction Summary Reporting Program will negatively affect patient safety and the transparency of malfunction reports. Summary, quarterly reporting in accordance with this program will result in some malfunction reports being submitted to FDA and added to the publicly available Manufacturer and User Facility Device Experience (MAUDE) database later
While summary malfunction reports submitted under this program will change the format in which information is presented to FDA, we do not believe there will be an adverse impact on the content of information provided to FDA. The format for summary reporting described in section IV.D includes a narrative section for describing malfunctions, similar to the narrative section required for individual reporting. In addition, each narrative section is required to include a sentence specifying the number of malfunction events summarized in the report, providing transparency for the public regarding the number of events that a summary report available in MAUDE represents. Therefore, we agree with the comment that the summary reporting format will improve transparency for the public when compared to some past summary reports submitted to FDA, such as reports submitted under the ASR program (Ref. 2).
(Comment 3) One comment requested clarification as to whether a manufacturer would need to apply or obtain permission to participate in the program and asked FDA to clarify how the proposed program would work with other alternative summary reporting situations. Another comment asked FDA to clarify whether manufacturers can still apply for an exemption or variance to be granted under § 803.19 for their devices that do not fall under an eligible product code.
(Response 3) FDA is clarifying in the description of the alternative that manufacturers do not need to submit a request or application to FDA before participating in the Voluntary Malfunction Summary Reporting Program. For devices that fall within eligible product codes, the alternative that FDA is granting under § 803.19 provides that manufacturers may choose or “self-elect” to participate, subject to the program conditions identified in section IV. If a manufacturer wishes to request a different exemption, variance, or alternative under § 803.19 (including for devices in product codes that are eligible for the Voluntary Malfunction Summary Reporting Program) the manufacturer may submit a request to FDA. For more information regarding the recommended content of such requests, see section 2.27 of the Agency's guidance entitled “Medical Device Reporting for Manufacturers: Guidance for Industry and Food and Drug Administration Staff” (MDR Guidance) (Ref. 3).
Whether participation in the Voluntary Malfunction Summary Reporting Program will have an impact on a manufacturer being granted a different exemption, variance, or alternative under § 803.19 will depend on the scope of the other exemption, variance, or alternative. FDA will make a case-by-case determination on requests for an exemption, variance, or alternative submitted under § 803.19(b).
(Comment 4) Several comments also discussed the scope of product codes that should be eligible for the proposed program. One comment expressed concern about including class III devices and class II devices that are permanently implantable, life-supporting, or life-sustaining in the program and urged FDA to issue another
(Response 4) FDA disagrees that it should publish another
(Comment 5) Three comments recommended that importers be included within the scope of the proposed program and indicated that FDA should provide a rationale for not including them. One of those comments suggested that without more information, it appeared arbitrary that FDA did not include importers and user facilities in the summary reporting program.
(Response 5) FDA disagrees with these comments. Unlike manufacturers, device user facilities are not required to submit malfunction reports under part 803. User facilities, such as hospitals or nursing homes, are required to submit MDRs to FDA and/or the manufacturer
Importers are also subject to different requirements for reporting device malfunctions than those for manufacturers under part 803. Under § 803.40, importers are required to submit a report to the device manufacturer, not to FDA, within 30 days after becoming aware of a reportable malfunction event. Manufacturers then determine the reportability of the information received from the importer and accordingly submit those reports to FDA. This program specifically addresses malfunction summary reporting to FDA. In addition, we believe it is important for importers to continue to submit individual malfunction MDRs to device manufacturers in accordance with § 803.40 so that manufacturers receive detailed information necessary to conduct adequate investigations and follow up related to malfunction events.
(Comment 6) One comment suggested that when requesting that a manufacturer submit a 5-day report, FDA should have an objective and documented basis for making such a request, as well as an opportunity for manufacturers to appeal. Other comments asked FDA to define the term “substantially similar” as used in describing the program condition regarding 5-day reports and to clarify
(Response 6) The circumstances in which a 5-day report is required are defined under § 803.53, and those circumstances remain unchanged for manufacturers participating in the Voluntary Malfunction Summary Reporting Program. As stated in the 2017 Proposal, the reporting requirements at § 803.53 will continue to apply to manufacturers of devices in eligible product codes who participate in this program. We have added a separate heading to the description of the alternative to clarify this point further. For more information regarding the handling of a 5-day report, please see section 2.20 of the Agency's MDR Guidance (Ref. 3).
The first individual reporting condition requires that if a manufacturer submits a 5-day report for an event or events that require remedial action to prevent an unreasonable risk of substantial harm to public health, all subsequent reportable malfunctions of the same nature that involve substantially similar devices must be submitted as individual MDRs in accordance with §§ 803.50 and 803.52 until the date that the remedial action has been resolved to FDA's satisfaction. For purposes of this individual reporting condition, a “substantially similar” device could be, for example, a device that is the same except for certain performance characteristics or a device that is the same except for certain cosmetic differences in color or shape.
Regarding the term “imminent hazard,” FDA notes that the term is used to describe one of the general overarching principles for summary reporting, but is not included in the descriptions of any of the individual reporting conditions. For purposes of these overarching principles, we intend “imminent hazard” to capture situations in which a device poses a significant risk to health and creates a public health situation that should be addressed immediately to prevent injury. Use of that term in one of the overarching principles was not intended to indicate any change in the standard for a 5-day report under § 803.53.
(Comment 7) One comment indicated that there should be objective and documented criteria for when FDA would provide written notice that manufacturers must submit an individual, 30-day malfunction report in accordance with the proposed program conditions, along with an opportunity for appeal. The comment further asserted that due process considerations need to be made regarding these reporting requirements, including notice, a written justification for the request, and a process to appeal.
(Response 7) FDA disagrees that there should be fixed criteria for notifying a manufacturer that it must submit an individual, 30-day malfunction report in accordance with the program conditions. Manufacturers who are notified to submit individual reports in accordance with the individual reporting conditions will need to comply with MDR requirements to which they would otherwise be subject if not granted this alternative under § 803.19. FDA has provided examples of when it would make these notifications, but public health issues that require submission of individual MDRs to monitor device safety are not uniform and may arise in various ways.
FDA will provide written notice to manufacturers when they need to submit individual MDRs pursuant to individual reporting conditions 3 and 4, as described in section IV.B. In addition, the Agency already has a process in place for stakeholders to request review of decisions made by CDRH employees. For more information, refer to the FDA Guidance entitled “Center for Devices and Radiological Health Appeals Processes” (Ref. 4).
(Comment 8) Some comments disagreed with the proposed program condition that would have required manufacturers to submit individual, 30-day MDRs for reportable malfunction events that are the subject of any ongoing device recall and suggested that the condition be modified or removed. The comments cited several different reasons for objecting to this condition, including that the condition is not mentioned in the MDUFA IV Commitment Letter, that the condition may discourage manufacturers from conducting voluntary or class III recalls, that the condition is duplicative of information that FDA receives during a recall, and that it may be difficult for manufacturers to manage the requirements (
(Response 8) FDA disagrees with the comments recommending removal of this individual reporting condition. Recall classification takes into account both the severity of harm and the likelihood of occurrence, and it is important for FDA to have access to more timely information on malfunctions related to certain recalls to ensure that the recall has been appropriately classified and that the recall strategy is effective.
FDA also provides the following responses to the additional specific issues raised in the comments: (a) For the reasons discussed above, FDA continues to believe that it is important for malfunctions related to certain recalls to be reported as individual MDRs. However, after considering the comments, FDA has determined that this individual reporting condition should only apply to reportable malfunctions that are the subject of a recall involving a correction or removal that must be reported to FDA under part 806 (21 CFR part 806). Under part 806, manufacturers and importers are required to make a written report to FDA of any correction or removal of a device if the correction or removal was initiated to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act caused by the device that may present a risk to health, unless the information has already been submitted to FDA in accordance with other reporting requirements. (See § 806.10(a) and (f).) Because the definition of “risk to health” under part 806 tracks the definitions of class I and class II recalls in § 7.3(m) (21 CFR 7.3(m)), reports of corrections and removals are required for actions that meet the definition of class I and class II recalls. However, under part 806, manufacturers and importers need not report events that are categorized as class III recalls under § 7.3(m) (see 62 FR 27183, May 19, 1997). Therefore, an action that meets the definition of a class III recall would not, on its own, trigger the requirement to submit individual reports under the Voluntary Malfunction Summary Reporting Program.
(b) FDA agrees that it is important to provide clarity regarding when the requirement to submit individual MDRs is triggered under this individual reporting condition and the events to which that requirement applies. Therefore, FDA is revising the alternative to clarify that, as of the date a manufacturer submits a required report of a correction or removal under part 806 (or the date that the manufacturer submits a report of the correction or removal under 21 CFR part 803 or part 1004 instead, as permitted under § 806.10(f)), the manufacturer must submit reportable malfunction events related to that correction or removal as individual MDRs in accordance with §§ 803.50 and 803.52. We believe these revisions will help provide manufacturers with a clear date on which this individual reporting obligation is triggered.
With respect to malfunction events that were identified for inclusion in a summary report but are subsequently identified as the subject of a reportable correction or removal prior to the end of the relevant summary reporting period, FDA is revising the alternative to state that a summary MDR must be submitted for those reportable malfunctions within 30 calendar days of when the manufacturer submits the required report of correction or removal. In the summary report, the manufacturer must include a check on the box for “Recall” in SECTION H.7 of the electronic Form FDA 3500A. We have similarly revised the description of individual reporting conditions 3 and 4 to clarify the requirements for handling malfunction events identified for inclusion in a summary report (but not yet submitted) prior to the date that individual reporting is triggered.
(c) As part of its recall termination process, FDA considers MDR information, including reported malfunctions to help evaluate the effectiveness of the recall. Therefore, FDA disagrees with the suggestion to limit the duration of individual reporting under this condition to 90 days past the date of a recall. However, after considering the comments, we do not believe it is necessary to receive individual MDRs for reportable malfunction events that are the subject of a recall after FDA has terminated the recall. We have revised the alternative accordingly (see Section IV.B.2.). For similar reasons, we have revised the first individual reporting condition to state that individual MDRs associated with a 5-day report are only required until the remedial action at issue is resolved to FDA's satisfaction.
(d) By “malfunction events of the same nature,” FDA means additional reportable malfunction events involving the same malfunction that prompted the recall.
(Comment 9) One comment, regarding proposed individual reporting condition 3, suggested that FDA provide information on the timing for when the Agency will provide written notice to a manufacturer that the manufacturer can resume participation in the Voluntary Malfunction Summary Reporting Program.
(Response 9) FDA cannot provide a uniform timeframe for when the Agency would notify manufacturers submitting individual reports due to an identified public health issue that they can resume submission of summary, quarterly malfunction reports for those devices because the timing and resolution of public health issues is specific to each situation.
(Comment 10) Three comments recommended that FDA clarify what constitutes a “new type of reportable malfunction” that is exempt from summary reporting. One of these comments indicated that FDA should provide additional information regarding when a manufacturer can begin submitting summary reports for these new types of device malfunctions.
(Response 10) FDA disagrees that the meaning of the phrase “new type of reportable malfunction” was unclear in the proposal. Manufacturers are required under § 820.198 (21 CFR 820.198) to evaluate complaints to determine if they represent events that must be reported to FDA under part 803 or if an investigation is required. Through this process, if a manufacturer identifies a new type of reportable malfunction that has not previously been reported to FDA over the life of that device, this information must be submitted to FDA as an individual MDR in accordance with §§ 803.50 and 803.52 and may not be reported to FDA in a summary malfunction report. This will allow FDA and manufacturers to better understand and address emergent issues with medical devices. We have revised this individual reporting condition to clarify that after manufacturers submit an individual MDR for the initial occurrence of a previously unreported type of reportable malfunction for a device, subsequent reports for that same type of malfunction for that device may be in summary form, unless they are subject to individual reporting for another reason.
(Comment 11) Some comments suggested that FDA allow manufacturers to “bundle together” reportable malfunction events in a summary report by product code or product family and allow the use of International Medical Device Regulators Forum's (IMDRF) Level 1,2 codes to bundle like events in a summary report.
(Response 11) FDA disagrees with the suggestion that manufacturers be permitted to bundle reportable malfunction events by product code or product family for purposes of submitting a summary report. Each unique combination of device brand name (corresponding to SECTION D1 of the Form FDA 3500A), device model, and device problem code(s) (corresponding to SECTION F10/H6 of the Form FDA 3500A) can be summarized together in reports submitted under this program. (Comments regarding the number of brand names that should be included in each summary report are further addressed in the response to Comment 16 below, and we have made corrections to the summary reporting instructions for SECTION D.4 to be clear that each summary malfunction report should summarize events for a single device model.) Bundling together malfunction reports by product codes or device families would make summarizing and interpreting the information in a summary report difficult for manufacturers, FDA, and the public because a product code or product family could contain several devices with different functions, components, and modes of operation that are important for purposes of understanding malfunction events and the causes of those events. The intent of the Voluntary Malfunction Summary Reporting Program is to streamline reporting of events that are the same or similar, yet not to over bundle reports such that important details regarding device performance are obscured.
The IMDRF (Ref. 5) is working towards harmonization of all medical device coding, including device problem codes. To harmonize medical device coding globally, device problem codes have been organized in a hierarchical arrangement, such that higher level codes (
(Comment 12) One comment noted that it was unclear whether a summary malfunction report will be available in MAUDE or another database. Another comment recommended that FDA allow Excel spreadsheets with malfunction report data to be uploaded to MAUDE.
(Response 12) FDA plans to make summary reports submitted under the Voluntary Malfunction Summary Reporting Program publicly available in MAUDE. However, FDA will not upload Excel spreadsheets to MAUDE because they are incompatible with the MAUDE interface.
(Comment 13) One comment indicated that FDA should consider amending the requirement that an individual process the complaints twice—once for reporting assessment and then quarterly.
(Response 13) FDA disagrees with this comment. FDA is granting an alternative to the individual reporting requirements under part 803 for certain reportable malfunction events. The Quality System (QS) regulation requires manufacturers to evaluate all complaints to determine if they represent events that must be reported to FDA under part 803 (§ 820.198(a)). If a complaint represents an MDR reportable event, then the manufacturer must, among other things, investigate it and submit an MDR to FDA. (See §§ 803.10(c), 803.50, and 820.198(d)) The difference for manufacturers that have been granted the alternative described in this document is that they could choose to report certain malfunction events to FDA as a summary report instead of as an individual report.
(Comment 14) One comment requested that FDA provide more detail concerning the terms “similar device” and “similar complaint,” as used in the discussion of the rationale for the proposed summary reporting format.
(Response 14) The term “similar device” is used in FDA's MDR regulations to describe malfunction events for which manufacturers must submit a report to FDA. (see
FDA does not believe it is necessary to provide a formal definition of the term “similar complaint” for purposes of this alternative because that term is not used in describing any of the conditions of the Voluntary Malfunction Summary Reporting Program, including the required reporting format. Whether a complaint constitutes a “similar complaint” for purposes of conducting an investigation under FDA's QS regulation is outside the scope of this alternative.
(Comment 15) One comment asked FDA to provide further information on how a manufacturer is to provide supplemental information, including whether FDA expects such information to be shared with the Agency. Some comments also noted that FDA should explain how a previously submitted summary malfunction report should be updated with new information, including how to handle new information regarding a previously reported event that would change the categorization of the event (
(Response 15) FDA understands the need for clarification of how to handle additional information and supplemental reporting under this program and has revised the alternative to address this issue. A manufacturer participating in the Voluntary Malfunction Summary Reporting Program must submit an initial summary report within the Summary Malfunction Reporting Schedule timeframe described in table 1. Supplemental reports to a summary malfunction report must also be submitted within that timeframe. For example, if a manufacturer submits a summary report for certain malfunction events of which it became aware in January to March and in May of that same year becomes aware of additional information that would have been required in the initial summary report if it had been known to the manufacturer, then the manufacturer must submit a supplemental report with that additional information by July 31. Manufacturers do not need to submit a supplemental report for new information if they would not have been required to report that information had it been known or available at the time of filing the initial summary malfunction report.
However, this timing for supplemental reports would not apply when additional information is learned about an event or events included in a previously submitted summary report that triggers individual reporting requirements. For example, if the manufacturer becomes aware of additional information reasonably suggesting that a previously reported malfunction meets the criteria for a reportable serious injury or death event, then the manufacturer must submit an initial, individual MDR for the identified serious injury or death within 30 calendar days of becoming aware of the additional information. The manufacturer must simultaneously submit a supplement to the initial MDR summary report reducing the number of events summarized by 1, so that the total number of events remains the same. The alternative has been revised to reflect that these are requirements for participating in the Voluntary Malfunction Summary Reporting Program.
(Comment 16) One comment stated that Form FDA 3500A is not an optimal format because it is only used for single event reporting. Other comments made specific recommendations and/or raised issues regarding the proposed summary reporting format using Form FDA 3500A, including the following: (a) In Form FDA 3500A, SECTIONS B.5 and H.10, FDA should request that information be entered in a summary, high-level form, rather than requiring detailed descriptions or itemized investigation findings; (b) clarify the most “up to date” information that is expected to be received in the report; (c) clarify that only one brand name per product code should be entered in the field with additional brand names being provided in a separate attachment (SECTION D.1); (d) inclusion of patient age, weight, and breakdown of gender and race is inappropriate for summary malfunction reporting, and it is not clear if such information is required in a summary malfunction report; (e) clarify that manufacturers can submit summary malfunction reports for devices manufactured at multiple manufacturing sites (SECTION D.3); (f) the summary format should permit a serial number to be used instead of a lot number to identify the devices that are the subject of a summary report (SECTION D.4); and (g) address how a manufacturer should link a device problem code with a method code, result code, and evaluation conclusion code (if different) for a single summary report that includes more than one device problem.
(Response 16) FDA does not believe the summary reporting format should be changed to use a new form. The
(Comment 17) Some comments raised issues regarding the application of the malfunction summary reporting for combination products that contain a device constituent part but that are marketed under drug or biological product marketing authorization pathways (referred to in this document as drug and biologic-led combination products), as opposed to those under device marketing authorization pathways (device-led combination products). Issues raised in these comments include: Concerns about a device product code-based eligibility approach for drug and biologic-led combination products because such products may not have a device product code; the quarterly schedule proposed because it would create redundancies for drug and biologic-led combination products, which are subject to periodic reporting; the format proposed because it might not be compatible with the reporting systems for drugs or biological products that are utilized for drug and biologic-led combination products; and development of a single report that includes malfunction summary reporting and satisfies other combination product reporting requirements.
(Response 17) Among other things, the final rule on postmarketing safety reporting (PMSR) for combination products (81 FR 92603, December 20, 2016), codified in part 4, subpart B (21 CFR part 4, subpart B), clarified that all combination product applicants must comply with malfunction reporting requirements as described in part 803 if their combination product contains a device constituent part. Accordingly, in the 2017 Proposal, FDA requested comment on how the Voluntary Malfunction Summary Reporting Program might be implemented for combination products, including drug and biologic-led combination products. Shortly after the issuance of the proposal for this program, FDA also published a draft guidance entitled, “Postmarketing Safety Reporting for Combination Products; Guidance for Industry and FDA Staff” (PMSR draft guidance) (Ref. 7) regarding compliance with the final rule on PMSR for combination products, and an Immediately in Effect guidance announcing FDA's compliance policy for that rule (Ref. 8). The PMSR draft guidance noted that the Agency was proposing the Voluntary Malfunction Summary Reporting Program and stated that the Agency intends to update the PMSR draft guidance if combination products are included in the program. The compliance policy guidance announced the Agency's intent to delay enforcement of certain provisions of the rule, including malfunction reporting requirements for drug and biologic-led combination products, to provide applicants with additional time to consider Agency recommendations and technical specifications as they update their systems and procedures to comply with those provisions.
Applicants of device-led combination products must submit MDRs in accordance with part 803 (see § 4.104 (21 CFR 4.104)), and therefore, they report malfunctions using the same system as device manufacturers. Thus, FDA believes the eMDR data system and instructions support use of the Voluntary Malfunction Summary Reporting Program for such products. Accordingly, we are including device-led combination products in the Voluntary Malfunction Summary Reporting Program. However, combination product applicants for drug
(Comment 18) One comment recommended that FDA permit manufacturers to submit individual reports for each adverse event within 90 calendar days from the date they become aware of the reportable event, while using the summary format. The comment also suggested that FDA provide an additional 30 days for the submission of summary reports because the manufacturer may need more than a month between the end of the reporting period and the due date to aggregate reports.
(Response 18) FDA disagrees with this comment. Permitting manufacturers to submit individual reports using the summary format within 90 calendar days would delay the submission of malfunction information to FDA without providing the anticipated benefits of summary reporting that FDA identified in the 2017 Proposal, such as increased efficiency in processing malfunction reports and more readily apparent malfunction trends. While we recognize that a manufacturer may become aware of some reportable malfunction events toward the end of a quarter, manufacturers will have at least 30 days from that time to prepare and submit summary malfunction reports. FDA does not believe that manufacturers will need an additional 30 days beyond the reporting schedule outlined in the 2017 Proposal to aggregate malfunction reports into a summary report. Therefore, we have retained the Summary Malfunction Reporting Schedule that was included in the 2017 Proposal (see table 1).
(Comment 19) One comment suggested that FDA use a more generic reporting number format or a completely different reporting number format.
(Response 19) FDA disagrees with this comment. The required reporting number format for this program uses the existing common format that manufacturers must use to submit individual reports through their electronic reporting systems under part 803. Therefore, we believe there is no need for a separate MDR reporting number format to identify summary reports.
(Comment 20) One comment suggested that FDA clarify what the manufacturer should do if an investigation is not completed within the reported timeframe.
(Response 20) As discussed in response to Comment 15, FDA has revised the alternative to include instructions regarding supplemental reporting for summary reports submitted under this voluntary program. In situations where a manufacturer is not able to complete its investigation regarding a reportable malfunction by the deadline for submitting a summary report, the manufacturer is still required to report the event within the timeframes specified in the Summary Malfunction Reporting Schedule (see table 1). If additional information becomes known or available to the manufacturer after submission of a summary report, including additional information that becomes known through an investigation, the manufacturer is required to submit supplemental reports amending its initial submission as needed.
(Comment 21) Some comments suggested that FDA should explain more clearly how industry would make a request under § 803.19(b) and provide a mechanism for industry to request an exemption, when appropriate, for product codes that may be newly assigned within the first 2 years.
(Response 21) FDA is not making any changes to the alternative in response to this comment. As discussed in section VI, FDA intends to periodically assess the eligibility of product codes after they have been in existence for 2 years and will update the FDA's Product Classification database accordingly. Manufacturers can also send a request for a product code to be added to the list of eligible product codes and for manufacturers of devices within that product code to be granted the same alternative for malfunction events associated with those devices. Information about where to send such requests is provided in section VI.
(Comment 22) One comment stated that the average Paperwork Reduction Act (PRA) burden on manufacturers of 6 minutes per response appears to be a very low estimate.
(Response 22) FDA disagrees with this comment. The estimation of time is the amount of time needed to submit a summary malfunction report. It is essentially the same amount of time needed to submit an individual report because the event narrative should be similar, with the exception of one additional line that is entered that indicates the number of adverse events represented by the report. It does not include the time needed to evaluate and investigate complaints that may represent reportable malfunction events.
(Comment 23) Two comments suggested that FDA should provide clarity on how the program will apply with national competent authorities via the National Competent Authority Report (NCAR) exchange program.
(Response 23) FDA disagrees with this comment. The NCAR exchange program is separate from FDA's MDR reporting requirements. Malfunction summary reporting under this program does not change the information shared through the NCAR exchange program, and the NCAR program is currently outside the scope of the Voluntary Malfunction Summary Reporting Program.
(Comment 24) One comment suggests that FDA should use IBM's Watson Platform for Health GxP (Watson) to conduct an analysis to identify the product codes that represent the largest opportunity described in the business case for patients, industry, and FDA instead of other database systems.
(Response 24) FDA disagrees with this comment. Among other reasons, the IBM Watson Platform is not an FDA-owned resource; therefore, it is not logistically feasible for FDA to use this platform to identify product codes eligible for the Voluntary Malfunction Summary Reporting Program at this time.
Informed by the findings from the Pilot Program for Medical Device Reporting on Malfunctions, FDA identified the following overarching principles for summary reporting of malfunctions:
• The collection of information in summary format should allow FDA to
• To increase efficiency, summary malfunction reporting should occur in a common format for the electronic reporting system used.
• Information about reportable malfunctions should be transparent to FDA and to the public, regardless of whether the information is reported as an individual MDR or a summary report. Information contained in a summary malfunction report that is protected from public disclosure under applicable disclosure laws would be redacted prior to release of the report.
• Manufacturers should communicate information regarding an imminent hazard at the earliest time possible.
• Summary reporting is meant to streamline the process of reporting malfunctions. It does not change regulatory requirements for MDR-related investigations or recordkeeping by manufacturers. (For example, manufacturers participating in the Voluntary Malfunction Summary Reporting Program remain subject to requirements for establishing and maintaining MDR event files under § 803.18. In addition, under the QS regulation, manufacturers must evaluate, review, and investigate any complaint that represents an MDR reportable event (see § 820.198).
• Summary reporting information should not be duplicative of information received through other MDR reporting processes.
For the reasons discussed in the 2017 Proposal and in section II, the Agency has determined that, at this time, pursuant to section 519(a)(1)(B)(i)(III) of the FD&C Act, all devices should remain subject to the reporting requirements of part 803, to protect the public health. However, based on the findings from the 2015 Pilot Program, the Agency's experience with summary reporting programs, its experience with MDR reporting generally, and the comments received on 2017 Proposal, FDA has determined that for many devices, it is appropriate to permit manufacturers to submit malfunction summary reports on a quarterly basis, for certain malfunctions, instead of individual, 30-day malfunction reports.
Therefore, under § 803.19, FDA is granting the manufacturers of devices within eligible product codes, as identified in FDA's Product Classification Database (
The alternative permits manufacturers of devices within eligible product codes to submit malfunction reports in summary format on a quarterly basis for those devices, subject to the conditions of the alternative described in the remainder of this section. Such manufacturers “self-elect” to participate by submitting summary malfunction reports in accordance with the conditions of the alternative. They do not need to submit a separate application to FDA to participate.
The remainder of this section describes the following conditions that manufacturers must follow if they choose to submit summary malfunction reports for devices within eligible product codes under the alternative: (1) The conditions under which individual malfunction reports are required; (2) submission of supplemental reports; (3) the format for summary malfunction reports; (4) considerations for combination products; and (5) the schedule and other logistics for submission of summary reports. Because this is an alternative, if a manufacturer does not submit summary reports for reportable malfunction events in accordance with the conditions described in this section, including the reporting schedule and format, then the manufacturer must submit individual malfunction reports in compliance with all requirements under part 803 (unless the manufacturer has been granted a different exemption, variance, or alternative that applies).
The Voluntary Malfunction Summary Reporting Program does not apply to reportable death or serious injury events, which are still required to be reported to FDA within the mandatory 30-calendar-day timeframe, under §§ 803.50 and 803.52, or within the 5-work day timeframe under § 803.53. Thus, if a manufacturer participating in the program becomes aware of information reasonably suggesting that a device that it markets may have caused or contributed to a death or serious injury, then the manufacturer must submit an individual MDR for that event because it involves a reportable death or serious injury.
The reporting requirements at § 803.53 also continue to apply to manufacturers participating in the program. Under § 803.53(a), a 5-day report must be filed if a manufacturer becomes aware of an MDR reportable event that necessitates remedial action to prevent an unreasonable risk of substantial harm to the public health. Further, under § 803.53(b), if FDA has made a written request for the submission of a 5-day report, the manufacturer must submit, without further requests, a 5-day report for all subsequent reportable malfunctions of the same nature that involve substantially similar devices for the time period specified in the written request. FDA may extend the time period stated in the original written request if the Agency determines it is in the interest of the public health (see § 803.53(b)).
Manufacturers of devices in eligible product codes may continue submitting individual, 30-day malfunction reports in compliance with §§ 803.50 and 803.52 if they choose to do so. However, those manufacturers may submit all reportable malfunction events for devices in eligible product codes in the summary format and according to the schedule described below in section IV.D and F, unless one of the following individual reporting conditions applies:
After submitting a 5-day report required under § 803.53(a), all subsequent reportable malfunctions of the same nature that involve substantially similar devices must be submitted as individual MDRs in
When a device is the subject of a recall involving the correction or removal of the device to address a malfunction and that correction or removal is required to be reported to FDA under part 806,
If a manufacturer becomes aware of reportable malfunction events before the date that the requirement to submit individual reports is triggered and a summary report for those events has not yet been submitted to FDA, then the manufacturer must submit any of those malfunction events related to the recall in a summary MDR format within 30 calendar days of submitting the required report of correction or removal. In the summary MDR, the manufacturer must include a check box of recall in section H.7 of the electronic Form FDA 3500A.
If FDA has determined that individual malfunction reports are necessary to provide additional information and more rapid reporting for an identified public health issue involving certain devices, manufacturers must submit reportable malfunction events for those devices as individual MDRs in compliance with §§ 803.50 and 803.52. Under these circumstances, FDA will provide written notification to manufacturers of relevant devices that individual MDR submissions are necessary. FDA will provide further written notice when manufacturers of those devices may resume participation in summary malfunction reporting.
The requirement to submit individual reports under this condition is triggered on the date the manufacturer receives the written notification from FDA. If a manufacturer became aware of reportable malfunction events before the date that the requirement to submit individual reports is triggered and a summary report for those events has not yet been submitted to FDA, then the manufacturer must submit any of those malfunction events for the identified devices to FDA within 30 calendar days of receiving notification from FDA.
FDA may determine that a specific manufacturer is no longer allowed to participate in the Voluntary Malfunction Summary Reporting Program for reasons including, but not limited to, failure to comply with applicable MDR requirements under part 803, failure to follow the conditions of the program, or the need to monitor a public health issue. In that case, FDA will provide written notification to the device manufacturer to submit individual malfunction reports in compliance with §§ 803.50 and 803.52. The requirement to submit individual reports under this condition is triggered on the date the manufacturer receives the written notification from FDA. If a manufacturer became aware of reportable malfunction events before the date that the requirement to submit individual reports is triggered under this condition and a summary report for those events has not yet been submitted to FDA, then the manufacturer must submit those malfunction events within 30 calendar days of receiving notification from FDA.
If a manufacturer becomes aware of information reasonably suggesting a reportable malfunction event has occurred for a device that the manufacturer markets and the reportable malfunction is a new type of malfunction that the manufacturer has not previously reported to FDA for that device, then the manufacturer must submit an individual report for that reportable malfunction in compliance with §§ 803.50 and 803.52. After the manufacturer submits this initial individual report, subsequent malfunctions of this type may be submitted in summary form according to the reporting schedule in table 1, unless another individual reporting condition applies.
In general, if a manufacturer obtains information required in a malfunction summary report (see section IV.D. describing the required content of a summary report), that the manufacturer did not provide because it was not known or was not available when the manufacturer submitted the initial summary malfunction report, the manufacturer must submit the supplemental information to FDA in an electronic format in accordance with § 803.12(a). The supplemental information must be submitted to FDA by the submission deadline described in the Summary Malfunction Reporting Schedule (table 1), according to the date on which the manufacturer becomes aware of the supplemental information. Manufacturers must continue to follow the requirements for the content of supplemental reports set forth at § 803.56(a) thorough (c), meaning that on a supplemental or follow up report, the manufacturer must: (a) Indicate that the report being submitted is a supplemental or follow up report; (b) submit the appropriate identification numbers of the report that you are updating with the supplemental information (
However, if a manufacturer submits a summary malfunction report and subsequently becomes aware of information reasonably suggesting that
Manufacturers of devices in eligible product codes who elect to participate in the Voluntary Malfunction Summary Reporting Program must submit summary malfunction reports in the format described below. As detailed in the 2017 Proposal and Appendix, the format largely adopts the format that was tested in FDA's Pilot Program for Medical Device Reporting on Malfunctions and is compatible with the Form FDA 3500A (Ref. 9), which allows manufacturers to submit MDRs using the same electronic submission form that they use to submit individual MDRs, in accordance with the eMDR Final Rule (79 FR 8832, February 14, 2014). Because summary malfunction reports represent a grouping of malfunction events for a specific model of a device, the summary reporting format would require an additional element in the summary text narrative to identify the number of reportable malfunctions that each report represents. As described below, the XML tags “<NOE>” and “<NOE/>” are placed on both sides of the number of events (NOE) to make the number extractable from the report. FDA believes that submission of summary reports in the format described below will provide the most compact and efficient reporting mechanism for streamlining malfunction reporting that still provides sufficient detail for FDA to monitor devices effectively.
• SECTION B.5: Describe Event or Problem—To distinguish this report as a summary malfunction report, the first sentence of the device event narrative must read: “This report summarizes <NOE> XXX </NOE> malfunction events,” where XXX is replaced by the number of malfunction events being summarized.
The device event narrative must then include a detailed description of the nature of the events and, if relevant and available, we recommend including a range of patient age and weight and a breakdown of patient gender, race, and ethnicity.
• SECTION D.1: Brand Name.
• SECTION D.2 and D.2.b: Common Device Name and Product Code. Include the common name of the device and Product Classification Code (Procode).
• SECTION D.3: Manufacturer Name, City, and State.
• SECTION D.4: Device Identification—Enter the model and/or catalog number and lot number(s) and/or serial number(s) for the devices that are the subject of the MDR. Include any device identifier (DI) portion of the unique device identifier (UDI) for the device version or model that is the subject of the MDR.
• SECTION G.1: Contact Office (and Manufacturing Site(s) for Devices)—Enter the name, address, and email of the manufacturer reporting site (contact office), including the contact name for the summary report being submitted. Enter the name and address of the manufacturing site(s) for the device, if different from the contact office.
• SECTION G.2: Phone Number of Contact Office.
• SECTION G.5: Combination Products—If applicable, indicate that the report involves a combination product (see section IV.E.).
• SECTION H.1: Type of Reportable Event—Check “Malfunction” in this box.
• SECTION H.6: Event Problem and Evaluation Codes—
○ Enter the device problem code(s). (See Appendix A for case examples of how to report (Ref. 6).)
○ Enter the evaluation code(s) for the following categories: Method, Results, Conclusion.
○ Enter a Conclusion Code, even if the device was not evaluated.
• SECTION H.10: Additional Manufacturer Narrative—Provide a summary of the results of the investigation for the reported malfunctions, including any follow up actions taken, and any additional information that would be helpful in understanding how the manufacturer addressed the malfunction events summarized in the report. Enter a breakdown of the malfunction events summarized in the report, including the number of devices that were returned, the number of devices that were labeled “for single use” (if any), and the number of devices that were reprocessed and reused (if any).
As noted in the response to comment 17 above, device-led combination products are included in this alternative that we are granting under § 803.19 to permit voluntary malfunction summary reporting. The eMDR data system and instructions support use of the Voluntary Malfunction Summary Reporting Program for device-led combination products. However, as discussed in response to comment 17 above, additional considerations need to be addressed before drug and biologic-led combination products could be included in the Voluntary Malfunction Summary Reporting Program. As noted in Response 17, the Agency intends to delay enforcement of the malfunction reporting requirements for drug and biologic-led combination products under the PMSR final rule. FDA will consider the relevant comments received on the 2017 Proposal, as well as any additional, relevant comments relating to malfunction reporting for drug and biologic-led combination products submitted in relation to the PMSR draft guidance in developing an approach for voluntary malfunction summary reporting for such combination products.
Manufacturers submitting malfunction summary reports or supplemental reports to a malfunction summary report must use electronic reporting (Ref. 10) to submit those reports on a quarterly basis according to the schedule in table 1. The summary malfunction report must include the MDR Number, which consists of the registration number of the manufacturer, the year in which the event is being reported, and a 5-digit sequence number. Information included in a malfunction summary report must be current as of the last date of the quarterly timeframe identified in the first column of table 1.
The Voluntary Malfunction Summary Reporting Program applies only to reportable malfunction events that manufacturers become aware of on or after August 17, 2018. The deadline for FDA accepting the first round of quarterly reports for this program is October 31, 2018.
Under §§ 803.17 and 803.18, manufacturers are required to develop, maintain, and implement written MDR procedures and establish and maintain MDR event files, and those requirements remain applicable for manufacturers that elect to participate in this program. Among other things, a manufacturer must develop, maintain, and implement MDR procedures that provide for timely transmission of complete MDRs to FDA. (See § 803.17(a)(3)). Manufacturers participating in the Voluntary Malfunction Summary Reporting Program will need to update their internal MDR processes and procedures to provide for submitting summary malfunction reports within the Summary Malfunction Reporting Schedule.
The goal of the Voluntary Malfunction Summary Reporting Program is to permit manufacturers of devices under certain product codes to report malfunctions on a quarterly basis and in a summary format, as outlined in the MDUFA IV Commitment Letter (Ref. 1), in a manner that provides for effective monitoring of devices and is beneficial for FDA, industry, and the public. An important part of this voluntary program is providing clarification to manufacturers regarding the product codes eligible for the program.
Consistent with the MDUFA IV Commitment Letter (Ref. 1), FDA has identified eligible product codes for the Voluntary Malfunction Summary Reporting Program in FDA's Product Classification Database, available on FDA's website, as part of granting the alternative (see
If FDA determines that individual malfunction reports are necessary from a specific manufacturer or for specific devices, FDA will notify relevant manufacturers that they must submit individual reports and provide an explanation for that decision and, as appropriate, the steps necessary to return to summary, quarterly reporting. The Agency also notes that, under § 803.19(d), it may revoke or modify in writing an exemption, variance, or alternative reporting requirement if it determines that revocation or modification is necessary to protect the public health.
FDA recognizes that new product codes will be created after the date of granting the Voluntary Malfunction Summary Reporting Program alternative under § 803.19. In general, FDA does not intend to consider devices under product codes in existence for less than 2 years to be eligible for the program, unless the new product code was issued solely for administrative reasons. Any product code in existence after the publication date will be initially ineligible to participate in the program. However, FDA will periodically evaluate new product codes after they have been in existence for 2 years to determine whether they should be added to the list of product codes eligible for the Voluntary Malfunction Summary Reporting Program. If FDA determines that a new product code should be added, then it will grant manufacturers of devices within that product code the same alternative under § 803.19 for malfunction events associated with those devices and update FDA's Product Classification database accordingly to reflect the changes.
Manufacturers can send a request for a product code to be added to the list of eligible product codes and for manufacturers of devices within that product code to be granted the same alternative for malfunction events associated with those devices to the
In accordance with section 519(a)(1)(B)(i) of the FD&C Act and § 803.19, FDA is granting the alternative described in section IV to manufacturers of devices in eligible product codes, as identified in the FDA Product Classification Database (
The Agency has determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
The Voluntary Malfunction Summary Reporting Program described in this Notice contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). These provisions have been approved under OMB control number 0910-0437.
This document also refers to previously approved collections of information. These collections of information are subject to review by the OMB under the PRA (44 U.S.C. 3501-3520). The collections of information in part 4, subpart B, regarding postmarketing safety reporting for combination products have been approved under OMB control number 0910-0834; the collections of information in part 803, regarding medical device reporting, have been approved under OMB control number 0910-0437; the collections of information in 806, regarding corrections and removals, have been approved under OMB control number 0910-0359; the collections of information in 21 CFR part 807, subpart E, regarding premarket notification, have been approved under OMB control number 0910-0120; the collections of information in 21 CFR part 814, subparts A through E, regarding premarket approval, have been approved under OMB control number 0910-0231; the collections of information in 21 CFR part 810, regarding medical device recall authority, have been approved under OMB control number 0910-0432; the collections of information in part 820, regarding quality system regulations, have been approved under OMB control number 0910-0073; the collections of information in 21 CFR parts 1002 through 1050, regarding radiological health, have been approved under OMB control number 0910-0025; the collections of information regarding the MedWatch: The Food and Drug Administration Medical Products Reporting Program have been approved under OMB control number 0910-0291; and the collections of information regarding the Adverse Event Program for Medical Devices (Medical Product Safety Network (MedSun)) have been approved under OMB control number 0910-0471.
The following references are on display in the Dockets Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852 and are available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; they are also available electronically at
Coast Guard, DHS.
Notice of deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs the Interstate 5 (I-5) Bridges across the Columbia River, mile 106.5, between Portland, Oregon, and Vancouver, Washington. The deviation is necessary to facilitate the presence of participants in the Hands Across the Bridge Project. This deviation allows the bridges to remain in the closed-to-navigation position during the event.
This deviation is effective from 11 a.m. to 2 p.m. on September 3, 2018.
The docket for this deviation, USCG-2018-0775 is available at
If you have questions on this temporary deviation, call or email Mr. Steven Fischer, Bridge Administrator, Thirteenth Coast Guard District; telephone 206-220-7282, email
Oregon Department of Transportation (bridge owner) requested a temporary deviation from the operating schedule for the I-5 Bridges, mile 106.5, across the Columbia River between Vancouver, WA, and Portland, OR, to facilitate safe passage of participants in the Hands Across the Bridge Project. The I-5 Bridges provides three designated navigation channels with vertical clearances ranging from 39 to 72 feet above Columbia River Datum 0.0 while the lift spans are in the closed-to-navigation position. The normal operating schedule for the I-5 Bridges is 33 CFR 117.869. The subject bridges need not open to marine vessels during
Vessels able to pass under the bridges in the closed-to-navigation positions may do so at any time. Both bridges will be able to open for emergencies, and there is no immediate alternate route for vessels to pass. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridges must return to their regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation; modification.
The Coast Guard has modified a temporary deviation from the operating schedule that governs the Hawthorne Bridge crosses the Willamette River, mile 13.1, at Portland, OR. The deviation is necessary to accommodate a filming event for a movie. This modified deviation changes the period the bridge is authorized to remain in the closed-to-navigation position.
This modified deviation is effective from 6 p.m. on September 8, 2018, to 12:01 a.m. on September 9, 2018.
The docket for this deviation, USCG-2018-0676 is available at
If you have questions on this modification, call or email Mr. Steven Fischer, Bridge Administrator, Thirteenth Coast Guard District; telephone 206-220-7282, email
On July 19, 2018, we published a temporary deviation entitled “Drawbridge Operation Regulation; Willamette River at Portland, OR” in the
The Hawthorne Bridge provides a vertical clearance of 49 feet in the closed-to-navigation position referenced to the vertical clearance above Columbia River Datum 0.0. The subject bridge operates per 33 CFR 117.897(c)(3)(v). Waterway usage on this part of the Willamette River includes vessels ranging from commercial tug and barge to small pleasure craft. The Coast Guard requested objections to this modification from local mariners via email. No objections were submitted to us. Waterway usage on this part of the Willamette River includes vessels ranging from commercial tug and barge to small pleasure craft.
Vessels able to pass through the bridge in the closed-to-navigation position may do so at any time. The bridge will be able to open for emergencies, and there is no immediate alternate route for vessels to pass. The Coast Guard will inform the users of the waterway, through our Local and Broadcast Notices to Mariners, of the change in operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Environmental Protection Agency (EPA).
Direct final rule.
EPA is promulgating significant new use rules (SNURs) under the Toxic Substances Control Act (TSCA) for 27 chemical substances which were the subject of premanufacture notices (PMNs). The chemical substances are subject to Orders issued by EPA pursuant to section 5(e) of TSCA. This action requires persons who intend to manufacture (defined by statute to include import) or process any of these 27 chemical substances for an activity that is designated as a significant new use by this rule to notify EPA at least 90 days before commencing that activity. The required notification initiates EPA's evaluation of the intended use within the applicable review period. Persons may not commence manufacture or processing for the significant new use until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.
This rule is effective on October 16, 2018. For purposes of judicial review, this rule shall be promulgated at 1 p.m. (e.s.t.) on August 31, 2018.
Written adverse comments on one or more of these SNURs must be received on or before September 17, 2018 (see Unit VI. of the
For additional information on related reporting requirement dates, see Units I.A., VI., and VII. of the
Submit your comments, identified by docket identification (ID)
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Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this rule. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Manufacturers or processors of one or more subject chemical substances (NAICS codes 325 and 324110),
This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and orders under TSCA. Importers of chemicals subject to these SNURs must certify their compliance with the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, any persons who export or intend to export a chemical substance that is the subject of this rule on or after September 17, 2018 are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) (see § 721.20), and must comply with the export notification requirements in 40 CFR part 707, subpart D.
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Section 5(a)(2) of TSCA (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four bulleted TSCA section 5(a)(2) factors listed in Unit III. Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a significant new use notice (SNUN) to EPA at least 90 days before they manufacture or process the chemical substance for that use (15 U.S.C. 2604(a)(1)(B)(i)). TSCA furthermore prohibits such manufacturing or processing from commencing until EPA has conducted a review of the notice, made an appropriate determination on the notice, and taken such actions as are required in association with that determination (15 U.S.C. 2604(a)(1)(B)(ii)). As described in Unit V., the general SNUR provisions are found at 40 CFR part 721, subpart A.
General provisions for SNURs appear in 40 CFR part 721, subpart A. These provisions describe persons subject to the rule, recordkeeping requirements, exemptions to reporting requirements, and applicability of the rule to uses occurring before the effective date of the rule. Provisions relating to user fees appear at 40 CFR part 700. According to § 721.1(c), persons subject to these SNURs must comply with the same SNUN requirements and EPA regulatory procedures as submitters of PMNs under TSCA section 5(a)(1)(A). In particular, these requirements include the information submission requirements of TSCA section 5(b) and 5(d)(1), the exemptions authorized by TSCA section 5(h)(1), (h)(2), (h)(3), and (h)(5), and the regulations at 40 CFR part 720. Once
Section 5(a)(2) of TSCA states that EPA's determination that a use of a chemical substance is a significant new use must be made after consideration of all relevant factors, including:
• The projected volume of manufacturing and processing of a chemical substance.
• The extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance.
• The extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance.
• The reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.
In addition to these factors enumerated in TSCA section 5(a)(2), the statute authorizes EPA to consider any other relevant factors.
To determine what would constitute a significant new use for the chemical substances that are the subject of these SNURs, EPA considered relevant information about the toxicity of the chemical substances, likely human exposures and environmental releases associated with possible uses, and the four bulleted TSCA section 5(a)(2) factors listed in this unit.
EPA is establishing significant new use and recordkeeping requirements for 27 chemical substances in 40 CFR part 721, subpart E. In this unit, EPA provides the following information for each chemical substance:
• PMN number.
• Chemical name (generic name, if the specific name is claimed as CBI).
• Chemical Abstracts Service (CAS) Registry number (if assigned for non-confidential chemical identities).
• Basis for the TSCA section 5(e) Order.
• Information identified by EPA that would help characterize the potential health and/or environmental effects of the chemical substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use designated by the SNUR.
This information may include testing required in a TSCA section 5(e) Order to be conducted by the PMN submitter, as well as testing not required to be conducted but which would also help characterize the potential health and/or environmental effects of the PMN substance. Any recommendation for information identified by EPA was made based on EPA's consideration of available screening-level data, if any, as well as other available information on appropriate testing for the chemical substance. Further, any such testing identified by EPA that includes testing on vertebrates was made after consideration of available toxicity information, computational toxicology and bioinformatics, and high-throughput screening methods and their prediction models. EPA also recognizes that whether testing/further information is needed will depend on the specific exposure and use scenario in the SNUN. EPA encourages all SNUN submitters to contact EPA to discuss any potential future testing. See Unit VIII. for more information.
• CFR citation assigned in the regulatory text section of this rule.
The regulatory text section of each rule specifies the activities designated as significant new uses. Certain new uses, including exceedance of production volume limits (
These rules include 27 PMN substances that are subject to Orders issued under TSCA section 5(e)(1)(A)(ii)(I) where EPA determined that it has insufficient information to conduct a reasoned evaluation and the activities associated with the PMN substances may present unreasonable risk to human health or the environment. Those Orders require protective measures to limit exposures or otherwise mitigate the potential unreasonable risk. The SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).
Where EPA determined that the PMN substance may present an unreasonable risk of injury to human health via inhalation exposure, the underlying TSCA section 5(e) Order usually requires, among other things, that potentially exposed employees wear specified respirators unless actual measurements of the workplace air show that air-borne concentrations of the PMN substance are below a New Chemical Exposure Limit (NCEL) that is established by EPA to provide adequate protection to human health. In addition to the actual NCEL concentration, the comprehensive NCELs provisions in TSCA section 5(e) Orders, which are modeled after Occupational Safety and Health Administration (OSHA) Permissible Exposure Limits (PELs) provisions, include requirements addressing performance criteria for sampling and analytical methods, periodic monitoring, respiratory protection, and recordkeeping. However, no comparable NCEL provisions currently exist in 40 CFR part 721, subpart B, for SNURs. Therefore, for these cases, the individual SNURs in 40 CFR part 721, subpart E, will state that persons subject to the SNUR who wish to pursue NCELs as an alternative to the § 721.63 respirator requirements may request to do so under § 721.30. EPA expects that persons whose § 721.30 requests to use the NCELs approach for SNURs that are approved by EPA will be required to comply with NCELs provisions that are comparable to those contained in the corresponding TSCA section 5(e) Order for the same chemical substance.
1. Submission of certain toxicity testing on the representative congener groups prior to exceeding a certain time period specified in the Order.
2. Use of the PMN substances only for the uses specified in the Order: Flame retardants and plasticizers in PVC, polymers, and rubber; flame retardants, plasticizers, and lubricants in adhesives, caulk, sealants, and coatings; additives in lubricants including metalworking fluids; and flame retardants and waterproofers in textiles.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the representative congener groups prior to exceeding a certain time period specified in the Order.
2. Use of the PMN substances only for the uses specified in the Order: Flame retardants and plasticizers in PVC, polymers, and rubber; flame retardants, plasticizers, and lubricants in adhesives, caulk, sealants, and coatings; additives in lubricants including metalworking fluids; and flame retardants and waterproofers in textiles.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the representative congener groups prior to exceeding a certain time period specified in the Order.
2. Use of the PMN substances only for the uses specified in the Order: Flame retardants and plasticizers in PVC, polymers, and rubber; flame retardants, plasticizers, and lubricants in adhesives, caulk, sealants, and coatings; additives in lubricants including metalworking fluids; and flame retardants and waterproofers in textiles.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the substance prior to exceeding the production limits specified in the Order.
2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposure).
3. Use of a National Institute of Occupational Safety and Health (NIOSH)-certified respirator with an assigned protection factor (APF) of at least 1000 (where there is a potential for inhalation exposure) in conjunction with a minimum set of engineering controls described in the PMN, or compliance with a new chemical exposure limit (NCEL) of 170 parts per billion (ppb) as an 8-hour time-weighted average to prevent inhalation exposure.
4. Use of engineering controls to limit worker exposure and air release of the PMN substance to the environment.
5. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the Safety Data Sheet (SDS).
6. Manufacture, processing, and use in an enclosed process.
7. Use only as a chemical intermediate.
8. No release of the substance resulting in surface water concentrations that exceed 240 ppb.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the substance prior to exceeding the confidential production volume limit specified in the Order.
2. Use of personal protective equipment including impervious gloves and clothing which covers any other exposed areas of the arms, legs and torso (where there is a potential for dermal exposure).
3. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
4. No domestic manufacture of the substance.
5. Use of the substance only for the confidential uses specified in the Order.
6. No use involving application methods that generate a dust, mist, vapor, or aerosol.
7. Disposal of the substance only by water or landfill.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. No domestic manufacture of the substance.
2. Use of the substance in formulations containing no greater than 0.2% of the chemical substance and for the confidential uses specified in the Order.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of monitoring data on the substance.
2. Use of personal protective equipment including impervious gloves and protective clothing (where there is a potential for dermal exposures) and a NIOSH-certified powered air purifying particulate respirator with an Assigned Protection Factor (APF) of at least 1000 (where there is a potential for inhalation exposures).
3. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
4. Manufacture, process, and use of the substance in a closed system as specified in the PMN.
5. Use of the substance only as a chemical intermediate.
6. No release of the substance into the surface waters of the United States.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of monitoring data as specified in the Order.
2. Use of personal protective equipment as specified in the Order (where there is a potential for dermal exposure).
3. Use of a NIOSH-certified respirator with an APF of at least 1000 (where there is a potential for inhalation exposure).
4. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
5. No domestic manufacture of the substance.
6. Use of the substance only in an enclosed process.
7. Use of the substance only for the confidential uses specified in the Order.
8. Manufacture, process, or use of the substance without the engineering controls required by the Order to control dermal and inhalation exposure.
9. Disposal of the substance by hazardous waste incineration except when in wastewater.
10. No release of the substance resulting in surface water concentrations that exceed 3 ppb.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of test data on the substance prior to exceeding the confidential production volume limit specified in the Order.
2. Use of personal protective equipment including impervious gloves (where there is a potential for dermal exposure).
3. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
4. No domestic manufacture of the substance.
5. Use of the substance only as a site-limited intermediate for the production of UV curable coating resin.
6. No release of the substance to surface waters of the United States.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Use of personal protective equipment including impervious gloves to prevent dermal exposure (where there is a potential for dermal exposure).
2. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
3. No domestic manufacture of the substance.
4. No manufacture, process, or use of the substance that results in generation of a vapor, mist, or aerosol.
5. No manufacture of the substance where there is more than 0.1% residual isocyanate by weight.
6. Use of the substance only as a UV curable coating resin.
7. Only import the substance in totes.
8. Manufacture of the substance to have an average molecular weight of greater than 2,000 daltons.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the substance prior to exceeding the confidential production volume limit specified in the Order.
2. Use of personal protective equipment including impervious gloves to prevent dermal exposure (where there is a potential for dermal exposure).
3. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
4. No domestic manufacture of the substance.
5. No use of the substance other than other than for the confidential uses identified in the Order.
6. No release of the substance resulting in surface water concentrations that exceed 3 ppb.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the substance prior to exceeding the confidential production volume limit specified in the Order.
2. Use of personal protective equipment including impervious gloves to prevent dermal exposure (where there is a potential for dermal exposure).
3. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
4. No use other than for the confidential uses identified in the Order.
5. No use involving an application method that generates a vapor, mist, or aerosol.
6. No domestic manufacture of the substance.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the substances prior to exceeding the confidential production volume limit specified in the Order.
2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposure).
3. Establishment and use of a hazard communication program, including human health and environmental precautionary statements on each label and in the SDS.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the substance prior to
2. Use of personal protective equipment including impervious gloves to prevent dermal exposure (where there is a potential for dermal exposure).
3. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
4. No manufacture, processing, or use involving an application method that generates a vapor, mist, aerosol, or dust.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposure).
2. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
3. No use other than the confidential use allowed in the Order.
4. No domestic manufacture of the substance.
5. No processing without appropriate engineering controls to prevent inhalation exposure, including dust removal with 99.9% efficiency when loading or unloading the substance in powder form.
6. No release of the substance resulting in surface water concentrations that exceed 240 ppb.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Use of personal protective equipment including impervious gloves to prevent dermal exposure (where there is a potential for dermal exposure).
2. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
3. No manufacture beyond the confidential annual production volume limit specified in the Order.
4. No processing or use of the substances in an application method that generates a dust, mist, or aerosol.
The SNUR would designate as a “significant new use” the absence of these protective measures.
1. Submission of certain toxicity testing on the substance prior to exceeding the confidential production volume limit specified in the Order.
2. Use of personal protective equipment including impervious gloves (where there is a potential for dermal exposure).
3. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the SDS.
4. No domestic manufacture of the substance.
The SNUR would designate as a “significant new use” the absence of these protective measures.
During review of the PMNs submitted for the chemical substances that are subject to these SNURs, EPA concluded that for all 27 chemical substances regulation was warranted under TSCA section 5(e), pending the development of information sufficient to make reasoned evaluations of the health or environmental effects of the chemical substances. The basis for such findings is outlined in Unit IV. Based on these findings, TSCA section 5(e) Orders requiring the use of appropriate exposure controls were negotiated with the PMN submitters.
The SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).
EPA is issuing these SNURs for specific chemical substances which have undergone premanufacture review because the Agency wants to achieve the following objectives with regard to the significant new uses designated in this rule:
• EPA will receive notice of any person's intent to manufacture or process a listed chemical substance for the described significant new use before that activity begins.
• EPA will have an opportunity to review and evaluate data submitted in a SNUN before the notice submitter begins manufacturing or processing a listed chemical substance for the described significant new use.
• EPA will be able to either determine that the prospective manufacture or processing is not likely to present an unreasonable risk, or to take necessary regulatory action associated with any other determination, before the described significant new use of the chemical substance occurs.
• EPA will identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).
Issuance of a SNUR for a chemical substance does not signify that the chemical substance is listed on the TSCA Chemical Substance Inventory (TSCA Inventory). Guidance on how to determine if a chemical substance is on the TSCA Inventory is available on the internet at
EPA is issuing these SNURs as direct final rules. The effective date of these rules is September 17, 2018 without further notice, unless EPA receives written adverse comments before September 17, 2018.
If EPA receives written adverse comments on one or more of these SNURs before September 17, 2018, EPA will withdraw the relevant sections of this direct final rule before its effective date.
This rule establishes SNURs for a number of chemical substances. Any person who submits adverse comments must identify the chemical substance and the new use to which it applies. EPA will not withdraw a SNUR for a chemical substance not identified in the comment.
To establish a significant new use, EPA must determine that the use is not ongoing. The chemical substances subject to this rule have undergone premanufacture review. In cases where EPA has not received a notice of commencement (NOC) and the chemical substance has not been added to the TSCA Inventory, no person may commence such activities without first submitting a PMN. Therefore, for chemical substances for which an NOC has not been submitted EPA concludes that the designated significant new uses are not ongoing.
When chemical substances identified in this rule are added to the TSCA Inventory, EPA recognizes that, before the rule is effective, other persons might engage in a use that has been identified as a significant new use. However, TSCA section 5(e) Orders have been issued for all of the chemical substances, and the PMN submitters are prohibited by the TSCA section 5(e) Orders from undertaking activities which will be designated as significant new uses. The identities of 13 of the 27 chemical substances subject to this rule have been claimed as confidential and EPA has received no post-PMN
Therefore, EPA designates
Persons who begin commercial manufacture or processing of the chemical substances for a significant new use identified as of that date will have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons will have to first comply with all applicable SNUR notification requirements and wait until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.
EPA recognizes that TSCA section 5 does not require developing any particular new information (
In the absence of a TSCA section 4 test rule covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable by them (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing. Unit IV. lists potentially useful information for all of the listed SNURs. Descriptions of this information are provided for informational purposes. EPA strongly encourages persons, before performing any testing, to consult with the Agency pertaining to protocol selection. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing in vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h). To access the OCSPP test guidelines referenced in this document electronically, please go to
In certain of the TSCA section 5(e) Orders for the chemical substances regulated under this rule, EPA has established production volume limits in view of the lack of data on the potential health and environmental risks that may be posed by the significant new uses or increased exposure to the chemical substances. These limits cannot be exceeded unless the PMN submitter first submits the results of specified tests that would permit a reasoned evaluation of the potential risks posed by these chemical substances. Under recent TSCA section 5(e) Orders, each PMN submitter is required to submit each study at least 14 weeks (earlier TSCA section 5(e) Orders required submissions at least 12 weeks) before reaching the specified production limit. The SNURs contain the same production volume limits as the TSCA section 5(e) Orders. Exceeding these production limits is defined as a significant new use. Persons who intend to exceed the production limit must notify the Agency by submitting a SNUN at least 90 days in advance of commencement of non-exempt commercial manufacture or processing.
Any request by EPA for the triggered and pended testing described in the Orders was made based on EPA's consideration of available screening-level data, if any, as well as other available information on appropriate testing for the PMN substances. Further, any such testing request on the part of EPA that includes testing on vertebrates was made after consideration of available toxicity information, computational toxicology and bioinformatics, and high-throughput screening methods and their prediction models.
Potentially useful information identified in Unit IV. may not be the only means of addressing the potential risks of the chemical substance. However, submitting a SNUN without any test data or other information may increase the likelihood that EPA will take action under TSCA section 5(e), particularly if satisfactory test results have not been obtained from a prior PMN or SNUN submitter. EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to generate useful information.
SNUN submitters should be aware that EPA will be better able to evaluate SNUNs which provide detailed information on the following:
• Human exposure and environmental release that may result from the significant new use of the chemical substances.
• Information on risks posed by the chemical substances compared to risks posed by potential substitutes.
By this rule, EPA is establishing certain significant new uses which have been claimed as CBI subject to Agency confidentiality regulations at 40 CFR part 2 and 40 CFR part 720, subpart E. Absent a final determination or other disposition of the confidentiality claim under 40 CFR part 2 procedures, EPA is required to keep this information confidential. EPA promulgated a procedure to deal with the situation where a specific significant new use is CBI, at § 721.1725(b)(1).
Under these procedures a manufacturer or processor may request EPA to determine whether a proposed use would be a significant new use under the rule. The manufacturer or processor must show that it has a
If EPA determines that the use identified in the
According to § 721.1(c), persons submitting a SNUN must comply with the same notification requirements and EPA regulatory procedures as persons submitting a PMN, including submission of test data on health and environmental effects as described in 40 CFR 720.50. SNUNs must be submitted on EPA Form No. 7710-25, generated using e-PMN software, and submitted to the Agency in accordance with the procedures set forth in 40 CFR 720.40 and 721.25. E-PMN software is available electronically at
EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this rule. EPA's complete economic analysis is available in the docket under docket ID number EPA-HQ-OPPT-2017-0414.
This action establishes SNURs for several new chemical substances that were the subject of PMNs and TSCA section 5(e) Orders. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993).
According to PRA (44 U.S.C. 3501
The information collection requirements related to this action have already been approved by OMB pursuant to PRA under OMB control number 2070-0012 (EPA ICR No. 574). This action does not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average between 30 and 170 hours per response. This burden estimate includes the time needed to review instructions, search existing data sources, gather and maintain the data needed, and complete, review, and submit the required SNUN.
Send any comments about the accuracy of the burden estimate, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques, to the Director, Collection Strategies Division, Office of Environmental Information (2822T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001. Please remember to include the OMB control number in any correspondence, but do not submit any completed forms to this address.
On February 18, 2012, EPA certified pursuant to RFA section 605(b) (5 U.S.C. 601
1. A significant number of SNUNs would not be submitted by small entities in response to the SNUR.
2. The SNUR submitted by any small entity would not cost significantly more than $8,300.
A copy of that certification is available in the docket for this action.
This action is within the scope of the February 18, 2012 certification. Based on the Economic Analysis discussed in Unit XI. and EPA's experience promulgating SNURs (discussed in the certification), EPA believes that the following are true:
• A significant number of SNUNs would not be submitted by small entities in response to the SNUR.
• Submission of the SNUN would not cost any small entity significantly more than $8,300.
Therefore, the promulgation of the SNUR would not have a significant economic impact on a substantial number of small entities.
Based on EPA's experience with proposing and finalizing SNURs, State, local, and Tribal governments have not been impacted by these rulemakings, and EPA does not have any reasons to believe that any State, local, or Tribal government will be impacted by this action. As such, EPA has determined that this action does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of UMRA sections 202, 203, 204, or 205 (2 U.S.C. 1501
This action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999).
This action does not have Tribal implications because it is not expected to have substantial direct effects on Indian Tribes. This action does not significantly nor uniquely affect the communities of Indian Tribal governments, nor does it involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this action.
This action is not subject to Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and this action does not address environmental health or safety risks disproportionately affecting children.
This action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use and because this
In addition, since this action does not involve any technical standards, NTTAA section 12(d) (15 U.S.C. 272 note), does not apply to this action.
This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Reporting and recordkeeping requirements.
Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.
Therefore, 40 CFR parts 9 and 721 are amended as follows:
7 U.S.C. 135
15 U.S.C. 2604, 2607, and 2625(c).
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(2) The significant new uses are:
(i)
(ii) [Reserved]
(b)
(1)
(2)
(a)
(2) The significant new uses are:
(i)
(ii) [Reserved]
(b)
(1)
(2)
(a)
(2) The significant new uses are:
(i)
(A) As an alternative to the respirator requirements in paragraph (a)(2)(i) of this section, a manufacturer or processor may choose to follow the new chemical exposure limit (NCEL) provision listed in the TSCA section 5(e) Order for this substance. The NCEL is 170 ppb as an 8-hour time weighted average. Persons who wish to pursue NCELs as an alternative to § 721.63 respirator requirements may request to do so under § 721.30. Persons whose § 721.30 requests to use the NCELs approach are approved by EPA will be required to follow NCELs provisions comparable to those contained in the corresponding TSCA section 5(e) Order.
(B) [Reserved]
(ii)
(iii)
(iv)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(iv)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii) [Reserved]
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(iv)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(iv)
(v)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(iv)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(iv)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(iv)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(3)
(a)
(2) The significant new uses are:
(i)
(ii)
(iii)
(b)
(1)
(2)
(3)
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is taking final action to approve revisions to the San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD or “District”) portion of the California State Implementation Plan (SIP). These revisions concern the District's 2014 demonstration regarding Reasonably Available Control Technology (RACT) requirements for the 2008 8-hour ozone National Ambient Air Quality Standard (NAAQS). We are also taking final action to approve into the California SIP the following documents that help support the District's RACT demonstration: SJVUAPCD's supplement to its 2014 RACT SIP demonstration, which contains SJVUAPCD's negative declarations where the District concludes it has no sources subject to certain Control Techniques Guidelines (CTG) documents and relevant permit conditions to implement RACT level requirements for J.R. Simplot's Nitric Acid plant in Helm, California (CA); and SJVUAPCD's 2016 Ozone Plan for the 2008 8-Hour Ozone Standard—Chapter 3.4 and Appendix C only. We are approving local SIP revisions to demonstrate that RACT is implemented as required under the Clean Air Act (CAA or the “the Act”).
This rule will be effective on September 17, 2018.
The EPA has established a docket for this action under Docket ID No. EPA-R09-OAR-2018-0272. All documents in the docket are listed on the
Stanley Tong, EPA Region IX, (415) 947-4122,
Throughout this document, “we,” “us” and “our” refer to the EPA.
On May 17, 2018 (83 FR 22908), the EPA proposed to approve SJVUACPD's “2014 Reasonably Available Control Technology (RACT) Demonstration for the 8-Hour Ozone State Implementation Plan (SIP)” (
In addition to the
We are also approving portions of SJVUAPCD's “2016 Ozone Plan for the 2008 8-Hour Ozone Standard” (
As discussed in our proposed rule, the District's
The EPA's proposed action provided a 30-day public comment period. During this period, we received one anonymous comment that was outside the scope of this rulemaking. The comment was not germane to our evaluation of the submitted SJVUAPCD documents to demonstrate that the District's stationary sources are subject to RACT requirements.
No comments were submitted that change our assessment of the submitted documents as described in our proposed action. Therefore, as authorized in section 110(k)(3) of the Act, the EPA is fully approving the following documents into the California SIP: SJVUAPCD's
In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of certain permit conditions for the J.R. Simplot Nitric Acid Plan in Helm, CA and described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents available through
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• Does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 16, 2018. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52, chapter I, title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(449) * * *
(ii) * * *
(D) San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD).
(
(496) * * *
(ii) * * *
(B) San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD).
(
(507) New regulations for the following APCD were submitted on June 29, 2018 by the Governor's designee.
(i)
(
(ii)
(
(a) * * *
(8) * * *
(iii) The following negative declarations for the 2008 NAAQS were adopted by the San Joaquin Valley Unified Air Pollution Control District on June 21, 2018, and submitted to the EPA on June 29, 2018.
Civilian Board of Contract Appeals; General Services Administration (GSA).
Final rule.
The Civilian Board of Contract Appeals (Board) amends its rules of procedure for cases arising under the Contract Disputes Act, and for disputes between insurance companies and the Department of Agriculture's Risk Management Agency in which decisions of the Federal Crop Insurance Corporation are brought before the Board under the Federal Crop Insurance Act. The Board's current rules were issued in 2008 and were last amended in 2011. After considering the one responsive comment received, the Board now promulgates its final rules of procedure.
September 17, 2018.
Mr. J. Gregory Parks, Chief Counsel, Civilian Board of Contract Appeals, 1800 M Street NW, Suite 600, Washington, DC 20036; at 202-606-8787; or email at
The Board was established within GSA by section 847 of the National Defense Authorization Act for Fiscal Year 2006, Public Law 109-163. Board members are administrative judges appointed by the Administrator of General Services under 41 U.S.C. 7105(b)(2). Among its other functions, the Board hears and decides contract disputes between Government contractors and most civilian Executive agencies under the Contract Disputes Act, 41 U.S.C. 7101-7109, and its implementing regulations, and disputes pursuant to the Federal Crop Insurance Act, 7 U.S.C. 1501
The Board's rules of procedure for Contract Disputes Act cases and Federal Crop Insurance Act cases were adopted in May 2008 (73 FR 26947) and were last amended in August 2011 (76 FR 50926). The Board published in the
The period for comments closed on May 29, 2018. The Board has considered all comments received, revising the proposed rules, in part, as explained in part B below, and now promulgates its final rules of procedure. These rules simplify and modernize access to the Board by establishing a preference for electronic filing, increase conformity between the Board's rules and the Federal Rules of Civil Procedure, streamline the wording of the Board's rules, and clarify current rules and practices. In addition, the time for filing is amended from 4:30 p.m. to midnight Eastern Time, and the stated monetary limitations for electing the accelerated and small claims procedures are deleted and replaced with references to the requirements stated in the Contract Disputes Act.
The Board received comments from two commenters. Commenters included one attorney from a Federal agency and one anonymous source. Comments from the anonymous source concerned matters wholly unrelated to the proposed rule, and the concerns noted by the attorney were already addressed in the proposed rule. The Board carefully considered the comments but has not revised its proposed rule based on issues the commenters raised. The final rule incorporates minor, non-substantive corrections to the proposed rule. The corrections are addressed below.
Sections 6101.1, 6101.3, 6101.4, 6101.12, and 6101.23 are amended to correct spelling, grammatical, or spacing errors; include a cross-reference; and clarify a phrase.
GSA certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 602
The Paperwork Reduction Act, 44 U.S.C. 3501
The final rule is exempt from Congressional review under Public Law 104-121 because it relates solely to agency organization, procedure, and practice and does not substantially affect the rights or obligations of non-agency parties.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of
This final rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866.
Administrative practice and procedure; Government procurement; Agriculture.
Therefore, GSA revises 48 CFR parts 6101 and 6102 to read as follows:
41 U.S.C. 7101-7109.
(a)
(b)
(c)
(d)
(e)
(f)
(a)
(1) The name, telephone number, and mailing and email addresses of the appellant and/or its attorney or authorized representative;
(2) The contract number;
(3) The name of the contracting officer who received or issued the claim, with that person's telephone number, mailing address, and email address;
(4) A copy of the claim with any certification; and
(5) A copy of the contracting officer's decision on the claim or a statement that the appeal is from a failure to issue a decision (“a deemed denial”).
(b)
(1) The name, telephone number, and mailing and email addresses of the petitioner and/or its attorney or authorized representative;
(2) The contract number;
(3) The name of the contracting officer who received the claim, with that person's telephone number, mailing address, and email address; and
(4) A copy of the claim with any certification.
(c)
(d)
(2) Alternatively, under the CDA, a contractor may appeal when a contracting officer has not issued a decision on a claim within the time allowed by the CDA or the time set by a tribunal acting on a petition.
(3) Under the CDA, a petition may be filed in the period between—
(i) Receipt of notice from a contracting officer, within 60 days after the submission of a claim, that the contracting officer intends to issue a decision on the claim more than 60 days after its submission, and
(ii) The due date stated by the contracting officer.
(4) Under EAJA, an application must be filed within 30 days after the date that the decision in the underlying appeal becomes no longer subject to appeal.
(e)
(f)
(a)
(b)
(a)
(1) The contracting officer's decision on the claim;
(2) The contract, including all pertinent specifications, amendments, plans, drawings, and incorporated proposals or parts thereof;
(3) All correspondence between the parties relevant to the appeal;
(4) The claim with any certification;
(5) Relevant affidavits, witness statements, or transcripts of testimony taken before the appeal;
(6) All documents relied on by the contracting officer to decide the claim; and
(7) Relevant internal memoranda, reports, and notes.
(b)
(2) A party may efile an appeal file or a supplement thereto by permission of the Board.
(3) Appeal file exhibits shall be in .pdf format or will be rejected. The appeal file index and each exhibit shall be separate documents, without embedded documents.
(4) Appeal file exhibits shall be complete, legible, arranged in chronological order, numbered, and indexed. Parties shall avoid filing duplicative exhibits and shall number exhibits continuously and consecutively from one filing to the next, so that a complete appeal file consists of one set of consecutively numbered exhibits.
(5) Parties shall number the pages of each exhibit consecutively, unless an exhibit is already paginated in another logical manner.
(6) The appeal file index shall describe each exhibit by date and content.
(7) Parties may file documents
(c)
(2) Appeal file exhibits shall be complete, legible, arranged in chronological order, tabbed, and indexed. Parties shall avoid filing duplicative exhibits and shall number exhibits continuously and consecutively from one filing to the next, so a complete appeal file consists of one set of consecutively tabbed exhibits.
(3) Parties shall number the pages of each paper exhibit consecutively, unless an exhibit is already paginated in another logical manner.
(4) Parties shall file exhibits in 3-ring binders with spines no wider than 3 inches, labeled on the cover and spine with the name of the appeal, CBCA number, and tab numbers in each binder. Include in each binder the index of the entire filing.
(5) The appeal file index shall describe each exhibit by date and content.
(6) Parties shall separately file and index documents submitted
(d)
(e)
(f)
(g)
(h)
(a)
(2)
(3)
(b)
(c)
(a)
(b)
(c)
(d)
A party filing any document not submitted
(a)
(b)
(c)
(d)
(e)
(f)
(1)
(2)
(g)
(h)
(a)
(1)
(i) Rule 4 (48 CFR 6101.4) appeal file exhibits other than those to which an objection is sustained;
(ii) Other documents or parts thereof admitted as evidence;
(iii) Tangible things admitted as evidence;
(iv) Transcripts or recordings of testimony before the Board; and
(v) Factual stipulations and factual admissions.
(2)
(i) The notice of appeal, petition, or application;
(ii) The complaint, answer, and amendments thereto;
(iii) Motions and briefs on motions;
(iv) Other briefs;
(v) Demonstrative hearing exhibits; and
(vi) Anything else the Board may expressly admit or take notice of.
(b)
(c)
(d)
(1)
(2)
(i) The party submits the document to explain a discovery dispute;
(ii) The Board denies a motion for protective order, and the movant asks that the record include a document that the party would have used in the case with a protective order, for possible later review of the Board's denial; or
(iii) Good cause exists to find that
(3)
(e)
The Board may in its discretion receive any evidence to which no party objects. In ruling on evidentiary objections, the Board is guided but not bound by the Federal Rules of Evidence, except that the Board generally admits hearsay unless the Board finds it unreliable.
The Board may order a conference of the parties for any purpose. Conferences are usually telephonic and are rarely recorded or transcribed. No one may record a conference by any means without Board approval. If the Board issues a memorandum or order memorializing a conference, a party has 5 days from receipt of the memorandum or order to object in writing to the memorialization.
(a)
(b)
(2)
(3)
(4)
(c)
(d)
(a)
(b)
(c)
(d)
(e)
(2)
(3)
(f)
(a)
(b)
(c)
(d)
(2)
(3)
(e)
(f)
(a)
(b)
(c)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(a)
(b)
(c)
(d)
(a)
(b)
(a)
(b)
(c)
(a)
(b)
(c)
(a)
(b)
(c)
(d)
The Board arranges transcription of hearings, other than hearings under the small claims procedure of Rule 52 (48 CFR 6101.52). The Board may, but generally does not, arrange transcription of conferences or other proceedings. No one may record or transcribe a Board proceeding without the Board's permission. The Board may order or acknowledge corrections to an official transcript. Each party is responsible for obtaining its own copy of a transcript.
(a)
(b)
(a)
(b)
(a)
(b)
(1) The Board is satisfied that it has jurisdiction; and
(2) The stipulation states that no party will seek reconsideration of, seek relief from, or appeal the Board's decision.
(a)
(b)
(c)
(a)
(b)
(c)
(a)
(b)
(c)
(d)
(a)
(b)
(a)
(b)
(c)
(1) Specify the applicant, appeal, and amount sought;
(2) Explain why the applicant is legally eligible for an award;
(3) Provide a schedule of fees and expenses with supporting documentation;
(4) Be signed by the applicant or a person appearing for the applicant, with a declaration under penalty of perjury that the information in the application is correct;
(5) Provide evidence of the applicant's small business status or net worth; and
(6) Justify any request for attorney fees exceeding the statutory rate.
(d)
(2) The Board may order further proceedings if necessary for a full and fair resolution of issues arising from an application.
(e)
When permitted by law, Board awards under contracts may be paid from the permanent indefinite judgment fund under 31 U.S.C. 1304 and 31 CFR part 256. An EAJA award is paid from funds of the respondent.
(a)
(b)
(c)
(d)
If a Court remands a case to the Board for further proceedings, each party shall, within 30 days of receipt of the appellate mandate, recommend procedures to comply with the remand order. The Board will then issue an order on further proceedings.
No member of the Board or of the Board's staff will communicate with a party about any material issue in a case outside of the presence of the other party, and no one shall attempt such communications on behalf of a party. This rule does not bar such communications about the Board's administrative functions or procedures.
(a)
(b)
(1) Taking the facts pertaining to the matter in dispute to be established for the purpose of the case in accordance with the contention of the party who is not at fault;
(2) Forbidding the challenge of the accuracy of any evidence;
(3) Refusing to allow the party to support or oppose designated claims or defenses;
(4) Prohibiting the party from introducing into evidence designated claims or defenses;
(5) Striking pleadings or parts thereof, or staying further proceedings until the order is obeyed;
(6) Dismissing the case or any part thereof;
(7) Enforcing the protective order and disciplining individuals subject to such order for violation thereof, including disqualifying a party's representative, attorney, expert, or consultant from further participation in the case;
(8) Drawing evidentiary inferences adverse to the party; or
(9) Imposing such other sanctions as the Board deems appropriate.
(c)
(d)
(2)
The seal of the Board is a circular logo with “Civilian Board of Contract Appeals” on the outer margin. The seal is a means of authenticating records, notices, orders, dismissals, opinions, subpoenas, and certificates issued by the Board.
An appellant in an eligible case may elect the small claims procedure under Rule 52 (48 CFR 6101.52) or the accelerated procedure under Rule 53 (48 CFR 6101.53). Parties may jointly elect alternative dispute resolution under Rule 54 (48 CFR 6101.54).
(a)
(b)
(c)
(a)
(b)
(c)
(a)
(b)
(c)
(d)
(e)
7 U.S.C. 1501
These procedures govern the Board's resolution of disputes between insurance companies and the Department of Agriculture's Risk Management Agency (RMA) involving actions of the Federal Crop Insurance Corporation (FCIC). Prior to the creation of this Board, the Department of Agriculture Board of Contract Appeals resolved this variety of dispute pursuant
The rules of procedure for these cases are the same as the rules of procedure for Contract Disputes Act appeals, with these exceptions:
(a)
(2) A notice of appeal is filed upon its receipt by the Office of the Clerk of the Board, not when it is mailed.
(3) The terms “petition” and “petitioner” do not apply to FCIC cases.
(b)
(2) In Rule 2(a) (48 CFR 6101.2(a)), the references to “contracting officer” are references to “Deputy Administrator.”
(3) Rule 2(b) (48 CFR 6101.2(b)) does not apply to FCIC cases.
(4) In Rule 2(d)(1) (48 CFR 6101.2(d)(1)), an appeal from a determination of a Deputy Administrator shall be filed no later than 90 calendar days after the date the appellant receives that determination. The Board is authorized to resolve only those appeals that are timely filed.
(5) In Rule 2(d)(2) (48 CFR 6101.2(d)(2)), an appeal may be filed with the Board if the Deputy Administrator fails or refuses to issue a determination within 90 days after the appellant submits a request for a determination.
(c)
(2) In Rule 4(a), paragraphs (1) through (7) (48 CFR 6101.4(a)(1) through (7)), describing materials included in the appeal file, are replaced by the following:
(i) The determination of the Deputy Administrator that is the subject of the dispute;
(ii) The reinsurance agreement (with amendments or modifications) at issue in the dispute;
(iii) Pertinent correspondence between the parties that is relevant to the dispute, including prior administrative determinations and related submissions;
(iv) Documents and other tangible materials on which the Deputy Administrator relied in making the underlying determination; and
(v) Any additional material pertinent to the authority of the Board or the resolution of the dispute.
(3) The following subsection is added to Rule 4 (48 CFR 6101.4): Media on which appeal file is to be submitted. All appeal file submissions, including the index, shall be submitted in two forms: Paper and in a text or .pdf format submitted on a compact disk. Each compact disk shall be labeled with the name and docket number of the case. The judge may delay the submission of the compact disk copy of the appeal file until the close of the evidentiary record.
(d)
(e)
(f)
(g)
(h)
(1)
(2)
(i)
(j)
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS implements an accountability measure (AM) for the Other Jacks Complex commercial sector in the exclusive economic zone (EEZ) of the South Atlantic for the 2018 fishing year through this temporary rule. The Other Jacks Complex is composed of the lesser amberjack, almaco jack, and banded rudderfish. NMFS projects that commercial landings of the Other Jacks Complex will reach the combined commercial annual catch limit (ACL) by August 22, 2018. Therefore, NMFS closes the commercial sector for this complex in the South Atlantic EEZ, on August 22, 2018, and it will remain closed until the start of the next fishing year on January 1, 2019. This closure is
This temporary rule is effective at 12:01 a.m., local time, on August 22, 2018, until 12:01 a.m., local time, on January 1, 2019.
Mary Vara, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
The snapper-grouper fishery of the South Atlantic includes lesser amberjack, almaco jack, and banded rudderfish, which combined are the Other Jacks Complex. The Other Jacks Complex is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management Council and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.
The combined commercial ACL for the Other Jacks Complex is 189,422 lb (85,920 kg), round weight. Under 50 CFR 622.193(l)(1)(i), NMFS is required to close the commercial sector for the Other Jacks Complex when the commercial ACL has been reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register. NMFS has determined that the commercial sector for this complex is projected to reach its ACL by August 22, 2018. Therefore, this temporary rule implements an AM to close the commercial sector for the Other Jacks Complex in the South Atlantic, effective at 12:01 a.m., local time, on August 22, 2018.
The operator of a vessel with a valid commercial permit for South Atlantic snapper-grouper having lesser amberjack, almaco jack, or banded rudderfish on board must have landed and bartered, traded, or sold such species prior to 12:01 a.m., local time, on August 22, 2018. During the commercial closure, the recreational bag limit specified in 50 CFR 622.187(b)(8) and the possession limits specified in 50 CFR 622.187(c) apply to all harvest or possession of lesser amberjack, almaco jack, or banded rudderfish in or from the South Atlantic EEZ, while the recreational sector is open. These recreational bag and possession limits apply in the South Atlantic on board a vessel for which a valid Federal commercial or charter vessel/headboat permit for South Atlantic snapper-grouper has been issued, regardless of whether such species were harvested in state or Federal waters. During the commercial closure, the sale or purchase of lesser amberjack, almaco jack, or banded rudderfish taken from the South Atlantic EEZ is prohibited.
The Regional Administrator for the NMFS Southeast Region has determined this temporary rule is necessary for the conservation and management of the fish in the Other Jacks Complex, a component of the South Atlantic snapper-grouper fishery, and is consistent with the Magnuson-Stevens Act and other applicable laws.
This action is taken under 50 CFR 622.193(l)(1)(i) and is exempt from review under Executive Order 12866.
These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and public comment.
This action responds to the best scientific information available. The Assistant Administrator for NOAA Fisheries (AA) finds that the need to immediately implement this action to close the commercial sector for the Other Jacks Complex constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), as such procedures are unnecessary and contrary to the public interest. Such procedures are unnecessary because the rule implementing the AM itself has been subject to notice and comment, and all that remains is to notify the public of the closure. Such procedures are contrary to the public interest because of the need to immediately implement this action to protect the species in the Other Jacks Complex, since the capacity of the fishing fleet allows for rapid harvest of the commercial ACL. Prior notice and opportunity for public comment would require time and would potentially result in a harvest well in excess of the established commercial ACL.
For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS is prohibiting retention of sablefish by vessels using trawl gear in the West Yakutat District of the Gulf of Alaska (GOA). This action is necessary because the 2018 total allowable catch of sablefish allocated to vessels using trawl gear in the West Yakutat District of the GOA will be reached.
Effective 1200 hours, Alaska local time (A.l.t.), August 14, 2018, through 2400 hours, A.l.t., December 31, 2018.
Steve Whitney, 907-586-7228.
NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.
The 2018 total allowable catch (TAC) of sablefish allocated to vessels using trawl gear in the West Yakutat District of the GOA is 240 metric tons (mt) as established by the final 2018 and 2019 harvest specifications for groundfish of the GOA (83 FR 8768, March 1, 2018).
In accordance with § 679.20(d)(2), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2018 TAC of sablefish allocated to vessels using trawl gear in the West Yakutat District of the GOA will be reached. Therefore, NMFS is requiring that sablefish caught by vessels using trawl gear in the West Yakutat District of the GOA be treated as prohibited species in accordance with § 679.21(b).
This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay prohibiting the retention of sablefish by vessels using trawl gear in the West Yakutat District of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of August 13, 2018.
The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
This action is required by §§ 679.20 and 679.21 and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS is prohibiting directed fishing for Pacific ocean perch in the West Yakutat District of the Gulf of Alaska (GOA). This action is necessary to prevent exceeding the 2018 total allowable catch of Pacific ocean perch in the West Yakutat District of the GOA.
Effective 1200 hours, Alaska local time (A.l.t.), August 14, 2018, through 2400 hours, A.l.t., December 31, 2018.
Steve Whitney, 907-586-7228.
NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.
The 2018 total allowable catch (TAC) of Pacific ocean perch in the West Yakutat District of the GOA is 3,371 metric tons (mt) as established by the final 2018 and 2019 harvest specifications for groundfish of the GOA (83 FR 8768, March 1, 2018).
In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2018 TAC of Pacific ocean perch in the West Yakutat District of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 3,271 mt, and is setting aside the remaining 100 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific ocean perch in the West Yakutat District of the GOA. While this closure remains effective the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.
This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of directed fishing for Pacific ocean perch in the West Yakutat District of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of August 13, 2018.
The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
This action is required by § 679.20 and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend VHF Omnidirectional Range (VOR) Federal airways V-18, V-102, and V-278 in the vicinity of Guthrie, TX. The modifications are necessary due to the planned decommissioning of the Guthrie, TX, VOR/Tactical Air Navigation (VORTAC) navigation aid (NAVAID), which provides navigation guidance for portions of the affected air traffic service (ATS) routes. The Guthrie VORTAC is being decommissioned as part of the FAA's VOR Minimum Operational Network (MON) program.
Comments must be received on or before October 1, 2018.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: (800) 647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2018-0769; Airspace Docket No. 18-ASW-10 at the beginning of your comments. You may also submit comments through the internet at
FAA Order 7400.11B, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Colby Abbott, Airspace Policy Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would modify the route structure as necessary to preserve the safe and efficient flow of air traffic within the National Airspace System.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers (FAA Docket No. FAA-2018-0769; Airspace Docket No. 18-ASW-10) and be submitted in triplicate to the Docket Management Facility (see
Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2018-0769; Airspace Docket No. 18-ASW-10.” The postcard will be date/time stamped and returned to the commenter.
All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see
This document proposes to amend FAA Order 7400.11B, Airspace Designations and Reporting Points, dated August 3, 2017, and effective September 15, 2017. FAA Order
The FAA is planning decommissioning activities for the Guthrie, TX, VORTAC in 2019 as one of the candidate VORs identified for discontinuance by the FAA's VOR MON program and listed in the final policy statement notice, “Provision of Navigation Services for the Next Generation Air Transportation System (NextGen) Transition to Performance-Based Navigation (PBN) (Plan for Establishing a VOR Minimum Operational Network),” published in the
With the planned decommissioning of the Guthrie VORTAC, the remaining ground-based NAVAID coverage in the area is insufficient to enable the continuity of the affected airways. As such, proposed modifications to V-18, V-102, and V-278 would result in gaps in the route structures. To overcome the gaps, instrument flight rules (IFR) traffic could use adjacent VOR Federal airways V-14 and V-114 between the Lubbock, TX, VORTAC and Wichita Falls, TX, VORTAC; Federal airways V-14, V-114, and V-355 between the Lubbock, TX, VORTAC and Bowie, TX, VORTAC; or Federal airways V-62 and V-66 between the Lubbock, TX, VORTAC and Millsap, TX, VORTAC to circumnavigate the affected area. Additionally, IFR traffic could file point to point through the affected area using fixes that will remain in place, or receive air traffic control (ATC) radar vectors through the area. Visual flight rules pilots who elect to navigate via the airways through the affected area could also take advantage of the adjacent VOR Federal airways or ATC services listed previously.
The FAA is proposing an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 by modifying VOR Federal airways V-18, V-102, and V-278. The planned decommissioning of the Guthrie, TX, VORTAC has made these actions necessary. The proposed VOR Federal airway changes are outlined below.
VOR Federal airways are published in paragraph 6010(a) of FAA Order 7400.11B dated August 3, 2017, and effective September 15, 2017, which is incorporated by reference in 14 CFR 71.1. The VOR Federal airways listed in this document would be subsequently published in the Order.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
From Millsap, TX; Glen Rose, TX; Cedar Creek, TX; Quitman, TX; Belcher, LA; Monroe, LA; Magnolia, MS; Meridian, MS; Crimson, AL; Vulcan, AL; Talladega, AL; Atlanta, GA; Colliers, SC; to Charleston, SC.
From Salt Flat, TX; Carlsbad, NM; Hobbs, NM; to Lubbock, TX.
From Texico, NM; to Plainview, TX. From Bowie, TX; Bonham, TX; Paris, TX; Texarkana, AR; Monticello, AR; Greenville, MS; Sidon, MS; Bigbee, MS; to Vulcan, AL.
Food and Drug Administration, HHS.
Notification; request for comments.
As required by the FDA Reauthorization Act of 2017 (FDARA), the Food and Drug Administration (FDA or Agency) has identified a list of accessories for which the Agency believes general controls alone are sufficient to provide reasonable assurance of safety and effectiveness, so the accessories could be in class I. FDA is publishing this document proposing to classify these accessories into class I and distinct from other devices, as well as seek public comment in accordance with procedures established by FDARA. This document does not represent FDA's final determination with respect to the proposed accessories listed in this document.
Submit either electronic or written comments on the document by October 16, 2018.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before October 16, 2018 The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
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Ian Ostermiller, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5454, Silver Spring, MD 20993-0002, 301-796-5678.
On August 18, 2017, FDARA was signed into law (Pub. L. 115-52). Section 707 of FDARA amended section 513(f) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) and, among other amendments, created a process for FDA to propose a list of accessories suitable for distinct classification into class I (see section 513(f)(6)(D)(i) of the FD&C Act (21 U.S.C. 360c(f)(6)(D)(i))). Section 707 of FDARA mandated that FDA make the first such proposal within a year of enactment of FDARA, and FDA is publishing this document in accordance with this statutory mandate.
Section 201(h) of the FD&C Act defines “device” to include, among other articles, an “accessory” (see 21 U.S.C. 321(h)). As such, all articles that meet the definition of “device”, including accessories, are regulated under the FD&C Act. Based on sections 201(h) and 513(f)(6) of the FD&C Act, we have described our current thinking on which devices we would generally consider to be accessories in the guidance document, “Medical Device Accessories—Describing Accessories and Classification Pathways,” available at
Section 513 of the FD&C Act defines three classes of devices, reflecting the regulatory controls needed to provide reasonable assurance of their safety and effectiveness. The three classes of devices are class I (general controls), class II (special controls), and class III (premarket approval). Some accessories may be granted marketing authorization as part of a submission for another device with which they are intended to be used and in class II or III that, if considered distinctly from another device (such as the parent device), may be suitable for classification into class I if general controls alone are sufficient to provide a reasonable assurance of safety and effectiveness of the accessory.
Section 513(h)(1) defines general controls as the controls authorized by or under sections 501, 502, 510, 516, 518, 519, and 520 of the FD&C Act. These controls include, but are not limited to, provisions related to adulteration and misbranding, registration and listing, records and reports on devices, and good manufacturing practices. The regulations for good manufacturing practices are under 21 CFR part 820, the Quality System regulation. Subject to the exceptions identified in § 820.30(a)(2) (21 CFR 820.30(a)(2)) for specific devices and those automated with computer software, design controls under § 820.30 do not generally apply to a class I device.
This document represents FDA's compliance with FDARA's requirement to identify the first list of accessories suitable for distinct classification into class I. As required by FDARA, we are providing you with the opportunity to provide comment. Once the comment period ends, we will consider the comments and publish in the
The classification of each accessory will be based on the risks of the accessory when used as intended and the level of regulatory controls necessary to provide a reasonable assurance of safety and effectiveness of the accessory, notwithstanding the classification of any other device with which such accessory is intended to be used (see section 513(f)(6)(A) of the FD&C Act).
In general, we considered an accessory to be eligible for classification into class I distinct from another device if the accessory: (1) Is not for use in supporting or sustaining human life, or of substantial importance in preventing impairment to human health; (2) does not represent a potential unreasonable risk of illness or injury; and (3) general controls alone would be sufficient to provide a reasonable assurance of safety and effectiveness of the accessory.
Note that by regulation, design controls apply to class I devices only if the devices are automated with computer software or are listed under § 820.30(a)(2)(ii). Thus, if an accessory is not automated with computer software but would require design controls to provide reasonable assurance of safety and effectiveness, we did not consider it eligible for classification through the final action based on this document.
You may wish to propose additional accessories as suitable for distinct classification into class I using the factors described above where the accessories are otherwise eligible for classification under section 513(f)(6)(D)(i) of the FD&C Act. Should you wish to propose additional accessories, your comment should briefly explain why you think general controls alone will provide reasonable assurance of safety and effectiveness. Conversely, should you disagree with any of the proposed accessories for class I, your comments should briefly explain why additional regulatory controls, such as premarket review through a 510(k) submission or premarket approval (PMA), are necessary to provide reasonable assurance of safety and effectiveness.
Certain manual orthopedic instruments that are for use with other devices in orthopedic surgery meet FDA's definition of an accessory described in the Accessories Guidance. Accordingly, we are clarifying our intended regulatory approach for certain accessories used in orthopedic surgery to distinguish which accessories may be candidates for classification per section 513(f)(6)(D)(i) of the FD&C Act.
Instruments for use in orthopedic surgery vary widely from general manual surgical instruments used to manipulate tissue to more complex accessories specifically designed for use with a parent device/system. Orthopedic manual surgical instruments are classified in § 888.4540 (21 CFR 888.4540), and many “general use” instruments fall within this classification. This regulation pertains to “nonpowered hand-held device[s] intended for medical purposes to manipulate tissue, or for use with other devices in orthopedic surgery.” These devices are class I, subject to general controls, and exempt from premarket notification procedures, subject to the limitations of exemptions in 21 CFR 888.9. This classification was based upon recommendations provided to FDA by the Orthopedic Device Classification Panel (the Panel) in October 1977 regarding classification of medical devices in commercial distribution before May 28, 1976. The Panel identified the following risks to health for this device type: “Tissue damage and adverse tissue reaction: Inadequate mechanical properties, such as lack of material strength of the device, may result in device fracture and possible tissue damage and, if fragments of the fractured device remain in the tissue, an adverse tissue reaction may result” (47 FR 29052).
FDA agreed that class I was appropriate because general controls alone were sufficient to mitigate the risk of tissue damage and adverse tissue reaction associated with inadequate mechanical properties and provide a reasonable assurance of the safety and effectiveness of these devices. Over time, manufacturers have developed and sought to market orthopedic instrumentation with designs unique to a device system, and these types of instruments may present new or different risks compared to inadequate mechanical properties. For example, certain device-specific instruments are accessories and require precise technical specifications or design characteristics to function as intended to support, supplement or augment the parent device, and if not designed appropriately, could cause implant malpositioning or migration. Accordingly, FDA considers design controls (see § 820.30) to be an important element in the regulation of device-specific accessories, among other regulatory controls, to ensure appropriate compatibility between the accessory and the parent device. In contrast, class I orthopedic manual surgical instruments do not require such controls.
Instruments that are “device-specific,” or designed for use with a specific parent device/system and thus are accessories, have historically been reviewed in the same premarket submission as the parent device. In an effort to ensure a common understanding as to which orthopedic accessories fall under the existing class I regulation (§ 888.4540), and which devices do not and, therefore, may be candidates for classification under section 513(f)(6)(D)(i) of the FD&C Act,
It is often necessary for orthopedic instruments to be described in a premarket submission (
We welcome comments to help identify accessories in other product areas where the classification of the accessory relative to the parent device may be unclear and would benefit from this type of policy clarification.
We are proposing the following accessories, which have been granted marketing authorization as part of a premarket submission (
We would place each of these accessories in 21 CFR part 876, 878, or 886, as appropriate. Each of these accessories would be class I, exempt from the premarket notification procedures in 21 CFR part 807, subject to the applicable limitations of exemption (
This document refers to previously approved collections of information. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in the following FDA
Internal Revenue Service (IRS), Treasury.
Cancellation of notice of public hearing on proposed rulemaking.
This document cancels a public hearing on proposed regulations concerning how partnership liabilities are allocated for disguised sale purposes.
The public hearing, originally scheduled for August 21, 2018 at 10:00 a.m. is cancelled.
Regina Johnson of the Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration) at (202) 317-6901 (not a toll-free number).
A notice of proposed rulemaking and notice of public hearing that appeared in the
The public comment period for these regulations expired on July 19, 2018. The notice of proposed rulemaking and notice of hearing instructed those interested in testifying at the public hearing to submit a request to speak and an outline of the topics to be discussed. The outline of topics to be discussed was due by August 3, 2018. As of August 3, 2018, no one has requested to speak. Therefore, the public hearing scheduled for August 21, 2018 at 10:00 a.m. is cancelled.
Office of the Secretary, Department of Defense (DoD).
Proposed rule.
This proposed rule requests public comment on a proposed revision to the TRICARE Extended Care Health Option (ECHO) respite care benefit. Under the current program, TRICARE beneficiaries enrolled in ECHO are eligible for 16 hours of respite care per month in any month during which the beneficiary receives another ECHO authorized benefit (other than the EHHC benefit). This proposed rule seeks to eliminate the concurrent ECHO benefit requirement and allow beneficiaries enrolled in ECHO to receive a maximum of 16 hours of respite care per month, regardless of whether another ECHO benefit is received in the same month.
Written comments received at the address indicated below by October 16, 2018 will be accepted.
You may submit comments, identified by docket number or Regulatory Information Number (RIN) and title, by either of the following methods:
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Ms. Trish Reilly, Defense Health Agency, TRICARE Clinical Policy Division, telephone (619) 236-5332.
This proposed rule seeks to amend the TRICARE ECHO program regulation to expand beneficiary access to ECHO respite care services. This proposed rule, if implemented, would eliminate the concurrent ECHO benefit requirement and allow beneficiaries enrolled in ECHO to receive a maximum of 16 hours of respite care per month, regardless of whether another ECHO benefit is received in the same month.
This regulation is proposed under the authority of 5 U.S.C. 301 which allows
Per 32 CFR 199.5(c)(7), ECHO beneficiaries are eligible for a maximum of 16 hours of respite care per month in any month during which the beneficiary otherwise receives an ECHO benefit(s). This requirement for a concurrent ECHO benefit was originally implemented to ensure optimal medical management of the beneficiary's ECHO-qualifying condition. TRICARE proposes to eliminate the requirement for a beneficiary to receive a concurrent ECHO benefit in order to qualify for respite care. This change will expand access to respite care services (as recommended by the Military Compensation and Retirement Modernization Commission (MCRMC)), allowing families to access those hours without receiving another ECHO benefit during the same month the respite care is received.
The proposed rule is estimated to cost the Department of Defense $5.7 million annually (based on FY17 data). If the proposed rule is implemented, it is anticipated that 2,924 ECHO beneficiaries will participate in the respite care program at an average cost of $1,937 per beneficiary (this number does not include homebound beneficiaries who receive respite care under the ECHO Home Health Care (EHHC) program). These beneficiaries are already in ECHO and, therefore, have completed all registration requirements. This expansion of the benefit requires nothing additional from the beneficiaries and will not result in an increased burden to the public. Currently, beneficiaries may not access ECHO respite care services if they are not utilizing another ECHO benefit during the same month, and this rulemaking action will eliminate this barrier to care.
Military families face unique challenges in caring for family members with special medical or educational needs that are complicated by frequent moves and repeated deployments. Support for these families involves a multi-faceted system coordinated across numerous functional areas within the Department of Defense and Military Services to include: The Military Health System (MHS); military personnel support services; housing programs; dependents' education programs; child and youth services; morale, welfare, and recreation activities; and community support activities, among others.
The Exceptional Family Member Program (EFMP) is designed to identify active duty military family members with special medical and/or educational needs to ensure coordination of care and continuity of benefits throughout the military assignment and relocation process. EFMP provides additional support to these active duty military families to alleviate some of the challenges associated with frequent family relocations and deployments of their sponsoring service member as required by military duties. EFMP family support services have traditionally included respite care provided by certified day care providers in order to provide temporary relief to military family members who are responsible for the regular care of dependent family members with special needs. The Office of the Under Secretary of Defense for Personnel and Readiness published a proposed rule entitled “Exceptional Family Member Program (EFMP)” in the
Active Duty families enrolled in EFMP may be eligible, based on qualifying conditions, for TRICARE Extended Health Care Option (ECHO) expanded benefits. ECHO is a supplemental program to the TRICARE Basic Program that provides eligible Active Duty Family Members extended benefits to include comprehensive health care services (including services necessary to maintain, or minimize or prevent deterioration of function of the patient) and case management services with respect to the qualifying condition which include serious physical disabilities and extraordinary physical or psychological conditions as defined in 32 CFR 199.2. The purpose of ECHO is to provide an additional financial resource for an integrated set of services and supplies designed to assist in the reduction of the disabling effects of the beneficiary's qualifying condition. The ECHO program provides coverage for medical, habilitative, and rehabilitative services and supplies not covered under the TRICARE Basic Program; durable medical equipment, including adaptation and maintenance; assistive technologies devices and training to use the devices; comprehensive home health care services (
The final rule implementing the ECHO Program (which was previously called the Program for Persons with Disabilities (PFPWD) from 1997-2004, and before that the Program for the Handicapped (PFTH) from origination in 1966-1997), amended the TRICARE regulations governing the PFPWD and was published in the
ECHO-registered beneficiaries who are not receiving ECHO Home Health Care (EHHC) services currently are eligible to receive a maximum of 16 hours of respite care in any calendar month in which they also receive any other ECHO authorized benefit other than the EHHC benefit. Respite care consists of providing skilled and non-skilled health care services for the covered beneficiary such that in the absence of the primary caregiver, management of the beneficiary's ECHO qualifying condition and safety are provided. In order to assure the quality of care for beneficiaries enrolled in ECHO, all ECHO respite care services must be provided by Medicare or Medicaid certified Home Health Agencies (HHAs) who have in effect at the time of services a valid agreement to participate in the TRICARE program. The ECHO respite care program (which provides health care services by a home health agency) should not be considered a substitute for EFMP respite care (which provides day care services by a certified day care provider), because not all EFMP family members qualify for ECHO or require specific health care services in the absence of the primary caregiver. The goal is to ensure that these families have access to the appropriate services to meet their specific needs while still ensuring
In addition to EFMP respite care and ECHO respite care, there is a third type of respite care, EHHC respite care. The EHHC benefit provides coverage of home health care services and respite care services for ECHO eligible beneficiaries who require more than intermittent or part-time home health services covered under the TRICARE Basic Program. This would include ventilator-dependent beneficiaries and others with extraordinary physical conditions. EHHC beneficiaries whose plan of care includes frequent interventions by the primary caregiver(s) (
The Department of Defense remains committed to supporting Service members and their family members with special needs. Together, the Office of Community Support for Military Families with Special Needs, the Services, and the MHS, are working to enhance and improve support for these families, including everything from complex medical management to non-clinical case management and family support services. The Department is also committed to eliminating unnecessary requirements that act as barriers to care. Consistent with these principles, the Department is proposing this specific amendment to the existing regulations governing the ECHO program.
The requirement to receive a concurrent ECHO benefit in order to be entitled to ECHO respite care was originally imposed as a medical management tool. We now conclude that this specific requirement is no longer necessary and may serve as an inappropriate barrier to receipt of respite services for some families. Even in those months where no other ECHO services are provided (where all needed care may already be covered under the Basic Program or under demonstration authority), there may still be some health care services rendered to the beneficiary enrolled in ECHO by the primary caregiver for which respite care provided by a home health agency is warranted.
We note that the January 2015 Report of the MCRMC cited a need to improve support for military members with special needs dependents and made a number of recommendations. We have already implemented or are taking steps to implement several of their specific recommendations, including the recommendation to allow families to access ECHO respite care without receiving another ECHO benefit during the same month that respite care is received which is proposed in this rule. The Department is still studying some of the other recommendations that were made in order to identify and implement, as appropriate, ECHO enhancements that will be of greatest benefit to our beneficiaries. Finally, we believe some of the recommendations fall outside the purview of the ECHO program specifically, and the Military Health System in general, and are more appropriately directed to the Office of Community Support for Military Families with Special Needs, including the provision of respite care that does not involve health care services (
We propose that elimination of the requirement for a simultaneous ECHO benefit will provide maximum flexibility to families without sacrificing the goal of ensuring the safe and effective management of the beneficiary's ECHO qualifying condition. First, we note that TRICARE beneficiaries with complex medical needs may receive case management services including medical management, disease management and chronic care coordination, under the TRICARE Basic Program, regardless of whether the beneficiary is an ECHO eligible beneficiary. As the TRICARE program has evolved over time, continuing to require an ECHO eligible beneficiary to receive a concurrent ECHO benefit as a medical management tool is no longer necessary. Based on our current program structure, beneficiaries should already be receiving medical management services and the receipt of any ECHO benefit, including ECHO respite care, provides an additional opportunity to ensure the safe and effective management of the beneficiary's qualifying condition. Furthermore, in accordance with 32 CFR 199.5(h)(3), all ECHO benefits, including ECHO respite care, require authorization prior to receipt of such benefits. Paragraph (i) discusses required documentation as a prerequisite to authorizing ECHO benefits. As a practical matter, the home health agency providing the respite services must document the health care services needed by the ECHO beneficiary in the absence of the family caregiver and the schedule for the services during the provision of respite care in order to ensure an appropriately trained provider is sent and the beneficiary's needs are met. If this regulatory change is enacted, after public comment, additional details regarding required documentation to be provided to the Managed Care Support Contractor and home health agency for authorization of ECHO respite services will be published in the TRICARE Policy Manual available at
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in any one year). This rulemaking is neither “economically significant” as measured by the $100 million threshold, nor is it otherwise significant.
This proposed rule is not expected to be an E.O. 13771 regulatory action because it is not significant under E.O. 12866.
Under the Congressional Review Act, a major rule may not take effect until at least 60 days after submission to Congress of a report regarding the rule.
The Regulatory Flexibility Act requires that each Federal agency analyze options for regulatory relief of small businesses if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. This proposed rule is not an economically significant regulatory action, and it will not have a significant impact on a substantial number of small entities. Therefore, this rule is not subject to the requirements of the RFA.
Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any one year of $100 million in 1995 dollars, updated annually for inflation. That threshold level is currently approximately $140 million. This final rule will not mandate any requirements for state, local, or tribal governments or the private sector.
This rule will not impose significant additional information collection requirements on the public under the Paperwork Reduction Act of 1995 (44 U.S.C. 3502-3511). Existing information collection requirements of the TRICARE and Medicare programs will be utilized. TRICARE ECHO respite care providers will be coding and filing claims in the same manner as they currently are with TRICARE.
This rule has been examined for its impact under E.O. 13132, and it does not contain policies that have federalism implications that would have substantial direct effects on the States, on the relationship between the national Government and the States, or on the distribution of powers and responsibilities among the various levels of Government. Therefore, consultation with State and local officials is not required.
Claims, Dental health, Health care, Health insurance, Individuals with disabilities, Military personnel.
Accordingly, 32 CFR part 199 is proposed to be amended as follows:
5 U.S.C. 301; 10 U.S.C. chapter 55.
(c) * * *
(7)
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard proposes to establish special local regulations for certain navigable waters of the Choptank River. This action is necessary to provide for the safety of life on these waters near Oxford, MD, from October 7, 2018, through October 15, 2018, during a sailboat regatta. This proposed rule would prohibit persons and vessels from being in the regulated area unless authorized by the Captain of the Port Maryland-National Capital Region or the Coast Guard Patrol Commander. We invite your comments on this proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before September 17, 2018.
You may submit comments identified by docket number USCG-2018-0577 using the Federal eRulemaking Portal at
If you have questions about this proposed rulemaking, call or email Mr. Ronald Houck, U.S. Coast Guard Sector Maryland-National Capital Region; telephone 410-576-2674, email
On February 13, 2018, the Tred Avon Yacht Club of Oxford, MD, notified the Coast Guard through submission of a marine event application that it is planning to conduct a sailboat regatta from October 5, 2018, through October 15, 2018, the 2018 Star World Championship. Race activities on navigable waters are planned each afternoon of the regatta beginning on October 7th. The regatta consists of approximately 100 2-person, 23-foot long International Star Class sailboats. These vessels will operate along a designated and marked 2.5 nautical mile long course. The course is located on the Choptank River, in Talbot and Dorchester Counties, near Oxford, MD. Hazards from the sailboat regatta include participants operating within and adjacent to a designated navigation channel and interfering with vessels intending to operate within that channel, as well as injury to persons and damage to property that involve
The purpose of this rulemaking is to protect event participants, spectators, and transiting vessels on waters in and near the race area before, during, and after the scheduled event. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1233, which authorizes the Coast Guard to establish special local regulations to promote the safety of life on navigable waters during regattas or marine parades.
The COTP Maryland-National Capital Region is proposing to establish special local regulations that would be enforced from 11:30 a.m. until 5:30 p.m., each day, from October 7, 2018, through October 15, 2018. The proposed regulated area is rectangular in shape, measuring approximately six nautical miles in length by four nautical miles in width. The area would cover all navigable waters of the Choptank River, within an area bounded by the following coordinates: commencing at latitude 38°41′39.02″ N, longitude 076°11′19.18″ W, thence south to latitude 38°37′28.68″ N, longitude 076°11′19.18″ W, thence west to latitude 38°37′28.68″ N, longitude 076°18′18.35″ W, thence north to latitude 38°41′39027″ N, longitude 076°18′18.35″ W, thence east to point of origin, located near Oxford, MD.
This proposed rule provides additional information about an area within the regulated area, the “Race Area”, and its definition.
The proposed duration of the special local regulations and size of the regulated area are intended to ensure the safety of life on these navigable waters before, during, and after races, scheduled from noon until 5 p.m. on October 7, 8, 9, 10, 11, 12, 13, 14, and 15, 2018. The COTP and PATCOM would have authority to forbid and control the movement of vessels and persons, including event participants, in the regulated area. When hailed or signaled by an official patrol, a vessel or person in the regulated area would be required to immediately comply with directions given by the COTP or PATCOM. If a person or vessel fails to follow such directions, the Coast Guard may expel them from the area, issue them a citation for failure to comply, or both.
Except for 2018 Star World Championship participants, a vessel or person would be required to get permission from the COTP or PATCOM before entering the regulated area. Vessel operators can request permission to enter and transit through the regulated area by contacting the PATCOM on VHF-FM channel 16. Vessel traffic would be able to safely transit the regulated area once the PATCOM deems it safe to do so. A person or vessel not registered with the event sponsor as a participant or assigned as official patrols would be considered a spectator. Official Patrols are any vessel assigned or approved by the Commander, Coast Guard Sector Maryland-National Capital Region with a commissioned, warrant, or petty officer on board and displaying a Coast Guard ensign.
If permission is granted permission by the COTP or PATCOM, a person or vessel would be allowed to enter the regulated area or pass directly through the regulated area as instructed. Vessels would be required to operate at a safe speed that minimizes wake while within the regulated area. Official patrol vessels will direct spectator vessels while within the regulated area. Vessels would be prohibited from loitering within the navigable channel.
The regulatory text we are proposing appears at the end of this document.
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the size, duration and location of the regulated area. Vessel traffic would be able to safely transit around this regulated area, which would impact a small designated area of the Choptank River for 54 hours. The Coast Guard would issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the status of the regulated area. Moreover, the rule would allow vessels to seek permission to enter the regulated area, and vessel traffic would be able to safely transit the regulated area once the PATCOM deems it safe to do so.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the regulated area may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this proposed rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves implementation of regulations within 33 CFR part 100 applicable to organized marine events on the navigable waters of the United States. The temporary regulated area that would be enforced daily during a nine-day period during the sailboat regatta.. Normally such actions are categorically excluded from further review under paragraph L61 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Memorandum For Record for Categorically Excluded Actions supporting this determination is available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at
Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 100 as follows:
33 U.S.C. 1233; 33 CFR 1.05-1.
(a)
(b)
(1)
(2)
(c)
(2) Except for participants and vessels already at berth, a person or vessel within the regulated area at the start of enforcement of this section must immediately depart the regulated area.
(3) A spectator must contact the PATCOM to request permission to either enter or pass through the regulated area. The PATCOM, and official patrol vessels enforcing this regulated area, can be contacted on marine band radio VHF-FM channel 16 (156.8 MHz) and channel 22A (157.1 MHz). If permission is granted, the spectator may enter the regulated area or pass directly through the regulated area as instructed by PATCOM. A vessel within the regulated area must operate at a safe speed that minimizes wake. A spectator vessel must not loiter within the navigable channel while within the regulated area.
(4) Only participant vessels and official patrol vessels are allowed to enter the race area.
(5) A person or vessel that desires to transit, moor, or anchor within the regulated area must first obtain authorization from the COTP Maryland-National Capital Region or PATCOM. A person or vessel seeking such permission can contact the PATCOM on Marine Band Radio, VHF-FM channel 16 (156.8 MHz).
(6) The Coast Guard will publish a notice in the Fifth Coast Guard District Local Notice to Mariners and issue a marine information broadcast on VHF-FM marine band radio announcing specific event date and times.
(d)
(1) From 11:30 a.m. until 5:30 p.m. on October 7, 2018.
(2) From 11:30 a.m. until 5:30 p.m. on October 8, 2018.
(3) From 11:30 a.m. until 5:30 p.m. on October 9, 2018.
(4) From 11:30 a.m. until 5:30 p.m. on October 10, 2018.
(5) From 11:30 a.m. until 5:30 p.m. on October 11, 2018.
(6) From 11:30 a.m. until 5:30 p.m. on October 12, 2018.
(7) From 11:30 a.m. until 5:30 p.m. on October 13, 2018.
(8) From 11:30 a.m. until 5:30 p.m. on October 14, 2018.
(9) From 11:30 a.m. until 5:30 p.m. on October 15, 2018.
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard proposes to establish special local regulations for certain waters of the Breton Bay. This action is necessary to provide for the safety of life on these navigable waters of Breton Bay, at Leonardtown, MD, on October 6, 2018 and October 7, 2018. This proposed rulemaking would prohibit persons and vessels from being in the regulated area unless authorized by the Captain of the Port Maryland-National Capital Region or a designated representative. We invite your comments on this proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before September 17, 2018.
You may submit comments identified by docket number USCG-2018-0225 using the Federal eRulemaking Portal at
If you have questions about this proposed rulemaking, call or email MST2 Dane Grulkey, U.S. Coast Guard Sector Maryland-National Capital Region; telephone 410-576-2570, email
On January 22, 2018, the Southern Maryland Boat Club notified the Coast Guard that they will be conducting their fall regatta from 8 a.m. to 5 p.m. on October 6, 2018, and October 7, 2018. The regatta consists of approximately 40 boats, participating in an exhibition of vintage outboard racing V-hull boats; the regatta is not a competition but rather a demonstration of the vintage race craft. Hazards from the regatta include vessels reaching speeds of 90 mph and include risks of injury or death resulting from near or actual contact among participant vessels and spectator vessels or waterway users if normal vessel traffic were to interfere with the event. The COTP Maryland-National Capital Region has determined that potential hazards associated with the regatta would be a safety concern for anyone intending to operate within specified waters.
The purpose of this rulemaking is to protect marine event participants, spectators and transiting vessels on specified waters of Breton Bay before, during, and after the scheduled event. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1233, which authorize the Coast Guard to establish and define special local regulations.
The COTP Maryland-National Capital Region proposes to establish special local regulations to be enforced from 7:30 a.m. to 5:30 p.m. on October 6, 2018, and from 7:30 a.m. to 5:30 p.m. on October 7, 2018. The regulated area would include all navigable waters within Breton Bay, from shoreline to shoreline, within an area bound by a line drawn along latitude 38°16′43″ N;
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the size and duration of the regulated area, which would impact a small designated area of Breton Bay during October 6-7, 2018, for a total of 18 hours. The Coast Guard would issue a Broadcast Notice to Mariners via marine band radio VHF-FM channel 16 about the status of the regulated area. Moreover, the rule would allow vessel operators to request permission to enter the regulated area for the purpose of safely transiting the regulated area if deemed safe to do so by the Coast Guard Patrol Commander.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section IV-A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this proposed rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves the creation of a special local regulation to be enforced a total of 18 hours over two days. This category of marine event water activities includes but is not limited to sail boat regattas, boat parades, power boat racing, swimming events, crew racing, canoe and sail board racing. Normally such actions are categorically excluded from further review under paragraph L61 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Memorandum For Record for Categorically Excluded Actions is available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at
Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 100 as follows:
33 U.S.C. 1233.
(a)
(2)
(3)
(4)
(5)
(b)
(1)
(2)
(3)
(4)
(ii)
(iii)
(c)
(2) The operator of any vessel in the regulated area shall:
(i) Stop the vessel immediately when directed to do so by any Official Patrol and then proceed only as directed.
(ii) All persons and vessels shall comply with the instructions of the Official Patrol.
(iii) When authorized to transit the regulated area, all vessels shall proceed at the minimum speed necessary to maintain a safe course that minimizes wake near the race course.
(3) The Coast Guard Patrol Commander may terminate the event, or the operation of any participant, at any time it is deemed necessary for the protection of life or property.
(4) The Race Area is an area described by a line bounded by coordinates provided in latitude and longitude that outlines the boundary of a Race Area within the regulated area defined in paragraph (b)(2) of this section. The actual placement of the race course will be determined by the marine event sponsor but must be located within the designated boundaries of the Race Area. Only participants and official patrol vessels are allowed to enter the Race Area.
(5) The Buffer Zone is an area that surrounds the perimeter of the Race Area within the regulated area defined in paragraph (b)(3) of this section. The purpose of a Buffer Zone is to minimize potential collision conflicts with participants and spectators or nearby transiting vessels. This area provides separation between the Race Area and Spectator Area or other vessels that are operating in the vicinity of the regulated area defined in paragraph (b)(1) of this section. Only participants and official patrol vessels are allowed to enter the Buffer Zone.
(6) The Spectator Area is an area described by a line bounded by coordinates provided in latitude and longitude that outlines the boundary of a spectator area within the regulated area defined in paragraph (b)(4) of this section. Spectators are only allowed inside the regulated area if they remain within the Spectator Area. All spectator vessels shall be anchored or operate at a no-wake speed while transiting within the Spectator Area. Spectators may contact the Coast Guard Patrol Commander to request permission to either enter the Spectator Area or pass through the regulated area. If permission is granted, spectators must enter the Spectator Area or pass directly through the regulated area as instructed at safe speed and without loitering.
(7) The Coast Guard Patrol Commander and official patrol vessels enforcing this regulated area can be contacted on marine band radio VHF-FM channel 16 (156.8 MHz) and channel 22A (157.1 MHz). Persons and vessels desiring to transit, moor, or anchor within the regulated area must obtain authorization from Captain of the Port Maryland-National Capital Region or Coast Guard Patrol Commander. The Captain of the Port Maryland-National Capital Region can be contacted at telephone number 410-576-2693 or on Marine Band Radio, VHF-FM channel 16 (156.8 MHz). The Coast Guard Patrol Commander can be contacted on Marine Band Radio, VHF-FM channel 16 (156.8 MHz).
(8) The Coast Guard will publish a notice in the Fifth Coast Guard District Local Notice to Mariners and issue a marine information broadcast on VHF-FM marine band radio.
(d)
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing approval of two State Implementation Plan (SIP) revisions submitted by the State of Colorado. The revisions involve amendments to Colorado's Regulation Number 11, “Motor Vehicle Emissions Inspection Program.” The revisions enhance the use of Regulation Number 11's Clean Screen Program, allow self-inspecting vehicle fleets to use the On-Board Diagnostics (OBD) testing procedure, provide corrections to the Low Emitter Index (LEI) component of the Clean Screen Program, clarify existing provisions, correct administrative errors, delete obsolete language, establish inspection procedures for when emission control equipment tampering is detected, and make several other minor associated revisions. These actions are being taken under section 110 of the Clean Air Act (CAA).
Written comments must be received on or before September 17, 2018.
Submit your comments, identified by Docket ID No. EPA-R08-OAR-2018-0530, to the Federal Rulemaking Portal:
Tim Russ, Air Program, EPA, Region 8, Mail-code 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129, (303) 312-6479, or
Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.
Colorado's Regulation Number 11 (hereafter “Reg. No. 11”) addresses the implementation of the State's motor vehicle inspection and maintenance (I/M) program. The I/M program consists of an “enhanced” component that
The Clean Screen program component of Colorado's Reg. No. 11 was originally approved, for implementation in the Metro-Denver area, with the Denver carbon monoxide redesignation to attainment and maintenance plan (see: 66 FR 64751, December 14, 2001). The Clean Screen criteria that was approved in 2001 by the EPA required two valid passing remote sensing readings on different days or from different sensors, that met the applicable emissions reading requirements in Part F of Reg. No. 11, within a 12-month period to clean-screen a vehicle (see 66 FR 44097, August 22, 2001).
Colorado revised Reg. No. 11 to expand the definition and requirements for a “clean-screened vehicle” to also include vehicles identified as low emitting vehicles in the state-determined LEI which have one passing remote sensing reading prior to the vehicle's registration renewal date. As part of the LEI process, the Colorado Department of Public Health and Environment, Air Pollution Control Division (APCD) develops an LEI on or before July 1 of each year. The LEI is based on a tabulation of the previous calendar year's IM240 inspection program results for specific make, model, and model year vehicles that passed IM240 vehicle inspections the previous year at a minimum rate of 98%.
Beginning in January 2015, Colorado also began implementing an OBD test for certain model year vehicles. An OBD I/M test essentially means the electronic retrieval, by connecting an OBD test analyzer to the computer port data link in the vehicle, of information from a vehicle's computer system. The electronic information retrieved includes stored readiness status, diagnostic trouble codes (DTC), malfunction indicator light (MIL) illumination and other data. If emission related DTCs are present or the MIL is commanded on, that would indicate an emissions related malfunction.
In addition, Colorado also extended the Reg. No. 11 exemption from I/M testing for new vehicles from 4 years to 7 years. This revision was based on Colorado's gathering of emissions testing information over a period of several years, which demonstrated that historically new and newer vehicles typically did not fail the IM240 or OBD emissions test within the first seven years of the vehicle's life.
As explained below, the EPA is proposing to approve various revisions to Colorado's Reg. No. 11 that the State submitted to the EPA on February 20, 2015, and on May 14, 2018. Most of the revisions involve minor updates to several sections of Reg. No. 11 and the deletion of obsolete language. More specifically, the substantive SIP revisions involve:
a. Addition of a definition of “Tampering” to Part A.II.
b. Revisions to Part B.IV.B to require span gases to be labelled in accordance with Attachment VI of Appendix A.
c. Revisions to Part A.II.16 and Part C.XII. (A.3 and C.2) to increase clean screening efficiency by removing the requirement that two qualifying clean screen observations must be made on different days or at different locations.
d. Revisions to Part C.II.B.4 to remove incomplete and obsolescent qualifying criteria for certain vehicles that are unable to be tested on the IM240 chassis dynamometer.
e. Revisions to Part C.II.C to allow self-inspecting gasoline vehicle fleets to utilize the more effective and more convenient OBD II testing procedure on all 1996 model year and newer vehicles.
f. Revisions to Part C.II.C.3 regarding acceptable readiness criteria for OBD sensors and monitors.
g. Revisions to Part C.II.C.9 and C.10 regarding I/M240 tests and tampering associated with OBD tests.
h. Revisions to Part C.VIII and IX to clarify and modernize provisions for issuance of emissions repair, diagnostic and economic hardship waivers.
i. Revisions to Part D.I.B. 5, 6, and 7 to remove obsolete language regarding dwell meters, timing lights, and idle adjustment.
j. Revisions to Part F.VI.B, the roadside remote sensing clean screen LEI, to allow for greater utilization of this component of the I/M program.
k. Revisions to Part F.VII with regard to OBD testing criteria.
l. Revisions to Appendix A, Attachment IV, Section 2.2, and the deletion of Appendix B in its entirety such as to remove obsolete specifications and procedures for vehicle inspection analyzer calibration gasses.
m. Corrections of typographical, grammatical, and formatting errors throughout Reg. No. 11.
We note that the specific basis for our proposed action and our analyses and findings are discussed in this proposed rulemaking. Technical information that we relied upon in this proposal is contained in the docket, available at
Section 110(a)(2) of the CAA requires that a state provide reasonable notice and public hearing before adopting a SIP revision and submitting it to us.
On October 16, 2014, the Colorado Air Quality Control Commission (AQCC) conducted a public hearing to consider the adoption of revisions and additions to the Colorado SIP. The revisions affecting the SIP involved the Reg. No. 11 revisions noted above and as discussed below in section IV. There were no public comments. After conducting a public hearing, the AQCC adopted the proposed revisions to Reg. No 11 on October 16, 2014. The SIP revisions became State effective on November 30, 2014.
We evaluated the State's February 20, 2015 SIP submittal for Reg. No. 11 and determined that the State met the requirements for reasonable notice and public hearing under section 110(a)(2)
On May 17, 2017, the AQCC conducted a public hearing to consider the adoption of revisions and additions to the Colorado SIP. The revisions affecting the SIP involved the Reg. No. 11 revisions noted above and as discussed below in section V. There were no public comments. After conducting a public hearing, the AQCC adopted the proposed revisions to Reg. No. 11 on May 17, 2017. The SIP revisions became State effective on September 30, 2017.
We evaluated the State's May 14, 2018 SIP submittal for Reg. No. 11 and determined that the State met the requirements for reasonable notice and public hearing under section 110(a)(2) of the CAA. In addition, our evaluation of the SIP revisions submittal also concluded that it met the minimum “completeness” criteria found in 40 CFR part 51, Appendix V.
The sections of Reg. No. 11 that were revised with the State's February 20, 2015 submittal were as follows:
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The sections of Reg. No. 11 that were revised with the State's May 14, 2018 submittal were as follows:
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Our review of the State's Reg. No. 11 revisions, as presented above in sections IV and V, involved numerous revisions to Reg. No. 11 Parts A, B, C, D, F, Appendix A, the deletion of Appendix B, and overall formatting, correction of typographic errors and other non-substantive changes. Based on our review and evaluation discussed above, we propose that the Reg. No. 11 SIP revisions, submitted by the State in letters dated February 20, 2015, and May 14, 2018, sufficiently address applicable provisions in 40 CFR part 51, subpart S, 40 CFR part 85, subpart W, and that our approval is warranted.
Section 110(1) of the CAA states that a SIP revision cannot be approved if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress towards attainment of a National Ambient Air Quality Standard or any other applicable requirement of the CAA. In view of the evaluations presented in sections IV and V above, the EPA proposes that the revisions to Colorado's Reg. No. 11 that are contained in the State's SIP submittals dated February 20, 2015, and May 14, 2018 will not interfere with attainment, reasonable further progress, or any other applicable requirement of the CAA.
The EPA is proposing approval of the February 20, 2015, submitted SIP revisions to Colorado's Regulation Number 11, Part A, Part B, Part C, Part F, Appendix A and the deletion of Appendix B. The EPA notes that revisions to Part F, sections VI.B.3 and VI.B.4 were also provided with the State's February 20, 2015 submittal. The EPA is not proposing action on these sections of Part F for the reasons noted above in section IV of this action.
In addition, the EPA is proposing approval of the May 14, 2018, submitted SIP revisions to Regulation Number 11, Part C, Part D, Part F and Appendix A.
In this rule, the EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference the amendments described in sections IV and V, above. The EPA has made, and will continue to make, these materials generally available through
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices provided that they meet the criteria of the CAA. Accordingly, this action merely proposes to approve state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, and Volatile organic compounds.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing significant new use rules (SNURs) under the Toxic Substances Control Act (TSCA) for 27 chemical substances which were the subject of premanufacture notices (PMNs). The chemical substances are subject to Orders issued by EPA pursuant to section 5(e) of TSCA. This action would require persons who intend to manufacture (defined by statute to include import) or process any of these 27 chemical substances for an activity that is designated as a significant new use by these rules to notify EPA at least 90 days before commencing that activity. The required notification initiates EPA's evaluation of the intended use within the applicable review period. Persons may not commence manufacture or processing for the significant new use until EPA has conducted a review of the notice, made an appropriate determination on the notification, and has taken such actions as are required with that determination. In addition to this notice of proposed rulemaking, EPA is issuing the action as a direct final rule elsewhere in this issue of the
Comments must be received on or before September 17, 2018.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2017-0414, by one of the following methods:
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Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
In addition to this Notice of Proposed Rulemaking, EPA is issuing the action as a direct final rule elsewhere in this issue of the
Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.
Centers for Disease Control and Prevention, HHS.
Denial of petition for addition of a health condition.
On May 17, 2018, the Administrator of the World Trade Center (WTC) Health Program received a petition (Petition 019) to add irritable bowel syndrome (IBS) to the List of WTC-Related Health Conditions (List). Upon reviewing the scientific and medical literature, including information provided by the petitioner, the Administrator has determined that the available evidence does not have the potential to provide a basis for a decision on whether to add IBS to the List. The Administrator also finds that insufficient evidence exists to request a recommendation of the WTC Health Program Scientific/Technical Advisory Committee (STAC), to publish a proposed rule, or to publish a determination not to publish a proposed rule.
The Administrator of the WTC Health Program is denying this petition for the addition of a health condition as of August 17, 2018.
Visit the WTC Health Program website at
Rachel Weiss, Program Analyst, 1090 Tusculum Avenue, MS: C-48, Cincinnati, OH 45226; telephone (855) 818-1629 (this is a toll-free number); email
Title I of the James Zadroga 9/11 Health and Compensation Act of 2010 (Pub. L. 111-347, as amended by Pub. L. 114-113), added Title XXXIII to the Public Health Service (PHS) Act,
All references to the Administrator of the WTC Health Program (Administrator) in this document mean the Director of the National Institute for Occupational Safety and Health (NIOSH) or his designee.
Pursuant to section 3312(a)(6)(B) of the PHS Act, interested parties may petition the Administrator to add a health condition to the List in 42 CFR 88.15. Within 90 days after receipt of a valid petition to add a condition to the List, the Administrator must take one of the following four actions described in section 3312(a)(6)(B) of the PHS Act and § 88.16(a)(2) of the Program regulations: (1) Request a recommendation of the STAC; (2) publish a proposed rule in the
In addition to the regulatory provisions, the WTC Health Program has developed policies to guide the review of submissions and petitions,
A valid petition must include sufficient medical basis for the association between the September 11, 2001, terrorist attacks and the health condition to be added; in accordance with WTC Health Program policy, reference to a peer-reviewed, published, epidemiologic study about the health condition among 9/11-exposed populations or to clinical case reports of health conditions in WTC responders or survivors may demonstrate the required medical basis.
After the Program has determined that a petition is valid, the Administrator must direct the Program to conduct a review of the scientific literature to determine if the available scientific information has the potential to provide a basis for a decision on whether to add the health condition to the List.
On May 17, 2018, the Administrator received a petition (Petition 019) from a WTC survivor who was caught in the dust cloud near Ground Zero, requesting the addition of “irritable bowel syndrome (IBS)” to the List.
In response to Petition 019, and pursuant to the Program policy on the
The Administrator has determined that insufficient evidence is available to take further action at this time, including proposing the addition of IBS to the List (pursuant to PHS Act, sec. 3312(a)(6)(B)(ii) and 42 CFR 88.16(a)(2)(ii)) or publishing a determination not to publish a proposed rule in the
For the reasons discussed above, the Petition 019 request to add IBS to the List of WTC-Related Health Conditions is denied.
The Secretary, HHS, or his designee, the Director, Centers for Disease Control and Prevention (CDC) and Administrator, Agency for Toxic Substances and Disease Registry (ATSDR), authorized the undersigned, the Administrator of the WTC Health Program, to sign and submit the document to the Office of the Federal Register for publication as an official document of the WTC Health Program. Robert Redfield M.D., Director, CDC, and Administrator, ATSDR, approved this document for publication on August 10, 2018.
Agricultural Marketing Service, USDA.
Notice.
This Notice informs the public that the U.S. Department of Agriculture's (USDA) Agricultural Marketing Service (AMS) will not proceed with revisions to the United States Standards for Grades of Pork Carcasses (pork standards) at this time.
August 17, 2018.
USDA, AMS, Livestock and Poultry Program (LP), Quality Assessment Division (QAD); 1400 Independence Ave. SW; Room 3932-S, STOP 0258; Washington, DC 20250-0258.
David Bowden, Chief, Standardization Branch; USDA, AMS, LP, QAD; 1400 Independence Avenue SW; Room 3932-S, STOP 0258; Washington, DC 20250-0258; phone (202) 690-3148; or via email at
Official USDA grade standards and associated voluntary, fee-for-service grading programs are authorized under the Agricultural Marketing Act of 1946, as amended (7 U.S.C. 1621
AMS recognizes that the pork standards must be relevant to be of value to stakeholders and, therefore, recommendations for changes in the standards may be initiated by AMS or by interested parties at any time to achieve that goal. AMS originally posted this Notice seeking comment on the revised pork standards on October 23, 2017, with a closing date of December 22, 2017. Subsequently, AMS reopened the Notice for an additional 60-day comment period, ending March 19, 2018.
In all, 47 comments were received: There were 19 comments in favor of updating the pork standards, while 24 were opposed; 2 only requested extending the comment period; and 2 commenters did not clearly state a position. Responses received were representative of the pork industry and stakeholders, with the most comments coming from pork industry associations, packers, and producers.
The 19 commenters in support of revised pork standards said that changes were needed in the pork industry to revitalize domestic consumer demand and that the updated standards may be helpful in addressing the decline in purchases of fresh pork products, citing data that the average American consumer buys fresh pork only seven times a year. Some commenters expressed that a revised standard could lead to a USDA fee-for-service grading program, which would enhance uniformity of pork quality and build consumer confidence in pork purchasing decisions. Commenters also said that the revisions were scientifically sound and applicable to pork quality attributes that are consumer-recognized and tied to an improved eating experience. While some recognized the challenge of implementing the proposed standards revisions via a grading program in the modern processing environment, they expressed support for a standardized, objective carcass grading system focused more on quality than percent lean.
Most of the 24 comments against the proposed revisions were similar in nature and asserted the new grades would not add value for pork producers. Some commenters noted that the pork industry and individual companies have worked for many years to improve product quality attributes and promote their efforts through product branding and “niche” marketing, and the revised pork standards would endanger these efforts. Further, some commenters noted that proposed nomenclature of Prime, Choice, and Select, if implemented for pork, could result in devaluation of the established beef grading system. Pork packers and processors expressed concern that implementation of the revised pork standards would be impractical, in part because the technology available to accurately assess quality factors for pork is not yet effective while maintaining today's processing line speeds. Commenters opposed to the revisions also expressed concern that implementation at this time would cause disruption to existing producer-packer relationships and established logistics. Others were concerned that application of the standard specifically to the loin primal without positive correlation with the remaining carcass parts would be misleading, and that any premium generated by applying the standards would not offset the cost of implementing a USDA fee-for-service grading program in the plant.
A few commenters provided responses that were both for and against the revisions, outlining opportunities and challenges similar to those discussed above. All comments are available at the following website:
Based on the responses received from the Notices, AMS will not pursue any revisions to the pork standards at this time. AMS stands ready to assist agricultural industries in establishing voluntary standards and grading programs for commodities for which it has authority to do so; the pork industry retains this option should the need arise.
Food and Nutrition Service (FNS), USDA.
Notice.
In accordance with the Paperwork Reduction Act of 1995, this notice invites the general public and other public agencies to comment on the proposed collection. This is a revision of a currently approved collection in the Supplemental Nutrition Assistance Program and concerns Retail Store Applications (Forms FNS-252; FNS-252-E; FNS-252-FE; FNS-252-R; FNS-252-2; and FNS-252-C).
Written comments must be received on or before October 16, 2018.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical or other technological collection techniques or other forms of information technology.
Comments may be sent to: Nicole Budzius, Chief, Retailer Administration Branch, Supplemental Nutrition Assistance Program, Retailer Policy and Management Division, Food and Nutrition Service, U.S. Department of Agriculture, 3101 Park Center Drive, Room 422, Alexandria, VA 22302. Comments may be faxed to the attention of Ms. Budzius at (703) 305-1863 or via email to:
All responses to this notice will be summarized and included in the request for Office of Management and Budget approval. All comments will be a matter of public record.
Requests for additional information or copies of this information collection should be directed to Nicole Budzius at
FNS is also responsible for requiring updates to application information and reviewing retail food store applications at least once every five years to ensure that each firm is under the same ownership and continues to meet eligibility requirements. The Act specifies that only those applicants whose participation will “effectuate the purposes of the program” should be authorized.
There are six forms associated with this approved Office of Management and Budget (OMB) information collection number 0584-0008—the Supplemental Nutrition Assistance Program Application for Stores, Forms FNS-252 (English and Spanish) and FNS-252-E (paper and online version respectively); Farmer's Market Application, Form FNS-252-FE; Meal Service Application, Form FNS-252-2; Reauthorization Application, Form FNS-252-R; and the Corporation Supplemental Application, Form FNS-252-C used for individual (chain) stores under a corporation. For new authorizations, the majority of applicants use form FNS-252 or FNS-252-E (paper or online, respectively). FNS is responsible for reviewing retail food store applications at least once every five years to ensure that each firm is under the same ownership and continues to meet eligibility guidelines. In order to accomplish this regulatory requirement, form FNS-252-R is used for reauthorization. In addition to these forms, during authorization or reauthorization, FNS may conduct an on-site store visit of the firm. The store visit of the firm helps FNS confirm that the information provided on the application is correct. An FNS representative or store visit contractor obtains permission to fill in the store visit checklist, photograph the store and asks the store owner or manager about the continued ownership of the store.
Applicants using form FNS-252-E or FNS-252-FE must also first self-register for a Level 1 access account through the USDA eAuthentication system in order to start an online application. USDA eAuthentication facilitates the electronic authentication of an individual.
The Agricultural Act of 2014 (2014 Farm Bill) amended the Food and Nutrition Act of 2008 (the Act) and the Supplemental Nutrition Assistance Program (SNAP) revised all retailer application forms (paper and electronic) in January, 2018, as a result of regulatory changes required by the Act and amended by the 2014 Farm Bill. Such changes to the Act amended the definition of “retail food store” to clarify when a retailer is a restaurant rather than a retail food store. Among the changes made to the SNAP retailer application form(s), the Food and Nutrition Service (FNS) added a new question, Question 18, concerning restaurant licensing, and revised Question 22, regarding total retail sales on Form FNS-252. Currently, respondents select a Yes or No response if they have or are applying for a restaurant license for their store in Question 18. Question 22 currently asks retailers to enter their total retail sales by category in dollars for a one year period. Sales categories include gasoline, lottery, tobacco, alcohol, other nonfood, and hot foods, cold prepared foods, accessory foods, and staple foods. Due to concern with the manner in which FNS is currently asking for retailer sales data, FNS is updating the retailer application question regarding sales. FNS is also removing the question concerning restaurant licensing and the requirement for businesses located in community property states to provide spousal information for each owner. Question 22 will revert back to asking
FNS intends to (1) rename Question 3, “Doing Business As (if different from Store Name)” to “Legal Business Name (if different from Store Name)”, (2) update Question 14 to remove the sentence requiring spousal information for businesses located in community property states, and in the Business Title section remove the word “spouse” in questions 14a-14d, (3) delete Question 18 regarding restaurant licensing, (4) revise Question 22 concerning total retail sales in the following manner: (a) Respondents will provide a response for either estimated or actual sales for a one year period. If actual sales are provided, the respondent will indicate the applicable tax year for this information. FNS also added back in the option to provide estimated retail sales per day, week, month, or year for total retail sales in Question 22b, and (b) provide a percentage of total retail sales for each category of product sold: Staple foods; accessory foods; hot foods, cold foods prepared on site; gasoline, and other non-food items, (5) add a new sentence to the Certification and Signature Statement to more clearly outline the risk for owners that are disqualified or fined for violation of Program rules; and (6) where appropriate, re-number the questions and update assistance material such as the General and Specific Instructions sections and on-line help screens. With the exception of the question identified in 4(b) above, no new questions or data information is being asked.
A draft of the proposed revision to Question 22 is provided in Attachment A. FNS also shared a draft of the proposed changes with our stakeholders. The proposed revision incorporates the feedback FNS received with the exception of any changes that would render FNS unable to make an eligibility decision or complete retailer monitoring activities. FNS would like to take this opportunity to clarify that while cold foods prepared on-site, such as at an in-store deli or salad bar, are eligible for purchase with SNAP benefits, collection of the percentage sales information is still necessary for FNS to make a restaurant determination. Additionally, all information provided on the application is information “provided by the retailer” and is protected under Section 9(c) of the Food and Nutrition Act of 2008, as amended, (the Act) (7 U.S.C. 2011
FNS estimates that the hourly burden time per response associated with this information collection for respondents remains unchanged from our previous submission. The revisions to the application(s) are due to program adjustments and the update to Question 3, the removal of a sentence in Question 14, the deletion of Question 18, the reformatting of information collected in Question 22; and the revision to the Certification and Signature Statement.
FNS used FY 2017 data in our calculation of burden estimates associated with this information collection as this was the most complete data available to us at this time. Table A below clarifies the burden of this information collection.
As currently approved by OMB, the hourly burden rate per response varies by the type of application used and the response time per respondent varies from 1 minute to 19 minutes. We estimate the new burden, on average, to be 9.13 minutes per respondent. There is no recordkeeping burden associated with these forms.
Attachment A: Draft FNS-252.
Forest Service, USDA.
Notice of Availability of the Draft Environmental Impact Statement for the Lee Canyon Ski Area Master Development Plan Phase I and Public Comment Period for the Associated Forest Plan Amendment.
The Humboldt-Toiyabe National Forest is issuing this notice to advise the public of the 45-day public comment period for the Draft Environmental Impact Statement (EIS) for the Lee Canyon Ski Area Master Development Plan Phase I (Lee Canyon Project) and the addition of a proposed project-specific amendment to the Toiyabe National Forest Land and Resource Management Plan (Forest Plan) for the Proposed Action and alternatives other than the No Action alternative. The Notice of Intent for the Lee Canyon Project was published in the
The comment period ends 45 days after today's Notice of Availability or 45 days after the Environmental Protection Agency's Notice of Availability is published in the
Comments may be submitted by any one of the following methods:
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Chris Linehan, Interdisciplinary Team Leader, at (702) 515-5401, or via email at
The purpose and need for the proposed Lee Canyon Project, as described in the Notice of Intent, is to address the length of time since the resort's facilities have been upgraded and emerging trends in winter recreation. Specific details of these needs are described in Draft EIS. The purpose and need for the proposed plan amendment is to ensure consistency between the Forest Plan and the proposed Lee Canyon Project. As described in the Draft EIS, the need was identified for exempting the Lee Canyon Project from the following Standards of the 1996 Spring Mountains National Recreation Area (SMNRA) General
The need for this Forest Plan amendment is that in the Lee Canyon Proposed Action new service roads, and ski area facilities would occur within the 100-yard buffer zone established around known Clokey's eggvetch and rough angelica populations or potential habitat. These areas have been thoroughly inventoried for these species and none were found within the project foot print. This project-specific Forest Plan amendment will allow development within the 100-yard buffer zones for these two-species established in the Standard GMP 0.31 (p. 18) to allow for construction of service roads and ski area facilities.
Under the Proposed Action and other action alternatives, Standard GMP 0.31 would be amended to allow new service roads and developed recreation sites to be placed within the 100-yard buffer zone around known Clokey's eggvetch and rough angelica populations or potential habitat, and within biodiversity hotspots in the Lee Canyon Special Use Permit Boundary.
1. Expansion occurs within the existing sub-basin.
2. Does not impact any threatened, endangered, or sensitive species or species of concern or its habitat.
3. Expansion is commensurate with development of additional parking in the lower Lee Canyon area and shuttle services.
4. Expansion incorporates defensible space design and fire safe facilities.
5. Where consistent with other standards and guidelines.
The need for this Forest Plan amendment is that the Proposed Action and other action alternatives include development of ski runs, mountain coasters, zip lines, mountain bike trails, parking areas, and access roads within the Lee Canyon Ski Area permitted boundary. As the Mount Charleston Blue Butterfly was listed as a endangered species in 2015 and the designated critical habitat for the butterfly includes portions of the Lee Canyon Ski Area, Constraint #2 from the standard cannot be met. The Proposed Action and other action alternatives also include the addition of a 500 vehicle parking lot at the ski area to accommodate increased visitor use without the development of additional parking in lower Lee Canyon or shuttle services. The project-specifc Forest Plan Amendment would exempt the project from the requirements under Constraint #2 and Constraint #3.
The substantive requirements of the 2012 Planning Rule (36 CFR part 219) likely to be directly related and, therefore, applicable to the Forest Plan amendment for the Lee Canyon Project are in 36 CFR 219.9(b) regarding threatened and endangered species and 36 CFR 219.10(a)(1), (3), and (7) regarding integrated resource management for multiple use. The scope and scale to which these substantive requirements would apply are the scope and scale of the Lee Canyon Project. The amendment would not apply to any other projects or activities.
The Responsible Official for the Lee Canyon Project and the Forest Plan amendment is William A. Dunkelberger, Forest Supervisor, Humboldt-Toiyabe National Forest Supervisor's Office, 1200 Franklin Way, Sparks, Nevada 89431, phone (775) 355-5310.
In consideration of the stated purpose and need and the analysis of environmental effects documented in this EIS, the Responsible Official will review the proposed action and alternatives in order to make the following decisions:
• Whether to authorize the proposed action or an alternative, including the required no-action alternative, all or in part;
• What design criteria and mitigation measures to require as a condition of the authorization;
• What evaluation methods and documentation to require for monitoring project implementation and mitigation effectiveness; and
• Whether to amend the Forest Plan to exempt the project from Standard GMP 0.31 and from Constraints #2 and #3 of Standard GMP Management Area 11.57.
The Lee Canyon Project and the Forest Plan amendment will be subject to objection under 36 CFR part 218.
Rural Development USDA.
Notice.
The Assistant to the Secretary for Rural Development (Agency) is seeking applications to support regional economic development planning efforts in rural communities under the Rural Economic Development Innovation (REDI) initiative. This funding opportunity will be administered by the Rural Development Innovation Center, in partnership with the Rural Business-Cooperative Service. The Agency is announcing up to $750,000 in competitive cooperative agreement funds in fiscal year (FY) 2018. Rural Development Agency may select one, multiple, or no award recipients. The Agency reserves the right to withhold the awarding of any funds if no application receives a score of at least 60 points.
This Notice lists the information needed to submit an application for these funds. This Notice announces that the Agency is accepting FY 2018 applications to support REDI.
The deadline for receipt of a complete application is midnight Eastern Standard Time on Wednesday, September 5, via
The deadline for receipt of an application is midnight Eastern Standard Time on Wednesday, September 5, 2018. Applications may be submitted electronically through the
Question about this announcement can be directed to Christine Sorensen, Regional Coordinator, via 202-568-9832 or
The Agency encourages applications that will support recommendations made in the Rural Prosperity Task Force report to help improve life in rural America (
• Achieving e-Connectivity for Rural America.
• Developing the Rural Economy.
• Harnessing Technological Innovation.
• Supporting a Rural Workforce.
• Improving Quality of Life.
It is anticipated that the anticipated number of respondents affected by this information collection is less than 10 entities and therefore, this Notice contains no reporting or recordkeeping provisions requiring Office of Management and Budget (OMB) approval under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
USDA Rural Development (RD) is authorized to administer cooperative agreement awards in accordance with 7 U.S.C. 2204b(b)(4). Rural Economic Development Innovation (REDI) aims to strengthen the capacity of rural communities (50,000 people or less in the United States plus Tribes and territories) in implementing strategic community and economic development plans as referenced in Section 379H of the Consolidated Farm and Rural Development Act (7 U.S.C. 2008v). The goal of this funding announcement is to solicit applications to provide cooperative agreement funding to eligible applicants to enable them to provide technical assistance and training and actionable planning of implementation of strategic community and economic development plans. Supporting regional economic development plans help rural communities overcome multi-jurisdictional challenges and better leverage Federal, state, local or private funding.
For purposes of this proposal, a quality regional economic plan will include but not be limited to the following:
• Evidence-based understanding of community assets, challenges and opportunities.
• Goals are focused, logical, targeted and timely with tasks identified and with a responsible party assigned.
• The plan was created through broad community participation, public input and buy-in.
• The format must be persuasive in a non-technical manner.
• The plan makes clear how each of its strategies is intended to help produce, either directly or indirectly, improvements in the local and regional economy.
• Regional economic development plans developed through REDI assistance should identify possible projects to be funded through RD programs and/or other Federal, state, local or private sector resources.
This funding opportunity expands rural communities' ability to access planning resources to convene, identify needs, create actionable economic development plans, and implement project priorities to improve quality of life in rural communities. Quality of life is a measure of human well-being that can be identified though economic and social indicators. Modern utilities, affordable housing, efficient transportation and reliable employment are economic indicators that must be integrated with social indicators like access to medical services, public safety, education and community resilience to empower rural communities to thrive. Economic development plans developed through this funding opportunity should focus on one or more of these economic and/or social indicators.
Applicants are encouraged to consider regional planning projects that provide measurable results in helping rural communities built robust and sustainable economies through strategic investments in infrastructure, partnerships, and innovation. Such projects should also support rural communities' ability to qualify for priority funding under Section 379H of the Consolidated Farm and Rural Development Act [7 U.S.C. 2008v].
This approach to comprehensive rural community development is unique in its attempt to improve rural communities in a way that is (1) rooted in emphasizing partnerships and collaboration among multiple public agencies and community partners and (2) focused on combining state resources to make wide-ranging quality-of-life impacts as opposed to separate, piecemeal, incremental improvements.
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i. Authority to suspend work if specification or work statements are not met;
ii. Review and approval of one stage of work before another may begin;
iii. Review and approval of substantive provisions of proposed sub-grants or contracts;
iv. Prior review and approval of key personnel; and
v. Agency collaboration and coordination with respect to deliverables and execution of the work plan. At a minimum, applicants should anticipate Agency participation in the selection of communities to receive regional planning assistance; the convening of community members, partners, and stakeholders; the delivery of training on RD programs and/or economic development principles; and the review/approval of regional economic development plans for purposes of priority funding under Section 379H of the Consolidated Farm and Rural Development Act (7 U.S.C. 2008v).
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Applicants must meet all of the following eligibility requirements by the application deadline. Applications which fail to meet any of these requirements by the application deadline will be deemed ineligible and will not be evaluated further and will not receive a Federal award.
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Additional details about cost sharing or matching funds/contributions is located at 2 CFR 200.306. Applicant matching funds must be included in the budget narrative. For matching funds offered by project partners, a separate commitment letter is required for each cash and/or in-kind match contribution. Commitment letters must be signed by the authorized organizational representative of the contributing organization and the applicant organization, which must include: (i) The name, address, and telephone number of the contributor; (ii) the name of the applicant organization; (iii) the title of the project for which the contribution is made, (iv) the dollar amount of the contribution; and (v) a statement that the contributor commits to furnish the contribution during the cooperative agreement period.
Applications without signed written commitments are deemed incomplete and will be ineligible. The value of applicant contributions to the project is established according to Federal cost principles. Applicants should refer to 2 CFR 200.306 for additional guidance on matching funds, in-kind contributions, and allowable costs.
4. Substantial Involvement: Proposed project must include a component that allows for active participation by the Agency in the majority of tasks. Examples of substantial involvement include but are not limited to the following: Joint-selection of communities to receive regional planning assistance; joint-convening of community members, partners, and stakeholders; joint-delivery of training on RD programs and/or economic development principles; and joint-review/approval of regional economic development plans for purposes of priority funding under Section 6025 Strategic Economic and Community Development. It is the intent of this project to engage Agency and state RD staff in the development of regional economic development plans and it is the responsibility of the applicant to identify tasks where RD staff can provide substantial involvement in the project. If you do not identify those tasks, your application is not eligible for funding.
5.
If you include funds in your budget that are unallowable, RD will consider the application for funding only if the unallowable costs total 10 percent or less of the total project budget, including Federal and matching funds. However, if the application is successful, those unallowable costs must be removed from the budget before RD will make an award. If RD cannot determine the percentage of unallowable costs or the amount of those costs exceeds 10 percent of the total project budget, the application will not be considered for funding.
6.
7.
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2.
i.
ii.
iii.
iv.
a. Demonstrate
b. Demonstrate
c. Demonstrate
d. Demonstrate
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vi.
a. Project Background.
b. Project Objectives.
c. Project Approach/Methods.
d. Theory of Change.
e. Geographic Locations or Project Areas.
f. Project Management (Applicants are required to include a Work Plan Chart that lists each major Task by Key Personnel involved, Time Period of the task, Substantial Involvement of Rural Development staff, Deliverables, and Budget associated with each task).
g. Performance Metrics.
h. Graphics, References, Citations (Do not count against the 15-page maximum).
A Work Plan Chart template is available for applicants as part of this funding opportunity on
vii.
a.
b.
viii.
a. AD-3030, “Representations Regarding Felony Conviction and Tax Delinquent Status for Corporate Applicants.” The AD-3030 must be submitted if entity is a corporate non-profit or for-profit corporation as indicated in the applicants SAM registration.
b. AD-3030, “Representations Regarding Felony Conviction and Tax Delinquent Status for Corporate Applicants.” The AD-3030 must be submitted if entity is a corporate non-profit or for-profit corporation as indicated in the applicants SAM registration.
c. SF-424B, “Assurances for Non-Construction Programs.” The SF-242B must be completed by all applicants.
d. SF-424B, “Assurances for Non-Construction Programs.” The SF-242B must be completed by all applicants.
ix.
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xii.
3.
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All required application documents must be submitted by midnight Eastern Standard Time on Wednesday,
Submitting an application through
Please allow sufficient time to register in
i. Go to
ii. Select the “Applicant” tab.
iii. Select the “Apply for Grants” heading.
iv. Click on “Get Application Package.” Follow all steps.
v. Provide the “Funding Opportunity Number” or return to the “Search Grants” section.
vi. All necessary forms are included within the
Applications not received through
The Agency is not responsible for any technical malfunctions or website problems related to
5.
6.
i. Pre-award Costs. Pre-award costs are not authorized.
ii. Use of Funds. Award funds may be used to pay up to 50 percent of the project costs.
iii. Period of Performance. The maximum Period of Performance is 2 years. Applicants should anticipate a Period of Performance beginning September 30, 2018 and ending no later September 30, 2020.
iv. Indirect Cost Rate. The indirect cost rate is limited to 10 percent of direct charges for all nonprofit institutions, including institutions of higher education. All other organizations must use the rate identified in their Negotiated Indirect Cost Rate Approval (NICRA). If you do not have a NICRA, you may elect to charge only direct costs to the award. If you have never had a NICRA, you may also choose to use a de minimis rate of 10 percent of modified total direct costs in accordance with 2 CFR 200.414(f). Your indirect cost rate must be included on Form SF-424A.
v. Program Income. If you expect to earn Program Income during the Period of Performance, you must identify the amount and how you expect to use it (
vi. Prohibited Costs. In addition to costs identified as unallowable by 2 CFR part 200, the following costs are prohibited for this program. Neither award funds nor matching funds can be used to pay for the following types of expenses.
a. Duplicating services currently provided;
b. Funding a revolving loan fund;
c. Construction (in any form);
d. Salaries for positions involved in construction, renovations, rehabilitation, and any oversight of these types of activities;
e. Intermediary preparation of strategic plans for recipients;
f. Funding prostitution, gambling, or any illegal activities;
g. Grants to individuals;
h. Funding a grant where there may be a conflict of interest, or an appearance of a conflict of interest, involving any action by the Agency;
i. Providing assistance to only one individual, organization, or business;
j. Paying obligations incurred before the beginning date without prior Agency approval or after the ending date of the cooperative agreement;
k. Purchasing real estate;
l. Improvement or renovation of the recipient's office space or for the repair or maintenance of privately owned vehicles;
m. Any purpose prohibited in 2 CFR part 200 or 400;
n. Using cooperative agreement assistance or matching funds for Individual Development Accounts;
o. Purchasing vehicles.
Applications will first be reviewed to determine if they meet the eligibility requirements and comply with the funding restrictions in this Notice. If we determine that your application is ineligible, we will discontinue processing it, which means that we will not evaluate it further or provide any scoring information. We will notify you in writing regarding the reason(s) for ineligibility, and we will provide a description of your options if you believe that our determination is incorrect. Note that in the event that our determination is reversed, either due to the discovery of an Agency error or through a formal appeal, funding is restricted to available fiscal year 2018 funds.
If your application is determined to be eligible, we will further evaluate it based on the following criteria. All applications will be competitively ranked and the minimum score requirements for a cooperative agreement award under this Notice is 60 points.
1.
i. Soundness of Approach (0-20 points). The applicant can receive up to 20 points for soundness of approach. The maximum 20 points for this criterion will be based on the following:
a. The objectives must be clearly stated in the proposal and the applicant must define how this proposal will be implemented. The applicant must demonstrate how the proposal will strengthen the capacity of rural communities in developing and implementing regional plans for economic development. The applicant must demonstrate how the proposed technical assistance includes both the planning and implementation components referenced in Section C. The applicant must also demonstrate how the proposed technical assistance will expand rural communities' ability to access funding and planning resources to convene community members. The applicant must also demonstrate how the proposal will support implementation of regional economic development plans and should include descriptions on how proposed technical assistance will result in actionable steps to support implementation of these plans. (10 points)
b. The applicant clearly outlines their ability to provide the proposed technical assistance based on clearly stated and well-documented prior accomplishments. (5 points)
c. The proposal clearly outlines how it will implement activities to support alignment with one or more of the five key strategies (achieving e-connectivity, developing the rural economy, harnessing technological innovation, supporting a rural workforce, and improving quality of life in Rural America) the Agriculture and Rural Prosperity Task Force Report. (5 points)
ii. Partnerships (0-25 points). The applicant can receive up to 25 points for quality of the applicant's existing partnerships and proposed new partnerships for this effort. The applicant must recruit one or more private and/or public partners to meet match requirements and maximize leveraging of regional economic development plans developed through this project. The maximum 25 points for this criterion will be based on the following:
a. The applicant demonstrates how their proposal will focus on the quantity and quality of partnerships, including the ability to leverage new partners that have previously had limited engagement with RD projects or priorities to leverage resources, enhance technical assistance, and/or increase reach to underserved areas. The proposal must demonstrate that partners with shared missions and goals will be engaged to amplify reach in rural areas. (10 points)
b. The applicant demonstrates how their proposal will support the quantity and quality of match commitments to support this project, and percentage of match in cash form versus in-kind contributions. (5 points)
c. The applicant will demonstrate how their proposal will support the ability of applicant to leverage other community-driven plans or projects such as Comprehensive Economic Development Strategies (CEDS) or other Federally-recognized regional economic development plans. (5 points)
d. The applicant will demonstrate how their proposal will utilize partnerships outside of RD. The applicant will identify such partnerships and will demonstrate how they will provide access to such partnerships to support implementation of projects identified through development of regional economic development plans. (10 points)
iii. Innovation (0-10 points). The applicant can receive up to 10 points for innovative methods and practices to support development of regional economic development plans. The maximum 10 points for this criterion will be based on the following:
a. The applicant's proposal should demonstrate the ability of the applicant to propose methods and practices to utilize unique and innovative planning methods that are currently not being implemented at scale. (5 points)
b. The applicant's proposal should demonstrate the ability of the applicant to demonstrate that the proposed innovative methods and practices have been field-tested and ready to scale. (5 points) We are looking for unique and innovative ideas that are not currently being implemented at scale, so projects that propose innovative solutions that haven't been readily deployed before will receive higher points.
iv. Organizational Capacity & Qualifications (0-15 points). The applicant can receive up to 15 points based on organizational capacity and qualifications. The maximum 15 points for this criterion will be based on the following:
a. The applicant's proposal should demonstrate that the applicant has knowledge and prior experience in regional planning, particularly related to rural issues. The applicant should specify years of experience, types of communities served, and outcomes achieved. (10 points)
b. The applicant's proposal should demonstrate that the applicant has identified appropriate key personnel, both in terms of number of personnel and qualifications of personnel, to carry out the approach identified. Capacity of personnel to access data for needs assessments and access to planners and other technical experts will be evaluated. (5 points)
v. Work Plan (0-15 points). The applicant can receive up to 15 points based on the quality of the proposed work plan and approach. The maximum 15 points for this criterion will be based on the following:
a. Applicants should use the approved work plan template to include the following information: Description of objective, background approach, timeframe for key tasks along with substantial involvement, budget and deliverables that are necessary to implement project to support regional economic development planning in rural communities. Reasonableness and appropriateness of key tasks will be evaluated based on proposed project approach. (5 points)
b. The applicant's proposal should include a description of the types and general locations of rural communities to be served through this project, including the ability to support multiple rural planning activities across the nation and the reasonableness of effectively serving these communities based on key personnel, established timeframes, and budget. (5 points)
c. The applicant's proposal should include a description and appropriateness of the tasks to incorporate active participation from RD staff. (5 points)
vi. Performance Outcomes (0-15 points). The applicant can receive up to 15 points based on the quality of the proposed performance measures to evaluate progress and impacts of proposed project. The maximum 15 points for this criterion will be based on the following:
a. The applicant's proposal should include a description for how the results of the technical assistance will be measured, including the benchmarks to be used to measure effectiveness. Benchmarks should be specific and quantifiable. (10 points)
b. The applicant's proposal should include a description of benchmarks and outcomes achieved during previously deployed planning efforts. (5 points)
2.
i. Review Process. All eligible applications will be evaluated by an Application Review Panel using the criteria described in Section E.1 of this Notice. Panel members will be
ii. Selection Process. Applications will be ranked in descending order, according to the scores awarded by the Panel. Applications will be funded in rank order, until all available funds have been expended. Applications at or near the funding line may be funded in part, if the Agency believes an appropriate benefit can result from partial funding and if the applicant agrees to the amount of partial funding. In the event the Agency considers partial funding to be appropriate, we will contact the applicant and negotiate the final work plan and budget prior to approving an award.
iii. Anticipated Announcement and Award Dates. All awards must be obligated by September 30, 2018.
1. Federal Award Notices:
i. Successful applicants. Successful applicants will be notified in writing by
a. Complete Form RD 1942-46, “Letter of Intent to Meet Conditions.”
b. Complete Form RD 1940-1, “Request for Obligation of Funds.”
c. Complete FMMI Vendor Code Request Form.
d. Provide a copy of your organization's Negotiated Indirect Cost Rate Agreement.
e. Certify that all work completed for the award will benefit a rural area.
f. Certify that you will comply with the Federal Funding Accountability and Transparency Act of 2006 and report information about subawards and executive compensation.
g. Certify that the U.S. has not obtained an outstanding judgement against your organization in a Federal Court (other than in the United States Tax Court).
h. Execute Form SF-424B, “Assurances—Non-Construction Programs.”
i. Execute Form SF-LLL, “Disclosure Form to Report Lobbying,” if applicable or certify that your organization does not lobby.
j. Execute Form AD-1047, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters-Primary Covered Transactions.”
k. Obtain a certification on Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion-Lower Tier Covered Transactions,” from anyone you do business with as a result of this award.
l. Execute Form AD-1049, “Certification Regarding a Drug-Free Workplace Requirements (Grants).”
m. Execute Form AD-3031, “Assurance Regarding Felony Conviction or Tax Delinquent Status for Corporate Applicants.”
n. Execute Form RD 400-4, “Assurance Agreement.”
Once the conditions described in the LOC have been met, the award will be approved through the execution of Form RD 4280-2 in conjunction with the RDCA Program Attachment. If an applicant is unable to meet the conditions of the award within 90 calendar days, the award will be withdrawn.
ii. Unsuccessful applicants. Unsuccessful applicants will be notified in writing no later than October 31, 2018.
2. Administrative and National Policy Requirements. The terms of the award are available at:
3. Reporting Requirements. The following reporting requirements apply to awards made through this program.
i.
ii.
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If you have questions, you may contact Christine Sorensen at 202-568-9832 or
The Federal Government is not obligated to make any Federal award as a result of this announcement. Only authorized Federal officials can bind the Federal Government to the expenditure of funds.
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program. Political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Persons with disabilities who require alternative means of communication for program information (
To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at:
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2.
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USDA is an equal opportunity provider, employer, and lender.
Rural Housing Service, USDA.
Request for information.
The Rural Housing Service (RHS or Agency) seeks public comments on updating the provisions of the Single Family Housing Guaranteed Loan Program (SFHGLP), specifically regarding the maximum interest rate, its impact on loan making to potential SFHGLP borrowers, and possible changes to the interest rate cap. RHS is soliciting input regarding the maximum interest rate to help the Agency determine whether the interest rate cap should be modified in order to support the agency's mission to offer applicants, who are unable to secure the credit necessary for such housing from other sources under conventional credit terms, an opportunity to acquire new or existing housing for use as a primary residence; finance the repair and rehabilitation costs associated with the purchase of the home; and refinance an existing Section 502 loan to lower the interest rate.
These opportunities are provided to applicants under terms and conditions which the applicant can reasonably be expected to fulfill.
Written Comments: Interested parties must submit written comments on or before October 16, 2018.
Submit comments in either paper or electronic format by the following methods:
• Federal eRulemaking Portal at
•
Kate Jensen, Finance and Loan Analyst, at
RHS delivers programs authorized by the Housing Act of 1949, as amended (42 U.S.C. 1472
Stakeholder input is vital to ensure that the maximum interest rate continues to support the agency's mission and not overly burden SFHGLP lenders and their customers. Currently, the maximum allowable interest rate is defined in Section 7.3.B of the program handbook (available at
The following questions and discussion items are posed to guide stakeholder comments. Where possible, RHS requests that comments include specific suggestions regarding ways to improve existing programs and delivery mechanisms and eliminate or minimize the duplication of RHS's regulation and policies with work performed by other entities, including federal, state, and local agencies. RHS welcomes pertinent comments that are beyond the scope of these questions.
1. Should the Agency continue with the requirement that the maximum allowable interest rate shall not exceed the current Federal National Mortgage Association posted yield for 90-day delivery (Actual/Actual) plus one percent for 30-year fixed rate conventional loans, rounded up to the nearest one quarter of one percent?
2. Should the Agency consider indexing the maximum allowable interest rate to a source other than the Federal National Mortgage Association?
3. Should a higher maximum allowable interest rate cap be established? If so, what maximum rate is recommended, and why?
4. Does the current maximum interest rate create any barriers to loan making in eligible rural areas? If so, how and under what circumstances?
5. What effect would increasing or eliminating the maximum interest rate have for loan originators and borrowers in underserved populations and rural communities?
6. If the maximum allowable interest rate cap were to be increased or
7. If the maximum allowable interest rate is raised or removed, what steps should the Agency take to monitor lenders to ensure that borrowers are not overcharged?
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Persons with disabilities who require alternative means of communication for program information (
To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at
(1)
(2)
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USDA is an equal opportunity provider, employer, and lender.
Commission on Civil Rights.
Announcement of monthly planning meetings.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA), that a planning meeting of the Delaware State Advisory Committee to the Commission will convene by conference call, on Monday, September 17, 2018 at 10:00 a.m. (EDT). The purpose of the meeting is to discuss preparation of the Committee's report on implicit bias and policing in communities of color in Delaware.
Monday, September 17, 2018, at 10:00 a.m. (EDT).
Ivy L. Davis, at
Interested members of the public may listen to the discussion by calling the following toll-free conference call number: 1-800-210-9006 and conference call ID: 4124362. Please be advised that before placing them into the conference call, the conference call operator may ask callers to provide their names, their organizational affiliations (if any), and email addresses (so that callers may be notified of future meetings). Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free telephone number herein.
Persons with hearing impairments may also follow the discussion by first calling the Federal Relay Service at 1-800-877-8339 and providing the operator with the toll-free conference call number: 1-800-210-9006 and conference call ID: 4124362.
Members of the public are invited to submit written comments; the comments must be received in the regional office approximately 30 days after each scheduled meeting. Written comments may be mailed to the Eastern Regional Office, U.S. Commission on Civil Rights, 1331 Pennsylvania Avenue, Suite 1150, Washington, DC 20425, or emailed to Evelyn Bohor at
Records and documents discussed during the meeting will be available for public viewing as they become available at
Commission on Civil Rights.
Announcement of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA) that a meeting of the Virginia Advisory Committee to the Commission will convene by conference call at 12:00 p.m. (EST) on Wednesday, September 19, 2018. The purpose of the meeting is for Committee members to continue discussing plans for the in-person briefing on hate crimes in VA—incidences and responses.
Wednesday, September 19, 2018, at 12:00 p.m. EST.
Ivy Davis at
Interested members of the public may listen to the discussion by calling the following toll-free conference call-in number: 1-800-474-8920 and conference call 8310490. Please be advised that before placing them into the conference call, the conference call operator will ask callers to provide their names, their organizational affiliations (if any), and email addresses (so that callers may be notified of future meetings). Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free conference call-in number.
Persons with hearing impairments may also follow the discussion by first calling the Federal Relay Service at1-800-877-8339 and providing the operator with the toll-free conference call-in number: 1-800-474-8920 and conference call 8310490.
Members of the public are invited to make statements during the open comment period of the meeting or submit written comments. The comments must be received in the regional office approximately 30 days after each scheduled meeting. Written comments may be mailed to the Eastern Regional Office, U.S. Commission on Civil Rights, 1331 Pennsylvania Avenue, Suite 1150, Washington, DC 20425, faxed to (202) 376-7548, or emailed to Corrine Sanders at
Records and documents discussed during the meeting will be available for public viewing as they become available at
Commission on Civil Rights.
Announcement of monthly planning meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA), that a planning meeting of the District of Columbia Advisory Committee to the Commission will convene at 12:00 p.m. (EDT) Thursday, September 6, 2018, at the offices of the U.S. Commission on Civil Rights, 1331 Pennsylvania Avenue NW, Suite 1150, Washington, DC 20425. The purpose of the planning meeting is to continue project planning a briefing meeting on its civil rights project to examine the treatment of homeless persons that get swept up in the DC criminal justice system, including a review of the DC Mental Health Court.
Thursday, September 6, 2018 at 12:00 p.m. (EDT).
1331 Pennsylvania Avenue NW, Suite 1150, Washington, DC 20425.
Ivy L. Davis, at
Persons with accessibility needs should contact the Eastern Regional Office no later than 10 working days before the scheduled meeting by sending an email to the following email address at
Members of the public are entitled to submit written comments. The comments must be received in the regional office by Tuesday, October 9, 2018. Comments may be mailed to the Eastern Regional Office, U.S. Commission on Civil Rights, 1331 Pennsylvania Avenue, Suite 1150, Washington, DC 20425 or emailed to Evelyn Bohor at
Records and documents discussed during the meeting will be available for public viewing as they become available at
Commission on Civil Rights.
Announcement of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA) that a meeting of the West Virginia Advisory Committee to the Commission will convene by conference call at 12:00 p.m. (EST) on Friday, September 7, 2018. The purpose of the meeting is to discuss plans for preparing the Committee report on the collateral consequences of a felony record on West Virginians' access to employment, housing, professional licenses and public benefits.
Friday, September 7, at 12:00 p.m. EST
Ivy Davis at
Interested members of the public may listen to the discussion by calling the following toll-free conference call-in number: 1-800-474-8920 and conference call 5788080. Please be advised that before placing
Persons with hearing impairments may also follow the discussion by first calling the Federal Relay Service at 1-888-364-3109 and providing the operator with the toll-free conference call-in number: 1-800-474-8920 and conference call 5788080.
Members of the public are invited to make statements during the open comment period of the meeting or submit written comments. The comments must be received in the regional office approximately 30 days after each scheduled meeting. Written comments may be mailed to the Eastern Regional Office, U.S. Commission on Civil Rights, 1331 Pennsylvania Avenue, Suite 1150, Washington, DC 20425, faxed to (202) 376-7548, or emailed to Corrine Sanders at
Records and documents discussed during the meeting will be available for public viewing as they become available at
U.S. Commission on Civil Rights.
Announcement of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission) and the Federal Advisory Committee Act (FACA) that a meeting of the Idaho Advisory Committee (Committee) to the Commission will be held at 12:00 p.m. (Mountain Time) Tuesday, September 18, 2018, for the purpose of reviewing the project proposal on Native American voting rights.
The meeting will be held on Tuesday, September 18, 2018, at 12:00 p.m. MT.
Angelica Trevino at
This meeting is available to the public through the number listed above. Any interested member of the public may call this number and listen to the meeting. Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free telephone number. Persons with hearing impairments may also follow the proceedings by first calling the Federal Relay Service at 1-800-877-8339 and providing the Service with the conference call number and conference ID number.
Members of the public are entitled to make comments during the open period at the end of the meeting. Members of the public may also submit written comments; the comments must be received in the Regional Programs Unit within 30 days following the meeting. Written comments may be mailed to the Western Regional Office, U.S. Commission on Civil Rights, 300 North Los Angeles Street, Suite 2010, Los Angeles, CA 90012. They may be faxed to the Commission at (213) 894-0508, or emailed Angelica Trevino at
Records and documents discussed during the meeting will be available for public viewing prior to and after the meeting at
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) is rescinding the administrative review of the countervailing duty (CVD) order on carbazole violet pigment 23 (CVP-23) from India for the period January 1, 2016, through December 31, 2016.
Applicable August 17, 2018.
Gene H. Calvert, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3586.
On December 4, 2017, Commerce published a notice of opportunity to request an administrative review of the CVD order on CVP-23 from India for the period of review (POR) January 1, 2016, through December 31, 2016.
Pursuant to 19 CFR 351.213(d)(1), Commerce will rescind an administrative review, in whole or in part, if the party that requested the review withdraws its request for review within 90 days of the date of publication of the notice of initiation of the requested review. In this case, Pidilite timely withdrew its request for review within the 90-day deadline, and no other party requested an administrative review of the CVD order. Therefore, in accordance with 19 CFR 351.213(d)(1), Commerce is rescinding this administrative review in its entirety.
Commerce will instruct U.S. Customs and Border Protection (CBP) to assess countervailing duties on all appropriate entries. Because Commerce is rescinding this administrative review in its entirety, entries of CVP-23 from India during the period January 1, 2016, through December 31, 2016, shall be assessed countervailing duties at rates equal to the cash deposit of estimated countervailing duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). Commerce intends to issue appropriate assessment instructions to CBP 15 days after the publication of this notice in the
This notice serves as a final reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.213(d)(4).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public hearings.
The Mid-Atlantic Fishery Management Council (Council), jointly with the Atlantic States Marine Fisheries Commission (Commission's) Summer Flounder, Scup, and Black Sea Bass Board (Board), will hold 10 public hearings, including one webinar hearing, to solicit public comments on the Draft Summer Flounder Commercial Issues and Goals and Objectives Amendment to the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP).
Written public comments must be received on or before 11:59 p.m. EST, October 12, 2018. The meetings will be held between September 10, 2018 and September 27, 2018. For specific dates and times, see
The hearing documents are accessible electronically via the internet at:
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Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: (302) 526-5255.
The Mid-Atlantic Fishery Management Council and the Atlantic States Marine Fisheries Commission have been preparing an amendment to the Summer Flounder, Scup, and Black Sea Bass FMP, known as the “Summer Flounder Commercial Issues and Goals and Objectives Amendment.” This amendment considers modifications to the qualification criteria for Federal commercial moratorium summer flounder permits, the current allocation of summer flounder commercial quota, and the current list of frameworkable items in the FMP (specifically, it considers adding a framework provision for commercial landings flexibility). An additional purpose of the action is to revise the FMP goals and objectives for summer flounder only. Additional information and amendment documents are available at:
The Council and Board will hold 10 public hearings on this amendment, during which Council or Commission staff will brief the public on the contents of the amendment documents and alternatives under consideration, prior to opening the hearing for public comments. The hearings schedule is as follows:
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These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to M. Jan Saunders at the Mid-Atlantic Council Office, (302) 526-5251, at least 5 days prior to the meeting date.
National Marine Fisheries Service, National Oceanic and Atmospheric Administration, Commerce.
Notice of public meetings.
The Pacific Fishery Management Council (Pacific Council) and its advisory entities will hold public meetings.
The Pacific Council and its advisory entities will meet September 5-12, 2018. The Pacific Council meeting will begin on Friday, September 7, 2018 at 10 a.m. Pacific Daylight Time (PDT), reconvening at 8 a.m. each day through Wednesday, September 12, 2018. All meetings are open to the public, except a closed session will be held from 8 a.m. to 10 a.m., Friday, September 7 to address litigation and personnel matters. The Pacific Council will meet as late as necessary each day to complete its scheduled business.
Meetings of the Pacific Council and its advisory entities will be held at the Doubletree by Hilton Hotel Seattle Airport, 18740 International Blvd., Seattle, WA; telephone: (206) 246-8600.
Mr. Chuck Tracy, Executive Director; telephone: (503) 820-2280 or (866) 806-7204 toll-free; or access the Pacific Council website,
The September 7-12, 2018 meeting of the Pacific Council will be streamed live on the internet. The broadcasts begin initially at 10 a.m. PDT Friday, September 7, 2018 and continue at 8 a.m. daily through Wednesday, September 12, 2018. Broadcasts end daily at 5 p.m. PDT or when business for the day is complete. Only the audio portion and presentations displayed on the screen at the Pacific Council meeting will be broadcast. The audio portion is listen-only; you will be unable to speak to the Pacific Council via the broadcast. To access the meeting online, please use the following link:
The following items are on the Pacific Council agenda, but not necessarily in this order. Agenda items noted as “Final Action” refer to actions requiring the Council to transmit a proposed fishery management plan, proposed plan amendment, or proposed regulations to the U.S. Secretary of Commerce, under Sections 304 or 305 of the Magnuson-Stevens Fishery Conservation and Management Act. Additional detail on agenda items, Council action, advisory entity meeting times, and meeting rooms are described in Agenda Item A.5, Proposed Council Meeting Agenda, and will be in the advance September 2018 briefing materials and posted on the Pacific Council website at
Advisory body agendas will include discussions of relevant issues that are on the Pacific Council agenda for this meeting, and may also include issues that may be relevant to future Council meetings. Proposed advisory body agendas for this meeting will be available on the Pacific Council website
Although non-emergency issues not contained in this agenda may come before the Pacific Council for discussion, those issues may not be the subject of formal Council action during this meeting. Council action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the Pacific Council's intent to take final action to address the emergency.
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt at (503) 820-2280, ext. 411 at least ten business days prior to the meeting date.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; receipt of application.
Notice is hereby given that Tamara McGuire, 310 W 123rd Ave., Anchorage, AK 99515, has applied in due form for a permit to conduct research on endangered Cook Inlet beluga whales.
Written, telefaxed, or email comments must be received on or before September 17, 2018.
The application and related documents are available for review by selecting “Records Open for Public Comment” from the “Features” box on the Applications and Permits for Protected Species (APPS) home page,
These documents are also available upon written request or by appointment in the Permits and Conservation Division, Office of Protected Resources,
Written comments on this application should be submitted to the Chief, Permits and Conservation Division, at the address listed above. Comments may also be submitted by facsimile to (301) 713-0376, or by email to
Those individuals requesting a public hearing should submit a written request to the Chief, Permits and Conservation Division at the address listed above. The request should set forth the specific reasons why a hearing on this application would be appropriate.
Amy Hapeman or Sara Young, (301) 427-8401.
The subject permit is requested under the authority of the Marine Mammal Protection Act of 1972, as amended (MMPA; 16 U.S.C. 1361
Ms. McGuire requests a 5-year permit to conduct research on endangered Cook Inlet beluga whales (
In compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Concurrent with the publication of this notice in the
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The North Pacific Fishery Management Council (Council) Science and Statistical Committee Subgroup (SSC Subgroup) will hold a public meeting.
The meeting will be held on Monday, September 10, 2018 from 9 a.m. to 4 p.m.
The meeting will be held in Room 2079, at the Alaska Fisheries Science Center (AFSC), 7700 Sand Point Way NE, Seattle, WA 98115.
Stephani Zador, AFSC staff; telephone: (206) 526-4693.
The agenda will include: (a) AFSC review of Alaska surveys and budget considerations; (b) discussion of alternatives for survey planning based on different budget scenarios; (c) develop recommendations for the SSC and Council; (d) other business. The Agenda is subject to change, and the latest version will be posted at
Public comment letters will be accepted until the start of the meeting, and should be submitted either electronically to Diana Evans, Council staff:
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Shannon Gleason at (907) 271-2809 at least 7 working days prior to the meeting date.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of SEDAR 61 in-person Data/Assessment Workshop for Gulf of Mexico Red Grouper.
The SEDAR 61 assessment of the Gulf of Mexico Red Grouper will consist of one in-person Data/Assessment Workshop and a series of webinars. See
The SEDAR 61 Data/Assessment Workshop will be held from 9 a.m. until 5 p.m. on September 11, 2018, from 8:30 a.m. until 5 p.m. on September 12, 2018, and from 8:30 a.m. until 1 p.m. on September 13, 2018.
Julie A. Neer, SEDAR Coordinator; (843) 571-4366. Email:
The Gulf of Mexico, South Atlantic, and Caribbean Fishery Management Councils, in conjunction with NOAA Fisheries and the Atlantic and Gulf States Marine Fisheries Commissions have implemented the Southeast Data, Assessment and Review (SEDAR) process, a multi-step method for determining the status of fish stocks in the Southeast Region. SEDAR is a multi-step process including: (1) Data/Assessment Workshop, and (2) a series of webinars. The product of the Data/Assessment Workshop is a report which compiles and evaluates potential
The items of discussion in the Data/Assessment Workshop are as follows:
1. An assessment data set and associated documentation will be developed during the workshop.
2. Participants will evaluate proposed data and select appropriate sources for providing information on life history characteristics, catch statistics, discard estimates, length and age composition, and fishery dependent and fishery independent measures of stock abundance.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during these meetings. Action will be restricted to those issues specifically identified in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to the Council office (see
16 U.S.C. 1801
Committee for Purchase From People Who Are Blind or Severely Disabled.
Proposed addition to and deletions from the Procurement List.
The Committee is proposing to add a product to the Procurement List that will be furnished by a nonprofit agency employing persons who are blind or have other severe disabilities, and deletes products and services previously furnished by such agencies.
Comments must be received on or before: September 16, 2018.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S Clark Street, Suite 715, Arlington, Virginia 22202-4149.
For further information or to submit comments contact: Michael R. Jurkowski, Telephone: (703) 603-2117, Fax: (703) 603-0655, or email
This notice is published pursuant to 41 U.S.C. 8503(a)(2) and 41 CFR 51-2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
If the Committee approves the proposed addition, the entities of the Federal Government identified in this notice will be required to procure the product listed below from nonprofit agency employing persons who are blind or have other severe disabilities.
The following product is proposed for addition to the Procurement List for production by the nonprofit agency listed:
The following products and services are proposed for deletion from the Procurement List:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Deletions from the Procurement List.
This action deletes products and services from the Procurement List previously furnished by nonprofit agencies employing persons who are blind or have other severe disabilities.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S Clark Street, Suite 715, Arlington, Virginia, 22202-4149.
Michael R. Jurkowski, Telephone: (703) 603-2117, Fax: (703) 603-0655, or email
On 7/6/2018 (83 FR 130) and 7/13/2018 (83 FR 135), the Committee for Purchase From People Who Are Blind or Severely Disabled published notices of proposed deletions from the Procurement List.
After consideration of the relevant matter presented, the Committee has determined that the products and services listed below are no longer suitable for procurement by the Federal Government under 41 U.S.C. 8501-8506 and 41 CFR 51-2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in additional reporting, recordkeeping or other compliance requirements for small entities.
2. The action may result in authorizing small entities to furnish the products and services to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501-8506) in connection with the products and services deleted from the Procurement List.
Accordingly, the following products and services are deleted from the Procurement List:
Consumer Product Safety Commission.
Notice.
Pursuant to the Paperwork Reduction Act of 1995, the Consumer Product Safety Commission (CPSC) requests comments on a proposed extension of approval of information collection requirements for manufacturers and importers of carpets and rugs under the Standard for the Surface Flammability of Carpets and Rugs and the Standard for the Surface Flammability of Small Carpets and Rugs. The CPSC will consider all comments received in response to this notice before requesting an extension of this collection of information from the Office of Management and Budget (OMB).
Submit written or electronic comments on the collection of information by October 16, 2018.
You may submit comments, identified by Docket No. CPSC-2012-0030, by any of the following methods:
Bretford Griffin, Consumer Product Safety Commission, 4330 East-West Highway, Bethesda, MD 20814; (301) 504-7037, or by email to:
CPSC seeks to renew the following currently approved collection of information:
The CPSC solicits written comments from all interested persons about the proposed collection of information. The CPSC specifically solicits information relevant to the following topics:
Consumer Product Safety Commission.
Notice.
Pursuant to the Paperwork Reduction Act (PRA) of 1995, the
Submit written or electronic comments on the collection of information by October 16, 2018.
You may submit comments, identified by Docket No. CPSC-2012-0024, by any of the following methods:
Bretford Griffin, Consumer Product Safety Commission, 4330 East-West Highway, Bethesda, MD 20814; (301) 504-7037, or by email to:
CPSC seeks to renew the following currently approved collection of information:
The CPSC solicits written comments from all interested persons about the proposed collection of information. The CPSC specifically solicits information relevant to the following topics:
Department of the Air Force, DoD.
30-Day information collection notice.
The Department of Defense has submitted to OMB for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act.
Consideration will be given to all comments received by September 17, 2018.
Comments and recommendations on the proposed information collection should be emailed to Ms. Jasmeet Seehra, DoD Desk Officer, at
Fred Licari, 571-372-0493, or
You may also submit comments and recommendations, identified by Docket ID number and title, by the following method:
•
Requests for copies of the information collection proposal should be sent to Mr. Licari at
Office of the Under Secretary of Defense for Personnel and Readiness, DoD.
30-Day information collection notice.
The Department of Defense has submitted to OMB for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act.
Consideration will be given to all comments received by September 17, 2018.
Comments and recommendations on the proposed information collection should be emailed to Ms. Jasmeet Seehra, DoD Desk Officer, at
Fred Licari, 571-372-0493, or
You may also submit comments and recommendations, identified by Docket ID number and title, by the following method:
•
Requests for copies of the information collection proposal should be sent to Mr. Licari at
Under Secretary of Defense for Research and Engineering, DoD.
Information collection notice.
In compliance with the
Consideration will be given to all comments received by October 16, 2018.
You may submit comments, identified by docket number and title, by any of the following methods:
To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to Defense Technical Information Center, ATTN: Ms. Vakare Valaitis, 8725 John J. Kingman Road, Ft. Belvoir, VA 22060-6218, or call (703) 767-9159.
Under Secretary of Defense for Acquisition and Sustainment, DoD.
Information collection notice.
In compliance with the
Consideration will be given to all comments received by October 16, 2018.
You may submit comments, identified by docket number and title, by any of the following methods:
To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to: The Defense Logistics Agency, Office of Small Business Programs, ATTN: Sherry Savage, 8725 John J. Kingman Road, Fort Belvoir, VA 22060 or write to
Office of the Under Secretary of Defense for Personnel and Readiness, DoD.
30-Day information collection notice.
The Department of Defense has submitted to OMB for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act.
Consideration will be given to all comments received by September 17, 2018.
Comments and recommendations on the proposed information collection should be emailed to Ms. Jasmeet Seehra, DoD Desk Officer, at
Fred Licari, 571-372-0493, or
You may also submit comments and recommendations, identified by Docket ID number and title, by the following method:
•
Requests for copies of the information collection proposal should be sent to Mr. Licari at
Office of the Under Secretary of Defense for Personnel and Readiness, DoD.
Information collection notice.
In compliance with the
Consideration will be given to all comments received by October 16, 2018.
You may submit comments, identified by docket number and title, by any of the following methods:
To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to Office of the Under Secretary of Defense (Personnel and Readiness) (FE&T), Office of Financial Readiness, ATTN: Mr. Andrew Cohen, 4000 Defense Pentagon, Washington, DC 20301-4000, or telephone Mr. Cohen at (703) 692-5286.
Respondents are creditors extending consumer credit as defined in the Final
The creditor shall provide the disclosures in writing in a form the covered borrower can keep. The creditor also shall provide the required disclosures orally. In mail and internet transactions, the creditor satisfies this requirement by providing a toll-free telephone number on or with the written disclosures that consumers may use to obtain oral disclosures. One disclosure for each transaction involving consumer credit; one covered-borrower check for each transaction involving consumer credit.
Federal Student Aid (FSA), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995, ED is proposing a revision of an existing information collection.
Interested persons are invited to submit comments on or before October 16, 2018.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Ian Foss, 202-377-3681.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Federal Student Aid (FSA), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995, ED is proposing an extension of an existing information collection.
Interested persons are invited to submit comments on or before October 16, 2018.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Take notice that on August 10, 2018, pursuant to section 206 of the Federal Power Act, 16 U.S.C. 824e, Rule 206 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR 385.206 (2018), and section 16.1 of the Fifth Amended and Restated Power Supply and Coordination Agreement between Duke Energy Progress, LLC (DEP or Respondent) and the North Carolina Electric Membership Corporation (NCEMC or Complainant), FERC Rate Schedule No. 182, NCEMC filed a formal complaint against DEP alleging that the Respondent's Fixed Demand Rate, Variable Demand Rate, and the formula production rate that will go into effect January 1, 2020, are excessive, unjust and unreasonable, and not cost-based as required by the Respondent's Market-Based Rate Tariff, as more fully explained in the complaint.
The Complainant certifies that copies of the complaint were served on the contacts for the Respondent listed on the Commission's list of Corporate Officials and on the North Carolina Utilities Commission and the South Carolina Public Service Commission.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. The Respondent's answer and all interventions, or protests must be filed on or before the comment date. The Respondent's answer, motions to intervene, and protests must be served on the Complainant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
Revision to the
Friday, August 24, 2018, 9:00 a.m. Eastern Time.
Jacqueline A. Berrien Training Center on the First Floor of the EEOC Office Building, 131 “M” Street NE, Washington, DC 20507.
The meeting will be closed to the public.
The Associate Legal Counsel has certified that, in her opinion, exemption 10 of the Sunshine Act, 5 U.S.C. 552b(c)(10) and 29 CFR 1612.4(j), permits consideration of the scheduled matters at the closed meeting.
Agency Adjudication and Determination on Federal Agency Discrimination Complaint Appeals:
The Commission will be considering four (4) cases.
Please telephone (202) 663-7100 (voice) and (202) 663-4074 (TTY) at any time for information on these meetings. The EEOC provides sign language interpretation and Communication Access Realtime Translation (CART) services at Commission meetings for the hearing impaired. Requests for other reasonable accommodations may be made by using the voice and TTY numbers listed above.
Bernadette B. Wilson, Executive Officer on (202) 663-4077.
Centers for Medicare & Medicaid Services (CMS), HHS.
Final notice.
This final notice announces our decision to approve the DNV GL— Healthcare for continued recognition as a national accrediting organization for hospitals that wish to participate in the Medicare or Medicaid programs.
This decision is effective August 17, 2018 through September 26, 2022.
Karena Meushaw (410) 786-6609, or Monda Shaver (410) 786-3410.
Under the Medicare program, eligible beneficiaries may receive covered services from a hospital, provided that certain requirements are met. Section 1861(e) of the Social Security Act (the Act), establishes distinct criteria for facilities seeking designation as a hospital. Regulations concerning provider agreements are at 42 CFR part 489 and those pertaining to activities relating to the survey and certification of facilities are at 42 CFR part 488. The regulations at 42 CFR part 482 specify the minimum conditions that a hospital must meet to participate in the Medicare program.
Generally, to enter into an agreement, a hospital must first be certified by a State survey agency as complying with the conditions or requirements set forth in part 482 of our regulations. Thereafter, the hospital is subject to regular surveys by a State survey agency to determine whether it continues to meet these requirements. There is an alternative, however, to surveys by State agencies.
Section 1865(a)(1) of the Act provides that, if a provider entity demonstrates through accreditation by an approved national accrediting organization that all applicable Medicare conditions are met or exceeded, we may deem those provider entities as having met the requirements. Accreditation by an accrediting organization is voluntary and is not required for Medicare participation.
If an accrediting organization is recognized by the Secretary of the Department of Health and Human Services as having standards for accreditation that meet or exceed Medicare requirements, any provider entity accredited by the national accrediting body's approved program may be deemed to meet the Medicare conditions. A national accrediting organization applying for approval of its accreditation program under part 488, subpart A, must provide the Centers for Medicare and Medicaid Services (CMS) with reasonable assurance that the accrediting organization requires the accredited provider entities to meet requirements that are at least as stringent as the Medicare conditions. Our regulations concerning the approval of accrediting organizations are set forth at § 488.5. The regulations at § 488.5(e)(2)(i) require accrediting organizations to reapply for continued approval of its accreditation program
Section 1865(a)(3)(A) of the Act provides a statutory timetable to ensure that our review of applications for CMS-approval of an accreditation program is conducted in a timely manner. The Act provides us 210 days after the date of receipt of a complete application, with any documentation necessary to make the determination, to complete our survey activities and application process. Within 60 days after receiving a complete application, we must publish a notice in the
In the April 17, 2018
• An onsite administrative review of DNV GL's: (1) Corporate policies; (2) financial and human resources available to accomplish the proposed surveys; (3) procedures for training, monitoring, and evaluation of its hospital surveyors; (4) ability to investigate and respond appropriately to complaints against accredited hospitals; and, (5) survey review and decision-making process for accreditation.
• The comparison of DNV GL's Medicare hospital accreditation program standards to our current Medicare hospitals Conditions of Participation (CoPs).
• A documentation review of hospital's survey process to:
++ Determine the composition of the survey team, surveyor qualifications, and DNV GL's ability to provide continuing surveyor training.
++ Compare DNV GL's processes to those we require of state survey agencies, including periodic resurvey and the ability to investigate and respond appropriately to complaints against accredited hospitals.
++ Evaluate DNV GL's procedures for monitoring hospitals it has found to be out of compliance with DNV GL's program requirements. (This pertains only to monitoring procedures when DNV GL identifies non-compliance. If noncompliance is identified by a state survey agency through a validation survey, the state survey agency monitors corrections as specified at § 488.9(c)).
++ Assess DNV GL's ability to report deficiencies to the surveyed hospital and respond to the hospital's plan of correction in a timely manner.
++ Establish DNV GL's ability to provide us with electronic data and reports necessary for effective validation and assessment of the organization's survey process.
++ Determine the adequacy of DNV GL's staff and other resources.
++ Confirm DNV GL's ability to provide adequate funding for performing required surveys.
++ Confirm DNV GL's policies with respect to surveys being unannounced.
++ Obtain DNV GL's agreement to provide us with a copy of the most current accreditation survey together with any other information related to the survey as we may require, including corrective action plans.
In accordance with section 1865(a)(3)(A) of the Act, the April 17, 2018 proposed notice also solicited public comments regarding whether DNV GL's requirements met or exceeded the Medicare CoPs for hospitals. We received two comments in response to our proposed notice. All of the comments received expressed unanimous support for DNV GL's hospital accreditation program.
We compared DNV GL's hospital accreditation program requirements and survey process with the Medicare CoPs at 42 CFR part 482, and the survey and certification process requirements of Parts 488 and 489. Our review and evaluation of DNV GL's hospital application, which were conducted as described in section III of this final notice, yielded the following areas where, as of the date of this notice, DNV GL has revised its standards and certification processes in order to meet the requirements at:
• Section 482.11 through 482.58, to ensure its standards replace the use of the word “shall” to “must” in all situations where CMS regulations use the word “must” or, clarify in DNV's glossary the intended definition of the word “shall” means “must.”
• State Operations Manual, Section 3012, to ensure that DNV GL's policies related to the timeframe(s) for follow-up activities, including follow-up surveys, for facilities that have previously demonstrated non-compliance at the condition level.
• Section 488.5(a)(4)(iv), to ensure that the hospital and provider-based locations (or a sample when allowed) are included in the hospital survey and deficiencies cited under the appropriate CoPs.
• Section 488.5(a)(11)(ii), to ensure that the data submitted in to CMS is timely, complete and accurate.
• Section 488.5(a)(12), to ensure a clearly defined complaint investigation process is in place that meets the requirements in the State Operations Manual Chapter 5 Section 5010 and Chapter 5 Section 5075.2 that includes the following:
++ Complete and accurate tracking of complaints as well as a process for maintaining a documented record of contacts made (for example, phone, email and United States mail) with the complainant, and others, if applicable;
++ Define the number of contact attempts required before closing out a complaint, if the complainant does not respond;
++ Educate DNV GL complaint intake staff that when complaint allegations could potentially result in condition-level non-compliance affecting the health and safety of patients, a survey is to be considered regardless if the allegation also involves payment related allegations; and,
++ The complaint must be investigated onsite within an appropriate timeframe.
• Section 488.26(b), to ensure that DNV GL survey documentation includes a detailed deficiency statement that clearly supports the manner and degree of non-compliance and that all observed non-compliance is cited at the appropriate level (condition verses standard level).
• Section 488.26(c)(4), to ensure that DNV GL surveyors review a sufficient number of inpatient and outpatient medical records during the survey process; the appropriate number of documents, logs, personnel and credentialing files are reviewed during the survey process; the document sources are clearly identified in the survey file; and that DNV GL surveyors have been appropriately trained and determined by DNV GL to be competent in identifying Immediate Jeopardy (IJ)
• Section 488.28(a), to ensure that the corrective action plan submitted by hospitals fully addresses the deficiencies cited and that the hospital's corrective actions are hospital wide and not focused solely on the area in which the deficiency was identified.
• Section 488.28(d), to ensure that all corrective action plans
• Section 488.18(a), to ensure all observations of non-compliance are adequately documented in the survey report and ensure corrective action is required by the hospital.
Based on our review and observations described in section III of this final notice, we approve DNV GL as a national accreditation organization for hospitals that request participation in the Medicare program, effective August 17, 2018 through September 26, 2022.
To verify DNV GL's continued compliance with the provisions of this final notice, CMS will conduct a follow-up corporate on-site visit and survey observation within 18 months of the publication date of this notice.
This document does not impose information collection requirements, that is, reporting, recordkeeping or third-party disclosure requirements. Consequently, there is no need for review by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
States, the District of Columbia, and the Commonwealth of Puerto Rico are required to report statistics for the previous Federal fiscal year on:
• Assisted and applicant households, by type of LIHEAP assistance;
• Assisted and applicant households, by type of LIHEAP assistance and poverty level;
• Assisted households receiving nominal payments of $50 or less;
• Assisted households receiving only utility payment assistance; this information will automatically be transferred to the grantee's Performance Data Form.
• Assisted households, regardless of the type(s) of LIHEAP assistance, excluding households that only receive nominal payments of $50 or less;
• Assisted households, by type of LIHEAP assistance, having at least one vulnerable member who is at least 60 years or older, disabled, or five years old or younger;
• Assisted households, by type of LIHEAP assistance, with at least one member age 2 years or under;
• Assisted households, by type of LIHEAP assistance, with at least one member ages 3 years through 5 years; and
• Assisted households, regardless of the type(s) of LIHEAP assistance, having at least one member 60 years or older, disabled, or five years old or younger. Insular areas (other than the Commonwealth of Puerto Rico) and Indian Tribal Grantees are required to submit data only on the number of households receiving heating, cooling, energy crisis, and/or weatherization benefits.
The information is being collected for the Department's annual LIHEAP Report to Congress. The data also provides information about the need for LIHEAP funds. Finally, the data are used in the calculation of LIHEAP performance measures under the Government Performance and Results Act of 1993. The data elements will allow the accuracy of measuring LIHEAP targeting performance and LIHEAP cost efficiency.
In compliance with the requirements of the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chap. 35), the Administration for Children and Families is soliciting public comment on the specific aspects of the information collection described above. Copies of the proposed collection of information can be obtained and comments may be forwarded by writing to the Administration for Children and Families, Office of Planning, Research and Evaluation, 330 C Street SW, Washington, DC 20201. Attn: ACF Reports Clearance Officer. Email address:
The Department specifically requests comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or
We are requesting no changes in the collection of data with the Carryover and Reallotment Report for FY 2018, a form for the collection of data, and the Simplified Instructions for Timely Obligations of FY 2019 LIHEAP Funds and Reporting Funds for Carryover and Reallotment. The form clarifies the information being requested and ensures the submission of all the required information. The form facilitates our response to numerous queries each year concerning the amounts of obligated funds. Use of the form is voluntary. Grantees have the option to use another format.
In compliance with the requirements of the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chap 35), the Administration for Children and Families is soliciting public comment on the specific aspects of the information collection described above. Copies of the proposed collection of information can be obtained and comments may be forwarded by writing to the Administration for Children and Families, Office of Planning, Research and Evaluation, 330 C Street SW, Washington DC 20201. Attn: ACF Reports Clearance Officer. Email address:
The Department specifically requests comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted within 60 days of this publication.
Food and Drug Administration, HHS.
Notice of public workshop.
The Food and Drug Administration (FDA) Center for Biologics Evaluation and Research and the National Institutes of Health, National Institute of Allergy and Infectious Diseases (NIAID) are announcing a public workshop entitled “Science and Regulation of Live Microbiome-Based Products Used to Prevent, Treat, or Cure Diseases in Humans.” The purpose of the public workshop is to exchange information with the scientific community about the clinical, manufacturing, and regulatory considerations associated with live microbiome-based products, when administered to prevent, treat, or cure a disease or condition in humans. The public workshop will bring together government Agencies, academia, industry, and other stakeholders involved in research, development, and regulation of live microbiome-based products for such uses.
The public workshop will be held on September 17, 2018, from 9 a.m. to 5 p.m. See the
The public workshop will be held at the NIAID Conference Center, 5601 Fishers Lane, Rm. 1D13, Rockville, MD 20852. Entrance for public workshop participants is through the lobby, where routine security check procedures will be performed. For parking and security information, please refer to
Loni Warren Henderson or Sherri Revell, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 1118, Silver Spring, MD 20993, 240-402-8010, email:
Live microbiome-based products used to prevent, treat, or cure a disease or condition in humans are biological products. There is increasing interest in the use of such products for the treatment and/or prevention of conditions such as necrotizing enterocolitis and diarrhea. Historically, these products have presented with unique scientific and regulatory challenges.
The topics for discussion at the public workshop include the clinical, manufacturing, and regulatory considerations for live microbiome-based products to prevent, treat, or cure a disease or condition in humans, and the objective is to provide a forum for the exchange of information and perspectives on these topics.
Registration is free and based on space availability, with priority given to early registrants. Persons interested in attending this public workshop must register by August 28, 2018, midnight Eastern Time. Early registration is recommended because seating is limited; therefore, FDA may limit the number of participants from each organization. There will be no onsite registration.
If you need special accommodations due to a disability, please contact Loni Warren Henderson or Sherri Revell no later than September 10, 2018 (See
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA, Agency, or we) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Fax written comments on the collection of information by September 17, 2018.
To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, Fax: 202-395-7285, or emailed to
Domini Bean, Office of Operations, Food and Drug Administration, Three White Flint North, 10a.m.-12 midnight, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-5733,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
This information collection supports the above captioned Agency guidance. FDA has agreed to specific program enhancements and performance goals specified in the Generic Drug User Fee Reauthorization (GDUFA II) Commitment Letter. One of the performance goals applies to controlled correspondence related to generic drug development. The GDUFA II Commitment Letter includes details on FDA's commitment to respond to questions submitted as controlled correspondence within certain timeframes. To support these program goals, we have developed the guidance entitled “Controlled Correspondence Related to Generic Drug Development.” The guidance document is intended to facilitate FDA's prompt consideration of controlled correspondence and to assist in meeting the prescribed timeframes by providing procedural recommendations to include the following information in the inquiry: (1) Name, title, address, phone number, and entity of the person submitting the inquiry; (2) a letter of authorization, if applicable; (3) the FDA-assigned control number and submission date of any previous, related controlled correspondence that was accepted for substantial review and response, if any, as well as a copy of that previous controlled correspondence and FDA's response, if any; (4) the relevant reference listed drug(s), as applicable, including the application number, proprietary (brand) name, manufacturer, active ingredient, dosage form, and strength(s); (5) a statement that the controlled correspondence is related to a potential abbreviated new drug application (ANDA) submission to the Office of Generic Drugs and the ANDA number, if applicable; (6) a concise statement of the inquiry; (7) a recommendation of the appropriate FDA review discipline; and (8) relevant prior research and supporting materials.
The GDUFA II Commitment Letter also includes details on FDA's commitment to respond to requests to clarify ambiguities in FDA's controlled correspondence response within certain timeframes. To facilitate FDA's prompt consideration of the request and to assist in meeting the prescribed timeframes, the guidance document recommends including the following information in the inquiry: (1) Name, title, address, phone number, and entity of the person submitting the inquiry; (2) a letter of authorization, if applicable; (3) the FDA-assigned control number, submission date of the controlled correspondence on which the requestor is seeking clarification, a copy of that previous controlled correspondence, and FDA's response to the controlled correspondence; and (4) the clarifying questions and the corresponding section(s) of FDA's controlled correspondence response on which the requestor is seeking clarification.
In the
We estimate the burden of the information collection as follows:
This is the first extension of the information collection. We base our estimate on a review of Agency data of Fiscal Year submissions for 2014, 2015, and 2016, which reflects an increase in submissions that we attribute to an increase in generic drug development. Accordingly, we estimate 390 generic drug manufacturers and related industry (
Because the content of inquiries considered controlled correspondence is widely varied, we are providing an average burden hour for each inquiry. We estimate that it will take an average of 5 hours per inquiry for industry to gather necessary information, prepare the request, and submit the request to FDA. As a result, we estimate that it will take an average of 7,480 hours annually for industry to prepare and submit inquiries considered controlled correspondence.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of the draft guidance entitled “Process to Request a Review of FDA's Decision Not to Issue Certain Export Certificates for Devices; Draft Guidance for Industry and Food and Drug Administration Staff.” FDA is issuing this draft guidance to comply with changes to the Federal Food, Drug, and Cosmetic Act (FD&C Act) as amended by the FDA Reauthorization Act of 2017 (FDARA), to specify the process afforded to persons denied a Certificate to Foreign Government (CFG) for a device. This draft guidance describes the information that the Center for Devices and Radiological Health (CDRH) and the Center for Biologics Evaluation and Research (CBER) will provide to a person whose request for a CFG for a device is denied, and the process for seeking review of such a denial. This draft guidance is not final nor is it in effect at this time.
Submit either electronic or written comments on the draft guidance by October 16, 2018 to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance.
You may submit comments on any guidance at any time as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
An electronic copy of the guidance document is available for download from the internet. See the
Joann Belt, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 3658, Silver Spring, MD 20993-0002,
FDA is issuing this draft guidance to comply with section 704 of FDARA (Pub. L. 115-52), which amended section 801 of the FD&C Act, to specify the process afforded to persons denied a CFG for a device. This draft guidance describes the information that CDRH and CBER will provide to a person whose request for a CFG for a device is denied, and the process for seeking review of such a denial. This draft guidance applies to the process for persons denied CFGs requested pursuant to section 801(e)(4)(A) of the FD&C Act (21 U.S.C. 381(e)(4)(A) for devices manufactured in an establishment registered under section 510 of the FD&C Act (21 U.S.C. 360) (
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on the process for persons denied a certificate to foreign government for a device. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. This guidance is not subject to Executive Order 12866.
Persons interested in obtaining a copy of the draft guidance may do so by downloading an electronic copy from the internet. A search capability for all CDRH guidance documents is available at
This draft guidance refers to previously approved collections of information. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in sections 801(e) and 802 (21 U.S.C. 382) of the FD&C Act have been approved under OMB control number 0910-0498; the collections of information in 21 CFR part 807, subparts A through E, have been approved under OMB control number 0910-0625; the collections of information in 21 CFR part 820 have been approved under OMB control number 0910-0073; and the collections of information in the guidance “Center for Devices and Radiological Health Appeals Processes” have been approved under OMB control number 0910-0738.
Food and Drug Administration, HHS.
Notice; extension of the proposal period.
The Food and Drug Administration (FDA, Agency, or we) is extending the proposal period for the “Quality Metrics Site Visit Program for Center for Drug Evaluation and Research and Center for Biologics Evaluation and Research Staff,” published in the
FDA is extending the proposal period on the notice published June 29, 2018 (83 FR 30751). Submit either an electronic or written proposal by December 17, 2018 directly to Tara Gooen Bizjak or Stephen Ripley (see
Tara Gooen Bizjak, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 2109, Silver Spring, MD 20993-0002, 301-796-3257, email:
In the
Persons with access to the internet may obtain the information about the FDA Quality Metrics for Drug Manufacturing Program, including this Quality Metric Site Visit Program, at
Office of the Secretary, HHS.
Notice.
In compliance with the requirement of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, is publishing the following summary of a proposed collection for public comment.
Comments on the ICR must be received on or before October 16, 2018.
Submit your comments to
When submitting comments or requesting information, please include the document identifier 0990-New-60D and project title for reference, to
Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
National Institutes for Health, HHS.
Notice.
The purpose of this Request for Information (RFI) is to solicit input on how best to accomplish the ambitious vision for the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative® set forth in BRAIN 2025: A Scientific Vision. NIH is soliciting input from all interested stakeholders, including members of the scientific community, trainees, academic institutions, the private sector, health professionals, professional societies, advocacy groups, and patient communities, as well as other interested members of the public.
The Request for Information is open for public comment. To assure consideration, your responded must be received by November 15, 2018, 11:59 p.m.
Responses to this RFI must be submitted electronically using the web-based form at
Please direct all inquiries to Samantha White, Ph.D., National Institute of Neurological Disorders and Stroke, 301-496-1675;
The BRAIN Initiative aims to develop new tools and technologies to understand and manipulate networks of cells in the brain. BRAIN 2025: A Scientific Vision serves as the strategic plan for the BRAIN Initiative at NIH and outlines an overarching vision, seven high level scientific priorities, and many specific goals. Designed to be achieved over at least a decade, the first five years of BRAIN 2025 emphasizes development of tools and technology, and the next five years shifts emphasis to using these tools to make fundamental discoveries about how brain circuits work and what goes wrong in disease.
The BRAIN Initiative is well underway (see
The ACD-WG will use the responses to this RFI, along with information gathered through a series of public workshops, to help inform their discussions of the BRAIN Initiative's progress and potential updates to the plan moving forward.
Anyone wishing to submit a response is asked to include:
• Ideas for new tools and technologies that have the potential to transform brain circuit research.
• Suggestions for fundamental questions about brain circuit function in
• Considerations for data sharing infrastructure and policies.
• Areas and topics for research on the ethical implications of BRAIN Initiative-supported emerging neurotechnologies and advancements and their applications.
• Approaches for disseminating new tools and technologies as well as training the broader neuroscience research community.
• Any other topic relevant to the strategic plan of the BRAIN Initiative.
National Institutes of Health, HHS.
Notice.
The National Institutes of Health (NIH) seeks public comment on its proposal to amend the
To ensure consideration, comments must be submitted in writing by October 16, 2018.
Comments may be submitted electronically by visiting:
If you have questions, or require additional background information about these proposed changes, please contact the NIH by email at
NIH is proposing a series of actions to the
At this time, there is duplication in submitting protocols, annual reports, amendments, and serious adverse events for HGT clinical protocols to both NIH and FDA that does not exist for other areas of clinical research. Historically, this duplication was conceived as harmonized reporting, enabling FDA to provide regulatory oversight while NIH provided a forum for open dialogue and transparency. However, since these complementary functions were first envisioned, we have now seen several converging systems emerge that provide some of these functions. For instance,
While the science and oversight system have evolved, HGT protocols continue to receive special oversight that is not afforded to other areas of clinical research. This observation was also noted in a 2014 Institute of Medicine of the National Academies report,
Briefly to summarize, NIH proposes amending the
1. Eliminate RAC review and reporting requirements to NIH for HGT protocols.
2. Modify roles and responsibilities of investigators, institutions, IBCs, the RAC, and NIH to be consistent with these goals including:
a. Modifying roles of IBCs in reviewing HGT to be consistent with review of other covered research, and
b. Eliminating references to the RAC, including its roles in HGT and biosafety.
NIH suggests that the series of changes proposed in this Notice is a rational next step in the process of considering appropriate oversight of HGT. Consistent with these proposed changes to the
With the proposed elimination of the requirements for safety reporting under Appendix M, IBC oversight should be completed immediately after the last participant is administered the final dose of product. Additionally, the role of IBC review is proposed to be amended to be consistent with FDA's current guidance regarding individual patient expanded access to investigational drugs. In this way, the role of the IBCs will be focused on providing local biosafety oversight of basic and clinical research involving recombinant or synthetic nucleic acids. In particular, NIH seeks comment on whether the expectations of IBCs, in light of these proposed changes, have been articulated clearly in the proposed revisions to the
Notably, the roles and responsibilities of the RAC are proposed to be removed from the
The proposed changes outlined above will require amendment of multiple portions of the
Section I-A currently states:
The purpose of the
Section I-A is proposed to be amended as follows:
The purpose of the
Section I-A-1 currently states:
Section I-A-1. Any nucleic acid molecule experiment, which according to the
Section I-A-1 is proposed to be amended as follows:
Section I-A-1. Any nucleic acid molecule experiment, which according to the
Section I-A-1-a currently states:
Section I-A-1-a. For experiments involving the deliberate transfer of recombinant or synthetic nucleic acid molecules, or DNA or RNA derived from recombinant or synthetic nucleic acid molecules, into human research participants (human gene transfer), no research participant shall be enrolled (see definition of enrollment in Section I-E-7) until the NIH protocol registration process has been completed (see Appendix M-I-B,
For a clinical trial site that is added after the completion of the NIH protocol registration process, no research participant shall be enrolled (see definition of enrollment in Section I-E-7) at the clinical trial site until IBC approval and IRB approval from that site have been obtained. Within 30 days of enrollment (see definition of enrollment in Section I-E-7) at a clinical trial site, the following documentation shall be submitted to NIH OSP: (1) Institutional Biosafety Committee approval (from the clinical trial site); (2) Institutional Review Board approval; (3) Institutional Review Board-approved informed consent document(s); and (4) NIH grant number(s) if applicable.
Section I-A-1-a is proposed to be amended as follows:
Section I-A-1-a. For experiments involving the deliberate transfer of recombinant or synthetic nucleic acid molecules, or DNA or RNA derived from recombinant or synthetic nucleic acid molecules, into human research participants (human gene transfer), no human gene transfer experiment shall be initiated (see definition of initiation in Section I-E-7) until Institutional Biosafety Committee (IBC) approval (from the clinical trial site) has been obtained; and all other applicable institutional and regulatory authorization(s) and approvals have been obtained.
Section I-E. General Definitions is proposed to be amended to delete the current definitions I-E-4, I-E-7 through I-E-12 and to include a new definition for “initiation.”
Section I-E-4 is proposed to be amended to define initiation as the following: “Initiation” of research is the introduction of recombinant or synthetic nucleic acid molecules into organisms, cells, or viruses.
Section III currently states:
This section describes six categories of experiments involving recombinant or synthetic nucleic acid molecules: (i) Those that require Institutional Biosafety Committee (IBC) approval, RAC review, and NIH Director approval before initiation (see Section III-A), (ii) those that require NIH OSP and Institutional Biosafety Committee approval before initiation (see Section III-B), (iii) those that require Institutional Biosafety Committee and Institutional Review Board approvals and RAC review before research participant enrollment (see Section III-C), (iv) those that require Institutional Biosafety Committee approval before initiation (see Section III-D), (v) those that require Institutional Biosafety Committee notification simultaneous with initiation (see Section III-E), and (vi) those that are exempt from the
If an experiment falls into Sections III-A, III-B, or III-C and one of the other sections, the rules pertaining to Sections III-A, III-B, or III-C shall be followed. If an experiment falls into Section III-F and into either Sections III-D or III-E as well, the experiment is considered exempt from the
Any change in containment level, which is different from those specified in the
Section III is proposed to be amended as follows:
This section describes six categories of experiments involving recombinant or synthetic nucleic acid molecules: (i) Those that require Institutional Biosafety Committee (IBC) approval and NIH Director approval before initiation (see Section III-A), (ii) those that require NIH OSP and Institutional Biosafety Committee approval before initiation (see Section III-B), (iii) those that require Institutional Biosafety Committee approval before initiation of human gene transfer (see Section III-C), (iv) those that require Institutional Biosafety Committee approval before initiation (see Section III-D), (v) those that require Institutional Biosafety Committee notification simultaneous with initiation (see Section III-E), and (vi) those that are exempt from the
If an experiment falls into Sections III-A, III-B, or III-C and one of the other sections, the rules pertaining to Sections III-A, III-B, or III-C shall be followed. If an experiment falls into Section III-F and into either Sections III-D or III-E as well, the experiment is considered exempt from the
Any change in containment level, which is different from those specified in the
Section III-A currently states:
Experiments considered as
Section III-A-1-a. The deliberate transfer of a drug resistance trait to microorganisms that are not known to acquire the trait naturally (see Section V-B,
Consideration should be given as to whether the drug resistance trait to be used in the experiment would render that microorganism resistant to the primary drug available to and/or indicated for certain populations, for example children or pregnant women.
At the request of an Institutional Biosafety Committee, NIH OSP will make a determination regarding whether a specific experiment involving the deliberate transfer of a drug resistance trait falls under Section III-A-1-a and therefore requires RAC review and NIH Director approval. An Institutional Biosafety Committee may also consult with NIH OSP regarding experiments that do not meet the requirements of Section III-A-1-a but nonetheless raise important public health issues. NIH OSP will consult, as needed, with one or more experts, which may include the RAC.
Section III-A is proposed to be amended as follows:
Experiments considered as
Section III-A-1-a. The deliberate transfer of a drug resistance trait to microorganisms that are not known to acquire the trait naturally (see Section V-B,
Consideration should be given as to whether the drug resistance trait to be used in the experiment would render that microorganism resistant to the primary drug available to and/or indicated for certain populations, for example children or pregnant women.
At the request of an Institutional Biosafety Committee, NIH OSP will
Section III-C currently states:
Section III-C. Experiments that Require Institutional Biosafety Committee and Institutional Review Board Approvals and RAC Review (if applicable) Before Research Participant Enrollment
Section III-C-1. Experiments Involving the Deliberate Transfer of Recombinant or Synthetic Nucleic Acid Molecules, or DNA or RNA Derived from Recombinant or Synthetic Nucleic Acid Molecules, into One or More Human Research Participants
Human gene transfer is the deliberate transfer into human research participants of either:
1. Recombinant nucleic acid molecules, or DNA or RNA derived from recombinant nucleic acid molecules, or
2. Synthetic nucleic acid molecules, or DNA or RNA derived from synthetic nucleic acid molecules that meet any one of the following criteria:
a. Contain more than 100 nucleotides; or
b. Possess biological properties that enable integration into the genome (
c. Have the potential to replicate in a cell; or
d. Can be translated or transcribed.
No research participant shall be enrolled (see definition of enrollment in Section I-E-7) until the NIH protocol registration process has been completed (see Appendix M-I-B,
In its evaluation of human gene transfer protocols, NIH will make a determination, following a request from one or more oversight bodies involved in the review at an initial site(s), whether a proposed human gene transfer experiment meets the requirements for selecting protocols for public RAC review and discussion (See Appendix M-I-B). The process of public RAC review and discussion is intended to foster the safe and ethical conduct of human gene transfer experiments. Public review and discussion of a human gene transfer experiment (and access to relevant information) also serves to inform the public about the technical aspects of the proposal, the meaning and significance of the research, and any significant safety, social, and ethical implications of the research.
Public RAC review and discussion of a human gene transfer experiment will be initiated in two exceptional circumstances: (1) Following a request for public RAC review from one or more oversight bodies involved in the review at an initial site(s), the NIH concurs that (a) the individual protocol would significantly benefit from RAC review and (b) that the submission meets one or more of the following NIH RAC review criteria: (i) The protocol uses a new vector, genetic material, or delivery methodology that represents a first-in-human experience, thus presenting an unknown risk; (ii) the protocol relies on preclinical safety data that were obtained using a new preclinical model system of unknown and unconfirmed value; or (iii) the proposed vector, gene construct, or method of delivery is associated with possible toxicities that are not widely known and that may render it difficult for oversight and federal regulatory bodies to evaluate the protocol rigorously. However, if one or more oversight bodies involved in the review at an initial site(s) requests public RAC review, but NIH does not concur that (a) the individual protocol would significantly benefit from RAC review and (b) that the submission meets one or more of the RAC review criteria (listed in i, ii, or iii), then the NIH OSP will inform, within 10 working days, the requesting and other oversight bodies involved in the review at an initial site(s) that public RAC review is not warranted. (2) The NIH Director, in consultation (if needed) with appropriate regulatory authorities, determines that the submission: (a) Meets one or more of the NIH RAC review criteria (listed in i, ii, or iii) and that public RAC review and discussion would provide a clear and obvious benefit to the scientific community or the public; or (b) raises significant scientific, societal, or ethical concerns.
For a clinical trial site that is added after the completion of the NIH protocol registration process, no research participant shall be enrolled (see definition of enrollment in Section I-E-7) at the clinical trial site until IBC approval and IRB approval from that site have been obtained. Within 30 days of enrollment (see definition of enrollment in Section I-E-7) at a clinical trial site, the following documentation shall be submitted to NIH OSP: (1) Institutional Biosafety Committee approval (from the clinical trial site); (2) Institutional Review Board approval; (3) Institutional Review Board-approved informed consent document(s); and (4) NIH grant number(s) if applicable.
In order to maintain public access to information regarding human gene transfer (including protocols that are not publicly reviewed by the RAC), the NIH OSP will maintain the documentation described in Appendices M-I through M-II. The information provided in response to Appendix M should not contain any confidential commercial or financial information or trade secrets, enabling all aspects of RAC review to be open to the public.
For specific directives concerning the use of retroviral vectors for gene delivery, consult Appendix B-V-1,
Section III-C is proposed to be amended as follows:
Human gene transfer is the deliberate transfer into human research participants of either:
1. Recombinant nucleic acid molecules, or DNA or RNA derived from recombinant nucleic acid molecules, or
2. Synthetic nucleic acid molecules, or DNA or RNA derived from synthetic nucleic acid molecules that meet any one of the following criteria:
a. Contain more than 100 nucleotides; or
b. Possess biological properties that enable integration into the genome (
c. Have the potential to replicate in a cell; or
d. Can be translated or transcribed.
Research cannot be initiated until Institutional Biosafety Committee and all other applicable institutional and regulatory authorization(s) and approvals have been obtained.
An individual patient expanded access IND is not research subject to the
Section III-D-7-b currently states:
Section III-D-7-b. Highly Pathogenic Avian Influenza H5N1 strains within the Goose/Guangdong/96-like H5 lineage (HPAI H5N1). Experiments involving influenza viruses containing a majority of genes and/or segments from a HPAI H5N1 influenza virus shall be conducted at BL3 enhanced containment, (see Appendix G-II-C-5, Biosafety Level 3 Enhanced for Research Involving Risk Group 3 Influenza Viruses). Experiments involving influenza viruses containing a minority of genes and/or segments from a HPAI H5N1 influenza virus shall be conducted at BL3 enhanced unless a risk assessment performed by the IBC determines that they can be conducted safely at biosafety level 2 and after they have been excluded pursuant to 9 CFR 121.3(e). NIH OSP is available to IBCs to provide consultation with the RAC and influenza virus experts when risk assessments are being made to determine the appropriate biocontainment for experiments with influenza viruses containing a minority of gene/segments from HPAI H5N1. Such experiments may be performed at BL3 enhanced containment or containment may be lowered to biosafety level 2, the level of containment for most research with other influenza viruses. (USDA/APHIS regulations and decisions on lowering containment also apply). In deciding to lower containment, the IBC should consider whether, in at least two animal models (
Section III-D-7-b is proposed to be amended as follows:
Section III-D-7-b. Highly Pathogenic Avian Influenza H5N1 strains within the Goose/Guangdong/96-like H5 lineage (HPAI H5N1). Experiments involving influenza viruses containing a majority of genes and/or segments from a HPAI H5N1 influenza virus shall be conducted at BL3 enhanced containment, (see Appendix G-II-C-5, Biosafety Level 3 Enhanced for Research Involving Risk Group 3 Influenza Viruses). Experiments involving influenza viruses containing a minority of genes and/or segments from a HPAI H5N1 influenza virus shall be conducted at BL3 enhanced unless a risk assessment performed by the IBC determines that they can be conducted safely at biosafety level 2 and after they have been excluded pursuant to 9 CFR 121.3(e). NIH OSP is available to IBCs to provide consultation with influenza virus experts when risk assessments are being made to determine the appropriate biocontainment for experiments with influenza viruses containing a minority of gene/segments from HPAI H5N1. Such experiments may be performed at BL3 enhanced containment or containment may be lowered to biosafety level 2, the level of containment for most research with other influenza viruses. (USDA/APHIS regulations and decisions on lowering containment also apply). In deciding to lower containment, the IBC should consider whether, in at least two animal models (
Section III-D-7-d currently states:
Section III-D-7-d. Antiviral Susceptibility and Containment. The availability of antiviral drugs as preventive and therapeutic measures is an important safeguard for experiments with 1918 H1N1, HPAI H5N1, and human H2N2 (1957-1968). If an influenza virus containing genes from one of these viruses is resistant to both classes of current antiviral agents, adamantanes and neuraminidase inhibitors, higher containment may be required based on the risk assessment considering transmissibility to humans, virulence, pandemic potential, alternative antiviral agents if available, etc.
Experiments with 1918 H1N1, human H2N2 (1957-1968) or HPAI H5N1 that are designed to create resistance to neuraminidase inhibitors or other effective antiviral agents (including investigational antiviral agents being developed for influenza) would be subject to Section III-A-1 (
Section III-D-7-d is proposed to be amended as follows:
Section III-D-7-d. Antiviral Susceptibility and Containment. The availability of antiviral drugs as preventive and therapeutic measures is an important safeguard for experiments with 1918 H1N1, HPAI H5N1, and human H2N2 (1957-1968). If an influenza virus containing genes from one of these viruses is resistant to both classes of current antiviral agents, adamantanes and neuraminidase inhibitors, higher containment may be required based on the risk assessment considering transmissibility to humans, virulence, pandemic potential, alternative antiviral agents if available, etc.
Experiments with 1918 H1N1, human H2N2 (1957-1968) or HPAI H5N1 that are designed to create resistance to neuraminidase inhibitors or other effective antiviral agents (including investigational antiviral agents being developed for influenza) would be subject to Section III-A-1 (
Section III-F-6 currently states:
Section III-F-6. Those that consist entirely of DNA segments from different species that exchange DNA by known physiological processes, though one or more of the segments may be a synthetic equivalent. A list of such exchangers will be prepared and periodically revised by the NIH Director with advice of the RAC after appropriate notice and opportunity for public comment (see Section IV-C-1-b-(1)-(c),
Section III-F-6 is proposed to be amended as follows:
Section III-F-6. Those that consist entirely of DNA segments from different species that exchange DNA by known physiological processes, though one or more of the segments may be a synthetic equivalent. A list of such exchangers will be prepared and periodically revised by the NIH Director after appropriate notice and opportunity for public comment (see Section IV-C-1-b-(1)-(c),
Section III-F-8 currently states:
Section III-F-8. Those that do not present a significant risk to health or the
Section III-F-8 is proposed to be amended as follows:
Section III-F-8. Those that do not present a significant risk to health or the environment (see Section IV-C-1-b-(1)-(c),
Section IV-B-1-f currently states:
Section IV-B-1-f. Ensure that when the institution participates in or sponsors recombinant or synthetic nucleic acid molecule research involving human subjects: (i) The Institutional Biosafety Committee has adequate expertise and training (using
Section IV-B-1-f is proposed to be amended as follows:
Section IV-B-1-f. Ensure that when the institution participates in or sponsors recombinant or synthetic nucleic acid molecule research involving human subjects: (i) The Institutional Biosafety Committee has adequate expertise and training (using
None of the other sub-sections under Section IV-B-1. General Information are proposed to be amended.
Section IV-B-2-a-(1) currently states:
Section IV-B-2-a-(1). The Institutional Biosafety Committee must be comprised of no fewer than five members so selected that they collectively have experience and expertise in recombinant or synthetic nucleic acid molecule technology and the capability to assess the safety of recombinant or synthetic nucleic acid molecule research and to identify any potential risk to public health or the environment. At least two members shall not be affiliated with the institution (apart from their membership on the Institutional Biosafety Committee) and who represent the interest of the surrounding community with respect to health and protection of the environment (
Section IV-B-2-a-(1) is proposed to be amended as follows:
Section IV-B-2-a-(1). The Institutional Biosafety Committee must be comprised of no fewer than five members so selected that they collectively have experience and expertise in recombinant or synthetic nucleic acid molecule technology and the capability to assess the safety of recombinant or synthetic nucleic acid molecule research and to identify any potential risk to public health or the environment. At least two members shall not be affiliated with the institution (apart from their membership on the Institutional Biosafety Committee) and who represent the interest of the surrounding community with respect to health and protection of the environment (
Section IV-B-2-b-(1) currently states:
Section IV-B-2-b-(1). Reviewing recombinant or synthetic nucleic acid molecule research conducted at or sponsored by the institution for compliance with the
Section IV-B-2-b-(1) is proposed to be amended as follows:
Section IV-B-2-b-(1). Reviewing recombinant or synthetic nucleic acid molecule research conducted at or sponsored by the institution for compliance with the
Section IV-B-2-b-(8) currently states:
Section IV-B-2-b-(8). The Institutional Biosafety Committee may not authorize initiation of experiments which are not explicitly covered by the
Section IV-B-2-b-(8) is proposed to be amended as follows:
Section IV-B-2-b-(8). The Institutional Biosafety Committee may not authorize initiation of experiments which are not explicitly covered by the
None of the other sub-sections under Section IV-B-2. Institutional Biosafety Committee (IBC) are proposed to be amended.
Section IV-B-6 currently states:
When the institution participates in or sponsors recombinant or synthetic nucleic acid molecule research involving human subjects, the institution must ensure that: (i) The Institutional Biosafety Committee has adequate expertise and training (using
Section IV-B-6 is proposed to be amended as follows:
When the institution participates in or sponsors recombinant or synthetic nucleic acid molecule research involving human subjects, the institution must ensure that the Institutional Biosafety Committee has adequate expertise and training (using
Section IV-B-7 currently states:
On behalf of the institution, the Principal Investigator is responsible for full compliance with the
Section IV-B-7 is proposed to be amended as follows:
On behalf of the institution, the Principal Investigator is responsible for full compliance with the
Section IV-B-7-b-(6) is proposed to be deleted in its entirety
Section IV-B-7-e-(5) is proposed to be deleted in its entirety
None of the other sub-sections under Section IV-B-7. Principal Investigator are proposed to be amended.
Section IV-C currently states:
The NIH Director is responsible for: (i) Establishing the
The NIH Director is responsible for:
Section IV-C-1-a-(1). Promulgating requirements as necessary to implement the
Section IV-C-1-a-(2). Establishing and maintaining RAC to carry out the responsibilities set forth in Section IV-C-2,
Section IV-C-1-a-(3). Establishing and maintaining NIH OSP to carry out the responsibilities defined in Section IV-C-3,
Section IV-C-1-a-(4). Conducting and supporting training programs in laboratory safety for Institutional Biosafety Committee members, Biological Safety Officers and other institutional experts (if applicable), Principal Investigators, and laboratory staff.
Section IV-C-1-a-(5). Establishing and convening Gene Therapy Policy Conferences as described in Appendix L,
In carrying out the responsibilities set forth in this section, the NIH Director, or a designee shall weigh each proposed action through appropriate analysis and consultation to determine whether it complies with the
To execute
Section IV-C-1-b-(1)-(a). Changing containment levels for types of experiments that are specified in the
Section IV-C-1-b-(1)-(b). Assigning containment levels for types of experiments that are not explicitly considered in the
Section IV-C-1-b-(1)-(c). Promulgating and amending a list of classes of recombinant or synthetic nucleic acid molecules to be exempt from the
Section IV-C-1-b-(1)-(d). Permitting experiments specified by Section III-A,
Section IV-C-1-b-(1)-(e). Certifying new host-vector systems with the exception of minor modifications of already certified systems (the standards and procedures for certification are described in Appendix I-II,
Section IV-C-1-b-(1)-(f). Adopting other changes in the
NIH OSP shall carry out certain functions as delegated to it by the NIH Director (see Section IV-C-3,
Section IV-C-1-b-(2)-(a). Changing containment levels for experiments that are specified in Section III,
Section IV-C-1-b-(2)-(b). Assigning containment levels for experiments not explicitly considered in the
Section IV-C-1-b-(2)-(c). Revising the
Section IV-C-1-b-(2)-(d). Interpreting the
Section IV-C-1-b-(2)-(e). Setting containment under Sections III-D-1-d,
Section IV-C-1-b-(2)-(f). Approving minor modifications of already certified host-vector systems (the standards and procedures for such modifications are described in Appendix I-II,
Section IV-C-1-b-(2)-(g). Decertifying already certified host-vector systems;
Section IV-C-1-b-(2)-(h). Adding new entries to the list of molecules toxic for vertebrates (see Appendix F,
Section IV-C-1-b-(2)-(i). Determining appropriate containment conditions for experiments according to case precedents developed under Section IV-C-1-b-(2)-(c).
Section IV-C is proposed to be amended as follows:
The NIH Director is responsible for: (i) Establishing the
The NIH Director is responsible for:
Section IV-C-1-a-(1). Promulgating requirements as necessary to implement the
Section IV-C-1-a-(2). Establishing and maintaining NIH OSP to carry out the responsibilities defined in Section IV-C-3,
Section IV-C-1-a-(3). Conducting and supporting training programs in laboratory safety for Institutional Biosafety Committee members, Biological Safety Officers and other institutional experts (if applicable), Principal Investigators, and laboratory staff.
In carrying out the responsibilities set forth in this section, the NIH Director or a designee shall weigh each proposed action through appropriate analysis and consultation to determine whether it complies with the
To execute
Section IV-C-1-b-(1)-(a). Changing containment levels for types of experiments that are specified in the
Section IV-C-1-b-(1)-(b). Assigning containment levels for types of experiments that are not explicitly considered in the
Section IV-C-1-b-(1)-(c). Promulgating and amending a list of classes of recombinant or synthetic nucleic acid molecules to be exempt from the
Section IV-C-1-b-(1)-(d). Permitting experiments specified by Section III-A,
Section IV-C-1-b-(1)-(e). Certifying new host-vector systems with the exception of minor modifications (
Section IV-C-1-b-(1)-(f). Adopting other changes in the
NIH OSP shall carry out certain functions as delegated to it by the NIH Director (see Section IV-C-3,
Section IV-C-1-b-(2)-(a). Changing containment levels for experiments that are specified in Section III,
Section IV-C-1-b-(2)-(b). Assigning containment levels for experiments not explicitly considered in the
Section IV-C-1-b-(2)-(c). Revising the
Section IV-C-1-b-(2)-(d). Interpreting the
Section IV-C-1-b-(2)-(e). Setting containment under Sections III-D-1-d,
Section IV-C-1-b-(2)-(f). Approving minor modifications of already certified host-vector systems (the standards and procedures for such modifications are described in Appendix I-II,
Section IV-C-1-b-(2)-(g). Decertifying already certified host-vector systems;
Section IV-C-1-b-(2)-(h). Adding new entries to the list of molecules toxic for vertebrates (see Appendix F,
Section IV-C-1-b-(2)-(i). Determining appropriate containment conditions for experiments according to case precedents developed under Section IV-C-1-b-(2)-(c).
Section IV-C-2. Recombinant DNA Advisory Committee (RAC) is proposed to be deleted in its entirety.
Section IV-C-3. Office of Science Policy (OSP) is proposed to be amended as follows:
Sections IV-C-3-a through IV-C-3-f are proposed to be deleted in their entirety. Section IV-C-3-h is proposed to be deleted in its entirety. Section IV-C-3-g will be renumbered to Section IV-C-3-a. Section IV-C-i will be renumbered to Section IV-C-3-b; Section IV-C-3-i-(1), Section IV-C-3-i-(2) and Section IV-C-3-i-(3) are proposed to be deleted in their entirety. Section IV-C-3-j will be renumbered to Section IV-C-3-c.
Section IV-C-3 is proposed to be amended as follows:
OSP shall serve as a focal point for information on recombinant or synthetic nucleic acid molecule activities and provide advice to all within and outside NIH including institutions, Biological Safety Officers, Principal Investigators, Federal agencies, state and local governments, and institutions in the private sector. OSP shall carry out such other functions as may be delegated to it by the NIH Director. OSP's responsibilities include (but are not limited to) the following:
Section IV-C-3-a. Reviewing and approving experiments involving the cloning of genes encoding for toxin molecules that are lethal for vertebrates at an LD
Section IV-C-3-b. Publishing in the
Section IV-C-3-c. Reviewing and approving the membership of an institution's Institutional Biosafety Committee, and where it finds the Institutional Biosafety Committee meets the requirements set forth in Section IV-B-2,
Section IV-D-5 currently states:
In general, the Freedom of Information Act requires federal agencies to make their records available to the public upon request. However, this requirement does not apply to, among other things, “trade secrets and commercial or financial information that is obtained from a person and that is privileged or confidential.” Under 18 U.S.C. 1905, it is a criminal offense for an officer or employee of the U.S. or any federal department or agency to publish, divulge, disclose, or make known “in any manner or to any extent not authorized by law any information coming to him in the course of his employment or official duties or by reason of any examination or investigation made by, or return, report or record made to or filed with, such department or agency or officer or employee thereof, which information concerns or relates to the trade secrets, (or) processes . . . of any person, firm, partnership, corporation, or association.” This provision applies to all employees of the federal government, including special Government
Section IV-D-5 is proposed to be amended as follows:
In general, the Freedom of Information Act requires federal agencies to make their records available to the public upon request. However, this requirement does not apply to, among other things, “trade secrets and commercial or financial information that is obtained from a person and that is privileged or confidential.” Under 18 U.S.C. 1905, it is a criminal offense for an officer or employee of the United States or any federal department or agency to publish, divulge, disclose, or make known “in any manner or to any extent not authorized by law any information coming to him in the course of his employment or official duties or by reason of any examination or investigation made by, or return, report or record made to or filed with, such department or agency or officer or employee thereof, which information concerns or relates to the trade secrets, (or) processes . . . of any person, firm, partnership, corporation, or association.” This provision applies to all employees of the federal government, including special Government employees.
None of the other sub-sections under Section IV are proposed to be amended.
Section V currently states:
Section V-A. The NIH Director, with advice of the RAC, may revise the classification for the purposes of the
Section V-B. Section III,
Section V is proposed to be amended as follows:
Section V-A. The NIH Director may revise the classification for the purposes of the
Section V-B. Section III,
Appendix A currently states:
Certain specified recombinant or synthetic nucleic acid molecules that consist entirely of DNA segments from different species that exchange DNA by known physiological processes, though one or more of the segments may be a synthetic equivalent are exempt from these
Appendix A is proposed to be amended as follows:
Certain specified recombinant or synthetic nucleic acid molecules that consist entirely of DNA segments from different species that exchange DNA by known physiological processes, though one or more of the segments may be a synthetic equivalent are exempt from these
Appendix C-IX-A currently states:
The NIH Director, with advice of the RAC, may revise the classification for the purposes of these
Appendix C-IX-A is proposed to be amended as follows:
The NIH Director may revise the classification for the purposes of these
None of the other sub-sections under Appendix C-IX. Footnotes and References of Appendix C are proposed to be amended.
Appendix D currently states in part:
As noted in the subsections of Section IV-C-1-b-(1), the Director, NIH, may take certain actions with regard to the
Appendix D is proposed to be amended as follows:
As noted in the subsections of Section IV-C-1-b-(1), the Director, NIH, may take certain actions with regard to the
Appendix I-II currently states:
Host-Vector 1 systems (other than
The following types of data shall be submitted, modified as appropriate for the particular system under consideration: (i) A description of the organism and vector; the strain's natural habitat and growth requirements; its physiological properties, particularly those related to its reproduction, survival, and the mechanisms by which it exchanges genetic information; the range of organisms with which this organism normally exchanges genetic information and the type of information is exchanged; and any relevant information about its pathogenicity or toxicity; (ii) a description of the history of the particular strains and vectors to be used, including data on any mutations which render this organism less able to survive or transmit genetic information; and (iii) a general description of the range of experiments contemplated with emphasis on the need for developing such an Host-Vector 1 system.
Investigators planning to request Host-Vector 2 systems certification may obtain instructions from NIH OSP concerning data to be submitted (see Appendices I-III-N and O,
Appendix I-II is proposed to be amended as follows:
Host-Vector 1 systems (other than
The following types of data shall be submitted, modified as appropriate for the particular system under consideration: (i) A description of the organism and vector; the strain's natural habitat and growth requirements; its physiological properties, particularly those related to its reproduction, survival, and the mechanisms by which it exchanges genetic information; the range of organisms with which this organism normally exchanges genetic information and the type of information is exchanged; and any relevant information about its pathogenicity or toxicity; (ii) a description of the history of the particular strains and vectors to be used, including data on any mutations which render this organism less able to survive or transmit genetic information; and (iii) a general description of the range of experiments contemplated with emphasis on the need for developing such an Host-Vector 1 system.
Investigators planning to request Host-Vector 2 systems certification may obtain instructions from NIH OSP concerning data to be submitted (see Appendices I-III-N and O,
Appendix L, GENE THERAPY POLICY CONFERENCES (GTPCS), is proposed to be deleted in its entirety.
Appendix M, Points to Consider in the Design and Submission of Protocols for the Transfer of Recombinant or Synthetic Nucleic Acid Molecules into One or More Human Research Participants (Points to Consider), is proposed to be deleted in its entirety.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
National Institutes of Health, HHS.
Notice.
The National Toxicology Program (NTP) announces a meeting to peer review the Draft Report on Carcinogens Monograph on Night Shift Work and Light at Night. NTP has conducted a literature-based assessment to determine whether night shift work (
Kate Helmick, ICF, 2635 Meridian Parkway, Suite 200, Durham, NC, USA 27713. Phone: (919) 293-1673, Fax: (919) 293-1645, Email:
NTP has conducted a literature-based assessment and applied the
The monograph assesses the evidence from cancer studies in humans and experimental animals and mechanistic data and provides NTP's preliminary recommendation regarding whether night shift work and or light at night should be listed in the Report on Carcinogens, and if so, how the two exposure scenarios should be defined. The listing categories include
The deadline for submission of written comments is September 21, 2018. Written public comments should be submitted through the meeting website. Persons submitting written comments should include name, affiliation, mailing address, phone, email, and sponsoring organization (if any). Written comments received in response to this notice will be posted on the NTP website and the submitter will be identified by name, affiliation, and sponsoring organization (if any). Comments that address scientific/technical issues will be forwarded to the peer-review panel and NTP staff prior to the meeting.
The agenda allows for one oral public comment period (up to 12 commenters, up to 5 min per speaker). Registration to provide oral comments is September 21, 2018, at
If possible, oral public commenters should send a copy of their slides and/or statement or talking points to Kate Helmick by email:
Following the meeting, a report of the peer review will be prepared and made available on the NTP website.
Coast Guard, DHS.
Notice and request for comments.
The Coast Guard announces that it is harmonizing personal flotation device (PFD) standards between the United States and Canada by accepting a new standard for approval of PFDs. Specific elements of the new standard are contained in a policy letter and deregulatory savings analysis, on which we are requesting public comment, and are intended to promote the Coast Guard's maritime safety and stewardship missions.
Comments must be submitted to the online docket via
You may submit comments identified by docket number USCG-2018-0565 using the Federal eRulemaking Portal at
For information about this document call or email Jacqueline Yurkovich, Coast Guard; telephone 202-372-1389, email
We encourage you to submit comments on the lifejacket approval harmonization policy letter entitled, ADOPTION OF ANSI/CAN/UL 12402-5 AND -9, and the deregulatory savings analysis entitled, “Approval for Personal Floatation Devices/Adoption of ANSI/CAN/UL 12402-5 and 9,” which are available in the docket. The policy letter is also available on the USCG website,
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
The United States Coast Guard (USCG) has statutory authority under Title 46, U.S. Code, Sections 3306(a) and (b), 4102(a) and (b), 4302(a), and 4502(a) and (c)(2)(B) to prescribe regulations for the design, construction, performance, testing, carriage, use, and inspection of lifesaving equipment on commercial and recreational vessels. Since 2008, the USCG has been working closely with Transport Canada (TC) and a diverse group of U.S. and Canadian stakeholders to harmonize PFD standards with the current international standard (ISO 12402) to create a single North American standard for PFD approval. A single North American standard will allow manufacturers the opportunity to produce more innovative equipment that meets the approval requirements of both the United States and Canada.
In 2015, Underwriters Laboratories Inc. published bi-national standards
In April 2017, the USCG and TC signed a Memorandum of Understanding (MOU) outlining intended cooperation for approval of personal lifesaving appliances that comply with mutually acceptable standards, are tested by mutually accepted conformity assessment bodies or independent test laboratories, and are covered by a mutually acceptable follow-up program. In January 2018, TC published a policy stating it will accept UL 12402-5 as a substitute for its PFD standards in support of the MOU. The policy letter on which we are requesting comment builds on the efforts described above by establishing that the USCG will accept Level 70 PFDs complying
The adoption of this policy marks the culmination of over a decade of dedicated work across the lifejacket and recreational boating safety community and supports National Boating Safety Advisory Council Resolution 2009-83-01, which is available in the docket.
This policy letter allows manufacturers to have their products certified to the new bi-national standard, in lieu of the legacy standards codified in title 46 CFR. This allowance is intended to reduce the burden of maintaining approvals in U.S. and Canadian markets and to make additional types of PFDs available to U.S. and Canadian boaters.
This policy does not impact existing PFD approvals, and does not require any action on the part of boaters or mariners who have approved PFDs onboard. An existing approved PFD will continue to meet the same carriage requirements, as long as it remains in good and serviceable condition.
The Coast Guard has prepared a Deregulatory Savings Analysis for the policy letter that identifies and examines the potential costs and savings associated with implementing the new standards plan and is available in the docket. We request your comments on any concerns that you may have related to the policy changes.
This notice is issued under authority of 5 U.S.C. 552(a).
Federal Emergency Management Agency, DHS.
Committee Management; Notice of Federal Advisory Committee Meeting.
The Federal Emergency Management Agency (FEMA) Technical Mapping Advisory Council (TMAC) will meet in person on Tuesday, September 25, 2018, and Wednesday, September 26, 2018, in Reston, Virginia. The meeting will be open to the public.
The TMAC will meet on Tuesday, September 25, 2018, from 8:00 a.m.-5:30 p.m. Eastern Daylight Time (EDT), and Wednesday, September 26, 2018, from 8:00 a.m.-5:30 p.m. EDT. Please note that the meeting will close early if the TMAC has completed its business.
The meeting will be held at the United States Geological Survey (USGS) Headquarters at 12201 Sunrise Valley Drive, Reston, VA 20192. Members of the public who wish to attend the meeting must register in advance by sending an email to
For information on facilities or services for individuals with disabilities or to request special assistance at the meeting, contact the person listed below in the
To facilitate public participation, members of the public are invited to provide written comments on the issues to be considered by the TMAC, as listed in the
•
•
•
A public comment period will be held on Tuesday, September 25, 2018, from 4:00 p.m. to 4:30 p.m. EDT and again on Wednesday, September 26, 2018, from 11:30 a.m. to 12:00 p.m. EDT. Speakers are requested to limit their comments to no more than three minutes. The public comment period will not exceed 30 minutes. Please note that the public comment period may end before the time indicated, following the last call for comments. Contact the individual listed below to register as a speaker by close of business on Friday, September 21, 2018.
Michael Nakagaki, Designated Federal Officer for the TMAC, FEMA, 400 C Street SW, Washington, DC 20024, telephone (202) 212-2148, and email
Notice of this meeting is given under the
In accordance with the
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW, Room 4176, Washington, DC 20410-5000; telephone 202-402-3400 (this is not a toll-free number) or email at
John Olmstead, Housing Program Specialist, Office of Housing Counseling, Office of Policy and Grant Administration, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410; email
Copies of available documents submitted to OMB may be obtained from Ms. Pollard.
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) The accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Ways to enhance the quality, utility, and clarity of the information to be collected; and (4) Ways to minimize the burden of the
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.
Office of the Chief Information Officer, HUD.
Notice.
HUD submitted the proposed information collection requirement described below to the Office of Management and Budget (OMB) for review, in accordance with the Paperwork Reduction Act. The purpose of this notice is to allow for 30 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: HUD Desk Officer, Office of Management and Budget, New Executive Office Building, Washington, DC 20503; fax: 202-395-5806, Email:
Colette Pollard, Reports Management Officer, QMAC, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410; email
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.
The
The ICDBG program regulations are at 24 CFR part 1003. The ICDBG program requires eligible applicants to submit information to enable HUD to select the best projects for funding during annual competitions. Additionally, the information submitted is essential for HUD in monitoring grants to ensure that grantees are complying with applicable statutes and regulations and implementing activities as approved.
ICDBG applicants must submit a complete application package which includes an Application for Federal Assistance (SF-424), Applicant/Recipient Disclosure/Update Report (HUD-2880), Cost Summary (HUD-4123), and Implementation Schedule (HUD-4125). If the applicant has a waiver of the electronic submission requirement and is submitting a paper application, an Acknowledgement of Application Receipt (HUD-2993) must also be submitted. If the applicant is a tribal organization, a resolution from the tribe stating that the tribal organization is submitting an application on behalf of the tribe must also be included in the application package.
ICDBG recipients are required to submit a quarterly Federal Financial Report (SF-425) that describes the use of grant funds drawn from the recipient's line of credit. The reports are used to monitor cash transfers to the recipients and obtain expenditure data from the recipients. (2 CFR 200.327)
The regulations at 24 CFR part 200 require that grantees and sub-grantees take all necessary affirmative steps to assure that minority firms, women's business enterprises, and labor surplus area firms are used when possible. Consistent with these regulations, 24 CFR 1003.506(b) requires that ICDBG grantees report on these activities on an annual basis, with Contract and Subcontract Activity Report being due to HUD on October 10 of each year (HUD-2516).
The regulations at 24 CFR 1003.506 instruct recipients to submit to HUD an Annual Status and Evaluation Report (ASER) that describes the progress made in completing approved activities with a listing of work to be completed; a breakdown of funds expended; and when the project is completed, a program evaluation expressing the effectiveness of the project in meeting community development needs. The ASER is due by November 15 each year and at grant closeout.
The information collected will allow HUD to accurately audit the program.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond: Including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.
Office of the Chief Information Officer, HUD.
Notice.
HUD submitted the proposed information collection requirement described below to the Office of Management and Budget (OMB) for review, in accordance with the Paperwork Reduction Act. The purpose of this notice is to allow for 30 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: HUD Desk Officer, Office of Management and Budget, New Executive Office Building, Washington, DC 20503; fax: 202-395-5806, Email:
Colette Pollard, Reports Management Officer, QMAC, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410; email
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.
The
In accordance with 24 CFR 203.439(c), lenders must report monthly to HUD and the DHHL on delinquent borrowers and provide documentation to HUD to support that the loss mitigation requirements of 24 CFR 203.602 have been met. To assist the DHHL in identifying delinquent loans, lenders report monthly. A delinquent mortgage that is reported timely would allow DHHL to intervene and prevent foreclosure.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond: Including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.
Fish and Wildlife Service, Interior.
Notice of availability and request for public comment.
We, the U.S. Fish and Wildlife Service, announce the availability of the draft recovery plan for the endangered Neosho mucket. The draft recovery plan includes specific recovery objectives and criteria that must be met in order for us to delist this species under the Endangered Species Act. We request review and comment on this draft recovery plan from local, State, and Federal agencies; Tribes; and the public.
In order to be considered, comments on the draft recovery plan must be received on or before October 16, 2018.
For additional information about submitting comments, see
Melvin Tobin, by telephone at 501-513-4473, or via email at
We, the U.S. Fish and Wildlife Service (Service), announce the availability of the draft recovery plan for the endangered Neosho mucket (
The Neosho mucket is a freshwater mussel. The shell is up to 5 inches (18 cm) long. The species is sexually dimorphic, as is typical of
Neosho mucket glochidia (larvae) are obligate parasites on smallmouth bass (
The ESA specifies five factors for listing species as endangered or threatened. The Neosho mucket is threatened primarily by the destruction, modification, or curtailment of its habitat or range (Listing Factor A of the ESA). Specific threats include impoundment, sedimentation, chemical contaminants, mining, the inadequacy of existing regulatory mechanisms, population fragmentation and isolation, invasive nonindigenous species, and water temperature. Climate change (Listing Factor E) is also likely to have adverse effects on the species due to alteration of hydrologic cycles of rivers that support Neosho mucket, but the extent or magnitude of this threat has not been quantified at this time. We determined that other existing
As a result of these threats, the Neosho mucket was listed as endangered on the Federal List of Endangered and Threatened Wildlife in title 50 of the Code of Federal Regulations (50 CFR 17.11) on September 17, 2013 (78 FR 57076). A total of 483 river miles (777 river kilometers) in seven rivers and one creek (Elk, Fall, Illinois, Neosho, Spring, North Fork Spring, and Verdigris Rivers and Shoal Creek) has been designated as critical habitat for the Neosho mucket (80 FR 24692, April 30, 2015). Critical habitat as set forth in 50 CFR 17.95(f) is located in Benton and Washington Counties, Arkansas; Allen, Cherokee, Coffey, Elk, Greenwood, Labette, Montgomery, Neosho, Wilson, and Woodson Counties, Kansas; Jasper, Lawrence, McDonald, and Newton Counties, Missouri; and Adair, Cherokee, and Delaware Counties, Oklahoma.
Section 4(f) of the ESA requires the development of recovery plans for listed species, unless such a plan would not promote the conservation of a particular species. Recovery plans describe actions considered necessary for conservation of the species, establish recovery criteria, and estimate time and cost for implementing recovery measures. Section 4(f) of the ESA also requires us to provide public notice and an opportunity for public review and comment during recovery plan development. We will consider all information presented during a public comment period prior to approval of each new or revised recovery plan. We and other Federal agencies will take these comments into account in the course of implementing approved recovery plans.
The goal of this recovery plan is to ensure the long-term viability of the Neosho mucket in the wild to the point that it can be removed (“delisted”) from the Federal List of Endangered and Threatened Wildlife. To achieve this goal, it will be necessary to establish naturally self-sustaining populations with healthy long-term demographic traits and trends. We are defining the following reasonable delisting criteria based on the best available information on this species. These criteria will be reevaluated as new information becomes available:
The Neosho mucket will be considered for delisting when:
(1) Two of four targeted river basins (Illinois, Verdigris, Neosho, and Spring River basins) contain viable populations with positive or stable basin-wide population trend, as evidenced by a population number measured with sufficient precision to detect change of ±25 percent (Factors A, D, and E);
(2) Spatial distribution of natural or stocked aggregations distributed throughout the basin is sufficient to protect against local catastrophic or stochastic events (Factors A and E);
(3) All life stages are supported by sufficient habitat quantity and quality (see Primary Constituent Elements in the
(4) Threats and causes of decline have been reduced or eliminated (Factors A, D, and E).
A viable population is defined as a wild, naturally reproducing population that is able to persist and maintain sufficient genetic variation to evolve and respond to natural changes and stochastic events without further human intervention. Viable populations are expected to be large and genetically diverse, include at least five age classes with at least one cohort ≤7 years of age, and recruit at sufficient rates to maintain or increase population size.
We request written comments on the draft recovery plan. We will consider all comments we receive by the date specified in
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
The authority for this action is section 4(f) of the Endangered Species Act, 16 U.S.C. 1533 (f).
Bureau of Indian Affairs, Interior.
Notice.
The State of Oklahoma entered into compact amendments with the Absentee Shawnee Tribe, Cherokee Nation, Chickasaw Nation, Citizen Potawatomi Nation, Eastern Shawnee Tribe of Oklahoma, Iowa Tribe of Oklahoma, Kaw Nation, Muscogee (Creek) Nation, Seneca-Cayuga Nation, Wichita and Affiliated Tribes, and Wyandotte Nation of Oklahoma governing certain forms of class III gaming; this notice announces the approval of the State of Oklahoma Gaming Compact Non-house-Banked Table Games Supplement between the State of Oklahoma and the Absentee Shawnee Tribe, Cherokee Nation, Citizen Potawatomi Nation, Eastern Shawnee Tribe of Oklahoma, Iowa Tribe of Oklahoma, Kaw Nation, Muscogee (Creek) Nation, Seneca-Cayuga Nation, Wichita and Affiliated Tribes, and Wyandotte Nation.
The compact amendments take effect on August 17, 2018.
Ms. Paula L. Hart, Director, Office of Indian Gaming, Office of the Deputy Assistant Secretary—Policy and Economic Development, Washington, DC 20240, (202) 219-4066.
Under section 11 of the Indian Gaming Regulatory Act (IGRA) Public Law 100-497, 25 U.S.C. 2701
Bureau of Indian Affairs, Interior.
Notice.
The State of Oklahoma entered into compact amendments with the Choctaw Nation of Oklahoma and with the Fort Sill Apache Tribe of Oklahoma governing certain forms of class III gaming; this notice announces the approval of the State of Oklahoma Gaming Compact Non-house-Banked Table Games Supplement between the State of Oklahoma and the Choctaw Nation of Oklahoma and the Fort Sill Apache Tribe of Oklahoma.
The compact amendments take effect on August 17, 2018.
Ms. Paula L. Hart, Director, Office of Indian Gaming, Office of the Deputy Assistant Secretary—Policy and Economic Development, Washington, DC 20240, (202) 219-4066.
Under section 11 of the Indian Gaming Regulatory Act (IGRA) Public Law 100-497, 25 U.S.C. 2701
Bureau of Indian Affairs, Interior.
Notice.
The Bureau of Indian Affairs (BIA) owns or has an interest in irrigation projects located on or associated with various Indian reservations throughout the United States. We are required to establish irrigation assessment rates to recover the costs to administer, operate, maintain, and rehabilitate these projects. We are notifying you that we have adjusted the irrigation assessment rates at several of our irrigation projects and facilities to reflect current costs of administration, operation, maintenance, and rehabilitation.
The irrigation assessment rates are current as of January 1, 2018.
For details about a particular BIA irrigation project or facility, please use the tables in the
A Notice of Proposed Rate Adjustment was published in the
Yes. The 2019 Operation and Maintenance (O&M) rate for the Wind River Irrigation Project, Units 2, 3, and 4, was proposed in the
Yes. BIA received twelve (12) written comments related to the proposed irrigation rate adjustment for the Flathead Indian Irrigation Project and Wind River Irrigation Project.
Commenters raised concerns on the proposed rates about the following issues:
Written comments relating to the proposed rate adjustment were received by letter. BIA's summary of the issues and BIA's responses are provided below.
Regarding the timing of this
Regarding concerns with how FIIP management expends funds, each Project Manager has discretion to assess priorities and address those priorities, subject to available funding. As discussed in more detail below, BIA chose not to implement the full, recommended $7.50 increase in 2017, choosing instead to impose a $3.00 increase. As a result, the FIIP Project Manager had less funding available to address key priorities. It is anticipated that the proposed $4.50 increase will provide the FIIP Project Manager with opportunities to address additional priorities.
The BIA's Operations and Management Guidelines require only an annual meeting with the FJBC. This meeting took place on April 11, 2017. These Guidelines also allow FIIP management to meet with individual irrigation districts on an ad hoc basis; to that end, the FIIP Project Manager met with the chairmen of the three individual irrigation districts on June 15, 2017 to discuss the $4.50 rate increase. The FIIP Project Manager also met with the FJBC on September 12, 2017 and October 10, 2017, but the FJBC did not discuss the rate increase at those meetings.
In 2017, BIA proposed to increase the 2018 rate by $7.50 and explained in the
Written comments relating to the proposed rate adjustment were received by letter. The BIA's summary of the issues and BIA's responses are provided below.
BIA's irrigation program has been the subject of serval Office of Inspector General (OIG) and U.S. Government Accountability Office (GAO) audits. In the most recent OIG audit, No. 96-I-641, March 1996, the OIG concluded:
Operation and maintenance revenues were insufficient to maintain the projects, and some projects had deteriorated to the extent that their continued capability to deliver water was in doubt. This occurred because operation and maintenance rates were not based on the full cost of delivering irrigation water, including the costs of systematically rehabilitating and replacing project facilities and equipment, and because project personnel did not seek regular rate increases to cover the full cost of project operation.
A previous OIG audit performed on one of BIA's largest irrigation projects, the Wapato Irrigation Project, No. 95-I-1402, September 1995, reached the same conclusion.
To address the issues noted in these audits, BIA must systematically review and evaluate irrigation assessment rates and adjust them, when necessary, to reflect the full cost to operate and perform all appropriate maintenance on the irrigation project or facility infrastructure to ensure safe and reliable operation. If this review and adjustment is not accomplished, a rate deficiency can accumulate over time. Rate deficiencies force BIA to raise irrigation assessment rates in larger increments over shorter periods than would have been otherwise necessary.
BIA has projected this proposed rate increase for several years, and anticipated increasing the assessment rates in both 2018 and 2019. The Wind River Irrigation Project (WRIP) Operations and Maintenance (O&M) budget was prepared in accordance with BIA financial guidelines. The intent of the increases is for maintenance of a
Based on increased costs associated with administering, operating, maintaining, and rehabilitating WRIP, the need for the proposed rate increase is clear and justified for both 2018 and 2019. For those farm units where BIA determines that our irrigation facilities are not capable of delivering adequate irrigation water, an Annual Assessment Waiver can be granted to waive the O&M assessment.
Of the six WRIP rates, BIA does not set the rates for LeClair District or Riverton Valley Irrigation District. Of the remaining four WRIP rates, BIA is raising each Unit's 2017 rate by $1.00 over the course of two years. Rates for three Units (Unit 6, Crow Heart Unit, and A Canal Unit) are increasing by $1.00 in 2018; these three Units' rates will not increase in 2019. The remaining rate for Units 2, 3, and 4 will be raised by $1 over the course of two years: $0.50 increase in 2018 and $.50 increase in 2019. The rate increases will replenish WRIP's reserve fund; as explained below, the reserve fund is for contingencies or emergencies.
Regarding Unit 6 specifically, RCWUA bases its annual budget on the 85% collection rate minus the BIA direct service cost. The BIA direct service cost is $3.50 per acre and based on a cost per acre of direct services BIA provides to Unit 6 (Ray Canal water users), which includes: (1) Administrative functions for two full-time Accounting Technicians; (2) general office per acre cost; (3) 7.5% of the Project Manager's per acre cost; and (4) 8% of the Equipment Operator's per acre cost. With respect to the last item, BIA's Equipment Operators operate and maintain Washakie Dam, which provides water to the Ray Canal Diversion structure. The Equipment Operators also clean trash racks and maintain the diversion structure for Ray Canal. Operation and maintenance of Washakie Dam and the Ray Canal Diversion structure is captured in BIA's direct service cost of $3.50 per acre.
Although RCWUA may be functioning within its budget to provide O&M within Unit 6, BIA must assess rates based on the entire WRIP. BIA must increase the rate to (1) reflect the full cost of operating and performing all maintenance on the irrigation project or facility infrastructure and (2) maintain a reserve fund to cover emergencies, including critical repairs to avoid potential system failures that occurred in 2017. The reserve fund is used as needed for any Unit within WRIP, including Unit 6. Although BIA receives some non-water user funding for irrigation rehabilitation, each irrigation project needs to maintain a reserve fund for emergencies and equipment purchases. The BIA National Irrigation Handbook's Emergency Reserve Fund Guidelines recommends a reserve of 40% of the annual O&M costs, which is calculated by averaging five years of costs. For WRIP, the recommended reserve amount is $310,000. In addition, irrigation projects should maintain a sinking fund to meet future expenditures for replacement of equipment and vehicles. Currently, the reserve fund and sinking fund combined total is $280,000. The WRIP rate increases will bring in just over $28,000 in 2018 and over $36,000 in the following years for replenishment of WRIP's reserve and sinking funds. Thus, BIA views the modest rate increase here to be necessary and reasonable.
This notice affects you if you own or lease land within the assessable acreage of one of our irrigation projects or if you have a carriage agreement with one of our irrigation projects.
You can contact the appropriate office(s) stated in the tables for the irrigation project that serves you, or you can use the internet site for the Government Printing Office at
Our authority to issue this notice is vested in the Secretary of the Interior (Secretary) by 5 U.S.C. 301 and the Act of August 14, 1914 (38 Stat. 583; 25 U.S.C. 385). The Secretary has in turn delegated this authority to the Assistant Secretary—Indian Affairs under Part 209, Chapter 8.1A, of the Department of the Interior's Departmental Manual.
The following tables are the regional and project/agency contacts for our irrigation facilities.
The rate table below contains the final rates for the 2018 and 2019 calendar years for all irrigation projects where we recover costs of administering, operating, maintaining, and rehabilitating them. An asterisk immediately following the rate category notes the irrigation projects where 2018 rates are different from the 2019 rates.
The Department of the Interior strives to strengthen its government-to-government relationship with Indian Tribes through a commitment to consultation with Indian Tribes and recognition of their right to self-governance and Tribal sovereignty. We have evaluated this notice under the Department's consultation policy and under the criteria of Executive Order 13175 and have determined there to be substantial direct effects on federally recognized Tribes because the irrigation projects are located on or associated with Indian reservations. To fulfill its consultation responsibility to Tribes and Tribal organizations, BIA communicates, coordinates, and consults on a continuing basis with these entities on issues of water delivery, water availability, and costs of administration, operation, maintenance, and rehabilitation of projects that concern them. This is accomplished at the individual irrigation project by project, agency, and regional representatives, as appropriate, in accordance with local protocol and procedures. This notice is one component of our overall coordination and consultation process to provide notice to, and request comments from, these entities when we adjust irrigation assessment rates.
The rate adjustments are not a significant energy action under the definition in Executive Order 13211. A Statement of Energy Effects is not required.
These rate adjustments are not a significant regulatory action and do not need to be reviewed by the Office of Management and Budget under Executive Order 12866.
These rate adjustments are not a rule for the purposes of the Regulatory Flexibility Act because they establish “a rule of particular applicability relating to rates.” 5 U.S.C. 601(2).
These rate adjustments do not impose an unfunded mandate on state, local, or Tribal governments in the aggregate, or on the private sector, of more than $130 million per year. They do not have a significant or unique effect on state, local, or Tribal governments or the private sector. Therefore, the Department is not required to prepare a statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531
These rate adjustments do not effect a taking of private property or otherwise have “takings” implications under Executive Order 12630. The rate adjustments do not deprive the public, state, or local governments of rights or property.
Under the criteria in section 1 of Executive Order 13132, these rate adjustments do not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement because they will not affect the States, the relationship
This notice complies with the requirements of Executive Order 12988. Specifically, in issuing this notice, the Department has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct as required by section 3 of Executive Order 12988.
These rate adjustments do not affect the collections of information which have been approved by the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), under the Paperwork Reduction Act of 1995. The OMB Control Number is 1076-0141 and expires June 30, 2019.
The Department has determined that these rate adjustments do not constitute a major Federal action significantly affecting the quality of the human environment and that no detailed statement is required under the National Environmental Policy Act of 1969, 42 U.S.C. 4321-4370(d), pursuant to 43 CFR 46.210(i). In addition, the rate adjustments do not present any of the 12 extraordinary circumstances listed at 43 CFR 46.215.
In developing this notice, we did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106-554).
Bureau of Land Management, Interior.
Notice of availability.
In accordance with the National Environmental Policy Act of 1969, as amended, and the Federal Land Policy and Management Act of 1976, as amended, the Bureau of Land Management (BLM) Grand Staircase-Escalante National Monument (GSENM) and Kanab Field Office (KFO) have prepared Draft Resource Management Plans (RMPs) and a Draft Environmental Impact Statement (EIS) for the GSENM Grand Staircase, Kaiparowits, and Escalante Canyons Units and Federal lands excluded from the Monument by Proclamation 9682 and by this notice are announcing the opening of the public comment period.
To ensure that comments will be considered, the BLM must receive written comments on the Draft RMPs/Draft EIS within 90 days of the date the Environmental Protection Agency publishes its Notice of Availability of the Draft RMPs/Draft EIS in the
You may submit comments on the Draft RMPs/Draft EIS by either of the following methods:
Copies of the Draft RMPs/Draft EIS are available at the following locations:
Matt Betenson, Associate Monument Manager, telephone (435) 644-1200; address 669 S Hwy. 89A, Kanab, UT 84741; email
On December 4, 2017, President Donald Trump signed Presidential Proclamation 9682 modifying the boundaries of the GSENM as established by Proclamation 6920 to exclude from designation and reservation approximately 861,974 acres of land. Lands that remain part of the GSENM are included in three units, known as the Grand Staircase, Kaiparowits, and Escalante Canyons Units and are reserved for the care and management of the objects of historic and scientific interest described in Proclamation 6920, as modified by Proclamation 9682. Lands that are excluded from the Monument boundaries are now referred to as the Kanab-Escalante Planning Area (KEPA) and are managed in accordance with the BLM's multiple-use mandate.
The planning area is located in Kane and Garfield Counties, Utah, and encompasses approximately 1.86 million acres of public land. For the GSENM Grand Staircase, Kaiparowits, and Escalante Canyons Units, this planning effort, is needed to identify goals, objectives, and management actions necessary for the conservation, protection, restoration, or enhancement of the resources, objects, and values identified in Proclamation 6920, as modified by Proclamation 9682. For lands excluded from the monument, this planning effort is needed to determine to identify goals, objectives, and management actions necessary to ensure that public lands and their various resource values are utilized in the combination that will best meet the present and future needs of the American people.
The entire planning area is currently managed by the BLM and under the Grand Staircase-Escalante National Monument Management Plan (BLM 1999), as amended. This planning effort would replace the existing Monument Management Plan with four new RMPs.
Within the Draft EIS, the BLM is also considering alternatives related to livestock Grazing on 318,000 acres of land within the Glen Canyon National Recreation Area, 65,500 acres in the Kanab Field Office and 2,300 acres in the Arizona Strip Field Office. The EIS includes information regarding the environmental consequences of implementing various livestock grazing management actions on resources in these areas. At the completion of this planning process, the National Park Service, who is cooperating with the BLM on preparation of the NEPA analysis, may adopt the EIS and prepare a separate decision related to livestock grazing for lands under NPS authority.
The BLM reviewed public scoping comments to identify planning issues that directed the formulation of alternatives and framed the scope of analysis in the Draft RMPs/Draft EIS. Issues identified include management of recreation and access; paleontological and cultural resources; livestock grazing; mineral resources; and wildlife, water, vegetation, and soil resources. This planning effort also considers management of lands with wilderness characteristics and designation of Areas of Critical Environmental Concern (ACECs).
The Draft RMPs/Draft EIS evaluate four alternatives in detail. Alternative A is the No Action alternative, which is a continuation of existing decisions in the Monument Management Plan. Alternative B generally focuses on protection of resources (
Pursuant to 43 CFR 1610.7-2(b), the BLM is required to publish a notice in the
The application of the Federal coal unsuitability criteria to portions of the Southern Kaiparowits in the lands excluded from the monument is included in the Draft RMP/Draft EIS. As required by 43 CFR 3461.2-1(a)(2), the public is invited to comment on the results of the application of the criteria and the process used to derive these results.
BLM Utah is soliciting comments on the entire Draft RMPs/Draft EIS. Please note that public comments and information submitted including names, street addresses, and email addresses of persons who submit comments will be available for public review and disclosure at addresses provided in the
Before including your address, phone number, email address or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may request to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
40 CFR 1506.6, 40 CFR 1506.10 and 43 CFR 1610.2.
Bureau of Land Management, Interior.
Notice of availability.
In accordance with the National Environmental Policy Act of 1969, as amended, and the Federal Land Policy and Management Act of 1976, as amended, the Bureau of Land Management (BLM) Canyon Country District Office, in coordination with the United States Forest Service (USFS), Manti-La Sal National Forest, has prepared Draft Monument Management Plans (MMPs) and an Environmental Impact Statement (EIS) for the Bears Ears National Monument (BENM) Indian Creek and Shash Jáa Units. By this Notice, the BLM is announcing the opening of the public comment period.
To ensure that comments will be considered, the BLM must receive written comments on the BENM Draft MMPs/Draft EIS within 90 days of the date the Environmental Protection Agency publishes its Notice of Availability of the BENM Draft MMPs/Draft EIS in the
You may submit comments on the BENM Draft MMPs/EIS by either of these methods:
Copies of the BENM Draft MMPs/Draft EIS are available at the following locations:
Lance Porter, District Manager, BLM Canyon Country District Office, 82 East Dogwood, Moab, UT 84532, telephone 435-259-2100 or email
On December 4, 2017, President Donald Trump signed Proclamation 9681 modifying the Bears Ears National Monument designated by Proclamation 9558 to exclude from its designation and reservation approximately 1,150,860 acres of land. The revised BENM boundary includes two units—Shash Jáa and Indian Creek Units—that are reserved for the care and management of the objects of historic and scientific interest within their boundaries. The planning area is located entirely in San Juan County, Utah and encompasses 169,289 acres of BLM-managed lands and 32,587 acres of National Forest System Lands. All of the National Forest System Lands are within the Shash Jáa Unit.
The BLM is the lead agency for the preparation of the EIS, and the Forest Service is participating as a cooperating agency.
This planning effort is needed to identify goals, objectives, and management actions necessary for the conservation, protection, restoration, or enhancement of the resources, objects, and values identified in Proclamation 9558, as modified by Proclamation 9681. The BENM is jointly managed by the BLM and USFS under the Monticello Resource Management Plan (BLM 2008), as amended, and the Manti La-Sal Land and Resource Management Plan (LRMP), as amended (USFS 1986). The MMPs would replace the existing Monticello RMP for the BLM-administered lands within the BENM, and would amend the existing Manti La-Sal LRMP for USFS-administered lands within the BENM.
Each agency will continue to manage their lands within the monument pursuant to their respective applicable legal authorities. The responsible official for the BLM is the Utah State Director; the responsible official for the USFS is the Manti-La Sal Forest Supervisor. The USFS intends to use the BLM's EIS to make its decision for the part of the Shash Jáa Unit MMP it administers. The USFS will use the BLM's administrative review procedures, as provided by the USFS 2012 Planning Rule, at 36 CFR 219.59(b).
The BLM and USFS have reviewed public scoping comments to identify planning issues that directed the formulation of alternatives and framed the scope of analysis in the Draft MMPs/Draft EIS. Issues identified include management of cultural resources, including protection of American Indian sacred sites, traditional cultural properties, and access by members of Indian tribes for traditional cultural and customary uses; recreation and access; livestock grazing; and wildlife, water, vegetation, and soil resources. This planning effort also considers management of lands with wilderness characteristics.
The Draft MMPs/Draft EIS evaluate four alternatives in detail. Alternative A is the No Action alternative, which is a continuation of existing decisions in the Monticello RMP and in the Manti-La Sal Forest Plan, to the extent that those decisions are compatible with the proclamations. Alternative B emphasizes resource protection and conservation. It is the alternative which imposes the greatest restrictions on recreation and other uses. The BLM and USFS would take a more active management approach to ensure that objects and values are conserved, protected and restored. Alternative C represents a balance among levels of restriction on recreation and other uses and emphasizes adaptive management to protect the long-term sustainability of Monument objects and values while providing for other multiple uses. Alternative D is the alternative with the least restrictive management prescriptions and utilizes a more passive management strategy, with the aim of minimizing the number of changes in the BENM. The agencies would focus on management actions that preserve objects and values but do not alter the existing character of the landscape or limit future agency discretion.
The BLM and USFS have identified Alternative D as the preferred
BLM Utah and the USFS are soliciting comments on the entire Draft MMPs/Draft EIS. Please note that public comments and information submitted including names, street addresses, and email addresses of persons who submit comments will be available for public review and disclosure at addresses provided in the
Before including your address, phone number, email address or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may request to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
40 CFR 1506.6, 40 CFR 1506.10, 43 CFR 1610.2, and 36 CFR 219.59.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a pre-clearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95). This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. The Bureau of Labor Statistics (BLS) is soliciting comments concerning the proposed extension for the collection of the “BLS Data Sharing Program.” A copy of the proposed information collection request (ICR) can be obtained by contacting the individual listed below in the
Written comments must be submitted to the office listed in the
Send comments to Erin Good, BLS Clearance Officer, Division of Management Systems, Bureau of Labor Statistics, Room 4080, 2 Massachusetts Avenue NE, Washington, DC 20212. Written comments may be transmitted by fax to 202-691-5111. (This is not a toll free number.)
Erin Good, BLS Clearance Officer, 202-691-7763. (See
An important aspect of the mission of the BLS is to disseminate to the public the maximum amount of information possible. Not all data are publicly available because of the importance of maintaining the confidentiality of BLS data. However, the BLS has opportunities available on a limited basis for eligible researchers to access confidential data for purposes of conducting valid statistical analyses that further the mission of the BLS as permitted in the Confidential Information Protection and Statistical Efficiency Act of 2002 (CIPSEA). The BLS makes confidential data available to eligible researchers through three major programs:
1. The Census of Fatal Occupational Injuries (CFOI), as part of the BLS occupational safety and health statistics program, compiles a count of all fatal work injuries occurring in the U.S. in each calendar year. Multiple sources are used in order to provide as complete and accurate information concerning workplace fatalities as possible. A research file containing CFOI data is made available offsite to eligible researchers.
2. The National Longitudinal Surveys of Youth (NLSY) is designed to document the transition from school to work and into adulthood. The NLSY collects extensive information about youths' labor market behavior and educational experiences over time. The NLSY includes three different cohorts: The National Longitudinal Survey of Youth 1979 (NLSY79), the NLSY79 Young Adult Survey, and the National Longitudinal Survey of Youth 1997 (NLSY97). NLSY data beyond the public use data are made available in greater detail through an offsite program to eligible researchers.
3. Additionally, the BLS makes available data from several employment, compensation, prices, and working conditions surveys to eligible researchers for onsite use. Eligible visiting researchers can access these data in researcher rooms at the BLS national office in Washington, DC or at a Federal Statistical Research Data Center (FSRDC).
Office of Management and Budget clearance is being sought for the BLS Data Sharing Program. In order to provide access to confidential data, the BLS must determine that the researcher's project will be exclusively statistical in nature and that the researcher is eligible based on guidelines set out in CIPSEA, the Office of Management and Budget (OMB) implementation guidance on CIPSEA, and BLS policy. This information collection provides the vehicle through which the BLS will obtain the necessary details to ensure all researchers and projects comply with appropriate laws and policies.
The Bureau of Labor Statistics is particularly interested in comments that:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility.
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they also will become a matter of public record.
Weeks of August 20, 27, September 3, 10, 17, 24, 2018.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and Closed.
There are no meetings scheduled for the week of August 20, 2018.
There are no meetings scheduled for the week of August 27, 2018.
There are no meetings scheduled for the week of September 3, 2018.
There are no meetings scheduled for the week of September 17, 2018.
For more information or to verify the status of meetings, contact Denise McGovern at 301-415-0681 or via email at
The NRC Commission Meeting Schedule can be found on the internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the public meetings in another format (
Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301-415-1969), or you may email
Pension Benefit Guaranty Corporation.
Notice of intent to request extension of OMB approval of information collection.
The Pension Benefit Guaranty Corporation (PBGC) intends to request that the Office of Management and Budget (OMB) extend approval, under the Paperwork Reduction Act, of a collection of information contained in its regulation on Partitions of Eligible Multiemployer Plans. This notice informs the public of PBGC's intent and solicits public comment on the collection of information.
Comments must be submitted on or before October 16, 2018.
Comments may be submitted by any of the following methods:
•
•
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All submissions received must include the agency's name (Pension Benefit Guaranty Corporation, or PBGC) and refer to OMB control number 1212-0068. All comments received will be posted without change to PBGC's website,
Copies of the collections of information may also be obtained by writing to Disclosure Division, Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street NW, Washington, DC 20005-4026, or calling 202-326-4040 during normal business hours. TTY users may call the Federal relay service toll-free at 800- 877-8339 and ask to be connected to 202-326-4040. PBGC's regulations on
Melissa Rifkin (
The Pension Benefit Guaranty Corporation (PBGC) intends to request that the Office of Management and Budget (OMB) extend approval, under the Paperwork Reduction Act, of a collection of information contained in its regulation on Partitions of Eligible Multiemployer Plans (29 CFR part 4233) (OMB control number 1212-0068; expires December 31, 2018). This notice informs the public of PBGC's intent and solicits public comment on the collection of information.
Sections 4233(a) and (b) of the Employee Retirement Income Security Act of 1974 (ERISA) allow a plan sponsor of a multiemployer plan to apply to PBGC for a partition of the plan and state the criteria that PBGC uses to determine a plan's eligibility for a partition.
PBGC's regulation on Partitions of Eligible Multiemployer Plans (29 CFR part 4233) sets forth the procedures for applying for a partition, the information required to be included in a partition application, and notices to interested parties of the application.
PBGC needs the information to determine whether a plan is eligible for partition and whether a proposed partition would comply with the statutory conditions required before PGBC may order a partition.
The collection of information under the regulation has been approved by OMB control number 1212-0068 (expires December 31, 2018). PBGC intends to request that OMB extend its approval for another three years. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
PBGC estimates that there will be six applications for partition each year for which plan sponsors submit applications under this regulation. The total estimated annual burden of the collection of information is 78 hours and $239,400.
PBGC is soliciting public comments to—
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodologies and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Issued in Washington, DC.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing for the Commission's consideration concerning negotiated service agreements. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's website (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3010, and 39 CFR part 3020, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comment deadline(s) for each request appear in section II.
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This Notice will be published in the
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to delete the current rules on arbitration (“Current Arbitration Rules”), currently under the 10000 Series (Rules 10001 through 10102), and adopt the Nasdaq ISE, LLC (“ISE”) rules on arbitration in Chapter 18 of the ISE's rulebook (“Proposed Arbitration Rules”) into General 6 in the Exchange's rulebook's (“Rulebook”) shell structure.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to delete the rules on arbitration, currently under the 10000 Series (Rules 10001 through 10102), and adopt the ISE rules on arbitration in Chapter 18 of the ISE's rulebook into General 6 in the Exchange's Rulebook.
The Exchange adopted the Current Arbitration Rules to ensure a fair and efficient manner in which to handle any dispute, claim or controversy arising out of, or in connection with, the business of any Member of the Exchange. To help administer the process of dispute resolution, the Exchange and FINRA are parties to a Regulatory Contract, pursuant to which FINRA has agreed to perform certain functions and provide access to certain services, including: member regulation and registration; non-real time market surveillance; examinations and investigations; and dispute resolution. FINRA currently operates the largest securities dispute resolution forum in the United States,
Because the Affiliated Exchanges are also parties to similar Regulatory Contracts with FINRA that make their members and associated persons of such members subject to the FINRA Code of Arbitration Procedure, the Exchange believes it is pertinent that a common set of rules on arbitration be included in the General section of the Rulebook's shell. These rules will, pursuant to subsequent filings, then replace the existing arbitration rules for each of the Affiliated Exchanges.
As part of the process of harmonizing these rules, staff evaluated the corresponding rules on arbitration at each of the Affiliated Exchanges. Staff have determined that the Proposed Arbitration Rules are the easiest to read and the most accessible, and do not
Therefore, the Exchange will adopt the Proposed Arbitration Rules and place them under the “General 6 Arbitration” of the shell's “General Equity and Options Rules” section. As mentioned, these rules are already in place on ISE, and also apply to Nasdaq GEMX, LLC and Nasdaq MRX, LLC, which incorporate Chapter 18 of the ISE Rules by reference. Subsequently, the other Affiliated Exchanges plan to adopt these rules also.
The relocation and harmonization of the arbitration rules is part of the Exchange's continued effort to promote efficiency and conformity of its processes with those of its Affiliated Exchanges.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed changes do not impose a burden on competition because, as previously stated, they are (i) of a non-substantive nature, (ii) intended to harmonize the Exchange's rules with those of its Affiliated Exchanges, and (iii) intended to organize the Rulebook in a way that it will ease the Members' navigation and reading of the rules across the Affiliated Exchanges.
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On June 26, 2018, New York Stock Exchange LLC (“Exchange” or “NYSE”) filed with the Securities and Exchange Commission (“Commission”) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to amend NYSE Rule 49 to require certain member organizations to participate in scheduled Market-Wide Circuit Breaker (“MWCB”) testing.
The Securities Information Processors (“SIPs”) for the U.S. equity markets have established a quarterly MWCB testing schedule.
The Exchange states that quarterly MWCB testing is critical to ensure that securities markets halt trading and subsequently re-open in a manner consistent with the MWCB rules.
The Exchange also proposes new Rule 49(c)(1), which would provide that each member organization notified of its obligation to participate in mandatory testing pursuant to standards established under paragraphs (b)(1) and (3) of Rule 49
Finally, proposed Rule 49(c)(2) would provide that member organizations not required to participate in a scheduled MWCB test pursuant to standards established in paragraphs (b)(1) and (3) of Rule 49 would be permitted to participate in a scheduled MWCB test.
The Exchange proposes to implement the proposed rule change at the same time that the Exchange notifies member organizations of required participation in the 2019 Regulation SCI industry test.
After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Commission believes that amending NYSE Rule 49 to require certain member organizations to participate in scheduled MWCB testing would enable the Exchange, participating member organizations, and others to assess the readiness of participating member organizations to respond in the event of unanticipated market volatility. Member organizations required to participate in MWCB testing pursuant to the proposal would be designated as such using the same standards used by the Exchange in determining which member organizations are subject to mandatory Regulation SCI testing. Because these member organizations have been designated by the Exchange as essential to the maintenance of a fair and orderly market, their demonstrated ability to halt and subsequently re-open trading in a manner consistent with the MWCB rules should contribute to the fairness and orderliness of the market for the benefit of all market participants. The Commission therefore believes that the proposal, as modified by Amendment No. 1, is designed to remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and to protect investors and the public interest.
Accordingly, for the reasons discussed above, the Commission believes that the Exchange's proposal, as modified by Amendment No. 1, is consistent with the Act.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On June 13, 2018, ICE Clear Credit LLC (“ICC”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The proposed rule change would revise Chapters 4, 8, and 20 of the ICC Rules to more clearly characterize Mark-to-Market Margin payments as settlement payments (“settled-to-market”) rather than collateral (“collateralized-to-market”).
The proposed rule change would revise Rule 401 to reference Mark-to-Market Margin Balance, a new term that is defined in Rule 404 to mean the aggregate amount of Mark-to-Market Margin paid or received.
As stated above, the proposed rule change would not modify the current calculation of Mark-to-Market Margin, or other operational practices, but, instead, would replace certain specifics relating to ICC's Mark-to-Market Margin calculation with the new defined term Mark-to-Market Margin Balance.
Further, the proposed rule change would revise Rule 401(g) to specify that amounts ICC currently pays to CPs as interest on any Mark-to-Market Margin would no longer be considered interest but instead would be treated as a new payment obligation between ICC and CPs and referred to as the “price alignment amount.”
The proposed rule change would also clarify in proposed revisions to Rule 401(g) that the rate ICC may pay or charge a CP for a price alignment amount on any Mark-to-Market Margin or interest on any Initial Margin in the form of cash may be negative. This proposed revision is intended by ICC to more clearly address the effect negative market rate environments could have on how such amounts might be paid or charged by ICC to CPs.
The proposed rule change would add and clarify references to amounts that ICC will continue to treat as collateral to avoid confusion over the proper characterization of Mark-to-Market Margin under the ICC Rules. Specifically, the proposed rule change would update Rule 401(h) to provide that CPs may substitute, in accordance with the ICC Procedures and applicable law, Eligible Margin only for an amount of Initial Margin.
The proposed rule change would similarly add and clarify references to amounts that ICC would treat as settled to avoid confusion over the proper characterization of Mark-to-Market Margin under the ICC Rules. The proposed rule change would add language to Rule 402(e) to describe ICC's rights with respect to Mark-to-Market Margin and more clearly state that Mark-to-Market Margin payments constitute a settlement. The proposed rule change would also update Rule 401(l) to refer to settlement finality in relation to Mark-to-Market Margin.
Finally, the proposed rule change would make clarifications and conforming changes to Chapters 8 and 20 of the ICC Rules. The proposed rule change would revise Rule 801(a)(i), which describes how ICC calculates a CP's Required Contribution to the General Guaranty Fund, to refer to the transfer of Mark-to-Market Margin.
The proposed rule change would also replace, in the defined term MTM in Rule 808, the phrase “amount of MTM held by any Participant or ICE Clear Credit” with a conforming reference to the new defined term Mark-to-Market Margin Balance.
The proposed rule change would replace terminology in Rule 810(e) that is commonly used in conjunction with collateral by changing the words “posted” to “transferred” and removing the phrase “and be offset against”. This change would avoid confusion over the proper characterization of Mark-to-Market Margin as settlement payments.
Finally, the proposed rule change would clarify in Rule 20-605(c)(i)(B), which specifies the resources to be used to cover losses with respect to Client-Related Positions, that ICC would use the defaulting CP's Client-Related Mark-to-Market Margin, to the extent not previously applied to pay Mark-to-Market Margin to other CPs.
Section 19(b)(2)(C) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such organization.
Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of ICC be designed to promote the prompt and accurate clearance and settlement of securities transactions and, to the extent applicable, derivative agreements, contracts, and transactions, as well as to assure the safeguarding of securities and funds which are in the custody or control of ICC or for which it is responsible, and, in general, to protect investors and the public interest.
As described above, the proposed rule change would revise Chapters 4, 8, and 20 of the ICC Rules to more clearly characterize Mark-to-Market Margin payments as settlement payments rather than collateral. To facilitate this characterization, the proposed rule change would introduce a new definition, Mark-to-Market Margin Balance, and a new concept, price alignment amount. Moreover, the proposed rule change would update the terminology used in certain rules, and the application of certain rules to Mark-to-Market Margin, in light of the characterization of Mark-to-Market Margin payments as settlement payments rather than collateral. The proposed rule change would not change the manner in which Mark-to-Market Margin is calculated, or other current ICC operational practices.
The Commission believes that by clarifying the treatment of Mark-to-Market Margin payments, the proposed rule change would help ensure that Mark-to-Market margin is treated as settled payments rather than collateral, consistent with ICC's intention. In doing so, the Commission further believes the proposed rule change would clarify that ICC has all rights and outright title to such Mark-to-Market Margin. The Commission believes the proposed rule change would clarify ICC's interest in and rights to Mark-to-Market Margin, thereby supporting ICC's ability to use Mark-to-Market Margin to cover credit and market losses.
The Commission further believes that in this regard the proposed rule change would remove potential confusion regarding the treatment of Mark-to-Market Margin, thereby helping to improve the operation and effectiveness of ICC's margin system. Given that an effective margin system is necessary to manage ICC's credit exposures to its CPs and the risks associated with clearing security based swap-related portfolios, the Commission believes that the proposed rule change would help improve ICC's ability to avoid the losses that could result from the mismanagement of credit exposures and the risks associated with clearing security based swap-related portfolios. Because such losses could disrupt ICC's ability to promptly and accurately clear security based swap transactions, the Commission believes that the proposed rule change, by improving the operation and effectiveness of ICC's margin system, would thereby help promote the prompt and accurate clearance and settlement of securities transactions.
Similarly, given that mismanagement of ICC's credit exposures to its CPs and the risks associated with clearing security based swap-related portfolios could cause ICC to realize losses on such portfolios and threaten ICC's ability to operate, thereby threatening access to securities and funds in ICC's control, the Commission believes that the proposed rule change would help assure the safeguarding of securities and funds which are in the custody or control of the ICC or for which it is responsible. Finally, for both of these reasons, the Commission believes the Framework would, in general, protect investors and the public interest.
Therefore, the Commission finds that the proposed rule change would promote the prompt and accurate clearance and settlement of securities transactions, assure the safeguarding of securities and funds in ICC's custody and control, and, in general, protect investors and the public interest, consistent with the Section 17A(b)(3)(F) of the Act.
Rule 17Ad-22(b)(2) requires that ICC establish, implement, maintain and enforce written policies and procedures reasonably designed to use margin requirements to limit its credit exposures to participants under normal market conditions and use risk-based models and parameters to set margin requirements and review such margin requirements and the related risk-based models and parameters at least monthly.
As described above, the proposed rule change would revise Chapters 4, 8, and 20 of the ICC Rules to more clearly characterize Mark-to-Market Margin payments as settlement payments rather than collateral. Specifically, the Proposed Rule Change would revise Rule 401 to reference Mark-to-Market Margin Balance, a new term that is defined in Rule 404 to mean the aggregate amount of Mark-to-Market Margin paid or received. The new definition would be used in Rule 401(a), regarding House Margin, which would be revised to state that ICC calculates a net amount of Mark-to-Market Margin by subtracting a CP's Mark-to-Market Margin Balance from a CP's Mark-to-Market Margin Requirement. Moreover, under the proposed revised Rule 401(g), ICC would pay or charge a CP price alignment, which would be economically equivalent to interest, on any Mark-to-Market Margin and interest on any cash Initial Margin at a rate that may be negative. The proposed rule change would not modify the current calculation of Mark-to-Market Margin, or other operational practices, but, instead, would replace certain specifics relating to ICC's Mark-to-Market Margin calculation with the new defined term Mark-to-Market Margin Balance.
The Commission believes that by clarifying the treatment of Mark-to-Market Margin payments, the proposed rule change would help ensure that Mark-to-Market margin is treated as settled payments rather than collateral. The Commission believes that in this regard the proposed rule change would help ensure that the margin system is operating consistently for all CPs and in a manner that is consistent with ICC's view on the treatment of Mark-to-Market Margin by confirming that all Mark-to-Market Margin would be treated as settlement payments. In doing so, the Commission further believes the proposed rule change would clarify that ICC has all rights and outright title to such Mark-to-Market Margin. The Commission believes the proposed rule change would thereby clarify ICC's interest in and rights to Mark-to-Market Margin, thereby supporting ICC's ability to use Mark-to-Market to cover credit and market losses. The Commission therefore believes the proposed rule change would help ICC maintain and
Moreover, as noted above, the proposed rule change resulted from a request by CPs for ICC to confirm it treats Mark-to-Market Margin as settlement payments. CPs therefore may hesitate to post Mark-to-Market Margin if ICC does not consistently treat such margin as settlement payments. Thus, the Commission believes the proposed rule change would help ICC enforce written policies and procedures reasonably designed to use margin requirements to limit its credit exposures to participants under normal market conditions.
Therefore, for the above reasons the Commission finds that the proposed rule change is consistent with Rule 17Ad-22(b)(2).
Rule 17Ad-22(d)(1) requires that ICC establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for a well-founded, transparent, and enforceable legal framework for each aspect of its activities in all relevant jurisdictions.
As discussed above, the proposed rule change would revise Chapters 4, 8, and 20 of the ICC Rules to more clearly characterize Mark-to-Market Margin payments as settlement payments rather than collateral. The proposed rule change would also revise terminology to further clarify the legal characterization that payments of Mark-to-Market Margin represent settlement rather than collateral payments. These clarifying changes are the result of ICC's analysis of the legal characterization of Mark-to-Market Margin payments, at the request of its CPs.
Thus, ICC intends to treat Mark-to-Market Margin payments as settled rather than collateral, and the Commission believes that the proposed rule change's clarifications and additions would help ensure that ICC's margin system operates consistently with this intention. The Commission further believes that the proposed rule change would help ensure that the margin system is operating consistently for all CPs by confirming that all Mark-to-Market Margin would be treated as settlement payments. In ensuring the consistent treatment of Mark-to-Market Margin, the Commission believes that the proposed rule change would help ensure that the policies and procedures underlying ICC's margin system provide a well-founded, transparent, and enforceable legal framework.
Therefore, for the above reasons the Commission finds that the proposed rule change is consistent with Rule 17Ad-22(d)(1).
On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act, and in particular, with the requirements of Section 17A(b)(3)(F) of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend the Exchange's transaction fees at Rule 7018(a), as described further below.
While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on August 1, 2018.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend the Exchange's transaction fees at Rule 7018 to (i) adjust the volume threshold for a credit associated with orders that access liquidity that are entered by members that access liquidity equal to or in excess of a certain percentage of their [sic] total Consolidated Volume
The Exchange operates on the “taker-maker” model, whereby it pays credits to members that take liquidity and charges fees to members that provide liquidity. Currently, the Exchange offers several different credits for orders that access liquidity on the Exchange. Among these credits, the Exchange pays a credit of $0.0015 per share executed for an order that accesses liquidity (excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with a Non-displayed price) entered by a member that accesses liquidity equal to or exceeding 0.075% of total Consolidated Volume during a month. The Exchange proposes to decrease the Consolidated Volume threshold applicable to this credit to 0.065% of total Consolidated Volume during a month. The Exchange recently had increased this threshold to 0.075%,
The Exchange presently offers several credits for members whose orders remove liquidity from the Exchange. Among these credits, the Exchange offers a $0.0018 per share executed credit for orders that access liquidity in securities in Tapes A and C (excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with a Non-displayed price) that are entered by a member that: (i) Accesses liquidity equal to or exceeding 0.20% of total Consolidated Volume during a month; and (ii) accesses 20% more liquidity as a percentage of Consolidated Volume than the member accessed in May 2018. The Exchange also offers a $0.0019 per share executed credit for orders that access liquidity in securities in Tape B (excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with a Non-displayed price) that are entered by a member that: (i) Accesses liquidity equal to or exceeding 0.20% of total Consolidated Volume during a month; and (ii) accesses 20% more liquidity as a percentage of Consolidated Volume than the member accessed in May 2018.
The Exchange now plans to add two new tiers that will also entitle members to receive credits of $0.0018 and $0.0019 per share executed. The first of these new tiers will offer a member a $0.0018 per share executed credit for its orders that access liquidity in securities in Tapes A and C (excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with a Non-displayed price) to the extent that the member, during a given month: (i) Has a total volume (including both providing and accessing liquidity) that is equal to or exceeds 0.20% [sic] of total Consolidated Volume during that month; (ii) has a total volume that is at least 20% greater (as a percentage of Consolidated Volume) than its total volume in July 2018; and (iii) of the 20% or more increase in total volume described above, at least 30% is attributable to adding liquidity. The second tier will offer a member a $0.0019 per share executed credit for orders that access liquidity in securities in Tape B (excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with a Non-displayed price) to members that satisfy these same three conditions.
An example of how these two new credits will work is as follows. Firm X adds and removes 0.60% of total Consolidated Volume in securities in Tape A in July 2018. In August 2018, Firm X adds and removes 0.72% of total Consolidated Volume in securities in the same Tape. The increase in total volume as a percentage of total Consolidated Volume from July to August is 0.12%—which is an increase of approximately [sic] 20%. If at least 30% of that 0.12% increase (0.036%) is attributable to Firm X adding liquidity, then Firm X will qualify for a $0.0018 per share executed credit for its orders that access liquidity in securities in Tape A (excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with a Non-displayed price).
The Exchange proposes to add these credits to provide new and stronger incentive for members to increase their total volume of activity on the Exchange, provided that at least a certain percentage of that increase in total volume arises from adding liquidity. The Exchange also proposes a higher credit for increasing volume in Tape B than it does in Tapes A or C to specifically target Tape B securities, where the Exchange has seen less activity than it has in Tape A and C securities.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
Likewise, in
Further, “[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers'. . . .”
The Exchange believes that it is reasonable to decrease the Consolidated Volume threshold on its credit for orders that access liquidity (excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with Midpoint pegging [sic]) entered by members that access liquidity equal to or exceeding 0.075% of total Consolidated Volume during a month. The Exchange must, from time to time, assess the effectiveness of its credits in achieving their intended objectives and adjust the levels of such credits based on the Exchange's observations of market participant behavior. In this instance, the Exchange recently had increased the Consolidated Volume threshold to provide a stronger incentive to market participants to improve the market, but the Exchange has since determined that this increase was too high and that the threshold needs to be recalibrated downward to 0.065% to ensure that firms can continue to qualify for the credit. The Exchange believes that the proposed decrease is equitable and is not unfairly discriminatory because it will apply to all similarly situated member firms.
Likewise, the Exchange believes that its proposal is reasonable to add new credits for orders that access liquidity (excluding orders with Midpoint pegging and those that receive price improvement and execute against an order with a non-displayed price) that are entered by members that, in a given month, remove and access [sic] liquidity equal to or in excess of 0.50% of Consolidated Volume during the month, have a total volume (as a percentage of Consolidated Volume) that is 20% greater than it was in July 2018, and where at least 30% of the 20% increase in total volume (as a percentage of Consolidated Volume) arises from adding liquidity. This proposal is reasonable because it will provide new and stronger incentive for members to improve the market by both adding and removing liquidity from the Exchange. It will also incent them to increase the extent of this activity on the Exchange relative to their activity levels as of July 2018. The Exchange believes it is reasonable, equitable, and not unfairly discriminatory to propose a higher credit to members that increase volume in securities in Tape B than those that do so in securities in Tapes A and C because the Exchange has experienced less activity in Tape B securities relative to Tapes A and C securities and it wishes to specifically target increased activity with respect to Tape B securities. The Exchange also believes that these proposals are equitable and not unfairly discriminatory because they will apply to all similarly situated member firms.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and credits to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee or credit changes in this market may impose any burden on competition is extremely limited.
In this instance, the Exchange's proposals to add to or modify its credits do not impose a burden on competition because these proposals are reflective of the Exchange's overall efforts to provide greater incentives to market participants that it believes will improve the market, to the benefit of all participants. The Exchange does not believe that any of the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. Moreover, because there are numerous competitive alternatives to the use of the Exchange, it is likely that BX will lose market share as a result of the changes if they are unattractive to market participants.
Likewise, the Exchange's proposed credits and credit amendments do not impose a burden on competition because the Exchange's execution services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. Again, if the proposed credits are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposal will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend the Exchange's Schedule of Fees to provide further explanation on how the Exchange charges Crossing Orders and Responses to Crossing Orders in index options on the Nasdaq 100 Reduced Value Index (“NQX”).
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange recently adopted transaction fees and rebates for adding or removing liquidity from ISE (
In SR-ISE-2018-61, the Exchange stated that the above pricing would apply to all executions in NQX, including Non-Priority Customer
The Exchange does not seek to amend the manner in which Crossing Orders in NQX and responses thereto are currently charged, rather the Exchange
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed language relating to the application of taker fees to Crossing Orders and Responses to Crossing Orders in NQX is reasonable because the proposed rule text will bring greater transparency to the manner in which the Exchange charges NQX orders submitted in ISE's various crossing mechanisms. As discussed above, the Exchange charges members the applicable taker fee to both the originating and contra side of Crossing Orders in NQX as well charging the NQX taker pricing for Responses to Crossing Orders. The Exchange believes it is reasonable and appropriate to charge taker and not maker pricing for these orders because the Exchange seeks to encourage market making activity in NQX by providing the $0.25 per contract maker rebate to Market Maker orders that post liquidity in the Exchange's new proprietary product during the initial months of trading. Furthermore, the manner in which the Exchange applies the NQX taker fees in Section III.B is not changing with this proposal, and the proposed changes are intended to bring greater clarity to ISE's Schedule of Fees, to the benefit of all market participants.
The Exchange's proposal to add the clarifying language is also equitable and not unfairly discriminatory because the Exchange will continue to apply the taker fees for Crossing Orders and Responses to Crossing Orders in NQX in a uniform manner for all similarly situated participants. The Exchange also believes that it is equitable and not unfairly discriminatory to assess no taker fees to Market Maker Crossing Orders and Responses to Crossing Orders in NQX as compared to other Non-Priority Customers, who are currently assessed the $0.25 per contract taker fee for such orders. Market Makers, unlike other market participants, take on a number of obligations, including quoting obligations, that other market participants do not have. Further, the Exchange believes that it is equitable and not unfairly discriminatory to assess no transaction fees to Priority Customer
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. As discussed above, the proposal is intended to eliminate ambiguity from the Schedule of Fees by further explaining how ISE charges the originating and contra side of Crossing Orders in NQX as well as Responses to Crossing Orders in NQX. The proposal does not amend the current manner in which the Exchange assesses fees for Crossing Orders and Responses to Crossing Orders in NQX, and the Exchange will continue to assess the applicable taker fees in Section III.B for such NQX orders in a uniform manner to all market participants. For the foregoing reasons, the Exchange believes that the proposed changes do not impose an undue burden on competition.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange is filing a proposal to amend Exchange Rule 514, Priority on the Exchange.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Exchange Rule 514, Priority on the Exchange. Specifically, the Exchange proposes to amend subsection (c), Self-Trade Protection, to broaden the protection afforded under the current rule by giving Members
Currently, the rule prevents orders entered by a Market Maker
Members of the Exchange may either be Market Makers or Electronic Exchange Members.
The Exchange now proposes to allow members to choose to have this protection applied at either the MPID level, as currently implemented, or at the member firm level. If members choose to have this protection applied at the member firm level, the System will prohibit orders entered from different MPIDs within the Member's firm from trading against one another. The Exchange believes that the proposed enhancement will provide Members with more tailored self-trade functionality that will allow Members to manage their trading as appropriate based on the Member's business needs. While the Exchange believes that some firms will want to restrict trading interest from the same MPID, (as currently implemented), the Exchange believes that other firms will find it helpful to apply self-trade protection across all MPIDs of the same firm.
The Exchange note that similar functionality also exists on the Nasdaq Stock Market (“NASDAQ”) which prevents self-trades by MPID, or alternatively, if selected by the member, self-trade protection for all MPIDs of the firm.
The Exchange will announce the implementation date of this functionality via a Regulatory Circular prior to the functionality being available on the Exchange.
MIAX PEARL believes that its proposed rule changes are consistent with Section 6(b) of the Act
The Exchange believes the proposed changes promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system by providing Market Makers with additional flexibility to configure self-trade protections offered by the Exchange. Currently, all Market Makers are provided functionality that prevents orders entered by a Market Maker via the MEO Interface or the FIX Interface using the same MPID from executing against orders entered on the opposite side of the market by the same Market Maker using the same MPID via the MEO Interface or the FIX Interface. While this functionality is helpful, some members would prefer not to trade with orders entered under different MPIDs of the same firm. Therefore, the Exchange is proposing to provide Exchange Members flexibility with respect to how self-trade protections are implemented. Members may continue to use the current functionality, while members who prefer to prevent self-trades across different MPIDs within the same firm will now be provided with functionality that allows them to do so.
Similar functionality exists on the Nasdaq Stock Market and CboeBZX
MIAX PEARL does not believe that the proposed rule change will impose any burden on intermarket or intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is designed to enhance the Exchange's current self-trade protection, and will benefit members that wish to protect their orders from trading with orders from other Market Makers within the same firm, rather than the more limited MPID standard currently in use. The new functionality, which is similar to functionality already provided on CboeBZX, is also completely voluntary, and members that wish to use the current functionality may continue to do so. The Exchange does not believe that providing more flexibility to members will have any significant impact on competition. Conversely, the Exchange believes that the proposed rule change will foster competition as Market Makers may send more orders to the Exchange knowing that there is no chance that they will trade with their own orders on the other side of the market. This could result in more order flow and more liquidity on the Exchange.
The Exchange does not believe that the proposed rule change will impose any burden on intra-market competition as self-trade protection is available to all Market Makers on the Exchange. Further, the Exchange does not believe that the proposed rule change will impose any burden on inter-market competition, and rather could potentially promote inter-market competition and result in more competitive order flow to the Exchange by more widely preventing Market Makers from trading with their own orders.
Written comments were neither solicited nor received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to make permanent Rule 11.24, which sets forth the Exchange's pilot Retail Price Improvement Program.
The text of the proposed rule change is available at the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements.
The purpose of the proposed rule change is to amend Rule 11.24 to make permanent the Retail Price Improvement Program (the “Program”), which is currently offered on a pilot basis. The Exchange has operated the pilot for a six year period and believes that it has been successful in its stated goal of providing price improvement opportunities to retail investors. The analysis conducted by the Exchange shows that retail investors have been provided a total of $4.5 million of price improvement during the 2.5 year period reviewed from January 2016 through June 2018. In addition, the Exchange's analysis shows that the Program has provided these benefits to retail investors without having an adverse impact on the broader market. The proposal provides an analysis of the economic benefits to retail investors and the marketplace flowing from operation of the Program, which the Exchange believes supports making the Program permanent.
In November 2012, the Commission approved the Program on a pilot basis.
The SEC approved the Program on a pilot basis, in part, because it concluded, “the Program is reasonably designed to benefit retail investors by providing price improvement to retail order flow.”
The Exchange adopted the following definitions under Rule 11.24(a):
First, the term “Retail Member Organization” is defined as a Member (or a division thereof) that has been approved by the Exchange to submit Retail Orders.
Second, the term “Retail Order” is defined as an agency order or riskless principal that meets the criteria of FINRA Rule 5320.03
Finally, the term “Retail Price Improvement Order” or “RPI Order” consists of non-displayed interest on the Exchange that is priced better than the Protected NBB or Protected NBO by at least $0.001 and that is identified as such (“RPI interest”).
The price of an RPI Order is determined by a User's entry of the following into the Exchange: (1) RPI buy or sell interest; (2) an offset, if any; and (3) a ceiling or floor price. RPI Orders submitted with an offset are similar to other peg orders available to Users in that the order is tied or “pegged” to a certain price, and would have its price automatically set and adjusted upon changes in the Protected NBBO, both upon entry and any time thereafter. RPI buy or sell interest is typically entered to track the Protected NBBO, that is, RPI Orders are typically submitted with an offset. The offset is a predetermined amount by which the User is willing to improve the Protected NBBO, subject to a ceiling or floor price. The ceiling or floor price is the amount above or below which the User does not wish to trade. RPI Orders in their entirety (the buy or sell interest, the offset, and the ceiling or floor) will remain non-displayed. The Exchange also allows Users to enter RPI Orders that establish the exact limit price, which is similar to a non-displayed limit order currently accepted by the Exchange except the Exchange accepts sub-penny limit prices on RPI Orders in increments of $0.001. The Exchange monitors whether RPI buy or sell interest, adjusted by any offset and subject to the ceiling or floor price, is eligible to interact with incoming Retail Orders.
Users and RMOs may enter odd lots, round lots or mixed lots as RPI Orders and as Retail Orders respectively. As discussed below, RPI Orders are ranked and allocated according to price and time of entry into the System consistent with Rule 11.12 and therefore without regard to whether the size entered is an odd lot, round lot or mixed lot amount. Similarly, Retail Orders interact with RPI Orders according to the Priority and Allocation rules of the Program and without regard to whether they are odd lots, round lots or mixed lots. Finally, Retail Orders are designated as Type 1 or Type 2 without regard to the size of the order.
RPI Orders interact with Retail Orders as follows. Assume a User enters RPI sell interest with an offset of $0.001 and a floor of $10.10 while the Protected NBO is $10.11. The RPI Order could interact with an incoming buy Retail Order at $10.109. If, however, the Protected NBO was $10.10, the RPI Order could not interact with the Retail Order because the price required to deliver the minimum $0.001 price improvement ($10.099) would violate the User's floor of $10.10. If a User otherwise enters an offset greater than the minimum required price improvement and the offset would produce a price that would violate the User's floor, the offset would be applied only to the extent that it respects the User's floor. By way of illustration, assume RPI buy interest is entered with an offset of $0.005 and a ceiling of $10.112 while the Protected NBB is at $10.11. The RPI Order could interact with an incoming sell Retail Order at $10.112, because it would produce the required price improvement without violating the User's ceiling, but it could not interact above the $10.112 ceiling. Finally, if a User enters an RPI Order
Under Rule 11.24(b), any Member may qualify as an RMO if it conducts a retail business or routes retail orders on behalf of another broker-dealer. For purposes of Rule 11.24(b), conducting a retail business shall include carrying retail customer accounts on a fully disclosed basis. Any Member that wishes to obtain RMO status is required to submit: (1) An application form; (2) supporting documentation sufficient to demonstrate the retail nature and characteristics of the applicant's order flow; and (3) an attestation, in a form prescribed by the Exchange, that substantially all orders submitted as Retail Orders will qualify as such under Rule 11.24.
An RMO is required to have written policies and procedures reasonably designed to assure that it will only designate orders as Retail Orders if all requirements of a Retail Order are met. Such written policies and procedures must require the Member to (i) exercise due diligence before entering a Retail Order to assure that entry as a Retail Order is in compliance with the requirements of this rule, and (ii) monitor whether orders entered as Retail Orders meet the applicable requirements. If the RMO represents Retail Orders from another broker-dealer customer, the RMO's supervisory procedures must be reasonably designed to assure that the orders it receives from such broker-dealer customer that it designates as Retail Orders meet the definition of a Retail Order. The RMO must (i) obtain an annual written representation, in a form acceptable to the Exchange, from each broker-dealer customer that sends it orders to be designated as Retail Orders that entry of such orders as Retail Orders will be in compliance with the requirements of this rule, and (ii) monitor whether its broker-dealer customers' Retail Order flow continues to meet the applicable requirements.
If the Exchange disapproves the application, the Exchange provides a written notice to the Member. The disapproved applicant could appeal the disapproval by the Exchange as provided in Rule 11.24(d), and/or reapply for RMO status 90 days after the disapproval notice is issued by the Exchange. An RMO also could voluntarily withdraw from such status at any time by giving written notice to the Exchange.
Rule 11.24(c) addresses an RMO's failure to abide by Retail Order requirements. If an RMO designates orders submitted to the Exchange as Retail Orders and the Exchange determines, in its sole discretion, that those orders fail to meet any of the requirements of Retail Orders, the Exchange may disqualify a Member from its status as an RMO. When disqualification determinations are made, the Exchange provides a written disqualification notice to the Member. A disqualified RMO may appeal the disqualification as provided in Rule 11.24(d) and/or reapply for RMO status 90 days after the disqualification notice is issued by the Exchange.
Rule 11.24(d) provides appeal rights to Members. If a Member disputes the Exchange's decision to disapprove it as an RMO under Rule 11.24(b) or disqualify it under Rule 11.24(c), such Member (“appellant”) may request, within five business days after notice of the decision is issued by the Exchange, that the Retail Price Improvement Program Panel (“RPI Panel”) review the decision to determine if it was correct.
The RPI Panel consists of the Exchange's Chief Regulatory Officer (“CRO”), or a designee of the CRO, and two officers of the Exchange designated by the Chief Operating Officer (“COO”). The RPI Panel reviews the facts and render [sic] a decision within the time frame prescribed by the Exchange. The RPI Panel may overturn or modify an action taken by the Exchange and all determinations by the RPI Panel constitute final action by the Exchange on the matter at issue.
Under Rule 11.24(e), the Exchange disseminates an identifier when RPI interest priced at least $0.001 better than the Exchange's Protected Bid or Protected Offer for a particular security is available in the System (“Retail Liquidity Identifier”). The Retail Liquidity Identifier is disseminated through consolidated data streams (
Under Rule 11.24(f), an RMO can designate how a Retail Order would interact with available contra-side interest as follows:
A Type 1-designated Retail Order will interact with available contra-side RPI Orders and other price improving contra-side interest but will not interact with other available contra-side interest in the System that is not offering price improvement or route to other markets. The portion of a Type 1-designated Retail Order that does not execute against contra-side RPI Orders or other price improving liquidity will be immediately and automatically cancelled.
A Type 2-designated Retail Order will interact first with available contra-side RPI Orders and other price improving liquidity and then any remaining
Under Rule 11.24(g), competing RPI Orders in the same security are ranked and allocated according to price then time of entry into the System. Executions occur in price/time priority in accordance with Rule 11.12. Any remaining unexecuted RPI interest remains available to interact with other incoming Retail Orders if such interest is at an eligible price. Any remaining unexecuted portion of the Retail Order will cancel or execute in accordance with Rule 11.24(f). The following example illustrates this method:
An incoming Retail Order to sell ABC for 1,000 executes first against User 3's bid for 500 at $10.035, because it is the best priced bid, then against User 2's bid for 500 at $10.02, because it is the next best priced bid. User 1 is not filled because the entire size of the Retail Order to sell 1,000 is depleted. The Retail Order executes against RPI Orders in price/time priority.
However, assume the same facts above, except that User 2's RPI Order to buy ABC at $10.02 is for 100. The incoming Retail Order to sell 1,000 executes first against User 3's bid for 500 at $10.035, because it is the best priced bid, then against User 2's bid for 100 at $10.02, because it is the next best priced bid. User 1 then receives an execution for 400 of its bid for 500 at $10.015, at which point the entire size of the Retail Order to sell 1,000 is depleted.
As a final example, assume the same facts as above, except that User 3's order was not an RPI Order to buy ABC at $10.035, but rather, a non-displayed order to buy ABC at $10.03. The result would be similar to the result immediately above, in that the incoming Retail Order to sell 1,000 executes first against User 3's bid for 500 at $10.03, because it is the best priced bid, then against User 2's bid for 100 at $10.02, because it is the next best priced bid. User 1 then receives an execution for 400 of its bid for 500 at $10.015, at which point the entire size of the Retail Order to sell 1,000 is depleted.
All Regulation NMS securities traded on the Exchange are eligible for inclusion in the RPI Program. The Exchange limits the Program to trades occurring at prices equal to or greater than $1.00 per share. Toward that end, Exchange trade validation systems prevent the interaction of RPI buy or sell interest (adjusted by any offset) and Retail Orders at a price below $1.00 per share.
The Exchange established the Program in an attempt to attract retail order flow to the Exchange by providing an opportunity for price improvement to such order flow. The Exchange believes that the Program promotes transparent competition for retail order flow by allowing Exchange members to submit RPI Orders to interact with Retail Orders. Such competition promotes efficiency by facilitating the price discovery process and generating additional investor interest in trading securities, thereby promoting capital formation and retail investment opportunities. The Program will continue to be limited to trades occurring at prices equal to or greater than $1.00 per share.
In accordance with its filing establishing the pilot, the Exchange did “produce data throughout the pilot, which will include statistics about participation, the frequency and level of price improvement provided by the Program, and any effects on the broader market structure.”
The SEC stated in the RPI Approval Order that the Program could promote competition for retail order flow among execution venues, and that this could benefit retail investors by creating additional well-regulated and transparent price improvement opportunities for marketable retail order flow, most of which is currently executed in the Over-the-Counter (“OTC”) markets without ever reaching a public exchange.
Brokers route retail orders to a wide range of different trading systems. The Program offers a transparent and well-regulated option, providing meaningful competition and price improvement. As explained above, the purpose of the Program is to attract retail order flow to the Exchange by providing an opportunity for retail investors to receive price improvement. The Exchange believes that the Program has satisfied this goal, having provided a total of $4.5 million of price improvement, or approximately $153,000 per month, in the last 2.5 years. Furthermore, while the amount of price improvement provided in the Program varies month to month, the amount of price improvement provided in recent months has generally increased relative to prior months due to additional participation in the Program by market participants with retail order flow. The Exchange believes that this supports permanent approval of the pilot as retail investors continue to reap the benefits afforded by the Program. The amount of monthly and cumulative price improvement provided in the Program is illustrated in Chart 1 below.
Furthermore, Retail Order volume executed in the Program accounted for between 0.86% and 2.32% of total BYX volume from January 2017 to June 2018, as shown in Chart 2 below, and between 0.05% and 0.11% of total consolidated volume, as shown in Chart 3 below. Despite its size relative to total volume executed on the Exchange or the broader market, the Program has continued to provide considerable price improvement each month to retail investors that participated in the Program. In addition, the Exchange believes that the relatively modest volume executed in the Program relative to total BYX volume and total consolidated volume limits the potential impact of the Program on broader market quality on the Exchange.
Retail Orders are routed by sophisticated brokers using systems that seek the highest fill rates and amounts of price improvement. These brokers have many choices of execution venues for this order flow. When they choose to route to the Program, they have determined that it is the best opportunity for fill rate and price improvement at that time. As shown in Table 1 below, Retail Order average daily volume (“ADV”) executed in the Program averaged between 2 and 7 million shares from January 2016 to June 2018. Increased volatility in February 2018 likely contributed to the increased Retail Order shares executed in the Program that month. Fill rates for the majority of the period studied ranged from 11%-19% with fill rates declining below 10% starting in December 2017, likely due to additional participation in the Program that resulted in a significant increase in the Retail Order volume entered on the Exchange. Retail Orders also continue to receive more than the minimum $0.001 price improvement required of a liquidity providing RPI Order, with the monthly average price improvement provided to Retail Orders ranging from $0.0011-$0.0014 per share, and the monthly effective/quoted spread ratio ranging from 0.77-0.90. The Exchange believes that this data supports permanent approval of the Program as this would allow retail investors to continue to execute their orders with price improvement in the Program.
Tables 2, 3, and 4 show the distribution of Retail Orders entered and executed in the Program for the period from January 2017 to June 2018. As shown in Table 2, a majority of all Retail Orders entered to participate in the Program from January 2016 to June 2018 were for a round lot or fewer shares. Specifically, Retail Orders of one round lot or fewer shares accounted for an average of approximately 56% of the total number of Retail Orders entered. More than 73% of Retail Orders entered were for 300 shares or less. Very large orders of more than 7,500 shares accounted for only 1.9% of Retail Orders submitted to the Program but accounted for a significant portion (approximately 40%) of the shares entered, as shown in Table 3. In addition, despite lower fill rates, large orders account for a reasonable portion (approximately 9%) of the shares executed in the Program, as shown in Table 4. The Program also receives a significantly large number of odd lot and single lot sized shares, which could be representative of retail marketable orders from retail customers. By providing price improvement to these orders, retail customers would continue to benefit from the Program.
The Exchange also analyzed fill rates across the different order size buckets and found that while fill rates are higher for smaller orders as expected, large size orders are still able to access liquidity and therefore receive price improvement in the Program. Moreover, overall fill rates indicate that market participants that provide liquidity are responding with quote depth when the contra side order is looking for a fill. While fill rates decreased starting in November 2017, the Exchange believes that this is due to new Retail Order flow being routed to the Program, rather than a decrease in the available liquidity. Monthly volume executed in the Program, as shown in Table 1, has therefore remained constant or increased since November 2017 despite the lower overall fill rates for those months. The Exchange therefore believes that the Program is an attractive option for market participants looking to fill Retail Orders with price improvement.
As shown in Charts 2 and 3 above, Retail Order volume executed in the Program is a small percentage of both total volume executed on the Exchange and total consolidated volume. While the Program has better depth available for Retail Orders, it does not significantly affect the market volume of BYX. The average volume within the 95th percentile is between 1.3% and 1.7%. With the Program volume mostly below 2.5% of BYX volume, the Exchange does not believe that it is able to significantly impact BYX market quality. Nevertheless, to test the impact of the Program on broader market quality, the Exchange reviewed the correlation between metrics that are tied to overall market quality with relevant Program metrics over both 2017 and 2018. Based on this analysis, which is provided in Table 6 below, the Exchange does not believe that the Program has had any significant impact on broader market quality.
Specifically, the Exchange's analysis shows that: (1) Inside size in the broader market is not correlated with either RPI effective spreads or the percentage of volume executed in the Program, which suggests that market participants are not moving volume from the regular market to the Program as effective spreads narrow or volume executed in the Program increases; (2) effective spreads in the broader market are not correlated with the percentage of volume executed in the Program, which suggests that spreads are not widening as a result of more Retail Order flow being executed in the Program, (3) midpoint volume executed is not correlated with effective spreads in the Program, which suggests that market participants are not moving midpoint liquidity from the regular market to instead receive price improvement in the Program, and (4) displayed volume executed is not correlated with quoted spreads in the Program, which suggest that market participants are not entering non-displayed retail price improving interest in the Program as an alternative to displaying interest on an order book. The Exchange therefore believes that the Program can continue on a permanent basis—and thereby provide increased price improvement opportunities to retail investors on a transparent well-regulated exchange—without degrading market quality outside of the Program.
Based
The Exchange believes the proposed rule change is consistent with the requirements of Section 6(b) of the Act,
The Exchange believes that making the pilot permanent is consistent with these principles because the Program is reasonably designed to attract retail order flow to the exchange environment, while helping to ensure that retail investors benefit from the better price that liquidity providers are willing to give their orders. During the pilot period, the Exchange has provided data and analysis to the Commission. The Exchange believes that this data and analysis, as well as the further analysis provided in this filing, show that the Program has provided the intended benefits to the market, and retail investors in particular, and is therefore consistent with the Act.
Additionally, the Exchange believes the proposed rule change is designed to facilitate transactions in securities and to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system because making the Program permanent would allow the Exchange to continue to attract retail order flow to a public exchange and allow such order flow to receive potential price improvement. The data provided by the Exchange to the Commission staff demonstrates that the Program provided tangible price improvement to retail investors through a competitive pricing process
Finally, the Exchange also believes that it is subject to significant competitive forces, as described below in the Exchange's statement regarding the burden on competition. For all of these reasons, the Exchange believes that the proposed rule change is consistent with the Act.
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that making the Program permanent would continue to promote competition for retail order flow among execution venues and contribute to the public price discovery process. The Exchange believes that the data supplied to the Commission, and experience gained over the life of the pilot, have demonstrated that the Program creates price improvement opportunities for retail orders that are equal to what would be provided under OTC internalization arrangements, thereby benefiting retail investors and increasing competition between execution venues. The Exchange also believes that making the Program permanent will promote competition between execution venues operating their own retail liquidity programs. Such competition will lead to innovation within the market, thereby increasing the quality of the national market system. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can easily direct their orders to competing venues, including off-exchange venues. In such an environment, the Exchange must continually review, and consider adjusting the services it offers and the requirements it imposes to remain competitive with other U.S. equity exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
The Exchange has neither solicited nor received written comments on the proposed rule change.
Within 45 days of the date of publication of this notice in the
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
U.S. Small Business Administration.
Amendment 1.
This is an amendment of the Presidential declaration of a major disaster for the State of Hawaii (FEMA-4366-DR), dated 06/14/2018.
Issued on 06/14/2018.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
The notice of the President's major disaster declaration for the State of Hawaii, dated 06/14/2018, is hereby amended to extend the deadline for filing applications for physical damages as a result of this disaster to 09/12/2018.
All other information in the original declaration remains unchanged.
U.S. Small Business Administration.
Notice of changes to Secondary Market Program.
The purpose of this Notice is to provide the public with notification of program changes to SBA's Secondary Market Loan Pooling Program. Specifically, SBA is increasing the minimum maturity ratio for both SBA Standard Pools and Weighted-Average Coupon (WAC) Pools by 1.0%, to 95.0%. The changes described in this Notice are being made to ensure that there are sufficient funds to cover the estimated cost of the timely payment guaranty for newly formed SBA 7(a) loan pools. The changes in this Notice will be incorporated, as needed, into the SBA Secondary Market Program Guide and all other appropriate SBA Secondary Market documents.
The changes will apply to SBA 7(a) loan pools with an issue date on or after October 1, 2018.
Address comments concerning this Notice to John M. Wade, Chief Secondary Market Division, U.S. Small Business Administration, 409 3rd Street SW, Washington, DC 20416, or
John M. Wade, Chief, Secondary Market Division, U.S. Small Business Administration, 409 3rd Street SW, Washington, DC 20416, 202-205-3647, or
The Secondary Market Improvements Act of 1984 authorized SBA to guarantee the timely payment of principal and interest on Pool Certificates. A Pool Certificate represents a fractional undivided interest in a “Pool,” which is an aggregation of SBA guaranteed portions of loans made by SBA Lenders under section 7(a) of the Small Business Act, 15 U.S.C. 636(a). In order to support the timely payment guaranty requirement, SBA established the Master Reserve Fund (“MRF”), which serves as a mechanism to cover the cost of SBA's timely payment guaranty. Borrower payments on the guaranteed portions of pooled loans, as well as SBA guaranty payments on defaulted pooled loans, are deposited into the MRF. Funds are held in the MRF until distributions are made to investors (“Registered Holders”) of Pool Certificates. The interest earned on the borrower payments and the SBA guaranty payments deposited into the MRF supports the timely payments made to Registered Holders.
From time to time, SBA provides guidance to SBA Pool Assemblers on the required loan and pool characteristics necessary to form a Pool. These characteristics include, among other things, the minimum number of guaranteed portions of loans required to form a Pool, the allowable difference between the highest and lowest gross and net note rates of the guaranteed portions of loans in a Pool, and the minimum maturity ratio of the guaranteed portions of loans in a Pool. The minimum maturity ratio is equal to the ratio of the shortest and the longest remaining term to maturity of the guaranteed portions of loans in a Pool.
On October 1, 2017, SBA increased the minimum maturity ratio for both SBA Standard Pools and Weighted-Average Coupon (WAC) Pools to 94.0%. Based on SBA's expectations as to the performance of future Pools, SBA has determined that, in order to support the costs associated with SBA's Secondary Market Loan Pooling Program, it is necessary to further increase the minimum maturity ratio—in other words, to reduce the difference between the shortest and the longest remaining term of the guaranteed portions of loans in a Pool. SBA does not expect a 1 percentage point increase in the minimum maturity ratio to have an adverse impact on either the program or the participants in the program. SBA has monitored Pools formed over the last 18 months and has observed that many existing Pools have a minimum maturity ratio of at least 95.0%.
A higher minimum maturity ratio will decrease the difference between the amortization rates of the guaranteed portions of loans in a Pool. This will cause the cash flows from the guaranteed portions of loans in the Pool to be more homogenous, and will more closely match the amortization rate of the Pool Certificate. This is the primary driver in reducing the cost of SBA's timely payment guaranty on Pool Certificates. Therefore, effective October 1, 2018, all guaranteed portions of loans in a Pool presented for settlement with SBA's Fiscal Transfer Agent will be required to have a minimum maturity ratio of at least 95% for Standard Pools and WAC Pools. SBA is making this change pursuant to Section 5(g)(2) of the Small Business Act, 15 U.S.C. 634(g)(2).
SBA will continue to monitor loan and pool characteristics and will provide notification of additional changes as necessary. It is important to note that there is no change to SBA's obligation to honor its guaranty of the amounts owed to Registered Holders of Pool Certificates and that such guaranty continues to be backed by the full faith and credit of the United States.
This program change will be incorporated as necessary into SBA's Secondary Market Guide and all other appropriate SBA Secondary Market documents. As indicated above, this change will be effective for Pools with an issue date on or after October 1, 2018, and will modify any previous guidance regarding the minimum maturity ratio for Standard Pools or WAC Pools.
Acting under the authority of and in accordance with section 1(b) of Executive Order 13224 of September 23, 2001, as amended by Executive Order 13268 of July 2, 2002, and Executive Order 13284 of January 23, 2003, I hereby determine that the person known as Qassim Abdullah Ali Ahmed, aka Qassim al-Muamen, aka Qassim Al Muamen, aka Qassim Abdullah Ali, aka Qassim Abdullah, committed, or poses a significant risk of committing, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States. Consistent with the determination in section 10 of Executive Order 13224 that prior notice to persons determined to be subject to the Order
This notice shall be published in the
Based upon a review of the Administrative Record assembled pursuant to Section 219(a)(4)(C) of the Immigration and Nationality Act, as amended (8 U.S.C. 1189(a)(4)(C)) (“INA”), and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that the circumstances that were the basis for the designation of the aforementioned organization as a Foreign Terrorist Organization have not changed in such a manner as to warrant revocation of the designation and that the national security of the United States does not warrant a revocation of the designation.
Therefore, I hereby determine that the designation of the aforementioned organization as a Foreign Terrorist Organization, pursuant to Section 219 of the INA (8 U.S.C. 1189), shall be maintained.
This determination shall be published in the
Based upon a review of the Administrative Record assembled pursuant to Section 219(a)(4)(C) of the Immigration and Nationality Act, as amended (8 U.S.C. 1189(a)(4)(C)) (“INA”), and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that the circumstances that were the basis for the designation of the aforementioned organization as a Foreign Terrorist Organization have not changed in such a manner as to warrant revocation of the designation and that the national security of the United States does not warrant a revocation of the designation.
Therefore, I hereby determine that the designation of the aforementioned organization as a Foreign Terrorist Organization, pursuant to Section 219 of the INA (8 U.S.C. 1189), shall be maintained.
This determination shall be published in the
Surface Transportation Board (Board).
Notice of National Grain Car Council meeting.
Notice is hereby given of a meeting of the National Grain Car Council (NGCC), pursuant to the Federal Advisory Committee Act.
The meeting will be held on Thursday, September 13, 2018, beginning at 1:00 p.m. (CDT), and is expected to conclude at 5:00 p.m. (CDT).
The meeting will be held at the Kansas City Marriott Downtown, 200 West 12th Street, Kansas City, MO 64105 (Phone (816) 421-6800).
Fred Forstall at (202) 245-0241 or
The NGCC was established by the Interstate Commerce Commission (ICC) as a working group to facilitate private-sector solutions and recommendations to the ICC (and now the Board) on matters affecting rail grain car availability and transportation.
The general purpose of this meeting is to discuss rail carrier preparedness to transport the 2018 grain harvest. Agenda items include the following: Remarks by NGCC Chair Sharon G. Clark, Board Chair Ann D. Begeman, Board Vice Chairman and NGCC Co-Chair Deb Miller; reports by member groups on expectations for the upcoming harvest, domestic and foreign markets, the supply of rail cars, and rail service; and presentations by industry analysts. The full agenda, along with other information regarding the NGCC, is posted on the Board's website at
The meeting is open to the public and will be conducted pursuant to the Federal Advisory Committee Act, 5 U.S.C. app. 2; Federal Advisory Committee Management, 41 CFR pt. 102-3; the NGCC charter; and Board procedures.
By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings.
Tennessee Valley Authority (TVA).
Notice of meeting.
The TVA Regional Energy Resource Council (RERC) will hold a meeting on Wednesday, September 5, 2018, to discuss the scenarios and strategies that TVA has identified for the 2019 Integrated Resource Plan.
The RERC was established to advise TVA on its energy resource activities and the priority to be placed among competing objectives and values. Notice of this meeting is given under the Federal Advisory Committee Act (FACA).
The public meeting will be held on Wednesday, September 5, 2018, from 10:00 a.m. to 4:00 p.m., EDT.
The meeting will be held at the Hilton Knoxville, 501 West Church Avenue, Knoxville, Tennessee 37902, and will be open to the public. Anyone needing special access or accommodations should let the contact below know at least a week in advance.
Barbie Perdue, 865-632-6113,
The meeting agenda includes the following:
The RERC will hear opinions and views of citizens by providing a public comment session starting at 12:45 p.m., EDT, lasting up to one hour, on Wednesday, September 5, 2018. Persons wishing to speak are requested to register at the door between 11:00 a.m. and 12:00 p.m., EDT, on Wednesday, September 5, 2018, and will be called on during the public comment period. TVA will set time limits for providing oral comments, once registered. Handout materials should be limited to one printed page. Written comments are also invited and may be mailed to the Regional Energy Resource Council, Tennessee Valley Authority, 400 West Summit Hill Drive, WT-9-D, Knoxville, Tennessee 37902.
Federal Aviation Administration (FAA), DOT.
Notice.
This notice contains a summary of a petition seeking relief from 14 CFR part 61.103(a),
Comments on this petition must identify the petition docket number and must be received on or before September 6, 2018.
Send comments identified by docket number FAA-2018-0175 using any of the following methods:
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Brent Hart (202) 267-4034, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Highway Administration (FHWA), Department of Transportation (DOT).
Notice.
The FHWA is issuing this notice to advise the public that we are rescinding the September 26, 2013, NOI to prepare an EIS for a proposed project, the I-90 Tolling Project, to manage congestion and traffic flow on I-90 between I-5 and I-405, and contribute revenue to the sustainable, long-term funding for timely completion of the SR 520 Bridge Replacement and HOV Program and maintenance and future transportation improvements on I-90.
Lindsey Handel, Urban Transportation Engineer, Federal Highway Administration, Washington Division, 711 S. Capitol Way, Suite 501, Olympia, WA 98501; telephone: 360-753-9550; and email:
On September 26, 2013, FHWA published a Notice of Intent to prepare an EIS for the I-90 Tolling Project to manage congestion and traffic flow on I-90 between I-5 and I-405, and contribute revenue to the sustainable, long-term funding for timely completion of the SR 520 Bridge Replacement and HOV Program and maintenance and future transportation improvements on I-90. The passage of the Connecting Washington state funding package in 2015 provided sufficient funding to complete the SR 520 Bridge Replacement, eliminating part of the purpose for this project. Any futureI-90 tolling projects will progress under a separate environmental review process in accordance with all applicable laws and regulations.
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule.
We are revising 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 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 making changes relating to Medicare graduate medical education (GME) affiliation agreements for new urban teaching hospitals. In addition, we are providing the market basket update that will apply to the rate-of-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 updating 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 establishing new requirements or revising existing requirements for quality reporting by specific Medicare providers (acute care hospitals, PPS-exempt cancer hospitals, and LTCHs). We also are establishing new requirements or revising 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 finalizing modifications to the requirements that apply to States operating Medicaid Promoting Interoperability Programs. We are updating 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 making 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.
This final rule is effective on October 1, 2018.
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-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-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 and Hospital Value-Based Purchasing—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.
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.
This
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
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.
This final rule makes payment and policy changes under the Medicare inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it makes payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). This final rule also makes policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs.
We are establishing new requirements and revising existing requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, and LTCHs) that are participating in Medicare. We also are establishing new requirements and revising existing requirements for eligible professionals (EPs), eligible hospitals, and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs. We are updating policies for the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction Program.
We are making 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 making 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, 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. 106-113) and section 307(b)(1) of the BIPA (Pub. L. 106-554) (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
• 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 and 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(a)(1) 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) by adding new clause (iv), which specifies that the IPPS comparable amount defined in clause (ii)(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.
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.
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;
• 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:
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.
We received numerous comments from stakeholders regarding the Meaningful Measures Initiative and the impact of its implementation in CMS' quality programs. Many of these comments pertained to specific program proposals, and are discussed in the appropriate program-specific sections of this final rule. However, commenters also provided insights and recommendations for the ongoing development of the Meaningful Measures Initiative generally, including: ensuring transparency in public reporting and usability of publicly reported data; evaluating the benefit of individual measures to patients via use in quality programs weighed against the burden to providers of collecting and reporting that measure data; and identifying additional opportunities for alignment across CMS quality programs. We look forward to continuing to work with stakeholders to refine and further implement the Meaningful Measures Initiative, and will take commenters' insights and recommendations into account moving forward.
Below we provide a summary of the major provisions in this final rule. In general, these major provisions are 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 that we included in the proposed rule issued prior to this final rule is presented in section I.D. of the preamble of this final rule.
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 making an adjustment of +0.5 percent to the standardized amount.
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 making conforming amendments to § 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 is subject to payment as a transfer case.
Section 3133 of the Affordable Care Act modified the Medicare 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 FY 2019 IPPS/LTCH PPS final rule, we are updating 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
In this final rule, we set forth 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 eliminating the 25-percent threshold policy, and under this policy, we are applying a one-time adjustment of approximately 0.9 percent to the LTCH PPS standard Federal payment rate in FY 2019 to ensure this elimination of the 25-percent threshold policy is budget neutral.
We are making changes to policies for the Hospital Readmissions Reduction Program, which was 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 final rule, we are establishing the applicable periods for FY 2019, FY 2020, and FY 2021. We also are codifying the definitions of dual-eligible patients, the proportion of dual-eligibles, and the applicable period for dual-eligibility.
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 final rule, we are removing a total of 4 measures from the Hospital VBP Program, all of which will continue to be used in the Hospital IQR Program, in order to reduce the costs and complexity of tracking these measures in multiple programs. Specifically, we are removing one measure, beginning with the FY 2021 program year: (1) Elective Delivery (NQF #0469) (PC-01). We also are removing three measures from the Hospital VBP Program, effective with the effective date of this FY 2019 IPPS/LTCH PPS final rule: (1) Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI Payment); (2) Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); and (3) Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Pneumonia (PN Payment) (NQF #2579). In addition, we are renaming the Clinical Care domain as the Clinical Outcomes domain, beginning with the FY 2020 program year. We also are adopting measure removal factors for the Hospital VBP Program.
We are not finalizing our proposals to remove of the following six patient safety measures: (1) National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138); (2) National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139); (3) American College of Surgeons-Centers for Disease Control and Prevention (ACS-CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure (NQF #0753); (4) National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant
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 final rule, we are retaining the measures currently included in the HAC Reduction Program because the measures address a performance gap in patient safety and reduce harm caused in the delivery of care. In this final rule, we are: (1) Establishing 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, 2020 infectious events; (2) changing the scoring methodology by removing domains and assigning equal weighting to each measure for which a hospital has a measure; and (3) establishing the
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 final rule, we are making 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 final rule, we are adding a new measure removal factor and removing a total of 39 measures from the Hospital IQR Program. We are finalizing a modified version of our proposal to remove 5 of those measures such that removal is delayed by 1 year. For a full list of measures being removed, we refer readers to section VIII.A.5.c. of the preamble of this final rule. Beginning with the CY 2018 reporting period/FY 2020 payment determination and subsequent years, we are removing 17 claims-based measures and two structural measures. Beginning with the CY 2019 reporting period/FY 2021 payment determination and subsequent years, we are removing three chart-abstracted measures and two claims-based measures. Beginning with the CY 2020 reporting period/FY 2022 payment determination and subsequent years, we are removing six chart-abstracted measures, one claims-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 removing one claims-based measure.
In addition, for the CY 2019 reporting period/FY 2021 payment determination, we are: (1) Requiring 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 data for 4 eCQMs in the Hospital IQR Program measure set; and (2) requiring that hospitals use the 2015 Edition certification criteria for CEHRT. These changes are in alignment with changes 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 summarizing public comments we received on two measures we are considering for potential future inclusion in the Hospital IQR Program, as well as on the potential future development and adoption of electronic clinical quality measures generally.
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 final rule, we are removing three measures from the LTCH QRP. We also are adopting a new measure removal factor and are codifying the measure removal factors in our regulations. In addition, we are updating our regulations to expand the 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.
In this final rule, we are finalizing several changes to reduce burden, increase interoperability and improve patient electronic access to their health information under the Medicare and Medicaid Promoting Interoperability Programs (previously referred to as Medicare and Medicaid EHR Incentive Programs). Specifically, we are finalizing: (1) An EHR reporting period of a minimum of any continuous 90 days in CYs 2019 and 2020 for new and returning participants attesting to CMS or their State Medicaid agency; (2) modifications to our proposed performance-based scoring methodology, which consists of a smaller set of objectives as well as a smaller set of new and modified measures; (3) the removal of certain CQMs beginning with the reporting period in CY 2020 as well as the CY 2019 reporting requirements we proposed to align the CQM reporting requirements for the Promoting Interoperability Programs with the Hospital IQR Program; (4) the codification of policies for subsection (d) Puerto Rico hospitals; (5) amendments to the prior approval policy applicable in the Medicaid Promoting Interoperability Program to align with the prior approval policy for MMIS and ADP systems and to minimize burden on States; and (6) deadlines for funding availability for States to conclude the Medicaid Promoting Interoperability Program.
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For FY 2019, we are updating 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 using only the data regarding low-income insured days for FY 2013. In addition, in this final rule, we are establishing 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 will 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 project that the amount available to distribute as payments for uncompensated care for FY 2019 will increase by approximately $1.5 billion, as compared to the estimate of overall payments, including Medicare DSH payments and uncompensated care payments, that will be distributed in FY 2018. The 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.
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The removal of NHSN HAI measures from the Hospital IQR Program and the subsequent cessation of its validation processes for NHSN HAI measures and the creation of a validation process for the HAC Reduction program represent no net change in reporting burden across CMS hospital quality programs. However, with the finalization of our proposal to remove HAI chart-abstracted measures from the Hospital IQR Program, 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.
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Further, we anticipate that the removal of 39 measures will 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 finalized policies will reduce the above-described costs.
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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-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-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-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-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 an 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-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.
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-of-increase ceiling on inpatient operating costs. Similarly, extended neoplastic disease care hospitals are paid on a reasonable cost basis, subject to a rate-of-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.
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, 2015 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).
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.
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.
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, receive payment under a site neutral rate unless the discharge meets certain patient-specific criteria. In this final rule, we are continuing to update certain policies that implemented provisions under section 1206 of the Pathway for SGR Reform Act.
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 final rule, we are continuing 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 post-acute care providers, to report standardized patient assessment data, data on quality measures, and data on resource use and other measures.
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.
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,
• 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 final rule, we are continuing 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.
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 implementing or continuing to implement in this final 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 final rule, we are making 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 also qualify as a postacute care transfer and are subject to payment adjustments.
In the proposed rule that appeared in the
Below is a general summary of the major changes that we proposed to make in the proposed rule.
In section II. of the preamble of the proposed rule, we included—
• 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-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).
In section III. of the preamble to the proposed rule, we proposed 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.
In section IV. of the preamble of the proposed rule, we discussed 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
• 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.
In section V. of the preamble to the proposed rule, we discussed the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2019.
In section VI. of the preamble of the proposed rule, we discussed—
• 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.
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.
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.
In section IX. of the preamble of the proposed rule, we set forth proposed revisions to the supporting documentation required for an acceptable Medicare cost report submission.
In section X. of the preamble of the proposed rule, we discussed 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.
In section XI. of the preamble of the proposed rule, we set forth proposed revisions to the requirements for supporting information used for physician certification and recertification of claims.
In section XII. of the preamble of the proposed rule, we included a request for information on the 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.
In sections II. and III. of the Addendum to the proposed rule, we set forth the 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 proposed to establish the threshold amounts for outlier cases. In addition, in section IV. of the Addendum to the proposed rule, we addressed the update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2019 for certain hospitals excluded from the IPPS.
In section V. of the Addendum to the 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 proposed to establish the adjustments for wage levels, the labor-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.
In Appendix A of the proposed rule, we set forth an analysis of the impact the proposed changes would have on affected acute care hospitals, CAHs, LTCHs, and PCHs.
In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided 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-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.
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
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.
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).
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).
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.
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
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20176 and 20177), consistent with the requirements of section 414 of the MACRA, we proposed to implement a positive 0.5 percentage point adjustment to the standardized amount for FY 2019. We indicated that this would be a permanent adjustment to payment rates. We stated in the proposed rule that we plan to propose future adjustments required under section 414 of the MACRA for FYs 2020 through 2023 in future rulemaking.
After consideration of the public comments we received, we are finalizing the +0.5 percentage point adjustment to the standardized amount for FY 2019, as required under section 414 of the MACRA.
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-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 have calculated the IPPS MS-DRG relative weights using 19 CCRs, which now include distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization.
Consistent with our established policy, we calculated the final 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 19 CCRs and the MS-DRG relative weights for FY 2019 is included in section II.G. of the preamble to this FY 2019 IPPS/LTCH PPS final rule. As we did with the FY 2018 IPPS/LTCH PPS final rule, for this FY 2019 final rule, we are providing the version of the HCRIS from which we calculated these 19 CCRs on the CMS website at:
We will continue to explore ways in which we can improve the accuracy of the cost report data and calculated CCRs used in the cost estimation process.
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).
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:
Following are the changes that we proposed to the MS-DRGs for FY 2019 in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20177 through 20257). We invited 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 the proposed rule. In some cases, we proposed changes to the MS-DRG classifications based on our analysis of claims data and consultation with our clinical advisors. In other cases, we proposed to maintain the existing MS-DRG classifications based on our analysis of claims data and consultation with our clinical advisors. For the 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 referred to our analysis of claims data from the “September 2017 update of the FY 2017 MedPAR file.”
In this FY 2019 IPPS/LTCH PPS final rule, we summarize the public comments we received on our proposals, present our responses, and state our final policies. For this FY 2019 final rule, we did not perform any further MS-DRG analysis of claims data. Therefore, all of the data analysis is based on claims data from the September 2017 update of the FY 2017 MedPAR file, which contains bills received through September 30, 2017, for discharges occurring through September 30, 2017.
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 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.
We are making the FY 2019 ICD-10 MS-DRG GROUPER and Medicare Code Editor (MCE) Software Version 36, the ICD-10 MS-DRG Definitions Manual files Version 36 and the Definitions of Medicare Code Edits Manual Version 36 available to the public on our CMS website at:
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:
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20178 through 20179), 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.
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.
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.
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20180), we stated that 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 recommended 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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20180), we provided 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.
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.
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.
We did not find any cases reporting the following procedure code combinations (clusters) in the claims data.
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). In the FY 2019 IPPS/LTCH PPS proposed rule, we agreed with the commenters' recommendation to maintain the structure of Pre-MDC MS-DRGs 001 and 002 for FY 2019 and stated that we would continue to analyze the claims data.
After consideration of the public comments we received, we are maintaining the current structure of Pre-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. As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20184), 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.
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 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
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 of an implantable heart assist system.
In the proposed rule, we stated that we agreed 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 noted 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.
In the proposed rule, we indicated that our clinical advisors also agreed that additional claims data are needed for analysis prior to proposing any changes to MS-DRG 215. Therefore, we did not propose to make any modifications to MS-DRG 215 for FY 2019.
After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRG 215 for FY 2019.
As stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20185) and 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-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 final 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.
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.
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.
We stated in the proposed rule that, 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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20186), we proposed to not reassign cases reporting procedure code 5A15223 when reported with procedure code 02HA3RZ or procedure code 02HA4RZ for FY 2019. We stated in the proposed rule that our clinical advisors agreed 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.
Another commenter suggested that CMS should assign cases representing patients receiving treatment involving the peripheral VA ECMO procedure to MS-DRG 215 or another MS-DRG within MDC 5. The commenter stated that cases representing patients currently assigned to MS-DRG 215 are clinically coherent to the characteristics of the patients who undergo a peripheral VA ECMO procedure. Another commenter recommended that the new procedure code describing a percutaneous veno-venous (VV) ECMO procedure be considered for assignment to MS-DRG 004 or another MS-DRG within MDC 4 because the indication is to provide respiratory support.
In response to the commenters' suggestions to assign the new procedure codes for percutaneous ECMO procedures to MS-DRG 215, we note that the new procedure codes created to describe percutaneous ECMO procedures were not finalized at the time of the proposed rule. In addition, the deletion of the current procedure code for ECMO (ICD-10-PCS code 5A15223) and the creation of the new procedure code for central ECMO were not finalized at the time of the proposed rule. As these codes were not finalized at the time of the proposed rule, they were not reflected in Table 6B.—New Procedure Codes (which is available via the internet on the CMS website at:
Consistent with our annual process of assigning new procedure codes to MDCs and MS-DRGs, and designating a procedure as an O.R. or non-O.R. procedure, we reviewed the predecessor procedure code assignments. The predecessor procedure code (ICD-10-PCS code 5A15223) for the new percutaneous ECMO procedure codes describes an open approach which requires an incision along the sternum (sternotomy) and is performed for open heart surgery. It is considered extremely invasive and carries significant risks for complications, including bleeding, infection, and vessel injury. For central ECMO, arterial cannulation typically occurs directly into the ascending aorta and venous cannulation occurs directly into the right atrium. Conversely, percutaneous (peripheral) ECMO does not require a sternotomy and can be performed in the intensive care unit or at the bedside. The cannulae are placed percutaneously and can utilize a variety of configurations, according to the indication (VA or VV) and patient age (adult vs. pediatric). While percutaneous ECMO also carries risks, they differ from those of central ECMO. For example, our clinical advisor note that patients receiving percutaneous ECMO are at a greater risk of suffering vascular complications.
Upon review, our clinical advisors do not support assigning the new procedure codes for peripheral ECMO procedures to the same MS-DRG as the predecessor code for open (central) ECMO in Pre-MDC MS-DRG 003. Our clinical advisors also do not agree with designating percutaneous ECMO procedures as O.R. procedures because they are less resource intensive compared to open ECMO procedures. As shown in Table 6B.—New Procedure Codes associated with this final rule (which is available via the internet on the CMS website at:
Our clinical advisors support the designation of the peripheral ECMO procedures as a non-O.R. procedure affecting the MS-DRG assignment of MS-DRG 207 because they consider the procedure to be similar to providing mechanical ventilation greater than 96 hours in terms of both clinical severity and resource use. Because any respiratory diagnosis classified under MDC 4 with mechanical ventilation greater than 96 hours is assigned to MS-DRG 207, it is reasonable to expect that any patient with a respiratory diagnosis who requires treatment involving a peripheral ECMO procedure should also be assigned to MS-DRG 207. The same rationale was applied for MS-DRG 870, which also includes mechanical ventilation greater than 96 hours. In addition, based on the common clinical indications for which a percutaneous ECMO procedure is utilized, such as cardiogenic shock and cardiac arrest, our clinical advisors determined that MS-DRGs 291 (Heart Failure and Shock with MCC) and 296 (Cardiac Arrest, Unexplained with MCC) also are appropriate for a percutaneous ECMO procedure to affect the MS-DRG assignment. The MS-DRG assignment for a central ECMO procedure will remain in Pre-MDC MS-DRG 003.
In cases where a percutaneous external heart assist device is utilized, in combination with a percutaneous ECMO procedure, effective October 1, 2018, the ICD-10 MS-DRG Version 36 GROUPER logic results in a case assignment to MS-DRG 215 because the percutaneous external heart assist device procedure is designated as an O.R. procedure and assigned to MS-DRG 215.
Because the procedure codes describing percutaneous ECMO procedures are new, becoming effective October 1, 2018, we do not yet have any claims data to analyze. Once claims data becomes available, we can examine the
After consideration of the public comments we received, we are finalizing our proposal to not reassign cases reporting ICD-10-PCS procedure code 5A15223 when reported with ICD-10-PCS procedure code 02HA3RZ or ICD-10-PCS procedure code 02HA4RZ for FY 2019. Consistent with our policy for determining MS-DRG assignment for new codes and for the reasons discussed, the two new procedure codes describing percutaneous ECMO procedures discussed and displayed in the table above, under the ICD-10 MS-DRGs Version 36 GROUPER logic, effective October 1, 2018, are designated as non-O.R. procedures impacting the MS-DRG assignment of MS-DRGs 207, 291, 296, and 870. The MS-DRG assignment for the central ECMO procedure remains in Pre-MDC MS-DRG 003.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20186), we also discussed that 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.
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
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). In the proposed rule, we stated that we agreed 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 proposed to not make any changes to the structure of MS-DRGs 268 and 269 for FY 2019.
After consideration of the public comments we received, we are finalizing our proposal to maintain the structure of MS-DRGs 268 and 269 for FY 2019.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20188), we received a request to create a new Pre-MDC MS-DRG for all procedures involving the CivaSheet® 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® 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® 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 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 referred readers to Table 6P.—ICD-10-CM and ICD-10-PCS Codes for Proposed MS-DRG Changes associated with the proposed rule, which is available via the internet on the CMS website at:
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. In the proposed rule, we stated that 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 did not propose to create a new Pre-MDC MS-DRG for procedures involving the CivaSheet® technology for FY 2019.
We agree with the commenter that there were some inadvertent errors in the table included in the proposed rule in reference to certain procedure codes and MS-DRGs; the table in this final rule above now correctly reflects the procedure codes and MS-DRGs reflected in the FY 2017 MedPAR file (as of the September 2017 update). We note that because our proposal was based on the small number of cases, and not the nature of those cases, these errors had no bearing on our proposal or our decision to finalize this proposal. We acknowledge the commenters' concerns about the adequacy of payment for these low volume services. Therefore, as part of our ongoing, comprehensive analysis of the MS-DRGs under ICD-10, we will continue to explore mechanisms through which to address rare diseases and low volume DRGs.
After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG structure for procedures involving the CivaSheet® technology for FY 2019.
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:
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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20188), we proposed 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 proposed 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.
After consideration of the public comments we received, we are finalizing our proposal to reorder the lists of diagnoses and procedure codes for Pre-MDC MS-DRGs 11, 12, and 13 in the ICD-10 MS-DRG Definitions Manual Version 36. We also are finalizing our proposal to revise the titles for Pre-MDC MS-DRGs 11, 12, and 13 as follows for the ICD-10 MS-DRGs Version 36, effective October 1, 2018:
• MS-DRG 11 (Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with MCC);
• MS-DRG 12 (Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with CC); and
• MS-DRG 13 (Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy without CC/MCC).
Chimeric Antigen Receptor (CAR) T-cell therapy is a cell-based gene therapy in which T-cells are genetically engineered to express a chimeric antigen receptor that will bind to a certain protein on a patient's cancerous cells. The CAR T-cells are then administered to the patient to attack certain cancerous cells and the individual is observed for potential serious side effects that would require medical intervention.
Two CAR T-cell therapies received FDA approval in 2017. KYMRIAH® (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. In May 2018, KYMRIAH received FDA approval for a second indication, treatment of adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy, including diffuse large B-cell lymphoma (DLBCL), high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. YESCARTA® (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-cell therapies 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.
As we discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20189), we have received many inquiries from the public regarding payment of CAR T-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-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-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 hematologic cancers 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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20189), we proposed to assign ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-DRG 016 for FY 2019. In addition, we proposed 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 noted in the proposed rule that, as discussed in greater detail in section II.H.5.a. of the preamble of the proposed rule and this final rule, the manufacturer of KYMRIAH and the manufacturer of YESCARTA submitted applications for new technology add-on payments for FY 2019. We stated that 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-cost of these CAR T-cell therapies, 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 therapies and cases representing patients receiving treatment involving CAR T-cell therapies. We stated in the proposed rule that we believed 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 therapies 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. We stated that, as noted in section II.H.5.a. of the preamble of the 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 invited 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 invited public comments on alternative approaches, including in the context of the pending KYMRIAH and YESCARTA new technology add-on payment applications, and the most appropriate way to establish payment for FY 2019 under any alternative approaches. We indicated that 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 KYMRIAH and YESCARTA CAR T-cell therapies, as discussed further in section II.A.4.g.2. of the Addendum of the proposed rule and this final rule. We further stated that 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 invited 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 stated that we are considering approaches and authorities to encourage value-based care and lower drug prices. We solicited comments on how the payment methodology alternatives may intersect and affect future participation in any such alternative approaches.
We noted that, as stated in section II.F.1.b. of the preamble of the proposed rule, we described the criteria used to establish new MS-DRGs. In particular,
Some commenters recommended that, until a more permanent solution is developed, CMS finalize the proposed assignment of CAR T-cell therapy to MS-DRG 016, approve the NTAP application for CAR T-cell therapy, and/or allow for a CCR of 1.0 for CAR T-cell therapy. However, some commenters disagreed with CMS' proposed assignment of CAR T-cell therapy to MS-DRG 016 and requested a new separate MS-DRG. These commenters disagreed that patients receiving CAR T-cell therapy are sufficiently clinically similar to patients receiving autologous bone marrow transplants. Reasons cited by these commenters included differences in lengths of stay, the level and predictability of associated toxicity, and the overall disease burden. Some of these commenters suggested creating a new separate MS-DRG for CAR T-cell therapy and developing the FY 2019 weight for this MS-DRG not based only on historical claims data but also including alternative data on the cost of CAR T-cell therapy drugs, such as average sales price (ASP) data. Some commenters pointed to the establishment of a separate DRG for drug eluting stents under the IPPS as a possible payment model for CAR T-cell therapy.
Other commenters did not support the creation of a new separate MS-DRG for CAR T-cell therapy. Reasons cited by these commenters included the relative newness of the therapy, the limited number of providers delivering these treatments, the low volume of patients, redistributive effects, and the lack of long term data surrounding length of stay, treatment complexities, and costs. These commenters urged CMS to collect more comprehensive clinical and cost data before considering assignment of a new MS-DRG to these therapies.
Some commenters requested that CMS carve out the cost of CAR T-cell therapy from the IPPS and pay for it on a pass-through basis reflecting the cost of the therapy to the hospital and indicated that this was the approach taken by some state Medicaid programs. These commenters believed that payment on a pass-through basis, for inpatient and/or outpatient care, provides the most accurate payment while minimizing inappropriate payment incentives across the inpatient and outpatient setting.
Commenters also made technical and operational suggestions to CMS if we were to adopt changes to our existing payment mechanisms in the final rule as they apply to CAR T-cell therapy, including how a CCR of 1.0 would be operationalized, or how CMS would collect data on the cost of CAR T-cell therapy for pass-through and other purposes.
Given the relative newness of CAR T-cell therapy, the potential model, including the reasons underlying our consideration of a potential model described in greater detail in the CY 2019 OPPS/ASC proposed rule, and our request for feedback on this model approach, we believe it would be premature to adopt changes to our existing payment mechanisms, either under the IPPS or for IPPS-excluded cancer hospitals, specifically for CAR T-cell therapy. Therefore, we disagree with commenters who have requested such changes under the IPPS for FY
We agree with commenters who recommended that we finalize the proposed assignment of CAR-T therapy to MS-DRG 016 rather than consider the creation of a new MS-DRG for these therapies, given the relative newness of the therapy, the limited number of providers delivering these treatments, the low volume of patients, redistributive effects, and the lack of long-term data surrounding length of stay, treatment complexities, and costs. In addition to the potential model, we agree we should collect more comprehensive clinical and cost data before considering assignment of a new MS-DRG to these therapies.
In response to the commenters who indicated that MS-DRG 016 is a poor clinical match for CAR T-cell therapy patients and would prefer that we create a new MS-DRG for CAR-T cell therapy, we acknowledge that there are differences between the treatment approaches, but we continue to believe that MS-DRG 016 is the most appropriate match of the existing MS-DRGs, given similarities between CAR-T cell therapy and autologous bone marrow transplant in harvesting and infusion of patient cells as well as post-infusion monitoring for and management of potentially severe adverse effects. We reiterate that, in light of the potential model and our request for feedback on this approach, it would be premature to create a new MS-DRG specifically for CAR T-cell therapy. We will consider requests for alternative MS-DRG assignments and/or the creation of a new MS-DRG for CAR T-cell therapy after we review the public feedback on a potential model and as we gain further experience with CAR T-cell therapy and can better evaluate the commenters' concerns.
As described in more detail in section II.H. of the preamble of this final rule, we are approving new technology add-on payments for CAR T-cell therapy for FY 2019.
In response to commenters who made technical and operational suggestions if CMS were to adopt changes to its existing payment mechanisms in the final rule as they apply to CAR T-cell therapy, because we are not adopting such changes, we are not addressing those technical and operational comments at the current time but will consider them for future rulemaking as appropriate.
After consideration of the public comments we received, we are finalizing our proposed approach of assigning ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-DRG 016 for FY 2019 and 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.”
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
• 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).
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20190), we stated that we agreed 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 agreed that adding the two additional epilepsy diagnosis codes is appropriate. Therefore, we proposed 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.
After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-CM diagnosis codes G40.109 and G40.111 to the list of epilepsy diagnosis codes for assignment to MS-DRG 023 in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20190), 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
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.
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 in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20191) and 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
• 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.
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 the proposed rule (which is available via the internet on the CMS website at:
The ICD-10-PCS procedure codes displayed in the following table describe use of a thrombolytic agent.
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 findings are shown in the following table.
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-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
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 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 the proposed rule (which is available via the internet on the CMS website at:
We also used the list of 90 ICD-10-CM diagnosis codes that specify a cerebral infarction listed in Table 6P.1a associated with the proposed rule for our analysis. We noted 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.
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.
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 19,471 cases 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.
We stated in the proposed rule that 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-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-DRG 061 ($23,780 versus $20,097). For the 34 cases that reported mechanical ventilation <=996 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 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).
We stated in the proposed rule that, 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. We stated in the proposed rule that, 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.
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 noted 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 noted 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.
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 noted 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 noted 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 acknowledged in the proposed rule 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
We stated in the proposed rule that 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-DRGs involving small numbers of cases for various indications in which mechanical ventilation may be required.
The second request focused on patients diagnosed with
Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule, we did not propose 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.
After consideration of the public comments we received, we are finalizing our proposal to not create new MS-DRGs, classified under MDC 1, for cases that identify patients requiring mechanical ventilation and are diagnosed with stroke or any other neurological condition with or without a thrombolytic, and in the absence of an O.R. procedure for FY 2019.
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-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and without MCC, respectively) because assignment of cases to these MS-DRGs 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
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20198), we noted 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 noted 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 referred the reader to the ICD-10 MS-DRG Definitions Manual Version 33, which is available via the internet on the CMS website at:
As discussed in the FY 2019 IPS/LTCH PPS proposed rule (83 FR 20198), 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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 the 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 stated that 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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20203), we proposed 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.
After consideration of the public comments we received, we are finalizing our proposal 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 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
We also proposed 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 in the proposed rule and earlier in this section and consistent with how these procedures were classified under the Version 33 ICD-10 MS-DRG GROUPER logic.
After consideration of the public comments we received, we are finalizing our proposal 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 outside of MDC 5 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
In the proposed rule, we referred readers to Table 6P.1d, Table 6P.1e, and Table 6P.1f. associated with the proposed rule (which is available via the internet on the CMS website at:
In addition, we proposed to maintain the current GROUPER logic for MS-DRGs 258 and 259 (Cardiac 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:
After consideration of the public comments we received, we are finalizing the lists of the procedure codes in Tables 6P.1d., Table 6P.1e., and Table 6P.1f associated with the proposed rule, with the addition of ICD-10-PCS procedure codes 02H63MZ and 02H73MZ to be included for the pacemaker insertion code pairs and as stand-alone codes for the insertion of a pacemaker lead, as reflected in Tables 6P.1.d. and 6P.1.f. associated with this final rule. We also are finalizing our proposal to maintain the current GROUPER logic for MS-DRGs 258 and 259 and for MS-DRGs 260, 261, and 262
We noted in the proposed rule 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.
In the proposed rule, we solicited 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.
After consideration of the public comments we received, we are maintaining the O.R. designation of the procedure codes listed in the above table under the ICD-10 MS-DRGs Version 36, effective October 1, 2018. As additional claims data become available, we will continue to analyze these procedures.
We also note in the proposed rule 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.
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.
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, in the FY 2019 IPPS/LTCH PPS proposed rule, we solicited 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.
After consideration of the public comments we received, we are maintaining the O.R. designation of the procedure codes listed in the above table under the ICD-10 MS-DRGs Version 36, effective October 1, 2018. As additional claims data become available, we will continue to analyze these procedures.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38111), we discontinued new technology add-on payments for the LUTONIX® and IN.PACT
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20205), 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.
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.
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-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
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-coated balloon in the performance of the procedure across MS-DRGs 252, 253, and 254.
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 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.
We stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20207) that the results of our claims data analysis and the advice from our clinical advisors did 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. We further stated that, 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 stated that 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 proposed 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.
After consideration of the public comments we received, we are finalizing our proposal 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 for FY 2019.
We noted in the proposed rule that because 24 of the 36 ICD-10-PCS procedure codes describing the use of a
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-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, as we stated in the proposed rule, 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.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20207), 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-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-DRGs to the ICD-10 MS-DRGs, there was not a specific code available that identified the kidney from which to 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-DRGs to the ICD-10 MS-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.
In the proposed rule, we proposed 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
After consideration of the public comments we received, we are finalizing our proposals to reassign ICD-10-CM diagnosis code D17.71 from MS-DRGs 393, 394, and 395 under MDC 6 to MS-DRGs 686, 687, and 688 under MDC 11, and to reassign ICD-10-CM diagnosis code D17.72 from MS-DRGs 606 and 607 under MDC 9 to MS-DRGs 686, 687, and 688 under MDC 11 in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20208), 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):
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-10-PCS procedure codes listed in the table above. Our findings are shown in the following table:
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.
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. We stated in the FY 2019 IPPS/LTCH PPS proposed rule that 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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20209), we proposed to maintain the current assignment of the 8 specific bowel repositioning procedures in MS-DRGs 344, 345, and 346 for FY 2019.
After consideration of the public comments we received, we are finalizing our proposal to maintain the current assignment of the 8 specific bowel repositioning procedures in MS DRGs 344, 345, and 346 for FY 2019.
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.
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.
We stated in the FY 2019 IPPS/LTCH PPS proposed rule that 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, in the proposed rule, we proposed 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.
Commenters also noted that several questions and answers regarding these ICD-10-PCS procedure codes were published in
After consideration of the public comments we received, we are not finalizing our proposal 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 for FY 2019.
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 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:
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.
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20210), we thanked 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 did not propose any changes to the MS-DRGs involving spinal fusion procedures for FY 2019. However, in response to the commenter's suggestion and findings, we provided the following 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 noted 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 the proposed rule (which is available via the internet on the CMS website at:
As shown in Table 6P.1g associated with the 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
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 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.
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. We stated in the proposed rule that 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 indicated in the proposed rule that 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 the FY 2019 IPPS/LTCH PPS proposed rule will no longer be in the classification system, 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
For the reasons described and as stated in the proposed rule and earlier in our discussion, we proposed not to make any changes to the spinal fusion MS-DRGs for FY 2019.
After consideration of the public comments we received, we are finalizing our proposal to not make any changes to the spinal fusion MS-DRGs for FY 2019.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20212), we received a request to reassign ICD-10-CM diagnosis codes reported with a principal 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.
For the FY 2019 IPPS/LTCH PPS proposed rule, 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 principal 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.
As shown in this table, we examined the subsets of cases in MS-DRGs 602 and 603 reported with a principal 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 principal 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
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 principal 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. We stated in the proposed rule that 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 principal 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, in the proposed rule, we stated that these cases are more clinically aligned with all cases in MS-DRGs 602 and 603. For these reasons, we did not propose 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 invited 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 principal diagnosis of cellulitis.
After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG classification for cases reported with ICD-10-CM diagnosis codes B95.62 and A49.02 when reported as secondary diagnoses with a principal diagnosis of cellulitis.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20212), we received a request to revise the MS-DRG classification for cases of 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® (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.
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-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.
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 stated in the FY 2019 IPPS/LTCH PPS proposed rule that 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. We further stated that 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 did not propose to revise the MS-DRG classification for porphyria cases.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20212 through 20213), we recognize the average costs of the small number of porphyria cases are greater than the average costs of the cases in MS-DRG 642 overall. An averaged payment system depends on aggregation of similar cases with a range of costs, and it is therefore usually possible to define subsets with higher values and subsets with lower values. We seek to identify sufficiently large sets of claims data with a resource/cost similarity and clinical similarity in developing diagnostic-related groups rather than smaller subsets of diagnoses. In response to the commenters' assertion that these cases are not clinically similar to other cases within the MS-DRG, our clinical advisors continue to believe that MS-DRG 642 represents the most clinically appropriate placement within the current MS-DRG structure at this time because 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.
We are sensitive to the commenters' concerns about access to treatment for beneficiaries who have been diagnosed with this condition. Therefore, as part of our ongoing, comprehensive analysis of the MS-DRGs under ICD-10, we will continue to explore mechanisms through which to address rare diseases and low volume DRGs. However, at this time, for the reasons summarized earlier, we are finalizing our proposal for FY 2019 to maintain the MS-DRG classification for porphyria cases.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20213 through 20214),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:
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 continued 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.
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 stated in the FY 2019 IPPS/LTCH PPS proposed rule that we did not believe that it was appropriate to maintain a vestigial MS-DRG, particularly due to the fact that the transition to ICD-10 had resulted in three out of four codes that mapped to the MS-DRG being precluded from being used as principal diagnosis codes on the claim. In addition, our clinical advisors believed 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) was clinically appropriate because the reassignment would 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 MCE, we proposed to 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, and to delete MS-DRG 685.
After consideration of the public comments we received, we are finalizing our proposal 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 for FY 2019, without modification.
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
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.
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.
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.
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.
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20217), we thanked the commenters and stated that we appreciated 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 noted 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 indicated that 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 referred readers to the ICD-10 MS-DRG Version 35 Definitions Manual located via the internet on the CMS website at:
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.
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 stated in the proposed rule that 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, Laparaoscopy 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, in the proposed rule, we stated we agreed 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 in the proposed rule and 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-DRG CC and MCC
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 noted that, as described in the proposed rule and 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 stated in the proposed rule that 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.
While we acknowledged that these procedures may be performed to treat obstetrical lacerations as discussed in prior rulemaking (81 FR 56853), we stated that 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 stated in the proposed rule 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. In the proposed rule, we noted 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 in the proposed rule and 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
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 in the proposed rule and 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.
As shown in the table, we suggested deleting MS-DRGs 765 and 766. We also suggested 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.
As shown in the table, we suggested deleting MS-DRGs 767, 774, and 775. We also suggested 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. In the proposed rule, we stated 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.
As shown in the table, we suggested deleting MS-DRGs 777, 778, 780, 781, and 782. We also suggested 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.
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.
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.
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.
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.
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-way severity level split or the suggested Other Antepartum Diagnoses with O.R. Procedure 3-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-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.
Similar to the analysis performed for the 3-way severity level split, we acknowledged that when the criteria to create subgroups was applied for the alternative 2-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, in the FY 2019 IPPS/LTCH PPS proposed rule, we proposed the deletion of 10 MS-DRGs and the creation of 18 new MS-DRGs (as shown below). This proposal was 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. We indicated in the proposed rule that 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. We stated that our proposals, as set forth below, would also simplify the vaginal delivery procedure logic that we identified and commenters acknowledged as technically complex by eliminating the extensive diagnosis and procedure code lists for several conditions that must be met for assignment to the vaginal delivery MS-DRGs. We stated that our proposals also are 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 proposed 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 proposed 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 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
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 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
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 proposed to add a new Questionable Obstetric Admission edit under the MCE. We invited public comments on this proposed MCE edit and we also invited public comments on the need for any additional MCE considerations with regard to the proposed changes for the MDC 14 MS-DRGs.
We referred readers to Tables 6P.1h. through 6P.1k. associated with the proposed rule for the lists of the diagnosis and procedure codes that we proposed to assign to the GROUPER logic for the proposed new MS-DRGs and the existing MS-DRGs under MDC 14. We invited 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 noted 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
With regard to the commenter's concern that the diagnosis codes listed above appear to be missing from the GROUPER logic, we note that, currently, all of the diagnoses codes are included in the MDC 14 Assignment of Diagnosis Codes List. The diagnosis codes that include the terminology “complicating the puerperium” are listed under the “Second Condition—Principal or Secondary Diagnosis” code list in the diagnosis code logic for MS-DRG 774, and the diagnosis codes that include the terminology “complicating childbirth” are listed under the “Principal Diagnosis” code list for the diagnosis code logic for MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications). We acknowledge that the diagnosis codes that include the
As stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20220), in our proposal for restructuring the MDC 14 MS-DRGs under the ICD-10 MS-DRGs Version 36, diagnoses described as occurring during pregnancy and diagnoses specifying a trimester or maternal care in the absence of a delivery procedure reported are considered antepartum conditions. Also, as shown in Table 6P.1j. associated with the proposed rule (available via the internet on the CMS website at:
After consideration of the public comments we received, we are finalizing our proposals, without modification, including the list of diagnosis codes assigned to the MS-DRGs under the restructuring of the vaginal delivery MS-DRGs under MDC 14, which we note also addresses the list of diagnosis codes that a commenter identified and were noted in the proposed rule as appearing to be missing from the GROUPER logic.
We also invited 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.
After consideration of the public comments we received, we are finalizing 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 the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
After consideration of the public comments we received, we are finalizing our proposed list of diagnosis and procedure codes for assignment to the revised MDC 14 MS-DRGs including the deletion of 10 MS-DRGs and the creation of 18 new MS-DRGs in the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
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). As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20226), 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.
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
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.
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 noted in the FY 2019 IPPS/LTCH PPS proposed rule 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-infectious disease processes, such as trauma, malignant neoplasm, or pancreatitis. When SIRS is documented with a non-infectious condition, and no subsequent infection 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:
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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20227), we proposed 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.
As noted in the ICD-10 MS-DRG Definitions Manual Version 35, Appendix B—Diagnosis Code/MDC/MS-DRG Index, each diagnosis code is listed with the MDC and the MS-DRGs to which the diagnosis is used to define the logic of the DRG either as a principal diagnosis or a secondary diagnosis. For diagnosis codes R65.10 and R65.11, the ICD-10 MS DRG Definitions Manual displays MDC 18 and MS-DRGs 870-872, as described previously. As discussed in the proposed rule, because the diagnosis are codes listed under the heading of “Principal Diagnosis” in the ICD-10 MS DRG Definitions Manual, it may appear to indicate that these codes are to be reported as a principal diagnosis for assignment to these MS-DRGs. However, the Definitions Manual display of the GROUPER logic assignment for each diagnosis code is for grouping purposes only and does not correspond to coding guidelines for reporting the principal diagnosis. In other words, cases will group according to the GROUPER logic, regardless of any coding guidelines or coverage policies. It is the MCE and other payer specific edits that identify inconsistencies in the coding guidelines or coverage policies. Under our proposed change to the ICD-10 MS-DRGs Version 36, cases reporting diagnosis code R65.10 or R65.11 as a secondary diagnosis would result in assignment to MS-DRG 864 when one of the other listed diagnosis codes in the MS-DRG 864 logic is reported as the principal diagnosis.
After consideration of the public comments we received, we are finalizing our proposal 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”.
ICD-10-CM Coding Guidelines include “Code first” sequencing instructions for cases reporting a principal 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). As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20227), 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-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 principal diagnosis of corrosive burn, which group to MS-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 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 principal diagnosis of toxic effect with secondary diagnosis of corrosive burn. We noted in the proposed rule that we found no cases from this subset in MS-DRGs 903, 907, 908, and 909 and, therefore, did not include the results for these MS-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 principal diagnosis of corrosive burn. Our findings are shown in the following two tables.
As shown in this table, there were a total of 55 cases with a principal 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 the proposed rule and this final 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. We stated in the proposed rule that 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 principal 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 did 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.
To address the request of reassigning cases with a principal 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 principal diagnosis of corrosive burn. We found a total of 60 cases reporting a principal diagnosis of corrosive burn, with an average length of stay of 8.5 days and average costs of $19,456. We stated in the proposed rule that our clinical advisors believe that these cases reporting a principal diagnosis of corrosive burn are appropriately placed in MDC 22 as they are clinically aligned with other patients in this MDC. We further stated that, in
After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG structure for cases reporting a principal 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).
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
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20229), we addressed the MCE requests we received by the November 1, 2017 deadline. We also discussed the proposals we were making based on our internal review and analysis. In this FY 2019 IPPS/LTCH PPS final rule, we present a summation of the comments we received in response to the MCE requests and proposals presented based on internal reviews and analyses in the proposed rule, our responses to those comments, and our finalized policies.
In addition, as a result of new and modified code updates approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting, we routinely make changes to the MCE. In the past, in both the IPPS proposed and final rules, we only provided the list of changes to the MCE that were brought to our attention after the prior year's final rule. We historically have not listed the changes we have made to the MCE as a result of the new and modified codes approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting. These changes are approved too late in the rulemaking schedule for inclusion in the proposed rule. Furthermore, although our MCE policies have been described in our proposed and final rules, we have not provided the detail of each new or modified diagnosis and procedure code edit in the final rule. However, we make available the finalized Definitions of Medicare Code Edits (MCE) file. Therefore, we are making available the FY 2019 ICD-10 MCE Version 36 Manual file, along with the link to the mainframe and computer software for the MCE Version 36 (and ICD-10 MS DRGs), on the CMS website at:
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).
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
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20229), we indicated that, 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.
Therefore, we proposed 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 proposed to continue to include the existing diagnosis codes currently listed under the Perinatal/Newborn Diagnoses Category edit code list.
After consideration of the public comments we received, we are finalizing our proposal 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 finalizing our proposal to continue to include the existing list of codes on the Perinatal/Newborn Diagnoses Category edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
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 the proposed rule, Table 6C.—Invalid Diagnosis Codes associated with the proposed rule and this final (which is available via the internet on the CMS website at:
After consideration of the public comments we received, we are finalizing our proposal to remove ICD-10-CM diagnosis code Z13.4 from the Pediatric Diagnoses Category edit code list. We also are finalizing our proposal to maintain the other existing codes on the Pediatric Diagnoses Category edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
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 the proposed rule, Table 6A.—New Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at:
In addition, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6C.—Invalid Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at:
After consideration of the public comments we received, we are finalizing our proposal to add the diagnosis codes listed in the table above to the Maternity Diagnoses Category edit code list and our proposal to remove ICD-10-CM diagnosis codes F53 and O86.0 from the Maternity Diagnoses Category edit code list. We also are finalizing our proposal to maintain the other existing codes on the Maternity Diagnoses Category edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20231), we indicated that 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.
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 agreed 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 the proposed rule, Table 6A.—New Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at:
After consideration of the public comments we received, we are finalizing our proposals to add ICD-10-CM diagnosis codes Z30.015, Z31.7 and Z98.891 and the ICD-10-CM diagnosis codes listed in the table above to the Diagnoses for Females Only edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
In addition, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6C.—Invalid Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at:
Because these three ICD-10-CM diagnosis codes will no longer be effective as of October 1, 2018, we proposed to remove them from the Diagnoses for Females Only edit code list under the Sex Conflict edit.
After consideration of the public comments we received, we are finalizing our proposal to remove ICD-10-CM diagnosis codes F53, O86.0, and Q51.2, from the Diagnoses for Females Only edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
As discussed in section II.F.15. of the preamble of the FY 2019 IPPS/LTCH PPS proposed rule, Table 6B.—New Procedure Codes associated with the proposed rule (which is available via the internet on the CMS website at:
We also proposed to continue to include the existing procedure codes currently listed under the Procedures for Females Only edit code list.
After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS procedure codes 0UY90Z0, 0UY90Z1 and 0UY90Z2 to the Procedures for Females Only edit code list. We also are finalizing our proposal to maintain the existing list of codes on the Procedures for Females Only edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
As discussed in section II.F.15. of the preamble of the proposed rule, Table 6A.—New Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at:
We also proposed to continue to include the existing diagnosis codes currently listed under the Diagnoses for Males Only edit code list.
After consideration of the public comments we received, we are finalizing our proposal to add the ICD-10-CM diagnosis codes listed in the table above to the Diagnoses for Males Only edit code list. We also are finalizing our proposal to maintain the existing list of codes on the Diagnoses for Males Only edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20232), we noted that, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6A.—New Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at:
After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-CM diagnosis codes K82.A1 and K82.A2 to the Manifestation Code as Principal Diagnosis edit code list and to continue to include the existing diagnosis codes currently listed under the Manifestation Code as Principal Diagnosis edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20233), we noted that, as discussed in section II.F.10. of the preamble of the proposed rule, we were proposing several modifications to the MS-DRGs under MDC 14 (Pregnancy, Childbirth and the Puerperium). We stated in the proposed rule that one aspect of these proposed modifications involves the GROUPER logic for the cesarean section and vaginal delivery MS-DRGs. We referred readers to section II.F.10. of the preamble of the 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 proposed to create a new “Questionable Obstetric Admission Edit” under the Questionable Admission edit to read as follows:
We proposed 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.
We proposed 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
We proposed 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.
After consideration of the public comments we received, we are finalizing our proposal to create the new Questionable Obstetric Admission edit. We also are finalizing our proposal to include ICD-10-PCS procedure codes 10D00Z0, 10D00Z1, and 10D00Z2 listed above for the “Procedure code list for cesarean section” portion of the edit. We are finalizing our proposal to include the procedure codes listed above for vaginal delivery with modifications. Specifically, we are not including ICD-10-PCS procedure codes 10D07Z6, 10D07Z87, 10D17Z9 and 10D18Z9 in the “Procedure code list for vaginal delivery” portion of the edit and finalizing the inclusion of the remaining
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20234), we noted that, as discussed in section II.F.9. of the preamble of the 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 proposed 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.
We also noted in the proposed rule that, as discussed in section II.F.15. of the preamble of the proposed rule, Table 6C.—Invalid Diagnosis Codes associated with the proposed rule (which is available via the internet on the CMS website at:
We also proposed to continue to include the other existing diagnosis codes currently listed under the Unacceptable Principal Diagnosis edit code list.
After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-CM diagnosis code Z49.01 to the Unacceptable Principal Diagnosis edit code list. We also are finalizing our proposal to remove ICD-10-CM diagnosis code Z13.4 from the Unacceptable Principal Diagnosis edit code list. In addition, we are finalizing our proposal to maintain the other existing codes on the Unacceptable Principal Diagnosis edit code list under the ICD-10 MCE Version 36, effective October 1, 2018.
The procedures shown below are identified as non-covered procedures only when any code from the diagnoses list shown below is present as either a principal or secondary diagnosis.
This update will also be reflected in the ICD-10 MCE software Version 36 effective October 1, 2018.
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. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20235), we indicated that 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:
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-intensive to least resource-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-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 final rule.
This methodology may occasionally result in assignment of a case involving multiple procedures to the lower-weighted MS-DRG (in the highest, most resource-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-intensive surgical class, in
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-ordered surgical class has lower average costs than the class ordered below it.
Based on the changes that we proposed to make in the FY 2019 IPPS/LTCH PPS proposed rule, as discussed in section II.F.10. of the preamble of this final rule, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20235), we proposed to revise the surgical hierarchy for MDC 14 (Pregnancy, Childbirth & the Puerperium) as follows: In MDC 14, we proposed 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 proposed 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 proposed 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 proposed 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 proposed to sequence proposed new MS-DRGs 817, 818, and 819 (Other Antepartum Diagnoses with O.R. procedure with 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.
After consideration of the public comments we received, we are finalizing our proposed changes to Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 36 as illustrated in the table above effective October 1, 2018.
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-DRG Classification Change Request Mailbox located at:
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-DRGs we adopted for FY 2008 (72 FR 47152 through 47171).
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20236), we indicated that 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 were available via the internet on the CMS website at:
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 invited public comments on our proposed severity level designations for the diagnosis codes listed in Table 6I.1. and Table 6J.1. We noted 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 referred readers to the Tables 6I.1, 6I.2, 6J.1, and 6J.2 associated with the proposed rule, which are available via the internet on the CMS website at:
As shown in the table below and in Table 6J.1. associated with the proposed rule, a total of six new diagnosis codes were proposed to be designated at the CC severity level based on review of the predecessor code (T81.4XXA), clinical coherence, and resource considerations.
Therefore, for the reasons discussed above, our clinical advisors continue to support the proposed CC severity level designation for diagnosis code T81.44XA for FY 2019.
In addition, because these diagnosis codes identified by the commenter are new, we do not have any claims data for further analysis. Once we have additional claims data to allow us to conduct further review, we can continue to examine these conditions to determine if their impact on resource use is equal to or above the expected value of a CC severity level designation.
After consideration of the public comments we received, we are finalizing our proposal to designate diagnosis codes K35.20 and T81.44XA as CC severity levels. We also are finalizing our other proposed additions and deletions with their corresponding severity level designations for FY 2019. We refer readers to Tables 6I.1., 6I.2, 6J.1, and 6J.2. associated with this final rule, which are available via the internet on the CMS website at:
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 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-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. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20237), to evaluate the effectiveness of the special logic, we 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-DRG.
In the proposed rule, 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 final rule for further information regarding the methodology for calculation of the 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-
Below we provide a summary of the steps that we followed for the analysis performed.
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 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-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
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.
Based on our analysis of the data, we stated that 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 in the proposed rule and 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 proposed 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 proposed 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 invited public comments on our proposals.
After consideration of the public comments we received, we are finalizing our proposal to remove the special logic in the GROUPER for processing claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists as an initial step in our first phase of the comprehensive review of the CC and MCC lists. We also are finalizing our proposal 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 Version 36, effective October 1, 2018.
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.
The ICD-10 MS-DRGs Version 35 CC Exclusion List is included as Appendix C in the ICD-10 MS-DRG Definitions Manual, which is available via the internet on the CMS website at:
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20239), for FY 2019, we proposed 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 the proposed rule are available via the internet on the CMS website at:
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 the proposed rule and this final rule.
These tables are not published in the Addendum to the proposed rule or the final rule but are available via the internet on the CMS website at:
In the FY 2019 IPPS/LTCH PPS proposed rule, we invited 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 invited 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.
The commenter stated that the proposed MS-DRG assignment for diagnosis code K35.20 is inappropriate and urged CMS to assign additional MS-DRGs and revise Table 6A. Specifically, the commenter expressed concern that MS-DRGs 371, 372, and 373 (Major Gastrointestinal Disorders and Peritoneal Infections with MCC, with CC, and without CC/MCC, respectively) were the only MS-DRGs assigned to diagnosis code K35.20 and requested that MS-DRGs 338, 339, and 340 (Appendectomy with Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) also be assigned. The commenter questioned why CMS only assigned MS-DRGs 371, 372, and 373 for diagnosis code K35.20 when diagnosis code K35.32 was assigned to MS-DRGs 338, 339, and 340 in addition to MS-DRGs 371, 372, and 373. The commenter stated that the FY 2019 ICD-10-CM Tabular List of Diseases and Injuries indicates that codes at the new subcategory K35.2 include a ruptured or perforated appendix, which is a complicating diagnosis and requires additional resources. The commenter expressed concern that the proposed MS-DRG assignment for diagnosis code K35.20 does not appropriately reflect the complications of the underlying disease or resources associated with acute appendicitis with generalized peritonitis. The commenter also noted that studies of patients admitted with appendicitis define complicated appendicitis as the presence of either generalized peritonitis due to perforated appendicitis or appendicular abscess. The commenter further noted that an appendix may perforate and cause generalized peritonitis without abscess if the perforation is walled off from the remainder of the peritoneal cavity because of its retroperitoneal location or by loops of small intestine or omentum.
We also consulted with the staff at the Centers for Disease Control's (CDC's) National Center for Health Statistics (NCHS) because NCHS has the lead responsibility for maintaining the ICD-10-CM diagnosis codes. The NCHS' staff acknowledged the clinical concerns of the commenter based on the manner in which diagnosis codes K35.2 and K35.3 were expanded and confirmed that they will consider further review of these newly expanded codes with respect to the clinical concepts.
Therefore, we maintain that the proposed MS-DRG assignment for diagnosis code K35.20 as shown in Table 6A is appropriate. Because the diagnosis codes that the commenter submitted in its comments are new, effective October 1, 2018, we do not yet have any claims data. We will continue to monitor these codes as data become available.
After consideration of the public comments we received, we are finalizing our proposal to assign diagnosis code K35.20 to MS-DRGs 371, 372, and 373 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
According to the commenter, abscesses, postoperative infections, and gangrene of gallbladder warrant the CC designation because they are acute conditions and require antibiotics or surgical treatment and impact the length of stay. The commenter noted that, currently, diagnosis codes K61.3 (Ischiorectal abscess) and K61.4 (Intrasphincteric abscess) are designated as CCs. The commenter also noted that gangrene of gallbladder classifies to acute cholecystitis, which is a CC, and recommended that the codes listed in the above table all be designated as CCs.
With regard to the commenter's statement that gangrene of gallbladder classifies to acute cholecystitis which is a CC, we acknowledge that, currently, diagnosis code K81.0 (Acute cholecystitis) is a CC and has an inclusion term for gangrene of gallbladder. However, the new code description does not include the term “acute”. Upon review of code K82.A1, our clinical advisors continue to support maintaining the proposed non-CC designation because they do not agree from a clinical perspective that this condition warrants a CC designation or significantly impacts resource utilization as a secondary diagnosis as the primary diagnosis likely is a more significant contributor to resource utilization. With regard to the codes describing infection of obstetrical wound of varying degrees and depths, the predecessor code O86.0 (Infection of obstetric wound) is currently classified as a non-CC and our clinical advisors agreed that, in the absence of data for the new codes, they are appropriately designated as non-CCs.
After consideration of the public comments we received, we are finalizing our proposed severity level assignments for the above listed diagnosis codes under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
We also are making available on the CMS website at
• 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.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2019;
• Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2019;
• Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2019;
• Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2019;
• Table 6I.1.—Additions to the MCC List—FY 2019;
• Table 6I.2.-Deletions to the MCC List—FY 2019;
• Table 6J.1.—Additions to the CC List—FY 2019; and
• Table 6J.2.—Deletions to the CC List—FY 2019.
We note that, as discussed in section II.F.15.c. of the preamble of this final rule, we proposed, and in this final rule are finalizing, to delete Table 6L. and Table 6M. from the ICD-10 MS-DRG Definitions Manual for FY 2019.
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, a CC, or a non-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:
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-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:
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-CCs, the impact on resource use of the secondary diagnoses is greater than the expected value for a non-CC by an amount equal to 80 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-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.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20241), 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.
We stated in the proposed rule that 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 proposed to change the severity level of ICD-10-CM diagnosis code B20 from an MCC to a CC.
As discussed in section II.F.18. of the preamble of this final rule, requests for new ICD-10-CM diagnosis codes are discussed at the ICD-10 Coordination and Maintenance Committee meetings. We refer the commenter to the National Center for Health Statistics (NCHS) website at
After consideration of the public comments we received, we are finalizing our proposal to change the severity level of diagnosis code of B20 from an MCC to a CC.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20241), 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.
We stated in the proposed rule that 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-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 agreed that the resources required to care for a patient with this secondary diagnosis are consistent with those of an MCC. Therefore, we proposed to change the severity level of ICD-10-CM diagnosis code J80 from a CC to an MCC.
After consideration of the public comments we received, we are finalizing our proposal to change the severity level of ICD-10-CM diagnosis code J80 from a CC to an MCC.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20241), 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.
We stated in the proposed rule that 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-CCs. We stated in the proposed rule that the resources are 15 percent lower than expected when reported in conjunction with another secondary diagnosis that is a CC, and 49 percent lower than expected when reported in conjunction with another secondary diagnosis code that is an MCC. The sentence should have read as follows: The resources are 15 percent lower than expected when reported in conjunction with another secondary diagnosis that is a CC, and 51 percent lower than expected when reported in conjunction with another secondary diagnosis code that is an MCC. We noted 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 agreed that, from a clinical standpoint, the resources involved in caring for a patient with this condition are aligned with those of an MCC. Therefore, we did not propose a change to the severity level for ICD-10-CM diagnosis code G93.40.
After consideration of the public comments we received, we are changing the severity level for ICD-10-CM diagnosis code G93.40 from an MCC to a CC.
After consideration of the public comment received, we are not changing the severity level of ICD-10-CM code I50.84 or the ICD-10-CM codes describing hepatic encephalopathy for FY 2019.
Each year, we review cases assigned to MS-DRGs 981, 982, and 983 (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.
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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20242), we did not propose 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.
After consideration of the public comments we received, we are not
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 also proposed to maintain the current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989.
After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
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
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:
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20243), we proposed 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.
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.
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.
As a result of our review, we proposed 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 agreed 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. We stated in the propsed rule that 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 proposed 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).
After consideration of the public comments we received, we are finalizing the proposal 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 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
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.
We noted 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, 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
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.
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 agreed 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.
We stated in the proposed rule that 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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20245), we proposed 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 invited public comments on our proposals.
After consideration of the public comments we received, we are finalizing the proposal 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 MDC 4 to MDC 8 to MS-DRGs 564, 565, and 566 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
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 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.
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.
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 to MDC 8 that describe repositioning of the ribs.
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.
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 agreed 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 noted 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
Our clinical advisors agreed 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.
We stated in the proposed rule that 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.
After consideration of the public comments we received, we are finalizing the proposal to add ICD-10-PCS procedure codes 0PS104Z, 0PS10ZZ, 0PS134Z, 0PS144Z, 0PS204Z, 0PS20ZZ, 0PS234Z and 0PS244Z currently assigned to MDC 8 into MDC 4 in MS-DRGs 166, 167 and 168 under the ICD-10 MS-DRGs Version 36, effective October 1, 2018.
In September 1985, the ICD-9-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-9-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-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:
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 was 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 this final 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 final rule, which are available via the internet on the CMS website at:
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:
We encourage commenters to address suggestions on coding issues involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-10 Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo Road, Hyattsville, MD 20782. Comments may be sent by Email to:
Questions and comments concerning the procedure codes should be submitted via Email to:
In the September 7, 2001 final rule implementing the IPPS new technology add-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 108-173 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-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-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
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-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 1, 2018 implementation of a code at the September 12-13, 2017 Committee meeting. Therefore, there were 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:
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:
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.
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.
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.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20250 through 20251), for FY 2019, we did not propose to add any MS-DRGs to the policy for replaced devices offered without cost or with a credit. We proposed to continue to include the existing MS-DRGs currently subject to the policy as displayed in the table below.
We did not receive any public comments on our proposal to continue to include the existing MS-DRGs currently subject to the policy and to not add any additional MS-DRGs. Therefore, we are finalizing the list of MS-DRGs in the table included in the proposed rule and above that will be subject to the replaced devices offered without cost or with a credit policy, effective October 1, 2018.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20251 through 20257), we addressed 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 proposed to change the designation of procedure codes from non-O.R. to O.R. procedures, we also proposed 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 invited public comments on these proposed MS-DRG assignments.
We also noted 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 discussed 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.
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.
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 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).
In the proposed rule, we stated that we agreed with the requestor that these procedures typically require the resources of an operating room. Therefore, we proposed 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).
After consideration of the public comment we received, we are finalizing our proposal to change the designation of the 22 ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.
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.
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).
In the proposed rule, we stated that we disagreed 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 disagreed that these procedures are similar to open drainage procedures. Therefore, we proposed to maintain the status of these 22 ICD-10-PCS procedure codes as non-O.R. procedures.
After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. status of the 22 identified open extirpation 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-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.
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).
In the proposed rule, we stated that we agreed 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 stated that 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 proposed 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,
After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 13 ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.
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.
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-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).
In the proposed rule, we stated that we agreed with the requestor that these eight procedures typically require the resources of an operating room. Therefore, we proposed 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).
After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 8 ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.
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.
In the proposed rule, we stated that we agreed 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 proposed 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
After consideration of the public comments we received, we are finalizing our proposal to change the designation of the eight ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.
One requestor identified the following three ICD-10-PCS procedure codes that describe procedures involving endoscopic dilation of ureter(s) with intraluminal device.
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).
In the proposed rule, we stated that we agreed 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 further stated that 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 proposed 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).
After consideration of the public comments we received, we are finalizing our proposal to change the designation of the three ICD-10-PCS procedure codes shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.
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.
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.
In the proposed rule, we stated that we agreed 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:
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 proposed 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 invited public comments on our proposal.
After consideration of the public comments we received, we are finalizing our proposal to change the designation of the nine ICD-10-PCS procedure codes shown in the tables above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.
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.
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 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.
In the proposed rule, we stated that we agreed with the requestor that procedures involving open insertion of totally implantable VAD procedures typically require the resources of an operating room. However, we stated that we disagreed that the tunneled VAD procedures typically require the resources of an operating room. Therefore, we proposed 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 noted that these procedures already affect MS-DRG assignment to these MS-DRGs. However, we stated that 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-DRG.
After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 10 ICD-10-PCS procedure codes describing open insertion of totally implantable VAD procedures shown in the table above from non-O.R. procedures to O.R. procedures, effective October 1, 2018.
After consideration of the public comments we received, we are finalizing our proposals to change the designation of the totally implantable VAD procedures to O.R. procedures and to maintain the non-O.R. designation of the tunneled VAD procedures.
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.
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.
In the proposed rule, we stated that we disagreed 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 proposed to maintain the status of these 20 ICD-10-PCS procedure codes as non-O.R. procedures.
After consideration of the public comments we received, we are finalizing our proposal to maintain the non-O.R. status of the 20 ICD-10-PCS procedure codes that describe procedures involving percutaneous joint reposition with internal fixation device listed in the table above.
One requestor identified four ICD-10-PCS procedure codes that describe procedures involving endoscopic destruction of the intestine, as shown in the following table.
The requestor stated that these procedures are rarely performed in the operating room. In the ICD-10 MS-DRGs Version 35, these four ICD-10-PCS procedure codes are currently recognized as O.R. procedures for purposes of MS-DRG assignment.
In the proposed rule, we stated that we agreed with the requestor that these procedures do not typically require the resources of an operating room. Therefore, we proposed 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.
After consideration of the public comments we received, we are finalizing our proposal to change the designation of the four ICD-10-PCS procedure codes shown in the table above from O.R. procedures to non-O.R. procedures, effective October 1, 2018.
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.
The requestor stated that these procedures are rarely performed in the operating room.
In the proposed rule, we stated that we agreed 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:
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 proposed 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.
After consideration of the public comments we received, we are finalizing our proposal to change the designation of the five ICD-10-PCS procedure codes shown in the tables above from O.R. procedures to non-O.R. procedures, effective October 1, 2018.
One commenter responding to the FY 2019 IPPS/LTCH PPS proposed rule identified eight ICD-10-PCS procedure codes that describe endobronchial valve procedures that the commenter believed should be designated as O.R. procedures. The codes are identified in the following table.
The commenter stated that these procedures are most commonly performed in the O.R., given the need for better monitoring and support through the process of identifying and occluding a prolonged air leak using endobronchial valve technology. The commenter also noted that other endobronchial valve procedures have an O.R. designation. 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 commenter requested that these eight codes be assigned to MS-DRG 163 (Major Chest Procedures with MCC) due to similar cost and resource use.
Our clinical advisors disagree with the commenter that the eight identified procedures typically require the use of an operating room. Our clinical advisors believe that these procedures would typically be performed in an endoscopy suite. Therefore, we are not changing the non-O.R. designation of the eight identified ICD-10-PCS codes listed in the table above.
We received public comments regarding a number of MS-DRG and related issues that were outside the scope of the proposals included in the FY 2019 IPPS/LTCH PPS proposed rule. These comments were as follows:
• One commenter requested that CMS evaluate the MS-DRG assignment for Face Transplant procedures and its designation as an extensive versus nonextensive O.R. procedure.
• One commenter requested that a new ICD-10-CM diagnosis code be created for a Kennedy terminal ulcer.
• One commenter requested that CMS examine the MS-DRG assignment and/or payment of patients who are admitted to the hospital for initiation or titration of certain antiarrhythmic drugs.
• One commenter requested that diagnosis codes in category O9A.2- and
• One commenter requested that new MS-DRGs be created for endovascular cardiac valve replacements with and without a cardiac catheterization.
• One commenter recommended that CMS analyze claims data for cases reporting renal replacement therapy and issue guidance to facilities on the use of the ICD-10-PCS procedure codes.
• One commenter requested specific MS-DRG assignments for ICD-10-PCS codes that were not yet approved at the time of issuance of the proposed rule.
• One commenter recommended changes to the severity level designation for diagnosis codes that appear in Table 6E.—Revised Diagnosis Code Titles associated with the proposed rule.
Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing them in this final rule. As stated in section II.F.1.b. of the preamble of this final rule, we encourage individuals with comments about MS-DRG classification to submit these comments no later than November 1 of each year so that they can be considered for possible inclusion in the annual proposed rule and, if included, may be subjected to public review and comment. We will consider these public comments for possible proposals in future rulemaking as part of our annual review process.
In developing the FY 2019 system of weights, we proposed 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 final rule include discharges occurring on October 1, 2016, through September 30, 2017, based on bills received by CMS through March 31, 2018, from all hospitals subject to the IPPS and short-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 relative weights includes data for approximately 9,689,743 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 March 31, 2018 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 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 FY 2019 relative weights are based on the ICD-10-CM diagnoses and ICD-10-PCS procedure codes from the FY 2017 MedPAR claims data, grouped through the ICD-10 version of the FY 2019 GROUPER (Version 36).
The second data source used in the cost-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 March 31, 2018 update of the FY 2016 HCRIS for calculating the final FY 2019 cost-based relative weights.
As we explain in section II.E.2. of the preamble of this final rule, we calculated the FY 2019 relative weights based on 19 CCRs, as we did for FY 2018. The methodology we used to calculate the FY 2019 MS-DRG cost-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 FY 2019 MS-DRG classifications discussed in sections II.B. and II.F. of the preamble of this final rule.
• The transplant cases that were used to establish the relative weights for heart and heart-lung, liver and/or intestinal, and lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively) were limited to those Medicare-approved transplant centers that have cases in the FY 2017 MedPAR file. (Medicare coverage for heart, heart-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-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-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 the hospitals 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 web page on the CMS Center for Medicare and Medicaid Innovation's website at:
The charges for each of the 19 cost groups for each claim were standardized to remove the effects of differences in area wage levels, IME and DSH payments, and for hospitals located in Alaska and Hawaii, the applicable cost-of-living adjustment. Because hospital charges include charges for both operating and capital costs, we standardized total charges to remove the effects of differences in geographic adjustment factors, cost-of-living adjustments, and DSH payments under the capital IPPS as well. Charges were then summed by MS-DRG for each of the 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 national average CCRs developed from the FY 2016 cost report data.
The 19 cost centers that we used in the 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 19 national cost center CCRs. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20259), we stated that if stakeholders have comments about the groupings in this table, we may consider those comments as we finalize our policy. However, we did not receive any comments on the groupings in this table, and therefore, we are finalizing the groupings as proposed.
In the FY 2019 IPPS/LTCH PPS proposed rule, we also invited public comments on our proposals related to recalibration of the proposed FY 2019 relative weights and the changes in the relative weights from FY 2018.
We developed the national average CCRs as follows:
Using the FY 2016 cost report data, we removed CAHs, Indian Health Service hospitals, all-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-specific CCR. The Medicare-specific CCR was determined by taking the Medicare charges for each line item from Worksheet D-3 and deriving the Medicare-specific costs by applying the hospital-specific departmental CCRs to the Medicare-specific charges for each line item from Worksheet D-3. Once each hospital's Medicare-specific costs were established, we summed the total Medicare-specific costs and divided by the sum of the total Medicare-specific charges to produce national average, charge-weighted CCRs.
After we multiplied the total charges for each MS-DRG in each of the 19 cost centers by the corresponding national average CCR, we summed the 19 “costs” across each MS-DRG to produce a total standardized cost for the MS-DRG. The average standardized cost for each MS-DRG was then computed as the total standardized cost for the MS-DRG divided by the transfer-adjusted case count for the 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 final 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 MS-DRG was then divided by the national average standardized cost per case to determine the relative weight.
The FY 2019 cost-based relative weights were then normalized by an adjustment factor of 1.761194774 so that the average case weight after recalibration was equal to the average case weight before recalibration. The 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 19 national average CCRs for FY 2019 are as follows:
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
After consideration of the comments we received, we are finalizing our proposals, with the modification for recalibrating the relative weights for FY 2019 at the same level as the FY 2018 relative weights for MS-DRGs where the FY 2018 relative weight declined by 20 percent from the FY 2017 relative weight and the FY 2019 relative weight would have declined by 20 percent or more from the FY 2018 relative weight.
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 § 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, § 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-
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. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20276), we proposed, beginning with the thresholds for FY 2020 and future years, 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:
We did not receive any public comments on this proposal. Therefore, we are finalizing the proposal, without modification, and presenting the MS-DRG threshold amounts (previously included in Table 10 of the annual IPPS/LTCH PPS proposed and final rules) that will be used in evaluating new technology add-on payment applications for FY 2020 in a data file that is available, along with the other data files associated with this FY 2019 IPPS/LTCH PPS final rule, on the CMS website at:
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, § 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 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 § 412.88, if the costs of the discharge (determined by applying cost-to-charge ratios (CCRs) as described in § 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 § 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 § 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
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:
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
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20277), we noted 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:
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—
• 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 the FY 2019 IPPS/LTCH PPS proposed rule, we published a notice in the
As stated in the 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-streamed the town hall meeting and posted the town hall on the CMS YouTube web page at:
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-on payments. (We refer readers to the FY 2019 IPPS/LTCH PPS proposed rule for summaries of the comments received in response to the published notice and the New Technology Town Hall meeting and our responses (83 FR 20278 through 20280).) We also noted in the proposed rule that we do not summarize comments that are unrelated to the “substantial clinical improvement” criterion. As explained earlier and in the
Public commenters stated opinions and made suggestions relating to the mapping of new technologies to the appropriate MS-DRG, deeming a new technology a substantial clinical improvement if it receives HDE approval from the FDA, and the use of external data in determining the cost threshold that CMS considers to be outside of the scope of the proposed rule. Because we did not request public comments nor propose to make any changes to any of the issues above, we are not summarizing these public comments, nor responding to them in this final rule. As noted below in section II.H.5.a. of the preamble of this final rule, we refer readers to section II.F.2.d. of the preamble of this final rule for a summary of and our responses to the public comments we received in response to our solicitation regarding the most appropriate mechanism to provide payment to hospitals for new technologies, such as CAR T-cell therapy drugs, including through the use of new technology add-on payments (82 FR 20294), as well as a summary of the public comments we received in response to the solicitation for public comment on our concerns with the payment alternatives that we considered for CAR T-cell therapy drugs and therapies and our responses to those comments (83 FR 20190).
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:
Jazz Pharmaceuticals submitted an application for new technology add-on payments for FY 2017 for Defitelio® (defibrotide), 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® improves the survival rate of patients diagnosed with VOD with multi-organ failure by 23 percent.
Defitelio® 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® received FDA approval on March 30, 2016. The applicant confirmed that Defitelio® 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® was finalized with FDA approval, and that commercial shipments of Defitelio® to hospitals and treatment centers began on April 4, 2016. Therefore, we agreed that, based on this information, the newness period for Defitelio® 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®, 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® and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved Defitelio® 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® technology would incur an average cost per case of $151,800 (70 kg adult × 25 mg/kg/day × 21 days = 36,750 mg per patient/200 mg vial = 184 vials per patient × $825 per vial = $151,800). Under § 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® 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®, we considered the beginning of the newness period to commence on the first day Defitelio® was commercially available (April 4, 2016). Because the 3-year anniversary date of the entry of the Defitelio® onto the U.S. market (April 4, 2019) will
After consideration of the public comments we received, we are finalizing our proposal, with modification, to continue new technology add-on payments for Defitelio® for FY 2019. Based on the applicant's updated cost information, the maximum new technology add-on payment for a case involving the use of Defitelio® is $80,500 for FY 2019.
Two manufacturers, Edwards Lifesciences and LivaNova, submitted applications for new technology add-on payments for FY 2018 for the INTUITY Elite
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
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 § 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
In addition, we do not believe that case volume is a relevant consideration for making the determination as to whether a product is “new.” Consistent with the statute and our implementing regulations, a technology is no longer considered as “new” once it is more than 2 to 3 years old, irrespective of how frequently the medical service or technology has been used in the Medicare population (70 FR 47349). As such, in this case, because the Perceval and INTUITY valves have been available on the U.S. market for more than 2 to 3 years, we consider the costs to have been included in the MS-DRG relative weights regardless of whether the technologies' use in the Medicare population has been frequent or infrequent.
Based on all of the reasons stated above, the Perceval and INTUITY valves are no longer considered “new” for purposes of new technology add-on payments for FY 2019. Therefore, after consideration of the public comments we received, we are finalizing our proposal to discontinue new technology add-on payments for the Perceval and INTUITY valves for FY 2019.
W. L. Gore and Associates, Inc. submitted an application for new technology add-on payments for the GORE® EXCLUDER® 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® EXCLUDER® 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 FDA pre-market 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
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 § 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, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20282), we proposed to discontinue new technology add-on payments for this technology for FY 2019. We invited public comments on our proposal to discontinue new technology add-on payments for the GORE IBE device.
With regard to the GORE IBE device, the applicant noted that there was a deletion of ICD-10-PCS procedure codes in FY 2018 used for the coding of procedures identifying the GORE IBE implant, which created confusion for hospital billing departments that were reporting these codes. As a result, the applicant believed that the GORE IBE implant procedures may have been under-reported and the claims data has not captured the utilization and cost data for these implant procedures. Additionally, the applicant stated that MACs, as a general practice, do not include Category III CPT codes in their internal processes and, specifically, do not include 0254T for the identification of the GORE IBE procedure. The applicant believed that this lack of alignment between the new technology add-on payment policy and the MACs' treatment of Category III CPT codes for the identification of GORE IBE procedures likely contributed to the severe under-reporting of procedures involving the GORE IBE implant. Therefore, the applicant recommended that CMS maintain consistent ICD-10 coding practices, encourage the MACs to include procedures involving devices for which new technology add-on payments are effective in their internal processes, and extend new technology add-on payments for the GORE IBE technology through FY 2019 to allow assessment of sufficient claims data that reflect the costs of the GORE IBE device.
Based on the reasons stated above, the GORE IBE device is no longer considered “new” for purposes of new technology add-on payments for FY 2019. Therefore, after consideration of the public comments we received, we are finalizing our proposal to discontinue new technology add-on payments for the GORE IBE device for FY 2019.
Boehringer Ingelheim Pharmaceuticals, Inc. submitted an application for new technology add-on payments for FY 2017 for idarucizumab (also known as PRAXBIND), a product developed as an antidote to reverse the effects of PRADAXA (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.
PRAXBIND was approved by the FDA on October 16, 2015. PRAXBIND is indicated for the use in the treatment of
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 § 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 PRAXBIND 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 PRAXBIND onto the U.S. market will occur in the first half of FY 2019 (October 15, 2018), in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20282), we proposed to discontinue new technology add-on payments for this technology for FY 2019. We invited public comments on our proposal to discontinue new technology add-on payments for idarucizumab.
Janssen Biotech submitted an application for new technology add-on payments for the Stelara® induction therapy for FY 2018. Stelara® received FDA approval as an intravenous (IV) infusion treatment for adult patients with moderately to severe active Crohn's disease (CD) who have failed or were intolerant to treatment using immunomodulators or corticosteroids, but never failed a tumor necrosis factor (TNF) blocker, or failed or were intolerant to treatment using one or more TNF blockers. The FDA approved Stelara® on September 23, 2016. Stelara® IV is intended for induction—subcutaneous prefilled syringes are intended for maintenance dosing. Stelara® must be administered intravenously by a health care professional in either an inpatient hospital setting or an outpatient hospital setting.
Stelara® 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® (2 vials); patients weighing more than (>)55 kg, but less than (<)85 kg are administered 390 mg of Stelara® (3 vials); and patients weighing more than (>)85 kg are administered 520 mg of Stelara® (4 vials). An average dose of Stelara® administered through IV infusion is 390 mg (3 vials). Maintenance doses of Stelara® 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 including the mouth, esophagus, stomach, small intestine, and large intestine. Conventional pharmacologic treatments of CD include antibiotics, mesalamines, corticosteroids, immunomodulators, tumor necrosis alpha (TNFα) 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® and consideration of the public comments we received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved Stelara® for new technology add-on payments for FY 2018 (82 FR 38129). Cases involving Stelara® 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 § 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® is $2,400.
With regard to the newness criterion for Stelara®, we considered the beginning of the newness period to commence when Stelara® 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® onto the U.S. market (September 23, 2019) will occur after FY 2019, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20282 through 20283) we proposed to continue new technology add-on payments for this technology for FY 2019. We proposed that the maximum payment for a case involving Stelara® would remain at $2,400 for FY 2019. We invited public comments on our proposal to continue new technology add-on payments for Stelara® for FY 2019.
BTG International Inc. submitted an application for new technology add-on payments for the Vistogard
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.
Vistogard
With regard to the newness criterion, Vistogard
After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for Vistogard
With regard to the newness criterion for the Vistogard
Merck & Co., Inc. submitted an application for new technology add-on payments for ZINPLAVA
ZINPLAVA
After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for ZINPLAVA
With regard to the newness criterion for ZINPLAVA
We received 15 applications for new technology add-on payments for FY 2019. In accordance with the regulations under § 412.87(c), applicants for new technology add-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. Since the issuance of the FY 2019 IPPS/LTCH PPS proposed rule, three applicants, Progenics Pharmaceuticals, Inc. (the applicant for AZEDRA®), Somahlution, Inc. (the applicant for DURAGRAFT®), and TherOx, Inc. (the applicant for Supersaturated Oxygen (SSO
Two manufacturers, Novartis Pharmaceuticals Corporation and Kite Pharma, Inc. submitted separate applications for new technology add-on payments for FY 2019 for KYMRIAH (tisagenlecleucel) and YESCARTA (axicabtagene ciloleucel), respectively. Both of these technologies are CD-19-directed T-cell immunotherapies used for the purposes of treating patients with aggressive variants of non-Hodgkin lymphoma (NHL). In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20284), we noted that KYMRIAH 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 a table presented in the proposed rule and updated in the following table presented in this final rule, the new indication for which Novartis Pharmaceuticals Corporation is requesting approval for new technology add-on payments for KYMRIAH is as an autologous T-cell immune therapy indicated for use in the treatment of patients with relapsed/refractory (r/r) diffuse large B-Cell lymphoma after two or more lines of systemic therapy including diffuse large B-cell lymphoma (DLBCL) not eligible for autologous stem cell transplant (ASCT). In addition, we indicated that as of the time of the development of the proposed rule, Novartis Pharmaceuticals Corporation had been granted Breakthrough Therapy designation by the FDA, and was awaiting FDA approval for the use of KYMRIAH under this new indication. The updated table that follows reflects that Novartis Pharmaceuticals Corporation received FDA approval for the use of KYMRIAH under this new indication on May 1, 2018. We also noted 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-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. resubmitted an application for approval for new technology add-on payments for FY 2019 for KTE-C19 under a new name, YESCARTA, for the same indication. Kite Pharma, Inc. received FDA approval for this original indication and treatment use of YESCARTA on October 18, 2017. (We refer readers to the following updated table for a comparison of the indications and FDA approvals for KYMRIAH and YESCARTA).
We note that procedures involving the KYMRIAH and YESCARTA 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 final rule, we are finalizing our proposal to assign cases reporting these ICD-10-PCS procedure codes to Pre-MDC MS-DRG 016 for FY 2019 and to revise the title of this MS-DRG to (Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy). We refer readers to section II.F.2.d. of the preamble of this final rule for a complete discussion of these final policies.
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-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.
According to Novartis Pharmaceuticals Corporation, the recent FDA approval (on May 1, 2018) for the additional indication allows KYMRIAH to be used for the treatment of patients with R/R DLBCL who are not eligible for ASCT. Novartis Pharmaceuticals Corporation describes KYMRIAH as a CD-19-directed genetically modified autologous T-cell immunotherapy which utilizes peripheral blood T-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 KYMRIAH cells. The transduced T-cells expand in vivo to engage and eliminate CD-19-expressing cells and may exhibit immunological endurance to help support long-lasting remission.
According to Kite Pharma, Inc., YESCARTA 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 YESCARTA described the technology as a CD-19-directed genetically modified autologous T-cell immunotherapy that binds to CD-19-expressing cancer cells and normal B-cells. These normal B-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-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. In the FY 2019 IPPS/LTCH PPS proposed rule, we noted 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. We indicated that KYMRIAH had 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 the proposed rule, was awaiting FDA approval. As noted previously, the applicant for KYMRIAH received approval for this additional indication on May 1, 2018. We further noted in the proposed rule that, YESCARTA 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, KYMRIAH and YESCARTA are the first CAR T-cell immunotherapies of their kind. Because potential cases representing patients who may be eligible for treatment using KYMRIAH and YESCARTA 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 KYMRIAH or YESCARTA), and we believed 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 disagreed with the applicants and believed these two technologies 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. For these reasons, and as discussed further below, we stated that we intended 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 KYMRIAH and YESCARTA. Several public commenters submitted comments regarding whether the technologies are substantially similar to each other in response to the proposed rule and we summarize and respond to the public comments below.
With respect to the newness criterion, as previously stated, YESCARTA received FDA approval on October 18, 2017. According to the applicant, prior to FDA approval, YESCARTA 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, YESCARTA 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 YESCARTA was received by a certified treatment center on November 22, 2017. As discussed previously, KYMRIAH received FDA approval May 1, 2018, for use in the treatment of patients diagnosed with r/r DLBCL that are not eligible for ASCT. Additionally, as noted in the proposed rule, KYMRIAH was previously granted Breakthrough Therapy designation by the FDA. We stated in the proposed rule that 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
We stated in the proposed rule 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 discussed each set of data separately. However, we stated that we intended to make one determination regarding new technology add-on payments that would apply to both applications. We stated that 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).
We stated that, 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, we stated that, because the technologies have been submitted for review in the same year and 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 received public comments regarding our proposal to evaluate KYMRIAH and YESCARTA as one application for new technology add-on payments under the IPPS and we summarize and respond to these public comments below.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20284), we stated that we believe that KYMRIAH and YESCARTA are substantially similar to each other for purposes of analyzing these two applications as one application. As discussed in the proposed rule, we stated that we also need to determine whether KYMRIAH and YESCARTA 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 KYMRIAH 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.
The applicant for YESCARTA stated that YESCARTA is the first engineered autologous cellular immunotherapy comprised of CAR T-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 YESCARTA'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. At the time of the development of the proposed rule, the applicant also pointed out that YESCARTA was 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
The applicant for YESCARTA 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 YESCARTA explained that YESCARTA 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 YESCARTA is different from the BiTE technology, the applicant explained that the BiTE technology is not an engineered autologous T-cell immunotherapy derived from a patient's own T-cells. Instead, it is a bi-specific T-cell engager that recognizes CD-19 and CD-3 cancer cells. Unlike engineered T-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-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 YESCARTA 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 YESCARTA also indicated that its mechanism of action is not the same or similar to the mechanism of action used by KYMRIAH's currently available FDA-approved CD-19-directed genetically modified autologous T-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.
We stated in the proposed rule that while the applicant for YESCARTA stated how its technology is different from KYMRIAH, because both technologies are CD-19-directed T-cell immunotherapies used for the purpose of treating patients with aggressive variants of NHL, we believe that YESCARTA and KYMRIAH are substantially similar treatment options. Furthermore, in the FY 2019 IPPS/LTCH PPS proposed rule, we also stated that we were concerned there may be an age overlap (18 to 25) between the two different patient populations for the currently approved KYMRIAH technology and YESCARTA technology. We stated in the proposed rule, which was issued prior to the approval for a second indication (adult patients), that the indication for the KYMRIAH technology is for use in the treatment of patients who are up to 25 years of age and the YESCARTA technology is indicated for use in the treatment of adult patients.
We noted in the proposed rule that the applicant asserted that YESCARTA is not substantially similar to KYMRIAH. We stated that under this scenario, if both YESCARTA and KYMRIAH 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-on payment, because procedures utilizing either YESCARTA or KYMRIAH CAR T-cell therapy drugs are reported using the same ICD-10-PCS procedure codes, in order to accurately pay the new technology add-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-on payments. In the FY 2019 IPPS/LTCH PPS proposed rule, CMS invited comments on alternative coding mechanisms to make the new technology add-on payments, if necessary.
We also invited public comments on whether KYMRIAH and YESCARTA are substantially similar to existing technologies and whether the technologies meet the newness criterion.
The applicant for YESCARTA stated that it continued to believe each technology consists of notable differences in the construction, as well as manufacturing processes and successes that may lead to differences in activity. The applicant encouraged CMS to evaluate YESCARTA as a separate new technology add-on payment application and approve separate new technology add-on payments for YESCARTA, effective October 1, 2018, and to not move forward with a single new technology add-on payment evaluation determination that covers both CAR T-cell therapies, YESCARTA and KYMRIAH. The applicant stated that the transmembrane domain of YESCARTA is comprised of a fragment of CD-28 co-stimulatory molecule, including an extracellular hinge domain, which provides structural flexibility for optimal binding of the target antigen by the scFV target binding region. The applicant further stated that, in contrast, KYMRIAH consists of a spacer and a transmembrane domain, which are derived from CD8-a. The applicant for YESCARTA believed that, the spacer provides a flexible link between the scFv and the transmembrane domain, which then accommodates different orientations of the antigen binding domain upon CD19 antigen recognition. The applicant stated that these differences in the origin of the transmembrane component between the YESCARTA and KYMRIAH may be one of the differences which lead to differentiation in CAR function and resulting activity between the two CAR constructs, which will be described later in this section.
The applicant for YESCARTA believed perhaps the most critical difference between the two technologies, YESCARTA and KYMRIAH, may be that of the co-stimulatory domains, which connect the extracellular scFv antigen binding domain to the cytoplasmic CD3-zeta downstream signaling domain. The applicant explained that, for YESCARTA, the technology is derived from the intracellular domains of co-stimulatory protein CD-28. However, for KYMRIAH, in contrast, the technology is derived from the co-stimulatory protein 4-1BB (CD137). The applicant believed that, although clear mechanisms are unknown, it is surmised that the difference in co-stimulatory region of the two CAR products may be responsible for differences in activity. The applicant stated that the ongoing hypothesis for these differences are based on differentially affecting CAR T-cell cytokine production, expansion, cytotoxicity and persistence after administration.
The applicant for YESCARTA also described an additional concept regarding the manufacturing process that it believed supported why the two technologies were different. The applicant explained that both, YESCARTA and KYMRIAH, are prepared from the patient's peripheral blood mononuclear cells, which are obtained via a standard leukapheresis procedure. However, the applicant stated that, with YESCARTA, the mononuclear cells are then enriched for T-cells and activated with anti-CD-3 antibody in the presence of IL-2 then transduced with the replication incompetent y-retroviral vector containing the anti-CD-19 CAR transgene. The applicant further explained that the transduced T-cells are expanded in cell culture, washed, formulated into a suspension, and cryopreserved. The applicant for YESCARTA believed that, in contrast, KYMRIAH uses anti CD-3/anti CD-28 coated magnetic beads for T-cell enrichment and activation, rather than anti-CD-3 antibody and IL-2, which are removed after CAR T-cell expansion and prior to harvest. The applicant explained that a further difference in the manufacturing of KYMRIAH is the use of lentiviral vector in the anti-CD-19 CAR gene transduction rather than a y-retroviral vector, as used for YESCARTA in manufacturing. The applicant stated that both y-retroviral or lentiviral vectors can permanently insert DNA into the genome. However, lentiviral vectors are capable of transducing quiescent cells, while y-retroviral vectors require cells in mitosis. According to the applicant, the manufacturing success in clinical trials is also different with results showing median turnaround time of 17 days for YESCARTA, with 99 percent success rate versus median turnaround time of 113 days, with 93 percent success rate for KYMRIAH.
The applicant for YESCARTA further stated that, if CMS decides to establish one new technology add-on payment determination and approval for both CAR T-cell therapies, the add-on payments should be structured to ensure that payment does not hinder access in any way for patients to receive the most appropriate cell therapy and use of YESCARTA and KYMRIAH can be uniquely and individually identified in the Medicare inpatient data.
Other commenters believed that the two CAR T-cell technologies should be considered as separate new technology add-on payment applications because the technologies' indications are approved for two different patient populations and diagnoses. The commenters stated that, while the approval for one of the diagnoses for adults is the same for KYMRIAH and YESCARTA, KYMRIAH has also been approved for treating children and, therefore, that should be reasoning to consider the application separately. Additionally, commenters stated that the pricing of both medications varies based on the patient population, and encouraged CMS to recognize this discrepancy when determining approval of new technology add-on payment and establishing adequate payments rates. Commenters agreed with CMS' conclusion that it is appropriate to consider both sets of cost and clinical data when determining whether the standard criteria for new technology add-on payments for KYMRIAH and YESCARTA were met, but also encouraged CMS to consider evaluation and determination of both technologies as separate applications.
Some commenters disagreed with CMS' views of the YESCARTA and KYMRIAH with respect to substantial similarity and expressed concerns with CMS' conclusion that the two CAR T-cell therapies are substantially similar to each other. The commenters believed that, because each therapy has received separate FDA Breakthrough designations, is approved based on separate Biological License Applications, and may likely be used in the treatment of different patient populations in different sites of care, consideration for approval of new technology add-on payments should be based on separate applications. Commenters further believed that, for purposes of meeting the newness criterion, each new technology add-on payment application must be treated as being unique. Despite these concerns, commenters supported CMS creating a new MS-DRG for procedures and cases representing patients receiving treatment involving CAR T-cell therapies, and recognized that each of the CAR T-cell therapies would be used in the treatment of cases representing patients that would be assigned to the same MS-DRG.
Several commenters disagreed with CMS' determination that the applications for KYMRIAH and YESCARTA are similar enough to warrant consideration as a single new technology add-on payment application, and recommended CMS consider the applications separately. Commenters believed that because KYMRIAH received FDA approval for the use in the treatment of patients diagnosed with
Other commenters further cautioned CMS that combining the new technology add-on payment applications' evaluation and determination for these two therapies would create precedent that may make it unlikely for future CAR T-cell therapies to be considered distinct from existing CAR T-cell therapies, or substantially similar. As a result, the commenters believed that, if CMS finalized its proposal to make a combined decision for KYMRIAH and YESCARTA, it is more likely that future CAR T-cell therapies will not qualify for new technology add-on payments. The commenters noted that, to mitigate any potential negative impact if CMS combines both the applications and makes its determination, it would be important for CMS to leave open the option for future CAR T-cell therapies to apply for and receive approval of new technology add-on payments, regardless of the decision made for the current applications under consideration.
Some commenters believed that section 1886(d)(5)(K) of the Act does not appear to clearly authorize CMS to jointly evaluate KYMRIAH and YESCARTA, which were submitted by separate manufacturers, as separate new technology add-on payment applications for two different products approved by FDA under two separate Biologics License Applications with distinct clinical and cost data submissions. The commenters believed that CMS' assessment appeared concentrated on a handful of perceived similarities in the mechanism of action and the patient and disease categories between the two newly approved CAR T-cell products. Commenters stated that this focused approach appeared to give little weight to the distinctions in the manufacturing process and co-stimulatory domains between the two CAR T-cell therapies, which obscures the important distinctions in how the different CAR T-cell technologies have been refined and optimized. The commenters further stated that CMS' evaluation also does not fully account for the difference in clinical profiles of these two agents.
Other commenters believed that failure to recognize the legitimate distinctions and technological innovations reflected by CAR T-cell therapy—and inherent across different CAR T-cell treatments, such as KYMRIAH and YESCARTA, could artificially restrict access to new technology add-on payments for these new and promising technologies. Commenters recommended CMS encourage development of medical innovation by applying the new technology add-on payment “newness” criterion in a way that recognizes the unique, novel, and distinct nature of the CAR T-cell technology.
In evaluating the new technology add-on payment applications for KYMRIAH and YESCARTA, some commenters believed that CMS may be overlooking the significant ways these two technologies represent a substantial medical advancement compared to existing therapies, most of which patients have already failed, before they go on to receive treatment involving CAR T-cell therapy. The commenters stated that CMS appeared to be unduly focusing on the perceived similarities between the two newly approved CAR T-cell therapies versus the advancement the technologies represent over existing therapies. The commenters encouraged CMS to recognize the ways in which KYMRIAH and YESCARTA significantly differ from existing technologies and to further apply the “newness” eligibility requirement for new technology add-on payments in a manner that does not unnecessarily discourage the availability of new technology add-on payments for these newly approved CAR T-cell therapies that represent significant clinical advantages over existing treatments.
The applicant for KYMRIAH stated that, at the time it submitted its new technology add-on payment application and as summarized in the FY 2019 IPPS/LTCH PPS proposed rule, similar to the applicant for YESCARTA, it believed the two technologies were not substantially similar to the other, or to other cancer drugs or biologics currently approved for use in the treatment of aggressive B-cell NHL and, therefore, met the newness criterion. However, the applicant acknowledged that, since the date it submitted its new technology add-on payment application both technologies, YESCARTA and KYMRIAH, have received FDA approval for the technologies' intended indications. The applicant for KYMRIAH further indicated that, based on FDA's recent approval, it agreed with CMS that KYMRIAH is substantially similar to YESCARTA, as defined by the new technology add-on payment application evaluation criteria.
The applicant for KYMRIAH detailed how it believed the technology is substantially similar to YESCARTA with respect to each criterion pertaining to substantial similarity.
With regard to the first criterion, whether YESCARTA and KYMRIAH use the same or a similar mechanism of action to achieve a therapeutic action, the applicant stated that, although KYMRIAH's and YESCARTA's mechanisms of actions are distinct and unique from any other cancer drug or biologic that is currently FDA-approved, namely single-agent or combination chemotherapy regimens, the applicant believed KYMRIAH and YESCARTA use the same or similar mechanisms of action to achieve the therapeutic outcome. To further support the assertion that the two technologies are substantially similar to one another, the applicant for KYMRIAH also provided the FDA-approved prescribing information (“12.1 Mechanism of Action”) issued for KYMRIAH and YESCARTA describing the mechanisms of actions as being the same or similar for both technologies in the following manner:
KYMRIAH:
YESCARTA:
In a summary of the FDA-approved prescribing information, the applicant further noted that, within the FDA-approved prescribing information, both KYMRIAH and YESCARTA are CD-19-directed genetically modified autologous T-cell immunotherapies that bind to CD-19-expressing cancer cells and normal B cells. Upon binding to CD-19-expressing cells, the respective CARs transmit a signal to promote T cell expansion, activation, and target cell elimination.
In response to the differences between KYMRIAH and YESCARTA related to spacer, transmembrane and co-stimulatory domains, which were stated by the applicant for YESCARTA, the applicant for KYMRIAH believed that, although there are structural differences that impact aspects of how the treatment effect is achieved, the overall mechanisms of actions of the two CAR T-cell therapy products are similar. The applicant explained that in defining drug classes, the FDA provided guidance that a class defined by mechanism of action would include drugs that have similar pharmacologic action at the receptor, membrane or tissue level. The applicant indicated that KYMRIAH is a cellular immunotherapy generated by gene modification of autologous donor T-cells. Further, the applicant for KYMRIAH stated that through the process of apheresis, leukocytes are harvested from the patient and undergo a process of ex-vivo gene transfer in which a CAR is introduced by lentiviral transduction. The applicant further explained that the CAR construct contains an antigen binding region designed to target CD-19, a co-stimulatory domain known as 4-1BB and a signaling domain called CD-3-zeta. The applicant stated that once transferred, the patient's T-cells will express the CAR construct anti-CD-19 4-1BB/CD-3-zeta, and undergo ex-vivo expansion. The applicant for KYMRIAH stated that both, KYMRIAH and YESCARTA, utilize a gene transfer process to modify autologous patient immune cells with a chimeric antigen receptor capable of directing immune mediated killing at a pre-specified target. The applicant further explained that both technologies accomplish their pharmacological effect through the use of three specialized domains, which are structurally different, but achieve similar environmental interactions. The applicant indicated that, in both agents, the antigen binding domain identifies CD-19 and, therefore, the interaction between the agent and its environment begins with the same receptor target interaction. Additionally, the applicant noted that both KYMRIAH and YESCARTA induce T-cell mediated cell death of the bound tumor cell by activating the T-cell expressing the CAR through the signaling domain, which is common to both agents and, therefore, at the tissue level, both generate a pharmacological impact by producing T-cell mediated apoptosis. The applicant for KYMRIAH stated that the pharmacological effect of these two agents is attained through tumor directed expansion of CAR T-cells and the development of memory T-cells that allow for potential long-term persistence and immunosurveillance. The applicant believed that, in both agents, this is achieved through the use of a co-stimulatory domain, which leads to the secretion of inflammatory substances such as cytokines, chemokines and growth factors, which induce T-cell proliferation and differentiation. The applicant for KYMRIAH stated that, although it agreed with the applicant for YESCARTA
With regard to the second criterion, whether YESCARTA and KYMRIAH will be assigned to the same or a different MS-DRG, the applicant stated that this criterion is met because cases representing patients eligible for treatment involving both, KYMRIAH and YESCARTA, will be reported using the same ICD-10-PCS procedure codes (XW033C3 and XW043C3) and will be assigned to the same MS-DRG—Pre-MDC MS-DRG 016 (as discussed in section II.F.2.d. of the preamble of this final rule).
With regard to the third criterion, whether YESCARTA® and KYMRIAH® will be used to treat the same or similar patient population, the applicant stated that both, KYMRIAH and YESCARTA, are FDA approved to treat adult patients diagnosed with r/r aggressive B-cell NHL in the same or similar patient population. The applicant, in summary, agreed with CMS' conclusion that KYMRIAH is “substantially similar” to YESCARTA, as defined by CMS, because both technologies are: (1) Intended to treat the same or similar disease in the same or similar patient population; (2) purposed to achieve the same therapeutic outcome using the same or similar mechanism of action; and (3) would be assigned to the same MS-DRGs. However, the applicant stated that, despite being “substantially similar” technologies, KYMRIAH and YESCARTA are not “substantially similar” to any other existing technology and, therefore, it believed KYMRIAH met the newness criterion.
Other commenters, generally, agreed that both, KYMRIAH and YESCARTA, are substantially similar technologies. One commenter stated that it agreed with CMS' approach on both clinical and policy grounds because given the promises and perils of both therapies, the surrounding coverage and payment issues present to be the same and that will also be the case for the successor drugs expected to soon achieve FDA approval and enter the U.S. market. The commenter explained that consideration of KYMRIAH and YESCARTA as one new technology add-on payment application simplifies the newness test because both technologies were assigned an ICD-10-PCS procedure code in 2017, and cases involving the utilization of the technologies and procedures reporting the ICD-10-PCS procedure codes will be assigned to the same MS-DRG, effective with the beginning of FY 2019 on October 1, 2018. The commenter also noted that, CMS indicated that November 22, 2017, would be the beginning date for the “newness” period because it marks the first delivery of YESCARTA to eligible treatment centers. The commenter believed this date was somewhat arbitrary, but did not provide an alternative date for consideration and, therefore, agreed that KYMRIAH and YESCARTA should be considered together as one new technology add-on payment application, both technologies met the criterion for newness, and the newness period appropriately begins on November 22, 2017. The commenter stated that, if approved for new
After consideration of the public comments we received, although we recognize the technologies are not completely the same in terms of their manufacturing process, co-stimulatory domains, and clinical profiles, we and also as the commenters expressed, are not convinced that these differences result in the use of a different mechanism of action and, therefore, infer that the two technologies' mechanisms of action are the same. Furthermore, we believe that KYMRIAH and YESCARTA are substantially similar to one another because potential cases representing patients who may be eligible for treatment using KYMRIAH and YESCARTA 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 KYMRIAH or YESCARTA). We also believe, as we and other commenters describe throughout this section, that these technologies are intended to treat the same or similar disease in the same or similar patient population—patients with r/r DLBCL who are ineligible for, or who have failed ASCT, and are purposed to achieve the same therapeutic outcome—ORR, CR, OS using the same or similar mechanism of action using genetically modified autologous T-cell immunotherapies. The respective CAR T-cells transmit a signal to promote T-cell expansion, activation, and ultimately cancer cell elimination to produce a targeted cellular therapy that may persist in the body even after the malignancy is eradicated.
We also believe that KYMRIAH and YESCARTA are not substantially similar to any other existing technologies because, as both applicants asserted in their FY 2019 new technology add-on payment applications and as stated by the other commenters, the technologies do not use the same or similar mechanism of action to achieve a therapeutic outcome as any other existing drug or therapy assigned to the same or different MS-DRG and represent the only FDA-approved technologies for this treatment population.
With regard to the commenter that indicated pricing of both products varies based on the patient population, and encouraged CMS to recognize this discrepancy when determining approval of new technology add-on payment and establishing adequate payments rates, we note that the applicants for both, KYMRIAH and YESCARTA, estimate that the average cost for an administered dose of KYMRIAH or YESCARTA is $373,000. We refer readers to the end of this discussion for complete details on the pricing of KYMRIAH and YESCARTA.
With respect to CMS' policy for evaluating substantially similar technologies, we believe our current policy is consistent with the authority and criteria in section 1886(d)(5)(K) of the Act. We note that CMS is authorized by the Act to develop criteria for the purposes of evaluating new technology add-on payment applications. For the purposes of new technology add-on payments, when 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, for the reasons we discussed above and consistent with our evaluation of substantially similar technologies in prior rulemaking (82 FR 38120).
Finally, we note that for FY 2019, there is no payment impact regarding the determination that the two technologies are substantially similar to each other because the cost of the technologies is the same. However, we welcome additional comments in future rulemaking regarding whether KYMRIAH and YESCARTA are substantially similar and intend to revisit this issue in next year's proposed rule.
As we stated in the proposed rule and 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 KYMRIAH searched the FY 2016 MedPAR claims data file to identify potential cases representing patients who may be eligible for treatment using KYMRIAH. 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 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 KYMRIAH 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 KYMRIAH 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 KYMRIAH. 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 KYMRIAH. The applicant standardized the charges and then applied an inflation factor of 1.09357, which is the 2-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 KYMRIAH 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-weighted standardized charge per case for
We noted in the proposed rule that, as discussed in section II.F.2.d. of the preamble of the proposed rule, we proposed 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-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, we noted that similar to above, the applicant expected the cost of KYMRIAH to be higher than the new technology add-on payment threshold amount for MS-DRG 016. Therefore, it appeared that KYMRIAH would meet the cost criterion under this scenario as well.
We stated in the proposed rule that we appreciated the applicant's analysis. However, we noted that the applicant did not provide information regarding which specific historic charges were removed in conducting its cost analysis. Nonetheless, we stated that we believed that even if historic charges were identified and removed, the applicant would meet the cost criterion because, as indicated, the applicant expected the cost of KYMRIAH to be higher than the new technology add-on payment threshold amounts listed earlier.
We invited public comments on whether KYMRIAH meets the cost criterion.
After consideration of the public comments we received, we agree that KYMRIAH meets the cost criterion.
With regard to the cost criterion in reference to YESCARTA, 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-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 YESCARTA 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 YESCARTA 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 exceeded the average case-weighted threshold amount, the technology met the cost criterion.
We noted in the proposed rule that, as discussed in section II.F.2.d. of the preamble of the proposed rule, we proposed 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-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, we noted that the applicant expected the cost of YESCARTA to be higher than the new technology add-on payment threshold amount for MS-DRG 016. Therefore, we stated that it appeared that YESCARTA would meet the cost criterion under this scenario as well.
We invited public comments on whether YESCARTA technology meets the cost criterion.
After consideration of the public comments we received, we agree that YESCARTA meets the cost criterion.
With regard to substantial clinical improvement for KYMRIAH, the applicant asserted that several aspects of the treatment represent a substantial clinical improvement over existing technologies. The applicant believed that KYMRIAH 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 KYMRIAH 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 KYMRIAH 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 KYMRIAH 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).
The applicant for KYMRIAH conveyed that the PARMA study established high-dose chemotherapy and ASCT as the standard treatment for patients with r/r DLBCL.
According to the applicant for KYMRIAH, 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.
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.
To express how KYMRIAH has improved clinical outcomes, including ORR, CR rate, OS, and durability of response, the applicant referenced clinical trials in which KYMRIAH was tested. Study 1 was a single-arm, open-label, multi-site, global Phase II study to determine the safety and efficacy of tisagenlecleucel in patients with R/R DLBCL (CCTL019C2201/CT02445248/‘JULIET' study).
The applicant for KYMRIAH 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.
The applicant for KYMRIAH reported that Study 3 was a supportive, patient-level meta-analysis of historical outcomes in patients who were diagnosed with refractory DLBCL (SCHOLAR-1).
The applicant asserted that KYMRIAH provides a manageable safety profile when treatment is performed by trained medical personnel and, as opposed to ASCT, KYMRIAH 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.
After reviewing the studies provided by the applicant, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20292), we stated that we were concerned 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 KYMRIAH, 43 discontinued prior to infusion (9 discontinued due to inability to manufacture, and 34 discontinued due to patient-related issues). Finally, the rate of patients who experienced a diagnosis of CRS was high, 58 percent.
The applicant for YESCARTA stated that YESCARTA represents a substantial clinical improvement over existing technologies when used in the treatment of patients with aggressive B-cell NHL. The applicant asserted that YESCARTA can benefit the patient population with the highest unmet need, patients withr/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 YESCARTA, 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.
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 YESCARTA.
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).
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 YESCARTA in the hospital inpatient setting and were monitored in the inpatient setting for at least 7 days for early identification and treatment involving YESCARTA-related toxicities, which primarily included CRS diagnoses and neurotoxicities. The applicant noted that the interim analysis showed the length of stay following infusion of YESCARTA 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 YESCARTA-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.
The applicant for YESCARTA provided information regarding a safety expansion cohort, Study 1 Phase II Safety Expansion Cohort 3 that was created and carried out in 2017. 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 YESCARTA 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
After reviewing the information submitted by the applicant as part of its FY 2019 new technology add-on payment application for YESCARTA, we stated in the FY 2019 IPPS/LTCH PPS proposed rule that we were 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-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 believed 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 stated that we were concerned that there are few published results showing any survival benefits from the use of this treatment. In addition, we were concerned with the limited number of patients (n=108) that were studied after infusion involving YESCARTA T-cell immunotherapy. Finally, we indicated that we were concerned about the data related to the percentage of patients who experienced complications or toxicities related to YESCARTA treatment. According to the applicant, of the patients who participated in YESCARTA clinical trials, 93 percent developed CRS diagnoses and 64 percent experienced neurological adverse events.
We invited public comments on whether KYMRIAH and YESCARTA meet the substantial clinical improvement criterion.
The applicants for KYMRIAH and YESCARTA, as well as others submitted comments regarding whether KYMRIAH and YESCARTA met the substantial clinical improvement criterion.
In response to CMS' concerns that the use of the SCHOLAR-1 study as a baseline for comparison to the JULIET trial may have skewed results because the baseline population of the SCHOLAR-1 study included patient populations diagnosed with TFL and PMBCL, the applicant for KYMRIAH stated that the JULIET trial included patients diagnosed with TFL, making this patient population similar in nature to what was included in the SCHOLAR study. The applicant also indicated that, although it is true that patients diagnosed with PMBCL were excluded from the JULIET trial, these patients only make up 2 percent of the total population of the 636 patients evaluated in the SCHOLAR-1 study; limiting the impact that these patients could have had on the observed response rates. The applicant further explained that PMBCL is a form of large cell lymphoma, which differs from DLBCL in that the patient population is often younger and healthier and patients diagnosed with PMBCL are more likely to respond to first-line therapy, therefore, relapsed and refractory (r/r) patients are rare compared to those diagnosed with DLBCL. The applicant also stated that, due to the infrequency of patients diagnosed with r/r PMBCL, research isolating this pathology for treatment effect is limited. The applicant indicated that, although some studies estimate that chemorefractory PMBCL has a lower response rate than refractory DLBCL, those studies still report ORR equivalent to what was shown in SCHOLAR and each of these studies' results show r/r PMBCL patients having a CR rate that is equivalent or better than what was observed in the larger SCHOLAR study. The applicant believed that, given these outcomes and the small number of patients diagnosed with PMBCL in the SCHOLAR literature, it is unlikely that the results are skewed in such a way as to overestimate the comparative efficacy of KYMRIAH for patients diagnosed with r/r DLBCL.
In response to CMS' concerns regarding the drop-out rate within the JULIET trial, the applicant for KYMRIAH stated that the JULIET trial was designed to reflect a paradigm of patient management that the applicant believes reflects the real-world treatment decisions of health care providers. The applicant explained that in the JULIET trial, any patient who was identified as a candidate for treatment involving KYMRIAH and could undergo apheresis was enrolled in the trial at the time of apheresis collection, then patients were allowed to undergo bridging chemotherapy during the time that they awaited a manufacturing slot assignment and during the manufacturing process. The applicant indicated that this is in contrast with protocols of other trials in which patients are not enrolled until such time as a manufacturing slot is available because patients diagnosed with r/r DLBCL have rapidly progressive disease and they often have disease which is resistant or refractory to therapy and, therefore, patients may progress during this time. The applicant further stated that the design of the JULIET trial allowed these events to be captured, whereas other study designs that do not
The applicant also responded to CMS' concern regarding the percentage of patients who experienced CRS in the JULIET trial. The applicant for KYMRIAH stated that updated results show, using the conservative University of Pennsylvania Scale, CRS occurred in 78 percent of the patients enrolled in the JULIET clinical trial. However, only 23 percent of the patients had ≥Grade III CRS and no patient had Grade V CRS. The applicant further stated that patients with low grade CRS may reflect symptoms such as fever, myalgia, nausea or fatigue. The applicant noted that, in this context, the patients with ≥Grade III CRS represent those with a life-threatening condition that requires interventions to support respiratory or circulatory function. The applicant indicated that CRS was manageable by a trained staff according to a specific CRS treatment algorithm and current standard-of-care for these patients includes high-dose salvage chemotherapy regimens, as well as myeloablative therapy prior to autologous stem cell transplant, both of which have aggressive toxicity profiles. However, the applicant indicated that many of the toxicities of autologous stem cell transplant are managed without the benefit of treatment algorithms and directed therapies which aid in the management of CRS.
The applicant for YESCARTA responded to CMS' concern that its new technology add-on payment application did not appear to include patient mortality data that was included as part of the applicant's FY 2018 new technology add-on payment application for the KTE-C19 technology. The applicant acknowledged that the Study 1 interim analysis data included in the FY2018 new technology add-on payment application and depicted as CMS' concern was not explicitly detailed in the FY 2019 application, which focused on the primary analysis, nor in Supplement 2, which provided data from the updated analysis. The applicant confirmed that there were no new deaths from adverse events at the time of the Study 1 primary analysis (median follow-up of 6 months) or at the time of the updated analysis (median follow-up of 15.4 months).
The applicant also responded to CMS' concern that there are few published results describing survival benefits from the use of YESCARTA. The applicant indicated that information to address this issue was submitted to CMS in a new technology add-on payment supplemental file. The applicant indicated that this file provided data from the updated analysis (median follow-up of 15.4 months) and references for the published manuscripts. (We note that the information the applicant provided with its public comment was also previously provided to CMS in the supplemental file mentioned above). The applicant stated that, in December 2017, the long-term follow-up of Study 1 (ZUMA-1), Phase I (n=7), and Phase II (n=101) was published in the New England Journal of Medicine and presented at ASH 2017. The applicant explained that at median 15.4 months follow-up at the time of the updated analysis data cutoff (August 11, 2017), responses were ongoing in 42 percent of the patients where median duration of response for complete response has not been reached and median overall survival has not been reached. The applicant indicated that the authors concluded these high levels of durable response confirmed that YESCARTA is highly effective and provides substantial clinical benefit for patients diagnosed with large B-cell lymphoma who otherwise have no curative options. Additionally, the applicant stated that results show (best objective response, ongoing) ORR (82 percent, 42 percent) and CR (58 percent, 40 percent) at the time of the updated analysis (15.4 months) are significantly improved over results from SCHOLAR-1 historical control of 26 percent. The applicant stated that, based on the evidence of improved benefits provided to patients with no other treatment options, this study supports the finding that YESCARTA demonstrates that it represents a substantial clinical improvement over existing treatment options. The applicant further detailed that the results from the updated analysis show: The median time to response was rapid (1.0 month; range, 0.8 to 6.0) and that the median duration of complete response has not been reached. Additionally, the applicant explained that responses to treatment, including ongoing ones, were consistent across key covariates, including in individuals 65 years of age and younger and those individuals 65 years of age and older. The applicant also indicated that the median overall survival has not been reached. However, the applicant stated that the results of the updated analysis show the overall survival rate at 18 months was 52 percent and 56 percent of patients enrolled in the study were alive at the time of the updated analysis. The applicant also indicated that results show ongoing durable remissions have been observed in patients at 24 months.
The applicant for YESCARTA also responded to CMS' concern regarding the limited number of patients (n=108) that were studied after infusion involving YESCARTA T-cell immunotherapy. The applicant stated that the statistical plan for Study 1 was developed by Kite in close discussion with FDA. The applicant explained that the design of this statistical plan was developed so that the study size would be powered to show statistical significance for the primary end point: ORR. The applicant indicated that the primary analysis of Study 1, Phase II demonstrates that the primary endpoint has been met and that key secondary endpoints including Duration of Response and Overall Survival were also met. Therefore, the applicant believed that the results of the clinical data show YESCARTA has demonstrated substantial clinical improvement for patients who previously had no curative options, no standard therapy and a short expected survival. The applicant also explained that the sample size (the number of patients planned) for Study 1 was determined by the number of patients required to statistically demonstrate an improvement in the response rate with treatment involving YESCARTA and is
After consideration of the public comments we received, we agree that both, KYMRIAH and YESCARTA, represent a substantial clinical improvement over existing technologies because the technologies allow access for a treatment option for those patients who are unable to receive standard-of-care treatment. Additionally, there are no other currently FDA-approved treatment options for patients with r/r DLBCL who are ineligible for, or who have failed ASCT. Finally, both technologies appear to significantly improve clinical outcomes, including ORR, CR, OS, and durability of response, and allow for a manageable safety profile.
In summary, we have determined that KYMRIAH and YESCARTA meet all of the criteria for approval of new technology add-on payments. Therefore, we are approving new technology add-on payments for KYMRIAH and YESCARTA for FY 2019. We expect that KYMRIAH will be administered for the treatment of adult patients (18 years old and older) diagnosed with r/r DLBCL not eligible for ASCT, and YESCARTA will be administered for the treatment of adult patients diagnosed 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. Cases involving KYMRIAH and YESCARTA that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedure codes XW033C3 and XW043C3. The applicants for both, KYMRIAH and YESCARTA, estimate that the average cost for an administered dose of KYMRIAH or YESCARTA is $373,000. Under § 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 the use of KYMRIAH or YESCARTA is $186,500 for FY 2019.
We note that on May 16, 2018, CMS opened a national coverage determination (NCD) analysis on CAR T-cell therapy for Medicare beneficiaries with advanced cancer. The expected national coverage analysis completion date is May 17, 2019. For more information, we refer reader to the CMS website at:
Lastly, we note that in the FY 2019 IPPS/LTCH proposed rule (83 FR 20294), we discussed possible payment alternatives and invited public comments regarding the most appropriate mechanism to provide payment to hospitals for new technologies such as CAR T-cell therapy drugs, including through the use of new technology add-on payments. We also invited public comments on how they would affect incentives to encourage lower drug prices.
As discussed further in section II.F.2.d. of the preamble of this final rule, building on President Trump's
Jazz Pharmaceuticals, Inc. submitted an application for new technology add-on payments for the VYXEOS
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
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.
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-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 VYXEOS
VYXEOS
Cytarabine and daunorubicin are co-encapsulated inside the VYXEOS
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 VYXEOS
The applicant provided the results of clinical studies to demonstrate that the CombiPlex technology and the ratiometric dosing of VYXEOS
The applicant maintained that, while VYXEOS
With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, we stated that we believe that potential cases representing patients who may be eligible for treatment involving VYXEOS
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 VYXEOS
The following unique ICD-10-PCS codes were created to describe the administration of VYXEOS
In the FY 2019 IPPS/LTCH PPS proposed rule, we invited public comments on whether VYXEOS
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 VYXEOS
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 VYXEOS
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
The applicant provided additional analyses with the inclusion of VYXEOS
Finally, the applicant also provided the following sensitivity analyses (that did not include charges for VYXEOS
• Sensitivity Analysis 1—limited 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—identified patients who have been diagnosed with AML in remission.
The applicant noted that, in all of the sensitivity analysis scenarios, the average case-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 VYXEOS
After consideration of the public comments we received, we believe that VYXEOS
With regard to substantial clinical improvement, according to the applicant, clinical data results have shown that the use of VYXEOS
• The applicant stated that clinical data results show that treatment with VYXEOS
• 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 VYXEOS
Based on data from the Phase III Study 301,
• 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 VYXEOS
• The applicant asserted that VYXEOS
According to the applicant, patient outcome following transplant strongly favored patients in the VYXEOS
• The applicant asserted that VYXEOS
The applicant cited Gordon, et al., 2016,
• The applicant asserted that younger patients (18 to 65 years old) with poor risk first relapse AML have shown higher response rates with VYXEOS
• 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 VYXEOS
Based on all of the data presented above, the applicant concluded that VYXEOS
We invited public comments on whether VYXEOS
Based on evaluation of the new technology add-on payment application and consideration of the public comments we received, we have determined that VYXEOS
In its application, the applicant estimated that the average cost of a single vial for VYXEOS
Melinta Therapeutics, Inc., submitted an application for new technology add-on payments for VABOMERE
Complicated urinary tract infections (cUTIs) are defined as chills, rigors, or fever (temperature of greater than or equal to 38.0 °C); elevated white blood cell count (greater than 10,000/mm3), 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 °C); elevated white blood cell count (greater than 10,000/mm3), or left shift (greater than 15 percent immature PMNs); nausea or vomiting; dysuria, increased urinary frequency, or urinary urgency; flank pain; costo-vertebral angle tenderness on physical examination. Risk factors for infection with drug-resistant organisms do not, on their own, indicate a cUTI.
The applicant reported that it has developed a beta-lactamase combination antibiotic, VABOMERE
The applicant stated that meropenem, a carbapenem, is a broad spectrum beta-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 VABOMERE
The applicant stated that VABOMERE
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, VABOMERE
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20300), we stated that we believed, although the molecular structure of the vaborbactam component of VABOMERE
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 VABOMERE
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 VABOMERE
In the proposed rule, we stated that we were concerned VABOMERE
Several commenters believed that VABOMERE
Other commenters stated that, given the recognized shortage of new antibiotics, the unique benefits of VABOMERE
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 VABOMERE
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. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20301), we noted 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-weighted unstandardized charge per case) rather than the actual average case-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. At the time of the development of the proposed rule, the applicant noted that it did not yet have sufficient charge data from hospitals and would work to supplement its application with the information once it was 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-weighted standardized charge per case as $91,304, which exceeded the average case-weighted threshold amount of $74,815. Therefore, the applicant asserted that VABOMERE
In the proposed rule, we indicated we were concerned that, as noted earlier, instead of using actual charges from the Premier Research Database, the applicant computed the average case-weighted unstandardized charge per case based on the average case-weighted threshold amounts in Table 10 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 VABOMERE
For each subset, the applicant conducted a cost analysis for 100 percent of the identified cases, 75 percent of the identified cases, the top 20 MS-DRGs to which potential cases would map, and the top 10 MS-DRGs to which potential cases would map. For each subset, the applicant performed the following: (1) Calculated the case-weighted unstandardized charge per case; (2) removed 100 percent of the drug charges from the relevant cases in order to conservatively estimate for charges for drugs that potentially may be replaced by VABOMERE
The applicant stated that the cost of VABOMERE
The applicant stated that each subset demonstrated the average case-weighted standardized charge per case exceeded the average case-weighted threshold amount. Below are three tables, one for each subset, showing that the average case-weighted standardized charge per case exceeded the average case-weighted threshold amount.
With regard to the substantial clinical improvement criterion, the applicant believed that the results from the VABOMERE
TANGO I
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 VABOMERE
• Mean body mass index was approximately 26.5 kg/m2 in both treatment groups.
• Concomitant bacteremia was identified in 12 (6 percent) and 15 (8 percent) of the patients at baseline in the VABOMERE
• The proportion of patients who were diagnosed with diabetes mellitus at baseline was 17 percent and 19 percent in the VABOMERE
• 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-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 VABOMERE
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 VABOMERE
• The TOC—7 days post IV therapy was 76.5 percent (124 of 162 patients) for the VABOMERE
• Despite being an NI trial, TANGO-I showed a statistically significant difference favoring VABOMERE
• VABOMERE
• Because the lower limit of the 95 percent CI is also greater than 0 percent, VABOMERE
• Because non-inferiority was demonstrated, then superiority was tested. Further, the applicant asserted that a non-inferiority design may have a “superiority” hypothesis imbedded within the study design that is appropriately tested using a non-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 VABOMERE
In the proposed rule, we noted that the eradication rates of the EMA endpoint were not statistically significant. We invited public comments with respect to our concern as to whether the FDA endpoints demonstrating non-inferiority are statistically sufficient data to support that VABOMERE
In its application, the applicant offered data from the TANGO-I trial comparing VABOMERE
In the proposed rule we noted that the applicant asserted that the TANGO II study
A total of 72 patients were enrolled in the TANGO 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 VABOMERE
According to the applicant, subgroup analyses of the TANGO II studies include an analysis of adverse events in which VABOMERE
• VABOMERE
• VABOMERE
• Efficacy results of the TANGO II trial cUTI/AP subgroup demonstrated VABOMERE
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20303), we noted that many of the TANGO II trial outcomes showing improvements in the use of VABOMERE
We invited public comments on whether the VABOMERE
The applicant further indicated that, with regard to the size of the study population for TANGO II, this study focused specifically on a patient population known to have or suspected of having CRE. The applicant further stated that, despite a concerted effort to search for patients with CRE infection and intensive pre-screening and screening activities across the globe, it took more than 2.5 years to enroll 77 patients. The applicant also noted that many other clinical studies in the context of new antibiotics development and other areas have involved similar or smaller cohorts of patients. According to the applicant, in the specific context of TANGO II, approximately 100 patients were pre-screened for each individual enrolled patient. The applicant stated that challenges are typical of the “ultra-orphan” world of antimicrobial development, where new treatments are needed, and pathogen-focused or resistance-focused clinical trials are crucial to accurately determine the efficacy of the treatment. The applicant further stated that unfortunately, study challenges (including difficulty consenting seriously-ill patients and their families, restricted entry criteria, exclusion for prior antibiotics, among others), along with a rare diagnosis, make larger trials with this life-threatening condition quite difficult to conduct. The applicant indicated that the patients enrolled in this study had a high incidence of underlying comorbidities and a high disease severity, with approximately 40 percent of the patients being immunocompromised and 75 percent with a Charlson Comorbidity Score >5. The applicant also noted appreciation that CMS recognized these challenges, particularly in the context of clinical trials for new antibiotic products that treat serious and life-threatening infections. The applicant believed that, for these reasons, the sample size used in the TANGO II trial does not undermine or diminish the significance of its results. The applicant indicated that the study focused specifically on
One commenter agreed with CMS' concern that improved outcomes in some trials may not be statistically significant and that the small number of patients, and the lack of a comparison to other antibiotic treatments of cUTIs known to be effective against uropathogens may not support that VABOMERE
In summary, we have determined that VABOMERE
As discussed above, according to the applicant, the cost of VABOMERE
Respicardia, Inc. submitted an application for new technology add-on payments for the remedē® System for FY 2019. According to the applicant, the remedē® 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 remedē® 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 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.
According to the applicant, prior to the introduction of the remedē® 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.
On October 6, 2017, the remedē® 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 remedē® 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 October 1, 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.
As stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20309), 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 remedē® 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 remedē® 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 remedē® 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 remedē® 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 remedē® 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 remedē® System is particularly suited for the treatment of CSA in patients who also have been diagnosed with heart failure. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20310), we stated we were concerned that, while the remedē® 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 noted that the applicant's clinical analyses and data results related to patients who specifically were diagnosed with CSA and heart failure. We invited public comments on whether the remedē® System meets the newness criterion.
The applicant explained that currently, cases representing Medicare patients who have been admitted to the hospital with a diagnosis of CSA to receive treatment map to a wide array of MS-DRGs. However, the applicant believed that cases representing patients eligible for treatment involving the remedē® System would be assigned to a different MS-DRG than cases representing patients treated using standard treatment options, including CPAP or ASV. The applicant further explained that, based on an analysis of FY 2018 MedPAR data, claims including a diagnosis of CSA mapped to 458 MS-DRGs with no single MS-DRG representing more than 4.5 percent of the total claims. The applicant believed this variant assignment of cases representing patients who have been diagnosed with CSA and received treatment is likely due to the fact that
Several other commenters also supported approval of new technology add-on payments for the remedē® System, and asserted that the neurostimulation of the phrenic nerve is a different mechanism of action. The commenters indicated that they believed positive airway pressure (PAP) treatment is inferior to phrenic nerve stimulation because of patient intolerability, a lack of evidence in support of the success of PAP treatment in this population, or evidence showing that PAP such as ASV being contraindicated in the treatment of patients who have been diagnosed with CSA and heart failure. Another commenter agreed with the applicant, and stated that the remedē® System's mechanism of action to deliver treatment, the neurostimulation of the phrenic nerve, is a new treatment approach that has never previously been used.
After consideration of the public comments we received, for the reasons discussed, we believe that the remedē® System is not substantially similar to any existing technology and it 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 remedē® 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 remedē® System assigned to MS-DRG 040; 5,309 cases representing potential patients who may be eligible for treatment involving the remedē® System assigned to MS-DRG 041; and 2,178 cases representing potential patients who may be eligible for treatment involving the remedē® 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 met the cost criterion. With regard to the analysis above, in the proposed rule, we stated that we were concerned that all cases in MS-DRGs 040, 041, and 042 were used in the analysis. We further stated that we were unsure if all of these cases represent patients that may be truly eligible for treatment involving the remedē® System. We invited public comments on whether the remedē® System meets the cost criterion.
The applicant identified a total of 2,416 cases representing potential patients who may be eligible for treatment involving the remedē® System, with 1,762 cases (72.9 percent of all of the cases) mapping to MS-DRG 41 and 654 cases (27.1 percent of all of the cases) mapping to MS-DRG 42, resulting in an average case-weighted charge per case of $86,744. The applicant removed 100 percent of the charges associated with the services provided in connection with the prior technology. The applicant then standardized the charges and inflated the charges by an inflation factor of 9.36 percent, which resulted in an inflated average case-weighted standardized charge per case of $61,426. According to the applicant, the cost of the remedē® System is $34,500. The applicant converted the costs of the technology to charges by dividing the costs by the national CCR of 0.332 for “Implantable Devices” from the FY 2018 IPPS/LTCH PPS final rule. This resulted in $103,916 in estimated hospital charges for the new technology, which were added to the inflated standardized charges per case. The final inflated average case-weighted standardized charge per case is $165,342, which is $87,877 more than the Table 10 average case-weighted threshold amount of $77,465. Therefore, the applicant maintained that it meets the cost criterion.
After consideration of the additional information provided by the applicant, we agree that the remedē® System meets the cost criterion.
With respect to the substantial clinical improvement criterion, the applicant asserted that the remedē® System meets the substantial clinical improvement criterion. The applicant stated that the remedē® 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 remedē® 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 remedē® 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
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;
• 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.
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,
The applicant also stated that the remedē® System represents a substantial clinical improvement over existing technologies because of the reduction in the number of future hospitalizations, few device-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 indicated that study results showed the remedē® 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
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
The third study
The fourth study
The fifth study
The final study data was from the pivotal study with limited information in the form of an abstract
The applicant asserted that the results from the pivotal trial
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. In the FY 2019 IPPS/LTCH PPS proposed rule, we invited public comments on whether this current study design is sufficient to support substantial clinical improvement of the remedē® System with respect to all patient populations,
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 remedē® 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 remedē® 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).
In the proposed rule we stated we were concerned that the remedē® 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 noted that the FDA-approved indication for the implantation of the remedē® System is for use in the treatment of adult patients who have been diagnosed with moderate to severe CSA. We also noted that the applicant's supporting studies were directed primarily at patients who had been treated with the remedē® 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 remedē® 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 remedē® System has been studied, we indicated we were concerned that any claims on mortality as they relate to treatment involving the use of the remedē® System may be limited. Therefore, we were 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.
We stated in the proposed rule that the applicant has shown that, among the subpopulation of patients who have been diagnosed with CSA and heart failure, the remedē® System decreases morbidity outcomes as compared to the CPAP and ASV treatment options. In the proposed rule, we noted that we understood 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,
Therefore, in the proposed rule we stated we were concerned that differences in morbidity and mortality outcomes between CPAP, ASV, and the remedē® 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.
We also noted that the clinical study had a small patient population (n=151), with follow-up for 6 months. We stated that we were interested in longer follow-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 remedē® System. We also expressed interest 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 stated that we were 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 invited public comments on whether the remedē® System represents a substantial clinical improvement over existing technologies.
• Other clinical trials, such as the CANPAP and SERVE-HF, which used PAP treatments in the course of treating patients who had been diagnosed with CSA were halted early due to the possibility of increased mortality;
• There exists little evidence showing that PAP treatments are effective for treatment of non-heart failure patients who have been diagnosed with CSA, according to the AASM; and
• Prior to the development of the remedē® System's pivotal trial, there was a lack of prospective, randomized data showing a relationship between PAP treatments and morbidity outcomes.
The applicant also believed that positive airway pressure devices were more likely to be considered for use in the treatment of patients who have been diagnosed with CSA, but without a diagnosis of heart failure. Another commenter stated that it agreed with the applicant's reasons and supported the rationale for not using PAP treatments as comparators in its clinical trials.
With regard to CMS' concern that claims related to mortality following treatment with the remedē® System are limited, the applicant agreed with CMS' assessment and stated that limited research on the system's impact on mortality for patients who have been diagnosed with CSA has been completed. The applicant further noted that mortality information was collected primarily for safety purposes during the pivotal trial. Another commenter also agreed with CMS' and the applicant's assessment and reiterated the applicant's statements.
The applicant addressed CMS' concern that the FDA-approved indication for the remedē® System is for all patients diagnosed with moderate to severe CSA and not specifically those diagnosed with a heart failure comorbidity. The applicant stated that the data from the pivotal trial provided evidence that the use of the remedē® System as a treatment option is safe and effective for patients who have been diagnosed with CSA, regardless of a heart failure comorbidity. Another commenter agreed with the applicant and stated that the data from the pivotal trial supported the applicant's response regarding the concern of the FDA-approved indication.
Regarding the concern that baseline statistical comparisons between treatment groups were not provided controlling for heart failure status, the applicant stated that there were no significant differences in baseline CSA disease burden between the treatment and control groups. The applicant further stated that, as expected, the heart failure and non-heart failure groups differed slightly by age and cardiac (for example, atrial fibrillation and hypertension) and other comorbidities (for example, hospitalizations within the last 12 months, diabetes, renal disease, depression).
In regard to the results at 6 and 12 months, the applicant stated that in all categories, except for quality of life, both the heart failure and non-heart failure groups showed statistically significant improvements from the baseline. The applicant asserted that for quality of life, which did not have a baseline, both groups had greater than 50 percent of respondents, which demonstrates marked or moderate improvement to their quality of life with a higher proportion in the non-heart failure group as compared to the heart failure group. Another commenter added that given the overall consistent balance achieved between the treatment and control groups across the many baseline variables examined, there is no evidence suggesting noteworthy imbalances to be expected in these subgroups.
The applicant addressed CMS' concerns related to the differences between heart failure and non-heart failure patients who received treatment with the remedē® System. The applicant asserted that it is well established that a significant proportion of patients who have been diagnosed with CSA have a heart failure comorbidity; 64 percent of patients enrolled in the pivotal trial had a diagnosis of heart failure. The applicant stated that it expected a higher proportion of heart failure patients enrolled in the study of CSA due to the correlated incidence of these diseases and the pivotal trial inclusion criteria being based on conventional sleep apnea metrics and not comorbidities. The applicant further stated that, regardless of the patients' comorbidity status, patients experienced consistent and durable improvements with the use of the remedē® System as a treatment option.
The applicant responded to CMS' concern regarding the small sample size used for the pivotal trial. The applicant stated that the sample size was chosen with an alpha error of 0.025, a power of 80 percent, an expected 50 percent response rate in the treatment group, and a 25 percent response rate in the control group. The applicant further stated that the study accounted for a 15 percent implantation failure and a 10 percent drop-out rate. The applicant indicated that, ultimately, the trial randomized 151 patients, with 147 successful implantations. Another commenter stated that the results showing highly statistical significance were derived from a sample size of patients across 31 different places around the world and, therefore, are generalizable.
The applicant responded to CMS' interest in longer term follow-up data. The applicant stated that 12-month follow-up data was recently published providing 12 months of treatment data for patients enrolled in the treated group and 6 months of treatment data for patients enrolled in the control group. Other commenters stated that 12-month follow-up data results are available and show continued durability of 6-month results.
The applicant addressed CMS' concern about the potential for electrical stimulation of unintended targets and interference from outside devices. The applicant stated that 42 percent of the patients involved in the pivotal trial had a concomitant cardiac device. The applicant stated that interactions between devices are not unique to the remedē® System and that only three serious device interactions were reported, all of which were resolved with reprogramming. The applicant further indicated that, all except 1 of the 21 extra-respiratory stimulation cases that occurred were resolved with routine reprogramming of the remedē® System, the other required repositioning of the lead. Ultimately, 96 percent of the patients enrolled in the pivotal trial would elect to have the medical procedure again.
Lastly, the applicant addressed CMS' concern about longevity of the implanted device, batteries, and leads. The applicant stated that the expected typical battery life is 41 months, which is consistent with other implanted neurostimulation devices. The applicant further stated that the leads were FDA pre-market approved and designed based on predicate, permanent cardiac pacing leads for which the standards are more rigorous than those for neurostimulation. The applicant indicated that, the leads, therefore, compare favorably to leads used for neurostimulation in categories such as lead breakage, connector failure, lead dislodgement, and infection.
Another commenter responded to CMS' concern about the possible failure in randomization when controlling for heart failure status. The commenter stated that it does not consider the reported baseline difference as a failure of randomization. The commenter further noted that, of the approximately 50 baseline factors examined and reported in the clinical study report from the pivotal trial, only MAI had a p-value equal to less than 0.05 associated with a study group difference.
Many commenters stated that the remedē® System represented a substantial clinical improvement and referenced clinical data, in general, and others specifically mentioned the pivotal trial results as demonstration of the improved benefit over existing treatment options. These commenters also noted that the use of the remedē® System and the mechanism of action of phrenic nerve stimulation showed sustained benefits for patients who have been diagnosed with CSA and received treatment using the system.
After consideration of the public comments we received, we have determined that the remedē® System meets all of the criteria for approval for new technology add-on payments. Therefore, we are approving new technology add-on payments for the remedē® System for FY 2019. Cases involving the use of the remedē® System that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedures codes 0JH60DZ and 05H33MZ in combination with procedure code 05H03MZ (Insertion of neurostimulator lead into right innominate vein, percutaneous approach) or 05H043MZ (Insertion of neurostimulator lead into left innominate vein, percutaneous approach).
In its application, the applicant estimated that the average Medicare beneficiary would require the surgical implantation of one remedē® System per patient. According to the application, the cost of the remedē® System is $34,500 per patient. Under § 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 the use of the remedē® System is $17,250 for FY 2019. In accordance with the current indication for the use of the remedē® System, CMS expects that the remedē® System will be used for the treatment of adult patients who have been diagnosed with moderate to severe CSA.
Titan Spine submitted an application for new technology add-on payments for the Titan Spine nanoLOCK® Interbody Device (the Titan Spine nanoLOCK®) 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® 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-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®'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® received FDA clearance for the use of five lumbar interbody devices and one cervical interbody device: The nanoLOCK® TA—Sterile Packaged Lumbar ALIF Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; the nanoLOCK® TAS—Sterile Packaged Lumbar ALIF Stand Alone Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; the nanoLOCK® TL—Sterile Packaged Lumbar Lateral Approach Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; the nanoLOCK® TO—Sterile Packaged Lumbar Oblique/PLIF Approach Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; the nanoLOCK® TT—Sterile Packaged Lumbar TLIF Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy; and the nanoLOCK® TC—Sterile Packaged Cervical Interbody Fusion Device with nanoLOCK® surface, available in multiple sizes to accommodate anatomy.
The applicant received FDA clearance on December 14, 2015, for the nanoLOCK® TCS—Sterile Package Cervical Stand Alone Interbody Fusion Device with nanoLOCK® 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® 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® would begin on October 1, 2016. Procedures involving the Titan Spine nanoLOCK® technology can be identified by the following ICD-10-PCS Section “X” New Technology codes:
• XRG0092 (Fusion of occipital-cervical joint using nanotextured 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.
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. In the proposed rule we noted 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® 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®'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® 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 believed 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® interbody devices, contain optimized nano 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®'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®'s surface is created by using a reductive process of the titanium itself. The applicant asserted that use of the Titan Spine nanoLOCK® 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 (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 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 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 textured surfaces has demonstrated greater promotion of osteoblast differentiation when compared to use of PEEK-based surfaces.
The applicant maintains that the nanoLOCK® 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 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
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® 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® 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® 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® technology is substantially similar to existing technologies.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20316), we stated we were concerned that the Titan Spine nanoLOCK® interbody devices may be substantially similar to currently available titanium interbody devices because other roughened 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 were concerned that the Titan Spine nanoLOCK® interbody devices use the same or similar mechanism of action as other devices.
We invited public comments on whether the Titan Spine nanoLOCK® 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® interbody devices meet the cost criterion. In the proposed rule, we noted that cases reporting procedures involving lumbar and cervical interbody devices would map to different MS-DRGs. As discussed in the Inpatient New Technology Add 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 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® lumbar interbody devices. This resulted in a final inflated average case-weighted standardized charge per case of $174,688, which exceeded the average
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 exceeded 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-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 final inflated average case-weighted standardized charge per case of $149,915, which exceeded the average case-weighted Table 10 MS-DRG threshold amount of $104,094.
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all of the applicant's analyses, the applicant maintained that the technology met the cost criterion.
We invited public comments on whether the Titan Spine nanoLOCK® meets the cost criterion.
We did not receive any public comments concerning whether the Titan Spine nanoLOCK® meets the cost criterion or the cost analysis presented in the proposed rule. We believe that the Titan Spine nanoLOCK® meets the cost criterion.
With regard to the substantial clinical improvement criterion for the Titan Spine nanoLOCK® 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® 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. In the proposed rule, we noted 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® 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 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
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® patients from “Baseline,” based on improvement at earlier than standard time points.
In the proposed rule, we stated we were 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 limited 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 indicated we were 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 series provided by the applicant, we stated that we were unable to determine whether the findings regarding extremity and back pain, ODI scores, and percentage of subjects not taking pain medication for patients who received treatment involving the Titan Spine nanoLOCK® devices represent a substantial clinical improvement due to the inconsistent sample size over time across both treatment arms in all evaluated outcome measures. The quantity of missing data in this case series, along with the lack of explanation for the missing data, raised concerns for the interpretation of these results. We also stated that we were unable to determine based on this case series whether there were improvements in extremity pain and back pain, ODI scores, and percentage of subjects not taking pain medicines for patients who received treatment involving the Titan Spine nanoLOCK® devices versus conventional and other intervertebral body fusion devices, as there were no comparisons to current therapies. As noted in the proposed rule and above, the applicant did not provide an explanation of why the outcomes studied in the case series were chosen for review. Therefore, we believed that we may have had insufficient information to determine if the outcomes studied in the case series are validated proxies for evidence that the nanoLOCK®'s surface promotes greater osteoblast differentiation when compared to use of PEEK-based surfaces. We invited public comments regarding our concerns, including with respect to why the outcomes studied in the case series were chosen for review.
We note that, we did not receive any public comments with respect to why the outcomes in the case series were selected for review.
The applicant's second clinical evaluation was a case-control study with a 1:5 case to control ratio. The applicant used deterministically linked, de-identified, individual level health care claims, electronic medical records (EMR), and other data sources to identify 70 cases and 350 controls for a total sample size of 420 patients. The applicant also identified OM1
The mean age for all patients in the study was 55 years old, and 47 percent were male. For the clinical length of stay outcome, the applicant noted that the mean length of stay was slightly longer among control patients, 3.9 days (SD=5.4) versus 3.2 days (SD=2.9) for cases, and a larger proportion of patients in the control group had lengths of stay equal to or longer than 5 days (21 percent versus 17 percent). Three control patients (0.8 percent) were readmitted within 30 days compared to zero readmissions among case patients. A slightly lower proportion of case patients were on opioids 3 months post-surgery compared to control patients (15 percent versus 16 percent).
In the proposed rule (83 FR 20318), we stated we were concerned that there may be significant outliers not identified in the case and control arms because for the mean length of stay outcome, the standard deviation for control patients (5.4 days) is larger than the point estimate (3.9 days). Based on the results of this clinical evaluation provided by the applicant, we stated that we were unable to determine whether the findings regarding lengths of stay and cumulative post-surgical opioid use for patients who received treatment involving the nanoLOCK® devices versus conventional intervertebral body fusion devices represent a substantial clinical improvement. We stated that without further information on selection of controls and whether there were adjustments in the statistical analyses controlling for confounding factors (for example, cause of back pain, level of experience of the surgeon, BMI and length of pain), we were concerned that the interpretation of the results may be limited. Finally, we stated we were concerned that the current data does not adequately support a strong association between the outcome measures of length of stay, readmission rates, and use of opioids and the use of nano-surface textures in the manufacturing of the Titan Spine nanoLOCK® device. For these reasons, we stated that we were concerned that the current data do not support a substantial clinical
In the proposed rule, we noted that the applicant indicated its intent to submit the results of additional ongoing studies to support the evidence of substantial clinical improvement over existing technologies for patients who received treatment involving the nanoLOCK® devices versus patients receiving treatment involving other interbody fusion devices. We invited public comments on whether the Titan Spine nanoLOCK® meets the substantial clinical improvement criterion.
After consideration of all the information from the applicant, as well as the public comments we received, we are unable to determine if the Titan Spine nanoLOCK® represents a substantial clinical improvement over the currently available devices used for lumbar and cervical DDD treatment due to a lack of significant and meaningful data. As stated above, we remain concerned that the current data does not adequately support a sufficient association between the outcome measures of length of stay, readmission rates, and use of opioids and the use of nano-surface textures in the manufacturing of the Titan Spine nanoLOCK® device to determine that the technology represents a substantial clinical improvement over existing available options. Therefore, after consideration of all of the new technology add-on payment criteria we are not approving new technology add-on payments for the Titan Spine nanoLock® devices for FY 2019.
Achaogen, Inc. submitted an application for new technology add-on payments for Plazomicin for FY 2019. We note that, since the publication of the proposed rule, the applicant has announced that the trade name for Plazomicin is ZEMDRI
The applicant stated that there is a strong need for antibiotics that can treat infections caused by MDR Enterobacteriaceae, specifically carbapenem resistant Enterobacteriaceae (CRE). Life-threatening infections caused by MDR bacteria have increased over the past decade, and the patient population diagnosed with infections caused by CRE is projected to double within the next 5 years, according to the Centers for Disease Control and Prevention (CDC). Infections caused by CRE are often associated with poor patient outcomes due to limited treatment options. Patients who have been diagnosed with BSIs due to CRE face mortality rates of up to 50 percent. Patients most at risk for CRE infections are those with CRE colonization, recent hospitalization or stay in a long-term care or skilled-nursing facility, an extensive history of antibacterial use, and whose care requires invasive devices like urinary catheters, intravenous (IV) catheters, or ventilators. The applicant estimated, using data from the Center for Disease Dynamics, Economics & Policy (CDDEP), that the Medicare population that has been diagnosed with antibiotic-resistant cUTI numbers approximately 207,000 and approximately 7,000 for BSIs/sepsis due to CRE.
The applicant noted that due to the public health concern of increasing antibiotic resistance and the need for new antibiotics to effectively treat MDR infections, Plazomicin has received the following FDA designations: Breakthrough Therapy; Qualified Infectious Disease Product, Priority Review; and Fast Track. The applicant noted that Breakthrough Therapy designation was granted on May 17, 2017, for the treatment of bloodstream infections (BSIs) caused by certain Enterobacteriaceae in patients who have been diagnosed with these types of infections who have limited or no alternative treatment options. The applicant noted that Plazomicin is the first antibacterial agent to receive this designation. The applicant noted that on December 18, 2014, the FDA designated Plazomicin as a Qualified Infectious Disease Product (QIDP) for the indications of hospital-acquired bacterial pneumonia (HAPB), ventilator-associated bacterial pneumonia (VABP), and complicated urinary tract infection (cUTI), including pyelonephritis and catheter-related blood stream infections (CRBSI). The applicant noted that Fast Track designation was granted by the FDA on August 12, 2012, for the Plazomicin development program for the treatment of serious and life-threatening infections due to CRE. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20320), we indicated that Plazomicin had not received approval from the FDA as of the time of the development of the proposed rule. However, as noted previously, the applicant received approval from the FDA on June 25, 2018, for Plazomicin with the trade name ZEMDRI
The applicant's request for approval for a unique ICD-10-PCS procedure code to identify the use of ZEMDRI
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 Plazomicin 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 Plazomicin has a unique chemical structure designed to improve activity against aminoglycoside-resistant bacteria, which also are often resistant to other key classes of antibiotics, including beta-lactams and carbapenems. Bacterial resistance to aminoglycosides usually occurs through enzymatic modification by aminoglycoside modifying enzymes (AMEs) to compromise binding the target bacterial site. According to the applicant, AMEs were found in 98.6 percent of aminoglycoside nonsusceptible E. coli, Klebsiella spp, Enterobacter spp, and Proteus spp collected in 2016 U.S. surveillance
The applicant asserted that the mechanism of action is new due to the unique chemical structure. With regard to the general mechanism of action against bacteria, in the proposed rule, we stated we were concerned that the mechanism of action of Plazomicin appeared to be similar to other aminoglycoside antibiotics. As with other aminoglycosides, Plazomicin is bactericidal through inhibition of bacterial protein synthesis. The applicant maintained that the structural changes to the antibiotic constitute a new mechanism of action because it allows the antibiotic to remain active despite AMEs. Additionally, the applicant stated that Plazomicin would be the first, new aminoglycoside brought to market in over 40 years.
We invited public comments on whether Plazomicin's mechanism of action is new, including comments in response to our concern that its mechanism of action to eradicate bacteria (inhibition of bacterial protein synthesis) may be similar to that of other aminoglycosides, even if improvements to its structure may allow Plazomicin to be active even in the presence of common AMEs that inactivate currently marketed aminoglycosides.
Another commenter noted that CMS' concerns focused on commonalities between Plazomicin and other antibiotics in the same general antibiotic class, and stated that the unique benefits of this medicine should not be ignored due to the substantial similarities to other medicines, given the recognized shortage of new antibiotics.
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 Plazomicin would be assigned to the same MS-DRGs as cases representing patients who receive treatment for UTI or bacteremia.
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, we indicated in the proposed rule that the applicant asserted that Plazomicin is intended for use in the treatment of patients who have been diagnosed with cUTI, including pyelonephritis, and bloodstream infections, who have limited or no alternative treatment options. We stated that because the applicant anticipated that Plazomicin would be reserved for use in the treatment of patients who have limited or no alternative treatment options, the applicant believed that Plazomicin may be indicated to treat a new patient population for which no other technologies are available. However, we stated that it is possible that existing antimicrobials could also be used to treat those same bacteria Plazomicin is
Several other commenters supported the approval of new technology add-on payments for Plazomicin, and believed that Plazomicin treats a new patient population with very limited treatment options. The commenters specifically indicated that there is a need for new antibiotics to combat the crisis of multi-drug resistant bacteria, especially CRE infections. The commenters stated that there at least 70,000 cases of CRE annually in the United States, and the number is expected to double in 4 years. The commenters also noted that the CDC estimates that CRE infections are associated with mortality rates of up to 50 percent and occur in the most medically vulnerable patient populations. The commenters further recommended CMS acknowledge that as these organisms are becoming resistant to last-line antibiotic drugs, clinicians frequently face infections with no realistic treatment options for patients. The commenters also indicated that the CDC identified CRE as one of the three urgent drug-resistant threats to human health, and issued warning that without urgent action more patients will be “thrust back to a time before we had effective drugs.” Another commenter also noted that the World Health Organization identified CRE as one of the three pathogens with the highest priority for research and development of novel antimicrobials, and stated that Plazomicin is new because it has demonstrated superiority over historic regimens for the management of invasive CRE infections.
The applicant and other commenters also stated that, even with newly approved antibiotic products with activity against some CRE, development of resistance has already been reported resulting in patients having no other available treatment options. The applicant and other commenters further stated that there is a need for more than one effective antibiotic active against CRE for many reasons, including various patient characteristics such as drug allergies, source location of bacteria, and the need for two active antibiotics given at the same time—a common practice for multi-drug or pan-drug resistance. Therefore, the commenters believed that multiple antibiotic treatment options are necessary and the existence of other effective antibiotics does not preclude a new antibiotic such as ZEMDRI
Another commenter stated that it, generally, supported CMS' concerns regarding the substantial similarity criteria for Plazomicin.
After consideration of the public comments we received, we believe that the mechanism of action for ZEMDRI
With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. The analyses submitted by the applicant and presented in the proposed rule and below were for the indications of cUTI and BSI because the applicant was seeking FDA approval for both indications. However, as noted earlier, the technology was only approved for use in the treatment of cUTI, including pyelonephrits. Therefore, while we summarize both analyses below, as presented in the proposed rule, we note that only the cost information related to cUTI is evaluated to demonstrate that the applicant meets the cost criterion. We stated in the proposed rule that in order to identify the range of MS-DRGs that potential cases representing patients who have been diagnosed with the specific types of infections for which the technology had been proposed to be indicated for use in the treatment of and who may be potentially eligible for treatment involving Plazomicin may map to, the applicant identified all MS-DRGs in claims that
For the cost analysis summarized in the proposed rule, the applicant calculated an average unstandardized case-weighted charge per case using 2,046,275 identified cases (100 percent of all cases) and using 1,533,449 identified cases (75 percent of all cases) of $69,414 and $63,126, respectively. The applicant removed 50 percent of the charges associated with other drugs (associated with revenue codes 025x, 026x, and 063x) from the MedPAR data because the applicant anticipated that the use of Plazomicin would reduce the charges associated with the use of some of the other drugs, noting that this was a conservative estimate because other drugs would still be required for these patients during their hospital stay. The applicant then standardized the charges and applied the 2-year inflation factor of 9.357 percent from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) to inflate the charges from FY 2016 to FY 2018. No charges for Plazomicin were added in the analysis because the applicant explained that the anticipated price for Plazomicin had yet to be determined. Based on the FY 2018 IPPS/LTCH PPS Table 10 thresholds, the average case-weighted threshold amount was $56,996 in the first scenario utilizing 100 percent of all cases, and $55,363 in the second scenario utilizing 75 percent of all cases. The inflated average case-weighted standardized charge per case was $62,511 in the first scenario and $57,054 in the second analysis. Because the inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in both scenarios, the applicant maintained that the technology met the cost criterion. The applicant noted that the case-weighted threshold amount is met before including the average per patient cost of the technology in both analyses. As such, the applicant anticipated that the inclusion of the cost of Plazomicin, at any price point, would further increase charges above the average case-weighted threshold amount.
The applicant also supplied additional cost analyses that we summarized in the proposed rule, directing attention at each of the two proposed indications individually; the cost analyses considered potential cases representing patients who have been diagnosed with cUTI who may be eligible for treatment involving Plazomicin separately from potential cases representing patients who have been diagnosed with BSI/Bacteremia who may be eligible for treatment involving Plazomicin, with the cost analysis for each considering 100 percent and 75 percent of identified cases using the FY 2016 MedPAR data and the FY 2018 GROUPER Version 36. For the additional cost analyses summarized in the proposed rule, the applicant reported that, for potential cases representing patients who have been diagnosed with Bacteremia and who may be eligible for treatment involving Plazomicin, 100 percent of identified cases spanned 539 MS-DRGs, with 75 percent of the cases mapping to the following 4 MS-DRGs: 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC), 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours without MCC), 853 (Infectious and Parasitic Diseases with O.R. Procedure with MCC), and 870 (Septicemia or Severe Sepsis with Mechanical Ventilation 96+ hours).
According to the applicant, for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin, 100 percent of identified cases mapped to 702 MS-DRGs, with 75 percent of the cases mapping to 56 MS-DRGs. Potential cases representing patients who have been diagnosed with cUTIs and who may be eligible for treatment involving Plazomicin assigned to MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC) accounted for approximately 18 percent of all of the cases assigned to any of the identified 56 MS-DRGs (75 percent of cases sensitivity analysis), followed by MS-DRG 690 (Kidney and Urinary Tract Infections without MCC), which comprised almost 13 percent of all of the cases assigned to any of the identified 56 MS-DRGs. Two other common MS-DRGs containing potential cases representing potential patients who may be eligible for treatment involving Plazomicin who have been diagnosed with the specific type of indicated infections for which the technology is intended to be used, using the applicant's analysis approach for UTI based on mapping the ICD-10-CM diagnosis codes were: MS-DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours without MCC) and MS-DRG 689 (Kidney and Urinary Tract Infections with MCC).
According to the applicant's analyses submitted prior to the FDA approval, as stated in the proposed rule, for potential cases representing patients who have been diagnosed with BSI and who may be eligible for treatment involving Plazomicin, the applicant calculated the average unstandardized case-weighted charge per case using 1,013,597 identified cases (100 percent of all cases) and using 760,332 identified cases (75 percent of all cases) of $87,144 and $67,648, respectively. The applicant applied the same methodology as the combined analysis above. Based on the FY 2018 IPPS/LTCH PPS final rule Table 10 thresholds, the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with BSI assigned to the MS-DRGs identified in the sensitivity analysis was $66,568 in the first scenario utilizing 100 percent of all cases, and $61,087 in the second scenario utilizing 75 percent of all cases. The inflated average case-weighted standardized charge per case was $77,004 in the first scenario and $60,758 in the second scenario; in the 100 percent of Bacteremia cases sensitivity analysis, the final inflated case-weighted standardized charge per case exceeded the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with BSI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the sensitivity analysis by $10,436 before including costs of Plazomicin. In the 75 percent of all cases sensitivity analysis scenario, the final inflated case-weighted standardized charge per case did not
For potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin, the applicant calculated the average unstandardized case-weighted charge per case using 100 percent of all cases and 75 percent of all cases of $59,908 and $48,907, respectively. The applicant applied the same methodology as the combined analysis above. Based on the FY 2018 IPPS/LTCH PPS final rule Table 10 thresholds, the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the first scenario utilizing 100 percent of all cases was $51,308, and $46,252 in the second scenario utilizing 75 percent of all cases. The inflated average case-weighted standardized charge per case was $53,868 in the first scenario and $45,185 in the second scenario. In the 100 percent of cUTI cases sensitivity analysis, the final inflated case-weighted standardized charge per case exceeded the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the 100 percent of all cases sensitivity analysis by $2,560 before including costs of Plazomicin. In the 75 percent of all cases scenario, the final inflated case-weighted standardized charge per case did not exceed the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the 75 percent sensitivity analysis, at $1,067 less than the average case-weighted threshold amount. In the proposed rule, we noted that because the applicant had not yet determined pricing for Plazomicin, however, it is possible that Plazomicin may also exceed the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the 75 percent of all cases sensitivity analysis if charges for Plazomicin are more than $1,067. We invited public comments on whether Plazomicin meets the cost criterion.
We note that the FDA approval for ZEMDRI
The applicant also updated the cost threshold analysis including hospital charges for ZEMDRI
Consistent with the analysis submitted for the proposed rule, the applicant calculated the average unstandardized case-weighted charge per case using 100 percent of all cases and 75 percent of all cases of $59,908 and $48,907, respectively. Consistent with the analysis submitted for the proposed rule, based on the FY 2018 IPPS/LTCH PPS final rule Table 10 thresholds, the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with a cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the first scenario utilizing 100 percent of all cases was $51,308, and $46,252 in the second scenario utilizing 75 percent of all cases. The applicant utilized the same methodology described in the FY 2019 IPPS/LTCH PPS proposed rule with the exception of adding charges for Plazomicin. The applicant removed 50 percent of the charges associated with other drugs (associated with revenue
With respect to the substantial clinical improvement criterion, the applicant asserted that Plazomicin is a next generation aminoglycoside that offers a treatment option for a patient population who have limited or no alternative treatment options. Patients who have been diagnosed with BSI or cUTI caused by MDR Enterobacteria, particularly CRE, are difficult to treat because carbapenem resistance is often accompanied by resistance to additional antibiotic classes. For example, CRE may be extensively drug resistant (XDR) or even pandrug resistant (PDR). CRE are resistant to most antibiotics, and sometimes the only treatment option available to health care providers is a last-line antibiotic (such as colistin and tigecycline) with higher toxicity. According to the applicant, Plazomicin would give the clinician an alternative treatment option for patients who have been diagnosed with MDR bacteria like CRE because it has demonstrated activity against clinical isolates that possess a broad range of resistance mechanisms, including ESBLs, carbapenemases, and aminoglycoside modifying enzymes that limit the utility of different classes of antibiotics. Plazomicin also can be used to treat patients who have been diagnosed with BSI caused by resistant pathogens, such as ESBL-producing Enterobacteriaceae, CRE, and aminoglycoside-resistant Enterobacteriaceae. The applicant maintained that Plazomicin is a substantial clinical improvement because it offers a treatment option for patients who have been diagnosed with serious bacterial infections that are resistant to current antibiotics. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20322), we noted that Plazomicin is not indicated exclusively for resistant bacteria, but rather for certain susceptible organisms of gram-negative bacteria, including resistant and nonresistant strains for which existing antibiotics may be effective. We stated we were concerned that the applicant focused solely on Plazomicin's activity for resistant bacteria and did not supply information demonstrating substantial clinical improvement in treating nonresistant strains in the bacteria families for which Plazomicin is indicated. We note that because the FDA approval was for the cUTI indication only, and not the BSI proposed indication, we are only summarizing comments pertaining to the cUTI indication and evaluating whether ZEMDRI
The applicant stated that Plazomicin also meets the substantial clinical improvement criterion because it significantly improves clinical outcomes for a patient population compared to currently available treatment options. Specifically, the applicant asserted that Plazomicin has: (1) A mortality benefit and improved safety profile in treating patients who have been diagnosed with BSI due to CRE; and (2) statistically better outcomes at test-of-cure in patients who have been diagnosed with cUTI, including higher eradication rates for ESBL-producing pathogens, and lower rate of subsequent clinical relapses. The applicant conducted two Phase III studies, CARE and EPIC. The CARE trial compared Plazomicin to colistin, a last-line antibiotic that is a standard of care agent for patients who have been diagnosed with BSI when caused by CRE. The EPIC trial compared Plazomicin to meropenem for the treatment of patients who have been diagnosed with cUTI/acute pyelonephritis.
The CARE clinical trial was a randomized, open label, multi-center Phase III study comparing the efficacy of Plazomicin against colistin in the treatment of patients who have been diagnosed with BSIs or hospital-acquired bacterial pneumonia (HABP)/ventilator-acquired bacterial pneumonia
According to the applicant, the following results demonstrate a reduced mortality benefit in the patients who had been diagnosed with BSI subset. All-cause mortality at day 28 in the Plazomicin group was more than 5 times less than in the colistin group and all-cause mortality or significant complications at day 28 was reduced by 39 percent in the Plazomicin group compared to the colistin group. There was a large sustained 60-day survival benefit in the patients who had been diagnosed with BSI subset, with survival approximately 70 percent in the Plazomicin group compared to 40 percent in the colistin group. Additionally, according to the applicant, faster median time to clearance of CRE bacteremia of 1.5 versus 6 days for Plazomicin versus colistin and higher rate of documented clearance by day 5 (86 percent versus 46 percent) supported the reduced mortality benefit due to faster and more sustained clearance of bacteremia and also demonstrated clinical improvement in terms of more rapid beneficial resolution of the disease.
The applicant maintained that Plazomicin also represents a substantial clinical improvement in improved safety outcomes. Patients treated with Plazomicin had a lower incidence of renal events (10 percent versus 41.7 percent when compared to colistin), fewer Treatment Emergent Adverse Events (TEAEs), specifically blood creatinine increases and acute kidney injury, and approximately 30 percent fewer serious adverse events were in the Plazomicin group. According to the applicant, other substantial clinical improvements demonstrated by the CARE study for use of Plazomicin in patients who had been diagnosed with BSI included lower rate of superinfections or new infections, occurring in half as many patients treated with Plazomicin versus colistin (28.6 percent versus 66.7 percent).
According to the applicant, the CARE study demonstrates decreased all-cause mortality and significantly reduced disease complications at day 28 (EOS) and day 60 for patients who had been diagnosed with BSI, in addition to a superior safety profile to colistin. However, the applicant stated that, with the achieved enrollment, this study was not powered to support formal hypothesis testing and p-values and 90 percent confidence intervals are provided for descriptive purposes. The total number of patients who had been diagnosed with BSI was 29, with 14 receiving Plazomicin and 15 receiving colistin. While we understand the difficulty enrolling a large number of patients who have been diagnosed with BSI caused by CRE due to severity of the illness and the need for administering treatment promptly, we stated in the proposed rule we were concerned that results indicating reduced mortality and treatment advantages over existing standard of care for patients who have been diagnosed with BSI due to CRE are not statistically significant due to the small sample size. Therefore, we stated that we were concerned that the results from the CARE study cannot be used to support substantial clinical improvement.
The EPIC clinical trial was a randomized, multi-center, multi-national, double-blind study evaluating the efficacy and safety of Plazomicin compared with meropenem in the treatment of patients who have been diagnosed with cUTI based on composite cure endpoint (achieving both microbiological eradication and clinical cure) in the microbiological modified intent-to-treat (mMITT) population. Patients received between 4 to 7 days of IV therapy, followed by optional oral therapy like levofloxacin (or any other approved oral therapy) as step down therapy for a total of 7 to 10 days of therapy. Test-of-cure (TOC) was done 15 to 19 days and late follow-up (LFU) 24 to 32 days after the first dose of IV therapy. Six hundred nine patients fulfilled inclusion criteria, and were randomized to receive either Plazomicin or meropenem, with 306 patients receiving Plazomicin and 303 patients receiving meropenem. Safety analysis included 303 (99 percent) Plazomicin patients and 301 (99.3 percent) meropenem patients. mMITT analysis included 191 (62.4 percent) Plazomicin patients and 197 (65 percent) meropenem patients; exclusion from mMITT analysis was due to lack of study-qualifying uropathogen, which were pathogens susceptible to both Plazomicin and meropenem. In the mMITT population, both groups were comparable in terms of gender, age, percentage of patients who had been diagnosed with cUTI/acute pyelonephritis (AP)/urosepsis/bacteremia/moderate renal impairment at baseline.
According to the applicant, Plazomicin successfully achieved the primary efficacy endpoint of composite cure (combined microbiological eradication and clinical cure). At the TOC visit, 81.7 percent of Plazomicin patients versus 70.1 percent of meropenem patients achieved composite cure; this was statistically significant with a 95 percent confidence interval. Plazomicin also demonstrated higher eradication rates for key resistant pathogens than meropenem at both TOC (89.4 percent versus 75.5 percent) and LFU (77 percent versus 60.4 percent), suggesting that the Plazomicin treatment benefit observed at TOC was sustained. Specifically, Plazomicin demonstrated higher eradication rates, defined as baseline uropathogen reduced to less than 104, against the most common gram-negative uropathogens, including ESBL producing (82.4 percent Plazomicin versus 75.0 percent meropenem) and aminoglycoside resistant (78.8 percent Plazomicin versus 68.6 percent meropenem) pathogens. This was statistically significant, although of note, as total numbers of Enterobacteriaceae exceeded population of mMITT (191 Plazomicin, 197 meropenem) this presumably
According to the applicant, importantly, higher microbiological eradication rates at the TOC and LFU visits were associated with a lower rate of clinical relapse at LFU for Plazomicin treated patients (3 versus 14, or 1.8 percent Plazomicin versus 7.9 percent meropenem), with majority of the meropenem failures having had asymptomatic bacteriuria; that is, positive urine cultures without clinical symptoms, at TOC (21.1 percent), suggesting that the higher microbiological eradication rate at the TOC visit in Plazomicin-treated patients decreased the risk of subsequent clinical relapse. Plazomicin decreased recurrent infection by four-fold compared to meropenem, suggesting improved patient outcomes, such as reduced need for additional therapy and re-hospitalization for patients who have been diagnosed with cUTI. The safety profile of Plazomicin compared to meropenem was similar. The applicant noted that higher bacteria eradication results for Plazomicin were not due to meropenem resistance, as only patients with isolates susceptible to both drugs were included in the study. According to the applicant, the EPIC clinical trial results demonstrate clear differentiation of Plazomicin from meropenem, an agent considered by some as a gold-standard for treatment of patients who have been diagnosed with cUTI in cases due to resistant pathogens.
While the EPIC clinical trial was a non-inferiority study, the applicant contended that statistically significant improved outcomes and lower clinical relapse rates for patients treated with Plazomicin demonstrate that Plazomicin meets the substantial clinical improvement criterion for the cUTI indication. Specifically, according to the applicant, the efficacy results for Plazomicin combined with a generally favorable safety profile provide a compelling benefit-risk profile for patients who have been diagnosed with cUTI, and particularly those with infections due to resistant pathogens. Most patients enrolled in the EPIC clinical trial were from Eastern Europe. We expressed in the proposed rule that it is unclear how generalizable these results would be to patients in the United States as the susceptibilities of bacteria vary greatly by location. The applicant maintained that this is consistent with prior studies and is unlikely to have affected the results of the study because the pharmacokinetics of Plazomicin and meropenem are not expected to be affected by race or ethnicity. However, bacterial resistance can vary regionally and, in the proposed rule, we expressed that we are interested in how this data can be extrapolated to a majority of the U.S. population.
We also stated that it is also unknown how quickly resistance to Plazomicin might develop. Additionally, we stated that the microbiological breakdown of the bacteria is unknown without the full published results, and patients outside of the mMITT population were included when the applicant reported the statistically superior microbiological eradication rates of Enterobacteriaceae at TOC. In the FY 2019 IPPS/LTCH PPS proposed rule, we stated we were concerned whether there is still statistical superiority of Plazomicin in the intended bacterial targets in the mMITT.
The applicant also provided data presenting the breakdown of the uropathogens identified from baseline urine cultures in the mMITT population in the EPIC study, and clarified that statistically superior microbiological eradication rates observed with ZEMDRI
Finally, because both Plazomicin and meropenem were also utilized in conjunction with levofloxacin, we stated in the proposed rule that it is unclear to us whether combined antibiotic therapy will continue to be required in clinical practice, and how levofloxacin activity or resistance might affect the clinical outcome in both patient groups.
We invited public comments on whether Plazomicin meets the substantial clinical improvement criterion for patients who have been diagnosed with BSI and cUTI, including with respect to whether Plazomicin constitutes a substantial clinical improvement for the treatment of patients who have been diagnosed with BSI who have limited or no alternative treatment options, and whether statistically better outcomes at test-of-cure visit, including higher eradication rates for ESBL-producing pathogens, and lower rate of subsequent clinical relapses constitute a substantial clinical improvement for patients who have been diagnosed with cUTI.
In its application, the applicant estimated that the average Medicare beneficiary would require a dosage of 15 mg/kg administered as an IV infusion as a single dose. According to the applicant, the WAC for one dose is $330, and patients will typically require 3 vials for the course of treatment with ZEMDRI
The La Jolla Pharmaceutical Company submitted an application for new technology add-on payments for GIAPREZA
The applicant stated that shock is a life-threatening critical condition characterized by the inability to maintain blood flow to vital tissues due to dangerously low blood pressure (hypotension). Shock can result in organ failure and imminent death, such that mortality is measured in hours and days rather than months or years. Standard therapy for shock currently uses fluid and vasopressors to raise the mean arterial pressure (MAP). The two classes of standard of care (SOC) vasopressors are catecholamines and vasopressins. Patients do not always respond to existing standard of care therapies. Therefore, a diagnosis of shock can be a difficult and costly condition to treat. According to the applicant, 35 percent of patients who are diagnosed with shock fail to respond to standard of care treatment options using catecholamines and go on to second-line treatment, which is typically vasopressin. Eighty percent of patients on vasopressin fail to respond and have no other alternative treatment options. The applicant estimated that CMS covered charges to treat patients who are diagnosed with vasodilatory shock who fail to respond to standard of care therapy are approximately 2 to 3 times greater than the costs of other conditions, such as acute myocardial infarction, heart failure, and pneumonia. According to the applicant, one-third of patients in the intensive care unit are affected by vasodilatory shock, with 745,000 patients who have been diagnosed with shock being treated annually, of whom approximately 80 percent are septic.
With respect to the newness criterion, according to the applicant, the expanded access program (EAP), or FDA authorization for the “compassionate use” of an investigational drug outside of a clinical trial, was initiated August 8, 2017. GIAPREZA
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 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, GIAPREZA
The applicant explained that GIAPREZA
With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, we stated in the proposed rule that we believe that potential cases representing patients who may be eligible for treatment involving GIAPREZA
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, once patients have failed treatment using catecholamines, treatment options for patients who have been diagnosed with severe septic or other distributive shock are limited. According to the applicant, agents that were previously available are each associated with their own adverse events (AEs). The applicant noted that primary options that have been investigated include vasopressin, corticosteroids, methylene blue, and blood purification techniques. Of these options, the applicant stated that only vasopressin has a recommendation as add on vasopressor therapy in current treatment guidelines, but the recommendations are listed as weak with moderate quality of evidence. According to the applicant, there is uncertainty regarding vasopressin's effect on mortality due to mixed clinical trial results, and higher doses of vasopressin have been associated with cardiac, digital, and splanchnic ischemia. Therefore, the applicant asserted that there is a significant unmet medical need for treatments for patients who have been diagnosed with septic or distributive shock who remain hypotensive, despite adequate fluid and vasopressor therapy and for medications that can provide catecholamine-sparing effects.
The applicant also noted that there is currently no standard of care for addressing the clinical state of septic or other distributive shock experienced by patients who fail to respond to fluid and available vasopressor therapy. Additionally, according to the applicant, no clinical evidence or consensus for treatments is available.
Based on the applicant's statements as summarized above, we stated in the proposed rule that it appears that the applicant is asserting that GIAPREZA
In the proposed rule, we invited public comments on whether GIAPREZA
One commenter pointed out that vasoconstriction is a very general and fundamental physiologic mechanism by which blood pressure is regulated, such that it would occur with any regimen for treating patients who have been diagnosed with shock.
Other commenters stated that current standard-of-care treatment options only target two of the three major biological systems regulating MAP, which makes GIAPREZA
With respect to the second criterion, the applicant indicated that there are inherent difficulties in capturing specific patient types for a condition such as a diagnosis of shock, and explained that the current structure of the MS-DRG payment system does not yet have the refined elements necessary to identify those patients likely to respond to treatment involving GIAPREZA
Regarding the third criterion, the applicant contended that although the FDA approval for GIAPREZA
Other commenters similarly stated that GIAPREZA
In addition to the public comments summarized above regarding mechanism of action, MS-DRG assignment of potential cases eligible for treatment involving use of GIAPREZA
With regard to the cost criterion, the applicant conducted an analysis for a narrower indication, patients who have been diagnosed with refractory shock who have failed to respond to standard of care vasopressors, and an analysis for a broader indication of all patients who have been diagnosed with septic or other distributive shock. In the FY 2019 IPPS/LTCH PPS proposed rule (82 FR 20325), we stated we believed that only this broader analysis, which reflects the patient population for which the applicant's technology is approved by the FDA, is relevant to demonstrate that the technology meets the cost criterion and, therefore, we only summarized this broader analysis in the proposed rule (and below). In order to identify the range of MS-DRGs that potential cases representing potential patients who may be eligible for treatment using GIAPREZA
The first analysis (Scenario 1) selected the MS-DRGs most representative of the potential patient cases where treatment involving GIAPREZA
Among only the top quartile of potential patient cases, the single MS-DRG representative of most potential patient cases was MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation >96 Hours with MCC) for both ICD-9-CM diagnosis code selection scenarios, and in both selections, it accounted for a potential patient case percentage surpassing 25 percent. Because GIAPREZA
Results of the analyses for each of the two code selection scenarios, each with three sensitivity analyses for a total of six analyses, are summarized in the tables below:
The applicant maintained that, based on the Table 10 thresholds, the inflated average case-weighted standardized charge per case in the analyses exceeded the average case-weighted threshold amount. The applicant noted that the inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount by at least $18,189, without the average per patient cost of the technology. As such, the applicant anticipated that the inclusion of the cost of GIAPREZA
The applicant noted, as noted in the proposed rule, that the inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount before including the average per patient cost of the technology. The applicant also added charges for the cost of the technology to its updated analysis. The applicant indicated that the WAC of GIAPREZA
To estimate the anticipated average charge submitted by hospitals for use of GIAPREZA
With respect to the substantial clinical improvement criterion, the applicant summarized that it believes that GIAPREZA
Expanding on the statements above, we stated in the proposed rule that the applicant believes that the use of GIAPREZA
The applicant maintained that GIAPREZA
Second, the applicant maintained that GIAPREZA
Third, the applicant asserted that GIAPREZA
In the proposed rule, we noted that the applicant stated that while the study was not powered to detect mortality effects, there was a nonsignificant trend toward longer survival in the GIAPREZA
The applicant concluded that GIAPREZA
We stated in the proposed rule that we understood that, in this heterogeneous and difficult to treat patient population, studies assessing mortality as a primary endpoint are difficult, and as such, surrogate endpoints (that is, achieving baseline MAP) have been explored to assess the efficacy of treatments. While the outcomes presented by the applicant, such as achieving target MAP, lower SOFA scores, and reduced catecholamine usage, could be surrogates for clinical outcomes in these patients, we stated that there is not a strong pool of evidence connecting these single data points directly with morbidity and mortality. Therefore, in the proposed rule, we stated that we were unsure whether achieving target MAP, lower SOFA scores, and reduced catecholamine usage represents a substantial clinical improvement or instead short-term, temporary improvements without a change in overall patient prognosis.
In response to this concern about MAP constituting a meaningful measure for substantial clinical improvement, the applicant supplied additional information from the current Surviving Sepsis guidelines, which recommend an initial target MAP of 65 mmHg. The applicant explained that as MAP falls below a critical threshold, inadequate tissue perfusion occurs, potentially resulting in multiple organ dysfunction and death. Therefore, early and adequate hemodynamic support and treatment of hypotension is critical to restore adequate organ perfusion and prevent worsening organ dysfunction and failure. In diagnoses of septic or distributive shock, the goal of treatment is to increase and maintain a threshold MAP in order to improve tissue perfusion. According to the applicant, tissue perfusion becomes linearly dependent on arterial pressure below a threshold MAP. In patients who have been diagnosed with septic shock requiring vasopressors, the current Surviving Sepsis guidelines are based on available evidence that demonstrates that adequate MAP is important to clinical outcomes and that prolonged decreases in MAP below 65 mmHg is associated with poor outcome. According to information supplied by the applicant, even short durations like less than 5 minutes of low MAP have been associated with severe outcomes, such as myocardial infarction, stroke, and acute kidney injury. The applicant stated that a retrospective study
Finally, we stated in the proposed rule that we were concerned that the study results may demonstrate substantial clinical improvement only for patients who are unresponsive to the administration of fluids and vasopressors because patients were only included in the ATHOS-3 study if they failed fluids and vasopressors, rather than for the broader patient population of adult patients who have been diagnosed with septic or other distributive shock for which GIAPREZA
The applicant also reiterated that clinical data showing GIAPREZA
In response to our concern that the mortality benefit was not statistically significant, the applicant stated that the p-values for the decrease in mortality rates with use of GIAPREZA
The applicant also disagreed with CMS regarding our statement in the proposed rule that there is not a strong pool of evidence directly connecting target MAP, lower SOFA scores, and reduced catecholamine usage with morbidity and mortality. The applicant submitted additional evidence from the Surviving Sepsis Campaign and international and European consensus guidelines to demonstrate that maintaining an adequate MAP is a clinically meaningful benefit affecting morbidity and mortality. The applicant reiterated that when MAP drops below 60 mmHg, the human body loses autoregulatory control of blood supply to key organs,
The applicant also stated that clinical data show reduced catecholamine use, a benefit of treatment involving GIAPREZA
Finally, in response to our concern that the results from the clinical trial may be too narrow to accurately represent the entire patient population that has been diagnosed with septic or other distributive shock and, therefore, may not adequately demonstrate that GIAPREZA
•
•
•
•
•
Other commenters supported the clinical results and evidence of GIAPREZA
After consideration of the public comments we received, we have determined that GIAPREZA
In its application, the applicant estimated that the average Medicare beneficiary would require a dosage of 20ng/kg/min administered as an IV infusion over 48 hours, which would require 2 vials. The applicant explained that the WAC for one vial is $1,500, with each episode-of-care costing $3,000 per patient. Under § 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 the use of GIAPREZA
Claret Medical, Inc. submitted an application for new technology add-on payments for the Cerebral Protection System (Sentinel® Cerebral Protection System) for FY 2019. According to the applicant, the Sentinel Cerebral Protection System is indicated for the use as an embolic protection (EP) device to capture and remove thrombus and debris while performing transcatheter aortic valve replacement (TAVR) procedures. The device is percutaneously delivered via the right radial artery and is removed upon completion of the TAVR procedure. The De Novo request for the Sentinel® Cerebral Protection System was granted by FDA on June 1, 2017 (DEN160043).
Aortic stenosis (AS) is a narrowing of the aortic valve opening. AS restricts blood flow from the left ventricle to the aorta and may also affect the pressure in the left atrium. The most common presenting symptoms of AS include dyspnea on exertion or decreased exercise tolerance, exertional dizziness (presyncope) or syncope and exertional angina. Symptoms experienced by patients who have been diagnosed with AS and normal left ventricular systolic function rarely occur until stenosis is severe (defined as valve area is less than 1.0 cm2, the jet velocity is over 4.0 m/sec, and/or the mean transvalvular gradient is greater than or equal to 40 mmHg).
The TAVR procedure is a minimally invasive procedure that does not involve open heart surgery. During a TAVR procedure the prosthetic aortic valve is placed within the diseased native valve. The prosthetic valve then becomes the functioning aortic valve. As previously outlined, stroke is one of the risks associated with TAVR procedures. According to the applicant, the risk of stroke is highest in the early post-procedure period and, as previously outlined, is likely due to mechanical factors occurring during the TAVR procedure.
As stated earlier, the De Novo request for the Sentinel® Cerebral Protection System was granted by FDA on June 1, 2017. The FDA concluded that this device should be classified into Class II (moderate risk). Effective October 1, 2016, ICD-10-PCS Section “X” code X2A5312 (Cerebral embolic filtration, dual filter in innominate artery and left common carotid artery, percutaneous approach) was approved to identify cases involving TAVR procedures using the Sentinel® Cerebral Protection System.
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, the Sentinel® Cerebral Protection System device is inserted at the beginning of the TAVR procedure, via a small tube inserted through a puncture in the right wrist. Next, using a minimally invasive catheter, two small filters are placed in the brachiocephalic and left common carotid arteries. The filters collect debris, preventing it from becoming emboli, which can travel to the brain. These emboli, if left uncaptured, can cause cerebral ischemic lesions, often referred to as silent ischemic cerebral infarctions, potentially leading to cognitive decline or clinically overt stroke. At the completion of the TAVR procedure, the filters, along with the collected debris, are removed. The applicant stated that there are no other similar products for commercial sale available in the United States for cerebral protection during TAVR procedures. Two neuroprotection devices, the Triguard
With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, as stated earlier, the Sentinel® Cerebral Protection System is an EP device used to capture and remove thrombus and debris while performing TAVR procedures. Therefore, potential cases representing patients who may be eligible for treatment involving this device would map to the same MS-DRGs as cases involving TAVR procedures.
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, this technology will be used to treat patients who have been diagnosed with severe aortic valve stenosis who are eligible for a TAVR procedure. The applicant asserted that there are currently no approved alternative treatment options for cerebral protection during TAVR procedures, and the Sentinel® Cerebral Protection System is the first and only embolic protection device for use during TAVR procedures and, therefore, meets the newness criterion. The applicant also asserted that the device meets the newness criterion, as evidenced by the FDA's granting of the De Novo request and there was no predicate device.
Based on the above, we stated in the proposed rule that it appears that the Sentinel® Cerebral Protection System is not substantially similar to other existing technologies. We invited public comments on whether the Sentinel® Cerebral Protection System is substantially similar to any existing technology and whether it meets the newness criterion.
The applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. The applicant searched the FY 2016 MedPAR file for cases with the following ICD-10-CM procedure codes to identify cases involving TAVR procedures, which are potential cases representing patients who may be eligible for treatment involving use of the Sentinel® Cerebral Protection System: 02RF37Z (Replacement of aortic valve with autologous tissue substitute, percutaneous approach); 02RF38Z (Replacement of aortic valve with zooplastic tissue, percutaneous approach); 02RF3JZ (Replacement of aortic valve with synthetic substitute, percutaneous approach); 02RF3KZ (Replacement of aortic valve with nonautologous tissue substitute, percutaneous approach); 02RF37H (Replacement of aortic valve with autologous tissue substitute, transapical, percutaneous approach); 02RF38H (Replacement of aortic valve with zooplastic tissue, transapical, percutaneous approach); 02RF3JH (Replacement of aortic valve with synthetic substitute, transapical, percutaneous approach); and 02RF3KH (Replacement of aortic valve with nonautologous tissue substitute, transapical, percutaneous approach). This process resulted in 26,012 potential cases. The applicant limited its search to MS-DRG 266 (Endovascular Cardiac Valve Replacement with MCC) and MS-DRG
Using the 26,012 identified cases, the applicant determined that the average unstandardized case-weighted charge per case was $211,261. No charges were removed for the prior technology because the device is used to capture and remove thrombus and debris while performing TAVR procedures. The applicant then standardized the charges, but did not inflate the charges. The applicant then added charges for the new technology to the average case-weighted standardized charges per case by taking the cost of the device and dividing the amount by the CCR of 0.332 for implantable devices from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38103). The applicant calculated a final inflated average case-weighted standardized charge per case of $187,707 and a Table 10 average case-weighted threshold amount of $170,503. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant maintained that the technology met the cost criterion. We invited public comments on whether the Sentinel® Cerebral Protection System meets the cost criterion.
With regard to the substantial clinical improvement criterion, the applicant asserted that the Sentinel® Cerebral Protection System represents a substantial clinical improvement over existing technologies because it is the first and only cerebral embolic protection device commercially available in the United States for use during TAVR procedures. The applicant stated that the data below shows that the Sentinel® Cerebral Protection System effectively captures brain bound embolic debris and significantly improves clinical outcomes (that is, stroke) beyond the current standard of care, that is, TAVR procedures with no embolic protection.
The applicant provided the results of four key studies: (1) The SENTINEL® study
• Safety Arm patients who underwent a TAVR procedure involving the Sentinel® Cerebral Protection System—Patients enrolled in this arm of the study received safety follow-up at discharge, at 30 days and 90 days post-procedure; and neurological evaluation at baseline, discharge, 30 days and 90 days (only in the case of a stroke experienced less than or equal to 30 days) post-procedure. The Safety Arm patients did not undergo MRI or neurocognitive assessments.
• Test Arm patients who underwent a TAVR procedure involving the Sentinel® Cerebral Protection System—Patients enrolled in this arm of the study underwent safety follow-up at discharge, at 30 days and 90 days post-procedure; MRI assessment for efficacy at baseline, 2 to 7 days and 30 days post-procedure; neurological evaluation at baseline, discharge, 30 days and 90 days (only in the case of a stroke experienced less than or equal to 30 days) post-procedure; neurocognitive evaluation at baseline, 2 to 7 days (optional), 30 days and 90 days post-procedure; Quality of Life assessment at baseline, 30 days and 90 days; and histopathological evaluation of debris captured in the Sentinel® Cerebral Protection System's device filters.
• Control Arm patients who underwent a TAVR procedure only—Patients enrolled in this arm of the study underwent safety follow-up at discharge, at 30 days and 90 days post-procedure; MRI assessment for efficacy at baseline, 2 to 7 days and 30 days post-procedure; neurological evaluation at baseline, discharge, 30 days and 90 days (only in the case of a stroke experienced less than or equal to 30 days) post-procedure; neurocognitive evaluation at baseline, 2 to 7 days (optional), 30 days and 90 days post-procedure; and Quality of Life assessment at baseline, 30 days and 90 days.
The primary safety endpoint was occurrence of major adverse cardiac and cerebrovascular events (MACCE) at 30 days compared with a historical performance goal. MACCE was defined as follows: All causes of death; all strokes (disabling and nondisabling, Valve Academic Research Consortium-2 (VARC-2)); and acute kidney injury (stage 3, VARC-2). The point estimate for the historical performance goal for the primary safety endpoint at 30 days post-TAVR procedure was derived from a review of published reports of 30-day TAVR procedure outcomes. The VARC-2 established an independent collaboration between academic research organizations and specialty societies (cardiology and cardiac surgery) in the United States and Europe to create consistent endpoint definitions and consensus recommendations for implementation in TAVR procedure clinical research.
The applicant reported that results of the SENTINEL® study demonstrated the following:
• The rate of MACCE was numerically lower than the control arm, 7.3 percent versus 9.9 percent, but was not statistically significant from that of the control group (p=0.41).
• New lesion volume was 178.0 mm
• Strokes experienced at 30 days were 9.1 percent in control patients and 5.6 percent in patients treated with the Sentinel® Cerebral Protection System devices (p=0.25). Neurocognitive function was similar in control patients
• Debris was found within filters in 99 percent of patients and included thrombus, calcification, valve tissue, artery wall, and foreign material.
• The applicant also noted that the post-hoc analysis of these data demonstrated that there was a 63 percent reduction in 72-hour stroke rate (compared to control), p=0.05.
According to the applicant, the CLEAN-TAVI (Claret Embolic Protection and TAVI) trial, was a small, randomized, double-blind, controlled trial. The trial consisted of 100 patients assigned to either EP (n=50) with the Claret Medical, Inc. device (the Sentinel® Cerebral Protection System) or to no EP (n=50). Patients were all treated with femoral access and self-expandable (SE) devices. The study endpoint was the number of brain lesions at 2 days post-procedure versus baseline. Patients were evaluated with DW-MRI at 2 and 7 days post-TAVR procedure. The mean age of patients was 80 years old; 43 percent were male. The study results showed that patients treated with the Sentinel® Cerebral Protection System had a lower number of new lesions (4.00) than patients in the control group (10.0); (p<0.001).
According to the applicant, the single-center Ulm study, a large propensity matched trial, with 802 consecutive patients, occurred at the University of Ulm between 2014 and 2016. The first 522 patients (65.1 percent of patients) underwent a TAVR procedure without EPs, and the subsequent 280 patients (34.9 percent of patients) underwent a TAVR procedure with EP involving the Sentinel® Cerebral Protection System. For both arms of the study, a TAVR procedure was performed in identical settings except without cerebral EP, and neurological follow-up was performed within 7 days post-procedure. The primary endpoint was a composite of all-cause mortality or all-stroke according to the VARC-2 criteria within 7 days. The authors who documented the study noted the following:
• Patient baseline characteristics and aortic valve parameters were similar between groups, that both filters of the device were successfully positioned in 280 patients, all neurological follow-up was completed by the 7th post-procedure date, and that propensity score matching was performed to account for possible confounders.
• Results indicated a decreased rate of disabling and nondisabling stroke at 7 days post-procedure was seen in those patients who were treated with the Sentinel® Cerebral Protection System device versus control patients (1.6 percent versus 4.6 percent, p=0.03).
• At 48 hours, stroke rates were lower with patients treated with the Sentinel® Cerebral Protection System device versus control patients (1.1 percent versus 3.6 percent, p=0.03).
• In multi-variate analysis, TAVR procedures performed without the use of a EP device was found to be an independent predictor of stroke within 7 days (p=0.04).
The aim of the MISTRAL-C study was to determine if the Sentinel® Cerebral Protection System affects new brain lesions and neurocognitive performance after TAVR procedures. The study was designed as a multi-center, double-blind, randomized trial enrolling patients who were diagnosed with symptomatic severe aortic stenosis and 1:1 randomization to TAVI patients treated with or without the Sentinel® Cerebral Protection System. From January 2013 to August 2015, 65 patients were enrolled in the study. Patients ranged in age from 77 years old to 86 years old, 15 (47 percent) were female and 17 (53 percent) were male patients randomized to the Sentinel® Cerebral Protection System group and 16 (49 percent) were female and 17 (51 percent) were male patients randomized to the control group. There were 3 mortalities between 5 days and 6 months post-procedure for the Sentinel® Cerebral Protection System group. There were no strokes reported for the Sentinel® Cerebral Protection System group. There were 7 mortalities between 5 days and 6 months post-procedure for the control group. There were 2 strokes reported for the control group. Patients underwent DW-MRI and neurological examination, including neurocognitive testing 1 day before and 5 to 7 days after TAVI. Follow-up DW-MRI and neurocognitive testing was completed in 57 percent of TAVI patients treated with the Sentinel® Cerebral Protection System and 80 percent for the group of TAVI patients treated without the Sentinel® Cerebral Protection System. New brain lesions were found in 78 percent of the patients with follow-up MRI. According to the applicant, patients treated with the Sentinel® Cerebral Protection System had numerically fewer new lesions and a smaller total lesion volume (95 mm3 versus 197 mm3). Overall, 27 percent of the patients treated with the Sentinel® Cerebral Protection System and 13 percent of the patients treated in the control group had no new lesions. Ten or more new brain lesions were found only in the patients treated in the control group (20 percent in the control group versus 0 percent in the Sentinel® Cerebral Protection System group, p=0.03). Neurocognitive deterioration was present in 4 percent of the patients treated with the Sentinel® Cerebral Protection System versus 27 percent of the patients treated without (p=0.017). The filters captured debris in all of the patients treated with Sentinel® Cerebral Protection System device.
In the Ulm study, the primary outcome was a composite of all-cause mortality or stroke at 7 days, and occurred in 2.1 percent of the Sentinel® Cerebral Protection System group versus 6.8 percent of the control group(p=0.01, number needed to treat (NNT)=21). Use of the Sentinel® Cerebral Protection System device was associated with a 2.2 percent absolute risk reduction in mortality with NNT 45. Composite endpoint of major adverse cardiac and cerebrovascular events (MACCE) was found in 2.1 percent of those patients undergoing a TAVR procedure with the use of the Sentinel® Cerebral Protection System device versus 7.9 percent in the control group (p=0.01). Similar but statistically nonsignificant trends were found in the SENTINEL® study, with rate of MACCE of 7.3 percent in the Sentinel® Cerebral Protection System group versus 9.9 percent in the control group (p=0.41).
The applicant reported that the four studies discussed above that evaluated the Sentinel® Cerebral Protection System device have limitations because they are either small, nonrandomized and/or had significant loss to follow-up. In the proposed rule, we stated that a meta-analysis of EP device studies, the majority of which included use of the Sentinel® Cerebral Protection System device, found that use of cerebral EP devices was associated with a nonsignificant reduction in stroke and death.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20338), we stated
• The SENTINEL® study, although a randomized study, did not meet its primary endpoint as illustrated by non-statistically significant reduction in new lesion volume on MRI or non-disabling strokes within 30 days (5.6 percent stroke rate in the Sentinel® Cerebral Protection System device group versus a 9.1 percent stroke rate in the control group at 30 days; p=0.25).
• Only with a post-hoc analysis of the SENTINEL® study data were promising trends noted where the device use was associated with a 63 percent reduction in stroke events at 72 hours (p=0.05).
With regard to the above, the applicant responded and explained the following with respect to the SENTINEL® trial:
• The SENTINEL® trial's success criteria were designed with two primary efficacy endpoints that were a surrogate imaging endpoint combination of: (1) Observed reduction of 30 percent in new lesion volume on MRI; and (2) statistical reduction in new lesion volume on MRI. The applicant indicated that the trial was successful in demonstrating a 42 percent reduction in new lesion volume, but as CMS pointed out, it did not, on its own, reach statistical significance, which the applicant stated was because of, in part, the surrogate nature of the endpoint as well as the higher than expected variability. The applicant noted that the variability resulted from the following sources: (1) Variability in the MRI data, in part due to the variability in the allowed time window of 2 to 7 days, logistics of scheduling follow-up MRIs within this time window for elderly patients, and the transient nature of the DW-MRI signal over time which made the signal decay rate very noisy; (2) variability due to multiplicity (total of four types) of TAVR valve types (including balloon expandable and self-expanding) introduced mid-course into the trial (the trial was powered for only two types of TAVR valves originally), which behaved differently and required different procedural parameters in terms of pre-dilatation or post-dilatation and repositioning; and (3) variability in the patient baseline lesion volumes burden or white matter disease, which was unaccounted for because this was new science generated as a result of this trial
• In retrospect, the SENTINEL® trial was underpowered for the surrogate efficacy endpoint. However, according to the applicant, a meta-analysis of all three randomized trials of Claret dual-filter technology in TAVR using MRI endpoints by Latib, et al. (2017), which had an increased number of patients available for analysis, did show statistically significant reduction in new lesion volume.
• The primary safety endpoint for the SENTINEL® trial was occurrence of all Major Adverse Cardiac and Cerebrovascular Events (MACCE) at 30 days compared to a historical performance goal, and the Sentinel® Cerebral Protection System met this endpoint for noninferiority (p<0.001) and superiority (p=0.0026)
• The SENTINEL® trial was not designed to be powered to show a statistically significant reduction in procedural stroke between trial arms at 30-days; therefore, it did not reach statistical significance. However, according to the applicant, investigators were encouraged by the trend to lower rates of stroke in the Sentinel® arms (5.6 percent) as compared to Control (9.1 percent) at 30-days. Additionally, more than 60 percent of ischemic neurological events in TAVR occur during the acute peri procedural phase as a result of thromboembolic debris released from manipulation of TAVR and accessory devices in a heavily atherosclerotic vascular and valvular structures.
The applicant stated that an independent group recently published a similar meta-analysis of the same 5 randomized trials in the
However, in April 2018, based on updated data, the authors for the 2017 Giustino, G., et al. publication updated their conclusion of the 2017 meta-analysis and stated the following: “In conclusion, the totality of the data suggests that use of EP during TAVR appears to be associated with a nonsignificant trend towards reduction in death or stroke.” Therefore, we continue to be concerned that the use of cerebral protection devices may not be associated with a significant reduction in stroke and death beyond 7 days (which is the focus of the meta-analysis). However, we note, as discussed below, the applicant has responded with additional information regarding the reduction in death or stroke within 7 days.
The applicant added that it believed that the 1 to 7 day time period is the most appropriate for evaluation of cerebral protection efficacy because it is difficult to accurately diagnose neurological impairment immediately post-operatively when the patient is recovering from the effects of anesthesia and some sequelae of embolic events can take time to evolve and be diagnosed, and conversely time points later than a week or so are confounded by strokes unrelated to embolic events during the index procedure, such as New Onset of Atrial Fibrillation (NOAF), suboptimal concomitant anti-platelet/anticoagulation medication, and other comorbid history of the patients.
The applicant noted that, in the past few months, a number of TAVR centers have begun to share their data from routine practice using the Sentinel® Cerebral Protection System in TAVR procedures, which are in line with the clinical event reductions seen in the aforementioned trials. The applicant provided information from the following TAVR centers:
• Erasmus Medical Center (Rotterdam, The Netherlands) demonstrated comprehensive and systematic analysis of 747 TAVR patients treated with or without the use of the Sentinel® EP with independent neurological adjudication of the events. The applicant noted that, as presented by Nicolas van Mieghem, MD at the Joint Interventional Meeting (JIM) 2018 and Cardiovascular Research Technologies (CRT) 2018 conferences in February and March, there was an 80 percent relative risk reduction from 5 percent (23/453) to 1 percent (3/294) for all-stroke + TIA at 3 days with use of Sentinel® (p<0.01).
• Data from Cedars-Sinai Medical Center in Los Angeles, CA from a
• Data from Pinnacle Health (Harrisburg, PA) as presented by Hemal Gada, MD at the CMS New Technology Town Hall meeting, February 2018, demonstrated a reduction from 10 percent (7/69) 7-day stroke rate without the use of the Sentinel® to 0 percent (0/53) with the use of the Sentinel®, as of the time at the Town Hall presentation in February.
The applicant concluded that the clinical evidence is robust, consistent, reliable, and repeatable and that the totality of the data shows that Sentinel® Cerebral Protection System represents a substantial clinical improvement for patients undergoing TAVR procedures.
After consideration of the public comments we received, we have determined that the Sentinel® Cerebral Protection System meets all of the criteria for approval for new technology add-on payments. Therefore, we are approving new technology add-on payments for the Sentinel® Cerebral Protection System for FY 2019. Cases involving the use of the Sentinel® Cerebral Protection System that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedure code X2A5312. In its application, the applicant estimated that the cost of the Sentinel® Cerebral Protection System is $2,400. Under § 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 the use of the Sentinel® Cerebral Protection System is $1,400 for FY 2019.
PROCEPT BioRobotics Corporation submitted an application for new technology add-on payments for the AquaBeam System (Aquablation) for FY 2019. According to the applicant, the AquaBeam System is indicated for the use in the treatment of patients experiencing lower urinary tract symptoms caused by a diagnosis of benign prostatic hyperplasia (BPH). The AquaBeam System consists of three main components: a console with two high-pressure pumps, a conformal surgical planning unit with trans-rectal ultrasound imaging, and a single-use robotic hand-piece.
The applicant reported that The AquaBeam System provides the operating surgeon a multi-dimensional view, using both ultrasound image guidance and endoscopic visualization, to clearly identify the prostatic adenoma and plan the surgical resection area. Based on the planning inputs from the surgeon, the system's robot delivers Aquablation, an autonomous waterjet ablation therapy that enables targeted, controlled, heat-free and immediate removal of prostate tissue used for the purpose of treating lower urinary tract symptoms caused by a diagnosis of BPH. The combination of surgical mapping and robotically-controlled resection of the prostate is designed to offer predictable and reproducible outcomes, independent of prostate size, prostate shape or surgeon experience.
In its application, the applicant indicated that benign prostatic hyperplasia (BPH) is one of the most commonly diagnosed conditions of the male genitourinary tract
The initial treatment for a patient who has been diagnosed with BPH is watchful waiting and medications.
According to the applicant, while the TURP procedure achieves alleviation of the symptoms that affect the lower urinary tract associated with a diagnosis of BPH, morbidity rates caused by adverse events are high following the procedure. The TURP procedure has a well-documented history of associated adverse effects, such as hematuria, clot retention, bladder wall injury, hyponatremia, bladder neck contracture, urinary incontinence, and retrograde ejaculation.
The applicant asserted that the AquaBeam System provides superior safety outcomes as compared to the TURP procedure, while providing non-inferior efficacy in treating the symptoms that affect the lower urinary tract associated with a diagnosis of BPH. The applicant further stated that the AquaBeam System yields consistent and predictable procedure and resection times regardless of the size and shape of the prostate and the surgeon's experience. Lastly, according to the applicant, the AquaBeam System provides increased efficacy and safety for larger prostates as compared to the TURP procedure.
With respect to the newness criterion, FDA granted the applicant's
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 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, the applicant stated that the AquaBeam System is the first technology to deliver treatment to patients who have been diagnosed with BPH for the symptoms that effect the lower urinary tract caused by BPH via Aquablation therapy. The AquaBeam System utilizes intra-operative image guidance for surgical planning and then Aquablation therapy to robotically resect tissue utilizing a high-velocity waterjet. According to the applicant, all other BPH treatment procedures only utilize cystoscopic visualization, whereas the AquaBeam System utilizes Aquablation therapy, a combination of cystoscopic visualization and intra-operative image guidance. According to the applicant, the AquaBeam System's use of Aquablation therapy qualifies it as the only technology to utilize a high-velocity room temperature waterjet for tissue resection, while most other BPH surgical procedures utilize thermal energy to resect prostatic tissue, or require the implantation of clips to pull back prostatic tissue blocking the urethra. Lastly, according to the applicant, all other surgical modalities are executed by the operating surgeon, while the AquaBeam System allows planning by the surgeon and utilization of Aquablation therapy ensures accurate and efficient tissue resection is autonomously executed by the robot.
With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated that potential cases representing potential patients who may be eligible for treatment involving the AquaBeam System's Aquablation therapy technique will ultimately map to the same MS-DRGs as cases for existing BPH treatment options.
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
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20346), we stated we had the following concerns regarding whether the AQUABEAM System meets the newness criterion. Currently, there are many treatment options that utilize varying forms of ablation, such as mono and bipolar TURP procedures, laser, microwave, and radiofrequency, to treat the symptoms associated with a diagnosis of BPH. We stated that we were concerned that, while this device utilizes water to perform any tissue removal, its mechanism of action may not be different from that of other forms of treatment for patients who have been diagnosed with BPH. Further, the use of water to perform tissue removal in the treatment of associated symptoms in patients who have been diagnosed with BPH has existed in other areas of surgical treatment prior to the introduction of this product (for example, endometrial ablation and wound debridement). In addition, the standard operative treatment, such as with the TURP procedure, for patients who have been diagnosed with BPH is to widen the urethra compressed by an enlarged prostate in an effort to alleviate the negative effects of an enlarged prostate. Like other existing methods, the AQUABEAM System's Aquablation therapy also ablates tissue to relieve compression of the urethra. Additionally, while the robotic arm and computer programing may result in different outcomes for patients, we stated we were uncertain that the use of the robotic hand and computer programming result in a new mechanism of action. We invited public comments on this issue.
We also invited public comments on whether the AQUABEAM System's Aquablation therapy is substantially similar to existing technologies and whether it meets the newness criterion.
The applicant also believed that CMS' concerns that the use of water to perform tissue removal may not be different than other forms of tissue removal in treating BPH, the use of water has been used in other areas such as endometrial ablation and wound debridement, and there is uncertainty that the use of a robotic hand and computer programming result in a new mechanism of action reflect a broad interpretation of mechanism of action. The applicant stated that the notion that all ablation techniques are similar ignores the fact that ablation is used to treat a variety of illnesses and conditions throughout the body using a variety of technological approaches with varying effectiveness. The applicant reiterated that it believed the three mechanisms of action of the AquaBeam System are unique in prostate treatment when compared to all other existing prostate treatments, and the AquaBeam System is the only ablation technique that utilizes room-temperature water whereas other ablative approaches such as TURP, laser vaporization (PVP), laser resection (HoLEP/ThuLEP), microwave necrosis (TUMT), and mechanical radio-frequency resection (open simple prostatectomy) utilize heat as the primary mechanism of action. The applicant explained that the waterjet mechanism of action has the advantage of sparing sensitive tissues around the prostate like the bladder neck, verumontanum, and nerve and vascular tissues, whereas other ablative approaches are tissue agnostic. The applicant also disagreed with CMS' comparison of Aquablation therapy to wound debridement and tissue dissection because the surgical goals are different. The applicant stated that, in the application of wound debridement the surgical goal is wound cleansing and debris removal using a waterjet, and in tissue dissection, the goal is tissue separation or disassociating the parenchymal connective tissue. The applicant further stated, in contrast, the goal of all BPH surgical procedures is to remove excessive prostatic tissue. The applicant reiterated that the use of the robotic handpiece and computer programming is the essence of the AquaBeam System to deliver Aquablation therapy, and these components allow the surgeon to visualize the prostate in a way that was previously unavailable in BPH surgery to precisely determine the specific prostatic tissue to resect, which is not possible with existing technologies. The applicant further indicated that the
The applicant also stated that CMS has not historically applied such a broad definition when defining and evaluating mechanism of action, as in example, for new technology add-on payments for the INTUITY and Perceval valves that are aortic valve replacements that share the surgical goal of providing the patient with a functioning aortic valve. The applicant noted that, CMS determined the mechanisms of action of the INTUITY and Perceval valves in achieving the surgical goal were not substantially similar to treatments that were available at the time, and both technologies were approved for new technology add-on payments. In addition, the applicant stated that drug-coated balloons (a new combination of existing balloon and existing drugs) have a surgical goal similar to non-drug coated balloons of creating a lumen in the artery, and CMS determined that the drug-coated balloons used a different mechanism of action and similarly approved both applications for new technology add-on payments. The applicant explained that, in the case of Aquablation therapy, the surgical goal is similar to other BPH technologies in creating an opening in the prostatic urethra. However, the applicant indicated, as described above, the mechanism of action is different from any other technologies currently available. The applicant believed that, applying the same criterion as applied in the historical examples, the AquaBeam System meets the criteria for approval of new technology add-on payments.
The applicant also stated that for large prostates, the MS-DRG assignment for potential cases representing patients eligible for treatment involving the AquaBeam System would be similar to normal transurethral prostate treatments, which is different than the MS-DRG assignment for open prostatectomy (OP). The applicant believed that potential cases involving Aquablation therapy would group to MS-DRGs 713 and 714 (Transurethral Prostatectomy) and open simple prostatectomy procedures would group to MS-DRGs 707 and 708 (Major Male Pelvic Procedures). The applicant stated that, for prostates sized less than 80 ml, potential cases involving Aquablation therapy would map to the same MS-DRGs as other transurethral procedures, and for large prostates greater than 80 ml in size, procedures involving Aquablation therapy in lieu of an open prostatectomy would result in a different MS-DRG assignment. Therefore, the applicant believed AquaBeam System's Aquablation therapy meets this criterion under substantial similarity.
Other commenters believed that the AquaBeam System met the newness criterion. The commenters stated that the use of imaging and ultrasound, the autonomous robotic execution of the procedure, and the use of room temperature water rather than heat, combined make the AquaBeam System a novel treatment for BPH. Another commenter further indicated that many other technologies are surgeon- and experience-dependent, whereas the AquaBeam System's image guided procedure with robotic execution allows for a greater degree of precision and monitoring of the treatment independent of experience or expertise. The commenter believed that the addition of image guidance and robotic execution of the procedure leads to consistent results independent of surgeon experience.
With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. Given that at the time of the analysis, the AquaBeam System's Aquablation therapy procedure did not have a unique ICD-10-PCS procedure code, the applicant searched the FY 2016 MedPAR data file for cases with the following current ICD-10-PCS codes describing other BPH minimally invasive procedures to identify potential cases representing potential patients who may be eligible for treatment involving the AquaBeam System's Aquablation therapy: 0V507ZZ (Destruction of prostate, via natural or artificial opening), 0V508ZZ (Destruction of prostate, via natural or artificial opening endoscopic), 0VT07ZZ (Resection of prostate, via natural or artificial opening), and 0VT08ZZ (Resection of prostate, via natural or artificial opening endoscopic). The applicant identified a total of 133 MS-DRGs using these ICD-10-PCS codes.
In order to calculate the standardized charges per case, the applicant conducted two analyses, based on 100 percent and 75 percent of identified claims in the FY 2016 MedPAR data file. The applicant based its analysis on 100 percent of claims mapping to 133 MS-DRGs, and 75 percent of claims mapping to 6 MS-DRGs. The cases identified in the 75 percent analysis mapped to MS-DRGs 665 (Prostatectomy with MCC), 666 (Prostatectomy with CC), 667 (Prostatectomy without CC/MCC), 713 (Transurethral Prostatectomy with CC/MCC), 714 (Transurethral Prostatectomy without CC/MCC), and 988 (Non-Extensive O.R. Procedures Unrelated to Principal Diagnosis with CC). In situations in which there were fewer than 11 cases for individual MS-DRGs in the MedPAR data file, a value of 11 was imputed to ensure confidentiality for patients. When evaluating 100 percent of the cases identified, the applicant included low-volume MS-DRGs that had equal to or less than 11 total cases to represent potential patients who may be eligible for treatment involving the AquaBeam System's Aquablation therapy in order to calculate the average case-weighted unstandardized and standardized charge amounts. The 75 percent analysis removed those MS-DRGs with 11 cases or less representing potential patients who may be eligible for treatment involving the AquaBeam System's Aquablation therapy, resulting in only 6 of the 133 MS-DRGs remaining for analysis. A total of 8,449 cases were included in the 100 percent analysis and 6,285 cases were included in the 75 percent analysis.
Using the 100 percent and 75 percent samples, the applicant determined that the average case-weighted unstandardized charge per case was $69,662 and $47,475, respectively. The applicant removed 100 percent of total charges associated with the service category “Medical/Surgical Supply Charge Amount” (which includes revenue centers 027x and 062x) because the applicant believed that it was the most conservative choice, as this
The applicant standardized the charges, and inflated the charges using an inflation factor of 1.09357, from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38524). The applicant then added the charges for the new technology. The applicant computed a final inflated average case-weighted standardized charge per case of $69,588 for the 100 percent sample, and $51,022 for the 75 percent sample. The average case-weighted threshold amount was $59,242 for the 100 percent sample, and $48,893 for the 75 percent sample. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount for both analyses, the applicant maintained that the technology met the cost criterion.
We invited public comment regarding whether the technology meets the cost criterion.
With respect to the substantial clinical improvement criterion, the applicant asserted that the Aquablation therapy provided by the AquaBeam System represents a substantial clinical improvement over existing treatment options for symptoms associated with the lower urinary tract for patients who have been diagnosed with BPH. Specifically, the applicant stated that the AquaBeam System's Aquablation therapy provides superior safety outcomes compared to the TURP procedure, while providing non-inferior efficacy in treating the symptoms that effect the lower urinary tract associated with a diagnosis of BPH; the AquaBeam System's delivery of Aquablation therapy yields consistent and predictable procedure and resection times regardless of the size and shape of the prostate or the surgeon's experience; and the AquaBeam System's Aquablation therapy demonstrated superior efficacy and safety for larger prostates (that is, prostates sized 50 to 80 ml) as compared to the TURP procedure.
The applicant provided the results of one Phase I and one Phase II trial published articles, the WATER Study Clinical Study Report, and a meta-analysis of current treatments with its application as evidence for the substantial clinical improvement criterion.
According to the applicant, the first study
The applicant indicated that 8 of the 15 patients who were enrolled in the trial had at least 1 procedure-related adverse event (for example, catheterization, hematuria, dysuria, pelvic pain, bladder spasms), which the authors reported to be consistent with outcomes from minimally-invasive transurethral procedures.
The second study
The third document provided by the applicant is the Clinical Study Report: WATER Study,
At 3 months, 25 percent of the patients in the AquaBeam System's Aquablation therapy group and 40 percent of the patients in the TURP group had an adverse event. The difference of −15 percent has a 95 percent confidence interval of −29.2 and −1.0 percent. At 6 months, 25.9 percent of the patients in the AquaBeam System's Aquablation therapy group and 43.1 percent of the patients in the TURP group had an adverse event. The difference of −17 percent has a 95 percent confidence interval of −31.5 to −3.0 percent. An analysis of safety events classified with the CD system as possibly, probably or definitely related to the procedure resulted in a CD Grade 1 persistent event difference between −17.7 percent (favoring the AquaBeam System's Aquablation therapy) with 95 percent confidence interval of −30.1 to −7.2 percent and a CD Grade 2 or higher event difference of −3.3 percent with 95 percent confidence interval of −16.5 to 8.7 percent.
The applicant indicated that the primary efficacy endpoint was assessed by a change in IPSS score over time. While change in score and change in percentages are generally higher for the AquaBeam System's Aquablation therapy, no statistically significant differences occurred between the AquaBeam System's Aquablation therapy and the TURP procedure over time. For example, the AquaBeam System's Aquablation therapy group experienced changes in IPSS mean score by visit of 0, −3.8, −12.5, −16.0, and −16.9 at baseline, 1 week, 1 month, 3 months, and 6 months, respectively, while the TURP group had mean scores of 0, −3.6, −11.1, −14.6, and −15.1 at baseline, 1 week, 1 month, 3 months, and 6 months, respectively.
Lastly, the applicant indicated that secondary endpoints were assessed. A mean length of stay for both the AquaBeam System's Aquablation therapy and the TURP procedure groups of 1.4 was achieved. While the mean operative times were similar, the hand piece in and out time was statistically significantly shorter for the AquaBeam System's Aquablation therapy group at 23.3 minutes as compared to 34.2 in the TURP procedure group. The mean resection time was 23 minutes shorter for the AquaBeam System's Aquablation therapy group at 3.9 minutes. No statistically significant difference was seen between the AquaBeam System's Aquablation therapy and the TURP procedure groups on the outcomes of re-intervention and worsening sexual function; 32.9 percent of the AquaBeam System's Aquablation therapy group had worsening sexual function as compared to 52.8 percent of the TURP procedure group. While statistically significant differences occurred across groups for change in ejaculatory function, the difference no longer remained at 6 months. While a greater proportion of the TURP procedure group patients experienced a negative change in erectile function as compared to the AquaBeam System's Aquablation therapy group patients (10 percent versus 6.2 percent at 6 months), no statistically significant differences occurred. No statistically significant differences between groups occurred for major adverse urologic events.
The applicant provided a meta-analysis of landmark studies regarding typical treatments for patients who have been diagnosed with BPH in order to provide supporting evidence for the assertion of superior outcomes achieved with the use of the AquaBeam System's Aquablation therapy. The applicant cited four “landmark clinical trials,” which report on the AquaBeam System's Aquablation therapy,
In the FY 2019 IPPS/LTCH proposed rule (83 FR 20349), we stated that we have several concerns related to the substantial clinical improvement criterion. The applicant performed a meta-analysis comparing results from three separate studies, which tested the effects of three separate treatment options. According to the applicant, the results provided consistently show the AquaBeam System's Aquablation therapy and Urolift as being superior to the standard treatment of the TURP procedure. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20349), we stated we have concerns with the
We noted that the applicant submitted a meta-analysis in an effort to compare currently available therapies to the AquaBeam System's Aquablation therapy. We stated that the possibility of the heterogeneity of samples and methods across studies leads to the possible introduction of bias, which results in the difficulty or inability to distinguish between bias and actual outcomes. We invited public comments on the applicability of this meta-analysis.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20349), we indicated that we had a concern that the differences between the AquaBeam System's Aquablation therapy and standard treatment options may not be as impactful and confined to safety aspects. We stated that it appears that the data on efficacy supported the equivalence of the AquaBeam System's Aquablation therapy and the TURP procedure based upon noninferiority analysis. In the proposed rule, we stated we agree with the applicant that the safety data were reported as showing superiority of the AquaBeam System's Aquablation therapy over the TURP procedure, although the data were difficult to track because adverse consequences were combined into categories; the AquaBeam System's Aquablation therapy was reportedly better in terms of ejaculatory function. It was noted in the application that, while the AquaBeam System's Aquablation therapy was statistically superior to the TURP procedure in the CD Grade 1 + adverse events, it was not statistically different in the CD Grade 2 or greater category. The applicant stated that regardless of the method, the urethra is typically used as the means for performing the BPH treatment procedure, which necessarily increases the likelihood of CD Grade 2 adverse events in all transurethral procedures.
In addition, the applicant noted that the treatment option may depend on the size of the prostate. The applicant stated that the AquaBeam System's Aquablation therapy is appropriate for small and large prostate sizes as a BPH treatment procedure. The AquaBeam System's Aquablation therapy has been shown to have limited positive outcomes as compared to the TURP procedure for prostates sized greater than 50 grams to 80 grams in each of the studies provided by the applicant. However, the applicant noted that the TURP procedure would not be used for prostates larger than 80 grams in size. Therefore, we stated in the proposed rule that we believe that another proper comparator for the AquaBeam System's Aquablation therapy may be laser or radical/open surgical procedures given their respective indication for small and large prostate sizes.
Lastly, the applicant compared AquaBeam System's Aquablation therapy and the standard of care TURP procedure to support a finding of improved safety. We stated that there are other treatment modalities available that may have a similar safety profile as the AquaBeam System's Aquablation therapy and we are interested in information that compares the AquaBeam System's Aquablation therapy to other treatment modalities.
We invited public comments on whether the AquaBeam System's Aquablation therapy meets the substantial clinical improvement criterion.
In response to CMS' concern with regard to the WATER study finding of Aquablation's improved safety relative to TURP and that other treatment modalities demonstrate safety profiles similar to Aquablation, the applicant stated that, while this may be true, treatment modalities such as TUIP, TUNA/RF, Microwave, and PUL have inferior efficacy to TURP in a variety of objective and subjective measures including peak urine flow, PVR reduction and BPH symptom reduction.
In response to CMS' concern that Aquablation has limited positive outcomes for prostates sized 50 to 80 ml, the applicant stated that in a pre-specified subgroup analysis the WATER study showed superior safety and efficacy in prostates sized 50 to 80 ml
In response to CMS' concern that Aquablation therapy performed on larger prostates should be compared with laser (that is, HoLEP) and open simple prostatectomy procedures, the applicant stated that between September and December 2017, 101 men (67 percent were Medicare eligible) with moderate-to-severe BPH symptoms and prostates sized 80 to 150 ml in volume underwent Aquablation therapy in the prospective multi-center international WATER II clinical trial. The applicant indicated that, as noted above, the American Urological Association (AUA) BPH surgical guidelines recommend open simple prostatectomy or laser enucleation for the treatment of large prostates (>80 ml in volume). The applicant explained that the primary purpose of the WATER II was to assess the safety profile for Aquablation therapy in larger prostates. The applicant stated that the overall CD Grades 2, 3, and 4 complications were recorded in 19 percent, 11 percent, and 5 percent, respectively.
In response to CMS' concern regarding the appropriateness of the AquaBeam System for prostates of smaller sizes (for example, <30 mls), the applicant apologized for any inference in its application regarding smaller prostate sizes because it was not its intention to make any specific claims regarding smaller prostates.
Other commenters also believed that the AquaBeam System represented a substantial clinical improvement. Another commenter stated that all of its treated patients experienced improved urinary flow and decreased BPH symptoms following treatment with the AquaBeam System. The commenter further stated that treated patients appreciated the preservation of ejaculatory function and indicated they would undergo the procedure again. Two commenters summarized results from the WATER II study, a single-arm study of the AquaBeam System in patients diagnosed with BPH with >80 ml prostate volumes, and stated that the AquaBeam System decreases operative time, time under anesthesia, decreases the length of inpatient stays, and has fewer complications as compared to open prostatectomy, which is the standard treatment for large prostates greater than 80 ml in volume. Another commenter with an interest in providing the AquaBeam therapy at its facility stated that, if an adequate payment is provided for the therapy, increased volume will most likely reduce the cost of this method of treatment.
After consideration of the public comments we received, we have determined that the AquaBeam System's Aquablation therapy meets all of the criteria for approval of new technology add-on payments. Therefore, we are approving new technology add-on payments for the AquaBeam System for FY 2019. Cases involving the AquaBeam System that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedure code XV508A4 (Destruction of prostate using robotic waterjet ablation, via natural or artificial opening endoscopic, new technology group 4).
In its application, the applicant estimated that the average Medicare beneficiary would require the transurethral procedure of one AQUABEAM System per patient. According to the application, the cost of the AQUABEAM System is $2,500 per procedure. Under § 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 the use of the AQUABEAM System's Aquablation System is $1,250 for FY 2019. In accordance with the current indication for the AQUABEAM System, CMS expects that the AQUABEAM System will be used in the treatment for adult patients experiencing lower urinary tract symptoms caused by a diagnosis of BPH.
Portola Pharmaceuticals, Inc. (Portola) submitted an application for new technology add-on payments for FY 2019 for the use of AndexXa
AndexXa
As stated above, AndexXa
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. AndexXa
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 indicated that AndexXa
With regard to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated that AndexXa
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 indicated that AndexXa
Other commenters stated that AndexXa
With regard to the cost criterion, we stated in the proposed rule that the applicant researched the FY 2015 MedPAR claims data file for potential cases representing patients who may be eligible for treatment using AndexXa
The applicant identified a total of 51,605 potential cases that mapped to 683 MS- DRGs, resulting in an average case-weighted charge per case of $72,291. The applicant also provided an analysis that was limited to cases representing 80 percent of all potential cases identified (41,255 cases) that mapped to the top 151 MS-DRGs. Under this analysis, the average case-weighted charge per case was $69,020. The applicant provided a third analysis that was limited to cases representing 25 percent of all potential cases identified (12,873 cases) that mapped to the top 9 MS-DRGs. This third analysis resulted in an average case-weighted charge per case of $46,974.
Under each of these analyses, the applicant also provided sensitivity analyses based on variables representing two areas of uncertainty: (1) Whether to remove 40 percent or 60 percent of blood and blood administration charges; and (2) whether to remove pharmacy charges based on the ceiling price of factor eight inhibitor bypass activity (FEIBA), a branded anti-inhibitor coagulant complex, or on the pharmacy indicator 5 (PI5) in the MedPAR data file, which correlates to potential cases utilizing generic coagulation factors. Overall, the applicant conducted twelve sensitivity analyses, and provided the following rationales:
• The applicant chose to remove 40 percent and 60 percent of blood and blood administration charges because potential patients who may be eligible for treatment using AndexXa
• The applicant maintained that FEIBA is the highest priced clotting factor used for Factor Xa inhibitor reversal, and it is unlikely that pharmacy charges for Factor Xa reversal would exceed the FEIBA ceiling price of $2,642. Therefore, the applicant capped the charges to be removed at $2,642 to exclude charges unrelated to the reversal of Factor Xa anticoagulation. The applicant also considered an alternative scenario in which charges associated with pharmacy indicator 5 (PI5) were removed from the costs of potential cases that included this indicator in the MedPAR data. On average, charges removed from the costs of potential cases utilizing generic coagulation factors were much lower than the total pharmacy charges.
The applicant noted that, in all 12 scenarios, the average case-weighted standardized charge per case for potential cases representing patients who may be eligible for treatment using AndexXa
The applicant's order of operations used for each analysis is as follows: (1) Removing 60 percent or 40 percent of blood and blood product administration charges and up to 100 percent of pharmacy charges for PI5 or FEIBA from the average case-weighted unstandardized charge per case; and (2) standardizing the charges per cases using the Impact File published with the FY 2015 IPPS/LTCH PPS final rule. After removing the charges for the prior technology and standardizing charges, the applicant applied an inflation factor of 1.154181, which is a combination of 9.8446 percent, the value used in the FY 2017 IPPS final rule as the 2-year outlier threshold inflation factor, and 5.074 percent, the value used in the FY 2018 IPPS final rule as the 1-year outlier threshold inflation factor, to update the charges from FY 2015 to FY 2018. The applicant did not add charges for AndexXa
We invited public comments on whether AndexXa
The applicant indicated that the WAC for 1 gram of AndexXa
The applicant indicated that the addition of charges for AndexXa
With regard to the substantial clinical improvement criterion, the applicant asserted that AndexXa
The applicant stated that the use of any anticoagulant is associated with an increased risk of bleeding, and bleeding complications can be life-threatening. The applicant further indicated that bleeding is especially concerning for patients treated with these Factor Xa inhibitors because, prior to the FDA approval of AndexXa
As noted above, AndexXa
The applicant noted the following: (1) On average, patients with a bleeding complication were hospitalized for 6.3 to 8.5 days, and (2) the most common therapies currently used to manage severe bleeding events in patients undergoing anticoagulant treatment are blood and blood product transfusions, most frequently with packed red blood cells (RBC) or fresh frozen plasma (FFP).
The applicant asserted that laboratory studies have failed to provide consistent evidence of “reversal” of the anticoagulant effect of Factor Xa inhibitors across a range of different PCC products and concentrations. Results of thrombin generation assays have varied depending on the format of the assay. Despite years of experience with low molecular weight heparins and pentasaccharide anticoagulants, neither PCCs nor factor eight inhibitor bypassing activity are recognized as safe and effective reversal agents for these Factor Xa inhibitors.
The applicant provided results from two randomized, double-blind, placebo-controlled Phase III studies,
The applicant stated that the results from the two Phase III studies and previous proof-of-concept Phase II dose-finding studies showed that use of AndexXa
With regard to AndexXa
The applicant also stated that use of AndexXa
The applicant submitted interim data purporting to show substantial clinical improvement within its target patient population as part of an ongoing Phase IIIb/IV open-label ANNEXA-4 study. The ANNEXA-4 study is a multi-center, prospective, open-label, single group study that evaluated 67 patients who had acute, major bleeding within 18 hours of receipt of a Factor Xa inhibitor (32 patients receiving rivarobaxan, 31 receiving apixaban, and 4 receiving enoxaparin). The population in the study was reflective of a real-world population, with mean age of 77 years old, most patients with cardiovascular disease, and the majority of bleeds being intracranial or gastrointestinal. According to the applicant, the results of the ANNEXA-4 study demonstrate safe, reliable, and rapid reversal of Factor Xa levels in patients experiencing acute bleeding and are consistent with the results seen in the Phase II and Phase III trials, based on interim data. However, in the proposed rule, we stated we were concerned that this interim data also indicate 18 percent of patients experienced a thrombotic event and 15 percent of patients died following reversal during
We invited public comments on whether AndexXa
With respect to the 18 percent of patients that experienced a thrombotic event and 15 percent of patients that died following reversal during the 30-day follow-up period in the ongoing ANNEXA-4 trial, the applicant asserted that this is consistent with the high-risk profile of the patients who have an intrinsic risk of dying even if bleeding is reversed. Specifically, the applicant explained that the thrombotic event rate and mortality observed in the ANNEXA-4 study, to date, are a reflection of the patients taking Factor Xa inhibitors due to a prior history of venous thromboembolisms, and reversal of anticoagulation in bleeding patients by use of AndexXa
Several commenters also supported the clinical results as demonstration of substantial clinical improvement for AndexXa
After consideration of the public comments we received, we have determined that AndexXa
Section 1886(d)(3)(E) of the Act requires that, as part of the methodology for determining prospective payments to hospitals, the Secretary adjust the standardized amounts for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level. We currently define hospital labor market areas based on the delineations of statistical areas established by the Office of Management and Budget (OMB). A discussion of the FY 2019 hospital wage index based on the statistical areas appears under section III.A.2. of the preamble of this final rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update the wage index annually and to base the update on a survey of wages and wage-related costs of short-term, acute care hospitals. (CMS collects these data on the Medicare cost report, CMS Form 2552-10, Worksheet S-3, Parts II, III, and IV. The OMB control number for approved collection of this information is 0938-0050.) This provision also requires that any updates or adjustments to the wage index be made in a manner that ensures that aggregate payments to hospitals are not affected by the change in the wage index. The adjustment for FY 2019 is discussed in section II.B. of the Addendum to this final rule.
As discussed in section III.I. of the preamble of this final rule, we also take into account the geographic reclassification of hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when calculating IPPS payment amounts. Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amounts so as to ensure that aggregate payments under the IPPS after implementation of the provisions of sections 1886(d)(8)(B), 1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate prospective payments that would have been made absent these provisions. The budget neutrality adjustment for FY 2019 is discussed in section II.A.4.b. of the Addendum to this final rule.
Section 1886(d)(3)(E) of the Act also provides for the collection of data every 3 years on the occupational mix of employees for short-term, acute care hospitals participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index. A discussion of the occupational mix adjustment that we are applying to the FY 2019 wage index appears under sections III.E.3. and F. of the preamble of this final rule.
The wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. Under section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate hospital labor market areas based on OMB-established Core-Based Statistical Areas (CBSAs). The current statistical areas (which were implemented beginning with FY 2015) are based on revised OMB delineations issued on February 28, 2013, in OMB Bulletin No. 13-01. OMB Bulletin No. 13-01 established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas in the United States and Puerto Rico based on the 2010 Census, and provided guidance on the use of the delineations of these statistical areas using standards published on June 28, 2010 in the
Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses through OMB Bulletins. On July 15, 2015, OMB issued OMB Bulletin No. 15-01, which provided updates to and superseded OMB Bulletin No. 13-01 that was issued on February 28, 2013. The attachment to OMB Bulletin No. 15-01 provided detailed information on the update to statistical areas since February 28, 2013. The updates provided in OMB Bulletin No. 15-01 were based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2012 and July 1, 2013. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913), we adopted the updates set forth in OMB Bulletin No. 15-01 effective October 1, 2016, beginning with the FY 2017 wage index. For a complete discussion of the adoption of the updates set forth in OMB Bulletin No. 15-01, we refer readers to the FY 2017 IPPS/LTCH PPS final rule. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), we continued to use the OMB delineations that were adopted beginning with FY 2015 to calculate the area wage indexes, with updates as reflected in OMB Bulletin No. 15-01 specified in the FY 2017 IPPS/LTCH PPS final rule.
On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which provided updates to and superseded OMB Bulletin No. 15-01 that was issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 provide detailed information on the update to statistical areas since July 15, 2015, and are based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2014 and July 1, 2015. In OMB Bulletin No. 17-01, OMB announced that one Micropolitan Statistical Area now qualifies as a Metropolitan Statistical Area. The new urban CBSA is as follows:
• Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of the principal city of Twin Falls, Idaho in Jerome County, Idaho and Twin Falls County, Idaho.
The OMB bulletin is available on the OMB website at
In sections III.D. and E.2. of the preamble of the FY 2019 IPPS/LTCH PPS proposed rule, we provided the proposed FY 2019 unadjusted and occupational mix adjusted national average hourly wages. Taking the estimated average hourly wage of new CBSA 46300 and dividing by the proposed national average hourly wage resulted in the estimated wage indexes shown in the table in the proposed rule (83 FR 20354), which is also provided below.
For FY 2019, we are using the OMB delineations that were adopted beginning with FY 2015 to calculate the area wage indexes, with updates as reflected in OMB Bulletin Nos. 13-01, 15-01, and 17-01. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20354), we stated that, in the final rule, we would incorporate this change into the final FY 2019 wage index, ratesetting, and tables. We did not receive any public comments regarding this policy area. Therefore, we have incorporated the updates as reflected in OMB Bulletin Nos. 13-01, 15-01, and 17-01 into the final FY 2019 wage index, ratesetting, and tables for this final FY2019 rule.
CBSAs are made up of one or more constituent counties. Each CBSA and constituent county has its own unique identifying codes. There are two different lists of codes associated with counties: Social Security Administration (SSA) codes and Federal Information Processing Standard (FIPS) codes. Historically, CMS has listed and used SSA and FIPS county codes to identify and crosswalk counties to CBSA codes for purposes of the hospital wage index. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 38130), we have learned that SSA county codes are no longer being maintained and updated. However, the FIPS codes continue to be maintained by the U.S. Census Bureau. We believe that using the latest FIPS codes will allow us to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions.
The Census Bureau's most current statistical area information is derived from ongoing census data received since 2010; the most recent data are from 2015. The Census Bureau maintains a complete list of changes to counties or county equivalent entities on the website at:
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 38130) we adopted a policy to discontinue the use of the SSA county codes and began using only the FIPS county codes for purposes of crosswalking counties to CBSAs. In addition, in the same rule, we implemented the latest FIPS code updates which were effective October 1, 2017, beginning with the FY 2018 wage indexes. The updated changes were used to calculate the wage indexes in a manner generally consistent with the CBSA-based methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 IPPS/LTCH PPS final rule.
For FY 2019, we are continuing to use only the FIPS county codes for purposes of crosswalking counties to CBSAs. For FY 2019, Tables 2 and 3 associated with this final rule and the County to CBSA Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care Hospitals File posted on the CMS website reflect these county changes.
The FY 2019 wage index values are based on the data collected from the Medicare cost reports submitted by hospitals for cost reporting periods beginning in FY 2015 (the FY 2018 wage indexes were based on data from cost reporting periods beginning during FY 2014).
The FY 2019 wage index includes all of the following categories of data associated with costs paid under the IPPS (as well as outpatient costs):
• Salaries and hours from short-term, acute care hospitals (including paid lunch hours and hours associated with military leave and jury duty);
• Home office costs and hours;
• Certain contract labor costs and hours, which include direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services, and certain contract indirect patient care services (as discussed in the FY 2008 final rule with comment period (72 FR 47315 through 47317)); and
• Wage-related costs, including pension costs (based on policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586 through 51590)) and other deferred compensation costs.
Consistent with the wage index methodology for FY 2018, the wage index for FY 2019 also excludes the direct and overhead salaries and hours for services not subject to IPPS payment, such as skilled nursing facility (SNF) services, home health services, costs
Data collected for the IPPS wage index also are currently used to calculate wage indexes applicable to suppliers and other providers, such as SNFs, home health agencies (HHAs), ambulatory surgical centers (ASCs), and hospices. In addition, they are used for prospective payments to IRFs, IPFs, and LTCHs, and for hospital outpatient services. We note that, in the IPPS rules, we do not address comments pertaining to the wage indexes of any supplier or provider except IPPS providers and LTCHs. Such comments should be made in response to separate proposed rules for those suppliers and providers.
The wage data for the FY 2019 wage index were obtained from WorksheetS-3, Parts II and III of the Medicare cost report (Form CMS-2552-10, OMB Control Number 0938-0050) for cost reporting periods beginning on or after October 1, 2014, and before October 1, 2015. For wage index purposes, we refer to cost reports during this period as the “FY 2015 cost report,” the “FY 2015 wage data,” or the “FY 2015 data.” Instructions for completing the wage index sections of Worksheet S-3 are included in the Provider Reimbursement Manual (PRM), Part 2 (Pub. No. 15-2), Chapter 40, Sections 4005.2 through 4005.4. The data file used to construct the FY 2019 wage index includes FY 2015 data submitted to us as of June 20, 2018. As in past years, we performed an extensive review of the wage data, mostly through the use of edits designed to identify aberrant data.
We asked our MACs to revise or verify data elements that result in specific edit failures. For the proposed FY 2019 wage index, we identified and excluded 80 providers with aberrant data that should not be included in the wage index, although we stated in the FY 2019 IPPS/LTCH PPS proposed rule that if data elements for some of these providers are corrected, we intend to include data from those providers in the final FY 2019 wage index (83 FR 20355). We also adjusted certain aberrant data and included these data in the proposed wage index. For example, in situations where a hospital did not have documentable salaries, wages, and hours for housekeeping and dietary services, we imputed estimates, in accordance with policies established in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). We instructed MACs to complete their data verification of questionable data elements and to transmit any changes to the wage data no later than March 23, 2018. In addition, as a result of the April and May appeals processes, and posting of the April 27, 2018 PUF, we have made additional revisions to the FY 2019 wage data, as described further below. The revised data are reflected in this FY 2019 IPPS/LTCH PPS final rule.
In constructing the proposed FY 2019 wage index, we included the wage data for facilities that were IPPS hospitals in FY 2015, inclusive of those facilities that have since terminated their participation in the program as hospitals, as long as those data did not fail any of our edits for reasonableness. We believed that including the wage data for these hospitals is, in general, appropriate to reflect the economic conditions in the various labor market areas during the relevant past period and to ensure that the current wage index represents the labor market area's current wages as compared to the national average of wages. However, we excluded the wage data for CAHs as discussed in the FY 2004 IPPS final rule (68 FR 45397 through 45398); that is, any hospital that is designated as a CAH by 7 days prior to the publication of the preliminary wage index public use file (PUF) is excluded from the calculation of the wage index. For the proposed rule, we removed 8 hospitals that converted to CAH status on or after January 23, 2017, the cut-off date for CAH exclusion from the FY 2018 wage index, and through and including January 26, 2018, the cut-off date for CAH exclusion from the FY 2019 wage index. After excluding CAHs and hospitals with aberrant data, we calculated the proposed wage index using the Worksheet S-3, Parts II and III wage data of 3,260 hospitals.
Since the development of the FY 2019 proposed wage index, as a result of further review by the MACs and the April and May appeals processes, we received improved data for 28 hospitals and are including the wage data of these 28 hospitals in the final wage index. However, during our review of the wage data in preparation of the April 27, 2018 PUF, we identified and deleted the data of 2 additional hospitals whose data we determined to be aberrant (unusually low average hourly wages) relative to their CBSAs. With regard to CAHs, we have since learned of 3 additional hospitals that converted to CAH status on or after January 23, 2017, the cut-off date for CAH exclusion from the FY 2018 wage index, and through and including January 26, 2018, the cut-off date for CAH exclusion from the FY 2019 wage index. Accordingly, we have removed 11 hospitals that converted to CAH status from the FY 2019 wage index (8 CAHs for the proposed rule, and 3 more CAHs for the final rule). The final FY 2019 wage index is based on the wage index of 3,283 hospitals (3,260 + 28−2−3 = 3,283).
For the final FY 2019 wage index, we allotted the wages and hours data for a multicampus hospital among the different labor market areas where its campuses are located in the same manner that we allotted such hospitals' data in the FY 2018 wage index (82 FR 38131 through 38132); that is, using campus full-time equivalent (FTE) percentages as originally finalized in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51591). Table 2, which contains the final FY 2019 wage index associated with this final rule (available via the internet on the CMS website), includes separate wage data for the campuses of 16 multicampus hospitals. The following chart lists the multicampus hospitals by CSA certification number (CCN) and the FTE percentages on which the wages and hours of each campus were allotted to their respective labor market areas:
We note that, in past years, in Table 2, we have placed a “B” to designate the subordinate campus in the fourth position of the hospital CCN. However, for the FY 2019 proposed rule, this final rule, and future rulemaking, we have moved the “B” to the third position of the CCN. Because all IPPS hospitals have a “0” in the third position of the CCN, we believe that placement of the “B” in this third position, instead of the “0” for the subordinate campus, is the most efficient method of identification and interferes the least with the other, variable, digits in the CCN.
In the FY 2019 IPPS/LTCH PPS proposed rule, we indicated we were committed to transforming the health care delivery system, including the Medicare program, by putting an additional focus on patient-centered care and working with providers, physicians, and patients to improve outcomes. One key to that transformation is ensuring that the Medicare payment rates are as accurate and appropriate as possible, consistent with the law. We invited the public to submit comments, suggestions, and recommendations for regulatory and policy changes to address wage index disparities.
CMS looks forward to continuing to work on wage index disparities, particularly for rural hospitals, to the extent permitted under current law and appreciates responses to our request for public input on this issue. By allowing the imputed floor to expire for all urban States, as described section III.G.2. of the preamble of this final rule, CMS has begun the process of making the wage index more equitable.
The method used to compute the FY 2019 wage index without an occupational mix adjustment follows the same methodology that we used to compute the wage indexes without an occupational mix adjustment since FY 2012 (76 FR 51591 through 51593).
As discussed in the FY 2012 IPPS/LTCH PPS final rule, in “Step 5,” for each hospital, we adjust the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimate the percentage change in the employment cost index (ECI) for compensation for each 30-day increment from October 14, 2014, through April 15, 2016, for private industry hospital workers from the BLS'
For example, the midpoint of a cost reporting period beginning January 1, 2015, and ending December 31, 2015, is June 30, 2015. An adjustment factor of 1.01316 was applied to the wages of a hospital with such a cost reporting period.
Using the data as previously described, the FY 2019 national average hourly wage (unadjusted for occupational mix) is $42.997789358.
Previously, we also would provide a Puerto Rico overall average hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56915), prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. As a result, we calculated a Puerto Rico-specific wage index that was applied to the labor share of the Puerto Rico-specific standardized amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. As we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56915 through 56916), because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act, as amended by section 601 of the Consolidated Appropriations Act, 2016, there is no longer a need to calculate a Puerto Rico-specific average hourly wage and wage index. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the national average hourly wage (unadjusted for occupational mix) (which is $42.997789358 for this FY 2019 final rule) and the national wage index, which is applied to the national labor share of the national standardized amount. Therefore, for FY 2019, there is no Puerto Rico-specific overall average hourly wage or wage index.
Section 1886(d)(3)(E) of the Act requires the Secretary to update the wage index based on a survey of hospitals' costs that are attributable to wages and wage-related costs. In the September 1, 1994 IPPS final rule (59 FR 45356), we developed a list of “core” wage-related costs that hospitals may report on Worksheet S-3, Part II of the Medicare hospital cost report in order to include those costs in the wage index. Core wage-related costs include categories of retirement cost, plan administrative costs, health and insurance costs, taxes, and other specified costs such as tuition reimbursement.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20357 through 20358), in addition to these categories of core wage-related costs, we allow hospitals to report wage-related costs other than those on the core list if the other wage-related costs meet certain criteria. The criteria for
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38132 through 38136), we clarified that a hospital may be able to report a wage-related cost (defined as the value of the benefit) that does not appear on the core list if it meets all of the following criteria:
• The wage-related cost is provided at a significant financial cost to the employer. To meet this test, the individual wage-related cost must be greater than 1 percent of total salaries after the direct excluded salaries are removed (the sum of Worksheet S-3, Part II, Lines 11, 12, 13, 14, Column 4, and Worksheet S-3, Part III, Line 3, Column 4).
• The wage-related cost is a fringe benefit as described by the IRS and is reported to the IRS on an employee's or contractor's W-2 or 1099 form as taxable income.
• The wage-related cost is not furnished for the convenience of the provider or otherwise excludable from income as a fringe benefit (such as a working condition fringe).
We noted that those wage-related costs reported as salaries on Line 1 (for example, loan forgiveness and sick pay accruals) should not be included as other wage-related costs on Line 18.
The above instructions for calculating the 1-percent test inadvertently omitted Line 15 for Home Office Part A Administrator on Worksheet S-3, Part II from the denominator. As we stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20357), Line 15 should be included in the denominator because Home Office Part A Administrator is added to Line 1 in the wage index calculation. Therefore, in the proposed rule, we stated that we were correcting the inadvertent omission of Line 15 from the denominator, and we clarified that, for calculating the 1-percent test, each individual category of the other wage-related cost (that is, the numerator) should be divided by the sum of Worksheet S-3, Part III, Lines 3 and 4, Column 4 (that is, the denominator). Line 4 sums the following lines from Worksheet S-3, Part II: Lines 11, 12, 13, 14, 14.01, 14.02, and 15. We also directed readers to instructions for calculating the 1-percent test in the Provider Reimbursement Manual (PRM), Part II, Chapter 40, Section 4005.4, Line 25 and its subscripts on Worksheet S-3, Part IV of the Medicare cost report (Form CMS-2552-10, OMB control number 0938-0050), which state: “Calculate the 1-percent test by dividing each individual category of the other wage-related cost (that is, the numerator) by the sum of Worksheet S-3, Part III, Lines 3 and 4, Column 4, (that is, the denominator).”
In addition to our discussion about calculating the 1-percent test and other criteria for including other wage-related costs in the wage index, we stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38133 through 38166) that we would consider proposing to remove other wage-related costs from the wage index entirely.
In the FY 2018 IPPS/LTCH PPS proposed and final rules (82 FR 19901 and 82 FR 38133, respectively), we stated that we originally allowed for the inclusion of wage-related costs other than those on the core list because we were concerned that individual hospitals might incur unusually large wage-related costs that are not reflected on the core list but that may represent a significant wage-related cost. However, we stated in the FY 2018 IPPS/LTCH PPS proposed and final rules (82 FR 19901 and 82 FR 38133, respectively) that we were reconsidering allowing other wage-related costs to be included in the wage index because internal reviews of the FY 2018 wage data showed that only a small minority of hospitals were reporting other wage-related costs that meet the 1-percent test described earlier.
We stated in the FY 2019 IPPS/LTCH PPS proposed rule that, as part of the wage index desk review process for FY 2019, internal reviews showed that only 8 hospitals out of the more than 3,000 IPPS hospitals in the wage index had other wage-related costs that were correctly reported for inclusion in the wage index (83 FR 20357). Given the extremely limited number of hospitals nationally using Worksheet S-3, Part IV, Line 25 and subscripts, and Worksheet S-3, Part II, Line 18, to correctly report other wage-related costs in accordance with the criteria to be included in the wage index, we continue to believe that other wage-related costs do not constitute an appropriate and significant portion of wage costs in a particular labor market area. In other words, while other wage-related costs may represent costs that may have an impact on an
Furthermore, in the FY 2019 IPPS/LTCH PPS proposed rule, we also discussed that the open-ended nature of the types of other wage-related costs that may be included on Line 25 and its subscripts of Worksheet S-3 Part IV and Line 18 of Worksheet S-3 Part II, in contrast to the concrete list of core wage-related costs, may hinder consistent and proper reporting of fringe benefits. Our internal reviews indicate widely divergent types of costs that hospitals are reporting as other wage-related costs on these lines. We are concerned that inconsistent reporting of other wage-related costs further compromises the accuracy of the wage index as a representation of the relative average hourly wage for each labor market area. Our intent in creating a core list of wage-related costs in the September 1, 1994 IPPS final rule was to promote consistent reporting of fringe benefits, and we are increasingly concerned that inconsistent reporting of wage-related costs undermines this effort. Specifically, we expressed in the September 1, 1994 IPPS final rule that, since we began including fringe benefits in the wage index, we have been concerned with the inconsistent reporting of fringe benefits, whether because of a lack of provider proficiency in identifying fringe benefit costs or varying interpretations across fiscal intermediaries of the definition for fringe benefits in PRM-I, Section 2144.1 (59 FR 45356). We believe that the limited and inconsistent use of Line 25 and its subscripts of Worksheet S-3 Part IV and Line 18 of Worksheet S-3 Part II for reporting wage-related costs other than the core list indicate that including other wage-related costs in the wage
Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20358), for the reasons discussed earlier, for the FY 2020 wage index and subsequent years, we proposed to only include the wage-related costs on the core list in the calculation of the wage index and not to include any other wage-related costs in the calculation of the wage index. Under our proposal, we stated we would no longer consider any other wage-related costs beginning with the FY 2020 wage index. Considering the extremely limited number of hospitals reporting other wage-related costs and the inconsistency in types of other wage-related costs being reported, we indicated we believe this proposal will help ensure a more consistent and more accurate wage index representative of the relative average hourly wage for each labor market area. In addition, we stated that we believe that this proposal to no longer include other wage-related costs in the wage index calculation benefits the vast majority of hospitals because most hospitals do not report other wage-related costs. We explained that because the wage index is budget neutral, hospitals in an area without other wage-related costs included in the wage index have their wage indexes reduced when other areas' wage indexes are raised by including other wage-related costs in their wage index calculation. We also noted that this proposal to exclude other wage-related costs from the wage index, starting with the FY 2020 wage index, contributes to agency efforts to simplify hospital paperwork burden because it would eliminate the need for Line 18 on Worksheet S-3, Part II and Line 25 and its subscripts on Worksheet S-3, Part IV of the Medicare cost report (Form CMS-2552-10, OMB control number 0938-0050). We noted that we would include in the FY 2019 wage index the other wage-related costs of the 8 hospitals that accurately reported those costs in accordance with the criteria in effect as of FY 2018.
In summary, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20358), we clarified that our policy for calculating the 1-percent test includes Line 15 for Home Office Part A Administrator on Worksheet S-3, Part II in the denominator. In addition, we proposed to eliminate other wage-related costs from the calculation of the wage index for the FY 2020 wage index and subsequent years, as discussed earlier.
A few commenters opposed this proposal. One commenter stated that the proposal would unreasonably exclude legitimate fringe benefits that can be directly linked to individual employment. Another commenter disagreed that other wage-related costs of an individual hospital do not accurately reflect the economic conditions of the labor market as a whole, stating that these costs more accurately represent the economic conditions of the labor market and that the inclusion of these costs is important for the financial sustainability of the minority of hospitals incurring other wage-related costs. The commenter urged CMS to continue allowing costs that meet current criteria for reporting other wage-related costs when hospitals undergo serious circumstantial changes and incur costs to maintain qualified staff; for example, during a nursing strike when a hospital may engage in costly contract nursing agreements that include housing costs. This commenter believed that the cost report should remain a mechanism for CMS to acknowledge unforeseen or changing other labor costs.
Furthermore, the commenters suggested that the number of hospitals reporting physician malpractice costs should be included in the number of hospitals that currently report other wage-related costs. One commenter stated that CMS' count of eight hospitals in the country reporting noncore wage-related costs is incorrect because malpractice cost is a noncore wage-related cost that is required, by cost report instruction, to be included with physician wage-related costs rather than on the noncore wage-related cost line. The commenter explained that CMS required physicians' wage-related costs to be listed separately, effective with FY 1994, because CMS anticipated
In response to the commenters' citation of the September 1, 1994
Regarding the requirement for physician other wage-related costs to be listed separately, the commenters are correct that the instructions for Worksheet S-3, Part II, Line 18, currently include the following note: “Do not include the wage-related costs for physicians Parts A and B, non-physician anesthetists Part A and B, interns and residents in approved programs, and home office personnel.” However, we remind the commenters that
Calculate the 1-percent test only one time for a category of other wage related costs,
In response to the commenter who asserted that CMS is “vastly underestimating” the impact of removal of other wage-related costs and specifically malpractice insurance costs from the wage index, we conducted additional analysis to quantify the number of hospitals reporting malpractice insurance on lines other than Line 18 of Worksheet S-3, Part II, as an other wage-related cost meeting the 1-percent test. For the FY 2019 wage index, only 41 hospitals reported costs on Worksheet S-3, Part II, Line 22 (which includes core wage-related costs and may or may not include malpractice insurance as an other wage-related cost) that were greater than 1 percent of total salaries. Of those 41 hospitals, it is unlikely that the wage-related costs reported for Physician Part A Administrative were entirely comprised of malpractice insurance costs. Therefore, the number of hospitals reporting malpractice insurance as an other wage-related cost and which exceeds 1-percent of total salaries is likely less than 1.25 percent of the total hospitals in the wage index (that is, 41/3,283 IPPS hospitals included in the FY 2019 final wage index). In addition, we conducted further analysis and found that fewer than 30 hospitals indicated a description of malpractice on Line 25 of Worksheet S-3, Part IV, for other wage-related costs, and of those hospitals, only 3 hospitals met the 1-percent test criteria for inclusion. Consequently, we believe that we have conducted the comprehensive review requested by the commenter and thoroughly analyzed the potential impact of this proposal, and concluded that the number of hospitals reporting malpractice as an other wage-related cost is minimal. Therefore, we continue to believe that removing other wage-related costs reported on Line 18 and other lines from the wage index is appropriate because costs reported by only a very small minority of hospitals do not accurately reflect the economic conditions of the labor market area as a whole.
Therefore, after consideration of the public comments we received, for the reasons discussed above and in the proposed rule, we are finalizing our proposal, without modification, to eliminate other wage-related costs from the calculation of the wage index for the FY 2020 wage index and subsequent years. We also are clarifying that all other wage-related costs, even those not reported on Worksheet S-3, Part II, Line 18 and Worksheet S-3, Part IV, Line 25 and subscripts, such as contract labor, are being removed from the calculation of the wage index, and we will update the cost report instructions accordingly.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20358 through 20360), we have received an increasing number of inquiries regarding the treatment of multicampus hospitals as the number of multicampus hospitals has grown in recent years. While the regulations at § 412.230(d)(2)(iii) and (v) for geographic reclassification under the MGCRB include criteria for how multicampus hospitals may be reclassified, the regulations at § 412.92 for sole community hospitals (SCHs), § 412.96 for rural referral centers (RRCs), § 412.103 for rural reclassification, and § 412.108 for Medicare-dependent, small rural hospitals (MDHs) do not directly address multicampus hospitals. Thus, in the FY 2019 proposed rule, we proposed to codify in these regulations the policies for multicampus hospitals that we have developed in response to recent questions regarding CMS' treatment of multicampus hospitals for purposes other than geographic reclassification under the MGCRB.
We stated in the proposed rule (83 FR 20358) that the proposals (stated below) applied to hospitals with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meet the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, also referred to as multicampus hospitals or hospitals with remote locations. We proposed that a main campus of a hospital cannot obtain an SCH, RRC, or MDH status or rural reclassification independently or separately from its remote location(s), and vice versa. Rather, if the criteria are met in the regulations at § 412.92 for SCHs, § 412.96 for RRCs, § 412.103 for rural reclassification, or § 412.108 for MDHs (as discussed later in this section), the hospital (that is, the main campus and its remote location(s)) would be granted the special treatment or rural reclassification afforded by the aforementioned regulations.
We stated in the proposed rule that we believe this is an appropriate policy for two reasons. First, each remote location of a hospital is included on the main campus's cost report and shares the same provider number. That is, the main campus and remote location(s) would share the same status or rural reclassification because the hospital is a single entity with one provider agreement. Second, it would not be administratively feasible for CMS and the MACs to track every hospital with remote locations within the same CBSA and to assign different statuses or rural reclassifications exclusively to the main campus or to its remote location. We note that, for wage index purposes only, CMS tracks multicampus remote locations located
To qualify for rural reclassification or SCH, RRC, or MDH status, we proposed that a hospital with remote locations must demonstrate that both the main campus and its remote location(s) satisfy the relevant qualifying criteria. A hospital with remote locations submits a joint cost report that includes data from its main campus and remote location(s), and its MedPAR data also combine data from the main campus and remote location(s). We believe that it would not be feasible to separate data by location, nor would it be appropriate, because we consider a main campus and remote location(s) to be one hospital. Therefore, where the regulations at § 412.92, § 412.96, § 412.103, and § 412.108 require data, such as bed count, number of discharges, or case-mix index, for example, to demonstrate that the hospital meets the qualifying criteria, we proposed to codify in our regulations that the combined data from the main campus and its remote location(s) are to be used.
For example, if a hospital with a main campus with 200 beds and a remote location with 75 beds applies for RRC status, the combined count of 275 beds would be considered the hospital's bed count, and the main campus and its remote location would be granted RRC status if the hospital applies during the last quarter of its cost reporting period and both the main campus and the remote location are located in a rural area as defined in 42 CFR part 412, subpart D. This is consistent with the regulation at § 412.96(b)(1), which states, in part, that the number of beds is determined under the provisions of § 412.105(b). For § 412.105(b), beds are counted from the main campus and remote location(s) of a hospital. We believe this is also consistent with § 412.96(b)(1)(ii), which sets forth the
Similarly, combined data would be used for demonstrating the hospital meets criteria at § 412.92 for SCH status. For example, the patient origin data, which are typically MedPAR data used to document the boundaries of the hospital's service area as required in § 412.92(b)(1)(ii) and (iii), would be used from both locations. We reiterate that we believe this is the appropriate policy because the main campus and remote location are considered one hospital and that it is the only administratively feasible policy because there is currently no way to split the MedPAR data for each location.
For § 412.103 rural reclassification, we stated in the proposed rule (83 FR 20359) that a hospital with remote location(s) seeking to qualify under § 412.103(a)(3), which requires that the hospital would qualify as an RRC or SCH if the hospital were located in a rural area, would similarly demonstrate that it meets the criteria at § 412.92 or at § 412.96, such as bed count, by using combined data from the main campus and its remote location(s) (with the exception of certain criteria discussed below related to location, mileage, travel time, and distance requirements). We refer readers to the portions of our discussion that explain how hospitals with remote locations would meet criteria for RRC or SCH status.
A hospital seeking MDH status would also use combined data for bed count and discharges to demonstrate that it meets the criteria at § 412.108(a)(1). For example, if the main campus of a hospital has 75 beds and its remote location has 30 beds, the bed count exceeds 100 beds and the hospital would not satisfy the criteria at § 412.108(a)(1)(i) (which we proposed, and are finalizing, to be redesignated as § 412.108(a)(1)(ii)).
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20359), we reminded readers that, under § 412.108(b)(4) and § 412.92(b)(3)(i), an approved MDH or SCH status determination remains in effect unless there is a change in the circumstances under which the status was approved. We stated that while we believe that this proposal is consistent with the policies for multicampus hospitals that we have developed in response to recent questions, current MDHs and SCHs should make sure that this proposal does not create a change in circumstance (such as an increase in the number of beds to more than 100 for MDHs or to more than 50 for SCHs), which an MDH or SCH is required to report to the MAC within 30 days of the event, in accordance with § 412.108(b)(4)(ii) and (iii) and § 412.92(b)(3)(ii) and (iii).
In the FY 2019 proposed rule, we discussed that, with regard to other qualifying criteria set forth in the regulations at §§ 412.92, 412.96, 412.103, and 412.108 that do not involve data that can be combined, specifically qualifying criteria related to location, mileage, travel time, and distance requirements, a hospital would need to demonstrate that the main campus and its remote location(s) each independently satisfy those requirements in order for the entire hospital, including its remote location(s), to be reclassified or obtain a special status.
To qualify for SCH status, for example, it would be insufficient for only the main campus, and not the remote location, to meet distance criteria. Rather, the main campus and its remote location(s) would each need to meet at least one of the criteria at § 412.92(a). Specifically, the main campus and its remote location must each be located more than 35 miles from other like hospitals, or if in a rural area (as defined in § 412.64), be located between 25 and 35 miles from other like hospitals if meeting one of the criteria at § 412.92(a)(1) (and each meet the criterion at § 412.92(a)(1)(iii) if applicable), or between 15 and 25 miles from other like hospitals if the other like hospitals are inaccessible for at least 30 days in each 2 out of 3 years (§ 412.92(a)(2)), or travel time to the nearest like hospital is at least 45 minutes (§ 412.92(a)(3)). We believe that this is necessary to show that the hospital is indeed the sole source of inpatient hospital services reasonably available to individuals in a geographic area who are entitled to benefits under Medicare Part A, as required by section 1886(d)(5)(D)(iii)(II) of the Act. For hospitals with remote locations that apply for SCH classification under § 412.92(a)(1)(i) and (ii), combined data are used to document the boundaries of the hospital's service area using data from across both locations, as discussed earlier, and all like hospitals within a 35-mile radius of each location are included in the analysis. To be located in a rural area to use the criteria in § 412.92(a)(1), (2), and (3), the main campus and its remote location(s) must each be either geographically located in a rural area, as defined in § 412.64, or reclassified as rural under § 412.103.
Similarly, for RRC classification under § 412.96 and MDH classification under § 412.108, the main campus and its remote location(s) must each be either geographically located in a rural area, as defined in 42 CFR part 412, subpart D, or reclassified as rural under § 412.103 to meet the rural requirement portion of the criteria at § 412.96(b)(1), § 412.96(c), or § 412.108(a)(1) (or for MDH, be located in a State with no rural area and satisfy any of the criteria under § 412.103(a)(1) or (a)(3) or under § 412.103(a)(2) as of January 1, 2018). For hospitals with remote locations that apply for RRC classification under § 412.96(b)(2)(ii) or § 412.96(c)(4), 25 miles is calculated from each location (the main campus and its remote location(s)), and combined data from both the main campus and its remote location(s) are used to calculate the percentage of Medicare patients, services furnished to Medicare beneficiaries, and discharges.
For hospitals seeking to reclassify as rural by meeting the criteria at § 412.103(a)(1), (a)(2), or (a)(6), we also proposed to codify in our regulations that it would not be sufficient for only the main campus, and not its remote location(s), to demonstrate that its location meets the aforementioned criteria. Rather, under § 412.103(a)(1) and (2) (which also are incorporated in § 412.103(a)(6)), we proposed that the main campus and its remote location(s) must each either be located (1) in a rural census tract of an MSA as determined under the most recent version of the Goldsmith Modification, the Rural-Urban Commuting Area codes (§ 412.103(a)(1)), or (2) in an area designated by any law or regulation of the State in which it is located as a rural area, or be designated as a rural hospital by State law or regulation (§ 412.103(a)(2)). For hospitals seeking to reclassify as rural by meeting the criteria in § 412.103(a)(3), which require that the hospital would qualify as an RRC or a SCH if the hospital were located in a rural area, we refer readers to our discussion presented earlier that explains how hospitals with remote locations would meet criteria for RRC or SCH status.
In the FY 2019 IPPS/LTCH PPS proposed rule, we noted that we have also received questions about how a hospital with remote locations that trains residents in approved medical residency training programs would be treated for IME adjustment purposes if
We proposed to codify these policies regarding the application of the qualifying criteria for hospitals with remote locations in the regulations at § 412.92 for SCHs, § 412.96 for RRCs, § 412.103 for rural reclassification, or § 412.108 for MDHs. Specifically, we proposed to revise these regulations as follows:
We proposed to add paragraph (a)(4) to § 412.92 to specify that, for a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria at § 412.92(a)(1)(i) and (ii) are met. For the mileage and rural location criteria at § 412.92(a) and the mileage, accessibility, and travel time criteria specified at § 412.92(a)(1) through (a)(3), the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy those requirements.
In § 412.96, we proposed to redesignate paragraph (d) as paragraph (e) and add a new paragraph (d) to specify that, for a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria at § 412.96(b)(1) and (2) and (c)(1) through (c)(5) are met. For purposes of meeting the rural location criteria in § 412.96(b)(1) and (c) and the mileage criteria in § 412.96(b)(2)(ii) and (c)(4), the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy those requirements.
We proposed to add paragraph (a)(7) to § 412.103 to specify that, for a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy the location criteria specified in § 412.103(a)(1) and (2) (which criteria also are incorporated in § 412.103(a)(6)). As discussed in our response to public comments below, we note that we inadvertently referenced § 412.103(a)(6) (which applies to critical access hospitals (CAHs)) in proposed paragraph § 412.103(a)(7). As explained in the proposed rule (83 FR 20358) and above, these policies apply to hospitals where services are provided and billed under the IPPS. Thus, these policies do not apply to CAHs, which are not paid under the IPPS. Accordingly, as discussed in response to comments below, we are not including a reference to § 412.103(a)(6) in § 412.103(a)(7), as finalized in this rule.
We proposed to add paragraph (a)(3) to § 412.108 to specify that, for a hospital with a main campus and one or more remote locations under a single provider agreement where services are provided and billed under the IPPS and that meets the provider-based criteria at § 413.65 as a main campus and a remote location of a hospital, combined data from the main campus and its remote location(s) are required to demonstrate that the criteria in § 412.108(a)(1) and (2) are met. We stated that for the location requirement specified at proposed amended paragraph (a)(1)(i) of this section, the hospital must demonstrate that the main campus and its remote location(s) each independently satisfy this requirement. (We note that we are finalizing the proposed amendments to § 412.108(a)(1)(i) as discussed in section IV.G.2.a. of the preamble of this final rule.)
Several commenters requested clarification regarding the effective date of the proposals. The commenters asked what will happen to multicampus hospitals that have already reclassified as rural, and whether the proposals would affect new classification requests only and grandfather-in existing SCHs, RRCs, and MDHs, or if those hospitals with existing reclassifications or special statuses would be required to reapply according to the criteria presented in the proposed rule. One commenter specifically questioned CMS' authority to make a rule effective retroactively and asked that CMS clarify that the policy is effective for applications submitted on or after October 1, 2018. Similarly, another commenter stated that while the proposals are presented as a codification, they are a change in longstanding CMS policy because CMS has “long been treating multicampus facilities as distinct entities for a variety of purposes.” Some commenters requested that CMS not finalize the codification without research to demonstrate its impact because they view it as a change in policy. Commenters urged CMS to provide additional guidance and information on the policies for treatment of multicampus hospitals.
In response to the commenters' questions regarding the effective date of the policies discussed in the proposed rule, we reiterate that we proposed to codify in the regulations our existing policies for multicampus hospitals, and thus these policies have been and continue to be in effect. Consequently, there is no need to “grandfather in” multicampus hospitals with existing special statuses or reclassifications. Similarly, we disagree that we are promulgating a rule retroactively because these policies are CMS' longstanding policies. We note that the commenter's assertion that these proposed codifications are a change in longstanding CMS policy were not accompanied by examples of CMS treating multicampus facilities as distinct entities. It is unclear what the commenter was referring to in support of this assertion. If the commenter was referring to CMS' treatment of multicampus facilities for wage index purposes, as mentioned in the proposed rule (83 FR 20358), CMS tracks multicampus remote locations located
Similarly, because we proposed to codify existing policy, multicampus hospitals with existing special status or rural reclassification would not be required to reapply according to the criteria codified in this rule, as the current regulations at §§ 412.92(3)(i), 412.103(f), and 412.108(b)(4) state that an approved SCH classification, rural reclassification, or MDH status determination, respectively, remains in effect without need for reapproval unless there is a change in the circumstances under which the classification or determination was approved. We are reiterating that current MDHs and SCHs should make sure that any change in circumstance (such as an increase in the number of beds to more than 100 for MDHs or to more than 50 for SCHs) as a result of the MDH or SCH opening a remote location, for example, is correctly reported to the MAC within 30 days of the event in accordance with §§ 412.108(b)(4)(ii) and (iii) and 412.92(b)(3)(ii) and (iii).
With regard to the commenters' request that CMS not finalize its proposals to codify in the regulations its existing policies, we note that not finalizing the proposals would still leave our current policies unchanged and in effect with regard to multicampus hospitals and qualification for special statuses and reclassifications, although they would not be codified in regulations. We believe not finalizing the proposals to codify these policies in regulations would create confusion surrounding the existing policies currently in effect.
In response to commenters requesting more information and guidance on our existing policies, we agree and will consider further provider education on our existing policies, where appropriate.
One commenter agreed with CMS' policy in the scenario of the opening of a remote location that provides general inpatient services within 24 miles from an existing SCH. The commenter asserted that, while the remote location might cause the SCH to lose its classification as an SCH, this outcome appears “congruent with the intent of law” because the former SCH is no longer the sole source of inpatient services reasonably available to individuals in the geographic area. However, this commenter and other commenters disagreed with CMS' policy of including a remote location for determining SCH qualification if the remote location (either of a nearby hospital or of the SCH) does not meet the definition of a hospital or a like hospital or does not provide inpatient services reasonably available to individuals in the geographic area, such as a remote clinic with a small inpatient obstetrics and gynecology or labor and delivery unit or a few inpatient psychiatric or rehabilitation beds as a distinct part unit. One commenter stated that examining remote locations for distance requirements would be particularly concerning if the remote location does not provide 24/7 emergency care, because this would allow a small remote clinic with limited hours and providers to result in loss of access to life-saving emergency care. Another commenter similarly stated that the policy may allow a “competitive tactic inconsistent with the intent of the rule” if a hospital could lose SCH status as a result of a competing hospital opening a remote location that does not functionally represent a like provider.
Commenters urged CMS to carefully evaluate the impacts of the proposals on rural health care and consider a range of alternatives, including: Not finalizing the proposal to codify certain policies for multicampus hospitals with respect to SCHs; finalizing the proposal with protections for existing SCHs; excluding SCHs from the evaluation of the qualifying criteria on a combined basis; modifying the policy to apply only if the remote location is a full service inpatient facility; or apply the policy only if the remote location on its own could be licensed as a hospital under State law. One commenter specifically suggested that a remote location providing only limited inpatient services should not be considered a like provider.
However, we recognize that, under our current policies, for purposes of determining whether a nearby hospital consisting of a main campus and a remote location would be considered a like hospital with respect to an SCH or a hospital seeking SCH classification, the inpatient days of the remote location and the main hospital are not distinguishable for purposes of calculating the 8 percent. We also recognize that there may be scenarios in which a remote location that is within range of an SCH or a hospital seeking SCH classification and provides only very limited IPPS services is considered a like hospital by virtue of its being a remote location of a larger main hospital. We acknowledge the concerns raised by the commenters with respect to ensuring access to care in such situations, and we will take the feedback we received on this issue into consideration for potential future rulemaking.
For purposes of these policies, a facility without inpatient beds would not be considered for mileage requirements. We also are clarifying that because these policies apply to hospitals where services are provided and billed under the IPPS, these policies do not apply to CAHs. We note that we inadvertently included in proposed § 412.103(a)(7) a reference to § 412.103(a)(6), which pertains to CAHs. Thus, in this final rule, we are deleting the reference to § 412.103(a)(6) in § 412.103(a)(7).
After consideration of the public comments we received, for the reasons discussed above and in the proposed rule, we are finalizing as proposed, without modification, our codification of policies regarding multicampus hospitals in the regulations at § 412.92, § 412.96, and § 412.108. For the reason discussed in response to a comment above, we are finalizing our codification of policies regarding multicampus hospitals in the regulation at § 412.103(a)(7) with modification to remove an inadvertent reference to § 412.103(a)(6) (which pertains to CAHs). We may further consider commenters' suggestions regarding appropriate modifications to our policies in future rulemaking.
As stated earlier, section 1886(d)(3)(E) of the Act provides for the collection of data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index, for application beginning October 1, 2004 (the FY 2005 wage index). The purpose of the occupational mix adjustment is to control for the effect of hospitals' employment choices on the wage index. For example, hospitals may choose to employ different combinations of registered nurses, licensed practical nurses, nursing aides, and medical assistants for the purpose of providing nursing care to their patients. The varying labor costs associated with these choices reflect hospital management decisions rather than geographic differences in the costs of labor.
Section 304(c) of the Consolidated Appropriations Act, 2001 (Pub. L. 106-554) amended section 1886(d)(3)(E) of the Act to require CMS to collect data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program. We collected data in 2013 to compute the occupational mix adjustment for the FY 2016, FY 2017, and FY 2018 wage indexes. As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19903) and final rule (82 FR 38137), a new measurement of occupational mix is required for FY 2019.
The FY 2019 occupational mix adjustment is based on a new calendar year (CY) 2016 survey. Hospitals were required to submit their completed 2016 surveys (Form CMS-10079, OMB number 0938-0907) to their MACs by July 3, 2017. The preliminary, unaudited CY 2016 survey data were posted on the CMS website on July 12, 2017. As with the Worksheet S-3, Parts II and III cost report wage data, as part of the FY 2019 desk review process, the MACs revised or verified data elements in hospitals' occupational mix surveys that resulted in certain edit failures.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20361), for FY 2019, we proposed to calculate the occupational mix adjustment factor using the same methodology that we have used since the FY 2012 wage index (76 FR 51582 through 51586) and to apply the occupational mix adjustment to 100 percent of the FY 2019 wage index. Similar to the method we use for the calculation of the wage index without occupational mix, salaries and hours for a multicampus hospital are allotted among the different labor market areas where its campuses are located. Table 2 associated with this final rule (which is available via the internet on the CMS website), which contains the final FY 2019 occupational mix adjusted wage index, includes separate wage data for the campuses of 16 multicampus hospitals. We refer readers to section III.C. of the preamble of this final rule for a chart listing the multicampus hospitals and the FTE percentages used to allot their occupational mix data.
Because the statute requires that the Secretary measure the earnings and paid hours of employment by occupational category not less than once every 3 years, all hospitals that are subject to payments under the IPPS, or any hospital that would be subject to the IPPS if not granted a waiver, must complete the occupational mix survey, unless the hospital has no associated cost report wage data that are included in the FY 2019 wage index. For the proposed FY 2019 wage index, we used the Worksheet S-3, Parts II and III wage data of 3,260 hospitals, and we used the occupational mix surveys of 3,078 hospitals for which we also have Worksheet S-3 wage data, which represented a “response” rate of 94 percent (3,078/3,260). For the proposed FY 2019 wage index, we applied proxy data for noncompliant hospitals, new hospitals, or hospitals that submitted erroneous or aberrant data in the same manner that we applied proxy data for such hospitals in the FY 2012 wage
In summary, the proposed FY 2019 unadjusted national average hourly wage and the proposed FY 2019 occupational mix adjusted national average hourly wage were:
After consideration of the public comments we received, for FY 2019, we are adopting as final our proposal to calculate the occupational mix adjustment factor using the same methodology that we have used since the FY 2012 wage index. For the final FY 2019 wage index, we used the Worksheet S-3, Parts II and III wage data of 3,283 hospitals, and we used the occupational mix surveys of 3,114 hospitals for which we also have Worksheet S-3 wage data, which is a “response” rate of 95 percent (3,114/3,283). (We note that the “response” rate for this final rule differs from that of the proposed rule because for this final rule we have generally been able to include the occupational mix surveys of hospitals whose wage data were aberrant for the proposed rule but have since been improved and were used for this final rule. In addition, for this final rule, we have generally been able to include some occupational mix surveys that had been aberrant for the proposed rule but have since been improved and were used for this final rule.) For the final FY 2019 wage index, we applied proxy data for noncompliant hospitals, new hospitals, or hospitals that submitted erroneous or aberrant data in the same manner that we applied proxy data for such hospitals in the FY 2012 wage index occupational mix adjustment (76 FR 51586). As a result of applying this methodology, the final FY 2019 occupational mix adjusted national average hourly wage is $42.955567020.
In summary, the final FY 2019 unadjusted national average hourly wage and the final FY 2019 occupational mix adjusted national average hourly wage are:
As discussed in section III.E. of the preamble of this final rule, for FY 2019, we are applying the occupational mix adjustment to 100 percent of the FY 2019 wage index. We calculated the occupational mix adjustment using data from the 2016 occupational mix survey data, using the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51582 through 51586). Using the occupational mix survey data and applying the occupational mix adjustment to 100 percent of the FY 2019 wage index results in a national average hourly wage of $42.955567020.
The FY 2019 national average hourly wages for each occupational mix nursing subcategory as calculated in Step 2 of the occupational mix calculation are as follows:
The national average hourly wage for the entire nurse category as computed in Step 5 of the occupational mix calculation is $35.04005228. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of greater than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of less than 1.0. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of less than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of greater than 1.0.
Based on the 2016 occupational mix survey data, we determined (in Step 7 of the occupational mix calculation) that the national percentage of hospital employees in the nurse category is 42.1 percent, and the national percentage of hospital employees in the all other occupations category is 57.9 percent. (We note that the percentage for this final rule differs from that of the proposed rule because we have recalculated this percentage based on the occupational mix data we have included for this final rule. That is, for this final rule, we have generally been able to include the occupational mix surveys of hospitals whose wage data were aberrant for the proposed rule but have since been improved and were used for this final rule. In addition, for final rule we have generally been able to include some occupational mix surveys that had been aberrant for the proposed rule but have since been improved and were used for this final rule). At the CBSA level, the percentage of hospital employees in the nurse category ranged from a low of 26.6 percent in one CBSA to a high of 82.0 percent in another CBSA.
We compared the FY 2019 occupational mix adjusted wage indexes for each CBSA to the unadjusted wage indexes for each CBSA. As a result of applying the occupational mix adjustment to the wage data, the final wage index values for 233 (57.0 percent) urban areas and 23 (48.9 percent) rural areas increased. The final wage index values for 112 (27.4 percent) urban areas increased by greater than or equal to 1 percent but less than 5 percent, and the
We also compared the FY 2019 wage data adjusted for occupational mix from the 2016 survey to the FY 2019 wage data adjusted for occupational mix from the 2013 survey. This analysis illustrates the effect on area wage indexes of using the 2016 survey data compared to the 2013 survey data; that is, it shows whether hospitals' wage indexes increased or decreased under the 2016 survey data as compared to the prior 2013 survey data. Of the 409 urban CBSAs and 47 rural CBSAs, our analysis shows that the FY 2019 wage index values for 228 (55.7 percent) urban areas and 23 (48.9 percent) rural areas increased using the 2016 survey data. Fifty-two (12.7 percent) urban areas increased by greater than or equal to 1 percent but less than 5 percent, and 3 (0.7 percent) urban areas increased by 5 percent or more. Seven (14.9 percent) rural areas increased by greater than or equal to 1 percent but less than 5 percent, and 0 rural areas increased by 5 percent or more. However, the wage index values for 181 (44.3 percent) urban areas and 24 (51.1 percent) rural areas decreased using the 2016 survey data. Forty nine (12.0 percent) urban areas decreased by greater than or equal to 1 percent but less than 5 percent, and 3 (0.7 percent) urban areas decreased by 5 percent or more. Two (4.3 percent) rural areas decreased by greater than or equal to 1 percent but less than 5 percent, and no rural areas decreased by 5 percent or more. The largest positive impacts using the 2016 survey data compared to the 2013 survey data are 6.31 percent for an urban area and 4.71 percent for a rural area. The largest negative impacts are 14.32 percent for an urban area and 2.34 percent for rural areas. No urban areas and no rural areas are unaffected. These results indicate that the wage indexes of more CBSAs overall (55.0 percent) increased due to application of the 2016 occupational mix survey data as compared to the 2013 occupational mix survey data to the wage index. However, a larger percentage of urban areas (55.7 percent) benefitted from the use of the 2016 occupational mix survey data as compared to the 2013 occupational mix survey data than did rural areas (48.9 percent).
Section 4410(a) of Public Law 105-33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State. This provision is referred to as the “rural floor.” Section 3141 of Public Law 111-148 also requires that a national budget neutrality adjustment be applied in implementing the rural floor. Based on the FY 2019 wage index associated with this final rule (which is available via the internet on the CMS website), we estimate that 263 hospitals will receive an increase in their FY 2019 wage index due to the application of the rural floor.
In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we adopted the “imputed floor” policy as a temporary 3-year regulatory measure to address concerns from hospitals in all-urban States that have argued that they are disadvantaged by the absence of rural hospitals to set a wage index floor for those States. Since its initial implementation, we have extended the imputed floor policy eight times, the last of which was adopted in the FY 2018 IPPS/LTCH PPS final rule and is set to expire on September 30, 2018. (We refer readers to further discussions of the imputed floor in the IPPS/LTCH PPS final rules from FY 2014 through FY 2018 (78 FR 50589 through 50590, 79 FR 49969 through 49970, 80 FR 49497 through 49498, 81 FR 56921 through 56922, and 82 FR 38138 through 38142, respectively) and to the regulations at 42 CFR 412.64(h)(4).) Currently, there are three all-urban States—Delaware, New Jersey, and Rhode Island—with a range of wage indexes assigned to hospitals in these States, including through reclassification or redesignation. (We refer readers to discussions of geographic reclassifications and redesignations in section III.I. of the preamble of this final rule.)
In computing the imputed floor for an all-urban State under the original methodology, which was established beginning in FY 2005, we calculated the ratio of the lowest-to-highest CBSA wage index for each all-urban State as well as the average of the ratios of lowest-to-highest CBSA wage indexes of those all-urban States. We then compared the State's own ratio to the average ratio for all-urban States and whichever is higher is multiplied by the highest CBSA wage index value in the State—the product of which established the imputed floor for the State. As of FY 2012, there were only two all-urban States—New Jersey and Rhode Island—and only New Jersey benefitted under this methodology. Under the previous OMB labor market area delineations, Rhode Island had only 1 CBSA (Providence-New Bedford-Fall River, RI-MA) and New Jersey had 10 CBSAs. Therefore, under the original methodology, Rhode Island's own ratio equaled 1.0, and its imputed floor was equal to its original CBSA wage index value. However, because the average ratio of New Jersey and Rhode Island was higher than New Jersey's own ratio, this methodology provided a benefit for New Jersey, but not for Rhode Island.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53368 through 53369), we retained the imputed floor calculated under the original methodology as discussed above, and established an alternative methodology for computing the imputed floor wage index to address the concern that the original imputed floor methodology guaranteed a benefit for one all-urban State with multiple wage indexes (New Jersey) but could not benefit the other all-urban State (Rhode Island). The alternative methodology for calculating the imputed floor was established using data from the application of the rural floor policy for FY 2013. Under the alternative methodology, we first determined the average percentage difference between the post-reclassified, pre-floor area wage index and the post-reclassified, rural floor wage index (without rural floor
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50589 through 50590), we extended the imputed floor policy (both the original methodology and the alternative methodology) for 1 additional year, through September 30, 2014, while we continued to explore potential wage index reforms.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49969 through 49970), for FY 2015, we adopted a policy to extend the imputed floor policy (both the original methodology and alternative methodology) for another year, through September 30, 2015, as we continued to explore potential wage index reforms. In that final rule, we revised the regulations at § 412.64(h)(4) and (h)(4)(vi) to reflect the 1-year extension of the imputed floor. As discussed in section III.B. of the preamble of that FY 2015 final rule, we adopted the new OMB labor market area delineations beginning in FY 2015. Under the new OMB delineations, Delaware became an all-urban State, along with New Jersey and Rhode Island. Under the new OMB delineations, Delaware has three CBSAs, New Jersey has seven CBSAs, and Rhode Island continues to have only one CBSA (Providence-Warwick, RI-MA). We refer readers to a detailed discussion of our adoption of the new OMB labor market area delineations in section III.B. of the preamble of the FY 2015 IPPS/LTCH PPS final rule. Therefore, under the adopted new OMB delineations discussed in section III.B. of the preamble of the FY 2015 IPPS/LTCH PPS final rule, Delaware became an all-urban State and was subject to an imputed floor as well for FY 2015.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49497 through 49498), for FY 2016, we extended the imputed floor policy (under both the original methodology and the alternative methodology) for 1 additional year, through September 30, 2016. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56921 through 56922), for FY 2017, we extended the imputed floor policy (under both the original methodology and the alternative methodology) for 1 additional year, through September 30, 2017. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through 38142), for FY 2018, we extended the imputed floor policy (under both the original methodology and the alternative methodology) for 1 additional year, through September 30, 2018. In these three final rules, we revised the regulations at § 412.64(h)(4) and (h)(4)(vi) to reflect the additional 1-year extensions.
The imputed floor is set to expire effective October 1, 2018, and in the FY 2019 proposed rule (83 FR 20363), we did not propose to extend the imputed floor policy. As we stated in the proposed rule (83 FR 20363), in the FY 2005 IPPS final rule (69 FR 49110), we adopted the imputed floor policy for all-urban States under the authority of section 1886(d)(3)(E) of the Act, which gives the Secretary broad authority to adjust the proportion (as estimated by the Secretary from time to time) of hospitals' costs which are attributable to wages and wage-related costs of the DRG prospective payment rates for area differences in hospital wage levels by a factor (established by the Secretary). However, we explained in the proposed rule that we have expressed reservations about the establishment of an imputed floor, considering that the imputed rural floor methodology creates a disadvantage in the application of the wage index to hospitals in States with rural hospitals but no urban hospitals receiving the rural floor (72 FR 24786 and 72 FR 47322). As we discussed in the FY 2008 IPPS final rule (72 FR 47322), the application of the rural and imputed floors requires transfer of payments from hospitals in States with rural hospitals but where the rural floor is not applied to hospitals in States where the rural or imputed floor is applied. For this reason, in the FY 2019 proposed rule, we proposed not to apply an imputed floor to wage index calculations and payments for hospitals in all-urban States for FY 2019 and subsequent years. That is, we proposed that hospitals in New Jersey, Delaware, and Rhode Island (and in any other all-urban State) would receive a wage index that is calculated without applying an imputed floor for FY 2019 and subsequent years. Therefore, only States containing both rural areas and hospitals located in such areas (including any hospital reclassified as rural under the provisions of § 412.103 of the regulations) would benefit from the rural floor, in accordance with section 4410 of Public Law 105-33. In addition, we stated that we would no longer include the imputed floor as a factor in the national budget neutrality adjustment. Therefore, the proposed wage index and impact tables associated with the FY 2019 IPPS/LTCH PPS proposed rule (which are available via the internet on the CMS website) did not reflect the imputed floor policy, and there was no proposed national budget neutrality adjustment for the imputed floor for FY 2019.
A number of commenters stated that, under the current methodology, areas with few rural hospitals, such as Massachusetts, Arizona, and California, have the ability and incentive to have major urban hospitals reclassify as rural under 42 CFR 412.103 and, by selectively doing so, such an urban to rural reclassification could significantly raise the rural floor in those States. Commenters conveyed that while the establishment of a statewide rural floor is required by statute, the method by which the floor is calculated is entirely at CMS' discretion through regulatory authority and, in fact, CMS has already used its discretion in establishing the imputed rural floor for all-urban States. The commenters indicated that any rural floor calculation should mirror the spirit and intent of the law resulting in only the “natural” rural providers in a State considered when calculating a rural floor. Finally, the commenters suggested that CMS consider immediately issuing a change to the existing calculation that includes only the “natural” rural providers in calculating the rural floor for a State.
A number of commenters believed that eliminating the imputed floor would create the same uneven playing field in all-urban States that existed prior to 2005, in response to which CMS initially established the policy. According to the commenters, the anomaly originally cited by CMS (that is, that hospitals in all-urban States with predominant labor market areas do not have any type of protection, or “floor,” from declines in their wage index) would exist again if the imputed floor policy is discontinued.
In addition, the commenters stated that there are many Medicare payment programs that redirect scarce Medicare funding to a class of unique hospitals, and that not all States have hospitals that benefit from these programs. For example, according to the commenters, CMS makes payments to CAHs at a rate of 101 percent of their costs and States that do not have any CAHs do not benefit from this program. The commenters stated that while CAHs are paid outside the IPPS program, the dollars continue to come from a finite Medicare trust fund representing a transfer of payments from hospitals in States without any CAHs into States with CAHs, similar to the transfer of payments CMS cites as its rationale to discontinue the imputed floor.
The commenters also pointed out that CMS has upheld the imputed floor for over a decade as a valuable method of maintaining equitable wage index protections for all-urban States consistent with those that exist for States with rural areas. The commenters referenced previous CMS justification for creating and extending the floor in previous years, such as all-urban States are at a disadvantage due to the absence of a rural floor policy and that, in New Jersey, “because there is no floor to protect those hospitals not located in the predominant labor market area from facing continued declines in their wage index, it becomes increasingly difficult for those hospitals to continue to compete for labor.”
Finally, regarding the comparison made by commenters between the CAH payment methodology and the imputed floor methodology with respect to the transfer of payments, we disagree with this comparison. Because there is no national budget neutrality requirement relating to CAH payments (as there is with the imputed floor methodology), there is no transfer of payments from hospitals in States without any CAHs to hospitals in States with CAHs, similar to that which exists as a result of the application of the imputed floor. Under sections 1814(l) and 1834(g) of the Act, payments made to CAHs for inpatient and outpatient services are generally based on 101 percent of the reasonable costs of the CAH in providing such services. Reasonable cost is defined in section 1861(v)(1)(A) of the Act and determined in accordance with the regulations under 42 CFR part 413.
The commenters also pointed out that the inequity of this provision recently was highlighted in a March 2017 Office of Inspector General (OIG) report showing how a single hospital overreported dollars and underreported hours, driving up the average hourly wage. According to the commenters, the OIG estimated that this error resulted in more than $133 million in Medicare overpayments to be paid to Massachusetts hospitals. The commenters urged CMS to use its regulatory authority to curtail the adverse effects of section 3141 of the Affordable Care Act and restore integrity to the hospital wage index system, and further encouraged CMS to publish the effects of the nationwide rural floor on Medicare outpatient services in the proposed and final hospital outpatient prospective payment system payment and policy updates for CY 2019.
Regarding the comment encouraging CMS to publish the effects of the nationwide rural floor on Medicare outpatient services in the proposed and final hospital outpatient prospective payment system payment and policy updates for CY 2019, we will take this comment into consideration and may address them in the development of future rulemaking.
After consideration of public comments received, for the reasons discussed above and in the proposed rule, we believe it is appropriate to allow the imputed floor to expire on its expiration date, September 30, 2018. Therefore, we are allowing the imputed floor to expire under both the original methodology and the alternative methodology on the date it is currently set to expire, September 30, 2018. As proposed, the wage index and impact tables associated with this FY 2019 IPPS/LTCH PPS final rule (which are available on the internet via the CMS website) do not reflect the imputed floor policy and we are not applying a national budget neutrality adjustment for the imputed floor for FY 2019. There are 10 hospitals in New Jersey, 9 hospitals in Rhode Island, and 3
Section 10324 of Public Law 111-148 requires that hospitals in frontier States cannot be assigned a wage index of less than 1.0000. (We refer readers to the regulations at 42 CFR 412.64(m) and to a discussion of the implementation of this provision in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50160 through 50161).) In the FY 2019 IPPS/LTCH PPS proposed rule, we did not propose any changes to the frontier floor policy for FY 2019. We stated in the proposed rule that 50 hospitals would receive the frontier floor value of 1.0000 for their FY 2019 wage index. These hospitals are located in Montana, Nevada, North Dakota, South Dakota, and Wyoming.
We did not receive any public comments on the application of the State frontier floor for FY 2019. In this final rule, 50 hospitals will receive the frontier floor value of 1.0000 for their FY 2019 wage index. These hospitals are located in Montana, Nevada, North Dakota, South Dakota, and Wyoming.
The areas affected by the final rural and frontier floor policies for the FY 2019 wage index are identified in Table 2 associated with this final rule, which is available via the internet on the CMS website.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49498 and 49807 through 49808), we finalized a proposal to streamline and consolidate the wage index tables associated with the IPPS proposed and final rules for FY 2016 and subsequent fiscal years. Prior to FY 2016, the wage index tables had consisted of 12 tables (Tables 2, 3A, 3B, 4A, 4B, 4C, 4D, 4E, 4F, 4J, 9A, and 9C) that were made available via the internet on the CMS website. Effective beginning FY 2016, with the exception of Table 4E, we streamlined and consolidated 11 tables (Tables 2, 3A, 3B, 4A, 4B, 4C, 4D, 4F, 4J, 9A, and 9C) into 2 tables (Tables 2 and 3). In addition, as discussed in section III.J. of the preamble of the FY 2019 IPPS/LTCH PPS proposed rule, we added a Table 4 associated with the proposed rule entitled “List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act—FY 2019” (which is available via internet on the CMS website). We intend to make this information available annually via Table 4 in the IPPS/LTCH PPS proposed and final rules. We refer readers to section VI. of the Addendum to this final rule for a discussion of the final wage index tables for FY 2019.
Under section 1886(d)(10) of the Act, the Medicare Geographic Classification Review Board (MGCRB) considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. Hospitals must apply to the MGCRB to reclassify not later than 13 months prior to the start of the fiscal year for which reclassification is sought (usually by September 1). Generally, hospitals must be proximate to the labor market area to which they are seeking reclassification and must demonstrate characteristics similar to hospitals located in that area. The MGCRB issues its decisions by the end of February for reclassifications that become effective for the following fiscal year (beginning October 1). The regulations applicable to reclassifications by the MGCRB are located in 42 CFR 412.230 through 412.280. (We refer readers to a discussion in the FY 2002 IPPS final rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage for purposes of the proximity requirements.) The general policies for reclassifications and redesignations and the policies for the effects of hospitals' reclassifications and redesignations on the wage index are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012 final wage index (76 FR 51595 and 51596). In addition, in the FY 2012 IPPS/LTCH PPS final rule, we discussed the effects on the wage index of urban hospitals reclassifying to rural areas under 42 CFR 412.103. Hospitals that are geographically located in States without any rural areas are ineligible to apply for rural reclassification in accordance with the provisions of 42 CFR 412.103.
On April 21, 2016, we published an interim final rule with comment period (IFC) in the
We discussed that when there is both a § 412.103 redesignation and an MGCRB reclassification, the MGCRB reclassification controls for wage index calculation and payment purposes. We exclude hospitals with § 412.103 redesignations from the calculation of the reclassified rural wage index if they also have an active MGCRB reclassification to another area. That is, if an application for urban reclassification through the MGCRB is approved, and is not withdrawn or terminated by the hospital within the established timelines, we consider the hospital's geographic CBSA and the urban CBSA to which the hospital is reclassified under the MGCRB for the wage index calculation. We refer readers to the April 21, 2016 IFC (81 FR 23428 through 23438) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56922 through 56930) for a full discussion of the effect of simultaneous reclassifications under both the § 412.103 and the MGCRB processes on wage index calculations.
As previously stated, under section 1886(d)(10) of the Act, the MGCRB considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. The specific procedures and rules that apply to the geographic reclassification process are outlined in regulations under 42 CFR 412.230 through 412.280.
At the time this final rule was constructed, the MGCRB had completed its review of FY 2019 reclassification requests. Based on such reviews, there are 303 hospitals approved for wage index reclassifications by the MGCRB starting in FY 2019. Because MGCRB wage index reclassifications are effective for 3 years, for FY 2019, hospitals reclassified beginning in FY 2017 or FY 2018 are eligible to continue to be reclassified to a particular labor market area based on such prior reclassifications for the remainder of their 3-year period. There were 230 hospitals approved for wage index reclassifications in FY 2017 that will continue for FY 2019, and 348 hospitals approved for wage index
Under the regulations at 42 CFR 412.273, hospitals that have been reclassified by the MGCRB are permitted to withdraw their applications if the request for withdrawal is received by the MGCRB any time before the MGCRB issues a decision on the application, or after the MGCRB issues a decision, provided the request for withdrawal is received by the MGCRB within 45 days of the date that CMS' annual notice of proposed rulemaking is issued in the
Changes to the wage index that result from withdrawals of requests for reclassification, terminations, wage index corrections, appeals, and the Administrator's review process for FY 2019 are incorporated into the wage index values published in this FY 2019 IPPS/LTCH PPS final rule. These changes affect not only the wage index value for specific geographic areas, but also the wage index value that redesignated/reclassified hospitals receive; that is, whether they receive the wage index that includes the data for both the hospitals already in the area and the redesignated/reclassified hospitals. Further, the wage index value for the area from which the hospitals are redesignated/reclassified may be affected.
Applications for FY 2020 reclassifications (OMB control number 0938-0573) are due to the MGCRB by September 4, 2018 (the first working day of September 2018). We note that this is also the deadline for canceling a previous wage index reclassification withdrawal, or termination under 42 CFR 412.273(d). Applications and other information about MGCRB reclassifications may be obtained, beginning in mid-July 2018, via the internet on the CMS website at:
Under regulations in effect prior to FY 2018 (42 CFR 412.256(a)(1)), applications for reclassification were required to be mailed or delivered to the MGCRB, with a copy to CMS, and were not allowed to be submitted through the facsimile (FAX) process or by other electronic means. Because we believed this previous policy was outdated and overly restrictive and to promote ease of application for FY 2018 and subsequent years, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56928), we revised this policy to require applications and supporting documentation to be submitted via the method prescribed in instructions by the MGCRB, with an electronic copy to CMS. Specifically, in the FY 2017 IPPS/LTCH PPS final rule, we revised § 412.256(a)(1) to specify that an application must be submitted to the MGCRB according to the method prescribed by the MGCRB, with an electronic copy of the application sent to CMS. We specified that CMS copies should be sent via email to
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56928), we reiterated that MGCRB application requirements will be published separately from the rulemaking process, and paper applications will likely still be required. However, we note that, beginning with the FY 2020 reclassification application cycle, the MGCRB now requires applications, supporting documents, and subsequent correspondence to be filed electronically through the MGCRB module of the Office of Hearings Case and Document Management System (“OH CDMS”). Also, the MGCRB will issue all of its notices and decisions via email and these documents will be accessible electronically through OH CDMS. Registration instructions and the system user manual are available at
Section 412.230 of the regulations sets forth criteria for an individual hospital to apply for geographic reclassification to a higher rural or urban wage index area. Specifically, under § 412.230(a)(1)(ii), an individual hospital may be redesignated from an urban area to another urban area, from a rural area to another rural area, or from a rural area to an urban area for the purpose of using the other area's wage
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51600 through 51601), we implemented a policy change to allow for a waiver of the average hourly wage comparison criterion under § 412.230(d)(1)(iii) for a hospital in a single hospital MSA for reclassifications beginning in FY 2013 if the hospital could document that it is the single hospital in its MSA that is paid under 42 CFR part 412, subpart D (§ 412.230(d)(5)). In that final rule, we stated that we agreed that the then-current policies for geographic reclassification were disparate for hospitals located in single hospital MSAs compared to hospitals located in multiple hospital MSAs. We also acknowledged commenters' views that this disparity was sometimes a disadvantage because hospitals in single hospital MSAs had fewer options for qualifying for geographic reclassification. As we stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20365), in the years since we implemented this policy change, we have encountered questions and concerns regarding its implementation. In the proposed rule, we stated that to qualify under § 412.230(d)(5) for the waiver of the average hourly wage criterion under § 412.230(d)(1)(iii)(C), a hospital must document to the MGCRB that it is the only hospital in its geographic wage index area that is paid under 42 CFR part 412, subpart D. We noted that to do so, a hospital frequently was required to contact the appropriate CMS Regional Office or MAC for a statement certifying its status as the single hospital in its MSA. We explained that hospitals have indicated that this process may be time-consuming, inconsistent in its application nationally, and poses challenges with respect to accurately reflecting situations where hospitals have recently opened or ceased operations during the application process. We stated in the proposed rule (83 FR 20365) that, in light of these questions and concerns and after reviewing the implementation of this reclassification provision, we believed that a revision of the policy was necessary to reduce unnecessary burden to affected hospitals and enhance consistency while achieving previously stated policy goals.
We explained in the proposed rule that the objective of the 108/106 percent average hourly wage criterion at § 412.230(d)(1)(iii)(C) is to require a reclassifying hospital to document that it has significantly higher average hourly wages than other hospitals in its labor market area. The stated purpose of § 412.230(d)(5) was to provide additional reclassification options for hospitals that, due to their single hospital MSA status, could not mathematically meet the requirements of § 412.230(d)(1)(iii). Therefore, in order to determine whether a hospital is the single hospital in the MSA under § 412.230(d)(5), rather than require the hospital to obtain documentation from the CMS Regional Office or the MAC to prove its single hospital MSA status, we stated that we believe it would be appropriate to use the same data used to determine whether the 108/106 percent criterion is met under § 412.230(d)(1)(iii)(C): That is, the annually published 3-year average hourly wage data as provided in § 412.230(d)(2)(ii). Specifically, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20365), we proposed that, for reclassification applications for FY 2021 and subsequent fiscal years, a hospital would provide the wage index data from the current year's IPPS final rule to demonstrate that it is the only hospital in its labor market area with wage data listed within the 3-year period considered by the MGCRB. Accordingly, we proposed to revise the regulation text at § 412.230(d)(5) to provide that the requirements of § 412.230(d)(1)(iii) would not apply if a hospital is the single hospital in its MSA with published 3-year average hourly wage data included in the current fiscal year inpatient prospective payment system final rule. In proposing this revision, we stated that we would remove the language in this regulation requiring that the hospital be the single hospital “paid under subpart D of this part”, as we believe the proposed revisions to the regulation above more accurately identify the universe of hospitals this policy was intended to address.
As discussed in the proposed rule, the purpose of the single hospital MSA provision was to address situations where a hospital essentially had no means of comparing wages to other hospitals in its labor market area. We stated in the proposed rule that we believe this proposal would allow for a more straightforward and consistent implementation of the single hospital MSA exception and would reduce provider burden. We further stated that we believe the proposed requirements above for meeting the single hospital MSA exception could be easily verified and validated by the applicant and the MGCRB, and would continue to address the concerns expressed by commenters included in the FY 2012 IPPS/LTCH PPS final rule.
After consideration of the public comments we received, for the reasons discussed above and in the proposed rule, we are finalizing our revisions to § 412.230(d)(5) as proposed without modification. Thus, for applications for reclassification for FY 2021 and subsequent fiscal years, a hospital must provide the wage index data from the current year's IPPS final rule to demonstrate that it is the only hospital in its labor market area with wage data listed within the 3-year period considered by the MGCRB. Specifically, a hospital must provide documentation from Table 2 of the Addendum to the current fiscal year IPPS/LTCH PPS final rule demonstrating it is the only CCN listed within the associated “Geographic CBSA” number (currently listed under column H) with a “3-Year Average Hourly Wage (2018, 2019, 2020)” value (currently listed under column G).
Under current policy described in §§ 412.230(d)(2)(v), 412.232(d)(2)(iii), and 412.234(c)(2), and as discussed in the FY 2008 IPPS/LTCH final rule (72 FR 47334 through 47335), remote locations of hospitals in a distinct geographic area from the main hospital campus are eligible to seek wage index reclassification. As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20366), in Table 2 associated with that proposed rule (which is available via the internet on the CMS website), such locations are indicated with a “B” in the third digit of the CCN. (As
We did not receive any public comments specific to this clarification and request. Therefore, when a county group MGCRB reclassification includes a remote location of a hospital located in a different labor market area that has not yet been assigned a “B” number in Table 2 of the applicable IPPS final rule used to evaluate reclassification criteria, to help facilitate the MGCRB's review, the county group should submit the application to the MGCRB listing the remote location with a “B” in the third digit of its CCN. If the application is approved by the MGCRB, CMS will include the “B” location number, with applicable reclassification status and wage index values, in Table 2 of the subsequent IPPS final rule.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through 51600), we adopted the policy that, beginning with FY 2012, an eligible hospital that waives its Lugar status in order to receive the out-migration adjustment has effectively waived its deemed urban status and, thus, is rural for all purposes under the IPPS effective for the fiscal year in which the hospital receives the out-migration adjustment. In addition, in that rule, we adopted a minor procedural change that would allow a Lugar hospital that qualifies for and accepts the out-migration adjustment (through written notification to CMS within 45 days from the publication of the proposed rule) to waive its urban status for the full 3-year period for which its out-migration adjustment is effective. By doing so, such a Lugar hospital would no longer be required during the second and third years of eligibility for the out-migration adjustment to advise us annually that it prefers to continue being treated as rural and receive the out-migration adjustment. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56930), we again clarified that such a request to waive Lugar status, received within 45 days of the publication of the proposed rule, is valid for the full 3-year period for which the hospital's out-migration adjustment is effective. We further clarified that if a hospital wishes to reinstate its urban status for any fiscal year within this 3-year period, it must send a request to CMS within 45 days of publication of the proposed rule for that particular fiscal year. We indicated that such reinstatement requests may be sent electronically to
The proposed Lugar assignment of the hospital at issue for FY 2019 is not a clerical error. Under OMB's standards for determining whether an outlying county should be considered part of a CBSA, OMB examines commuting to central counties of the CBSA. Our longstanding policy is that, consistent with OMB standards, we examine commuting data to central counties of CBSAs in determining whether a hospital qualifies as a Lugar hospital and in determining the urban area to which it is assigned; we do not view the two steps in isolation. The proposed Lugar assignment of the hospital at issue for FY 2019 reflects proper application of this policy.
In accordance with section 1886(d)(13) of the Act, as added by section 505 of Public Law 108-173, beginning with FY 2005, we established a process to make adjustments to the hospital wage index based on commuting patterns of hospital employees (the “out-migration” adjustment). The process, outlined in the FY 2005 IPPS final rule (69 FR 49061), provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county but work in a different county (or counties) with a higher wage index.
Section 1886(d)(13)(B) of the Act requires the Secretary to use data the Secretary determines to be appropriate to establish the qualifying counties. When the provision of section 1886(d)(13) of the Act was implemented for the FY 2005 wage index, we analyzed commuting data compiled by the U.S. Census Bureau that were derived from a special tabulation of the 2000 Census journey-to-work data for all industries (CMS extracted data applicable to hospitals). These data were compiled from responses to the “long-form” survey, which the Census Bureau used at that time and which contained questions on where residents in each county worked (69 FR 49062). However, the 2010 Census was “short form” only; information on where residents in each county worked was not collected as part of the 2010 Census. The Census Bureau worked with CMS to provide an alternative dataset based on the latest available data on where residents in each county worked in 2010, for use in developing a new out-migration adjustment based on new commuting patterns developed from the 2010 Census data beginning with FY 2016.
To determine the out-migration adjustments and applicable counties for FY 2016, we analyzed commuting data compiled by the Census Bureau that were derived from a custom tabulation of the American Community Survey (ACS), an official Census Bureau survey, utilizing 2008 through 2012 (5-year) Microdata. The data were compiled from responses to the ACS questions regarding the county where workers reside and the county to which workers commute. As we discussed in the FYs 2016, 2017, and 2018 IPPS/LTCH PPS final rules (80 FR 49501, 81 FR 56930, and 82 FR 38150, respectively), the same policies, procedures, and computation that were used for the FY 2012 out-migration adjustment were applicable for FY 2016, FY 2017, and FY 2018, and in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20367), we proposed to use them again for FY 2019. We have applied the same policies, procedures, and computations since FY 2012, and we believe they continue to be appropriate for FY 2019. We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49500 through 49502) for a full explanation of the revised data source.
For FY 2019, the out-migration adjustment will continue to be based on the data derived from the custom tabulation of the ACS utilizing 2008 through 2012 (5-year) Microdata. For future fiscal years, we may consider determining out-migration adjustments based on data from the next Census or other available data, as appropriate. For FY 2019, we did not propose any changes to the methodology or data source that we used for FY 2016 (81 FR 25071). (We refer readers to a full discussion of the out-migration adjustment, including rules on deeming hospitals reclassified under section 1886(d)(8) or section 1886(d)(10) of the Act to have waived the out-migration adjustment, in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51601 through 51602).)
We did not receive any public comments on this proposed policy for FY 2019. Therefore, for FY 2019, we are finalizing our proposal, without modification, to continue using the same policies, procedures, and computation that were used for the FY 2012 out-migration adjustment and that were applicable for FY 2016, FY 2017, and FY 2018.
Table 2 associated with this final rule (which is available via the internet on the CMS website) includes the final out-migration adjustments for the FY 2019 wage index. In addition, as discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20367), we have added a new Table 4, “List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act—FY 2019”, associated with this final rule. For this final rule, Table 4 consists of the following: A list of counties that are eligible for the out-migration adjustment for FY 2019 identified by FIPS county code, the final FY 2019 out-migration adjustment, and the number of years the adjustment will be in effect. We believe this new table makes this information more transparent and provides the public with easier access to this information. We intend to make the information available annually via Table 4 in the IPPS/LTCH PPS proposed and final rules, and are including it among the tables associated with this FY 2019 IPPS/LTCH PPS final rule that are available via the internet on the CMS website.
Under section 1886(d)(8)(E) of the Act, a qualifying prospective payment hospital located in an urban area may apply for rural status for payment purposes separate from reclassification through the MGCRB. Specifically, section 1886(d)(8)(E) of the Act provides that, not later than 60 days after the receipt of an application (in a form and
Hospitals must meet the criteria to be reclassified from urban to rural status under § 412.103, as well as fulfill the requirements for the application process. There may be one or more reasons that a hospital applies for the urban to rural reclassification, and the timeframe that a hospital submits an application is often dependent on those reason(s). Because the wage index is part of the methodology for determining the prospective payments to hospitals for each fiscal year, we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931) that we believed there should be a definitive timeframe within which a hospital should apply for rural status in order for the reclassification to be reflected in the next Federal fiscal year's wage data used for setting payment rates.
Therefore, after notice of proposed rulemaking and consideration of public comments, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931 through 56932), we revised § 412.103(b) by adding paragraph (6) to specify that, in order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal year, the hospital's filing date (the lock-in date) must be no later than 70 days prior to the second Monday in June of the current Federal fiscal year and the application must be approved by the CMS Regional Office in accordance with the requirements of § 412.103. We refer readers to the FY 2017 IPPS/LTCH PPS final rule for a full discussion of this policy.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20367 through 20368), we proposed to change the lock-in date to provide for additional time in the ratesetting process and to match the lock-in date with another existing deadline. As we discussed in the FY 2017 IPPS/LTCH PPS proposed and final rules (81 FR 25071 and 56931, respectively), the IPPS ratesetting process that CMS undergoes each proposed and final rulemaking is complex and labor-intensive, and subject to a compressed timeframe in order to issue the final rule each year within the timeframes for publication. Accordingly, CMS must ensure that it receives, in a timely fashion, the necessary data, including, but not limited to, the list of hospitals that are reclassified from urban to rural status under § 412.103, in order to calculate the wage indexes and other IPPS rates.
In order to allot more time to the ratesetting process, we proposed to revise the lock-in date such that a hospital's application for rural reclassification under § 412.103 must be approved by the CMS Regional Office no later than 60 days after the public display date of the IPPS notice of proposed rulemaking at the Office of the Federal Register in order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal year. We stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20368) that depending on the public display date of the proposed rule (which may be earlier in future years), this proposed revision to the lock-in date would potentially allow for additional time in the ratesetting process for CMS to incorporate rural reclassification data, which we believe would support efforts to eliminate errors and assist in ensuring a more accurate wage index.
As we stated in the proposed rule, under this revision, there would no longer be a requirement that the hospital file its rural reclassification application by a specified date (which at the time of the proposed rule was 70 days prior to the second Monday in June). While we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56930 through 56932) that a hospital would need to file its reclassification application with the CMS Regional Office not later than 70 days prior to the second Monday in June, we stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20368) that timeframe was a precautionary measure to ensure that CMS would receive the approval in time to include the reclassified hospitals in the wage index and budget neutrality calculations for the upcoming Federal fiscal year (60 days for the CMS Regional Office to approve an application, in accordance with § 412.103(c), and an additional 10 days to process the approval and notify CMS Central Office). We explained that while we still believe that it would be prudent for hospitals to apply approximately 70 days prior to the proposed lock-in date, we believe that requiring hospitals to apply by a set date is unnecessary because the Regional Offices may approve a hospital's request to reclassify under § 412.103 in less than 60 days, and CMS may be notified in a timeframe shorter than 10 days. Therefore, we stated that, under our proposal, any hospital with an approved rural reclassification by the lock-in date proposed above (that is, 60 days after the public display date of the IPPS notice of proposed rulemaking at the Office of the Federal Register) would be included in the wage index and budget neutrality calculations for setting payment rates for the next Federal fiscal year, regardless of the date of filing.
In addition, we noted that CMS generally provides 60 days after the public display date of the IPPS notice of proposed rulemaking at the Office of the Federal Register for submitting public comments regarding the proposed rule for consideration in the final rule. Therefore, we believe that, in addition to providing for more time in the ratesetting process, which helps to ensure a more accurate wage index, this proposed revision would also provide clarity and simplify regulations by synchronizing the lock-in date for § 412.103 redesignations with the usual public comment deadline for the IPPS proposed rule.
Accordingly, we proposed to revise § 412.103(b)(6) to specify that in order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal year, the hospital's application must be approved by the CMS Regional Office in accordance with the requirements of § 412.103 no later than 60 days after the public display date at the Office of the Federal Register of the IPPS proposed rule for the next Federal fiscal year.
We also reiterated in the proposed rule that the lock-in date does not affect the timing of payment changes occurring at the hospital-specific level as a result of reclassification from urban to rural under § 412.103. As we discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931), this lock-in date also does not change the current regulation that allows hospitals that qualify under § 412.103(a) to request, at any time during a cost reporting period, to reclassify from urban to rural. A hospital's rural status and claims payment reflecting its rural status continue to be effective on the filing date of its reclassification application, which is the date the CMS Regional Office receives the application, in accordance with § 412.103(d). The hospital's IPPS claims will be paid
After consideration of the public comments we received, for the reasons discussed above and in the proposed rule, we are finalizing our proposal, without modification, to revise § 412.103(b)(6) to specify that in order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the next Federal fiscal year, the hospital's application must be approved by the CMS Regional Office in accordance with the requirements of § 412.103 no later than 60 days after the public display date at the Office of the Federal Register of the IPPS proposed rule for the next Federal fiscal year.
The preliminary, unaudited Worksheet S-3 wage data files for the proposed FY 2019 wage index were made available on May 19, 2017, and the preliminary CY 2016 occupational mix data files were made available on July 12, 2017, through the internet on the CMS website at:
On February 2, 2018, we posted a public use file (PUF) at:
In the interest of meeting the data needs of the public, beginning with the proposed FY 2009 wage index, we post an additional PUF on the CMS website that reflects the actual data that are used in computing the proposed wage index. The release of this file does not alter the current wage index process or schedule. We notify the hospital community of the availability of these data as we do with the current public use wage data files through our Hospital Open Door Forum. We encourage hospitals to sign up for automatic notifications of information about hospital issues and about the dates of the Hospital Open Door Forums at the CMS website at:
In a memorandum dated April 28, 2017, we instructed all MACs to inform the IPPS hospitals that they service of the availability of the preliminary wage index data files posted on May 19, 2017, and the process and timeframe for requesting revisions. The preliminary CY 2016 occupational mix survey data was posted on CMS' website on July 12, 2017.
If a hospital wished to request a change to its data as shown in the May 19, 2017 preliminary wage data files and the July 12, 2017 preliminary occupational mix data files, the hospital had to submit corrections along with complete, detailed supporting documentation to its MAC by September 1, 2017. Hospitals were notified of this deadline and of all other deadlines and requirements, including the requirement to review and verify their data as posted in the preliminary wage index data files on the internet, through the letters sent to them by their MACs. November 15, 2017 was the deadline for MACs to complete all desk reviews for hospital wage and occupational mix data and transmit revised Worksheet S-3 wage data and occupational mix data to CMS.
November 4, 2017 was the date by when MACs notified State hospital associations regarding hospitals that failed to respond to issues raised during the desk reviews. Additional revisions made by the MACs were transmitted to CMS throughout January 2018. CMS published the wage index PUFs that included hospitals' revised wage index data on February 2, 2018. Hospitals had until February 16, 2018, to submit requests to the MACs to correct errors in the February 2, 2018 PUF due to CMS or MAC mishandling of the wage index data, or to revise desk review adjustments to their wage index data as included in the February 2, 2018 PUF. Hospitals also were required to submit sufficient documentation to support their requests.
After reviewing requested changes submitted by hospitals, MACs were required to transmit to CMS any additional revisions resulting from the hospitals' reconsideration requests by March 23, 2018. Under our current policy as adopted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38153), the deadline for a hospital to request CMS intervention in cases where a hospital disagreed with a MAC's handling of wage data on any basis (including a policy, factual, or other dispute) was April 5, 2018. Data that were incorrect in the preliminary or February 2, 2018 wage index data PUFs, but for which no correction request was received by the February 16, 2018 deadline, were not considered for correction at this stage. In addition, April 5, 2018 was the deadline for hospitals to dispute data corrections made by CMS of which the hospital was notified after the February 2, 2018 PUF and at least 14 calendar days prior to April 5, 2018 (that is, March 22, 2018), that did not arise from a hospital's request for revisions. We note that, as we did for the FY 2018 wage index, for the FY 2019 wage index, in accordance with the FY 2019 wage index timeline posted on the CMS website at:
Hospitals were given the opportunity to examine Table 2 associated with the proposed rule, which was listed in section VI. of the Addendum to the proposed rule and available via the internet on the CMS website at:
We posted the final wage index data PUFs on April 27, 2018 via the internet on the CMS website at:
After the release of the April 2018 wage index data PUFs, changes to the wage and occupational mix data could only be made in those very limited situations involving an error by the MAC or CMS that the hospital could not have known about before its review of the final wage index data files. Specifically, neither the MAC nor CMS will approve the following types of requests:
• Requests for wage index data corrections that were submitted too late to be included in the data transmitted to CMS by the MACs on or before March 23, 2017.
• Requests for correction of errors that were not, but could have been, identified during the hospital's review of the February 2, 2018 wage index PUFs.
• Requests to revisit factual determinations or policy interpretations made by the MAC or CMS during the wage index data correction process.
If, after reviewing the April 2018 final wage index data PUFs, a hospital believed that its wage or occupational mix data were incorrect due to a MAC or CMS error in the entry or tabulation of the final data, the hospital was given
Verified corrections to the wage index data received timely (that is, by May 30, 2018) by CMS and the MACs were incorporated into the final FY 2019 wage index, which is effective October 1, 2018.
We created the processes previously described to resolve all substantive wage index data correction disputes before we finalize the wage and occupational mix data for the FY 2019 payment rates. Accordingly, hospitals that did not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute the MAC's decision with respect to requested changes. Specifically, our policy is that hospitals that do not meet the procedural deadlines set forth above (requiring requests to MACs by the specified date in February and, where such requests are unsuccessful, requests for intervention by CMS by the specified date in April) will not be permitted to challenge later, before the PRRB, the failure of CMS to make a requested data revision. We refer readers also to the FY 2000 IPPS final rule (64 FR 41513) for a discussion of the parameters for appeals to the PRRB for wage index data corrections. As finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156), this policy also applies to a hospital disputing corrections made by CMS that do not arise from a hospital's request for a wage index data revision. That is, a hospital disputing an adjustment made by CMS that did not arise from a hospital's request for a wage index data revision would be required to request a correction by the first applicable deadline. Hospitals that do not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute CMS' decision with respect to requested changes.
Again, we believe the wage index data correction process described earlier provides hospitals with sufficient opportunity to bring errors in their wage and occupational mix data to the MAC's attention. Moreover, because hospitals had access to the final wage index data PUFs by late April 2018, they had the opportunity to detect any data entry or tabulation errors made by the MAC or CMS before the development and publication of the final FY 2019 wage index by August 2018, and the implementation of the FY 2019 wage index on October 1, 2018. Given these processes, the wage index implemented on October 1 should be accurate. Nevertheless, in the event that errors are identified by hospitals and brought to our attention after May 30, 2018, we retain the right to make midyear changes to the wage index under very limited circumstances.
Specifically, in accordance with 42 CFR 412.64(k)(1) of our regulations, we make midyear corrections to the wage index for an area only if a hospital can show that: (1) The MAC or CMS made an error in tabulating its data; and (2) the requesting hospital could not have known about the error or did not have an opportunity to correct the error, before the beginning of the fiscal year. For purposes of this provision, “before the beginning of the fiscal year” means by the May deadline for making corrections to the wage data for the following fiscal year's wage index (for example, May 30, 2018 for the FY 2019 wage index). This provision is not available to a hospital seeking to revise another hospital's data that may be affecting the requesting hospital's wage index for the labor market area. As indicated earlier, because CMS makes the wage index data available to hospitals on the CMS website prior to publishing both the proposed and final IPPS rules, and the MACs notify hospitals directly of any wage index data changes after completing their desk reviews, we do not expect that midyear corrections will be necessary. However, under our current policy, if the correction of a data error changes the wage index value for an area, the revised wage index value will be effective prospectively from the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and 47485), we revised 42 CFR 412.64(k)(2) to specify that, effective on October 1, 2005, that is, beginning with the FY 2006 wage index, a change to the wage index can be made retroactive to the beginning of the Federal fiscal year only when CMS determines all of the following: (1) The MAC or CMS made an error in tabulating data used for the wage index calculation; (2) the hospital knew about the error and requested that the MAC and CMS correct the error using the established process and within the established schedule for requesting corrections to the wage index data, before the beginning of the fiscal year for the applicable IPPS update (that is, by the May 30, 2018 deadline for the FY 2019 wage index); and (3) CMS agreed before October 1 that the MAC or CMS made an error in tabulating the hospital's wage index data and the wage index should be corrected.
In those circumstances where a hospital requested a correction to its wage index data before CMS calculated the final wage index (that is, by the May 30, 2018 deadline for the FY 2019 wage index), and CMS acknowledges that the error in the hospital's wage index data was caused by CMS' or the MAC's mishandling of the data, we believe that the hospital should not be penalized by our delay in publishing or implementing the correction. As with our current policy, we indicated that the provision is not available to a hospital seeking to revise another hospital's data. In addition, the provision cannot be used to correct prior years' wage index data; and it can only be used for the current Federal fiscal year. In situations where our policies would allow midyear corrections other than those specified in 42 CFR 412.64(k)(2)(ii), we continue to believe that it is appropriate to make prospective-only corrections to the wage index.
We note that, as with prospective changes to the wage index, the final retroactive correction will be made irrespective of whether the change increases or decreases a hospital's payment rate. In addition, we note that the policy of retroactive adjustment will still apply in those instances where a final judicial decision reverses a CMS denial of a hospital's wage index data revision request.
The process set forth with the wage index timeline discussed in section III.L.1. of the preamble of this final rule allows hospitals to request corrections to their wage index data within prescribed timeframes. In addition to hospitals' opportunity to request corrections of wage index data errors or MACs' mishandling of data, CMS has the authority under section 1886(d)(3)(E) of the Act to make corrections to hospital wage index and occupational mix data in order to ensure the accuracy of the wage index. As we explained in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of the Act requires the Secretary to adjust the proportion of hospitals' costs attributable to wages and wage-related costs for area differences reflecting the relative hospital wage level in the geographic areas of the hospital compared to the national average hospital wage level. We believe that, under section 1886(d)(3)(E) of the Act, we have discretion to make corrections to hospitals' data to help ensure that the costs attributable to wages and wage-related costs in fact accurately reflect the relative hospital wage level in the hospitals' geographic areas.
We have an established multistep, 15-month process for the review and correction of the hospital wage data that is used to create the IPPS wage index for the upcoming fiscal year. Since the origin of the IPPS, the wage index has been subject to its own annual review process, first by the MACs, and then by CMS. As a standard practice, after each annual desk review, CMS reviews the results of the MACs' desk reviews and focuses on items flagged during the desk review, requiring that, if necessary, hospitals provide additional documentation, adjustments, or corrections to the data. This ongoing communication with hospitals about their wage data may result in the discovery by CMS of additional items that were reported incorrectly or other data errors, even after the posting of the February 2 PUF, and throughout the remainder of the wage index development process. In addition, the fact that CMS analyzes the data from a regional and even national level, unlike the review performed by the MACs that review a limited subset of hospitals, can facilitate additional editing of the data that may not be readily apparent to the MACs. In these occasional instances, an error may be of sufficient magnitude that the wage index of an entire CBSA is affected. Accordingly, CMS uses its authority to ensure that the wage index accurately reflects the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level, by continuing to make corrections to hospital wage data upon discovering incorrect wage data, distinct from instances in which hospitals request data revisions.
We note that CMS corrects errors to hospital wage data as appropriate, regardless of whether that correction will raise or lower a hospital's average hourly wage. For example, as discussed in section III.D.2. of the preamble of the FY 2019 IPPS/LTCH PPS proposed rule, in the calculation of the proposed FY 2019 wage index, upon discovering that hospitals reported other wage-related costs on Line 18 of Worksheet S-3, despite those other wage-related costs failing to meet the requirement that other wage-related costs must exceed 1 percent of total adjusted salaries net of excluded area salaries, CMS made internal edits to remove those other wage-related costs from Line 18. Conversely, if CMS discovers after conclusion of the desk review, for example, that a MAC inadvertently failed to incorporate positive adjustments resulting from a prior year's wage index appeal of a hospital's wage-related costs such as pension, CMS would correct that data error and the hospital's average hourly wage would likely increase as a result.
While we maintain CMS' authority to conduct additional review and make resulting corrections at any time during the wage index development process, in accordance with the policy finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156), starting with the FY 2019 wage index, we implemented a process for hospitals to request further review of a correction made by CMS that did not arise from a hospital's request for a wage index data correction. Instances where CMS makes a correction to a hospital's data after the February 2 PUF based on a different understanding than the hospital about certain reported costs, for example, could potentially be resolved using this process before the final wage index is calculated. We believe this process and the timeline for requesting such corrections (as described earlier and in the FY 2018 IPPS/LTCH PPS final rule) bring additional transparency to instances where CMS makes data corrections after the February 2 PUF, and provide opportunities for hospitals to request further review of CMS changes in time for the most accurate data to be reflected in the final wage index calculations. These additional appeals opportunities are described earlier and in the FY 2019 Wage Index Development Time Table, as well as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156).
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust the proportion of the national prospective payment system base payment rates that are attributable to wages and wage-related costs by a factor that reflects the relative differences in labor costs among geographic areas. It also directs the Secretary to estimate from time to time the proportion of hospital costs that are labor-related and to adjust the proportion (as estimated by the Secretary from time to time) of hospitals' costs which are attributable to wages and wage-related costs of the DRG prospective payment rates. We refer to the portion of hospital costs attributable to wages and wage-related costs as the labor-related share. The labor-related share of the prospective payment rate is adjusted by an index of relative labor costs, which is referred to as the wage index.
Section 403 of Public Law 108-173 amended section 1886(d)(3)(E) of the Act to provide that the Secretary must employ 62 percent as the labor-related share unless this would result in lower payments to a hospital than would otherwise be made. However, this provision of Public Law 108-173 did not change the legal requirement that the Secretary estimate from time to time the proportion of hospitals' costs that are attributable to wages and wage-related costs. Thus, hospitals receive payment based on either a 62-percent labor-related share, or the labor-related share estimated from time to time by the Secretary, depending on which labor-related share resulted in a higher payment.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through 38175), we rebased and revised the hospital market basket. We established a 2014-based IPPS hospital market basket to replace the FY 2010-based IPPS hospital market basket, effective October 1, 2017. Using the 2014-based IPPS market basket, we finalized a labor-related share of 68.3 percent for discharges occurring on or after October 1, 2017. In addition, in FY 2018, we implemented this revised and rebased labor-related share in a budget neutral manner (82 FR 38522). However, consistent with section 1886(d)(3)(E) of the Act, we did not take into account
The labor-related share is used to determine the proportion of the national IPPS base payment rate to which the area wage index is applied. We include a cost category in the labor-related share if the costs are labor intensive and vary with the local labor market. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20371), for FY 2019, we did not propose to make any further changes to the national average proportion of operating costs that are attributable to wages and salaries, employee benefits, professional fees: Labor-related, administrative and facilities support services, installation, maintenance, and repair services, and all other labor-related services. Therefore, for FY 2019, we proposed to continue to use a labor-related share of 68.3 percent for discharges occurring on or after October 1, 2018.
As discussed in section IV.B. of the preamble of this final rule, prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. As a result, we applied the Puerto Rico-specific labor-related share percentage and nonlabor-related share percentage to the Puerto Rico-specific standardized amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as amended by section 601 of the Consolidated Appropriations Act, 2016, there is no longer a need for us to calculate a Puerto Rico-specific labor-related share percentage and nonlabor-related share percentage for application to the Puerto Rico-specific standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the national labor-related share and nonlabor-related share percentages that are applied to the national standardized amount. Accordingly, for FY 2019, we did not propose a Puerto Rico-specific labor-related share percentage or a nonlabor-related share percentage.
We did not receive any public comments on our proposals related to the labor-related share percentage. Therefore, we are finalizing our proposals, without modification, to continue to use a labor-related share of 68.3 percent for discharges occurring on or after October 1, 2018 for all hospitals (including Puerto Rico hospitals) whose wage indexes are greater than 1.0000.
Tables 1A and 1B, which are published in section VI. of the Addendum to this FY 2019 IPPS/LTCH PPS final rule and available via the internet on the CMS website, reflect the national labor-related share, which is also applicable to Puerto Rico hospitals. For FY 2019, for all IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are less than or equal to 1.0000, we are applying the wage index to a labor-related share of 62 percent of the national standardized amount. For all IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are greater than 1.000, for FY 2019, we are applying the wage index to a labor-related share of 68.3 percent of the national standardized amount.
Existing regulations at 42 CFR 412.4(a) define discharges under the IPPS as situations in which a patient is formally released from an acute care hospital or dies in the hospital. Section 412.4(b) defines acute care transfers, and § 412.4(c) defines postacute care transfers. Our policy set forth in § 412.4(f) provides that when a patient is transferred and his or her length of stay is less than the geometric mean length of stay for the MS-DRG to which the case is assigned, the transferring hospital is generally paid based on a graduated per diem rate for each day of stay, not to exceed the full MS-DRG payment that would have been made if the patient had been discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by dividing the full MS-DRG payment by the geometric mean length of stay for the MS-DRG. Based on an analysis that showed that the first day of hospitalization is the most expensive (60 FR 45804), our policy generally provides for payment that is twice the per diem amount for the first day, with each subsequent day paid at the per diem amount up to the full MS-DRG payment (§ 412.4(f)(1)). Transfer cases also are eligible for outlier payments. In general, the outlier threshold for transfer cases, as described in § 412.80(b), is equal to the fixed-loss outlier threshold for nontransfer cases (adjusted for geographic variations in costs), divided by the geometric mean length of stay for the MS-DRG, and multiplied by the length of stay for the case, plus 1 day.
We established the criteria set forth in § 412.4(d) for determining which DRGs qualify for postacute care transfer payments in the FY 2006 IPPS final rule (70 FR 47419 through 47420). The determination of whether a DRG is subject to the postacute care transfer policy was initially based on the Medicare Version 23.0 GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is revised, we use the current version of the Medicare GROUPER and the most recent complete year of MedPAR data to determine if the DRG is subject to the postacute care transfer policy. Specifically, if the MS-DRG's total number of discharges to postacute care equals or exceeds the 55th percentile for all MS-DRGs and the proportion of short-stay discharges to postacute care to total discharges in the MS-DRG exceeds the 55th percentile for all MS-DRGs, CMS will apply the postacute care transfer policy to that MS-DRG and to any other MS-DRG that shares the same base MS-DRG. The statute directs us to identify MS-DRGs based on a high volume of discharges to postacute care facilities and a disproportionate use of postacute care services. As discussed in the FY 2006 IPPS final rule (70 FR 47416), we determined that the 55th percentile is an appropriate level at which to establish these thresholds. In that same final rule (70 FR 47419), we stated that we will not revise the list of DRGs subject to the postacute care transfer policy annually unless we are making a change to a specific MS-DRG.
To account for MS-DRGs subject to the postacute care policy that exhibit exceptionally higher shares of costs very early in the hospital stay, § 412.4(f) also includes a special payment methodology. For these MS-DRGs, hospitals receive 50 percent of the full MS-DRG payment, plus the single per diem payment, for the first day of the stay, as well as a per diem payment for subsequent days (up to the full MS-DRG payment (§ 412.4(f)(6)). For an MS-DRG to qualify for the special payment methodology, the geometric mean length of stay must be greater than 4
As discussed in section II.F. of the preamble of the FY 2019 IPPS/LTCH PPS proposed rule, based on our analysis of FY 2017 MedPAR claims data, we proposed to make changes to a number of MS-DRGs, effective for FY 2019. Specifically, we proposed to:
• Assign CAR-T therapy procedure codes to MS-DRG 016 (proposed revised title: Autologous Bone Marrow Transplant with CC/MCC or T-Cell Immunotherapy);
• Delete MS-DRG 685 (Admit for Renal Dialysis) and reassign 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);
• Delete 10 MS-DRGs (MS-DRGs 765, 766, 767, 774, 775, 777, 778, 780, 781, and 782) and create 18 new MS-DRGs relating to Pregnancy, Childbirth and the Puerperium (MS-DRGs 783 through 788, 794, 796, 798, 805, 806, 807, 817, 818, 819, and 831 through 833);
• Assign two additional diagnosis codes to 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);
• Reassign 12 ICD-10-PCS procedure codes from MS-DRGs 329, 330 and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 344, 345, and 346 (Minor Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively); and
• Reassign ICD-10-CM diagnosis codes R65.10 and R65.11 from MS-DRGs 870, 871, and 872 (Septicemia or Severe Sepsis with and without Mechanical Ventilation >96 Hours with and without MCC, respectively) to MS-DRG 864 (proposed revised title: Fever and Inflammatory Conditions).
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule, in light of the proposed changes to these MS-DRGs for FY 2019, according to the regulations under § 412.4(d), we evaluated these MS-DRGs using the general postacute care transfer policy criteria and data from the FY 2017 MedPAR file. If an MS-DRG qualified for the postacute care transfer policy, we also evaluated that MS-DRG under the special payment methodology criteria according to regulations at § 412.4(f)(6). We stated in the proposed rule that we continue to believe it is appropriate to reassess MS-DRGs when proposing reassignment of procedure codes or diagnosis codes that would result in material changes to an MS-DRG. We noted that MS-DRGs 023, 329, 330, 331, 698, 699, 700, 870, 871, and 872 are currently subject to the postacute care transfer policy. We stated that as a result of our review, these MS-DRGs, as proposed to be revised, would continue to qualify to be included on the list of MS-DRGs that are subject to the postacute care transfer policy. We note that, as discussed in section II.F.5.b. of the preamble of this final rule, we are finalizing these proposed changes to the MS-DRGs with the exception of our proposed revisions to MS-DRGs 329, 330, 331, 344, 345, and 336, which we are not finalizing. Therefore, MS DRGs 329, 330, 331, 344, 345, and 336 are not included in the updated analysis of the postacute care transfer policy and special payment policy criteria discussed below. We note that MS-DRGs that are subject to the postacute transfer policy for FY 2018 and are not revised will continue to be subject to the policy in FY 2019.
Using the December 2017 update of the FY 2017 MedPAR file, we developed a chart for the proposed rule (83 FR 20378 through 20380) which set forth the analysis of the postacute care transfer policy criteria completed for the proposed rule with respect to each of these proposed new or revised MS-DRGs. We note that, in the proposed rule, we incorrectly stated that we used the March 2018 update for purposes of this analysis rather than the December 2017 update. We indicated that, for the FY 2019 final rule, we would update this analysis using the most recent available data at that time. The following chart reflects our updated analysis for the finalized new and revised MS-DRGs using the postacute care transfer policy criteria and the March 2018 update of the FY 2017 MedPAR file. We note that, with the additional time since the proposed rule, this analysis does take into account the change relating to discharges to hospice care, effective October 1, 2018, discussed in section IV.A.3. of the preamble of this final rule. We also note that the postacute care transfer policy status for all finalized new and revised MS-DRGs remains unchanged from the proposed rule.
Based on our annual review of proposed new or revised MS-DRGs and analysis of the December 2017 update of the FY 2017 MedPAR file, we identified MS-DRGs that we proposed to include on the list of MS-DRGs subject to the special payment methodology policy. We note that, in the proposed rule, we incorrectly stated that we used the March 2018 update for purposes of this analysis rather than the December 2017 update. We noted in the proposed rule that none of the proposed revised MS-DRGs that were listed in the table included in the proposed rule as continuing to meet the criteria for postacute care transfer policy status (specifically, MS-DRGs 023, 330, 331, 698, 699, 700, 870, 871, and 872) are currently listed as being subject to the special payment methodology (as noted
In the proposed rule, we indicated that, for the FY 2019 final rule, we would update this analysis using the most recent available data at that time. The following chart reflects our updated analysis for the finalized new and revised MS-DRGs using our criteria and the March 2018 update of the FY 2017 MedPAR file. We note that with the additional time since the proposed rule this analysis does take into account the change relating to discharges to hospice care, effective October 1, 2018, discussed in section IV.A.3. of the preamble of this final rule. We also note that status for all finalized new and revised MS-DRGs remains unchanged from the proposed rule.
We did not receive any public comments specific to our proposal that MS-DRGs 23 and 24 would be subject to the special payment methodology effective FY 2019. Therefore, we are finalizing this proposal without modification.
The special payment policy status of these MS-DRGs is reflected in Table 5 associated with this final rule, which is listed in section VI. of the Addendum to this final rule and available via the internet on the CMS website.
Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), under section 1886(d)(5)(J) of the Act, a discharge was deemed a “qualified discharge” if the individual was discharged to one of the following postacute care settings:
• A hospital or hospital unit that is not a subsection (d) hospital.
• A skilled nursing facility.
• Related home health services provided by a home health agency provided within a timeframe established by the Secretary (beginning within 3 days after the date of discharge).
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, effective for discharges occurring 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. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20381 and 20382), we proposed to make conforming amendments to § 412.4(c) of the regulation to include discharges to hospice care occurring on or after October 1, 2018 as qualified discharges. We proposed that hospital bills with a Patient Discharge Status code of 50 (Discharged/Transferred to Hospice—Routine or Continuous Home Care) or 51 (Discharged/Transferred to Hospice, General Inpatient Care or Inpatient Respite) would be subject to the postacute care transfer policy in accordance with this statutory amendment. We stated in the proposed rule that, consistent with our policy for other qualified discharges, CMS claims processing software will be revised to identify cases in which hospice benefits were billed on the date of hospital discharge without the appropriate discharge status code. Such claims will be returned as unpayable to the hospital and may be rebilled with a corrected discharge code.
While several commenters recognized the statutory requirement for the proposed changes, they urged CMS to use its administrative discretion to mitigate or delay the potentially harmful effects that the policy could have on access to the hospice benefit by Medicare beneficiaries facing the end of life.
After consideration of the public comments we received, we are finalizing the proposed revisions to § 412.4(c) to include discharges to hospice care occurring on or after October 1, 2018 as qualified discharges, with one minor grammatical modification discussed previously. Hospital bills with a Patient Discharge Status code of 50 (Discharged/Transferred to Hospice—Routine or Continuous Home Care) or 51 (Discharged/Transferred to Hospice, General Inpatient Care or Inpatient Respite) will be subject to the postacute care transfer policy in accordance with this statutory amendment, effective for discharges occurring on or after October 1, 2018.
In accordance with section 1886(b)(3)(B)(i) of the Act, each year we update the national standardized amount for inpatient hospital operating costs by a factor called the “applicable percentage increase.” For FY 2019, we are setting the applicable percentage increase by applying the adjustments listed in this section in the same sequence as we did for FY 2018. Specifically, consistent with section 1886(b)(3)(B) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act, we are setting the applicable percentage increase by applying the following adjustments in the following sequence. The applicable percentage increase under the IPPS is equal to the rate-of-increase in the hospital market basket for IPPS hospitals in all areas, subject to—
(a) A reduction of one-quarter of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals that fail to submit quality information under rules established by the Secretary in accordance with section 1886(b)(3)(B)(viii) of the Act;
(b) A reduction of three-quarters of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals not considered to be meaningful EHR users in accordance with section 1886(b)(3)(B)(ix) of the Act;
(c) An adjustment based on changes in economy-wide productivity (the multifactor productivity (MFP) adjustment); and
(d) An additional reduction of 0.75 percentage point as required by section 1886(b)(3)(B)(xii) of the Act.
Sections 1886(b)(3)(B)(xi) and (b)(3)(B)(xii) of the Act, as added by section 3401(a) of the Affordable Care Act, state that application of the MFP adjustment and the additional FY 2019 adjustment of 0.75 percentage point may result in the applicable percentage increase being less than zero.
We note that, in compliance with section 404 of the MMA, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through 38175), we replaced the FY 2010-based IPPS operating market basket with the rebased and revised
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20381), we proposed to base the proposed FY 2019 market basket update used to determine the applicable percentage increase for the IPPS on IHS Global Inc.'s (IGI's) fourth quarter 2017 forecast of the 2014-based IPPS market basket rate-of-increase with historical data through third quarter 2017, which was estimated to be 2.8 percent. We proposed that if more recent data subsequently became available (for example, a more recent estimate of the market basket and the MFP adjustment), we would use such data, if appropriate, to determine the FY 2019 market basket update and the MFP adjustment in the final rule.
Based on the most recent data available for this FY 2019 IPPS/LTCH PPS final rule (that is, IGI's second quarter 2018 forecast of the 2014-based IPPS market basket rate-of-increase with historical data through the first quarter of 2018), we estimate that the FY 2019 market basket update used to determine the applicable percentage increase for the IPPS is 2.9 percent.
For FY 2019, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital that submits quality data) and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that is a meaningful EHR user), there are four possible applicable percentage increases that can be applied to the standardized amount. Based on the most recent data described above, we determined final applicable percentage increases to the standardized amount for FY 2019, as specified in the table that appears later in this section.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through 51692), we finalized our methodology for calculating and applying the MFP adjustment. As we explained in that rule, section 1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the Affordable Care Act, defines this productivity adjustment as equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business MFP (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, calendar year, cost reporting period, or other annual period). The Bureau of Labor Statistics (BLS) publishes the official measure of private nonfarm business MFP. We refer readers to the BLS website at
MFP is derived by subtracting the contribution of labor and capital input growth from output growth. The projections of the components of MFP are currently produced by IGI, a nationally recognized economic forecasting firm with which CMS contracts to forecast the components of the market baskets and MFP. As we discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509), beginning with the FY 2016 rulemaking cycle, the MFP adjustment is calculated using the revised series developed by IGI to proxy the aggregate capital inputs. Specifically, in order to generate a forecast of MFP, IGI forecasts BLS aggregate capital inputs using a regression model. A complete description of the MFP projection methodology is available on the CMS website at:
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20382), for FY 2019, we proposed an MFP adjustment of 0.8 percentage point. Similar to the market basket update, for the proposed rule, we used IGI's fourth quarter 2017 forecast of the MFP adjustment to compute the proposed MFP adjustment. As noted previously, we proposed that if more recent data subsequently became available, we would use such data, if appropriate, to determine the FY 2019 market basket update and the MFP adjustment for the final rule.
Based on the most recent data available for this FY 2019 IPPS/LTCH PPS final rule (that is, IGI's second quarter 2018 forecast of the MFP adjustment with historical data through the first quarter of 2018), for FY 2019, we have determined an MFP adjustment of 0.8 percentage point.
We did not receive any public comments on our proposals to use the most recent available data to determine the final market basket update and the MFP adjustment. Therefore, for this final rule, we are finalizing a market basket update of 2.9 percent and an MFP adjustment of 0.8 percentage point for FY 2019 based on the most recent available data.
Based on the most recent available data for this final rule, as described previously, we have determined four applicable percentage increases to the standardized amount for FY 2019, as specified in the following table:
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20382), we proposed to revise the existing regulations at 42 CFR 412.64(d) to reflect the current law for the FY 2019 update. Specifically, in accordance with section 1886(b)(3)(B) of the Act, we proposed to revise paragraph (vii) of § 412.64(d)(1) to include the applicable percentage increase to the FY 2019 operating standardized amount as the percentage increase in the market basket
We did not receive any public comments on our proposed changes to the regulations at § 412.64(d)(1) and, therefore, are finalizing these proposed changes without modification in this final rule.
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable percentage increase to the hospital-specific rates for SCHs and MDHs equals the applicable percentage increase set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all other hospitals subject to the IPPS). Therefore, the update to the hospital-specific rates for SCHs and MDHs also is subject to section 1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act. (As discussed in section IV.G. of the preamble of this FY 2019 IPPS/LTCH PPS final rule, section 205 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted on April 16, 2015) extended the MDH program through FY 2017 (that is, for discharges occurring on or before September 30, 2017). Section 50205 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted February 9, 2018, extended the MDH program for discharges on or after October 1, 2017 through September 30, 2022.)
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20382), for FY 2019, we proposed the following updates to the hospital-specific rates applicable to SCHs and MDHs: A proposed update of 1.25 percent for a hospital that submits quality data and is a meaningful EHR user; a proposed update of 0.55 percent for a hospital that fails to submit quality data and is a meaningful EHR user; a proposed update of −0.85 percent for a hospital that submits quality data and is not a meaningful EHR user; and a proposed update of −1.55 percent for a hospital that fails to submit quality data and is not a meaningful EHR user. As noted previously, for the FY 2019 IPPS/LTCH PPS proposed rule, we used IGI's fourth quarter 2017 forecast of the 2014-based IPPS market basket update with historical data through third quarter 2017. Similarly, we used IGI's fourth quarter 2017 forecast of the MFP adjustment. We proposed that if more recent data subsequently became available (for example, a more recent estimate of the market basket increase and the MFP adjustment), we would use such data, if appropriate, to determine the update in the final rule.
We did not receive any public comments with regard to our proposal. Therefore, we are finalizing the proposal to determine the update to the hospital-specific rates for SCHs and MDHs in this final rule using the most recent available data, specifically, IGI's second quarter 2018 forecast of the 2014-based IPPS market basket rate-of-increase and the MFP adjustment with historical data through the first quarter of 2018.
For this final rule, based on the most recent available data, we are finalizing the following updates to the hospital-specific rates applicable to SCHs and MDHs: An update of 1.35 percent for a hospital that submits quality data and is a meaningful EHR user; an update of 0.625 percent for a hospital that fails to submit quality data and is a meaningful EHR user; an update of -0.825 percent for a hospital that submits quality data and is not a meaningful EHR user; and an update of -1.55 percent for a hospital that fails to submit quality data and is not a meaningful EHR user.
As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56937 through 56938), prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. Section 601 of Public Law 114-113 amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount under the amendments to section 1886(d)(9)(E) of the Act, there is no longer a need for us to determine an update to the Puerto Rico standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the same update to the national standardized amount discussed under section IV.B.1. of the preamble of this final rule. Accordingly, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20382), for FY 2019, we proposed an applicable percentage increase of 1.25 percent to the standardized amount for hospitals located in Puerto Rico. We note that we did not receive any public comments with regard to our proposal. Based on the most recent data available for this final rule (as discussed in section IV.B.1. of the preamble of this final rule), we are finalizing an applicable percentage increase of 1.35 percent to the standardized amount for hospitals located in Puerto Rico.
We note that section 1886(b)(3)(B)(viii) of the Act, which specifies the adjustment to the applicable percentage increase for “subsection (d)” hospitals that do not submit quality data under the rules established by the Secretary, is not applicable to hospitals located in Puerto Rico.
In addition, section 602 of Public Law 114-113 amended section 1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are eligible for incentive payments for the meaningful use of certified EHR technology, effective beginning FY 2016, and also to apply the adjustments to the applicable percentage increase under section 1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not meaningful EHR users, effective FY 2022. Accordingly, because the provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable to hospitals located in Puerto Rico until FY 2022, the adjustments under this provision are not applicable for FY 2019.
Under the authority of section 1886(d)(5)(C)(i) of the Act, the regulations at § 412.96 set forth the criteria that a hospital must meet in order to qualify under the IPPS as a rural referral center (RRC). RRCs receive some special treatment under both the DSH payment adjustment and the criteria for geographic reclassification.
Section 402 of Public Law 108-173 raised the DSH payment adjustment for RRCs such that they are not subject to the 12-percent cap on DSH payments that is applicable to other rural hospitals. RRCs also are not subject to the proximity criteria when applying for geographic reclassification. In addition, they do not have to meet the requirement that a hospital's average hourly wage must exceed, by a certain percentage, the average hourly wage of the labor market area in which the hospital is located.
Section 4202(b) of Public Law 105-33 states, in part, that any hospital classified as an RRC by the Secretary for FY 1991 shall be classified as such an RRC for FY 1998 and each subsequent fiscal year. In the August 29, 1997 IPPS final rule with comment period (62 FR 45999), we reinstated RRC status for all
• The hospital's CMI is at least equal to the lower of the median CMI for urban hospitals in its census region, excluding hospitals with approved teaching programs, or the median CMI for all urban hospitals nationally; and
• The hospital's number of discharges is at least 5,000 per year, or, if fewer, the median number of discharges for urban hospitals in the census region in which the hospital is located. The number of discharges criterion for an osteopathic hospital is at least 3,000 discharges per year, as specified in section 1886(d)(5)(C)(i) of the Act.
Section 412.96(c)(1) provides that CMS establish updated national and regional CMI values in each year's annual notice of prospective payment rates for purposes of determining RRC status. The methodology we used to determine the national and regional CMI values is set forth in the regulations at § 412.96(c)(1)(ii). The national median CMI value for FY 2019 is based on the CMI values of all urban hospitals nationwide, and the regional median CMI values for FY 2019 are based on the CMI values of all urban hospitals within each census region, excluding those hospitals with approved teaching programs (that is, those hospitals that train residents in an approved GME program as provided in § 413.75). These values are based on discharges occurring during FY 2017 (October 1, 2016 through September 30, 2017), and include bills posted to CMS' records through March 2018.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20383), we proposed that, in addition to meeting other criteria, if rural hospitals with fewer than 275 beds are to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2018, they must have a CMI value for FY 2017 that is at least—
• 1.66185 (national—all urban); or
• The median CMI value (not transfer-adjusted) for urban hospitals (excluding hospitals with approved teaching programs as identified in § 413.75) calculated by CMS for the census region in which the hospital is located.
The proposed median CMI values by region were set forth in a table in the proposed rule (83 FR 20383). We stated in the proposed rule that we intended to update the proposed CMI values in the FY 2019 final rule to reflect the updated FY 2017 MedPAR file, which would contain data from additional bills received through March 2018.
We did not receive any public comments on our proposals.
Based on the latest available data (FY 2017 bills received through March 2018), in addition to meeting other criteria, if rural hospitals with fewer than 275 beds are to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2018, they must have a CMI value for FY 2017 that is at least:
• 1.6612 (national—all urban); or
• The median CMI value (not transfer-adjusted) for urban hospitals (excluding hospitals with approved teaching programs as identified in § 413.75) calculated by CMS for the census region in which the hospital is located.
The final CMI values by region are set forth in the following table.
A hospital seeking to qualify as an RRC should obtain its hospital-specific CMI value (not transfer-adjusted) from its MAC. Data are available on the Provider Statistical and Reimbursement (PS&R) System. In keeping with our policy on discharges, the CMI values are computed based on all Medicare patient discharges subject to the IPPS MS-DRG-based payment.
Section 412.96(c)(2)(i) provides that CMS set forth the national and regional numbers of discharges criteria in each year's annual notice of prospective payment rates for purposes of determining RRC status. As specified in section 1886(d)(5)(C)(ii) of the Act, the national standard is set at 5,000 discharges. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20384), for FY 2019, we proposed to update the regional standards based on discharges for urban hospitals' cost reporting periods that began during FY 2016 (that is, October 1, 2015 through September 30, 2016), which were the latest cost report data available at the time the proposed rule was developed. Therefore, we proposed that, in addition to meeting other criteria, a hospital, if it is to qualify for initial RRC status for
• 5,000 (3,000 for an osteopathic hospital); or
• If less, the median number of discharges for urban hospitals in the census region in which the hospital is located. (We refer readers to the table set forth in the FY 2019 IPPS/LTCH PPS proposed rule at 83 FR 20384.) In the proposed rule, we stated that we intended to update these numbers in the FY 2019 final rule based on the latest available cost report data.
We did not receive any public comments on our proposals.
Based on the latest discharge data available at this time, that is, for cost reporting periods that began during FY 2016, the final median number of discharges for urban hospitals by census region are set forth in the following table.
We note that because the median number of discharges for hospitals in each census region is greater than the national standard of 5,000 discharges, under this final rule, 5,000 discharges is the minimum criterion for all hospitals, except for osteopathic hospitals for which the minimum criterion is 3,000 discharges.
Section 1886(d)(12) of the Act provides for an additional payment to each qualifying low-volume hospital under the IPPS beginning in FY 2005. The additional payment adjustment to a low-volume hospital provided for under section 1886(d)(12) of the Act is in addition to any payment calculated under section 1886 of the Act. Therefore, the additional payment adjustment is based on the per discharge amount paid to the qualifying hospital under section 1886 of the Act. In other words, the low-volume hospital payment adjustment is based on total per discharge payments made under section 1886 of the Act, including capital, DSH, IME, and outlier payments. For SCHs and MDHs, the low-volume hospital payment adjustment is based in part on either the Federal rate or the hospital-specific rate, whichever results in a greater operating IPPS payment.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20384), section 50204 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123) modified the definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals for FYs 2019 through 2022. (Section 50204 also extended prior changes to the definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals through FY 2018, as discussed later in this section.). Beginning with FY 2023, the low-volume hospital qualifying criteria and payment adjustment will revert to the statutory requirements that were in effect prior to FY 2011. (For additional information on the low-volume hospital payment adjustment prior to FY 2018, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56941 through 56943). For additional information on the low-volume hospital payment adjustment for FY 2018, we refer readers to the FY 2018 IPPS notice (CMS-1677-N) that appeared in the
Section 50204 of the Bipartisan Budget Act of 2018 extended through FY 2018 certain changes to the low-volume hospital payment policy made by the Affordable Care Act and extended by subsequent legislation. We addressed this extension of the temporary changes to the low-volume hospital payment policy for FY 2018 in a notice that appeared in the
We did not receive any public comments on our proposal. Therefore, we are finalizing, without modification, our proposed conforming changes to paragraphs (b)(2)(ii) and (c)(2) introductory text of § 412.101 to reflect that the low-volume hospital payment adjustment policy in effect for FY 2018 is the same low-volume hospital payment adjustment policy in effect for FYs 2011 through 2017.
As discussed earlier, section 50204 of the Bipartisan Budget Act of 2018 further modified the definition of a low-
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20385), to implement this requirement, we proposed a continuous, linear sliding scale formula to determine the low volume hospital payment adjustment for FYs 2019 through 2022 that is similar to the continuous, linear sliding scale formula used to determine the low-volume hospital payment adjustment originally established by the Affordable Care Act and implemented in the regulations at § 412.101(c)(2)(ii) in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50240 through 50241). Consistent with the statute, we proposed that qualifying hospitals with 500 or fewer total discharges would receive a low-volume hospital payment adjustment of 25 percent. For qualifying hospitals with fewer than 3,800 discharges but more than 500 discharges, the low-volume payment adjustment would be calculated by subtracting from 25 percent the proportion of payments associated with the discharges in excess of 500. That proportion is calculated by multiplying the discharges in excess of 500 by a fraction that is equal to the maximum available add-on payment (25 percent) divided by a number represented by the range of discharges for which this policy applies (3,800 minus 500, or 3,300). In other words, for qualifying hospitals with fewer than 3,800 total discharges but more than 500 total discharges, we proposed the low-volume hospital payment adjustment for FYs 2019 through 2022 would be calculated using the following formula:
As discussed below, the formula as presented in the preamble to the proposed rule (83 FR 20385) contained a typographical error, in that an “×” sign was used in place of a minus (“−”) sign, as follows: (95/330) × (number of total discharges/13,200). The formula set forth in the proposed regulatory text at § 412.101(c)(3)(ii) was correct, and we have also corrected the typographical error in the formula as presented in the preamble of this final rule.
To reflect these changes for FYs 2019 through 2022, we proposed to revise § 412.101(b)(2) by adding paragraph (iii) to specify that a hospital must have fewer than 3,800 total discharges, which includes Medicare and non-Medicare discharges, during the fiscal year, based on the hospital's most recently submitted cost report, and be located more than 15 road miles from the nearest “subsection (d)” hospital, consistent with the amendments to section 1886(d)(12)(C)(i) of the Act as provided by section 50204(a)(2) of the Bipartisan Budget Act of 2018. We also proposed to add paragraph (3) to § 412.101(c), consistent with section 1886(d)(12)(D) of the Act as amended by section 50204(a)(3) of the Bipartisan Budget Act of 2018, to specify that:
• For low-volume hospitals with 500 or fewer total discharges during the fiscal year, the low-volume hospital payment adjustment is an additional 25 percent for each Medicare discharge.
• For low-volume hospitals with total discharges during the fiscal year of more than 500 and fewer than 3,800, the adjustment for each Medicare discharge is an additional percent calculated using the formula [(95/330) − (number of total discharges/13,200)]. (Similar to above, in the preamble to the proposed rule, we inadvertently included an “×” sign in place of a “−” sign in describing the formula that was specified in the text of proposed § 412.101(c)(3)(ii). As noted, the proposed regulatory text accurately reflected the proposed formula, and we have also corrected the typographical error in the formula as presented in the preamble of this final rule.)
In the proposed rule, we specified that the “number of total discharges” would be determined as total discharges, which includes Medicare and non-Medicare discharges during the fiscal year, based on the hospital's most recently submitted cost report.
In addition, in accordance with the provisions of section 50204(a) of the Bipartisan Budget Act of 2018, for FY 2023 and subsequent fiscal years, we proposed to make conforming changes to paragraphs (b)(2)(i) and (c)(1) of § 412.101 to reflect that the low-volume payment adjustment policy in effect for these years is the same low-volume hospital payment adjustment policy in effect for FYs 2005 through 2010, as described earlier. Lastly, we proposed to make conforming changes to paragraph (d) (which relates to eligibility of new hospitals for the adjustment), consistent with the provisions of section 50204(a) of the Bipartisan Budget Act of 2018, for FY 2019 and subsequent fiscal years, as total discharges are used under the low-volume hospital payment adjustment policy in effect for those years as described earlier.
After consideration of the public comments we received, we are finalizing, without modification, our proposed changes to § 412.101(b)(2), (c), and (d) to reflect the changes in the low-volume hospital payment policy provided by section 50204 of the Bipartisan Budget Act of 2018 as discussed in this section.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275 and 50414) and subsequent rulemaking (for example, the FY 2018 IPPS/LTCH PPS final rule (82 FR 38186 through 38188)), we discussed the process for requesting and obtaining the low-volume hospital payment adjustment. Under this previously established process, a hospital makes a written request for the low-volume payment adjustment under § 412.101 to its MAC. This request must contain sufficient documentation to establish that the hospital meets the applicable mileage and discharge
As described in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20385), for FY 2019 and subsequent fiscal years, the discharge determination is made based on the hospital's number of total discharges, that is, Medicare and non-Medicare discharges, as was the case for FYs 2005 through 2010. Under § 412.101(b)(2)(i) and new § 412.101(b)(2)(iii), as proposed and finalized in this final rule, a hospital's most recently submitted cost report is used to determine if the hospital meets the discharge criterion to receive the low-volume payment adjustment in the current year. We use cost report data to determine if a hospital meets the discharge criterion because this is the best available data source that includes information on both Medicare and non-Medicare discharges. (For FYs 2011 through 2018, the most recently available MedPAR data were used to determine the hospital's Medicare discharges because non-Medicare discharges were not used to determine if a hospital met the discharge criterion for those years.) Therefore, a hospital should refer to its most recently submitted cost report for total discharges (Medicare and non-Medicare) in order to decide whether or not to apply for low-volume hospital status for a particular fiscal year.
As also discussed in the FY 2019 IPPS/LTCH PPS proposed rule, in addition to the discharge criterion, for FY 2019 and for subsequent fiscal years, eligibility for the low-volume hospital payment adjustment is also dependent upon the hospital meeting the applicable mileage criterion specified in § 412.101(b)(2)(i) or proposed new § 412.101(b)(2)(iii) for the fiscal year (as noted in the previous section, we have finalized the amendments to § 412.101(b)(2) and new § 412.101(b)(2)(iii) as proposed). Specifically, to meet the mileage criterion to qualify for the low-volume hospital payment adjustment for FY 2019, as noted earlier, a hospital must be located more than 15 road miles from the nearest subsection (d) hospital. We define in § 412.101(a) the term “road miles” to mean “miles” as defined in § 412.92(c)(1) (75 FR 50238 through 50275 and 50414). For establishing that the hospital meets the mileage criterion, the use of a web-based mapping tool as part of the documentation is acceptable. The MAC will determine if the information submitted by the hospital, such as the name and street address of the nearest hospitals, location on a map, and distance from the hospital requesting low-volume hospital status, is sufficient to document that it meets the mileage criterion. If not, the MAC will follow up with the hospital to obtain additional necessary information to determine whether or not the hospital meets the applicable mileage criterion.
As explained in the proposed rule, in accordance with our previously established process, a hospital must make a written request for low-volume hospital status that is received by its MAC by September 1 immediately preceding the start of the Federal fiscal year for which the hospital is applying for low-volume hospital status in order for the applicable low-volume hospital payment adjustment to be applied to payments for its discharges for the fiscal year beginning on or after October 1 immediately following the request (that is, the start of the Federal fiscal year). For a hospital whose request for low-volume hospital status is received after September 1, if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC will apply the applicable low-volume hospital payment adjustment to determine payment for the hospital's discharges for the fiscal year, effective prospectively within 30 days of the date of the MAC's low-volume status determination.
Specifically, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20386), for FY 2019, we proposed that a hospital must submit a written request for low-volume hospital status to its MAC that includes sufficient documentation to establish that the hospital meets the applicable mileage and discharge criteria (as described earlier). Consistent with historical practice, for FY 2019, we proposed that a hospital's written request must be received by its MAC no later than September 1, 2018 in order for the low-volume hospital payment adjustment to be applied to payments for its discharges beginning on or after October 1, 2018. If a hospital's written request for low-volume hospital status for FY 2019 is received after September 1, 2018, and if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC would apply the low-volume hospital payment adjustment to determine the payment for the hospital's FY 2019 discharges, effective prospectively within 30 days of the date of the MAC's low-volume hospital status determination.
Under this process, a hospital receiving the low-volume hospital payment adjustment for FY 2018 may continue to receive a low-volume hospital payment adjustment without reapplying if it continues to meet the mileage criterion (which remains unchanged for FY 2019) and it also meets the applicable discharge criterion as modified for FY 2019 (that is, 3,800 or fewer total discharges). In this case, a hospital's request can include a verification statement that it continues to meet the mileage criterion applicable for FY 2019. (Determination of meeting the discharge criterion is discussed earlier in this section.) We noted in the proposed rule that a hospital must continue to meet the applicable qualifying criteria as a low-volume hospital (that is, the hospital must meet the applicable discharge criterion and mileage criterion for the fiscal year) in order to receive the payment adjustment in that fiscal year; that is, low-volume hospital status is not based on a “one-time” qualification (75 FR 50238 through 50275).
After consideration of the public comments we received, we are finalizing our proposals relating to the process for requesting and obtaining the low-volume hospital payment adjustment as described above, without modification.
Under the IPPS, an additional payment amount is made to hospitals with residents in an approved graduate medical education (GME) program in order to reflect the higher indirect patient care costs of teaching hospitals relative to nonteaching hospitals. The payment amount is determined by use of a statutorily specified adjustment factor. The regulations regarding the calculation of this additional payment, known as the IME adjustment, are located at § 412.105. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51680) for a full discussion of the IME adjustment and IME adjustment factor. Section 1886(d)(5)(B)(ii)(XII) of the Act provides that, for discharges occurring during FY 2008 and fiscal years thereafter, the IME formula multiplier is 1.35. Accordingly, for discharges occurring during FY 2019, the formula multiplier is 1.35. We estimate that application of this formula multiplier for the FY 2019 IME adjustment will result in an increase in IPPS payment of 5.5 percent for every approximately 10 percent increase in the hospital's resident-to-bed ratio.
We did not receive any comments regarding the IME adjustment factor, which, as noted earlier, is statutorily required. Accordingly, for discharges occurring during FY 2019, the IME formula multiplier is 1.35.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20386), in the regulation governing the IME payment adjustment at § 412.105(f)(1)(vii), we identified an inadvertent omission of a cross-reference relating to an adjustment to a hospital's full-time equivalent cap for a new medical residency training program. Section 412.105(f)(1)(vii) states that if a hospital establishes a new medical residency training program, as defined in § 413.79(l), the hospital's full-time equivalent cap may be adjusted in accordance with the provisions of § 413.79(e)(1) through (e)(4). However, there is a paragraph (e)(5) under § 413.79 that we have inadvertently omitted that applies to the regulation at § 412.105(f)(1)(vii). In the proposed regulation (83 FR 20567), we proposed to correct this omission by amending § 412.105 to remove the reference to “§§ 413.79(e)(1) through (e)(4)” and add in its place the reference “§ 413.79(e)” to make clear that the provisions of § 413.79(e)(1) through (e)(5) apply. This proposed revision was intended to correct the omission and was not intended to substantially change the underlying regulation.
We did not receive any public comments on this proposed technical correction to § 412.105, and therefore are finalizing it as was proposed in the proposed regulation.
Section 1886(d)(5)(F) of the Act provides for additional Medicare payments to subsection (d) hospitals that serve a significantly disproportionate number of low-income patients. The Act specifies two methods by which a hospital may qualify for the Medicare disproportionate share hospital (DSH) adjustment. Under the first method, hospitals that are located in an urban area and have 100 or more beds may receive a Medicare DSH payment adjustment if the hospital can demonstrate that, during its cost reporting period, more than 30 percent of its net inpatient care revenues are derived from State and local government payments for care furnished to needy patients with low incomes. This method is commonly referred to as the “Pickle method.” The second method for qualifying for the DSH payment adjustment, which is the most common, is based on a complex statutory formula under which the DSH payment adjustment is based on the hospital's geographic designation, the number of beds in the hospital, and the level of the hospital's disproportionate patient percentage (DPP). A hospital's DPP is the sum of two fractions: the “Medicare fraction” and the “Medicaid fraction.” The Medicare fraction (also known as the “SSI fraction” or “SSI ratio”) is computed by dividing the number of the hospital's inpatient days that are furnished to patients who were entitled to both Medicare Part A and Supplemental Security Income (SSI) benefits by the hospital's total number of patient days furnished to patients entitled to benefits under Medicare Part A. The Medicaid fraction is computed by dividing the hospital's number of inpatient days furnished to patients who, for such days, were eligible for Medicaid, but were not entitled to benefits under Medicare Part A, by the hospital's total number of inpatient days in the same period.
Because the DSH payment adjustment is part of the IPPS, the statutory references to “days” in section 1886(d)(5)(F) of the Act have been interpreted to apply only to hospital acute care inpatient days. Regulations located at 42 CFR 412.106 govern the Medicare DSH payment adjustment and specify how the DPP is calculated as well as how beds and patient days are counted in determining the Medicare DSH payment adjustment. Under § 412.106(a)(1)(i), the number of beds for the Medicare DSH payment adjustment is determined in accordance with bed counting rules for the IME adjustment under § 412.105(b).
Section 3133 of the Patient Protection and Affordable Care Act, as amended by section 10316 of the same Act and section 1104 of the Health Care and Education Reconciliation Act (Pub. L. 111-152), added a section 1886(r) to the Act that modifies the methodology for computing the Medicare DSH payment adjustment. (For purposes of this final rule, we refer to these provisions collectively as section 3133 of the Affordable Care Act.) Beginning with discharges in FY 2014, hospitals that qualify for Medicare DSH payments under section 1886(d)(5)(F) of the Act receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments. This provision applies equally to hospitals that qualify for DSH payments under section 1886(d)(5)(F)(i)(I) of the Act and those hospitals that qualify under the Pickle method under section 1886(d)(5)(F)(i)(II) of the Act.
The remaining amount, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, reduced to reflect changes in the percentage of individuals who are uninsured, is available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has uncompensated care. The payments to each hospital for a fiscal year are based on the hospital's amount of uncompensated care for a given time period relative to the total amount of uncompensated care for that same time period reported by all hospitals that receive Medicare DSH payments for that fiscal year.
As provided by section 3133 of the Affordable Care Act, section 1886(r) of the Act requires that, for FY 2014 and each subsequent fiscal year, a subsection (d) hospital that would
In addition to this empirically justified Medicare DSH payment, section 1886(r)(2) of the Act provides that, for FY 2014 and each subsequent fiscal year, the Secretary shall pay to such subsection (d) hospital an additional amount equal to the product of three factors. The first factor is the difference between the aggregate amount of payments that would be made to subsection (d) hospitals under section 1886(d)(5)(F) of the Act if subsection (r) did not apply and the aggregate amount of payments that are made to subsection (d) hospitals under section 1886(r)(1) of the Act for such fiscal year. Therefore, this factor amounts to 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act.
The second factor is, for FY 2018 and subsequent fiscal years, 1 minus the percent change in the percent of individuals who are uninsured, as determined by comparing the percent of individuals who were uninsured in 2013 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of CMS), and the percent of individuals who were uninsured in the most recent period for which data are available (as so estimated and certified), minus 0.2 percentage point for FYs 2018 and 2019.
The third factor is a percent that, for each subsection (d) hospital, represents the quotient of the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data), including the use of alternative data where the Secretary determines that alternative data are available which are a better proxy for the costs of subsection (d) hospitals for treating the uninsured, and the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act. Therefore, this third factor represents a hospital's uncompensated care amount for a given time period relative to the uncompensated care amount for that same time period for all hospitals that receive Medicare DSH payments in the applicable fiscal year, expressed as a percent.
For each hospital, the product of these three factors represents its additional payment for uncompensated care for the applicable fiscal year. We refer to the additional payment determined by these factors as the “uncompensated care payment.”
Section 1886(r) of the Act applies to FY 2014 and each subsequent fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620 through 50647) and the FY 2014 IPPS interim final rule with comment period (78 FR 61191 through 61197), we set forth our policies for implementing the required changes to the Medicare DSH payment methodology made by section 3133 of the Affordable Care Act for FY 2014. In those rules, we noted that, because section 1886(r) of the Act modifies the payment required under section 1886(d)(5)(F) of the Act, it affects only the DSH payment under the operating IPPS. It does not revise or replace the capital IPPS DSH payment provided under the regulations at 42 CFR part 412, subpart M, which were established through the exercise of the Secretary's discretion in implementing the capital IPPS under section 1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act provides that there shall be no administrative or judicial review under section 1869, section 1878, or otherwise of any estimate of the Secretary for purposes of determining the factors described in section 1886(r)(2) of the Act or of any period selected by the Secretary for the purpose of determining those factors. Therefore, there is no administrative or judicial review of the estimates developed for purposes of applying the three factors used to determine uncompensated care payments, or the periods selected in order to develop such estimates.
As explained earlier, the payment methodology under section 3133 of the Affordable Care Act applies to “subsection (d) hospitals” that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act. Therefore, hospitals must receive empirically justified Medicare DSH payments in a fiscal year in order to receive an additional Medicare uncompensated care payment for that year. Specifically, section 1886(r)(2) of the Act states that, in addition to the payment made to a subsection (d) hospital under section 1886(r)(1) of the Act, the Secretary shall pay to such subsection (d) hospitals an additional amount. Because section 1886(r)(1) of the Act refers to empirically justified Medicare DSH payments, the additional payment under section 1886(r)(2) of the Act is limited to hospitals that receive empirically justified Medicare DSH payments in accordance with section 1886(r)(1) of the Act for the applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY 2014 IPPS interim final rule with comment period (78 FR 61193), we provided that hospitals that are not eligible to receive empirically justified Medicare DSH payments in a fiscal year will not receive uncompensated care payments for that year. We also specified that we would make a determination concerning eligibility for interim uncompensated care payments based on each hospital's estimated DSH status for the applicable fiscal year (using the most recent data that are available). We indicated that our final determination on the hospital's eligibility for uncompensated care payments will be based on the hospital's actual DSH status at cost report settlement for that payment year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and in the rulemaking for subsequent fiscal years, we have specified our policies for several specific classes of hospitals within the scope of section 1886(r) of the Act. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20388 and 20389), we discussed our specific policies with respect to the following hospitals:
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As we have discussed earlier, section 1886(r)(1) of the Act requires the Secretary to pay 25 percent of the amount of the Medicare DSH payment that would otherwise be made under section 1886(d)(5)(F) of the Act to a subsection (d) hospital. Because section 1886(r)(1) of the Act merely requires the program to pay a designated percentage of these payments, without revising the criteria governing eligibility for DSH payments or the underlying payment methodology, we stated in the FY 2014 IPPS/LTCH PPS final rule that we did not believe that it was necessary to develop any new operational mechanisms for making such payments. Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50626), we implemented this provision by advising MACs to simply adjust the interim claim payments to the requisite 25 percent of what would have otherwise been paid. We also made corresponding changes to the hospital cost report so that these empirically justified Medicare DSH payments can be settled at the appropriate level at the time of cost report settlement. We provided more detailed operational instructions and cost report instructions following issuance of the FY 2014 IPPS/LTCH PPS final rule that are available on the CMS website at:
As we discussed earlier, section 1886(r)(2) of the Act provides that, for each eligible hospital in FY 2014 and subsequent years, the uncompensated care payment is the product of three factors. These three factors represent our estimate of 75 percent of the amount of Medicare DSH payments that would otherwise have been paid, an adjustment to this amount for the percent change in the national rate of uninsurance compared to the rate of uninsurance in 2013, and each eligible hospital's estimated uncompensated care amount relative to the estimated uncompensated care amount for all eligible hospitals. Below we discuss the data sources and methodologies for computing each of these factors, our final policies for FYs 2014 through 2018, and our proposed and final policies for FY 2019.
Section 1886(r)(2)(A) of the Act establishes Factor 1 in the calculation of the uncompensated care payment. Section 1886(r)(2)(A) of the Act states that this factor is equal to the difference between: (1) The aggregate amount of payments that would be made to subsection (d) hospitals under section 1886(d)(5)(F) of the Act if section 1886(r) of the Act did not apply for such fiscal year (as estimated by the Secretary); and (2) the aggregate amount of payments that are made to subsection (d) hospitals under section 1886(r)(1) of the Act for such fiscal year (as so estimated). Therefore, section 1886(r)(2)(A)(i) of the Act represents the estimated Medicare DSH payments that would have been made under section 1886(d)(5)(F) of the Act if section 1886(r) of the Act did not apply for such fiscal year. Under a prospective payment system, we would not know the precise aggregate Medicare DSH payment amount that would be paid for a Federal fiscal year until cost report settlement for all IPPS hospitals is completed, which occurs several years after the end of the Federal fiscal year. Therefore, section 1886(r)(2)(A)(i) of the Act provides authority to estimate this amount, by specifying that, for each fiscal year to which the provision applies, such amount is to be estimated by the Secretary. Similarly, section 1886(r)(2)(A)(ii) of the Act represents the estimated empirically justified Medicare DSH payments to be made in a fiscal year, as prescribed under section 1886(r)(1) of the Act. Again, section 1886(r)(2)(A)(ii) of the Act provides authority to estimate this amount.
Therefore, Factor 1 is the difference between our estimates of: (1) The amount that would have been paid in Medicare DSH payments for the fiscal year, in the absence of the new payment provision; and (2) the amount of empirically justified Medicare DSH payments that are made for the fiscal year, which takes into account the requirement to pay 25 percent of what would have otherwise been paid under section 1886(d)(5)(F) of the Act. In other words, this factor represents our estimate of 75 percent (100 percent minus 25 percent) of our estimate of Medicare DSH payments that would otherwise be made, in the absence of section 1886(r) of the Act, for the fiscal year.
As we did for FY 2018, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20389), in order to determine Factor 1 in the uncompensated care payment formula for FY 2019, we proposed to continue the policy established in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50628 through 50630) and in the FY 2014 IPPS interim final rule with comment period (78 FR 61194) of determining Factor 1 by developing estimates of both the aggregate amount of Medicare DSH payments that would be made in the absence of section 1886(r)(1) of the Act and the aggregate amount of empirically justified Medicare DSH payments to hospitals under 1886(r)(1) of the Act. These estimates will not be revised or updated after we know the final Medicare DSH payments for FY 2019.
Therefore, in order to determine the two elements of proposed Factor 1 for FY 2019 (Medicare DSH payments
For purposes of calculating Factor 1 and modeling the impact of the FY 2019 IPPS/LTCH PPS proposed rule, we used the Office of the Actuary's December 2017 Medicare DSH estimates, which were based on data from the September 2017 update of the Medicare Hospital Cost Report Information System (HCRIS) and the FY 2018 IPPS/LTCH PPS final rule IPPS Impact file, published in conjunction with the publication of the FY 2018 IPPS/LTCH PPS final rule. (We note that the proposed rule included an inadvertent reference to the HCRIS December 2017 update, which we have corrected in this final rule to reflect the September 2017 update of HCRIS, which was used by OACT in developing the December 2017 estimates. The cost report data from the December quarterly update were not available to be used in OACT's December 2017 estimates of Medicare DSH payments.) Because SCHs that are projected to be paid under their hospital-specific rate are excluded from the application of section 1886(r) of the Act, these hospitals also were excluded from the December 2017 Medicare DSH estimates. Furthermore, because section 1886(r) of the Act specifies that the uncompensated care payment is in addition to the empirically justified Medicare DSH payment (25 percent of DSH payments that would be made without regard to section 1886(r) of the Act), Maryland hospitals, which are not eligible to receive DSH payments, were also excluded from the Office of the Actuary's December 2017 Medicare DSH estimates. The 30 hospitals that were then participating in the Rural Community Hospital Demonstration Program were also excluded from these estimates because, under the payment methodology that applies during the second 5 years of the extension period, these hospitals are not eligible to receive empirically justified Medicare DSH payments or interim and final uncompensated care payments.
For the proposed rule, using the data sources discussed above, the Office of the Actuary's December 2017 estimate for Medicare DSH payments for FY 2019, without regard to the application of section 1886(r)(1) of the Act, was approximately $16.295 billion. Therefore, also based on the December 2017 estimate, the estimate of empirically justified Medicare DSH payments for FY 2019, with the application of section 1886(r)(1) of the
Some commenters expressed concern about whether underreporting of Medicaid coverage was factored into the calculation of Factor 1, as it was for Factor 2. The commenters noted that, in the proposed rule, CMS did not explain why OACT assumed that there is an underreporting of Medicaid coverage due to “a perceived stigma associated with being enrolled in the Medicaid program or confusion about the source of health insurance.” The commenters further stated that the proposed rule did not indicate that the same presumption was also applied to the calculation of Factor 1. Many commenters provided examples of other assumptions made by OACT for which CMS did not provide information in rulemaking to explain the basis for or the data used to make the assumptions. The commenters believed that, given the information available to CMS, such as enrollment and utilization information from States that have expanded Medicaid and recently released reports that concluded that the Affordable Care Act had insured fewer individuals than previously estimated (CBO September 2017 report; President's 2018 Economic Report), coverage levels were lower than estimated by CMS; and therefore, DSH payments to hospitals were suppressed. The commenters requested that CMS implement a system to reconcile uncompensated care payments once later data on Medicare DSH payments are available. One commenter thanked CMS for providing a table listing hospital-specific estimated uncompensated care payments and other DSH-related information for FY 2019. Another commenter suggested that, as CMS is permitting revisions to Factor 3, the agency consider completing reconciliation for Factor 1 and Factor 2. The commenter recognized that there are issues pertaining to completing reconciliation for all three factors, such as the determination of when to finalize all cost reports, but suggested using a methodology similar to the one used to determine the wage index by using prior years' data for settlement of a future year and developing time tables for submissions and revisions to the data.
To provide context, we first note that Factor 1 is not estimated in isolation from other OACT projections. The Factor 1 estimates for proposed rules are generally consistent with the economic assumptions and actuarial analysis used to develop the President's Budget estimates under current law, and the Factor 1 estimates for the final rule are generally consistent with those used for the Midsession Review of the President's Budget. As we have in the past, for additional information on the development of the President's Budget, we refer readers to the Office of Management and Budget website at:
For a general overview of the principal steps involved in projecting future inpatient costs and utilization, we refer readers to the “2018 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds” available on the CMS website at:
We also refer the public to the Actuarial Report on the Financial Outlook for Medicaid for a discussion of general issues regarding Medicaid projections.
Second, as described in more detail later in this section, in the FY 2019 IPPS/LTCH PPS proposed rule, we included information regarding the data sources, methods, and assumptions employed by the actuaries in determining the OACT's estimate of Factor 1. In summary, we indicated the historical HCRIS data update OACT used to identify Medicare DSH
Regarding the commenters' assertion that, similar to the adjustment for Medicaid underreporting on survey data in the estimation of Factor 2, we should also account for this underreporting in our estimate of Factor 1, we note that the Factor 1 calculation uses Medicaid enrollment data and estimates and does not require the adjustment because it does not use survey data.
Lastly, regarding the commenters' suggestion that CMS consider reconciling the estimates of Factors 1, 2, and 3, we continue to believe that applying our best estimates prospectively is most conducive to administrative efficiency, finality, and predictability in payments (78 FR 50628; 79 FR 50010; 80 FR 49518; 81 FR 56949; and 82 FR 38195). We believe that, in affording the Secretary the discretion to estimate the three factors used to determine uncompensated care payments and by including a prohibition against administrative and judicial review of those estimates in section 1886(r)(3) of the Act, Congress recognized the importance of finality and predictability under a prospective payment system. As a result, we do not agree with the commenters' suggestion that we should establish a process for reconciling our estimates of the three factors, which would be contrary to the notion of prospectivity. We also address comments specifically requesting that we establish procedures for reconciling Factor 3 later in this section, as part of the discussion of the comments received on the proposed methodology for Facto 3.
After consideration of the public comments we received, we are finalizing, as proposed, the methodology for calculating Factor 1 for FY 2019. We discuss the resulting Factor 1 amount for FY 2019 below.
For this final rule, the OACT used the most recently submitted Medicare cost report data from the March 2018 update of HCIRS to identify Medicare DSH payments and the most recent Medicare DSH payment adjustments provided in the Impact File published in conjunction with the publication of the FY 2018 IPPS/LTCH PPS final rule and applied update factors and assumptions for future changes in utilization and case-mix to estimate Medicare DSH payments for the upcoming fiscal year. The June 2018 OACT estimate for Medicare DSH payments for FY 2019, without regard to the application of section 1886(r)(1) of the Act, was approximately $16.339 billion. This estimate excluded Maryland hospitals participating in the Maryland All-Payer Model, hospitals participating in the Rural Community Hospital Demonstration, and SCHs paid under their hospital-specific payment rate. Therefore, based on the June 2018 estimate, the estimate of empirically justified Medicare DSH payments for FY 2019, with the application of section 1886(r)(1) of the Act, was approximately $4.085 billion (or 25 percent of the total amount of estimated Medicare DSH payments for FY 2019). Under § 412.106(g)(1)(i) of the regulations, Factor 1 is the difference between these two estimates of the OACT. Therefore, in this final rule, Factor 1 for FY 2019 is $12,254,291,878.57, which is equal to 75 percent of the total amount of estimated Medicare DSH payments for FY 2019 ($16,339,055,838.09 minus $4,084,763,959.52).
The Office of the Actuary's final estimates for FY 2019 began with a baseline of $13.230 billion in Medicare DSH expenditures for FY 2015. The following table shows the factors applied to update this baseline through the current estimate for FY 2019:
In this table, the discharges column shows the increase in the number of Medicare fee-for-service (FFS) inpatient hospital discharges. The figures for FY 2016 and FY 2017 are based on Medicare claims data that have been adjusted by a completion factor. The discharge figure for FY 2018 is based on preliminary data for 2018. The discharge figure for FY 2019 is an assumption based on recent trends recovering back to the long-term trend and assumptions related to how many beneficiaries will be enrolled in Medicare Advantage (MA) plans. The case-mix column shows the increase in case-mix for IPPS hospitals. The case-mix figures for FY 2016 and FY 2017 are based on actual data adjusted by a completion factor. The FY 2018 increase is based on preliminary data. The FY 2019 increase is an estimate based on the recommendation of the 2010-2011 Medicare Technical Review Panel. The “Other” column shows the increase in other factors that contribute to the Medicare DSH estimates. These factors
The table below shows the factors that are included in the “Update” column of the above table:
Section 1886(r)(2)(B) of the Act establishes Factor 2 in the calculation of the uncompensated care payment. Specifically, section 1886(r)(2)(B)(i) of the Act provides that, for each of FYs 2014, 2015, 2016, and 2017, a factor equal to 1 minus the percent change in the percent of individuals under the age of 65 who are uninsured, as determined by comparing the percent of such individuals (1) who were uninsured in 2013, the last year before coverage expansion under the Affordable Care Act (as calculated by the Secretary based on the most recent estimates available from the Director of the Congressional Budget Office before a vote in either House on the Health Care and Education Reconciliation Act of 2010 that, if determined in the affirmative, would clear such Act for enrollment); and (2) who are uninsured in the most recent period for which data are available (as so calculated), minus 0.1 percentage point for FY 2014 and minus 0.2 percentage point for each of FYs 2015, 2016, and 2017.
Section 1886(r)(2)(B)(ii) of the Act permits the use of a data source other than the CBO estimates to determine the percent change in the rate of uninsurance beginning in FY 2018. In addition, for FY 2018 and subsequent years, the statute does not require that the estimate of the percent of individuals who are uninsured be limited to individuals who are under 65. Specifically, the statute states that, for FY 2018 and subsequent fiscal years, the second factor is 1 minus the percent change in the percent of individuals who are uninsured, as determined by comparing the percent of individuals who were uninsured in 2013 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of CMS) and the percent of individuals who were uninsured in the most recent period for which data are available (as so estimated and certified), minus 0.2 percentage point for FYs 2018 and 2019.
As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197), in our analysis of a potential data source for the rate of uninsurance for purposes of computing Factor 2 in FY 2018, we considered the following: (a) The extent to which the source accounted for the full U.S. population; (b) the extent to which the source comprehensively accounted for both public and private health insurance coverage in deriving its estimates of the number of uninsured; (c) the extent to which the source utilized data from the Census Bureau; (d) the timeliness of the estimates; (e) the continuity of the estimates over time; (f) the accuracy of the estimates; and (g) the availability of projections (including the availability of projections using an established estimation methodology that would allow for calculation of the rate of uninsurance for the applicable Federal fiscal year). As we explained in the FY 2018 IPPS/LTCH PPS final rule, these considerations are consistent with the statutory requirement that this estimate be based on data from the Census Bureau or other sources the Secretary determines appropriate and help to ensure the data source will provide reasonable estimates for the rate of uninsurance that are available in conjunction with the IPPS rulemaking cycle. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20391), we proposed to use the same methodology as was used in FY 2018 to determine Factor 2 for FY 2019.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198), we explained that we determined the source that, on balance, best meets all of these considerations is the uninsured estimates produced by CMS' Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA). The NHEA represents the government's official estimates of economic activity (spending) within the health sector. The information contained in the NHEA has
The NHEA estimates of U.S. population reflect the Census Bureau's definition of the resident-based population, which includes all people who usually reside in the 50 States or the District of Columbia, but excludes residents living in Puerto Rico and areas under U.S. sovereignty, members of the U.S. Armed Forces overseas, and U.S. citizens whose usual place of residence is outside of the United States, plus a small (typically less than 0.2 percent of population) adjustment to reflect Census undercounts. In past years, the estimates for Factor 2 were made using the CBO's uninsured population estimates for the under 65 population. For FY 2018 and subsequent years, the statute does not restrict the estimate to the measurement of the percent of individuals under the age of 65 who are uninsured. Accordingly, as we explained in the FY 2018 IPPS/LTCH PPS proposed and final rules, we believe it is appropriate to use an estimate that reflects the rate of uninsurance in the United States across all age groups. In addition, we continue to believe that a resident-based population estimate more fully reflects the levels of uninsurance in the United States that influence uncompensated care for hospitals than an estimate that reflects only legal residents. The NHEA estimates of uninsurance are for the total U.S. population (all ages) and not by specific age cohort, such as the population under the age of 65.
The NHEA includes comprehensive enrollment estimates for total private health insurance (PHI) (including direct and employer-sponsored plans), Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and other public programs, and estimates of the number of individuals who are uninsured. Estimates of total PHI enrollment are available for 1960 through 2016, estimates of Medicaid, Medicare, and CHIP enrollment are available for the length of the respective programs, and all other estimates (including the more detailed estimates of direct-purchased and employer-sponsored insurance) are available for 1987 through 2016. The NHEA data are publicly available on the CMS website at:
In order to compute Factor 2, the first metric that is needed is the proportion of the total U.S. population that was uninsured in 2013. In developing the estimates for the NHEA, OACT's methodology included using the number of uninsured individuals for 1987 through 2009 based on the enhanced Current Population Survey (CPS) from the State Health Access Data Assistance Center (SHADAC). The CPS, sponsored jointly by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics (BLS), is the primary source of labor force statistics for the population of the United States. (We refer readers to the website at:
To estimate the number of uninsured individuals for 2010 through 2014, the OACT extrapolates from the 2009 CPS data using data from the National Health Interview Survey (NHIS). For both 2015 and 2016, OACT's estimates of the rate of uninsurance are derived by applying the NHIS data on the proportion of uninsured individuals to the total U.S. population as described above. The NHIS is one of the major data collection programs of the National Center for Health Statistics (NCHS), which is part of the Centers for Disease Control and Prevention (CDC). The U.S. Census Bureau is the data collection agent for the NHIS. The NHIS results have been instrumental over the years in providing data to track health status, health care access, and progress toward achieving national health objectives. For further information regarding the NHIS, we refer readers to the CDC website at:
The next metrics needed to compute Factor 2 are projections of the rate of uninsurance in both calendar years 2018 and 2019. On an annual basis, OACT projects enrollment and spending trends for the coming 10-year period. Those projections (currently for years 2017 through 2026) use the latest NHEA historical data, which presently run through 2016. The NHEA projection methodology accounts for expected changes in enrollment across all of the categories of insurance coverage previously listed. The sources for projected growth rates in enrollment for Medicare, Medicaid, and CHIP include the latest Medicare Trustees Report, the Medicaid Actuarial Report, or other updated estimates as produced by OACT. Projected rates of growth in enrollment for private health insurance and the uninsured are based largely on OACT's econometric models, which rely on the set of macroeconomic assumptions underlying the latest Medicare Trustees Report. Greater detail can be found in OACT's report titled “Projections of National Health Expenditure: Methodology and Model Specification,” which is available on the CMS website at:
As discussed in the FY 2018 IPPS/LTCH PPS final rule, the use of data from the NHEA to estimate the rate of uninsurance is consistent with the statute and meets the criteria we have identified for determining the appropriate data source. Section 1886(r)(2)(B)(ii) of the Act instructs the Secretary to estimate the rate of uninsurance for purposes of Factor 2 based on data from the Census Bureau or other sources the Secretary determines appropriate. The NHEA utilizes data from the Census Bureau; the estimates are available in time for the IPPS rulemaking cycle; the estimates are produced by OACT on an annual basis and are expected to continue to be produced for the foreseeable future; and projections are available for calendar year time periods that span the
Using these data sources and the methodologies described above, the OACT estimates that the uninsured rate for the historical, baseline year of 2013 was 14 percent and for CYs 2018 and 2019 is 9.1 percent and 9.6 percent, respectively.
As with the CBO estimates on which we based Factor 2 in prior fiscal years, the NHEA estimates are for a calendar year. In the rulemaking for FY 2014, many commenters noted that the uncompensated care payments are made for the fiscal year and not on a calendar year basis and requested that CMS normalize the CBO estimate to reflect a fiscal year basis. Specifically, commenters requested that CMS calculate a weighted average of the CBO estimate for October through December 2013 and the CBO estimate for January through September 2014 when determining Factor 2 for FY 2014. We agreed with the commenters that normalizing the estimate to cover FY 2014 rather than CY 2014 would more accurately reflect the rate of uninsurance that hospitals would experience during the FY 2014 payment year. Accordingly, we estimated the rate of uninsurance for FY 2014 by calculating a weighted average of the CBO estimates for CY 2013 and CY 2014 (78 FR 50633). We have continued this weighted average approach in each fiscal year since FY 2014.
We continue to believe that, in order to estimate the rate of uninsurance during a fiscal year more accurately, Factor 2 should reflect the estimated rate of uninsurance that hospitals will experience during the fiscal year, rather than the rate of uninsurance during only one of the calendar years that the fiscal year spans. Accordingly, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20393), we proposed to continue to apply the weighted average approach used in past fiscal years in order to estimate the rate of uninsurance for FY 2019. The OACT has certified this estimate of the fiscal year rate of uninsurance to be reasonable and appropriate for purposes of section 1886(r)(2)(B)(ii) of the Act.
The calculation of the proposed Factor 2 for FY 2019 using a weighted average of the OACT's projections for CY 2018 and CY 2019 was as follows:
• Percent of individuals without insurance for CY 2013: 14 percent.
• Percent of individuals without insurance for CY 2018: 9.1 percent.
• Percent of individuals without insurance for CY 2019: 9.6 percent.
• Percent of individuals without insurance for FY 2019 (0.25 × 0.091) + (0.75 × 0.096): 9.48 percent.
Therefore, we proposed that Factor 2 for FY 2019 would be 67.51 percent.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20393), we stated that the proposed FY 2019 uncompensated care amount was: $12,221,027,954.62 × 0.6751 = $8,250,415,972.16.
We invited public comments on our proposed methodology for calculation of Factor 2 for FY 2019.
In response to commenters who stated the increase in the estimated amount available to make uncompensated care payments in FY 2019 was not enough to address the underpayments to hospitals that occurred as a result of using CBO data in the past to estimate the change in the rate of uninsurance, we do not agree that addressing any difference between the prospectively determined estimates using the CBO data and later retrospective estimates would be appropriate for reasons we have articulated in past rulemaking and earlier in this section. We continue to believe that applying our best estimates prospectively is most conducive to administrative efficiency, finality, and predictability in payments (78 FR 50628; 79 FR 50010; 80 FR 49518; 81 FR 56949; and 82 FR 38195). We believe that, in affording the Secretary the discretion to estimate the three factors used to determine uncompensated care payments and by including a prohibition against administrative and judicial review of those estimates in section 1886(r)(3) of the Act, Congress recognized the importance of finality and predictability under a prospective payment system. As a result, we do not agree with the commenters' suggestion that we should establish a process for reconciling our estimate of Factor 2 for any given year using later estimates.
After consideration of the public comments we received, we are finalizing the calculation of Factor 2 for FY 2019 as proposed. The estimates of the percent of uninsured individuals have been certified by the Chief Actuary of CMS, as discussed in the proposed rule. The calculation of the final Factor 2 for FY 2019 using a weighted average of OACT's projections for CY 2018 and CY 2019 is as follows:
• Percent of individuals without insurance for CY 2013: 14 percent.
• Percent of individuals without insurance for CY 2018: 9.1 percent.
• Percent of individuals without insurance for CY 2019: 9.6 percent.
• Percent of individuals without insurance for FY 2019 (0.25 times 0.091) + (0.75 times 0.096): 9.48 percent.
Therefore, the final Factor 2 for FY 2019 is 67.51 percent.
The final FY 2019 uncompensated care amount is: $12,254,291,878.57 × 0.6751 = $8,272,872,447.22.
Section 1886(r)(2)(C) of the Act defines Factor 3 in the calculation of the uncompensated care payment. As we have discussed earlier, section 1886(r)(2)(C) of the Act states that Factor 3 is equal to the percent, for each subsection (d) hospital, that represents the quotient of: (1) The amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines alternative data are available that are a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and (2) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act for such period (as so estimated, based on such data).
Therefore, Factor 3 is a hospital-specific value that expresses the proportion of the estimated uncompensated care amount for each subsection (d) hospital and each subsection (d) Puerto Rico hospital with the potential to receive Medicare DSH payments relative to the estimated uncompensated care amount for all hospitals estimated to receive Medicare DSH payments in the fiscal year for which the uncompensated care payment is to be made. Factor 3 is applied to the product of Factor 1 and Factor 2 to determine the amount of the uncompensated care payment that each eligible hospital will receive for FY 2014 and subsequent fiscal years. In order to implement the statutory requirements for this factor of the uncompensated care payment formula, it was necessary to determine: (1) The definition of uncompensated care or, in other words, the specific items that are to be included in the numerator (that is, the estimated uncompensated care amount for an individual hospital) and the denominator (that is, the estimated uncompensated care amount for all hospitals estimated to receive Medicare DSH payments in the applicable fiscal year); (2) the data source(s) for the estimated uncompensated care amount; and (3) the timing and manner of computing the quotient for each hospital estimated to receive Medicare DSH payments. The statute instructs the Secretary to estimate the amounts of uncompensated care for a period based on appropriate data. In addition, we note that the statute permits the Secretary to use alternative data in the case where the Secretary determines that such alternative data are available that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured.
In the course of considering how to determine Factor 3 during the rulemaking process for FY 2014, the first year this provision was in effect, we considered defining the amount of uncompensated care for a hospital as the uncompensated care costs of that hospital and determined that Worksheet S-10 of the Medicare cost report potentially provides the most complete data regarding uncompensated care costs for Medicare hospitals. However, because of concerns regarding variations in the data reported on Worksheet S-10 and the completeness of these data, we did not use Worksheet S-10 data to determine Factor 3 for FY 2014, or for FYs 2015, 2016, or 2017. Instead, we believed that the utilization of insured low-income patients, as measured by patient days, would be a better proxy for the costs of hospitals in treating the uninsured and therefore appropriate to use in calculating Factor 3 for these years. Of particular importance in our decision making was the relative newness of Worksheet S-10, which went into effect on May 1, 2010. At the time of the rulemaking for FY 2014, the most recent available cost reports would have been from FYs 2010 and 2011, which were submitted on or after May 1, 2010, when the new Worksheet S-10 went into effect. We believed that concerns about the standardization and completeness of the Worksheet S-10 data could be more acute for data collected in the first year of the Worksheet's use (78 FR 50635). In addition, we believed that it would be most appropriate to use data elements that have been historically publicly available, subject to audit, and used for payment purposes (or that the public understands will be used for payment purposes) to determine the amount of uncompensated care for purposes of Factor 3 (78 FR 50635). At the time we issued the FY 2014 IPPS/LTCH PPS final rule, we did not believe that the available data regarding uncompensated care from Worksheet S-10 met these criteria and, therefore, we believed they were not reliable enough to use for determining FY 2014 uncompensated care payments. For FYs 2015, 2016, and 2017, the cost reports used for calculating uncompensated care payments (that is, FYs 2011, 2012, and 2013) were also submitted prior to the time that hospitals were on notice that Worksheet S-10 could be the data source for calculating uncompensated care payments. Therefore, we believed it was also appropriate to use proxy data to calculate Factor 3 for these years. We indicated our belief that Worksheet S-10 could ultimately serve as an appropriate source of more direct data regarding uncompensated care costs for purposes of determining Factor 3 once hospitals were submitting more accurate and consistent data through this reporting mechanism.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38202), we stated that we can no longer conclude that alternative data to the Worksheet S-10 are available for FY 2014 that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. Hospitals were on notice as of FY 2014 that Worksheet S-10 could eventually become the data source for CMS to calculate uncompensated care payments. Furthermore, hospitals' cost reports from FY 2014 had been publicly available for some time, and CMS had analyses of Worksheet S-10, conducted both internally and by stakeholders, demonstrating that Worksheet S-10 accuracy had improved over time. Analyses performed by MedPAC had already shown that the correlation between audited uncompensated care data from 2009 and the data from the FY 2011 Worksheet S-10 was over 0.80, as compared to a correlation of approximately 0.50 between the audited uncompensated care data and 2011 Medicare SSI and Medicaid days. Based on this analysis, MedPAC concluded that use of Worksheet S-10 data was already better than using Medicare SSI and Medicaid days as a proxy for uncompensated care costs, and that the
Subsequent analyses from Dobson/DaVanzo, originally commissioned by CMS for the FY 2014 rulemaking and updated in later years, compared Worksheet S-10 and IRS Form 990 data and assessed the correlation in Factor 3s derived from each of the data sources. The most recent update of this analysis, which used IRS Form 990 data for tax years 2011, 2012, and 2013 (the latest available years) as a benchmark, found that the amounts for Factor 3 derived using the IRS Form 990 and Worksheet S-10 data continue to be highly correlated and that this correlation continues to increase over time, from 0.80 in 2011 to 0.85 in 2013.
This empirical evidence led us to believe that we had reached a tipping point in FY 2018 with respect to the use of the Worksheet S-10 data. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38201 through 38203) for a complete discussion of these analyses.
We found further evidence for this tipping point when we examined changes to the FY 2014 Worksheet S-10 data submitted by hospitals following the publication of the FY 2017 IPPS/LTCH PPS final rule. In the FY 2017 IPPS/LTCH PPS final rule, as part of our ongoing quality control and data improvement measures for the Worksheet S-10, we referred readers to Change Request 9648, Transmittal 1681, titled “The Supplemental Security Income (SSI)/Medicare Beneficiary Data for Fiscal Year 2014 for Inpatient Prospective Payment System (IPPS) Hospitals, Inpatient Rehabilitation Facilities (IRFs), and Long Term Care Hospitals (LTCHs),” issued on July 15, 2016 (available at:
We also recognized commenters' concerns that, in using Medicaid days as part of the proxy for uncompensated care, it would be possible for hospitals in States that choose to expand Medicaid to receive higher uncompensated care payments because they may have more Medicaid patient days than hospitals in a State that does not choose to expand Medicaid. Because the earliest Medicaid expansions under the Affordable Care Act began in 2014, the 2011, 2012, and 2013 Medicaid days used to calculate uncompensated care payments in FYs 2015, 2016, and 2017 are the latest available data on Medicaid utilization that do not reflect the effects of these Medicaid expansions. Accordingly, if we had used only low-income insured days to estimate uncompensated care in FY 2018, we would have needed to hold the time period of these data constant and use data on Medicaid days from 2011, 2012, and 2013 in order to avoid the risk of any redistributive effects arising from the decision to expand Medicaid in certain States. As a result, we would have been using older data that may provide a less accurate proxy for the level of uncompensated care being furnished by hospitals, contributing to our growing concerns regarding the continued use of low-income insured days as a proxy for uncompensated care costs in FY 2018.
In summary, as we stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38203), when weighing the new information regarding the growing correlation between the Worksheet S-10 data and IRS 990 data that became available to us after the FY 2017 rulemaking in conjunction with the information regarding Worksheet S-10 data and the low-income days proxy that we analyzed as part of our consideration of this issue in prior rulemaking, we determined that we could no longer conclude that alternative data to the Worksheet S-10 are available for FY 2014 that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. We also stated that we believe that continued use of Worksheet S-10 will improve the accuracy and consistency of the reported data, especially in light of CMS' concerted efforts to allow hospitals to review and resubmit their Worksheet S-10 data for past years and the use of select audit protocols to trim aberrant data and replace them with more reasonable amounts. We also committed to continue to work with stakeholders to address their concerns regarding the accuracy of the reporting of uncompensated care costs through provider education and refinement of the instructions to Worksheet S-10.
Section 1886(r)(2)(C) of the Act governs both the selection of the data to be used in calculating Factor 3, and also allows the Secretary the discretion to determine the time periods from which we will derive the data to estimate the numerator and the denominator of the Factor 3 quotient. Specifically, section 1886(r)(2)(C)(i) of the Act defines the numerator of the quotient as the amount of uncompensated care for such hospital for a period selected by the Secretary. Section 1886(r)(2)(C)(ii) of the Act defines the denominator as the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act for such period. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50638), we adopted a process of making interim payments with final cost report settlement for both the empirically justified Medicare DSH payments and the uncompensated care payments required by section 3133 of the
In the FY 2017 IPPS/LTCH PPS final rule, in order to mitigate undue fluctuations in the amount of uncompensated care payments to hospitals from year to year and smooth over anomalies between cost reporting periods, we finalized a policy of calculating a hospital's share of uncompensated care based on an average of data derived from three cost reporting periods instead of one cost reporting period. As explained in the preamble to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56957 through 56959), instead of determining Factor 3 using data from a single cost reporting period as we did in FY 2014, FY 2015, and FY 2016, we used data from three cost reporting periods (Medicaid data for FYs 2011, 2012, and 2013 and SSI days from the three most recent available years of SSI utilization data (FYs 2012, 2013, and 2014)) to compute Factor 3 for FY 2017. Furthermore, instead of determining a single Factor 3 as we had done since the first year of the uncompensated care payment in FY 2014, we calculated an individual Factor 3 for each of the three cost reporting periods, which we then averaged by the number of cost reporting years with data to compute the final Factor 3 for a hospital. Under this policy, if a hospital had merged, we would combine data from both hospitals for the cost reporting periods in which the merger was not reflected in the surviving hospital's cost report data to compute Factor 3 for the surviving hospital. Moreover, to further reduce undue fluctuations in a hospital's uncompensated care payments, if a hospital filed multiple cost reports beginning in the same fiscal year, we combined data from the multiple cost reports so that a hospital could have a Factor 3 calculated using more than one cost report within a cost reporting period. We codified these changes for FY 2017 by amending the regulations at § 412.106(g)(1)(iii)(C).
For FY 2018, consistent with the methodology used to calculate Factor 3 for FY 2017, we advanced the time period of the data used in the calculation of Factor 3 forward by one year and used data from FY 2012, FY 2013, and FY 2014 cost reports. We believed it would not be appropriate to use Worksheet S-10 data for periods prior to FY 2014, as hospitals did not have notice that the Worksheet S-10 data from these years might be used for purposes of computing uncompensated care payments and, as a result, may not have fully appreciated the importance of reporting their uncompensated care costs as completely and accurately as possible. Rather, for cost reporting periods prior to FY 2014, we believed it would be appropriate to continue to use low-income insured days. Accordingly, for the time period consisting of three cost reporting years, including FY 2014, FY 2013, and FY 2012, we used Worksheet S-10 data for the FY 2014 cost reporting period and the low-income insured days proxy data for the two earlier cost reporting periods. In order to perform this calculation, we drew three sets of data (2 years of Medicaid utilization data and 1 year of Worksheet S-10 data) from the most recent available HCRIS extract. Accordingly, for FY 2018, in addition to the Worksheet S-10 data for FY 2014, we used Medicaid days from FY 2012 and FY 2013 cost reports and FY 2014 and FY 2015 SSI ratios. We also continued to use FY 2012 cost report data submitted to CMS by IHS and Tribal hospitals to determine FY 2012 Medicaid days for those hospitals. (Cost report data from IHS and Tribal hospitals are included in HCRIS beginning in FY 2013 and are no longer submitted separately.) We continued the policies that were finalized in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020) to address several specific issues concerning the process and data to be employed in determining Factor 3 in the case of hospital mergers as well as the policies finalized in the FY 2017 IPPS/LTCH PPS final rule concerning multiple cost reports beginning in the same fiscal year (81 FR 56957).
To limit the effect of aberrant reporting of Worksheet S-10 data, we identified those hospitals that had high levels of reported uncompensated care relative to the total operating costs reported on the cost report. Specifically, for those hospitals where the ratio of uncompensated care costs relative to total operating costs for the hospital's 2014 cost report exceeded 50 percent, we determined the ratio of uncompensated care costs relative to total operating costs from the hospital's 2015 cost report and applied that ratio to the hospital's total operating costs from the 2014 cost report to determine an adjusted amount of uncompensated care costs for FY 2014. We then substituted this amount for the FY 2014 Worksheet S-10 data when determining Factor 3 for FY 2018. We believed that this approach, which affected the data for three hospitals in FY 2018, balanced our desire to exclude potentially aberrant data from a small number of hospitals in the determination of Factor 3 with our concern regarding inappropriately reducing FY 2018 uncompensated care payments to a hospital that may have a legitimately high ratio. We stated our intent to consider in future rulemaking whether continued use of this adjustment or an alternative adjustment is necessary for subsequent years.
Due to concerns that the uncompensated care data reported by Puerto Rico hospitals and Indian Health Service and Tribal hospitals need to be examined further, we concluded that the Worksheet S-10 data for these hospitals should not be used to determine Factor 3 for FY 2018 (82 FR 38209). We also determined that Worksheet S-10 data should not be used to determine Factor 3 for all-inclusive rate providers, whose CCRs were deemed to be potentially erroneous and in need of further examination (82 FR 38212). For the reasons described earlier related to the impact of the Medicaid expansion beginning in FY 2014, we did not believe it was appropriate to calculate a Factor 3 for these hospitals using FY 2014 low-income insured days. Because we did not believe it was appropriate to use the FY 2014 uncompensated care data for these hospitals and we also did not believe it was appropriate to use the FY 2014 low-income insured days, we concluded that the best proxy for the costs of Puerto Rico, Indian Health Service and Tribal hospitals, and all-inclusive rate providers for treating the uninsured was the low-income insured days data for FY 2012 and FY 2013. Accordingly, in order to determine the Factor 3 for FY 2018 for these hospitals, we calculated an average of three individual Factor 3s using the Factor 3 calculated using FY 2013 cost report data twice and the Factor 3 calculated using FY 2012 cost report data once. We believed it was appropriate to double-weight the Factor 3 calculated using FY 2013 data as it reflects the most recent available information regarding the hospital's low-income insured days before any expansion of Medicaid. We stated that we would reexamine the use of the Worksheet S-10 data for Puerto Rico, Indian Health Service and Tribal
Therefore, for FY 2018, we computed a Factor 3 for each hospital by—
• Step 1: Calculating Factor 3 using the low-income insured days proxy based on FY 2012 cost report data and the FY 2014 SSI ratio;
• Step 2: Calculating Factor 3 using the insured low-income days proxy based on FY 2013 cost report data and the FY 2015 SSI ratio;
• Step 3: Calculating Factor 3 based on the FY 2014 Worksheet S-10 data (or using the Factor 3 calculated in Step 2 for Puerto Rico, IHS/Tribal hospitals, and all-inclusive rate providers); and
• Step 4: Averaging the Factor 3 values from Steps 1, 2, and 3; that is, adding the Factor 3 values from FY 2012, FY 2013, and FY 2014 for each hospital, and dividing that amount by the number of cost reporting periods with data to compute an average Factor 3.
We stated our belief that if we were to propose to continue this methodology for FY 2019 and FY 2020, this approach would have the effect of transitioning the incorporation of data from Worksheet S-10 into the calculation of Factor 3 because an additional year of Worksheet S-10 data would be incorporated into the calculation of Factor 3 in FY 2019, and the use of low-income insured days would be phased out by FY 2020.
As discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20396), since the publication of the FY 2018 IPPS/LTCH PPS final rule, we have continued to monitor the reporting of Worksheet S-10 data in anticipation of using Worksheet S-10 data from hospitals' FY 2014 and FY 2015 cost reports in the calculation of Factor 3. We acknowledge the concerns that have been raised regarding the instructions for Worksheet S-10. In particular, commenters have expressed concerns that the lack of clear and concise line level instructions prevents accurate and consistent data from being reported on Worksheet S-10. We note that, in November 2016, CMS issued Transmittal 10, which clarified and revised the instructions for the Worksheet S-10, including the instructions regarding the reporting of charity care charges. Transmittal 10 is available for download on the CMS website at:
During the FY 2018 rulemaking, commenters pointed out that, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56963), CMS agreed to institute certain additional quality control and data improvement measures prior to moving forward with incorporating Worksheet S-10 data into the calculation of Factor 3. However, the commenters indicated that, aside from a brief window in 2016 for hospitals to submit corrected data on their FY 2014 Worksheet S-10 by September 30, 2016, and the issuance of revised instructions (Transmittal 10) in November 2016 that are applicable to cost reports beginning on or after October 1, 2016, CMS had not implemented any additional quality control and data improvement measures. We stated in the FY 2018 IPPS/LTCH PPS final rule that we would continue to work with stakeholders to address their concerns regarding the reporting of uncompensated care through provider education and refinement of the instructions to the Worksheet S-10 (82 FR 38206).
On September 29, 2017, we issued Transmittal 11, which clarified the definitions and instructions for uncompensated care, non-Medicare bad debt, non-reimbursed Medicare bad debt, and charity care, as well as modified the calculations relative to uncompensated care costs and added edits to ensure the integrity of the data reported on Worksheet S-10. Transmittal 11 is available for download on the CMS website at:
We also provided another opportunity for hospitals to submit revisions to their Worksheet S-10 data for FY 2014 and FY 2015 cost reports. We refer readers to Change Request 10378, Transmittal 1981, titled “Fiscal Year (FY) 2014 and 2015 Worksheet S 10 Revisions: Further Extension for All Inpatient Prospective Payment System (IPPS) Hospitals,” issued on December 1, 2017 (available at:
However, for the FY 2019 IPPS/LTCH PPS proposed rule, we were able to include data updated in HCRIS through February 15, 2018. Specifically, in light of the impact of the hurricanes in 2017 (Harvey, Irma, Maria, and Nate) and the extension of the deadline for resubmitting Worksheets S-10 for FY 2014 and FY 2015 through January 2, 2018, we believed it was appropriate to use data updated through February 15, 2018, rather than the December 2017 HCRIS update, which we typically use for the annual proposed rule. We believe that providing the additional time to allow cost reports that may have been delayed due to these unique circumstances to be included in our calculations for purposes of the FY 2019 proposed rule, enabled us to use more accurate uncompensated care cost data in calculating the proposed Factor 3 values.
We examined hospitals' FY 2014 and FY 2015 cost reports to determine if the Worksheet S-10 data on those cost reports had changed as a result of the additional opportunity for hospitals to submit revised Worksheet S-10 data for FY 2014 and FY 2015. Specifically, we compared hospitals' FY 2014 and FY 2015 Worksheet S-10 data as reported in the fourth quarter of CY 2016 update of HCRIS to the February 15, 2018 update of HCRIS. We examined hospitals' cost report data to determine if the Worksheet S 10 data had changed for any of the following lines: Total bad debt from Line 26, charity care for uninsured patients from Line 20, Column 1, or charity care for insured patients from Line 20, Column 2. Based on our review, we found that Worksheet S-10 data for both FY 2014 and FY 2015 had changed over that time period for approximately one-half of the hospitals that were eligible to receive Medicare DSH payments in FY 2018. The fact that the Worksheet S-10 data changed for such a significant number of hospitals following the opportunity to review their previously submitted cost report data and submit a revised Worksheet S-10, and that this revised Worksheet S-10 information is available to be used in determining uncompensated care costs, contributes to our determination that it is appropriate to continue to incorporate Worksheet S-10 data into the calculation of Factor 3 values for hospitals that are eligible to receive Medicare DSH payments.
As we stated in the FY 2019 IPPS/LTCH PPS proposed rule, with the additional steps we have taken to ensure the accuracy and consistency of the data reported on Worksheet S-10 since the publication of the FY 2018 IPPS/LTCH PPS final rule, we continue to believe that we can no longer conclude that alternative data to the Worksheet S-10 are currently available for FY 2014 that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. Similarly, the actions that we have taken to improve the accuracy and consistency of the Worksheet S-10 data, including the opportunity for hospitals to resubmit Worksheet S-10 data for FY 2015, lead us to conclude that there are no alternative data to the Worksheet S-10 data currently available for FY 2015 that are a better proxy for the costs of subsection (d) hospitals for treating uninsured individuals. As such, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20400), we proposed to advance the time period of the data used in the calculation of Factor 3 forward by 1 year and to use data from FY 2013, FY 2014, and FY 2015 cost reports to determine Factor 3 for FY 2019. For the reasons we described earlier, we stated that we continue to believe it is inappropriate to use Worksheet S-10 data for periods prior to FY 2014. Rather, for cost reporting periods prior to FY 2014, we believe it is appropriate to continue to use low-income insured days. Accordingly, with a time period that includes 3 cost reporting years consisting of FY 2015, FY 2014, and FY 2013, we proposed to use Worksheet S-10 data for the FY 2014 and FY 2015 cost reporting periods and the low-income insured days proxy data for the earliest cost reporting period. As in previous years, in order to perform this calculation, we drew three sets of data (1 year of Medicaid utilization data and 2 years of Worksheet S-10 data) from the most recent available HCRIS extract, which, for purposes of the FY 2019 proposed rule, was the HCRIS data updated through February 15, 2018. In the FY 2019 IPPS/LTCH PPS proposed rule, we stated that we expected to use the March 2018 update of HCRIS for the final rule. However, due to unique circumstances regarding the impact of the hurricanes in 2017 (Harvey, Irma, Maria, and Nate) and the extension of the deadline to resubmit Worksheet S-10 data through January 2, 2018, and the subsequent impact on the MAC review timeline, we indicated that we might consider using data updated through May 31, 2018, in the final rule, if necessary.
Accordingly, for FY 2019, in addition to the Worksheet S-10 data for FY 2014 and FY 2015, we proposed to use Medicaid days from FY 2013 cost reports and FY 2016 SSI ratios. We noted that cost report data from Indian Health Service and Tribal hospitals are included in HCRIS beginning in FY 2013 and no longer need to be incorporated from a separate data source. We also proposed to continue the policies that were finalized in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020) to address several specific issues concerning the process and data to be employed in determining Factor 3 in the case of hospital mergers. In addition, we proposed to continue the policies that were finalized in the FY 2018 IPPS/LTCH PPS final rule to address technical considerations related to the calculation of Factor 3 and the incorporation of Worksheet S-10 data (82 FR 38213 through 38220). In that final rule, we adopted a policy, for purposes of calculating Factor 3, under which we annualize Medicaid days data and uncompensated care cost data reported on the Worksheet S-10 if a hospital's cost report does not equal 12 months of data. As in FY 2018, for FY 2019, we did not propose to annualize SSI days because we do not obtain these data from hospital cost reports in HCRIS. Rather, we obtain these data from the latest available SSI ratios posted on the Medicare DSH homepage (
We noted that we were proposing to discontinue the policy finalized in the FY 2017 IPPS/LTCH PPS final rule concerning multiple cost reports beginning in the same fiscal year (81 FR 56957). Under this policy, we would first combine the data across the multiple cost reports before determining the difference between the start date and the end date to determine if annualization is needed. The policy was developed in response to commenters' concerns regarding the unique circumstances of hospitals that filed cost reports that are shorter or longer than 12 months. As we explained in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56957 through 56959) and in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19953), we believed that, for hospitals that file multiple cost reports beginning in the same year, combining the data from these cost reports had the benefit of supplementing the data of hospitals that filed cost reports that are less than 12 months, such that the basis of their uncompensated care payments and those of hospitals that filed full-year 12-month cost reports would be more equitable. As we stated in the FY 2019 IPPS/LTCH PPS proposed rule, we now believe that concerns about the equitability of the data used as the basis of hospital uncompensated care payments are more thoroughly addressed by the policy finalized in the FY 2018 IPPS/LTCH PPS final rule, under which CMS annualizes the Medicaid days and uncompensated care cost data of hospital cost reports that do not equal 12 months of data. Based on our experience, we stated that we believe that in many cases where a hospital files two cost reports beginning in the same fiscal year, combining the data across multiple cost reports before annualizing would yield a similar result to choosing the longer of the two cost reports and then annualizing the data if the cost report is shorter or longer than 12 months. Furthermore, even in cases where a hospital files more than one cost report beginning in the same fiscal year, it is not uncommon for one of those cost reports to span exactly 12 months. In this case, if Factor 3 is determined using only the full 12-month cost report, annualization would be unnecessary as there would already be 12 months of data. Therefore, for FY 2019, we stated that we believed it was appropriate to propose to eliminate the additional step of combining data across multiple cost reports if a hospital filed more than one cost report beginning in the same fiscal year. Instead, for purposes of calculating Factor 3, we would use data from the cost report that is equivalent to 12 months or, if no such cost report exists, the cost report that is closest to 12 months and annualize the data. Furthermore, we acknowledged that, in rare cases, a hospital may have more than one cost report beginning in one fiscal year, where one report also spans the entirety of the following fiscal year, such that the hospital has no cost report beginning in that fiscal year. For instance, a hospital's cost reporting period may have started towards the end of FY 2012 but cover the duration of FY 2013. In these rare situations, we proposed to use data from the cost report that spans both fiscal years in the Factor 3 calculation for the latter fiscal year as the hospital would already have data from the preceding cost report that could be used to determine Factor 3 for the previous fiscal year.
We also proposed to continue to apply statistical trims to anomalous hospital CCRs using the methodology adopted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38217 through 38219), where we stated our belief that, just as we apply trims to hospitals' CCRs to eliminate anomalies when calculating outlier payments for extraordinarily high cost cases (§ 412.84(h)(3)(ii)), it is appropriate to apply statistical trims to the CCRs on Worksheet S-10, Line 1, that are considered anomalies. Specifically, § 412.84(h)(3)(ii) states that the Medicare contractor may use a statewide CCR for hospitals whose operating or capital CCR is in excess of 3 standard deviations above the corresponding national geometric mean (that is, the CCR “ceiling”). This mean is recalculated annually by CMS and published in the proposed and final IPPS rules each year.
Similar to the process used in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38217 through 38218) for trimming CCRs, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20398), we proposed the following steps for FY 2019:
Step 1: Remove Maryland hospitals. In addition, we would remove All Inclusive Rate Providers because they have charge structures that differ from other IPPS hospitals. For providers that did not report a CCR on Worksheet S-10, Line 1, we would assign them the statewide average CCR in step 5 below.
Step 2: For each fiscal year (FY 2014 and FY 2015), calculate a CCR “ceiling” with the following data: For each IPPS hospital that was not removed in Step 1 (including non-DSH eligible hospitals), we would use cost report data to calculate a CCR by dividing the total costs on Worksheet C, Part I, Line 202, Column 3 by the charges reported on Worksheet C, Part I, Line 202, Column 8. (Combining data from multiple cost reports from the same FY is no longer necessary in this step, as the longer cost report would be selected). The ceiling would be calculated as 3 standard deviations above the national geometric mean CCR for the applicable fiscal year. This approach is consistent with the methodology for calculating the CCR ceiling used for high-cost outliers. Remove all hospitals that exceed the ceiling so that these aberrant CCRs do not skew the calculation of the statewide average CCR. (For this final rule, this trim would remove 5 hospitals that have a CCR above the calculated ceiling of 1.031 for FY 2014 and 9 hospitals that have a CCR above the calculated ceiling of 0.93 for FY 2015.)
Step 3: Using the CCRs for the remaining hospitals in Step 2, determine the urban and rural statewide average CCRs for FY 2014 and for FY 2015 for hospitals within each State (including non-DSH eligible hospitals), weighted by the sum of total inpatient discharges and outpatient visits from Worksheet S-3, Part I, Line 14, Column 14.
Step 4: Assign the appropriate statewide average CCR (urban or rural) calculated in Step 3 to all hospitals with a CCR for the applicable fiscal year greater than 3 standard deviations above the corresponding national geometric mean for that fiscal year (that is, the CCR “ceiling”). For this final rule, the statewide average CCR would therefore be applied to 14 hospitals, of which 2 hospitals in FY 2014 have Worksheet S-10 data and 5 hospitals in FY 2015 have Worksheet S-10 data.
After applying the applicable trims to a hospital's CCR as appropriate, we proposed that we would calculate a hospital's uncompensated care costs for the applicable fiscal year as being equal
Hospital Uncompensated Care Costs = Line 30 (Line 23, Column 3 + Line 29), which is equal to—
[(Line 1 CCR (as adjusted, if applicable) × Uninsured patient charity care Line 20, Column 1) − (Payments received from uninsured patient charity care Line 22, Column 1)] + [(Insured patient charity care Line 20, Column 2) − Insured patient charges from days beyond length of stay limit * (1−(Line 1 CCR (as adjusted, if applicable))) − (Payments received from insured patient charity care Line 22, Column 2)] + [(Line 1 CCR (as adjusted, if applicable) × Non-Medicare bad debt Line 28) + (Medicare allowable bad debts Line 27.01 − Medicare reimbursable bad debt Line 27)].
Similar in concept to the policy that we adopted for FY 2018, for FY 2019, we stated in the proposed rule that we continue to believe that uncompensated care costs that represent an extremely high ratio of a hospital's total operating expenses (such as the ratio of 50 percent used in the FY 2018 IPPS/LTCH PPS final rule) may be potentially aberrant, and that using the ratio of uncompensated care costs to total operating costs to identify potentially aberrant data when determining Factor 3 amounts has merit. That is, we stated that we continue to believe that, in the rare situations where a hospital has a ratio of uncompensated care costs to total operating expenditures that is extremely high, the issue is most likely with the hospital's uncompensated care costs and not its total operating costs. We noted that we had instructed the MACs to review situations where a hospital has an extremely high ratio of uncompensated care costs to total operating costs with the hospital, but indicated that we did not intend to make the MACs' review protocols public. As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56964), for program integrity reasons, CMS desk review and audit protocols are confidential and are for CMS and MAC use only. If the hospital cannot justify its reported uncompensated care amount, we stated that we believed it would be appropriate to utilize data from another fiscal year to address the potentially aberrant Worksheet S-10 data for FY 2014 or FY 2015. As we have previously indicated, we do not believe it would be appropriate to use Worksheet S-10 data from years prior to FY 2014 in the determination of Factor 3. Therefore, the most widely available Worksheet S-10 data available to us if a hospital has an extremely high ratio of uncompensated care costs to total operating expenses based on its FY 2014 or FY 2015 Worksheet S-10 data are the FY 2015 and FY 2016 Worksheet S-10 data. Accordingly, similar in concept to the approach we used in FY 2018, in cases where a hospital's uncompensated care costs for FY 2014 are an extremely high ratio of its total operating costs and the hospital cannot justify the amount it reported, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20399), we proposed to determine the ratio of FY 2015 uncompensated care costs to FY 2015 total operating expenses from the hospital's FY 2015 cost report and apply that ratio to the FY 2014 total operating expenses from the hospital's FY 2014 cost report to determine an adjusted amount of uncompensated care costs for FY 2014. We proposed that we would then use this adjusted amount to determine Factor 3 for FY 2019. Similarly, if a hospital has uncompensated care costs for FY 2015 that are an extremely high ratio of its total operating costs for that year and the hospital cannot justify its reported amount, we proposed to follow the same methodology using data from the hospital's FY 2016 cost report to determine an adjusted amount of uncompensated care costs for FY 2015. That is, we would determine the ratio of FY 2016 uncompensated care costs to FY 2016 total operating expenses from a hospital's FY 2016 cost report and apply that ratio to the FY 2015 total operating expenses from the hospital's FY 2015 cost report to determine an adjusted amount of uncompensated care costs for FY 2015. We proposed that we would then use this adjusted amount when determining Factor 3 for FY 2019. We tentatively included the data for hospitals that had a high ratio of uncompensated care costs to total operating expenses when calculating Factor 3 for the proposed rule. However, we noted in the proposed rule that our calculation of Factor 3 for this final rule would be contingent on the results of the ongoing MAC reviews of these hospitals. In the event those reviews necessitate supplemental data edits, we stated that we would incorporate such edits in the final rule for the purpose of correcting aberrant data.
We also stated in the proposed rule that, for FY 2019, we believe that situations where there were extremely large dollar increases or decreases in a hospital's uncompensated care costs when it resubmitted its FY 2014 Worksheet S-10 or FY 2015 Worksheet S-10 data, or when the data it had previously submitted were reprocessed by the MAC, may reflect potentially aberrant data and warrant further review. For example, although we do not make our actual review protocols public, we indicated that we might conclude that it would be appropriate to review hospitals with increases or decreases in uncompensated care costs in the top 1 percent of such changes. We noted that we had instructed our MACs to review these situations with each hospital. If it is determined after this review that an increase or decrease in uncompensated care costs cannot be justified by the hospital, we proposed to follow the same approach that we proposed to use to address situations when a hospital's ratio of its uncompensated care costs to its operating expenses is extremely high and the hospital cannot justify its reported amount. Specifically, if after review, the increase or decrease in uncompensated care costs for FY 2014 or FY 2015 cannot be justified by the hospital, we proposed that we would determine the ratio of the uncompensated care costs to total operating expenses from the hospital's cost report for the subsequent fiscal year and apply that ratio to the total operating expenses from the hospital's resubmitted cost report with the large increase or decrease in uncompensated care payments to determine an adjusted amount of uncompensated care costs for the applicable fiscal year. We indicated that we had tentatively included the data for hospitals where there was an extremely large increase or decrease in uncompensated care payments when calculating Factor 3 for the proposed rule. However, we noted in the proposed rule that our calculation of Factor 3 for the final rule was contingent on the results of the ongoing MAC reviews of these hospitals. In the event those reviews necessitate supplemental data edits, we stated that we would incorporate such edits in the final rule for the purpose of correcting aberrant data.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20400), for Indian Health Service and Tribal hospitals, subsection (d) Puerto Rico hospitals, and all-inclusive rate providers, we proposed to continue the policy we first adopted for FY 2018 of substituting data regarding FY 2013 low-income insured days for the Worksheet S-10 data when determining Factor 3. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38209), the use of data from Worksheet S-10 to calculate the uncompensated care amount for Indian Health Service and Tribal hospitals may jeopardize these hospitals' uncompensated care payments due to their unique funding structure. With
Therefore, for FY 2019, we proposed to compute Factor 3 for each hospital by—
Step 1: Calculating Factor 3 using the low-income insured days proxy based on FY 2013 cost report data and the FY 2016 SSI ratio (or, for Puerto Rico hospitals, 14 percent of the hospital's FY 2013 Medicaid days);
Step 2: Calculating Factor 3 based on the FY 2014 Worksheet S-10 data;
Step 3: Calculating Factor 3 based on the FY 2015 Worksheet S-10 data; and
Step 4: Averaging the Factor 3 values from Steps 1, 2, and 3; that is, adding the Factor 3 values from FY 2013, FY 2014, and FY 2015 for each hospital, and dividing that amount by the number of cost reporting periods with data to compute an average Factor 3 (or for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and all-inclusive rate providers using the Factor 3 value from Step 1).
We also proposed to amend the regulations at § 412.106(g)(1)(iii)(C) by adding a new paragraph (5) to reflect this proposed methodology for computing Factor 3 for FY 2019.
In the proposed rule, we noted that if a hospital does not have both Medicaid days for FY 2013 and SSI days for FY 2016 available for use in the calculation of Factor 3 in Step 1, we consider the hospital not to have data available for the fiscal year, and will remove that fiscal year from the calculation and divide by the number of years with data. A hospital will be considered to have both Medicaid days and SSI days data available if it reports zero days for either component of the Factor 3 calculation in Step 1. However, if a hospital is missing data due to not filing a cost report in one of the applicable fiscal years, we will divide by the remaining number of fiscal years.
Although we did not make any proposals with respect to the development of Factor 3 for FY 2020 and subsequent fiscal years, in the proposed rule, we noted that the above methodology would have the effect of fully transitioning the incorporation of data from Worksheet S-10 into the calculation of Factor 3 if used in FY 2020. Starting with 1 year of Worksheet S-10 data in FY 2018, an additional year of Worksheet S-10 data will be incorporated into the calculation of Factor 3 in FY 2019 under the policies included in this final rule, and the use of low-income insured days would be phased out by FY 2020 if the same methodology is proposed and finalized for that year. We also indicated that it is possible that when we examine the FY 2016 Worksheet S-10 data, we may determine that the use of multiple years of Worksheet S-10 data is no longer necessary in calculating Factor 3 for FY 2020. For example, given the efforts hospitals have already undertaken with respect to reporting their Worksheet S-10 data and the subsequent reviews by the MACs that had already been conducted prior to the development of this final rule, along with additional review work that may take place following the issuance of this final rule, we may consider using 1 year of Worksheet S-10 data as the basis for calculating Factor 3 for FY 2020.
For new hospitals that do not have data for any of the three cost reporting periods used in the Factor 3 calculation, we proposed to continue to apply the new hospital policy finalized in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50643). That is, the hospital would not receive either interim empirically justified Medicare DSH payments or interim uncompensated care payments. However, if the hospital is later determined to be eligible to receive empirically justified Medicare DSH payments based on its FY 2019 cost report, the hospital would also receive an uncompensated care payment calculated using a Factor 3, where the numerator is the uncompensated care costs reported on Worksheet S-10 of the hospital's FY 2019 cost report, and the denominator is the sum of uncompensated care costs reported on Worksheet S-10 of all DSH eligible hospitals' FY 2015 cost reports. Due to the uncertainty regarding the completeness and accuracy of the FY 2019 uncompensated care cost data at the time this calculation would need to be performed, we stated that we believe it would be more appropriate to use the sum of the uncompensated care costs reported on Worksheet S-10 of all DSH eligible hospitals' cost reports from FY 2015, the most recent year of the 3-year time period used in the development of Factor 3, to determine the denominator of Factor 3 for new hospitals. We noted that, given the time period of the data used to calculate Factor 3, any hospitals with a CCN established after October 1, 2015 would be considered new and subject to this policy.
As we have done for every proposed and final rule beginning in FY 2014, we stated that, in conjunction with both the FY 2019 IPPS/LTCH PPS proposed rule and this final rule, we would publish on the CMS website a table listing Factor 3 for all hospitals that we estimate would receive empirically justified Medicare DSH payments in FY 2019 (that is, those hospitals that would receive interim uncompensated care payments during the fiscal year), and for the remaining subsection (d) hospitals and subsection (d) Puerto Rico hospitals that have the potential of receiving a Medicare DSH payment in the event that they receive an empirically justified Medicare DSH payment for the fiscal year as determined at cost report settlement. We noted that, at the time of the
In conjunction with the proposed rule, we also published a supplemental data file containing a list of the mergers that we were aware of and the computed uncompensated care payment for each merged hospital. Hospitals had 60 days from the date of public display of the FY 2019 IPPS/LTCH PPS proposed rule to review the table and supplemental data file published on the CMS website in conjunction with the proposed rule and to notify CMS in writing of any inaccuracies. Comments could be submitted to the CMS inbox at
Other commenters opposed the use of Worksheet S-10 to compute Factor 3 and allocate uncompensated care costs in FY 2019. Many of these commenters maintained their position from previous years that, while Worksheet S-10 has the potential to serve as a more exact measure of hospital uncompensated care costs, the data reported are not presently a reliable and accurate reflection of these uncompensated care costs. The commenters also noted that the administrative burden for hospitals to complete Worksheet S-10 is high. These commenters asserted that CMS should suspend its use, or not advance its implementation, until the agency can demonstrate that the data being reported are accurate and consistent, or at least until FY 2021. Some commenters pointed to the evaluation performed by Dobson DaVanzo and asserted that, while the analysis demonstrated correlation between Worksheet S-10 and IRS Form 990, it did not address potentially significant differences in the reporting requirements for the forms.
In the FY 2019 IPPS/LTCH PPS proposed rule, we stated that we could no longer conclude that alternative data to the Worksheet S-10 are available for FY 2014 and FY 2015 that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. Our reviews of selected FY 2014 and FY 2015 data and the potential data aberrancies pointed out by commenters have not altered that conclusion. We continue to acknowledge that the Worksheet S-10 data are not perfect, but there are no perfect data sources available to us. We also acknowledge that the approximately $1.5 billion increase in the overall amount available to make uncompensated care payments will help to mitigate the impact of any redistribution of uncompensated care payments due to the continued incorporation of Worksheet S-10 data on hospitals that serve a large number of Medicaid and SSI patients, yet report proportionately lower uncompensated care amounts.
Many commenters recognized the efforts undertaken by CMS in contacting select hospitals to verify reported data, and some commenters noted data improvements since the release of Transmittal 11 and CMS' subsequent contact with individual hospitals. However, a number of commenters provided specific examples of potentially aberrant data that they asserted are a result of the ambiguity of the Worksheet S-10 instructions. These examples of potentially aberrant data related in large part to the reporting of charity care charges and uninsured discounts on Worksheet S-10, Line 20, Columns 1 and 2. For example, commenters noted that some hospitals reported charity care coinsurance and deductibles of more than 25 percent of their total charity care charges; some hospitals reported charity care charges that were, on average, 80 percent of total hospital charges; and some hospitals reported negative charity care charges. Several commenters also noted potentially aberrant data related to bad debt, including, for example, cases in which a hospital reported Medicare allowable bad debt elsewhere on the cost report, but those amounts were not reflected in its Worksheet S-10; hospitals that reported having more Medicare bad debt than total hospital bad debts; and hospitals with significant differences in bad debt charges over time. With respect to uncompensated care costs, commenters noted that, for example, some hospitals reported uncompensated care costs that were 30 to 70 percent of total hospital costs; and some hospitals reported uncompensated care costs that ranged from 0.14 percent to 250 percent of total hospital revenue. Commenters remarked that these results are implausible and indicate that CMS must continue working to improve the reliability of Worksheet S-10. Several commenters observed that the current Worksheet S-10 methodology may provide an incentive to hospitals to overstate charity care, compromising the fidelity of the information collected. Another commenter was concerned that the revisions to the Worksheet S-10 instructions through Transmittal 11 and subsequent opportunity for hospitals to resubmit their cost reports for prior years created an incentive for hospitals to inflate charges for charity care. Finally, some commenters requested that CMS continue to offer hospitals the opportunity to amend, or require them to amend, cost reports for FY 2014, FY 2015, and later years.
As noted in the FY 2019 IPPS/LTCH PPS proposed rule, (83 FR 20396 and 20397), on September 29, 2017, we issued Transmittal 11, which clarified the definitions and instructions for reporting uncompensated care, non-Medicare bad debt, nonreimbursed Medicare bad debt, and charity care, as well as modified the calculations relative to uncompensated care costs and added edits to improve the integrity of the data reported on Worksheet S-10. We also provided another opportunity for hospitals to submit revisions to their Worksheet S-10 data for FY 2014 and FY 2015 cost reports. We refer readers to Change Request 10378, Transmittal 1981, titled “Fiscal Year (FY) 2014 and 2015 Worksheet S-10 Revisions: Further Extension for All Inpatient Prospective Payment System (IPPS) Hospitals,” issued on December 1, 2017 (available at:
We believe that the new Worksheet S-10 instructions implemented in Transmittal 11 were sufficiently clear to allow hospitals to accurately complete Worksheet S-10, and that hospitals were provided ample time following the issuance of Transmittal 11 to revise and amend Worksheet S-10 for FY 2014 and FY 2015. Because we recognize that there were delays in processing Worksheet S-10 to reflect the revisions in Transmittal 11 and consistent with our historical practice of using the best data available, we are using the June 30,
In response to the request by some commenters that CMS continue to offer hospitals the opportunity to amend, or require them to amend, cost reports for FY 2014, FY 2015 and later years, we are using data from a June 30, 2018 HCRIS update to determine Factor 3 for this FY 2019 IPPS/LTCH PPS final rule. We believe this gave hospitals ample time to review the revised instructions in Transmittal 11, and to resubmit Worksheet S-10 for these years. Furthermore, as discussed earlier with respect to our estimates of Factors 1 and 2, we continue to believe that applying our best estimates to determine uncompensated care payment amounts prospectively would be most conducive to administrative efficiency, finality, and predictability in payments. We believe that, in affording the Secretary the discretion to estimate the amount of the three factors used to determine uncompensated care payments and by including a prohibition against administrative and judicial review of those estimates in section 1886(r)(3) of the Act, Congress recognized the importance of finality and predictability under a prospective payment system. As a result, we do not agree that we should continue to offer hospitals the opportunity to amend, or require them to amend their FY 2014 and FY 2015 cost reports for purposes of determining uncompensated care payments for FY 2019, as this would be contrary to the notion of prospectivity. To the extent these commenters were requesting a further opportunity to revise their Worksheet S-10 data for use in future rulemaking for FY 2020 or later years, we are not addressing the issue of future resubmissions in this final rule. Therefore, the normal timelines and procedures apply for a hospital to request to amend a cost report.
However, numerous commenters also expressed concerns with the release of the transmittals, noting that between Transmittal 10 and 11, there were significant changes in the instructions and clarifications that resulted in significant modifications to hospitals' reporting. One commenter also pointed out that CMS' requests for data resubmissions in both Transmittal 10 and Transmittal 11 were only 1 year apart, adding to hospitals' administrative burden. One commenter stated that, by the time Transmittal 11 was issued, hospitals had already filed their initial FY 2014 and FY 2015 cost reports, with some hospitals having already updated Worksheet S-10 data through amended cost reports. Several commenters believed that Transmittal 11 added significant strain on and caused confusion for hospitals.
Aside from these concerns about the timing of and differences between Transmittals 10 and 11, numerous commenters pointed out specific reasons as to why the guidelines were confusing and difficult to be carried out, especially with regard to the changes made in Transmittal 11. For example, one commenter pointed out that providers that have already complied with CMS' updated instructions would not have to change submitted data. However, it was not clear from Transmittal 11 how hospitals were supposed to proceed in such a situation or if they simply had to calculate Worksheet S-10 data again and then resubmit.
Among the chief concerns raised by commenters regarding the release of Transmittal 11 was that hospitals did not have enough time or sufficient resources to revise their Worksheet S-10 data. According to commenters, the timeframe afforded by CMS was not long enough, given the administrative burden of complying with all of the changes in Transmittal 11. In addition, a few commenters pointed out that the Electronic Health Record audit by the Office of the Inspector General was earlier than the release of Transmittal 11, contributing to an even shorter timeline for hospitals to respond to changes in cost reporting for Worksheet S-10.
Many commenters also stated that among the factors contributing to restrict hospitals' ability to make timely revisions to their Worksheet S-10 data in response to Transmittal 11 were the limited personnel and financial resources available to make the changes in cost reporting outlined in Transmittal 11. The commenters also indicated that hospitals with inadequate internal financial management tracking systems were at an extreme disadvantage in meeting CMS' timeline.
On a related issue, many commenters stated that the software updates, which were required to accommodate the changes reflected in Transmittal 11, reduced the timeframe hospitals had to amend their cost reports by the deadline for inclusion in the proposed rule. At times, according to one commenter, the changes mandated by Transmittal 11 could not be executed by hospitals' information systems until a software update was possible, which likely did not coincide with the submission timeframe for the revisions.
Some commenters pointed out that the MACs' review of data following the issuance of Transmittal 11 largely focused on FY 2015 data, and perhaps paid much less attention to equally troubling FY 2014 data. Other commenters stated that only limited education efforts accompanied the issuance of Transmittal 11.
Regarding the confusion Transmittal 11 may have caused among stakeholders, we note Transmittal 11 was designed to be responsive to previous stakeholder concerns regarding Worksheet S-10, such as reporting of uninsured patient discounts and the modification of certain calculations to account for nonreimbursable Medicare bad debt. We also note that some commenters indicated that Worksheet S-10 instructions, consistency, and data accuracy have improved as a result Transmittal 11. However, we recognize that there are continuing opportunities to further improve guidance and education, and we will continue to work with our stakeholders to address their concerns through provider education and further refinement of the instructions.
Several commenters specifically requested that their cost data in the proposed FY 2019 DSH Supplemental Data File be updated in a timely manner to reflect the latest HCRIS information in order ensure that their Factor 3 for FY 2019 accurately reflects their uncompensated care costs. A few commenters also expressed concerns that many hospitals were still having challenges in resubmitting their corrections to Worksheet S-10 data and having them accepted by the MACs. One commenter urged CMS to validate the information in HCRIS before pulling data for the proposed and final rules. Another commenter suggested that CMS implement an alternative means for hospitals to submit cost report data to alleviate burden on hospitals and improve accuracy.
We have not previously been able to use such a recent update of HCRIS for purposes of the annual rulemaking, and it was operationally challenging to take the steps necessary to be able to use a June 30, 2018 update to calculate Factor 3 for FY 2019. The time required to complete the public use file process, which involves interactions with the MACs to ensure all reports have been appropriately included, would have exceeded the time we had available. In order to have the data with a bare minimum of time to use it in performing our calculations for the final rule, we needed to use a new expedited ad hoc process outside of the established process normally used to develop the public use file. We were not sure it even would be feasible to develop such an expedited ad hoc process. Ultimately, in order to develop the expedited process that was used, we had to bypass some of the safeguards built into the ordinary process and forgo our opportunity to further review the data. Given the unique circumstances that affected hospitals' ability to resubmit their Worksheet S-10 for FY 2014 and/or FY 2015, and the delays in processing by the MACs, we concluded that the potential to include additional, revised data for the final rule outweighed the risk that we might not include a report that would have been properly included had we been able to follow the usual process for preparing a public use file. Therefore, under ordinary circumstances, we would not even have contemplated this approach because the additional review time afforded by the use of the March extract under the established public use file process is important from an enhanced quality assurance standpoint and the benefits of this enhanced quality assurance were only outweighed by the extenuating circumstances affecting the timeline for both the resubmission of Worksheet S-10 data and the review of these data by the MACs in time to allow the data to be considered in this final rule.
Following the publication of this final rule, hospitals will have until August 31, 2018, to review and submit comments on the accuracy of the table
One commenter also suggested that CMS allow for administrative or judicial review of its Medicare DSH payment calculations, which would provide an important check if the agency makes errors in the calculations. One commenter also asked CMS to reconsider its decision not to reconcile final payments for uncompensated care with actual data for cost reporting periods during FY 2019. One commenter included a request to reopen its cost reports for FY 2014 and FY 2015 to make corrections.
Unless the relevant information was also reflected in the June 30, 2018 HCRIS update, we have not considered information from any revised Worksheets S-10 that were submitted as attachments to comments. We do not believe it would be appropriate to allow a hospital to use the rulemaking process to circumvent the requirement that cost report data need to be submitted to the MAC or the requirement that requests to reopen cost reports need to be submitted to the MAC. Otherwise we would have multiple potentially conflicting sources of information about a hospital's uncompensated care data or, more broadly, any cost report data that might be submitted during the rulemaking process. In addition, there are validity checks and other safeguards incorporated into the cost report submission process that would not be automatically applied to cost reports only submitted through rulemaking.
Furthermore, as noted earlier, under the deadlines established in Change Request 10378, we stated that all amended FY 2014 and FY 2015 cost reports containing a revised Worksheet S-10 (or a completed Worksheet S-10 if no data were included on the previously submitted cost report) received by January 2, 2018 would be available to be considered for purposes of the FY 2019 IPPS/LTCH PPS final rule. This date was important to allow sufficient time for reviews by MACs for potentially aberrant reports prior to the FY 2019 PPS/LTCH PPS final rule.
Also, as discussed earlier, we continue to believe that using the best data available to prospectively estimate Factor 3 is most conducive to administrative efficiency, finality, and predictability in payments (78 FR 50628; 79 FR 50010; 80 FR 49518; 81 FR 56949; and 82 FR 38195). Further, we believe that, in affording the Secretary the discretion to estimate the amount of the three factors used to determine these uncompensated care payments and by including a prohibition against administrative and judicial review of those estimates in section 1886(r)(3) of the Act, Congress recognized the importance of finality and predictability under a prospective payment system. In light of this preclusion, we do not have the ability to allow for administrative or judicial review of our estimates.
Regarding the concerns related to the Administrative Procedure Act, we note that, under the Administrative Procedure Act, a proposed rule is required to include either the terms or substance of the proposed rule or a description of the subjects and issues involved. In this case, the FY 2019 IPPS/LTCH PPS proposed rule included a detailed discussion of our proposed methodology for calculating Factor 3 and the data that would be used. We made public the best data available at the time of the proposed rule, in order to allow hospitals to understand the anticipated impact of the proposed methodology. Moreover, following the publication of the proposed rule, we continued our efforts to ensure that information hospitals properly submitted to their MAC in the prescribed timeframes would be available to be used in this final rule in the event we finalized our proposed methodology. We believe the fact that we provided data with the proposed rule while concurrently continuing to review that data with individual hospitals is entirely consistent with the Administrative Procedure Act. There is no requirement under either the Administrative Procedure Act or the Medicare statute that CMS make the actual data that will be used in a final rule available as part of the notice of proposed rulemaking. Rather, it is sufficient that we provide stakeholders with notice of our proposed methodology and the data sources that will be used, so that they may have a meaningful opportunity to submit their views on the proposed methodology and the adequacy of the data for the intended purpose. This requirement for notice and comment does not, however, extend to a requirement that we make all data that will be used to compute payments available to the public, so that they may have an opportunity to comment on accuracy of the data reported for individual hospitals. Similarly, there is no requirement that we provide an opportunity for comment on the actual payment amounts determined for each hospital.
Many commenters disagreed with CMS' stance on not sharing desk review and audit protocols with hospitals. These commenters pointed out that CMS has indicated that such protocols are confidential, but they believe this opacity could lead to inconsistencies in the reporting of Worksheet S-10 data and different interpretations of the Provider Reimbursement Manual among hospitals and even MACs. The commenters encouraged CMS to release the audit criteria for non-Medicare bad debt and charity care claimed on Worksheet S-10.
One commenter believed that CMS and the MACs hide behind the “bar to judicial review” that exists under the provisions of the statute governing the determination of uncompensated care payments, and this allows the MACs to commit outright errors that go unchecked if a hospital is otherwise unable to convince the MAC of the error. A few commenters expressed disappointment with what they characterized as the inconsistent and arbitrary decisions made by MACs in their reviews of Worksheet S-10 data and expressed the need for CMS to provide guidance to MACs to clarify which uninsured discounts CMS expects MACs to accept when reported on amended and/or corrected cost reports. Commenters pointed out that MACs may lack sufficient guidance, instruction, and training with respect to the inclusion of all discounts under the hospital's financial assistance policy in Line 20 of Worksheet S-10. For example, one commenter mentioned that some hospitals have experienced MAC audit disallowances of certain charity care and uninsured costs reported on Worksheet S-10 and stated that such disallowances can be egregious and cause significant reductions in the hospitals' uncompensated care payments. Commenters also suggested that these disallowances highlight the need for more upfront guidance and clearly defined terms as well as consistency by the MACs in the application of that guidance in their reviews.
Several commenters also were concerned or believed that MACs had created their own audit protocols for the Worksheet S-10 for purposes of auditing Electronic Health Record incentive payments under the HITECH Act without any guidance from CMS, and that any disparate interpretations could create disparities in the accuracy of the data across MACs. This, according to one commenter, allows MACs' audits to be subject to open interpretation. Another commenter expressed concern that the MACs are overstepping their authority to determine what the requirements for hospitals' financial assistance policies should be, when in fact hospitals are free to determine these requirements. The commenter also stated that the IRS already reviews and ensures that hospitals follow their financial assistance policy, and therefore there is no need for CMS and the MACs to duplicate its efforts.
Many commenters approved of the proposal to phase-in the use of data from the Worksheet S-10. However, other commenters had other varying opinions regarding the length of the phase-in period. Some commenters agreed with the proposal to continue the 3-year phase-in. However, other commenters requested that CMS consider a longer phase-in period or delay the transition to the use of Worksheet S 10 data. These commenters recommended a minimum 5-year transition period to gradually phase-in the use of Worksheet S-10 data, once the data have been audited. According to the commenters, this longer phase-in would mitigate the effect on hospitals of the redistribution in uncompensated care payments resulting from the inclusion of data from the Worksheet S-10.
Some commenters stated that the proposed methodology of using 1 year of low-income insured days and 2 years of uncompensated care data from Worksheet S-10 to compute uncompensated care payments for FY 2019 would be highly redistributive, and some commenters asked that CMS implement a stop-loss policy to protect hospitals that lose 5 to 10 percent in DSH payments in any given year as a result of transitioning to the use of Worksheet S-10 data. These commenters suggested that this stop-loss policy should extend beyond the 3-year phase-in to help hospitals with decreasing uncompensated care payments that are disproportionately affected by the transition to Worksheet S-10 data adjust to their new payment levels. However, another commenter noted that a stop-loss policy would not be warranted, given that a 3-year phase-in is an appropriate way to temporarily reduce the impact of new provisions.
Regarding the commenters' recommendation that we adopt a stop-loss policy, we believe that the use of 3 years of data to determine Factor 3 for FY 2019 already provides assurance that hospitals' uncompensated care payments will remain reasonably stable and predictable, and would not be subject to unpredictable swings and anomalies in a hospital's low-income insured days or reported uncompensated care costs. As a result, because there is already a mechanism that has the effect of smoothing the transition from the use of low-income insured days to the use of Worksheet S-10 data in place, we do not believe a stop-loss policy is necessary.
Regarding the commenters' view that CCR trims should not take place before we conduct audits and give providers further opportunities to explain or amend their data, we agree that, in an ideal circumstance, CCR trims without audits would not be needed. However, providers have had sufficient time to amend their data and/or contact CMS to explain that the FY 2019 DSH Supplemental Data File posted in conjunction with FY 2019 IPPS/LTCH PPS proposed rule had incorrect data. As a result, we consider CCRs greater than 3 standard deviations above the national geometric mean CCR for the applicable fiscal year to be aberrant CCRs. We are finalizing the trim methodology as proposed.
With regard to the comment that the CCRs on Worksheet S-10 are reported with the RCE limits applied, we believe the commenter is mistaken. Line 1 of Worksheet S-10 instructs hospitals to compute the CCR by dividing the costs from Worksheet C, Part I, Line 202, Column 3, by the charges on Worksheet C, Part I, Line 202, Column 8. The RCE limits are applied in Column 4, not in Column 3; thus, the RCE limits do not affect the CCR on line 1 of Worksheet S-10.
Several commenters urged CMS to use Worksheet S-10, Line 31 to identify a hospital's share of uncompensated care costs rather than Line 30. These commenters did not believe that Line 30 adequately captures a hospital's uncompensated care because it excludes unreimbursed costs for State and local indigent care programs. Commenters also believed that CMS' use of Line 30 results in a mismatch between payment and costs for care furnished to the uninsured and underinsured due to lack of clear reporting guidelines. The commenters believed that this is because many States support uncompensated care through supplemental Medicaid programs funded through their Federal Medicaid DSH allotment or a Medicaid waiver program. The commenters stated that these supplemental payments are likely reported on Worksheet S-10 as Medicaid revenue while some of the hospital's uncompensated care costs are reported as charity care, as such reporting was at a hospital's discretion at the time of cost report filing.
In addition to comments about the Medicaid shortfalls, commenters observed that States differ in how they define uncompensated care costs, and that not all costs incurred by hospitals in treating the uninsured are categorized as charity care and bad debt, such as in the case of discounts to the uninsured who are unable to pay or unwilling to provide means-tested information. One commenter supported CMS' definition of uncompensated care costs as the cost of all charity care and non-Medicare bad debt but expressed concerns with the proposed expansion under Transmittal 10 to include discounts to the uninsured. The commenter stated that its health system has a long history of providing discounts to the uninsured through a voluntary agreement with the Attorney General's Office. The commenter also argued that higher adoption of high-deductible health plans should be considered.
Conceptual issues aside, we note that even if we were to adjust the definition of uncompensated care to include Medicaid shortfalls, this would not be a feasible option at this time due to computational limitations. Specifically, computing such shortfalls is operationally problematic because Medicaid pays hospitals a single DSH payment that in part covers the hospital's costs in providing care to the uninsured and in part covers estimates of the Medicaid “shortfalls.” Therefore, it is not clear how CMS would determine how much of the “shortfall” is left after the Medicaid DSH payment is made. In addition, in some States, hospitals return a portion of their Medicaid revenues to the State via provider taxes, making the computation of “shortfalls” even more complex.
With regard to the comments that States differ in how they define uncompensated care costs, and that hospitals' costs of treating the uninsured are not always categorized as charity care and bad debt, such as in the case of discounts to the uninsured who are unable to pay or unwilling to provide income information, we believe the commenters are referring to the Worksheet S-10 instructions for Line 20, revised in Transmittal 10, which state, in part, “Enter in column 1, the full charges for uninsured patients and patients with coverage from an entity that does not have a contractual relationship with the provider who meet the hospital's charity care policy or FAP.” We believe that hospitals have the discretion to design their charity care policies as appropriate and may include discounts offered to uninsured patients as “charity care.” Accordingly, for the reasons discussed in the proposed rule and previously in this final rule, we are finalizing our proposal to define uncompensated care costs as the amount on Line 30 of Worksheet S-10, which is the cost of charity care (Line 23) and the cost of non-Medicare bad debt and non-reimbursable Medicare bad debt (Line 29).
A few commenters also expressed concerns about the Financial Accounting Standards Board (FASB) update 2014-09 Topic 606. These commenters noted that the FASB guidelines indicate that bad debt is to be reported based on historical experience and that recoveries may not correlate to reported bad debt expense on the general ledger. Specifically, commenters asked that CMS address whether bad debt should still be reported net of recoveries on the Worksheet S-10.
Several commenters also expressed concerns that instructions pertaining to Worksheet S-10, Line 20 are not clear. The commenters stated, for example, that many hospitals incorrectly report “insured” charity care on Worksheet S-10, Line 20, Column 2 (which is not reduced by CCR), citing, as an example, noncovered Medicaid charges, which need to be reported as “uninsured” on Worksheet S-10 and reduced by CCR, as stated in the Worksheet S-10 instructions. The commenters pointed out that this inconsistency with respect to the reporting of charity care costs is commonly due to misinterpretation of instructions because of lack of clarity, and may be contributing to the overstatement of charity care costs.
Several commenters also pointed out that some hospitals may interpret the instructions literally, while other hospitals do not. The commenters asked CMS to correct this uncertainty and ambiguity to avoid inconsistent interpretations. In relation to this, one commenter asserted that contradictory and confusing language in the instructions leaves key terms undefined,
Some commenters questioned whether guidance on determining indigence of a Medicare beneficiary should be applicable to non-Medicare patients to determine whether charity care was furnished. Several commenters also suggested improvements that could be made to the instructions of Worksheet S-10, such as adding a requirement to report utilization data to add context to the monetary amounts reported for uncompensated care.
One commenter recommended that CMS identify and seek comment on alternate sources of proxy data for Puerto Rico Hospitals for use in future years, such as using data for Medicare beneficiaries with Medicaid eligibility (dual eligible beneficiaries).
After consideration of the public comments we received, and for the reasons discussed in the proposed rule and in this final rule, we are finalizing our proposal to use 2 years of Worksheet S-10 data from FY 2014 and FY 2015 cost reports in conjunction with data on low-income insured days that reflects Medicaid days from FY 2013 and SSI days from FY 2016, to calculate Factor 3 for FY 2019.
Therefore, for FY 2019, we are finalizing a policy to compute Factor 3 for each hospital by—
Step 1: Calculating Factor 3 using the low-income insured days proxy based on FY 2013 cost report data and the FY 2016 SSI ratio (or, for Puerto Rico hospitals, 14 percent of the hospital's FY 2013 Medicaid days);
Step 2: Calculating Factor 3 based on the FY 2014 Worksheet S-10 data;
Step 3: Calculating Factor 3 based on the FY 2015 Worksheet S-10 data; and
Step 4: Averaging the Factor 3 values from Steps 1, 2, and 3; that is, adding the Factor 3 values from FY 2013, FY 2014, and FY 2015 for each hospital, and dividing that amount by the number of cost reporting periods with data to compute an average Factor 3 (or for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and all-inclusive rate providers using the Factor 3 value from Step 1).
We also are finalizing the following proposals: (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) to discontinue the policy of combining cost reports for providers with multiple cost reports beginning during the same fiscal year; (3) 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, to use the cost report that spans both fiscal years for the latter fiscal year; and (4) to apply statistical trim methodologies to potentially aberrant CCRs and potentially aberrant uncompensated care costs.
For this FY 20019 IPPS/LTCH PPS final rule, we are finalizing a HCRIS cutoff of June 30. This cutoff also applies to revised reports from providers who were contacted by their MAC regarding potentially aberrant uncompensated care costs.
We are also finalizing our proposal to amend the regulations at § 412.106(g)(1)(iii)(C) by adding a new paragraph (
Sections 1886(d)(5)(D) and (d)(5)(G) of the Act provide special payment protections under the IPPS to sole community hospitals (SCHs) and Medicare-dependent, small rural hospitals (MDHs), respectively. Section 1886(d)(5)(D)(iii) of the Act defines an SCH in part as a hospital that the Secretary determines 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 inpatient hospital services reasonably available to Medicare beneficiaries. The regulations at 42 CFR 412.92 set forth the criteria that a hospital must meet to be classified as a SCH. For more information on SCHs, we refer readers to the FY 2009 IPPS/LTCH PPS final rule (74 FR 43894 through 43897).
Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is located in a rural area, or is located in an all-urban State but meets one of the specified statutory criteria for rural reclassification (as added by section 50205 of the Bipartisan Budget Act of 2018, Pub. L. 115-123), has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (that is, not less than 60 percent of its inpatient days or discharges during the cost reporting period beginning in FY 1987 or two of the three most recently audited cost reporting periods for which the Secretary has a settled cost report were attributable to inpatients entitled to benefits under Part A). The regulations at 42 CFR 412.108 set forth the criteria that a hospital must meet to be
Since the extension of the MDH program through FY 2012 provided by section 3124 of the Affordable Care Act, the MDH program has been extended by subsequent legislation. Most recently, section 50205 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted on February 9, 2018, extended the MDH program for FYs 2018 through 2022 (that is, for discharges occurring before October 1, 2022). (Additional information on the extensions of the MDH program after FY 2012 and through FY 2017 can be found in the FY 2016 interim final rule with comment period (80 FR 49596).)
Section 50205 of the Bipartisan Budget Act of 2018 amended sections 1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH program for discharges occurring on or after October 1, 2017, through FY 2022 (that is, for discharges occurring on or before September 30, 2022).
We noted in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20401) that, consistent with the previous extensions of the MDH program, generally, a provider that was classified as an MDH as of September 30, 2017, was reinstated as an MDH effective October 1, 2017, with no need to reapply for MDH classification. However, if the MDH had classified as an SCH or cancelled its rural classification under § 412.103(g) effective on or after October 1, 2017, the effective date of MDH status may not be retroactive to October 1, 2017. We refer readers to the FY 2018 IPPS notice that appeared in the
In addition to extending the MDH program, section 50205 amended section 1886(d)(5)(G)(iv) of the Act to include in the definition of an MDH a hospital that is located in a State with no rural area (as defined in paragraph (2)(D)) and satisfies any of the criteria in section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act, in addition to the other qualifying criteria.
Section 50205 of the Bipartisan Budget Act of 2018 also amended section 1886(d)(5)(G)(iv) of the Act by adding a provision following section 1886(d)(5)(G)(iv)(IV), which specifies that new section 1886(d)(5)(G)(iv)(I)(bb) of the Act applies for purposes of the MDH payment under sections 1886(d)(5)(G)(ii) of the Act (that is, 75 percent of the amount by which the Federal rate is exceeded by the updated hospital-specific rate from certain specified base years) only for discharges of a hospital occurring on or after the effective date of a determination of MDH status made with respect to the hospital after the date of the enactment of this provision. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20401), we noted that, under existing regulations, the effective date for a determination of MDH status is 30 days after the date the MAC provides written notification of MDH status. We also noted that we were proposing in section IV.G.3. of the preamble of the proposed rule to change the effective date for a determination of MDH status. We stated that if the proposal is finalized, the policy would not be effective until FY 2019 (October 1, 2018) and therefore would not apply to hospitals applying for MDH classification before October 1, 2018. Furthermore, this new provision also specifies that, for purposes of new section 1886(d)(5)(G)(iv)(I)(bb) of the Act, section 1886(d)(8)(E)(ii)(II) of the Act shall be applied by inserting “as of January 1, 2018,” after “such State” each place it appears. Section 50205 of the Bipartisan Budget Act also made conforming amendments to sections 1886(b)(3)(D) (in the language proceeding clause (i)) and 1886(b)(3)(D)(iv) of the Act.
Section 1886(d)(8)(E) of the Act provides for an IPPS hospital that is located in an urban area to be reclassified as a rural hospital if it submits an application in accordance with CMS' established process and meets certain criteria at section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act (these statutory criteria are implemented in the regulations at § 412.103(a)(1) through (3)). A subsection (d) hospital that is located in an urban area and meets one of the three criteria under § 412.103(a) can reclassify as rural and is treated as being located in the rural area of the State in which it is located. However, a hospital that is located in an all-urban State is ineligible to reclassify as rural in accordance with the provisions of § 412.103 because the State in which it is located does not have a rural area into which it can reclassify. Prior to the amendments made by the Bipartisan Budget Act, a hospital could only qualify for MDH status if it was either geographically located in a rural area or if it reclassified as rural under the regulations at § 412.103. This precluded hospitals in all-urban States from being classified as MDHs. The newly added provision in the Bipartisan Budget Act of 2018 allows a hospital in an all-urban State to be eligible for MDH classification if, in addition to meeting the other criteria for MDH eligibility, it satisfies one of the criteria for rural reclassification under section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act (as of January 1, 2018, where applicable), notwithstanding its location in an all-urban State.
As noted earlier, prior to the enactment of the Bipartisan Budget Act of 2018, a hospital in an all-urban State was ineligible for MDH classification because it could not reclassify as rural. With the new provision added by section 50205 of the Bipartisan Budget Act of 2018, a hospital in an all-urban State can apply and be approved for MDH classification if it can demonstrate that: (1) It meets the criteria at § 412.103(a)(1) or (3) or the criteria at § 412.103(a)(2) as of January 1, 2018, for the sole purposes of qualifying for MDH classification; and (2) it meets the MDH classification criteria at § 412.108(a)(1)(i) through (iii), which, as amended, would be redesignated as § 412.108(a)(1)(i) through (iv). We noted in the proposed rule that for a hospital in an all-urban State to demonstrate that it would have qualified for rural reclassification notwithstanding its location in an all-urban State (as of January 1, 2018, where applicable), it must follow the applicable procedures for rural reclassification and MDH classification at § 412.103(b) and § 412.108(b), respectively. We also noted that we were not proposing any changes to the reclassification criteria under § 412.103 and that a hospital in an all-urban State that qualifies as an MDH under the newly added statutory provision will not be considered as having reclassified as rural but only as having satisfied one of the criteria at section 1886(d)(8)(E)(ii)(I), (II), or (III) of the Act (as of January 1, 2018, as applicable) for purposes of MDH classification, in accordance with amended section 1886(d)(5)(G)(iv) of the Act.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20402), we proposed to make conforming changes to the regulations at § 412.108(a)(1) and (c)(2)(iii) to reflect the extension of the MDH program for FY 2018 through FY 2022 and the additional MDH classification provision made for hospitals located in all-urban States by section 50205 of the Bipartisan Budget
After consideration of the public comments we received, we are adopting as final the proposed conforming changes to the regulations text at §§ 412.90 and 412.108 to reflect the extension of the MDH program through FY 2022 and the additional MDH classification provision made for hospitals located in all-urban States in accordance with section 50205 of the Bipartisan Budget Act of 2018. We are finalizing the proposed changes in paragraphs (a)(1) and (c)(2)(iii) of § 412.108 and paragraph (j) of § 412.90 without modification.
The regulations at 42 CFR 412.92(b)(2)(i) set forth an effective date for SCH classification of 30 days after the date of CMS' written notification of approval. Similarly, § 412.92(b)(2)(iv) specifies that a hospital classified as an SCH receives a payment adjustment effective with discharges occurring on or after 30 days after the date of CMS' approval of the classification.
Section 401 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Pub. L. 106-113, Appendix F) amended section 1886(d)(8) of the Act to add paragraph (E) which authorizes reclassification of certain urban hospitals as rural if the hospital applies for such status and meets certain criteria. The effective date for rural reclassification status under section 1886(d)(8)(E) of the Act is set forth at 42 CFR 412.103(d)(1) as the filing date, which is the date CMS receives the reclassification application (§ 412.103(b)(5)). One way that an urban hospital can reclassify as rural under § 412.103 (specifically, § 412.103(a)(3)) is if the hospital would qualify as a rural referral center (RRC) as set forth in § 412.96, or as an SCH as set forth in § 412.92, if the hospital were located in a rural area. A geographically urban hospital may simultaneously apply for reclassification as rural under § 412.103(a)(3) by meeting the criteria for SCH status (other than being located in a rural area), and apply to obtain SCH status under § 412.92 based on that acquired rural reclassification. However, the rural reclassification is effective as of the filing date, while the SCH status is effective 30 days after approval. In addition, while § 412.103(c) states that the CMS Regional Office will review the application and notify the hospital of its approval or disapproval of the request within 60 days of the filing date, the regulations do not set a timeframe by which CMS must decide on an SCH request. Therefore, geographically urban hospitals that obtain rural reclassification under § 412.103 for the purposes of obtaining SCH status may face a payment disadvantage because they are paid as rural until the SCH application is approved and the SCH classification and payment adjustment become effective 30 days after approval.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20402 and 20403), to minimize the lag between the effective date of rural reclassification under § 412.103 and the effective date for SCH status, we proposed to revise § 412.92(b)(2)(i) and (b)(2)(iv) so that the effective date for SCH classification and for the payment adjustment would be the date that CMS receives the complete SCH application, effective for SCH applications received on or after October 1, 2018. However, as discussed in response to comments below, because the MAC receives SCH applications and not CMS, we are clarifying in this final rule that under our policy, as finalized below, the effective date is the date that the MAC receives the complete application. We have revised our finalized regulatory text and this preamble throughout to reflect that the MAC, and not CMS, receives the SCH application. A complete application includes a request and all supporting documentation needed to demonstrate that the hospital meets criteria for SCH status as of the date of application, which includes documentation of rural reclassification in the case of a geographically urban hospital. We stated in the proposed rule that for an application to be complete, all criteria must be met as of the date CMS receives the SCH application, but, similar to above, we are clarifying in this final rule and revising this preamble discussion to reflect that all criteria must be met as of the date the MAC receives the SCH application, because the MAC, and not CMS, receives SCH applications. For example, a hospital applying for SCH status on the basis of a § 412.103 rural reclassification must submit its § 412.103 application no later than its SCH application in order to be considered rural as of the date the MAC receives the SCH application.
Similar to rural reclassification obtained under § 412.103, we proposed that the effective date for SCH status would be the date that CMS receives the complete application. We also proposed conforming changes to the effective date at § 412.92(b)(2)(ii) for instances when a court order or a determination by the Provider Reimbursement Review Board (PRRB) reverses a CMS denial of SCH status and no further appeal is made. In the interest of a clear and consistent policy, we proposed that this change in the SCH effective date would also apply for hospitals not reclassifying as rural under § 412.103, such as geographically rural hospitals obtaining SCH status. We stated that we believe these proposals to update the regulations at § 412.92 to provide an effective date for SCH status that is consistent with the effective date for rural reclassification under § 412.103 would benefit hospitals by minimizing any payment disadvantage caused by the lag between the effective date of rural reclassification and the effective date of SCH status. We also stated that we believe this proposal to align the SCH effective date with the § 412.103 effective date supports agency efforts to reduce regulatory burden because it would provide for a more uniform policy.
In addition, we proposed to make parallel changes to the effective date for an MDH status determination under § 412.108(b)(4). As discussed earlier, section 50205 of the Bipartisan Budget Act of 2018 extended the MDH program through FY 2022 by amending section 1886(d)(5)(G) of the Act. Similar to the proposed change in effective date for SCH status approvals, we proposed that a determination of MDH status would be effective as of the date that CMS receives the complete application, for applications received on or after October 1, 2018, rather than the current effective date at § 412.108(b)(4) of 30 days after the date the MAC provides written notification to the hospital. However, as discussed in response to comments below, because the MAC receives MDH applications and not CMS, we are clarifying in this final rule that under our policy, as finalized below, the effective date is the date that the MAC receives the complete application. We have revised our finalized regulatory text and this preamble throughout to reflect that the MAC, and not CMS, receives the MDH application. Similar to applications for SCH status, a complete application includes a request and all supporting documentation needed to demonstrate that the hospital meets criteria for MDH status as of the date of application. We stated in the proposed rule that for an application to be complete, all criteria must be met as of the date CMS receives
We stated that we believe that concurrently changing the SCH and MDH status effective dates from 30 days after the date of approval to the date the complete application is received would allow for consistency in the regulations governing effective dates of special rural hospital status. In addition, we stated that this proposal would benefit urban hospitals that are requesting § 412.103 rural reclassification at the same time as MDH status because it would synchronize effective dates to eliminate any payment consequences caused by a lag between effective dates for rural reclassification and MDH status.
After consideration of the public comments we received, we are finalizing our proposed changes to § 412.92(b)(2)(i) and (b)(2)(iv), with modification, so that for applications received on or after October 1, 2018, the effective date for SCH classification and for the payment adjustment is the date that the MAC, rather than CMS, receives the complete SCH application. We also are finalizing with modification conforming changes to the effective date at § 412.92(b)(2)(ii) for instances when a court order or a determination by the PRRB reverses a CMS denial of SCH status and no further appeal is made, so that if the hospital's application for SCH status was received on or after October 1, 2018, the effective date is the date the MAC receives the complete application.
Similarly, we are finalizing our proposed changes to § 412.108(b)(4), with modification, to specify that for applications received on or after October 1, 2018, a determination of MDH status made by the MAC is effective as of the date the MAC receives the complete application.
We note that, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20403), we also proposed to make technical conforming changes to the regulations in § 412.92 and § 412.108 to reflect the change CMS made some time ago to identify fiscal intermediaries as Medicare administrative contractors (MACs).
We did not receive any public comments on the proposed conforming changes to the regulations text at §§ 412.92 and 412.108 to reflect the change CMS made some time ago to identify fiscal intermediaries as MACs. Therefore, in this final rule, we are adopting as final the proposed revisions to § 412.92 and § 412.108 without modification.
Section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act, amended by section 10309 of the Affordable Care Act, and further amended by section 15002 of the 21st Century Cures Act, established the Hospital Readmissions Reduction Program. Under the Program, Medicare payments under the acute inpatient prospective payment system for discharges from an applicable hospital, as defined under section 1886(d) of the Act, may be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act requires the Secretary to compare peer groups of hospitals with respect to the number of their Medicare-Medicaid dual-eligible beneficiaries (dual-eligibles) in determining the extent of excess readmissions. We refer readers to section IV.E.1. of the preamble of the FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49531) and section V.I.1. of the preamble of the FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through 38240) for a detailed discussion of and additional information on the statutory history of the Hospital Readmissions Reduction Program.
We refer readers to the following final rules for detailed discussions of the regulatory background and descriptions of the current policies for the Hospital Readmissions Reduction Program:
• FY 2012 IPPS/LTCH PPS final rule (76 FR 51660 through 51676);
• FY 2013 IPPS/LTCH PPS final rule (77 FR 53374 through 53401);
• FY 2014 IPPS/LTCH PPS final rule (78 FR 50649 through 50676);
• FY 2015 IPPS/LTCH PPS final rule (79 FR 50024 through 50048);
• FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49543);
• FY 2017 IPPS/LTCH PPS final rule (81 FR 56973 through 56979); and
• FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through 38240).
These rules describe the general framework for the implementation of the Hospital Readmissions Reduction Program, including: (1) The selection of measures for the applicable conditions/procedures; (2) the calculation of the excess readmission ratio, which is used,
We also have codified certain requirements of the Hospital Readmissions Reduction Program at 42 CFR 412.152 through 412.154.
The Hospital Readmissions Reduction Program strives to put patients first by ensuring they are empowered to make decisions about their own healthcare along with their clinicians, using information from data-driven insights that are increasingly aligned with meaningful quality measures. We support technology that reduces costs and allows clinicians to focus on providing high quality health care for their patients. We also support innovative approaches to improve quality, accessibility, and affordability of care, while paying particular attention to improving clinicians' and beneficiaries' experiences when interacting with CMS programs. In combination with other efforts across the Department of Health and Human Services, we believe the Hospital Readmissions Reduction Program incentivizes hospitals to improve health care quality and value, while giving patients the tools and information needed to make the best decisions for them.
We note that we received public comments on the effectiveness and design of the Hospital Readmissions Reduction Program in response to the FY 2019 IPPS/LTCH PPS proposed rule. While we appreciate the commenters' feedback, because we did not include in the proposed rule any proposals related to these topics, we consider the public comments to be out of the scope of the proposed rule. Therefore, we are not addressing most of these comments in this final rule. All other topics that we consider to be out of scope of the proposed rule will be taken into consideration when developing policies and program requirements for future years.
We would like to clarify for the commenters that the Hospital Readmissions Reduction Program is required by statute, and we cannot decline to administer it.
However, we note that the basic readmissions payment adjustment formula for assessing readmissions and penalties under the Hospital Readmissions Reduction Program are specified in the Act, and we are required to implement the statute as written. In particular, the 21st Century Cures Act, which amended section 1886(q) of the Act, directs the Hospital Readmissions Reduction Program to develop a transitional methodology based on dual-eligible beneficiaries that allows for separate comparisons for hospitals within peer groups to determine a hospital's payment adjustment factor. It also allows the program to consider other risk-adjustment methodologies, taking into account studies conducted and recommendations made by the Secretary in reports required under section 2(d)(1) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act), Public Law 113-185. We will continue to review our risk-adjustment methodologies and monitor
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20403 through 20407), we proposed to: (1) Establish the applicable period for FY 2019, FY 2020 and FY 2021; (2) codify the previously adopted definition of “dual-eligible”; (3) codify the previously adopted definition of “proportion of dual-eligibles”; and (4) codify the previously adopted definition of “applicable period for dual-eligibility.”
These proposals are described in more detail below.
The Hospital Readmissions Reduction Program currently includes six applicable conditions/procedures: Acute myocardial infarction (AMI); heart failure (HF); pneumonia; total hip arthroplasty/total knee arthroplasty (THA/TKA); chronic obstructive pulmonary disease (COPD); and coronary artery bypass graft (CABG).
By publicly reporting quality data, we strive to prioritize patients by ensuring that they, along with their clinicians, are empowered to make decisions about their own healthcare using information aligned with meaningful quality measures. The Hospital Readmissions Reduction Program, together with the Hospital VBP Program and the HAC Reduction Program, represents a key component of the way that we bring quality measurement, transparency, and improvement together with value-based purchasing to the inpatient care setting. We have undertaken efforts to review the existing measure set in the context of these other programs, to identify how to reduce costs and complexity across programs while continuing to incentivize improvement in the quality and value of care provided to patients. To that end, we have begun reviewing our programs' measures in accordance with the Meaningful Measures Initiative that we described in section I.A.2. of the preambles of the proposed rule (82 FR 20167 through 20168) and this final rule.
As part of this review, we have taken a holistic approach to evaluating the appropriateness of the Hospital Readmissions Reduction Program's current measures in the context of the measures used in two other IPPS value-based purchasing programs (that is, the Hospital VBP Program and the HAC Reduction Program), as well as the Hospital IQR Program. We view the three value-based purchasing programs together as a collective set of hospital value-based purchasing programs. Specifically, we believe the goals of the three value-based purchasing programs (the Hospital VBP, Hospital Readmissions Reduction, and HAC Reduction Programs) and the measures used in these programs together cover the Meaningful Measures Initiative quality priorities of making care safer, strengthening person and family engagement, promoting coordination of care, promoting effective prevention and treatment, and making care affordable,—but that the programs should not add unnecessary complexity or costs associated with duplicative measures across programs. The Hospital Readmissions Reduction Program focuses on care coordination measures, which address the quality priority of promoting effective communication and care coordination within the Meaningful Measures Initiative. The HAC Reduction Program focuses on patient safety measures, which address the Meaningful Measures Initiative quality priority of making care safer by reducing harm caused in the delivery of care.
As part of this holistic quality payment program strategy, we believe the Hospital VBP Program should focus on the measurement priorities not covered by the Hospital Readmissions Reduction Program or the HAC Reduction Program. The Hospital VBP Program would continue to focus on measures related to: (1) The clinical outcomes, such as mortality and complications (which address the Meaningful Measures Initiative quality priority of promoting effective treatment); (2) patient and caregiver experience, as measured using the HCAHPS survey (which addresses the Meaningful Measures Initiative quality priority of strengthening person and family engagement as partners in their care); and (3) healthcare costs, as measured using the Medicare Spending per Beneficiary measure (which addresses the Meaningful Measures Initiative priority of making care affordable). We believe this framework will allow hospitals and patients to continue to obtain meaningful information about hospital performance and incentivize quality improvement while also streamlining the measure sets to reduce duplicative measures and program complexity so that the costs to hospitals associated with participating in these programs does not outweigh the benefits of improving beneficiary care.
Measures in the Hospital Readmissions Reduction Program are important markers of quality of care, particularly of the care of a patient in transition from an acute care setting to a non-acute care setting. By including these measures in the Program, we seek to encourage hospitals to address the serious problems indicated by the necessity of a hospital readmission and to reduce them and improve care coordination and communication. Therefore, after thoughtful review, we have determined that the six readmission measures in the Hospital Readmissions Reduction Program, which we proposed for removal from the Hospital IQR Program as discussed in section VIII.A.5.b.(3) of the preambles of the proposed rule and this final rule, are nevertheless appropriately included as part of the Hospital Readmissions Reduction Program.
We continue to believe that the measures that we have adopted adequately address the conditions and procedures specified in the Hospital Readmissions Reduction Program statute. Therefore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20404), we did not propose to adopt any new measures.
We note that we received public comments on the program's measures and our holistic approach to the value-based purchasing program and the program's measures. Because we did not propose any measure changes to the program in the FY 2019 IPPS/LTCH PPS proposed rule, we consider these public comments out of the scope of the proposed rule and, therefore, we are not addressing most of them in this final rule. All other topics that we consider to be out of the scope of the proposed rule will be taken into consideration when developing policies and program requirements for future years. However, we address some public comments pertaining to our holistic review of the value-based purchasing programs below.
We received numerous comments from stakeholders regarding our holistic approach to evaluating the appropriateness of measures previously adopted under the Hospital Readmissions Reduction Program, the Hospital VBP Program, the HAC Reduction Program, and the Hospital IQR Program and our vision for the future of these programs. While program-specific comments and policies are discussed in more detail in each program-specific section of this final rule, we would like to clarify that, in light of our mission to prioritize patients in the provision of services, we are expanding the stated scope of the Hospital VBP Program to include patient safety measures. While we initially sought to delineate measure focus areas between the Hospital VBP Program and the HAC Reduction Program, we agree with commenters that patient safety is a critical component of quality improvement efforts. Therefore, we believe it is appropriate and important to provide incentives under more than one program to ensure that hospitals take every reasonable precaution to avoid adverse patient safety events. In addition, we believe including patient safety measures in both the HAC Reduction Program and the Hospital VBP Program will best promote transparency through publicly reporting hospital performance on these measures, as stakeholders will be able to see both hospitals' performance compared to all other hospitals and hospitals' performance improvement over time. Finally, we note that this approach will also reduce provider burden associated with safety measure data collection and reporting because these measures are being finalized for removal from the Hospital IQR Program, as discussed in section VIII.A.5.b.(2) of the preamble of this final rule.
We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50039) for a discussion of the maintenance of technical specifications for quality measures for the Hospital Readmissions Reduction Program. Technical specifications of the readmission measures are provided on our website in the Measure Methodology Reports at:
Under section 1886(q)(5)(D) of the Act, the Secretary has the authority to specify the applicable period with respect to a fiscal year under the Hospital Readmissions Reduction Program. In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51671), we finalized our policy to use 3 years of claims data to calculate the readmission measures. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53675), we codified the definition of “applicable period” in the regulations at 42 CFR 412.152 as the 3-year period from which data are collected in order to calculate excess readmissions ratios and payment adjustment factors for the fiscal year, which includes aggregate payments for excess readmissions and aggregate payments for all discharges used in the calculation of the payment adjustment. The applicable period for dual-eligibles is the same as the applicable period that we otherwise adopt for purposes of the Program.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20405), for FY 2019, consistent with the definition specified at § 412.152, we proposed that the “applicable period” for the Hospital Readmissions Reduction Program would be the 3-year period from July 1, 2014 through June 30, 2017. In other words, we proposed that the proportion of dual-eligibles, excess readmissions ratios and the payment adjustment factors (including aggregate payments for excess readmissions and aggregate payments for all discharges) for FY 2019 would be calculated using data for
In the FY 2019 IPPS/LTCH PPS proposed rule, for FY 2020, consistent with the definition specified at § 412.152, we proposed that the “applicable period” for the Hospital Readmissions Reduction Program would be the 3-year period from July 1, 2015 through June 30, 2018. As noted earlier, we define the applicable period for dual-eligibles as the applicable period that we otherwise adopted for purposes of the Program; therefore, for FY 2020, the applicable period for dual-eligibles would be the 3-year period from July 1, 2015 through June 30, 2018.
In addition, in the FY 2019 IPPS/LTCH PPS proposed rule, for FY 2021, consistent with the definition specified at § 412.152, we proposed that the “applicable period” for the Hospital Readmissions Reduction Program would be the 3-year period from July 1, 2016 through June 30, 2019. The applicable period for dual-eligibles for FY 2021 would similarly be the 3-year period from July 1, 2016 through June 30, 2019.
In addition, we have examined changes in risk-standardized readmission rates at the hospital level and the distribution of changes in rates for all claims-based readmission measures, comparing the results of the 2015, 2016, 2017, and 2018 reporting periods. These analyses suggest no more than typical year-to-year variability in hospital-level rates before and after the introduction of ICD-10 codes for most measures. Year-to-year changes between 2015 and 2016, which both contained only ICD-9 claims, are similar to year-to-year changes for the following years, which included a mix of ICD-9 and ICD-10 claims. Risk-standardized readmission rates for 2018 public reporting are similar to those for 2015, 2016, and 2017 public reporting, which also indicates that the results using ICD-9 codes and ICD-10 codes are comparable. Overall, these results suggest that we have successfully created measure specifications in ICD-10 that align with the intent of the measure, which allows us to compare rates with measures calculated using ICD-9 codes and ICD-10 codes.
We will continue to use a 3-year measurement period rather than a 1-year measurement period, despite the implementation of ICD-10. We use a 3-year measurement period because some small and rural hospitals do not have at least 25 admissions for Medicare FFS patients who are 65 years and older for each of the measure conditions in a single year or even over the course of 2 years. The 3-year period allows us to include the maximum possible number of hospitals in scoring and public reporting.
After consideration of the public comments we received, we are finalizing as proposed, without modification, the applicable period of the 3-year time period of July 1, 2014 through June 30, 2017 for FY 2019; the applicable period of the 3-year time period July 1, 2015 through June 30, 2018 for FY 2020; and the applicable period of the 3-year time period of July 1, 2016 through June 30, 2019 for FY 2021 to calculate readmission payment adjustment factor for FYs 2019, FY 2020, and FY 2021, respectively, under the Hospital Readmissions Reduction Program.
When calculating the numerator (aggregate payments for excess readmissions), we determine the base operating DRG payment amount for an individual hospital for the applicable period for such condition/procedure, using Medicare inpatient claims from the MedPAR file with discharge dates that are within the applicable period. Under our established methodology, we use the update of the MedPAR file for each Federal fiscal year, which is updated 6 months after the end of each
In identifying discharges for the applicable conditions/procedures to calculate the aggregate payments for excess readmissions, we apply the same exclusions to the claims in the MedPAR file as are applied in the measure methodology for each of the applicable conditions/procedures. For the FY 2019 applicable period, this includes the discharge diagnoses for each applicable condition/procedure based on a list of specific ICD-9-CM or ICD-10-CM and ICD-10-PCS code sets, as applicable, for that condition/procedure, because diagnoses and procedure codes for discharges occurring prior to October 1, 2015 were reported under the ICD-9-CM code set, while discharges occurring on or after October 1, 2015 (FY 2016) were reported under the ICD-10-CM and ICD-10-PCS code sets.
We only identify Medicare FFS claims that meet the criteria described above for each applicable condition/procedure to calculate the aggregate payments for excess readmissions (that is, claims paid for under Medicare Part C or Medicare Advantage, are not included in this calculation). This policy is consistent with the methodology to calculate excess readmissions ratios based solely on admissions and readmissions for Medicare FFS patients. Therefore, consistent with our established methodology, for FY 2019, we proposed to continue to exclude admissions for patients enrolled in Medicare Advantage as identified in the Medicare Enrollment Database.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20405), for FY 2019, we proposed to determine aggregate payments for excess readmissions, aggregate payments for all discharges using data from MedPAR claims with discharge dates that are on or after July 1, 2014, and no later than June 30, 2017. As we stated in FY 2018 IPPS/LTCH PPS final rule (82 FR 38232), we will determine the neutrality modifier using the most recently available full year of MedPAR data. However, we noted that, for the purpose of modeling the proposed FY 2019 readmissions payment adjustment factors for the proposed rule, we used the proportion of dual-eligibles, excess readmissions ratios, and aggregate payments for each condition/procedure and all discharges for applicable hospitals from the FY 2018 Hospital Readmissions Reduction Program applicable period. For the FY 2019 program year, applicable hospitals will have the opportunity to review and correct calculations based on the proposed FY 2019 applicable period of July 1, 2014 to June 30, 2017, before they are made public under our policy regarding reporting of hospital-specific information. Again, we reiterate that this period is intended to review the program calculations, and not the underlying data. For more information on the review and corrections process, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53399 through 53401).
In the proposed rule, for FY 2019, we proposed to use MedPAR data from July 1, 2014 through June 30, 2017 for FY 2019 Hospital Readmissions Reduction Program calculations. Specifically, for the final rule, we proposed to use the following MedPAR files—
• March 2015 update of the FY 2014 MedPAR file to identify claims within FY 2014 with discharges dates that are on or after July 1, 2014;
• March 2016 update of the FY 2015 MedPAR file to identify claims within FY 2015;
• March 2017 update of the FY 2016 MedPAR file to identify claims within FY 2016;
• March 2018 update of the FY 2017 MedPAR file to identify claims within FY 2017.
We did not receive any public comments on our proposal to use of the above stated MedPAR files, and therefore are finalizing as proposed, without modification, the use of the above listed MedPAR files to identify claims.
As discussed earlier, the final FY 2019 readmissions payment adjustment factors are not available at this time because hospitals have not yet had the opportunity to review and correct the data (program calculations based on the FY 2019 applicable period of July 1, 2014 to June 30, 2017) before the data are made public under our policy regarding the reporting of hospital-specific data. After hospitals have been given an opportunity to review and correct their calculations for FY 2019, we will post Table 15 (which will be available via the internet on the CMS website) to display the final FY 2019 readmissions payment adjustment factors that will be applicable to discharges occurring on or after October 1, 2018. We expect Table 15 will be posted on the CMS website in the fall of 2018.
As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226), section 1886(q)(3)(D) of the Act requires the Secretary to group hospitals and apply a methodology that allows for separate comparisons of hospitals within peer groups in determining a hospital's adjustment factor for payments applied to discharges beginning in FY 2019.
To implement this provision, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226 through 38237), we finalized several changes to the payment adjustment methodology for FY 2019. First, we finalized that an individual would be counted as a full-benefit dual-eligible patient if the beneficiary was identified as full-benefit dual status in the State Medicare Modernization Act (MMA) files for the month he/she was discharged from the hospital (82 FR 38226 through 38228). Second, we finalized our policy to define the proportion of full benefit dual-eligible beneficiaries as the proportion of dual-eligible patients among all Medicare FFS and Medicare Advantage stays (82 FR 38226 through 38228). Third, we finalized our policy to define the data period for determining dual-eligibility as the 3-year data period corresponding to the Program's applicable period (82 FR 38229). Fourth, we finalized our policy to stratify hospitals into quintiles, or five peer groups, based on their proportion of dual-eligible patients (82 FR 38229 through 38231). Finally, we finalized our policy to use the median Excess Readmission Ratio (ERR) for the hospital's peer group in place of 1.0 in the payment adjustment formula and apply a uniform modifier to maintain budget neutrality (82 FR 38231 through 38237). The payment adjustment formula would then be:
• “Applicable period for dual-eligibility” is the 3-year data period corresponding to the applicable period as established by the Secretary for the Hospital Readmissions Reduction Program.
• “Dual-eligible” is a patient beneficiary who has been identified as having full benefit status in both the Medicare and Medicaid programs in the State MMA files for the month the beneficiary was discharged from the hospital.
• “Proportion of dual-eligibles” is the number of dual-eligible patients among all Medicare FFS and Medicare Advantage stays during the applicable period.
We did not propose changes with respect to our previously finalized proposals. However, commenters provided many suggestions on the Hospital Readmissions Reduction Program's risk-adjustment methodology. While we appreciate the commenters' feedback, we consider these topics to be out of the scope of the proposed rule. Therefore, we are not addressing most of them in this final rule. However, because there is stakeholder interest in this topic, we have included summaries of some of these comments with responses below. All other topics that we consider to be out of the scope of the proposed rule, even if not addressed below, will be taken into consideration when developing policies and program requirements for future years.
After consideration of the public comments we received, we are finalizing as proposed, without modification, our decision to codify the definitions of “applicable period for dual-eligibility”; “dual-eligible”; and “proportion of dual-eligibles” as stated above at 42 CFR 412.152.
Section 1886(q)(3)(A) of the Act defines the payment adjustment factor for an applicable hospital for a fiscal year as equal to the greater of: (i) The ratio described in subparagraph (B) for the hospital for the applicable period (as defined in paragraph (5)(D)) for such fiscal year; or (ii) the floor adjustment factor specified in subparagraph (C). Section 1886(q)(3)(B) of the Act, in turn, describes the ratio used to calculate the adjustment factor. Specifically, it states that the ratio is equal to 1 minus the ratio of—(i) the aggregate payments for excess readmissions, and (ii) the aggregate payments for all discharges, scaled by the neutrality modifier. The calculation of this ratio is codified at § 412.154(c)(1) of the regulations and the floor adjustment factor is codified at § 412.154(c)(2) of the regulations. Section 1886(q)(3)(C) of the Act specifies the floor adjustment factor at 0.97 for FY 2015 and subsequent fiscal years.
Consistent with section 1886(q)(3) of the Act, codified in our regulations at § 412.154(c)(2), for FY 2019, the payment adjustment factor will be either the greater of the ratio or the floor adjustment factor of 0.97. Under our established policy, the ratio is rounded to the fourth decimal place. In other words, for FY 2019, a hospital subject to the Hospital Readmissions Reduction Program would have an adjustment factor that is between 1.0 (no reduction) and 0.9700 (greatest possible reduction).
After consideration of the public comments we received, we are finalizing as proposed, without modification, the calculation of payment adjustment for FY 2019.
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20406 through 20407), we discussed accounting for social risk factors in the Hospital Readmissions Reduction Program.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38237 through 38239), we discussed the importance of improving beneficiary outcomes including reducing health disparities. We also discussed our commitment to ensuring that medically complex patients, as well as those with social risk factors, receive excellent care. We discussed how studies show that social risk factors, such as being near or below the poverty level as determined by HHS, belonging to a racial or ethnic minority group, or living with a disability, can be associated with poor health outcomes and how some of this disparity is related to the quality of health care.
In the FY 2018 and CY 2018 proposed rules for our quality reporting and value-based purchasing programs, we solicited feedback on which social risk factors provide the most valuable information to stakeholders and the methodology for illuminating differences in outcomes rates among patient groups within a hospital or provider that would also allow for a comparison of those differences, or disparities, across providers. Feedback we received across our quality reporting programs included encouraging CMS to explore whether factors could be used to stratify or risk adjust the measures (beyond dual eligibility); considering the full range of differences in patient backgrounds that might affect outcomes; exploring risk adjustment approaches; and offering careful consideration of what type of information display would be most useful to the public.
We also sought public comment on confidential reporting and future public reporting of some of our measures stratified by patient dual eligibility. In general, commenters noted that stratified measures could serve as tools for hospitals to identify gaps in outcomes for different groups of patients, improve the quality of health care for all patients, and empower consumers to make informed decisions about health care. Commenters encouraged us to stratify measures by other social risk factors such as age, income, and educational attainment. With regard to value-based purchasing programs, commenters also cautioned to balance fair and equitable payment while avoiding payment penalties that mask health disparities or discouraging the provision of care to more medically complex patients. Commenters also noted that value-based payment program measure selection, domain weighting, performance scoring, and payment methodology must account for social risk.
As a next step, CMS is considering options to improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. We also are considering how this work applies to other CMS quality programs in the future. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38403 through 38409) for more details, where we discuss the potential stratification of certain Hospital IQR Program outcome measures. Furthermore, we continue to consider options to address equity and disparities in our value-based purchasing programs.
We plan to continue working with ASPE, the public, and other key stakeholders on this important issue to identify policy solutions that achieve the goals of attaining health equity for all beneficiaries and minimizing unintended consequences.
While we did not specifically request public comment on social risk factors in the FY 2019 IPPS/LTCH PPS proposed rule, we received a number of comments with respect to social risk factors. We thank commenters for sharing their views and their willingness to support the efforts of CMS and NQF on this important issue. We will take this feedback into account as we continue to review social risk factors on an ongoing and continuous basis. In addition, we both welcome and appreciate stakeholder feedback as we continue our work on these issues.
Section 1886(o) of the Act, as added by section 3001(a)(1) of the Affordable Care Act, requires the Secretary to establish a hospital value-based purchasing program (the Hospital VBP Program) under which value-based incentive payments are made in a fiscal year (FY) to hospitals that meet performance standards established for a performance period for such fiscal year. Both the performance standards and the performance period for a fiscal year are to be established by the Secretary.
For more of the statutory background and descriptions of our current policies for the Hospital VBP Program, we refer readers to the Hospital Inpatient VBP Program final rule (76 FR 26490 through 26547); the FY 2012 IPPS/LTCH PPS final rule (76 FR 51653 through 51660); the CY 2012 OPPS/ASC final rule with comment period (76 FR 74527 through 74547); the FY 2013 IPPS/LTCH PPS final rule (77 FR 53567 through 53614); the FY 2014 IPPS/LTCH PPS final rule (78 FR 50676 through 50707); the CY 2014 OPPS/ASC final rule (78 FR 75120 through 75121); the FY 2015 IPPS/LTCH PPS final rule (79 FR 50048 through 50087); the FY 2016 IPPS/LTCH PPS final rule (80 FR 49544 through 49570); the FY 2017 IPPS/LTCH PPS final rule (81 FR 56979 through 57011); the CY 2017 OPPS/ASC final rule with comment period (81 FR 79855 through 79862); and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38240 through 38269).
We also have codified certain requirements for the Hospital VBP Program at 42 CFR 412.160 through 412.167.
Section 1886(o)(7)(B) of the Act instructs the Secretary to reduce the base operating DRG payment amount for a hospital for each discharge in a fiscal year by an applicable percent. Under section 1886(o)(7)(A) of the Act, the sum total of these reductions in a fiscal year must equal the total amount available for value-based incentive payments for all eligible hospitals for the fiscal year, as estimated by the Secretary. We finalized details on how we would implement these provisions in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through 53573), and we refer readers to that rule for further details.
Under section 1886(o)(7)(C)(iv) of the Act, the applicable percent for the FY 2019 program year is 2.00 percent. Using the methodology we adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through 53573), we estimate that the total amount available for value-based incentive payments for FY 2019 is approximately $1.9 billion, based on the March 2018 update of the FY 2017 MedPAR file.
As finalized in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53573 through 53576), we will utilize a linear exchange function to translate this estimated amount available into a value-based incentive payment percentage for each hospital, based on its Total Performance Score (TPS). We will then calculate a value-based incentive payment adjustment factor that will be applied to the base operating DRG payment amount for each discharge occurring in FY 2019, on a per-claim basis. We published proxy value-based incentive payment adjustment factors in Table 16 associated with the FY 2019 IPPS/LTCH PPS proposed rule (which is available via the internet on the CMS website). We are publishing updated proxy value-based incentive payment adjustment factors in Table 16A associated with this final rule (which is available via the internet on the CMS website). The proxy factors are based on the TPS from the FY 2018 program year. These FY 2018 performance scores are the most recently available performance scores hospitals have been given the opportunity to review and correct. The updated slope of the linear exchange function used to calculate the proxy value-based incentive payment adjustment factors in Table 16A is 2.8887004713. This slope, along with the estimated amount available for value-based incentive payments, has been updated based on the March 2018 update to the FY 2017 MedPAR file and is also published in Table 16A (which is available via the internet on the CMS website).
After hospitals have been given an opportunity to review and correct their actual TPSs for FY 2019, we will post Table 16B (which will be available via the internet on the CMS website) to display the actual value-based incentive payment adjustment factors, exchange function slope, and estimated amount available for the FY 2019 program year. We expect Table 16B will be posted on the CMS website in the fall of 2018.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53592), we finalized a policy to retain measures from prior program years for each successive program year, unless otherwise proposed and finalized. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20408), we did not propose any changes to this policy.
In the FY 2019 IPPS/LTCH/PPS proposed rule (83 FR 20408), we proposed to revise our regulations at 42 CFR 412.164(a) to clarify that once we have complied with the statutory prerequisites for adopting a measure for the Hospital VBP Program (that is, we have selected the measure from the Hospital IQR Program measure set and included data on that measure on
Other commenters expressed confusion regarding the proposed revisions to the Hospital VBP Program's regulatory text, and requested clarification about whether measures would continue to be adopted in the Hospital IQR Program and publicly reported on
We also disagree that removing measures from the Hospital IQR Program after adoption by the Hospital VBP Program undermines the Hospital IQR Program's statutory requirements or purpose. The Hospital IQR Program will continue to serve as the primary quality reporting program for the inpatient hospital setting of care, and its authority to collect and report data is unaffected by this revision to the Hospital VBP Program's regulatory text. We believe removing certain measures from the Hospital IQR Program that have transitioned to the Hospital VBP Program will better enable the Hospital IQR Program to consider new quality measures and collect and publicly report these data for both patients and providers without imposing an unduly high burden on providers.
After consideration of the public comments we received, we are finalizing the proposed revisions to our regulations at 42 CFR 412.164(a).
As discussed earlier, we have adopted a policy to generally retain measures from prior year's Hospital VBP Program for subsequent years' measure sets unless otherwise proposed and finalized. We have previously removed measures from the Hospital VBP Program for reasons such as being topped out (80 FR 49550), the measure
The reasons we cited above to support the removal of measures from the Hospital VBP Program generally align with measure removal factors that have been adopted by the Hospital IQR Program. We believe that these factors are also applicable in evaluating Hospital VBP Program quality measures for removal, and that their adoption in the Hospital VBP Program will help ensure consistency in our measure evaluation methodology across our programs. Accordingly, in the FY 2019 IPPS/LTCH/PPS proposed rule (83 FR 20408 through 20409), we proposed to adopt the Hospital IQR Program measure removal factors that we finalized in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185) and further refined in the FY 2015 IPPS/LTCH PPS and FY 2016 IPPS/LTCH PPS final rules (79 FR 50203 through 50204 and 80 FR 49641 through 49643, respectively) for use in determining whether to remove Hospital VBP Program measures:
• Factor 1. Measure performance among hospitals is so high and unvarying that meaningful distinctions and improvements in performance can no longer be made (“topped out” measures), defined as: Statistically indistinguishable performance at the 75th and 90th percentiles; and truncated coefficient of variation ≤0.10;
• Factor 2. A measure does not align with current clinical guidelines or practice;
• Factor 3. The availability of a more broadly applicable measure (across settings or populations), or the availability of a measure that is more proximal in time to desired patient outcomes for the particular topic;
• Factor 4. Performance or improvement on a measure does not result in better patient outcomes;
• Factor 5. The availability of a measure that is more strongly associated with desired patient outcomes for the particular topic;
• Factor 6. Collection or public reporting of a measure leads to negative unintended consequences other than patient harm; and
• Factor 7. It is not feasible to implement the measure specifications.
We noted that these removal factors would be considerations taken into account when deciding whether or not to remove measures, not firm requirements. We continue to believe that there may be circumstances in which a measure that meets one or more factors for removal should be retained regardless, because the drawbacks of removing a measure could be outweighed by other benefits to retaining the measure.
Also, in alignment with proposals that were made for other quality reporting and value-based purchasing programs, we proposed to adopt the following additional factor to consider when evaluating measures for removal from the Hospital VBP Program measure set: Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program.
As we discuss in section I.A.2. of the preamble of the proposed rule with respect to our new Meaningful Measures Initiative and in this final rule, we are engaging in efforts to ensure that the Hospital VBP Program measure set continues to promote improved health outcomes for beneficiaries while minimizing the overall costs associated with the program. We believe these costs are multifaceted and include not only the burden associated with reporting, but also the costs associated with implementing and maintaining the program. We have identified several different types of costs, including, but not limited to: (1) Provider and clinician information collection burden and related cost and burden associated with the submission/reporting of quality measures to CMS; (2) the provider and clinician cost associated with complying with other quality programmatic requirements; (3) the provider and clinician cost associated with participating in multiple quality programs, and tracking multiple similar or duplicative measures within or across those programs; (4) the CMS cost associated with the program oversight of the measure, including measure maintenance and public display; and (5) the provider and clinician cost associated with compliance with other federal and/or state regulations (if applicable). For example, it may be needlessly costly and/or of limited benefit to retain or maintain a measure which our analyses show no longer meaningfully supports program objectives (for example, informing beneficiary choice or payment scoring). It may also 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. CMS may also have to expend unnecessary resources to maintain the specifications for the measure, as well as the tools needed to collect, validate, analyze, and publicly report the measure data. Furthermore, beneficiaries may find it confusing to see public reporting on the same measure in different programs.
When these costs outweigh the evidence supporting the continued use of a measure in the Hospital VBP Program, we believe it may be appropriate to remove the measure from the program. Although we recognize that one of the main goals of the Hospital VBP Program is to improve beneficiary outcomes by incentivizing health care providers to focus on specific care issues and making public data related to those issues, we also recognize that those goals can have limited utility where, for example, the publicly reported data (including percentage payment adjustment data) are of limited use because they cannot be easily interpreted by beneficiaries to influence their choice of providers. In these cases, removing the measure from the Hospital VBP Program may better accommodate the costs of program administration and compliance without sacrificing improved health outcomes and beneficiary choice.
We proposed that we would remove measures based on this factor on a case-by-case basis. We might, for example, decide to retain a measure that is burdensome for health care providers to report if we conclude that the benefit to beneficiaries justifies the reporting burden. Our goal is to move the program forward in the least burdensome manner possible, while maintaining a parsimonious set of meaningful quality measures and continuing to incentivize improvement in the quality of care provided to patients.
We also recognize that hospitals would still be required to monitor measures removed from one program but retained in another quality program. However, we believe that the simplification benefits hospitals because they will no longer be required to identify discrepancies in reporting and identify whether those discrepancies are due to differing measure specifications or due to potential CMS measure calculation error. Furthermore, we believe this simplification will benefit patients and caregivers because they will not need to review data submitted on the same or similar metrics through multiple programs to compare quality of care across multiple providers.
The other factors suggested by commenters are additional factors that we will consider in evaluating the costs and benefits of each measure on a case-by-case basis under measure removal Factor 8. For example, resources for quality improvement is an example of a cost that would be evaluated on a case-by-case basis because we believe that investing resources in quality improvement is an inherent part of delivering high-quality, patient-centered care, and is therefore, generally not considered a part of the quality reporting program requirements. However, there may be cases where a measure would require such a specific quality improvement initiative that it would be appropriate to consider this cost to be associated with the measure. We also value transparency in our processes, and continually seek stakeholder input through education and outreach activities, such as webinars and national provider calls, stakeholder listening sessions, through rulemaking, and other collaborative engagements with stakeholders.
We also understand that while a measure's use in the Hospital VBP Program may benefit many entities, the primary benefit is to patients and caregivers through incentivizing the provision of high quality care and through providing publicly reported data regarding the quality of care available. One key aspect of patient benefits is assessing the improved beneficiary health outcomes if a measure is retained in our measure set. We believe that these benefits are multifaceted, and are illustrated through the domains of the Meaningful Measures Initiative. When the costs associated with a measure outweigh the evidence supporting the benefits to patients with the continued use of a measure in the Hospital VBP Program we believe it may be appropriate to remove the measure from the program.
After consideration of the public comments we received, we are finalizing our proposals to adopt for the Hospital VBP Program the measure removal factors currently in the Hospital IQR Program, and a measure removal Factor 8, where “the costs associated with a measure outweigh the benefit of its continued use in the program” beginning with FY 2019 program year.
In addition to the proposals discussed above, to further align with policies adopted in the Hospital IQR Program (74 FR 43864), we proposed that if we believe continued use of a measure in the Hospital VBP Program poses specific patient safety concerns, we may promptly remove the measure from the program without rulemaking and notify hospitals and the public of the removal of the measure along with the reasons for its removal through routine communication channels to hospital, vendors, and QIOs, including, but not limited to, issuing memos, emails, and notices on the QualityNet website. We would then confirm the removal of the measure from the Hospital VBP Program measure set in the next IPPS rulemaking. In circumstances where we do not believe that continued use of a measure raises specific patient safety concerns, we would use the regular rulemaking process to remove a measure.
After consideration of the public comments we received, we are finalizing our proposal to allow the Hospital VBP Program to promptly remove a measure without rulemaking if we believe the measure poses specific patient safety concerns.
By publicly reporting quality data, we strive to put patients first, ensuring they, along with their clinicians, are empowered to make decisions about their own healthcare using information that are aligned with meaningful quality measures. The Hospital VBP Program, together with the Hospital Readmissions Reduction Program and the HAC Reduction Program, represents a key component of the way that we bring quality measurement, transparency, and improvement together with value-based purchasing to the inpatient care setting. We have undertaken efforts to review the existing Hospital VBP Program measure set in the context of these other programs, to identify how to reduce costs and complexity across programs while continuing to incentivize improvement in the quality and value of care provided to patients. To that end, we have begun reviewing our programs' measures in accordance with the Meaningful Measures Initiative we described in section I.A.2. of the preambles of the proposed rule and in this final rule.
As part of this review, we stated in the proposed rule that we have taken a holistic approach to evaluating the appropriateness of the Hospital VBP Program's current measures in the context of the measures used in two other IPPS value-based purchasing programs (that is, the Hospital Readmissions Reduction Program and the HAC Reduction Program), as well as in the Hospital IQR Program. We view the three value-based purchasing programs together as a collective set of hospital value-based purchasing
As part of this holistic quality payment program strategy, we stated in the proposed rule that we believe the Hospital VBP Program should focus on the measurement priorities not covered by the Hospital Readmissions Reduction Program or the HAC Reduction Program. We stated that the Hospital VBP Program would continue to focus on measures related to: (1) The clinical outcomes, such as mortality and complications (which address the Meaningful Measures Initiative quality priority of promoting effective treatment); (2) patient and caregiver experience, as measured using the HCAHPS survey (which addresses the Meaningful Measures Initiative quality priority of strengthening person and family engagement as partners in their care); and (3) healthcare costs, as measured using the Medicare Spending per Beneficiary measure (which addresses the Meaningful Measures Initiative priority of making care affordable). We stated that we believe this framework will allow hospitals and patients to continue to obtain meaningful information about hospital performance and incentivize quality improvement while also streamlining the measure sets to reduce duplicative measures and program complexity so that the costs to hospitals associated with participating in these programs does not outweigh the benefits of improving beneficiary care.
In the FY 2019 IPPS/LTCH/PPS proposed rule (83 FR 20409 through 20412), we proposed to remove the following 10 measures previously adopted for the Hospital VBP Program:
• Elective Delivery (NQF #0469) (PC-01);
• National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138) (CAUTI);
• National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139) (CLABSI);
• American College of Surgeons-Centers for Disease Control and Prevention (ACS-CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure (NQF #0753) (Colon and Abdominal Hysterectomy SSI);
• National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant
• National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset
• Patient Safety and Adverse Events (Composite) (NQF #0531) (PSI 90);
• Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI Payment);
• Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); and
• Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Pneumonia (NQF #2579) (PN Payment).
In addition to the measure-specific comments discussed below, we received a number of comments addressing all measures proposed for removal as a single set.
We proposed to remove the Elective Delivery (NQF #0469) (PC-01) measure beginning with the FY 2021 program year because the costs associated with the measure outweigh the benefit of its continued use in the program—proposed removal Factor 8. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38262), we finalized both the benchmark at 0.000000 and the achievement threshold at 0.000000 for the PC-01 measure for the FY 2020 program year, meaning that at least 50 percent of hospitals that met the case minimum performed 0 elective deliveries for the measure during the baseline period of CY 2016. We refer readers to the FY 2013, FY 2014, and FY 2015 IPPS/LTCH PPS final rules (77 FR 53599 through 53605; 78 FR 50694 through 50699; and 79 FR 50080 through 50081, respectively) for a more detailed discussion of the general scoring methodology used in the Hospital VBP Program. Based on past performance on the measure, we anticipate that continued use of the PC-01 measure in the Hospital VBP Program would result in more than half of hospitals with a calculable score for this measure earning the maximum 10 achievement points. We anticipate that the remaining hospitals with a calculable score would be awarded points based on improvement only because they will not have met the achievement threshold, earning zero to nine improvement points. Therefore, we believe the measure no longer meaningfully differentiates performance among most participating hospitals for scoring purposes in the Hospital VBP Program.
We continue to believe that avoiding early elective delivery is important; however, because overall performance on the PC-01 measure has improved over time and we anticipate the measure will have little meaningful effect on the TPS for most hospitals, we believe the measure is no longer appropriate for the Hospital VBP Program. In order to continue tracking and reporting rates of elective deliveries to incentivize continued high performance on the measure, this measure would remain in the Hospital IQR Program. We believe that maintaining the measure in the Hospital IQR Program, which publicly reports measure performance, will be sufficient to incentivize continued high performance or improvement on the measure. At the same time, we believe that removing the measure from the Hospital VBP Program will reduce costs and potential confusion for providers and clinicians to track the measure in both the Hospital IQR and Hospital VBP Programs, which may include reviewing different reports and tracking slightly different measure rates across programs.
Based on the reasons described above, we believe that under the measure removal Factor 8, the costs associated with a measure outweigh the benefit of its continued use in the program, which we are finalizing in section IV.I.2.b. of the preamble of this final rule, the costs of keeping the PC-01 measure in the Hospital VBP Program outweigh the benefits because the measure is costly for health care providers and clinicians to review multiple reports on this measure that is being retained in the Hospital IQR Program and our analyses show that the measure no longer meaningfully differentiates performance among participating hospitals for scoring purposes in the Hospital VBP Program.
Therefore, we proposed to remove the PC-01 measure from the Hospital VBP Program beginning with the FY 2021 program year, with data collection on this measure for purposes of the Hospital VBP Program ending with December 31, 2018 discharges, based on proposed removal Factor 8—because the costs associated with the measure outweigh the benefit of its continued use in the program.