[Federal Register Volume 84, Number 86 (Friday, May 3, 2019)]
[Proposed Rules]
[Pages 19158-19677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08330]



[[Page 19157]]

Vol. 84

Friday,

No. 86

May 3, 2019

Part II

Book 2 of 2 Books

Pages 19157-19682





 Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 412, 413, and 495



 Medicare Program; Hospital Inpatient Prospective Payment Systems for 
Acute Care Hospitals and the Long-Term Care Hospital Prospective 
Payment System and Proposed Policy Changes and Fiscal Year 2020 Rates; 
Proposed Quality Reporting Requirements for Specific Providers; 
Medicare and Medicaid Promoting Interoperability Programs Proposed 
Requirements for Eligible Hospitals and Critical Access Hospitals; 
Proposed Rule

  Federal Register / Vol. 84 , No. 86 / Friday, May 3, 2019 / Proposed 
Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, and 495

[CMS-1716-P]
RIN 0938-AT73


Medicare Program; Hospital Inpatient Prospective Payment Systems 
for Acute Care Hospitals and the Long-Term Care Hospital Prospective 
Payment System and Proposed Policy Changes and Fiscal Year 2020 Rates; 
Proposed Quality Reporting Requirements for Specific Providers; 
Medicare and Medicaid Promoting Interoperability Programs Proposed 
Requirements for Eligible Hospitals and Critical Access Hospitals

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

ACTION: Proposed rule.

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SUMMARY: We are proposing to revise the Medicare hospital inpatient 
prospective payment systems (IPPS) for operating and capital-related 
costs of acute care hospitals to implement changes arising from our 
continuing experience with these systems for FY 2020 and to implement 
certain recent legislation. We also are proposing to make changes 
relating to Medicare graduate medical education (GME) for teaching 
hospitals and payments to critical access hospital (CAHs). In addition, 
we are proposing to provide the market basket update that would 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 2020. We are proposing to update the payment policies and the 
annual payment rates for the Medicare prospective payment system (PPS) 
for inpatient hospital services provided by long-term care hospitals 
(LTCHs) for FY 2020. In this proposed rule, we are including proposals 
to address wage index disparities between high and low wage index 
hospitals; to provide for an alternative IPPS new technology add-on 
payment pathway for certain transformative new devices; and to revise 
the calculation of the IPPS new technology add-on payment. In addition, 
we are requesting public comments on the substantial clinical 
improvement criterion used for evaluating applications for both the 
IPPS new technology add-on payment and the OPPS transitional pass-
through payment for devices, and we discuss potential revisions that we 
are considering adopting as final policies related to the substantial 
clinical improvement criterion for applications received beginning in 
FY 2020 for IPPS (that is, for FY 2021 and later new technology add-on 
payments) and beginning in CY 2020 for the OPPS.
    We are proposing to establish new requirements or revise existing 
requirements for quality reporting by specific Medicare providers 
(acute care hospitals, PPS-exempt cancer hospitals, and LTCHs). We also 
are proposing to establish new requirements and revise existing 
requirements for eligible hospitals and critical access hospitals 
(CAHs) participating in the Medicare and Medicaid Promoting 
Interoperability Programs. We are proposing to update policies for the 
Hospital Value-Based Purchasing (VBP) Program, the Hospital 
Readmissions Reduction Program, and the Hospital-Acquired Condition 
(HAC) Reduction Program.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided in the ADDRESSES section, no later than 5 p.m. 
EDT on June 24, 2019.

ADDRESSES: In commenting, please refer to file code CMS-1716-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may (and we encourage you to) submit 
electronic comments on this regulation to http://www.regulations.gov. 
Follow the instructions under the ``submit a comment'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1716-P, P.O. Box 8013, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments via 
express or overnight mail to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-1716-P, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    For information on viewing public comments, we refer readers to the 
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Donald Thompson, (410) 786-4487, and 
Michele Hudson, (410) 786-4487, Operating Prospective Payment, MS-DRGs, 
Wage Index, New Medical Service and Technology Add-On Payments, 
Hospital Geographic Reclassifications, Graduate Medical Education, 
Capital Prospective Payment, Excluded Hospitals, Medicare 
Disproportionate Share Hospital (DSH) Payment Adjustment, Medicare-
Dependent Small Rural Hospital (MDH) Program, Low-Volume Hospital 
Payment Adjustment, and Critical Access Hospital (CAH) 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.
    Erin Patton, (410) 786-2437, Hospital Readmissions Reduction 
Program Administration Issues.
    Lein Han, 410-786-0205, Hospital Readmissions Reduction Program--
Readmissions--Measures Issues.
    Michael Brea, (410) 786-4961, Hospital-Acquired Condition Reduction 
Program Issues.
    Annese Abdullah-Mclaughlin, (410) 786-2995, 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.
    Cindy Tourison, (410) 786-1093, Hospital Inpatient Quality 
Reporting and Hospital Value-Based Purchasing--Measures Issues Except 
Hospital Consumer Assessment of Healthcare Providers and Systems 
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.
    Nekeshia McInnis, (410) 786-4486 and Ronique Evans, (410) 786-1000, 
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, Dylan Podson (410) 786-5031, and 
Bryan Rossi (410) 786-065l, Promoting Interoperability Programs.

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    Benjamin Moll, (410) 786-4390, Provider Reimbursement Review Board 
Appeals Issues.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments 
received before the close of the comment period are available for 
viewing by the public, including any personally identifiable or 
confidential business information that is included in a comment. We 
post all comments received before the close of the comment period on 
the following website as soon as possible after they have been 
received: http://www.regulations.gov/. Follow the search instructions 
on that website to view public comments.

Electronic Access

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

Tables Available Through the Internet on the CMS Website

    In the past, a majority of the tables referred to throughout this 
preamble and in the Addendum to the proposed rule and the final rule 
were published in the Federal Register as part of the annual proposed 
and final rules. However, beginning in FY 2012, the majority of the 
IPPS tables and LTCH PPS tables are no longer published in the Federal 
Register. Instead, these tables, generally, will be available only 
through the internet. The IPPS tables for this FY 2020 proposed rule 
are available through the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the 
screen titled, ``FY 2020 IPPS Proposed Rule Home Page'' or ``Acute 
Inpatient--Files for Download.'' The LTCH PPS tables for this FY 2020 
proposed rule are available through the internet on the CMS website at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation 
Number CMS-1716-P. For further details on the contents of the tables 
referenced in this proposed rule, we refer readers to section VI. of 
the Addendum to this proposed rule.
    Readers who experience any problems accessing any of the tables 
that are posted on the CMS websites identified above should contact 
Michael Treitel at (410) 786-4552.

Table of Contents

I. Executive Summary and Background
    A. Executive Summary
    B. Background Summary
    C. Summary of Provisions of Recent Legislation Implemented in 
This Proposed Rule
    D. Summary of the Provisions of This Proposed Rule
    E. Advancing Health Information Exchange
II. Proposed Changes to Medicare Severity Diagnosis-Related Group 
(MS-DRG) Classifications and Relative Weights
    A. Background
    B. MS-DRG Reclassifications
    C. Adoption of the MS-DRGs in FY 2008
    D. Proposed FY 2020 MS-DRG Documentation and Coding Adjustment
    E. Refinement of the MS-DRG Relative Weight Calculation
    F. Proposed Changes to Specific MS-DRG Classifications
    G. Recalibration of the Proposed FY 2020 MS-DRG Relative Weights
    H. Proposed Add-On Payments for New Services and Technologies 
for FY 2020
III. Proposed Changes to the Hospital Wage Index for Acute Care 
Hospitals
    A. Background
    B. Worksheet S-3 Wage Data for the Proposed FY 2020 Wage Index
    C. Verification of Worksheet S-3 Wage Data
    D. Method for Computing the Proposed FY 2020 Unadjusted Wage 
Index
    E. Proposed Occupational Mix Adjustment to the Proposed FY 2020 
Wage Index
    F. Analysis and Implementation of the Proposed Occupational Mix 
Adjustment and the Proposed FY 2020 Occupational Mix Adjusted Wage 
Index
    G. Proposed Application of the Rural Floor, Expired Imputed 
Floor Policy, and Proposed Application of the State Frontier Floor
    H. Proposed FY 2020 Wage Index Tables
    I. Proposed Revisions to the Wage Index Based on Hospital 
Redesignations and Reclassifications
    J. Proposed Out-Migration Adjustment Based on Commuting Patterns 
of Hospital Employees
    K. Reclassification from Urban to Rural Under Section 
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103
    L. Process for Requests for Wage Index Data Corrections
    M. Proposed Labor-Related Share for the FY 2020 Wage Index
    N. Proposals to Address Wage Index Disparities Between High and 
Low Wage Index Hospitals
IV. Other Decisions and Proposed Changes to the IPPS for Operating 
Costs
    A. Proposed Changes to MS-DRGs Subject to Postacute Care 
Transfer and MS-DRG Special Payment Policies
    B. Proposed Changes in the Inpatient Hospital Updates for FY 
2020 (Sec.  412.64(d))
    C. Proposed Rural Referral Centers (RRCs) Annual Updates to 
Case-Mix Index and Discharge Criteria (Sec.  412.96)
    D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec.  
412.101)
    E. Proposed Indirect Medical Education (IME) Payment Adjustment 
(Sec.  412.105)
    F. Proposed Payment Adjustment for Medicare Disproportionate 
Share Hospitals (DSHs) for FY 2020 (Sec.  412.106)
    G. Hospital Readmissions Reduction Program: Proposed Updates and 
Changes (Sec. Sec.  412.150 through 412.154)
    H. Hospital Value-Based Purchasing (VBP) Program: Proposed 
Policy Changes
    I. Hospital-Acquired Condition (HAC) Reduction Program
    J. Payments for Indirect and Direct Graduate Medical Education 
Costs (Sec. Sec.  412.105 and 413.75 through 413.83)
    K. Rural Community Hospital Demonstration Program
V. Proposed Changes to the IPPS for Capital-Related Costs
    A. Overview
    B. Additional Provisions
    C. Proposed Annual Update for FY 2020
VI. Proposed Changes for Hospitals Excluded From the IPPS
    A. Proposed Rate-of-Increase in Payments to Excluded Hospitals 
for FY 2020
    B. Request for Public Comments on Methodologies and Requirements 
for Adjustments to Rate-of-Increase Ceiling
    C. Critical Access Hospitals (CAHs)
VII. Proposed Changes to the Long-Term Care Hospital Prospective 
Payment System (LTCH PPS) for FY 2019
    A. Background of the LTCH PPS
    B. Proposed Medicare Severity Long-Term Care Diagnosis-Related 
Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2020
    C. Proposed Payment Adjustment for LTCH Discharges That Do Not 
Meet the Applicable Discharge Payment Percentage
    D. Proposed Changes to the LTCH PPS Payment Rates and Other 
Proposed Changes to the LTCH PPS for FY 2020
VIII. Proposed Quality Data Reporting Requirements for Specific 
Providers and Suppliers
    A. Hospital Inpatient Quality Reporting (IQR) Program
    B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
    C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
    D. Proposed Changes to the Medicare and Medicaid Promoting 
Interoperability Programs
IX. MedPAC Recommendations
X. Other Required Information
    A. Publicly Available Data
    B. Collection of Information Requirements
    C. Response to Public Comments
XI. Provider Reimbursement Review Board (PRRB) Appeals

Regulation Text

Addendum--Proposed Schedule of Standardized Amounts, Update Factors, 
and Rate-of-Increase Percentages Effective With Cost Reporting Periods 
Beginning on or After October 1, 2019 and Proposed Payment Rates for 
LTCHs Effective With Discharges Occurring on or After October 1, 2019

I. Summary and Background
II. Proposed Changes to the Prospective Payment Rates for Hospital 
Inpatient

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Operating Costs for Acute Care Hospitals for FY 2020
    A. Calculation of the Proposed Adjusted Standardized Amount
    B. Proposed Adjustments for Area Wage Levels and Cost-of-Living
    C. Calculation of the Proposed Prospective Payment Rates
III. Proposed Changes to Payment Rates for Acute Care Hospital 
Inpatient Capital-Related Costs for FY 2020
    A. Determination of Proposed Federal Hospital Inpatient Capital-
Related Prospective Payment Rate Update
    B. Calculation of the Proposed Inpatient Capital-Related 
Prospective Payments for FY 2020
    C. Capital Input Price Index
IV. Proposed Changes to Payment Rates for Excluded Hospitals: Rate-
of-Increase Percentages for FY 2020
V. Proposed Updates to the Payment Rates for the LTCH PPS for FY 
2020
    A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2020
    B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS 
for FY 2020
    C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs 
Located in Alaska and Hawaii
    D. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO) 
Cases
    E. Proposed Update to the IPPS Comparable/Equivalent Amounts to 
Reflect the Statutory Changes to the IPPS DSH Payment Adjustment 
Methodology
    F. Computing the Proposed Adjusted LTCH PPS Federal Prospective 
Payments for FY 2020
VI. Tables Referenced in This Proposed Rule and Available Through 
the Internet on the CMS Website

Appendix A--Economic Analyses

I. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Objectives of the IPPS and the LTCH PPS
    D. Limitations of Our Analysis
    E. Hospitals Included in and Excluded From the IPPS
    F. Effects on Hospitals and Hospital Units Excluded From the 
IPPS
    G. Quantitative Effects of the Proposed Policy Changes Under the 
IPPS for Operating Costs
    H. Effects of Other Proposed Policy Changes
    I. Effects of Proposed Changes in the Capital IPPS
    J. Effects of Proposed Payment Rate Changes and Policy Changes 
Under the LTCH PPS
    K. Effects of Proposed Requirements for Hospital Inpatient 
Quality Reporting (IQR) Program
    L. Effects of Proposed Requirements for the PPS-Exempt Cancer 
Hospital Quality Reporting (PCHQR) Program
    M. Effects of Proposed Requirements for the Long-Term Care 
Hospital Quality Reporting Program (LTCH QRP)
    N. Effects of Proposed Requirements Regarding the Medicare 
Promoting Interoperability Program
    O. Alternatives Considered
    P. Reducing Regulation and Controlling Regulatory Costs
    Q. Overall Conclusion
    R. Regulatory Review Costs
II. Accounting Statements and Tables
    A. Acute Care Hospitals
    B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA) Analysis
VI. Executive Order 13175
VII. Executive Order 12866

Appendix B: Recommendation of Update Factors for Operating Cost Rates 
of Payment for Inpatient Hospital Services

I. Background
II. Proposed Inpatient Hospital Update for FY 2020
    A. Proposed FY 2020 Inpatient Hospital Update
    B. Proposed Update for SCHs and MDHs for FY 2020
    C. Proposed FY 2020 Puerto Rico Hospital Update
    D. Proposed Update for Hospitals Excluded From the IPPS
    E. Proposed Update for LTCHs for FY 2020
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and 
Updating Payments in Traditional Medicare

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority
    This proposed rule would make payment and policy changes under the 
Medicare inpatient prospective payment systems (IPPS) for operating and 
capital-related costs of acute care hospitals as well as for certain 
hospitals and hospital units excluded from the IPPS. In addition, it 
would make payment and policy changes for inpatient hospital services 
provided by long-term care hospitals (LTCHs) under the long-term care 
hospital prospective payment system (LTCH PPS). This proposed rule also 
would make policy changes to programs associated with Medicare IPPS 
hospitals, IPPS-excluded hospitals, and LTCHs. In this proposed rule, 
we are including proposals to address wage index disparities between 
high and low wage index hospitals; to provide for an alternative IPPS 
new technology add-on payment pathway for certain transformative new 
devices; and to revise the calculation of the IPPS new technology add-
on payment. In addition, we are requesting public comments on the 
substantial clinical improvement criterion for evaluating applications 
for both the IPPS new technology add-on payment and the OPPS 
transitional pass-through payment for devices, and we discuss potential 
revisions that we are considering adopting as final policies related to 
the substantial clinical improvement criterion for FY 2020 for IPPS and 
CY 2020 for the OPPS.
    We are proposing to establish new requirements and revise 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 proposing to establish new 
requirements and revise existing requirements for eligible hospitals 
and CAHs participating in the Medicare and Medicaid Promoting 
Interoperability Programs. We are proposing to update policies for the 
Hospital Value-Based Purchasing (VBP) Program, the Hospital 
Readmissions Reduction Program, and the Hospital-Acquired Condition 
(HAC) Reduction Program.
    Under various statutory authorities, we are proposing to make 
changes to the Medicare IPPS, to the LTCH PPS, and to other related 
payment methodologies and programs for FY 2020 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.

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     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, 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, 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 amended by section 15002 of 
the 21st Century Cures Act, which establishes the Hospital Readmissions 
Reduction Program. Under the program, payments for discharges from an 
applicable hospital as defined under section 1886(d) of the Act will be 
reduced to account for certain excess readmissions. Section 15002 of 
the 21st Century Cures Act requires the Secretary to compare hospitals 
with respect to the number of their Medicare-Medicaid dual-eligible 
beneficiaries (dual-eligibles) in determining the extent of excess 
readmissions.
     Section 1886(r) of the Act, as added by section 3133 of 
the Affordable Care Act, which provides for a reduction to 
disproportionate share hospital (DSH) payments under section 
1886(d)(5)(F) of the Act and for a new uncompensated care payment to 
eligible hospitals. Specifically, section 1886(r) of the Act requires 
that, for fiscal year 2014 and each subsequent fiscal year, subsection 
(d) hospitals that would otherwise receive a DSH payment made under 
section 1886(d)(5)(F) of the Act will receive two separate payments: 
(1) 25 percent of the amount they previously would have received under 
section 1886(d)(5)(F) of the Act for DSH (``the empirically justified 
amount''), and (2) an additional payment for the DSH hospital's 
proportion of uncompensated care, determined as the product of three 
factors. These three factors are: (1) 75 percent of the payments that 
would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 
minus the percent change in the percent of individuals who are 
uninsured; 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)(5)(D)(iv) of the Act, as added by section 
1206(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 
2013 (Pub. L. 113-67), which provides for the establishment of a 
functional status quality measure in the LTCH QRP for change in 
mobility among inpatients requiring ventilator support.
     Section 1899B of the Act, as added by section 2(a) of the 
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT 
Act) (Pub. L. 113-185), which provides for the establishment of 
standardized data reporting for certain post-acute care providers, 
including LTCHs.
2. Summary of the Major Provisions
    Below we provide a summary of the major provisions in this proposed 
rule. In general, these major provisions are being proposed as part of 
the annual update to the payment policies and payment rates, consistent 
with the applicable statutory provisions. A general summary of the 
proposed changes in this proposed rule is presented in section I.D. of 
the preamble of this proposed rule.
a. Proposed MS-DRG Documentation and Coding Adjustment
    Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. 
L. 112-240) amended section 7(b)(1)(B) of Public Law 110-90 to require 
the Secretary to make a recoupment adjustment to the standardized 
amount of Medicare payments to acute care hospitals to account for 
changes in MS-DRG documentation and coding that do not reflect real 
changes in case-mix, totaling $11 billion over a 4-year period of FYs 
2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments 
represented the amount of the increase in aggregate payments as a 
result of not completing the prospective adjustment authorized under 
section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the 
ATRA, this amount could not have been recovered under Public Law 110 
90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment 
we intended to make in FY 2018 with a 0.5 percent positive adjustment 
to the standardized amount of Medicare payments to acute care hospitals 
for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently 
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures 
Act.) Therefore, for FY 2020, we are proposing to make an adjustment of 
+ 0.5 percent to the standardized amount.
b. Request for Information on the New Technology Add-On Payment and 
Transitional Device Pass-Through Payment Substantial Clinical 
Improvement Criterion and Discussion of Potential Revisions to the New 
Technology Add-On Payment and Transitional Device Pass-Through Payment 
Substantial Clinical Improvement Criterion
    The substantial clinical improvement criterion that is used to 
evaluate a technology that is the subject of an application for the new 
technology add-on payment under the IPPS or an application for the 
transitional pass-through payment for additional costs of innovative 
devices under the OPPS is the subject of the request for information 
and the discussion of potential revisions included in this proposed 
rule.

[[Page 19162]]

    We understand that greater clarity regarding what would 
substantiate the requirements of this criterion would help the public, 
including innovators, better understand how CMS evaluates new 
technology applications for add-on payments and provide greater 
predictability about which applications will meet the criterion for 
substantial clinical improvement. We are considering potential 
revisions to the substantial clinical improvement criterion under the 
IPPS new technology add-on payment policy and the OPPS transitional 
pass-through payment policy for devices policy, and are seeking public 
comments on the type of additional detail and guidance that the public 
and applicants for new technology add-on payments would find useful. 
The comments we receive in response to those general questions will 
inform future rulemaking after the FY 2020 IPPS/LTCH PPS final rule. 
This request for public comments is intended to be broad in scope and 
provide a foundation for potential rulemaking in future years.
    In addition to this broad request for public comments for potential 
rulemaking in future years, in order to respond to stakeholder feedback 
requesting greater understanding of CMS' approach to evaluating 
substantial clinical improvement, we are soliciting public comments on 
specific changes or clarifications to the IPPS and OPPS substantial 
clinical improvement criterion that CMS might consider making in the FY 
2020 IPPS/LTCH PPS final rule for applications received beginning in FY 
2020 for the IPPS and CY 2020 for the OPPS to provide greater clarity 
and predictability.
c. Proposed Alternative Inpatient New Technology Add-On Payment Pathway 
for Transformative New Devices
    After consideration of the issues discussed in section III.H.8. of 
the preamble of this proposed rule relating to the Food and Drug 
Administration's (FDA's) expedited programs, and consistent with the 
Administration's commitment to addressing barriers to health care 
innovation and ensuring that Medicare beneficiaries have access to 
critical and life-saving new cures and technologies that improve 
beneficiary health outcomes, we concluded that it would be appropriate 
to develop an alternative pathway for the inpatient new technology add-
on payment for transformative medical devices. In situations where a 
new medical device is part of the FDA's Breakthrough Devices Program 
and has received FDA marketing authorization (that is, the device has 
received pre-market approval (PMA); 510(k) clearance; or the granting 
of a De Novo classification request), we are proposing an alternative 
inpatient new technology add-on payment pathway to facilitate access to 
this technology for Medicare beneficiaries.
    Specifically, we are proposing that, for applications received for 
IPPS new technology add-on payments for FY 2021 and subsequent fiscal 
years, if a medical device is part of the FDA's Breakthrough Devices 
Program and received FDA marketing authorization, such a device would 
be considered new and not substantially similar to an existing 
technology for purposes of new technology add-on payment under the 
IPPS. In light of the criteria applied under the FDA's Breakthrough 
Devices Program, and because the technology may not have a sufficient 
evidence base to demonstrate substantial clinical improvement at the 
time of FDA marketing authorization, we also are proposing that the 
medical device would not need to meet the requirement under 42 CFR 
412.87(b)(1) that it represent an advance that substantially improves, 
relative to technologies previously available, the diagnosis or 
treatment of Medicare beneficiaries.
d. Proposed Revision of the Calculation of the Inpatient Hospital New 
Technology Add-On Payment
    The current calculation of the new technology add-on payment is 
based on the cost to hospitals for the new medical service or 
technology. Under Sec.  412.88, if the costs of the discharge 
(determined by applying cost-to-charge ratios (CCRs) as described in 
Sec.  412.84(h)) exceed the full DRG payment (including payments for 
IME and DSH, but excluding outlier payments), Medicare will make an 
add-on payment equal to the lesser of: (1) 50 percent of the costs of 
the new medical service or technology; or (2) 50 percent of the amount 
by which the costs of the case exceed the standard DRG payment. 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.
    After consideration of the concerns raised by commenters and other 
stakeholders, we agree that there may be merit to the recommendations 
to increase the maximum add-on amount, and that capping the add-on 
payment amount at 50 percent could, in some cases, no longer provide a 
sufficient incentive for the use of new technology. To address this 
issue, we believe it would be appropriate to modify the current payment 
mechanism to increase the amount of the maximum add-on payment amount 
to 65 percent. Therefore, we are proposing that, beginning with 
discharges occurring on or after October 1, 2019, if the costs of a 
discharge involving a new medical service or technology exceed the full 
DRG payment (including payments for IME and DSH, but excluding outlier 
payments), Medicare would make an add-on payment equal to the lesser 
of: (1) 65 percent of the costs of the new medical service or 
technology; or (2) 65 percent of the amount by which the costs of the 
case exceed the standard DRG payment.
e. Proposals To Address Wage Index Disparities Between High and Low 
Wage Index Hospitals
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20372), we 
invited the public to submit further comments, suggestions, and 
recommendations for regulatory and policy changes to the Medicare wage 
index. Many of the responses received from this request for information 
(RFI) reflect a common concern that the current wage index system 
perpetuates and exacerbates the disparities between high and low wage 
index hospitals. Many respondents also expressed concern that the 
calculation of the rural floor has allowed a limited number of States 
to manipulate the wage index system to achieve higher wages for many 
urban hospitals in those States at the expense of hospitals in other 
States, which also contributes to wage index disparities.
    To help mitigate these wage index disparities, including those 
resulting from the inclusion of hospitals with rural reclassifications 
under 42 CFR 412.103 in the rural floor, we are proposing to reduce the 
disparity between high and low wage index hospitals by increasing the 
wage index values for certain hospitals with low wage index values and 
decreasing the wage index values for certain hospitals with high wage 
index values for budget neutrality purposes, as well as changing the 
calculation of the rural floor. We also are proposing a transition for 
hospitals experiencing significant decreases in their wage index values 
as a result of these proposed changes. We are proposing to make these 
changes in a budget neutral manner.
    In this proposed rule, we are proposing to increase the wage index 
for hospitals with a wage index value below the 25th percentile wage 
index value for a fiscal year by half the difference between the 
otherwise applicable final wage index value for a year for that 
hospital and the 25th percentile wage index value for that year across 
all hospitals. Furthermore, we are

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proposing that this policy would be effective for at least 4 years, 
beginning in FY 2020, in order to allow employee compensation increases 
implemented by these hospitals sufficient time to be reflected in the 
wage index calculation. Under our proposal, in order to offset the 
estimated increase in IPPS payments to hospitals with wage index values 
below the 25th percentile wage index value, we are proposing to 
decrease the wage index values for certain hospitals with high wage 
index values (that is, hospitals with wage index values above the 75th 
percentile wage index value), but preserve the rank order among those 
values.
    In addition, we are proposing to remove urban to rural 
reclassifications from the calculation of the rural floor, such that, 
beginning in FY 2020, the rural floor would be calculated without 
including the wage data of hospitals that have reclassified as rural 
under section 1886(d)(8)(E) of the Act (as implemented in the 
regulations at Sec.  412.103). Also, for the purposes of applying the 
provisions of section 1886(d)(8)(C)(iii) of the Act, we are proposing 
to remove urban to rural reclassifications from the calculation of 
``the wage index for rural areas in the State in which the county is 
located'' as referred to in the statute.
    Lastly, for FY 2020, we are proposing to place a 5-percent cap on 
any decrease in a hospital's wage index from the hospital's final wage 
index in FY 2019. We are proposing to apply a budget neutrality 
adjustment to the standardized amount so that our proposed transition 
for hospitals that could be negatively impacted is implemented in a 
budget neutral manner.
f. Proposed DSH Payment Adjustment and Additional Payment for 
Uncompensated Care
    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 2020 IPPS/LTCH PPS proposed rule, we are proposing to 
update our estimates of the three factors used to determine 
uncompensated care payments for FY 2020. We are proposing to continue 
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 proposing 
to use a single year of data on uncompensated care costs from Worksheet 
S-10 for FY 2015 to determine Factor 3 for FY 2020. We also are seeking 
public comments on whether we should, due to changes in the reporting 
instructions that became effective for FY 2017, alternatively use a 
single year of Worksheet S-10 data from the FY 2017 cost reports, 
instead of the FY 2015 Worksheet S-10 data, to calculate Factor 3 for 
FY 2020. In addition, we are proposing to continue to use only data 
regarding low-income insured days for FY 2013 to determine the amount 
of uncompensated care payments for Puerto Rico hospitals, and Indian 
Health Service and Tribal hospitals. We are not proposing specific 
Factor 3 polices for all-inclusive rate providers for FY 2020. In this 
proposed rule, we also are proposing to continue to use the following 
established 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, 
to use the cost report that spans both fiscal years for the latter 
fiscal year; and (3) to apply statistical trim methodologies to 
potentially aberrant cost-to-charge ratios (CCRs) and potentially 
aberrant uncompensated care costs reported on the Worksheet S-10.
g. Proposed Changes to the LTCH PPS
    In this proposed rule, we set forth proposed changes to the LTCH 
PPS Federal payment rates, factors, and other payment rate policies 
under the LTCH PPS for FY 2020. We also are proposing the payment 
adjustment for LTCH discharges when the LTCH does not meet the 
applicable discharge payment percentage and a proposed reinstatement 
process, as required by section 1886(m)(6)(C) of the Act. An LTCH would 
be subject to this payment adjustment if, for cost reporting periods 
beginning in FY 2020 and subsequent fiscal years, the LTCH's percentage 
of Medicare discharges that meet the criteria for exclusion from the 
site neutral payment rate (that is, discharges paid the LTCH PPS 
standard Federal payment rate) of its total number of Medicare FFS 
discharges paid under the LTCH PPS during the cost reporting period is 
not at least 50 percent.
h. Reduction of Hospital Payments for Excess Readmissions
    We are proposing to make changes to policies for the Hospital 
Readmissions Reduction Program, which was established under section 
1886(q) of the Act, as 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 2017 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), elective primary total hip arthroplasty/total knee 
arthroplasty (THA/TKA), and coronary artery bypass graft (CABG) 
surgery. In this proposed rule, we are proposing the following 
policies: (1) A measure removal policy that aligns with the removal 
factor policies previously adopted in other quality reporting and 
quality payment programs; (2) an update to the Program's definition of 
``dual-eligible'' beginning with the FY 2021 program year to allow for 
a 1-month lookback period in data sourced from the State Medicare 
Modernization Act (MMA) files to determine dual-eligible status for 
beneficiaries who die in the month of discharge; (3) a subregulatory 
process to address any potential future nonsubstantive changes to the 
payment adjustment factor components; and (4) an update to the 
Program's regulations at 42 CFR 412.152 and 412.154 to reflect proposed 
policies and to codify additional previously finalized policies.
i. Hospital Value-Based Purchasing (VBP) Program
    Section 1886(o) of the Act requires the Secretary to establish a 
Hospital VBP Program under which value-based incentive payments are 
made in a fiscal year to hospitals based on their performance on 
measures established for a performance period for such fiscal year. In 
this proposed rule, we are proposing that the Hospital VBP

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Program will use the same data used by the HAC Reduction Program for 
purposes of calculating the Centers for Disease Control and Prevention 
(CDC) National Health Safety Network (NHSN) Healthcare-Associated 
Infection (HAI) measures beginning with CY 2020 data collection, when 
the Hospital IQR Program will no longer collect data on those measures, 
and will rely on HAC Reduction Program validation to ensure the 
accuracy of CDC NHSN HAI measure data used in the Hospital VBP Program. 
We also are newly establishing certain performance standards.
j. Hospital-Acquired Condition (HAC) Reduction Program
    Section 1886(p) of the 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 hospitals that rank 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 FY 2019 IPPS/
LTCH PPS final rule (83 FR 41147 and 41148), we are proposing to: (1) 
Adopt a measure removal policy that aligns with the removal factor 
policies previously adopted in other quality reporting and quality 
payment programs; (2) clarify administrative policies for validation of 
the CDC NHSN HAI measures; (3) adopt the data collection periods for 
the FY 2022 program year; and (4) update 42 CFR 412.172(f) to reflect 
policies finalized in the FY 2019 IPPS/LTCH PPS final rule.
k. Hospital Inpatient Quality Reporting (IQR) Program
    Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) 
hospitals are required to report data on measures selected by the 
Secretary for a fiscal year in order to receive the full annual 
percentage increase that would otherwise apply to the standardized 
amount applicable to discharges occurring in that fiscal year.
    In this proposed rule, we are proposing to make several changes. We 
are proposing to: (1) Adopt two opioid-related eCQMs (Safe Use of 
Opioids--Concurrent Prescribing eCQM (NQF #3316e) and Hospital Harm--
Opioid-Related Adverse Events eCQM) beginning with the CY 2021 
reporting period/FY 2023 payment determination; (2) adopt the Hybrid 
Hospital-Wide All-Cause Readmission (Hybrid HWR) measure (NQF #2879) in 
a stepwise fashion, beginning with two voluntary reporting periods 
which would run from July 1, 2021 through June 30, 2022, and from July 
1, 2022 through June 30, 2023, before requiring reporting of the 
measure for the reporting period that would run from July 1, 2023 
through June 30, 2024, impacting the FY 2026 payment determination and 
for subsequent years; and (3) remove the Claims-Based Hospital-Wide 
All-Cause Unplanned Readmission Measure (NQF #1789) (HWR claims-only 
measure) beginning with the FY 2026 payment determination. We also are 
proposing reporting and submission requirements for eCQMs, including 
proposals to: (1) Extend current eCQM reporting and submission 
requirements for both the CY 2020 reporting period/FY 2022 payment 
determination and CY 2021 reporting period/FY 2023 payment 
determination; (2) change eCQM reporting and submission requirements 
for the CY 2022 reporting period/FY 2024 payment determination, such 
that hospitals would be required to report one, self-selected calendar 
quarter of data for three self-selected eCQMs and the proposed Safe Use 
of Opioids--Concurrent Prescribing eCQM (NQF #3316e), for a total of 
four eCQMs; and (3) continue requiring that EHRs be certified to all 
available eCQMs used in the Hospital IQR Program for the CY 2020 
reporting period/FY 2022 payment determination and subsequent years. 
These proposals are in alignment with proposals under the Promoting 
Interoperability Program. We also are proposing reporting and 
submission requirements for the Hybrid HWR measure. In addition, we are 
seeking public comments on three measures for potential future 
inclusion in the Hospital IQR Program.
l. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
    The LTCH QRP is authorized by section 1886(m)(5) of the Act and 
applies to all hospitals certified by Medicare as long-term care 
hospitals (LTCHs). Under the LTCH QRP, the Secretary must reduce 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 discussed in section VIII.C. of the preamble 
of this proposed rule, we are proposing to adopt two measures that meet 
the requirements of section 1899B(c)(1)(E) of the Act, modify an 
existing measure, and adopt new standardized patient assessment data 
elements that satisfy section 1899B(b) of the Act. We also are 
proposing to move the implementation date of the LTCH Continuity 
Assessment Record and Evaluation Data Set (LTCH CARE Data Set or LCDS) 
from April to October to align with other post-acute care programs 
beginning October 1, 2020. Lastly, we are proposing updates related to 
the system used for the submission of data and related regulations.
m. Medicare and Medicaid Promoting Interoperability Programs
    For purposes of an increased level of stability, reducing the 
burden on eligible hospitals and CAHs, and clarifying certain existing 
policies, we are proposing several changes to the Medicare Promoting 
Interoperability Program. Specifically, we are proposing to: (1) 
Eliminate requirement that, for the FY 2020 payment adjustment year, 
for an eligible hospital that has not successfully demonstrated it is a 
meaningful EHR user in a prior year, the EHR reporting period in CY 
2019 must end before and the eligible hospital must successfully 
register for and attest to meaningful use no later than the October 1, 
2019 deadline; (2) establish an EHR reporting period of a minimum of 
any continuous 90-day period in CY 2021 for new and returning 
participants (eligible hospitals and CAHs) in the Medicare Promoting 
Interoperability Program attesting to CMS; (3) require that the 
Medicare Promoting Interoperability Program measure actions must occur 
within the EHR reporting period beginning with the EHR reporting period 
in CY 2020; (4) revise the Query of PDMP measure to make it an optional 
measure worth 5 bonus points in CY 2020, remove the exclusions 
associated with this measure in CY 2020, require a yes/no response 
instead of a numerator and denominator for CY 2019 and CY 2020, and 
clearly state our intended policy that the measure is worth a full 5 
bonus points in CY 2019 and CY 2020; (5) change the maximum points 
available for the e-Prescribing measure to 10 points beginning in CY 
2020, in the event we finalize the proposed changes to the Query of 
PDMP measure; (6) remove the Verify Opioid Treatment Agreement measure 
beginning in CY 2020 and clearly state our intended policy that this 
measure is worth a full 5 bonus points in CY 2019; and (7) revise the 
Support Electronic Referral Loops by Receiving and Incorporating Health 
Information measure to more clearly

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capture the previously established policy regarding CEHRT use. We are 
also proposing to amend our regulations to incorporate several of these 
proposals.
    For CQM reporting under the Medicare and Medicaid Promoting 
Interoperability Programs, we are generally proposing to align our 
requirements with requirements under the Hospital IQR Program. 
Specifically, we are proposing to: (1) Adopt two opioid-related eCQMs 
(Safe Use of Opioids--Concurrent Prescribing eCQM (NQF #3316e) and 
Hospital Harm--Opioid-Related Adverse Events eCQM) beginning with the 
reporting period in CY 2021; (2) extend current CQM reporting and 
submission requirements for the reporting periods in CY 2020 and CY 
2021; and (3) establish CQM reporting and submission requirements for 
the reporting period in CY 2022, which would require all eligible 
hospitals and CAHs to report on the proposed Safe Use of Opioids--
Concurrent Prescribing eCQM (NQF #3316e) beginning with the reporting 
period in CY 2022.
    We are seeking public comments on whether we should consider 
proposing to adopt in future rulemaking the Hybrid Hospital-Wide All-
Cause Readmission (Hybrid HWR) measure beginning with the reporting 
period in CY 2023, a measure which we are proposing to adopt under the 
Hospital IQR Program, and we are seeking information on a variety of 
issues regarding the future direction of the Medicare and Medicaid 
Promoting Interoperability Programs.
3. Summary of Costs and Benefits
     Proposed Adjustment for MS-DRG Documentation and Coding 
Changes. Section 414 of the MACRA replaced the single positive 
adjustment we intended to make in FY 2018 once the recoupment required 
by section 631 of the ATRA was complete with a 0.5 percentage point 
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 percentage point by section 15005 
of the 21st Century Cures Act.) For FY 2020, we are proposing to make 
an adjustment of +0.5 percentage point to the standardized amount 
consistent with the MACRA.
     Proposed Alternative Inpatient New Technology Add-On 
Payment Pathway for Transformative New Devices: In this proposed rule, 
we are proposing an alternative inpatient new technology add-on payment 
pathway for a new medical device that is part of the FDA Breakthrough 
Devices Program and has received FDA marketing authorization, that is, 
received PMA approval, 510(k) clearance, or the granting of De Novo 
classification request.
    Given the relatively recent introduction of FDA's Breakthrough 
Devices Program, there have not been any medical devices that were part 
of the Breakthrough Devices Program and received FDA marketing 
authorization and for which the applicant applied for a new technology 
add-on payment under the IPPS and was not approved. Therefore, it is 
not possible to quantify the impact of this proposal.
     Proposed Changes to the Calculation of the 
Inpatient Hospital New Technology Add-On Payment: The current 
calculation of the new technology add-on payment is based on the cost 
to hospitals for the new medical service or technology. Under existing 
Sec.  412.88, if the costs of the discharge exceed the full DRG payment 
(including payments for IME and DSH, but excluding outlier payments), 
Medicare makes an add-on payment equal to the lesser of: (1) 50 percent 
of the estimated costs of the new technology or medical service; or (2) 
50 percent of the amount by which the costs of the case exceed the 
standard DRG payment. In this proposed rule, we are proposing to modify 
the current payment mechanism to increase the amount of the maximum 
add-on payment amount to 65 percent. Therefore, we are proposing that 
if the costs of a discharge involving a new technology exceed the full 
DRG payment (including payments for IME and DSH, but excluding outlier 
payments), Medicare would make an add-on payment equal to the lesser 
of: (1) 65 percent of the costs of the new medical service or 
technology; or (2) 65 percent of the amount by which the costs of the 
case exceed the standard DRG payment.
    We estimate that if we finalize our proposals for the 9 
technologies for which we are proposing to continue to make new 
technology add-on payments in FY 2020 and if we determine that all 17 
of the FY 2020 new technology add-on payment applications meet the 
specified criteria for new technology add-on payments for FY 2020, this 
proposal, if finalized, would increase IPPS spending by approximately 
$110 million in FY 2020.
     Proposed Changes to Address Wage Index Disparities Between 
High and Low Wage Index Hospitals. As discussed in section III.N. of 
the preamble of this proposed rule, to help mitigate wage index 
disparities, including those resulting from the inclusion of hospitals 
with rural reclassifications under 42 CFR 412.103 in the rural floor, 
we are proposing to reduce the disparity between high and low wage 
index hospitals by increasing the wage index values for certain 
hospitals with low wage index values and decreasing the wage index 
values of certain hospitals with high wage index values for budget 
neutrality purposes, as well as changing the calculation of the rural 
floor. We also are proposing a transition for hospitals experiencing 
significant decreases in their wage index values as a result of these 
proposed changes. We are proposing to make these changes in a budget 
neutral manner.
    We are proposing to apply a budget neutrality adjustment to the 
standardized amount so that our proposed transition for hospitals that 
could be negatively impacted is implemented in a budget neutral manner.
     Proposed Medicare DSH Payment Adjustment and Additional 
Payment for Uncompensated Care. For FY 2020, we are proposing to update 
our estimates of the three factors used to determine uncompensated care 
payments. We are proposing to continue to use uninsured estimates 
produced by OACT as part of the development of the NHEA in the 
calculation of Factor 2. We also are proposing to use a single year of 
data on uncompensated care costs from Worksheet S-10 for FY 2015 to 
determine Factor 3 for FY 2020. In addition, we are seeking public 
comments on whether we should, due to changes in the reporting 
instructions that became effective for FY 2017, alternatively use a 
single year of Worksheet S-10 data from the FY 2017 cost reports, 
instead of the FY 2015 Worksheet S-10 data, to calculate Factor 3 for 
FY 2020. To determine the amount of uncompensated care for purposes of 
calculating Factor 3 for Puerto Rico hospitals and Indian Health 
Service and Tribal hospitals, we are proposing to continue to use only 
data regarding low-income insured days for FY 2013.
    We project that the amount available to distribute as payments for 
uncompensated care for FY 2020 would increase by approximately $216 
million, as compared to our estimate of the uncompensated care payments 
that will be distributed in FY 2019. The payments have redistributive 
effects, based on a hospital's uncompensated care amount relative to 
the uncompensated care amount for all hospitals that are projected to 
be eligible to receive Medicare DSH payments, and the calculated 
payment amount is not directly tied to a hospital's number of 
discharges.

[[Page 19166]]

     Proposed Update to the LTCH PPS Payment Rates 
and Other Payment Policies. Based on the best available data for the 
384 LTCHs in our database, we estimate that the proposed changes to the 
payment rates and factors that we present in the preamble of and 
Addendum to this proposed rule, which reflect the end of the transition 
of the statutory application of the site neutral payment rate and the 
proposed update to the LTCH PPS standard Federal payment rate for FY 
2020, would result in an estimated increase in payments in FY 2020 of 
approximately $37 million.
     Proposed Changes to the Hospital Readmissions Reduction 
Program. For FY 2020 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), elective primary total 
hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery 
bypass graft (CABG) surgery. Overall, in this proposed rule, we 
estimate that 2,599 hospitals would have their base operating DRG 
payments reduced by their determined proxy FY 2020 hospital-specific 
readmission adjustment. As a result, we estimate that the Hospital 
Readmissions Reduction Program would save approximately $550 million in 
FY 2020.
     Value-Based Incentive Payments Under the Hospital VBP 
Program. We estimate that there would be no net financial impact to the 
Hospital VBP Program for the FY 2020 program year in the aggregate 
because, by law, the amount available for value-based incentive 
payments under the program in a given year must be equal to the total 
amount of base operating MS-DRG payment amount reductions for that 
year, as estimated by the Secretary. The estimated amount of base 
operating MS-DRG payment amount reductions for the FY 2020 program year 
and, therefore, the estimated amount available for value-based 
incentive payments for FY 2020 discharges is approximately $1.9 
billion.
     Proposed Changes to the HAC Reduction Program. A 
hospital's Total HAC score and its ranking in comparison to other 
hospitals in any given year depend on several different factors. The FY 
2020 program year is the first year in which we will implement our 
equal measure weights scoring methodology. Any significant impact due 
to the HAC Reduction Program proposed changes for FY 2020, including 
which hospitals will receive the adjustment, would depend on the actual 
experience of hospitals in the Program. We also are proposing to update 
the hourly wage rate associated with burden for CDC NHSN HAI validation 
under the HAC Reduction Program.
     Proposed Changes to the Hospital Inpatient Quality 
Reporting (IQR) Program. Across 3,300 IPPS hospitals, we estimate that 
our proposed changes for the Hospital IQR Program in this proposed rule 
would result in changes to the information collection burden compared 
to previously adopted requirements. The only proposal that would affect 
the information collection burden for the Hospital IQR Program is the 
proposal to adopt the Hybrid Hospital-Wide All-Cause Readmission 
(Hybrid HWR) measure (NQF #2879) in a stepwise fashion, beginning with 
two voluntary reporting periods which would run from July 1, 2021 
through June 30, 2022, and from July 1, 2022 through June 30, 2023, 
before requiring reporting of the measure for the reporting period that 
would run from July 1, 2023 through June 30, 2024, impacting the FY 
2026 payment determination and for subsequent years. We estimate that 
the impact of this proposed change is a total collection of information 
burden increase of 2,211 hours and a total cost increase of 
approximately $83,266 for all participating IPPS hospitals annually.
     Proposed Changes to the Medicare and Medicaid Promoting 
Interoperability Programs. We believe that, overall, the proposals in 
this proposed rule would reduce burden, as described in detail in 
section X.B.9. of the preamble and Appendix A, section I.N. of this 
proposed rule.

B. Background Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
    Section 1886(d) of the Social Security Act (the Act) sets forth a 
system of payment for the operating costs of acute care hospital 
inpatient stays under Medicare Part A (Hospital Insurance) based on 
prospectively set rates. Section 1886(g) of the Act requires the 
Secretary to use a prospective payment system (PPS) to pay for the 
capital-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 beginning on October 1, 2013, that considers the 
amount of uncompensated care furnished by the hospital relative to all 
other qualifying hospitals.
    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)

[[Page 19167]]

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

[[Page 19168]]

various types of hospitals are located in 42 CFR part 413.

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

1. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
    The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced 
new payment rules in the LTCH PPS. Under section 1206 of this law, 
discharges in cost reporting periods beginning on or after October 1, 
2015, under the LTCH PPS, receive payment under a site neutral rate 
unless the discharge meets certain patient-specific criteria. In this 
proposed rule, we are proposing to continue to update certain policies 
that implemented provisions under section 1206 of the Pathway for SGR 
Reform Act.
2. Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) (Pub. L. 113-185)
    The Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) (Pub. L. 113-185), enacted on October 6, 2014, made a 
number of changes that affect the Long-Term Care Hospital Quality 
Reporting Program (LTCH QRP). In this proposed rule, we are proposing 
to continue to implement portions of section 1899B of the Act, as added 
by section 2(a) of the IMPACT Act, which, in part, requires LTCHs, 
among other post-acute care providers, to report standardized patient 
assessment data, data on quality measures, and data on resource use and 
other measures.
3. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 
114-10)
    Section 414 of the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA, Pub. L. 114-10) specifies a 0.5 percent positive 
adjustment to the standardized amount of Medicare payments to acute 
care hospitals for FYs 2018 through 2023. These adjustments follow the 
recoupment adjustment to the standardized amounts under section 1886(d) 
of the Act based upon the Secretary's estimates for discharges 
occurring from FYs 2014 through 2017 to fully offset $11 billion, in 
accordance with section 631 of the ATRA. The FY 2018 adjustment was 
subsequently adjusted to 0.4588 percent by section 15005 of the 21st 
Century Cures Act.
4. The 21st Century Cures Act (Pub. L. 114-255)
    The 21st Century Cures Act (Pub. L. 114-255), enacted on December 
13, 2016, contained the following provision affecting payments under 
the Hospital Readmissions Reduction Program, which we are proposing to 
continue to implement in this proposed rule:
     Section 15002, which amended section 1886(q)(3) of the Act 
by adding subparagraphs (D) and (E), which requires the Secretary to 
develop a methodology for calculating the excess readmissions 
adjustment factor for the Hospital Readmissions Reduction Program based 
on cohorts defined by the percentage of dual-eligible patients (that 
is, patients who are eligible for both Medicare and full-benefit 
Medicaid coverage) cared for by a hospital. In this proposed rule, we 
are proposing to continue to implement changes to the payment 
adjustment factor to assess penalties based on a hospital's 
performance, relative to other hospitals treating a similar proportion 
of dual-eligible patients.

D. Summary of the Provisions of This Proposed Rule

    In this proposed rule, we set forth proposed payment and policy 
changes to the Medicare IPPS for FY 2020 operating costs and capital-
related costs of acute care hospitals and certain hospitals and 
hospital units that are excluded from IPPS. In addition, we set forth 
proposed changes to the payment rates, factors, and other payment and 
policy-related changes to programs associated with payment rate 
policies under the LTCH PPS for FY 2020.
    Below is a general summary of the changes that we are proposing to 
make in this proposed rule.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of 
Relative Weights
    In section II. of the preamble of this proposed rule, we include--
     Proposed changes to MS-DRG classifications based on our 
yearly review for FY 2020.
     Proposed adjustment to the standardized amounts under 
section 1886(d) of the Act for FY 2020 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 2020 status of new 
technologies approved for add-on payments for FY 2019 and a 
presentation of our evaluation and analysis of the FY 2020 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).
     A request for public comments on the substantial clinical 
improvement criterion used to evaluate applications for both the IPPS 
new technology add-on payments and the OPPS transitional pass-through 
payment for devices, and a discussion of potential revisions that we 
are considering adopting as final policies related to the substantial 
clinical improvement criterion for applications received beginning in 
FY 2020 for the IPPS (that is, for FY 2021 and later new technology 
add-on payments) and beginning in CY 2020 for the OPPS.
     A proposed alternative IPPS new technology add-on payment 
pathway for certain transformative new devices.
     Proposed changes to the calculation of the IPPS new 
technology add-on payment.
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
    In section III. of the preamble to this proposed rule, we are 
proposing to make revisions to the wage index for acute care hospitals 
and the annual update of the wage data. Specific issues addressed 
include, but are not limited to, the following:
     The proposed FY 2020 wage index update using wage data 
from cost reporting periods beginning in FY 2016.
     Proposals to address wage index disparities between high 
and low wage index hospitals.
     Calculation, analysis, and implementation of the proposed 
occupational mix adjustment to the wage index for acute care hospitals 
for FY 2020 based on the 2016 Occupational Mix Survey.
     Proposed application of the rural floor and the frontier 
State floor.
     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.
     Proposed change to Lugar county assignments.
     Proposed adjustment to the wage index for acute care 
hospitals for FY 2020 based on commuting patterns of hospital employees 
who reside in a county and work in a different area with a higher wage 
index.
     Proposed labor-related share for the proposed FY 2020 wage 
index.
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
    In section IV. of the preamble of this proposed rule, we discuss 
proposed changes or clarifications of a number of the provisions of the 
regulations in 42

[[Page 19169]]

CFR parts 412 and 413, including the following:
     Proposed changes to MS-DRGs subject to the postacute care 
transfer policy and special payment policy.
     Proposed changes to the inpatient hospital update for FY 
2020.
     Proposed conforming changes to the regulations for 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 
2020.
     Proposed changes to the methodologies for determining 
Medicare DSH payments and the additional payments for uncompensated 
care.
     A request for public comments on PRRB appeals related to a 
hospital's Medicaid fraction in the DSH payment adjustment calculation.
     Proposed changes to the policies for payment adjustments 
under the Hospital Readmissions Reduction Program based on hospital 
readmission measures and the process for hospital review and correction 
of those rates for FY 2020.
     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 2020.
     Proposed changes related to CAHs as nonproviders for 
direct GME and IME payment purposes.
     Discussion of and proposals relating to the implementation 
of the Rural Community Hospital Demonstration Program in FY 2020.
4. Proposed FY 2020 Policy Governing the IPPS for Capital-Related Costs
    In section V. of the preamble to this proposed rule, we discuss the 
proposed payment policy requirements for capital-related costs and 
capital payments to hospitals for FY 2020.
5. Proposed Changes to the Payment Rates for Certain Excluded 
Hospitals: Rate-of-Increase Percentages
    In section VI. of the preamble of this proposed rule, we discuss--
     Proposed changes to payments to certain excluded hospitals 
for FY 2020.
     Proposed change related to CAH payment for ambulance 
services.
     Proposed continued implementation of the Frontier 
Community Health Integration Project (FCHIP) Demonstration.
6. Proposed Changes to the LTCH PPS
    In section VII. of the preamble of this proposed rule, we set 
forth--
     Proposed changes to the LTCH PPS Federal payment rates, 
factors, and other payment rate policies under the LTCH PPS for FY 
2020.
     Proposed payment adjustment for discharges of LTCHs that 
do not meet the applicable discharge payment percentage.
7. Proposed Changes Relating to Quality Data Reporting for Specific 
Providers and Suppliers
    In section VIII. of the preamble of this 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 eligible 
hospitals and CAHs participating in the Medicare and Medicaid Promoting 
Interoperability Programs.
8. Provider Reimbursement Review Board Appeals
    In section XI. of the preamble of this proposed rule, we discuss 
the growing number of Provider Reimbursement Review Board appeals made 
by providers and the action initiatives that are being implemented with 
the goal to: decrease the number of appeals submitted; decrease the 
number of appeals in inventory; reduce the time to resolution; and 
increase customer satisfaction.
9. Determining Prospective Payment Operating and Capital Rates and 
Rate-of-Increase Limits for Acute Care Hospitals
    In sections II. and III. of the Addendum to this proposed rule, we 
set forth the proposed changes to the amounts and factors for 
determining the proposed FY 2020 prospective payment rates for 
operating costs and capital-related costs for acute care hospitals. We 
are proposing to establish the threshold amounts for outlier cases, 
including a proposed change to the methodology for calculating those 
threshold amounts for FY 2020 to incorporate a projection of outlier 
payment reconciliations. In addition, in section IV. of the Addendum to 
this proposed rule, we address the update factors for determining the 
rate-of-increase limits for cost reporting periods beginning in FY 2020 
for certain hospitals excluded from the IPPS.
10. Determining Prospective Payment Rates for LTCHs
    In section V. of the Addendum to this proposed rule, we set forth 
proposed changes to the amounts and factors for determining the 
proposed FY 2020 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 
2020. We are proposing 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.
11. Impact Analysis
    In Appendix A of this proposed rule, we set forth an analysis of 
the impact the proposed changes would have on affected acute care 
hospitals, CAHs, LTCHs, and PCHs.
12. Recommendation of Update Factors for Operating Cost Rates of 
Payment for Hospital Inpatient Services
    In Appendix B of this proposed rule, as required by sections 
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the 
appropriate percentage changes for FY 2020 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.
13. Discussion of Medicare Payment Advisory Commission Recommendations
    Under section 1805(b) of the Act, MedPAC is required to submit a 
report to Congress, no later than March 15 of each year, in which 
MedPAC reviews and makes recommendations on Medicare payment policies. 
MedPAC's March 2019 recommendations concerning hospital inpatient 
payment policies addressed the update factor for hospital inpatient 
operating costs and capital-related costs for hospitals under the IPPS. 
We address these

[[Page 19170]]

recommendations in Appendix B of this proposed rule. For further 
information relating specifically to the MedPAC March 2019 report or to 
obtain a copy of the report, contact MedPAC at (202) 220-3700 or visit 
MedPAC's website at: http://www.medpac.gov.

E. Advancing Health Information Exchange

    The Department of Health and Human Services (HHS) has a number of 
initiatives designed to encourage and support the adoption of 
interoperable health information technology and to promote nationwide 
health information exchange to improve health care. The Office of the 
National Coordinator for Health Information Technology (ONC) and CMS 
work collaboratively to advance interoperability across settings of 
care, including post-acute care.
    To further interoperability in post-acute care, we developed a Data 
Element Library (DEL) to serve as a publicly available centralized, 
authoritative resource for standardized data elements and their 
associated mappings to health IT standards. The DEL furthers CMS' goal 
of data standardization and interoperability, which is also a goal of 
the IMPACT Act. These interoperable data elements can reduce provider 
burden by allowing the use and exchange of health care data, support 
provider exchange of electronic health information for care 
coordination, person-centered care, and support real-time, data driven, 
clinical decision making. Standards in the Data Element Library 
(https://del.cms.gov/) can be referenced on the CMS website and in the 
ONC Interoperability Standards Advisory (ISA). The 2019 ISA is 
available at: https://www.healthit.gov/isa.
    The 21st Century Cures Act (the Cures Act) (Pub. L. 114-255, 
enacted December 13, 2016) requires HHS to take new steps to enable the 
electronic sharing of health information ensuring interoperability for 
providers and settings across the care continuum. In an important 
provision, Congress defined ``information blocking'' as practices 
likely to interfere with, prevent, or materially discourage access, 
exchange, or use of electronic health information, and established new 
authority for HHS to discourage these practices. In March 2019, ONC and 
CMS published the proposed rules, ``21st Century Cures Act: 
Interoperability, Information Blocking, and the ONC Health IT 
Certification Program'' (84 FR 7424 through 7610) and 
``Interoperability and Patient Access'' (84 FR 7610 through 7680), to 
promote secure and more immediate access to health information for 
patients and health care providers through the implementation of 
information blocking provisions of the Cures Act and the use of 
standardized application programming interfaces (APIs) that enable 
easier access to electronic health information. These two proposed 
rules are open for public comments at: www.regulations.gov.
    We invite providers to learn more about these important 
developments and how they are likely to affect hospitals paid under the 
IPPS and the LTCH PPS.

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

A. Background

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

B. MS-DRG Reclassifications

    For general information about the MS-DRG system, including yearly 
reviews and changes to the MS-DRGs, we refer readers to the previous 
discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 
43764 through 43766) and the FYs 2011 through 2019 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; 82 FR 38010 through 38085, and 83 FR 41158 through 41258, 
respectively).

C. Adoption of the MS-DRGs in FY 2008

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

D. Proposed FY 2020 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding 
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90 and 
the Recoupment or Repayment Adjustment Authorized by Section 631 of the 
American Taxpayer Relief Act of 2012 (ATRA)
    In the FY 2008 IPPS final rule with comment period (72 FR 47140 
through 47189), we adopted the MS-DRG patient classification system for 
the IPPS, effective October 1, 2007, to better recognize severity of 
illness in Medicare payment rates for acute care hospitals. The 
adoption of the MS-DRG system resulted in the expansion of the number 
of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number 
of MS-DRGs and more fully taking into account patient severity of 
illness in Medicare payment rates for acute care hospitals, MS-DRGs 
encourage hospitals to improve their documentation and coding of 
patient diagnoses.
    In the FY 2008 IPPS final rule with comment period (72 FR 47175 
through 47186), we indicated that the adoption of the MS-DRGs had the 
potential to lead to increases in aggregate payments without a 
corresponding increase in actual patient severity of illness due to the 
incentives for additional documentation and coding. In that final rule 
with comment period, we exercised our authority under section 
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget 
neutrality by adjusting the national standardized amount, to eliminate 
the estimated effect of changes in coding or classification that do not 
reflect real changes in case-mix. Our actuaries estimated that 
maintaining budget neutrality required an adjustment of -4.8 percentage 
points to the national standardized amount. We provided for phasing in 
this -4.8 percentage point adjustment over 3 years. Specifically, we 
established prospective documentation and coding adjustments of -1.2 
percentage points for FY 2008, -1.8 percentage points for FY 2009, and 
-1.8 percentage points for FY 2010.
    On September 29, 2007, Congress enacted the TMA [Transitional 
Medical Assistance], Abstinence Education, and

[[Page 19171]]

QI [Qualifying Individuals] Programs Extension Act of 2007 (Pub. L. 
110-90). Section 7(a) of Public Law 110-90 reduced the documentation 
and coding adjustment made as a result of the MS-DRG system that we 
adopted in the FY 2008 IPPS final rule with comment period to -0.6 
percentage point for FY 2008 and -0.9 percentage point for FY 2009.
    As discussed in prior year rulemakings, and most recently in the FY 
2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we 
implemented a series of adjustments required under sections 7(b)(1)(A) 
and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of 
FY 2008 and FY 2009 claims data. We completed these adjustments in FY 
2013 but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 
through 53275) that delaying full implementation of the adjustment 
required under section 7(b)(1)(A) of Public Law 110-90 until FY 2013 
resulted in payments in FY 2010 through FY 2012 being overstated, and 
that these overpayments could not be recovered under Public Law 110-90.
    In addition, as discussed in prior rulemakings and most recently in 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), 
section 631 of the ATRA amended section 7(b)(1)(B) of Public Law 110-90 
to require the Secretary to make a recoupment adjustment or adjustments 
totaling $11 billion by FY 2017. This adjustment represented the amount 
of the increase in aggregate payments as a result of not completing the 
prospective adjustment authorized under section 7(b)(1)(A) of Public 
Law 110-90 until FY 2013.
2. Adjustments Made for FY 2018 and FY 2019 as Required Under Section 
414 of Public Law 114-10 (MACRA) and Section 15005 of Public Law 114-
255
    As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), 
once the recoupment required under section 631 of the ATRA was 
complete, we had anticipated making a single positive adjustment in FY 
2018 to offset the reductions required to recoup the $11 billion under 
section 631 of the ATRA. However, section 414 of the MACRA (which was 
enacted on April 16, 2015) replaced the single positive adjustment we 
intended to make in FY 2018 with a 0.5 percentage point positive 
adjustment for each of FYs 2018 through 2023. In the FY 2017 
rulemaking, we indicated that we would address the adjustments for FY 
2018 and later fiscal years in future rulemaking. Section 15005 of the 
21st Century Cures Act (Pub. L. 114-255), which was enacted on December 
13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section 
631 of the ATRA and section 414 of the MACRA, to reduce the adjustment 
for FY 2018 from a 0.5 percentage point positive adjustment to a 0.4588 
percentage point positive adjustment. As we discussed in the FY 2018 
rulemaking, we believe the directive under section 15005 of Public Law 
114-255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38009) for FY 2018, we implemented the required +0.4588 
percentage point adjustment to the standardized amount. In the FY 2019 
IPPS/LTCH PPS final rule (83 FR 41157), consistent with the 
requirements of section 414 of the MACRA, we implemented a 0.5 
percentage point positive adjustment to the standardized amount for FY 
2019. We indicated that both the FY 2018 and FY 2019 adjustments were 
permanent adjustments to payment rates. We also stated that we plan to 
propose future adjustments required under section 414 of the MACRA for 
FYs 2020 through 2023 in future rulemaking.
3. Proposed Adjustment for FY 2020
    Consistent with the requirements of section 414 of the MACRA, we 
are proposing to implement a 0.5 percentage point positive adjustment 
to the standardized amount for FY 2020. This would constitute a 
permanent adjustment to payment rates. We plan to propose future 
adjustments required under section 414 of the MACRA for FYs 2021 
through 2023 in future rulemaking.

E. Refinement of the MS-DRG Relative Weight Calculation

1. Background
    Beginning in FY 2007, we implemented relative weights for DRGs 
based on cost report data instead of charge information. We refer 
readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed 
discussion of our final policy for calculating the cost-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.
2. Discussion of Policy for FY 2020
    Consistent with our established policy, we are calculating the 
proposed MS-DRG relative weights for FY 2020 using two data sources: 
The MedPAR file as the claims data source and the HCRIS as the cost 
report data source. We adjust the charges from the claims to costs by 
applying the 19 national average CCRs developed from the cost reports. 
The description of the calculation of the proposed 19 CCRs and the 
proposed MS-DRG relative weights for FY 2020 is included in section 
II.G. of the preamble to this FY 2020 IPPS/LTCH PPS proposed rule. As 
we did with the FY 2019 IPPS/LTCH PPS final rule, for this FY 2020 
proposed rule, we are providing the version of the HCRIS from which we 
calculated these proposed 19 CCRs on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the 
screen titled ``FY 2020 IPPS Proposed Rule Home Page'' or ``Acute 
Inpatient Files for Download.''

F. Proposed Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for Proposed FY 
2020 MS-DRG Updates
a. Conversion of MS-DRGs to the International Classification of 
Diseases, 10th Revision (ICD-10)
    As of October 1, 2015, providers use the International 
Classification of Diseases, 10th Revision (ICD-10) coding system to 
report diagnoses and procedures for Medicare hospital inpatient 
services under the MS-DRG system instead of the ICD-9-CM coding system, 
which was used through September 30, 2015. The ICD-10 coding system 
includes the International Classification of Diseases, 10th Revision, 
Clinical Modification (ICD-10-CM) for diagnosis coding and the 
International Classification of Diseases, 10th Revision, Procedure 
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as 
well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and 
Reporting. For a detailed discussion of the conversion of the MS-DRGs 
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56787 through 56789).
b. Basis for Proposed FY 2020 MS-DRG Updates
    CMS has previously encouraged input from our stakeholders 
concerning the annual IPPS updates when that input was made available 
to us by December

[[Page 19172]]

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 2020 by November 1, 2018, and should submit any 
comments and suggestions for FY 2021 by November 1, 2019 via the CMS 
MS-DRG Classification Change Request Mailbox located at: 
[email protected]. The comments that were submitted 
in a timely manner for FY 2020 are discussed in this section of the 
preamble of this proposed rule. As we discuss in the sections that 
follow, we may not be able to fully consider all of the requests that 
we receive for the upcoming fiscal year. We have found that, with the 
implementation of ICD-10, some types of requested changes to the MS-DRG 
classifications require more extensive research to identify and analyze 
all of the data that are relevant to evaluating the potential change. 
We note in the discussion that follows those topics for which further 
research and analysis are required, and which we will continue to 
consider in connection with future rulemaking.
    Following are the changes that we are proposing to the MS-DRGs for 
FY 2020. We are inviting public comments on each of the MS-DRG 
classification proposed changes, as well as our proposals to maintain 
certain existing MS-DRG classifications discussed in this proposed 
rule. In some cases, we are proposing changes to the MS-DRG 
classifications based on our analysis of claims data and consultation 
with our clinical advisors. In other cases, we are proposing to 
maintain the existing MS-DRG classifications based on our analysis of 
claims data and consultation with our clinical advisors. For this FY 
2020 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-
10 claims data from the September 2018 update of the FY 2018 MedPAR 
file, which contains hospital bills received through September 30, 
2018, for discharges occurring through September 30, 2018. In our 
discussion of the proposed MS-DRG reclassification changes, we refer to 
these claims data as the ``September 2018 update of the FY 2018 MedPAR 
file.''
    As explained in previous rulemaking (76 FR 51487), in deciding 
whether to propose to make further modifications to the MS-DRGs for 
particular circumstances brought to our attention, we consider whether 
the resource consumption and clinical characteristics of the patients 
with a given set of conditions are significantly different than the 
remaining patients represented in the MS-DRG. We evaluate patient care 
costs using average costs and lengths of stay and rely on the judgment 
of our clinical advisors to determine whether patients are clinically 
distinct or similar to other patients represented in the MS-DRG. In 
evaluating resource costs, we consider both the absolute and percentage 
differences in average costs between the cases we select for review and 
the remainder of cases in the MS-DRG. We also consider variation in 
costs within these groups; that is, whether observed average 
differences are consistent across patients or attributable to cases 
that are extreme in terms of costs or length of stay, or both. Further, 
we consider the number of patients who will have a given set of 
characteristics and generally prefer not to create a new MS-DRG unless 
it would include a substantial number of cases.
    In our examination of the claims data, we apply the following 
criteria established in FY 2008 (72 FR 47169) to determine if the 
creation of a new complication or comorbidity (CC) or major 
complication or comorbidity (MCC) subgroup within a base MS-DRG is 
warranted:
     A reduction in variance of costs of at least 3 percent;
     At least 5 percent of the patients in the MS-DRG fall 
within the CC or MCC subgroup;
     At least 500 cases are in the CC or MCC subgroup;
     There is at least a 20-percent difference in average costs 
between subgroups; and
     There is a $2,000 difference in average costs between 
subgroups.
    In order to warrant creation of a CC or MCC subgroup within a base 
MS-DRG, the subgroup must meet all five of the criteria.
2. Pre-MDC
a. Peripheral ECMO
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41166 through 
41169), we discussed a request we received to review cases reporting 
the use of extracorporeal membrane oxygenation (ECMO) in combination 
with the insertion of a percutaneous short-term external heart assist 
device. We also noted that a separate request to create a new ICD-10-
PCS procedure code specifically for percutaneous ECMO was discussed at 
the March 6-7, 2018 ICD-10 Coordination and Maintenance Committee 
Meeting for which we finalized the creation of three new procedure 
codes to identify and describe different types of ECMO treatments 
currently being utilized. These three new procedure codes were included 
in the FY 2019 ICD-10-PCS procedure codes files (which are available 
via the internet on the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/2019-ICD-10-PCS.html) and were made publicly available in 
May 2018. We received recommendations from commenters on suggested MS-
DRG assignments for the two new procedure codes that uniquely identify 
percutaneous (peripheral) ECMO, including assignment to MS-DRG 215 
(Other Heart Assist System Implant), or to Pre-MDC MS-DRG 004 
(Tracheostomy with Mechanical Ventilation >96 Hours or Principal 
Diagnosis Except Face, Mouth and Neck without Major O.R. Procedure) 
specifically for the new procedure code describing percutaneous veno-
venous (VV) ECMO or an alternate MS-DRG within MDC 4 (Diseases and 
Disorders of the Respiratory System). In our response, we noted that 
because these codes were not finalized at the time of the proposed 
rule, there were no proposed MDC or MS-DRG assignments or O.R. and non-
O.R. designations for these new procedure codes and they were not 
reflected in Table 6B.--New Procedure Codes (which is available via the 
internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) 
associated with the FY 2019 IPPS/LTCH PPS proposed rule.
    We further noted that, 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 assignment. For the reasons discussed in the FY 2019 
IPPS/LTCH PPS final rule, our clinical advisors did not support 
assigning the new procedure codes for the percutaneous (peripheral) 
ECMO procedures to the same MS-DRG as the predecessor code for open 
(central) ECMO in pre-MDC MS-DRG 003.

[[Page 19173]]

    Effective with discharges occurring on and after October 1, 2018, 
the three ECMO procedure codes and their corresponding MS-DRG 
assignments are as shown in the following table.

----------------------------------------------------------------------------------------------------------------
       ICD-10-PCS code            Code description                 MS-DRG                 MS-DRG description
----------------------------------------------------------------------------------------------------------------
5A1522F......................  Extracorporeal          Pre-MDC......................  ECMO or Tracheostomy with
                                Oxygenation,           MS-DRG 003...................   Mechanical Ventilation
                                Membrane, Central.                                     >96 Hours or Principal
                                                                                       Diagnosis Except Face,
                                                                                       Mouth and Neck with Major
                                                                                       O.R. Procedure.
5A1522G......................  Extracorporeal          MS-DRG 207...................  Respiratory System
                                Oxygenation,                                           Diagnosis with Ventilator
                                Membrane, Peripheral                                   Support >96 Hours or
                                Veno-arterial.                                         Peripheral Extracorporeal
                                                                                       Membrane Oxygenation
                                                                                       (ECMO).
                                                       MS-DRG 291...................  Heart Failure and Shock
                                                                                       with MCC or Peripheral
                                                                                       Extracorporeal Membrane
                                                                                       Oxygenation (ECMO).
                                                       MS-DRG 296...................  Cardiac Arrest,
                                                                                       Unexplained with MCC or
                                                                                       Peripheral Extracorporeal
                                                                                       Membrane Oxygenation
                                                                                       (ECMO).
                                                       MS-DRG 870...................  Septicemia Or Severe
                                                                                       Sepsis with Mechanical
                                                                                       Ventilation >96 Hours Or
                                                                                       Peripheral Extracorporeal
                                                                                       Membrane Oxygenation
                                                                                       (ECMO).
5A1522H......................  Extracorporeal          MS-DRG 207...................  Respiratory System
                                Oxygenation,                                           Diagnosis with Ventilator
                                Membrane, Peripheral                                   Support >96 Hours or
                                Veno-venous.                                           Peripheral Extracorporeal
                                                                                       Membrane Oxygenation
                                                                                       (ECMO).
                                                       MS-DRG 291...................  Heart Failure and Shock
                                                                                       with MCC or Peripheral
                                                                                       Extracorporeal Membrane
                                                                                       Oxygenation (ECMO).
                                                       MS-DRG 296...................  Cardiac Arrest,
                                                                                       Unexplained with MCC or
                                                                                       Peripheral Extracorporeal
                                                                                       Membrane Oxygenation
                                                                                       (ECMO).
                                                       MS-DRG 870...................  Septicemia Or Severe
                                                                                       Sepsis with Mechanical
                                                                                       Ventilation >96 Hours Or
                                                                                       Peripheral Extracorporeal
                                                                                       Membrane Oxygenation
                                                                                       (ECMO).
----------------------------------------------------------------------------------------------------------------

    After publication of the FY 2019 IPPS/LTCH PPS final rule, we 
received comments and feedback from stakeholders expressing concern 
with the MS-DRG assignments for the two new procedure codes describing 
peripheral ECMO. Specifically, these stakeholders stated that: (1) The 
MS-DRG assignments for ECMO should not be based on how the patient is 
cannulated (open versus peripheral) because most of the costs for both 
central and peripheral ECMO can be attributed to the severity of 
illness of the patient; (2) there was a lack of opportunity for public 
comment on the finalized MS-DRG assignments; (3) patient access to ECMO 
treatment and programs is now at risk because of inadequate payment; 
and (4) CMS did not appear to have access to enough patient data to 
evaluate for appropriate MS-DRG assignment consideration. They also 
stated that the new procedure codes do not account for an open cut-down 
approach that may be performed on a peripheral vessel during a 
peripheral ECMO procedure. These stakeholders recommended that, 
consistent with the usual process of assigning new procedure codes to 
the same MS-DRG as the predecessor code, the MS-DRG assignment for 
peripheral ECMO procedures should be revised to allow assignment of 
peripheral ECMO procedures to 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). They stated that this 
revision would also allow for the collection of further claims data for 
patients treated with ECMO and assist in determining the 
appropriateness of any future modifications in MS-DRG assignment.
    We also received feedback from a few stakeholders that, for some 
cases involving peripheral ECMO, the current designation provides 
compensation that these stakeholders believe is ``reasonable'' (for 
example, for peripheral ECMO in certain patients admitted with acute 
respiratory failure and sepsis). Some of these stakeholders agreed with 
CMS that once claims data become available, the volume, length of stay 
and cost data of claims with these new codes can be examined to 
determine if modifications to MS-DRG assignment or O.R. and non-O.R. 
designation are warranted. However, some of these stakeholders also 
expressed concerns that the current assignments and designation do not 
appropriately compensate for the resources used when peripheral ECMO is 
used to treat certain patients (for example, patients who are admitted 
with cardiac arrest and cardiogenic shock of known cause or patients 
admitted with a different principal diagnosis or patients who develop a 
diagnosis after admission that requires ECMO). These stakeholders 
stated that the current MS-DRG assignments for such cases involving 
peripheral ECMO do not provide sufficient payment and do not fully 
consider the severity of illness of the patient and the level of 
resources involved in treating such patients, such as surgical team, 
general anesthesia, and other ECMO support such as specialized 
monitoring.
    With regard to stakeholders' concerns that we did not allow the 
opportunity for public comment on the MS-DRG assignment for the three 
new procedure codes that describe central and peripheral ECMO, as noted 
above and as explained in the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41168), these new procedure codes were not finalized at the time of the 
proposed rule. We note that although there were no proposed MDC or MS-
DRG assignment or O.R. and non-O.R. designations for these three new 
procedure codes, we did, in fact, review and respond to comments on the 
recommended MDC and MS-DRG assignments and O.R./non-O.R. designations 
in the final rule (83 FR 41168 through 41169). For FY 2019, 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. Upon completing 
the review, our clinical advisors did not support assigning the two new 
ICD-10-PCS procedure codes for peripheral ECMO procedures to the same 
MS-DRG as the predecessor code for open (central) ECMO procedures. 
Further, our clinical advisors also did not agree with designating 
peripheral

[[Page 19174]]

ECMO procedures as O.R. procedures because they stated that these 
procedures are less resource intensive compared to open ECMO 
procedures.
    As noted, our annual process for assigning new procedure codes 
involves review of the predecessor procedure code's MS-DRG assignment. 
However, this process does not automatically result in the new 
procedure code being assigned (or proposed for assignment) to the same 
MS-DRG as the predecessor code. There are several factors to consider 
during this process that our clinical advisors take into account. For 
example, in the absence of volume, length of stay, and cost data, they 
may consider the specific service, procedure, or treatment being 
described by the new procedure code, the indications, treatment 
difficulty, and the resources utilized. We have continued to consider 
how these and other factors may apply in the context of classifying 
procedures under the ICD-10 MS-DRGs, including with regard to the 
specific concerns raised by stakeholders.
    In the absence of claims data for the new ICD-10-PCS procedure 
codes describing peripheral ECMO, we analyzed claims data from the 
September 2018 update of the FY 2018 MedPAR file for cases reporting 
the predecessor ICD-10-PCS procedure code 5A15223 (Extracorporeal 
membrane oxygenation, continuous) in Pre-MDC MS-DRG 003, including 
those cases reporting secondary diagnosis MCC and CC conditions, that 
were grouped under the ICD-10 MS-DRG Version 35 GROUPER. Our findings 
are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 003--All cases...........................................          14,456            29.6        $122,168
MS-DRG 003--Cases reporting procedure code 5A15223                         2,086            20.2         128,168
 (Extracorporeal membrane oxygenation, continuous)..............
MS-DRG 003--Cases reporting procedure code 5A15223                         2,000            20.7         131,305
 (Extracorporeal membrane oxygenation, continuous) with MCC.....
MS-DRG 003--Cases reporting procedure code 5A15223                            79             7.6          58,231
 (Extracorporeal membrane oxygenation, continuous) with CC......
----------------------------------------------------------------------------------------------------------------

    The total number of cases reported in MS-DRG 003 was 14,456, with 
an average length of stay of 29.6 days and average costs of $122,168. 
For the cases reporting procedure code 5A15223 (Extracorporeal membrane 
oxygenation, continuous), there was a total of 2,086 cases, with an 
average length of stay of 20.2 days and average costs of $128,168. For 
the cases reporting procedure code 5A15223 with an MCC, there was a 
total of 2,000 cases, with an average length of stay of 20.7 days and 
average costs of $131,305. For the cases reporting procedure code 
5A15223 with a CC, there was a total of 79 cases, with an average 
length of stay of 7.6 days and average costs of $58,231.
    Our clinical advisors reviewed these data and noted that the 
average length of stay for the cases reporting ECMO with procedure code 
5A15223 of 20.2 days may not necessarily be a reliable indicator of 
resources that can be attributed to ECMO treatment. Our clinical 
advisors believed that a more appropriate measure of resource 
consumption for ECMO would be the number of hours or days that a 
patient was specifically receiving ECMO treatment, rather than the 
length of hospital stay. However, they noted that this information is 
not currently available in the claims data. Our clinical advisors also 
stated that the average costs of $128,168 for the cases reporting ECMO 
with procedure code 5A15223 are not necessarily reflective of the 
resources utilized for ECMO treatment alone, as the average costs 
represent a combination of factors, including the principal diagnosis, 
any secondary diagnosis CC and/or MCC conditions necessitating 
initiation of ECMO, and potentially any other procedures that may be 
performed during the hospital stay. Our clinical advisors recognized 
that patients who require ECMO treatment are severely ill and 
recommended we review the claims data to identify the number 
(frequency) and types of principal and secondary diagnosis CC and/or 
MCC conditions that were reported among the 2,086 cases reporting 
procedure code 5A15223. Our findings are shown in the following tables 
for the top 10 principal diagnosis codes, followed by the top 10 
secondary diagnosis MCC and secondary diagnosis CC conditions that were 
reported within the claims data with procedure code 5A15223.

  Top 10 Principal Diagnosis Codes Reported With Procedure Code 5A1223
            [Extracorporeal membrane oxygenation, continuous]
------------------------------------------------------------------------
                                                             Number of
       ICD-10-CM code                 Description         times reported
------------------------------------------------------------------------
A41.9.......................  Sepsis, unspecified                    145
                               organism.
I21.4.......................  Non-ST elevation (NSTEMI)              137
                               myocardial infarction.
I35.0.......................  Nonrheumatic aortic                     81
                               (valve) stenosis.
J84.112.....................  Idiopathic pulmonary                    68
                               fibrosis.
I25.110.....................  Atherosclerotic heart                   55
                               disease of native
                               coronary artery with
                               unstable angina pectoris.
J96.01......................  Acute respiratory failure               52
                               with hypoxia.
I21.09......................  STEMI involving other                   49
                               coronary artery of
                               anterior wall.
I25.10......................  Atherosclerotic heart                   48
                               disease of native
                               coronary artery w/o
                               angina pectoris.
I13.0.......................  Hypertensive heart &                    46
                               chronic kidney disease w
                               heart failure and stage 1
                               through stage 4 chronic
                               kidney disease, or
                               unspecified chronic
                               kidney disease.
I21.19......................  ST elevation (STEMI)                    43
                               myocardial infarction
                               involving other coronary
                               artery of inferior wall.
------------------------------------------------------------------------


[[Page 19175]]


                  Top 10 Secondary Diagnosis MCC Conditions Reported With Procedure Code 5A1223
                                [Extracorporeal membrane oxygenation, continuous]
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
         ICD-10-CM code                     Description           times reported      of stay      Average costs
----------------------------------------------------------------------------------------------------------------
A41.9...........................  Sepsis, unspecified organism..             322            29.7        $186,055
E43.............................  Unspecified severe protein-                220            41.5         213,742
                                   calorie malnutrition.
G93.40..........................  Encephalopathy, unspecified...             217            27.2         165,193
J18.9...........................  Pneumonia, unspecified                     220            23.5         150,242
                                   organism.
J96.01..........................  Acute respiratory failure with             944            17.9         122,614
                                   hypoxia.
J96.02..........................  Acute respiratory failure with             220            20.9         139,511
                                   hypercapnia.
K72.00..........................  Acute and subacute hepatic                 524              19         140,878
                                   failure without coma.
N17.0...........................  Acute kidney failure with                  741            26.2         162,583
                                   tubular necrosis.
R57.0...........................  Cardiogenic shock.............             448            27.7         153,878
R65.21..........................  Severe sepsis with septic                  504            29.7         177,992
                                   shock.
----------------------------------------------------------------------------------------------------------------


                  Top 10 Secondary Diagnosis CC Conditions Reported With Procedure Code 5A1223
                                [Extracorporeal membrane oxygenation, continuous]
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
         ICD-10-CM code                     Description           times reported      of stay      Average costs
----------------------------------------------------------------------------------------------------------------
D62.............................  Acute posthemorrhagic anemia..           1,139            21.8        $144,033
D68.9...........................  Coagulation defect,                        402            20.5         138,417
                                   unspecified.
E87.0...........................  Hyperosmolality and                        585            26.6         162,028
                                   hypernatremia.
E87.1...........................  Hypo-osmolality and                        316            26.1         151,824
                                   hyponatremia.
E87.2...........................  Acidosis......................             937            17.3         120,881
E87.4...........................  Mixed disorder of acid-base                268              26         150,257
                                   balance.
I13.0...........................  Hypertensive heart and chronic             314            18.4         121,962
                                   kidney disease with heart
                                   failure and stage 1 through
                                   stage 4 chronic kidney
                                   disease, or unspecified
                                   chronic kidney disease.
I47.2...........................  Ventricular tachycardia.......             384            17.5         123,383
J98.11..........................  Atelectasis...................             273            26.9         158,812
N17.9...........................  Acute kidney failure,                      757            18.5         122,180
                                   unspecified.
----------------------------------------------------------------------------------------------------------------

    These data show that the conditions reported for these patients 
requiring treatment with ECMO and reported with predecessor ICD-10-PCS 
procedure code 5A1223 represent a greater severity of illness, present 
greater treatment difficulty, have poorer prognoses, and have a greater 
need for intervention. While the data analysis was based on the 
conditions reported with the predecessor ICD-10-PCS procedure code 
5A1223 (Extracorporeal membrane oxygenation, continuous), our clinical 
advisors believe the data may provide an indication of how cases 
reporting the new procedure codes describing peripheral (percutaneous) 
ECMO may be represented in future claims data with regard to 
indications for treatment, a patient's severity of illness, resource 
utilization, and treatment difficulty.
    Based on the results of our data analysis and further review of the 
cases reporting ECMO, including consideration of the stakeholders' 
concerns that the MS-DRG assignments for ECMO procedures should not be 
based on the method of cannulation, our clinical advisors agree that 
resource consumption for both central and peripheral ECMO cases can be 
primarily attributed to the severity of illness of the patient, and 
that the method of cannulation is less relevant when considering the 
overall resources required to treat patients on ECMO. Specifically, our 
clinical advisors noted that consideration of resource consumption for 
cases reporting the use of ECMO may extend well beyond the duration of 
time that a patient was actively receiving ECMO treatment, which may 
range anywhere from less than 24 hours to 10 days or more. As noted 
above, in the absence of unique procedure codes that specify the 
duration of time that a patient was receiving ECMO treatment, we cannot 
ascertain from the claims data the resource use specifically 
attributable to treatment with ECMO during a hospital stay. However, 
when reviewing consumption of hospital resources for the cases in which 
ECMO was reported during a hospital stay, the claims data clearly show 
that the patients placed on ECMO typically have multiple MCC and CC 
conditions. These data provide additional information on the expanding 
indications for ECMO treatment as well as an indication of the 
complexities and the treatment difficulty associated with these 
patients. While our clinical advisors continue to believe that central 
(open) ECMO may be more resource intensive and carries significant 
risks for complications, including bleeding, infection, and vessel 
injury because it requires an incision along the sternum (sternotomy) 
and is performed for open heart surgery, they believe that the subset 
of patients who require treatment with ECMO, regardless of the 
cannulation method, would be similar in terms of overall hospital 
resource consumption. We also note that while we do not yet have 
Medicare claims data to evaluate the new peripheral ECMO procedure 
codes, review of limited registry data provided by stakeholders for 
patients treated with a reported peripheral ECMO procedure did not 
contradict that costs for peripheral ECMO appear to be similar to the 
costs of overall resources required to treat patients on ECMO 
(regardless of method of cannulation) and appear to be attributable to 
the severity of illness of the patient.
    With regard to stakeholders who stated that the two new procedure 
codes do not account for an open cut-down approach that may be 
performed on a peripheral vessel during a peripheral ECMO procedure, we 
note that a request and proposal to create ICD-10-PCS codes to 
differentiate between peripheral vessel percutaneous and peripheral 
vessel open cutdown

[[Page 19176]]

according to the indication (VA or VV) for ECMO was discussed at the 
March 5-6, 2019 ICD-10 Coordination and Maintenance Committee meeting. 
We refer readers to the website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html for the committee meeting materials and discussion 
regarding this proposal. We also note that, in this same proposal, 
another coding option to add duration values to allow the reporting of 
the number of hours or the number of days a patient received ECMO 
during the stay was also made available for public comment.
    Upon further review and consideration of peripheral ECMO 
procedures, including the indications, treatment difficulty, and the 
resources utilized, for the reasons discussed above, our clinical 
advisors support the assignment of the new ICD-10-PCS procedure codes 
for peripheral ECMO procedures to the same MS-DRG as the predecessor 
code for open (central) ECMO procedures for FY 2020. Therefore, based 
on our review, including consideration of the comments and input from 
our clinical advisors, we are proposing to reassign the following 
procedure codes describing peripheral ECMO procedures from their 
current MS-DRG assignments to 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) as shown in the table 
below. If this proposal is finalized, we also would make conforming 
changes to the titles for MS-DRGs 207, 291, 296, and 870 to no longer 
reflect the ``or Peripheral Extracorporeal Membrane Oxygenation 
(ECMO)'' terminology in the title. We note that this proposal includes 
maintaining the designation of these peripheral ECMO procedures as non-
O.R. Therefore, if finalized, the procedures would be defined as non-
O.R. affecting the MS-DRG assignment for Pre-MDC MS-DRG 003.

----------------------------------------------------------------------------------------------------------------
       ICD-10-PCS code            Code description            Current MS-DRG               Proposed MS-DRG
----------------------------------------------------------------------------------------------------------------
5A1522G.....................  Extracorporeal           MS-DRG 207 (Respiratory       Pre-MDC MS-DRG 003 (ECMO or
                               Oxygenation, Membrane,   System Diagnosis with         Tracheostomy with
                               Peripheral Veno-         Ventilator Support >96        Mechanical Ventilation >96
                               arterial.                Hours or Peripheral           Hours or Principal
                                                        Extracorporeal Membrane       Diagnosis Except Face,
                                                        Oxygenation (ECMO)).          Mouth and Neck with Major
                                                                                      O.R. Procedure).
                                                       MS-DRG 291 (Heart Failure     Pre-MDC MS-DRG 003 (ECMO or
                                                        and Shock with MCC or         Tracheostomy with
                                                        Peripheral Extracorporeal     Mechanical Ventilation >96
                                                        Membrane Oxygenation          Hours or Principal
                                                        (ECMO)).                      Diagnosis Except Face,
                                                                                      Mouth and Neck with Major
                                                                                      O.R. Procedure).
                                                       MS-DRG 296 (Cardiac Arrest,   Pre-MDC MS-DRG 003 (ECMO or
                                                        Unexplained with MCC or       Tracheostomy with
                                                        Peripheral Extracorporeal     Mechanical Ventilation >96
                                                        Membrane Oxygenation          Hours or Principal
                                                        (ECMO)).                      Diagnosis Except Face,
                                                                                      Mouth and Neck with Major
                                                                                      O.R. Procedure).
                                                       MS-DRG 870 (Septicemia or     Pre-MDC MS-DRG 003 (ECMO or
                                                        Severe Sepsis with            Tracheostomy with
                                                        Mechanical Ventilation >96    Mechanical Ventilation >96
                                                        Hours or Peripheral           Hours or Principal
                                                        Extracorporeal Membrane       Diagnosis Except Face,
                                                        Oxygenation (ECMO)).          Mouth and Neck with Major
                                                                                      O.R. Procedure).
5A1522H.....................  Extracorporeal           MS-DRG 207 (Respiratory       Pre-MDC MS-DRG 003 (ECMO or
                               Oxygenation, Membrane,   System Diagnosis with         Tracheostomy with
                               Peripheral Veno-venous.  Ventilator Support >96        Mechanical Ventilation >96
                                                        Hours or Peripheral           Hours or Principal
                                                        Extracorporeal Membrane       Diagnosis Except Face,
                                                        Oxygenation (ECMO)).          Mouth and Neck with Major
                                                                                      O.R. Procedure).
                                                       MS-DRG 291 (Heart Failure     Pre-MDC MS-DRG 003 (ECMO or
                                                        and Shock with MCC or         Tracheostomy with
                                                        Peripheral Extracorporeal     Mechanical Ventilation >96
                                                        Membrane Oxygenation          Hours or Principal
                                                        (ECMO)).                      Diagnosis Except Face,
                                                                                      Mouth and Neck with Major
                                                                                      O.R. Procedure).
                                                       MS-DRG 296 (Cardiac Arrest,   Pre-MDC MS-DRG 003 (ECMO or
                                                        Unexplained with MCC or       Tracheostomy with
                                                        Peripheral Extracorporeal     Mechanical Ventilation >96
                                                        Membrane Oxygenation          Hours or Principal
                                                        (ECMO)).                      Diagnosis Except Face,
                                                                                      Mouth and Neck with Major
                                                                                      O.R. Procedure).
                                                       MS-DRG 870 (Septicemia or     Pre-MDC MS-DRG 003 (ECMO or
                                                        Severe Sepsis with            Tracheostomy with
                                                        Mechanical Ventilation >96    Mechanical Ventilation >96
                                                        Hours or Peripheral           Hours or Principal
                                                        Extracorporeal Membrane       Diagnosis Except Face,
                                                        Oxygenation (ECMO)).          Mouth and Neck with Major
                                                                                      O.R. Procedure).
----------------------------------------------------------------------------------------------------------------

b. Allogeneic Bone Marrow Transplant
    We received a request to create new MS-DRGs for cases that would 
identify patients who undergo an allogeneic hematopoietic cell 
transplant (HCT) procedure. The requestor asked us to split MS-DRG 014 
(Allogeneic Bone Marrow Transplant) into two new MS-DRGs and assign 
cases to the recommended new MS-DRGs according to the donor source, 
with cases for allogeneic related matched donor source assigned to one 
MS-DRG and cases for allogeneic unrelated matched donor source assigned 
to the other MS-DRG. The requestor stated that by creating two new MS-
DRGs for allogeneic related and allogeneic unrelated donor source, 
respectively, the MS-DRGs would more appropriately recognize the 
clinical characteristics and cost differences in allogeneic HCT cases.
    The requestor stated that allogeneic related and allogeneic 
unrelated HCT cases are clinically different and have significantly 
different donor search and cell acquisition charges. According to the 
requestor, 70 percent of patients do not have a matched sibling donor 
(that is, an allogeneic related matched donor) in their family. The 
requestor also stated that this rate is higher for Medicare 
beneficiaries. According to the requestor, the current payment for 
allogeneic HCT cases is inadequate and affects patient's access to 
care.
    The requestor performed its own analysis and stated that it found 
the average costs for HCT cases reporting revenue code 0815 (Stem cell 
acquisition) alone or revenue code 0819 (Other organ acquisition) in 
combination with revenue code 0815 with one of the ICD-10-PCS procedure

[[Page 19177]]

codes for allogeneic unrelated donor source were significantly higher 
than the average costs for HCT cases reporting revenue code 0815 alone 
or both revenue codes 0815 and 0819 in combination with one of the ICD-
10-PCS procedure codes for allogeneic related donor source. Further, 
the requestor reported that, according to its analysis, the average 
costs for HCT cases reporting revenue code 0815 alone or both revenue 
codes 0815 and 0819 in combination with one of the ICD-10-PCS procedure 
codes for unspecified allogeneic donor source were also significantly 
higher than the average costs for HCT cases reporting the ICD-10-PCS 
procedure codes for allogeneic related donor source. The requestor 
suggested that cases reporting the unspecified donor source procedure 
code are highly likely to represent unrelated donors, and recommended 
that, if the two new MS-DRGs are created as suggested, the cases 
reporting the procedure codes for unspecified donor source be included 
in the suggested new ``unrelated donor'' MS-DRG. The requestor also 
suggested that CMS apply a code edit through the inpatient Medicare 
Code Editor (MCE), similar to the edit in the Integrated Outpatient 
Code Editor (I/OCE) which requires reporting of revenue code 0815 on 
the claim with the appropriate procedure code or the claim may be 
subject to being returned to the provider.
    The ICD-10-PCS procedure codes assigned to MS-DRG 014 that identify 
related, unrelated and unspecified donor source for an allogeneic HCT 
are shown in the following table.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
30230G2.............................  Transfusion of allogeneic related
                                       bone marrow into peripheral vein,
                                       open approach.
30230G3.............................  Transfusion of allogeneic
                                       unrelated bone marrow into
                                       peripheral vein, open approach.
30230G4.............................  Transfusion of allogeneic
                                       unspecified bone marrow into
                                       peripheral vein, open approach.
30230X2.............................  Transfusion of allogeneic related
                                       cord blood stem cells into
                                       peripheral vein, open approach.
30230X3.............................  Transfusion of allogeneic
                                       unrelated cord blood stem cells
                                       into peripheral vein, open
                                       approach.
30230X4.............................  Transfusion of allogeneic
                                       unspecified cord blood stem cells
                                       into peripheral vein, open
                                       approach.
30230Y2.............................  Transfusion of allogeneic related
                                       hematopoietic stem cells into
                                       peripheral vein, open approach.
30230Y3.............................  Transfusion of allogeneic
                                       unrelated hematopoietic stem
                                       cells into peripheral vein, open
                                       approach.
30230Y4.............................  Transfusion of allogeneic
                                       unspecified hematopoietic stem
                                       cells into peripheral vein, open
                                       approach.
30233G2.............................  Transfusion of allogeneic related
                                       bone marrow into peripheral vein,
                                       percutaneous approach.
30233G3.............................  Transfusion of allogeneic
                                       unrelated bone marrow into
                                       peripheral vein, percutaneous
                                       approach.
30233G4.............................  Transfusion of allogeneic
                                       unspecified bone marrow into
                                       peripheral vein, percutaneous
                                       approach.
30233X2.............................  Transfusion of allogeneic related
                                       cord blood stem cells into
                                       peripheral vein, percutaneous
                                       approach.
30233X3.............................  Transfusion of allogeneic
                                       unrelated cord blood stem cells
                                       into peripheral vein,
                                       percutaneous approach.
30233X4.............................  Transfusion of allogeneic
                                       unspecified cord blood stem cells
                                       into peripheral vein,
                                       percutaneous approach.
30233Y2.............................  Transfusion of allogeneic related
                                       hematopoietic stem cells into
                                       peripheral vein, percutaneous
                                       approach.
30233Y3.............................  Transfusion of allogeneic
                                       unrelated hematopoietic stem
                                       cells into peripheral vein,
                                       percutaneous approach.
30233Y4.............................  Transfusion of allogeneic
                                       unspecified hematopoietic stem
                                       cells into peripheral vein,
                                       percutaneous approach.
30240G2.............................  Transfusion of allogeneic related
                                       bone marrow into central vein,
                                       open approach.
30240G3.............................  Transfusion of allogeneic
                                       unrelated bone marrow into
                                       central vein, open approach.
30240G4.............................  Transfusion of allogeneic
                                       unspecified bone marrow into
                                       central vein, open approach.
30240X2.............................  Transfusion of allogeneic related
                                       cord blood stem cells into
                                       central vein, open approach.
30240X3.............................  Transfusion of allogeneic
                                       unrelated cord blood stem cells
                                       into central vein, open approach.
30240X4.............................  Transfusion of allogeneic
                                       unspecified cord blood stem cells
                                       into central vein, open approach.
30240Y2.............................  Transfusion of allogeneic related
                                       hematopoietic stem cells into
                                       central vein, open approach.
30240Y3.............................  Transfusion of allogeneic
                                       unrelated hematopoietic stem
                                       cells into central vein, open
                                       approach.
30240Y4.............................  Transfusion of allogeneic
                                       unspecified hematopoietic stem
                                       cells into central vein, open
                                       approach.
30243G2.............................  Transfusion of allogeneic related
                                       bone marrow into central vein,
                                       percutaneous approach.
30243G3.............................  Transfusion of allogeneic
                                       unrelated bone marrow into
                                       central vein, percutaneous
                                       approach.
30243G4.............................  Transfusion of allogeneic
                                       unspecified bone marrow into
                                       central vein, percutaneous
                                       approach.
30243X2.............................  Transfusion of allogeneic related
                                       cord blood stem cells into
                                       central vein, percutaneous
                                       approach.
30243X3.............................  Transfusion of allogeneic
                                       unrelated cord blood stem cells
                                       into central vein, percutaneous
                                       approach.
30243X4.............................  Transfusion of allogeneic
                                       unspecified cord blood stem cells
                                       into central vein, percutaneous
                                       approach.
30243Y2.............................  Transfusion of allogeneic related
                                       hematopoietic stem cells into
                                       central vein, percutaneous
                                       approach.
30243Y3.............................  Transfusion of allogeneic
                                       unrelated hematopoietic stem
                                       cells into central vein,
                                       percutaneous approach.
30243Y4.............................  Transfusion of allogeneic
                                       unspecified hematopoietic stem
                                       cells into central vein,
                                       percutaneous approach.
30250G1.............................  Transfusion of nonautologous bone
                                       marrow into peripheral artery,
                                       open approach.
30250X1.............................  Transfusion of nonautologous cord
                                       blood stem cells into peripheral
                                       artery, open approach.
30250Y1.............................  Transfusion of nonautologous
                                       hematopoietic stem cells into
                                       peripheral artery, open approach.
30253G1.............................  Transfusion of nonautologous bone
                                       marrow into peripheral artery,
                                       percutaneous approach.
30253X1.............................  Transfusion of nonautologous cord
                                       blood stem cells into peripheral
                                       artery, percutaneous approach.
30253Y1.............................  Transfusion of nonautologous
                                       hematopoietic stem cells into
                                       peripheral artery, percutaneous
                                       approach.
30260G1.............................  Transfusion of nonautologous bone
                                       marrow into central artery, open
                                       approach.
30260X1.............................  Transfusion of nonautologous cord
                                       blood stem cells into central
                                       artery, open approach.
30260Y1.............................  Transfusion of nonautologous
                                       hematopoietic stem cells into
                                       central artery, open approach.
30263G1.............................  Transfusion of nonautologous bone
                                       marrow into central artery,
                                       percutaneous approach.
30263X1.............................  Transfusion of nonautologous cord
                                       blood stem cells into central
                                       artery, percutaneous approach.
30263Y1.............................  Transfusion of nonautologous
                                       hematopoietic stem cells into
                                       central artery, percutaneous
                                       approach.
------------------------------------------------------------------------

    We examined claims data from the September 2018 update of the FY 
2018 MedPAR file for MS-DRG 014 and identified the subset of cases 
within MS-DRG 014 reporting procedure codes for allogeneic HCT related 
donor source, allogeneic HCT unrelated donor source, and allogeneic HCT 
unspecified donor source, respectively. Our findings are shown in the 
following table.

[[Page 19178]]



----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 014--All cases...........................................             854            28.2         $91,446
MS-DRG 014--Cases reporting allogeneic HCT related donor source.             292            29.5          87,444
MS-DRG 014--Cases reporting allogeneic HCT unrelated donor                   466            27.9          95,146
 source.........................................................
MS-DRG 014--Cases reporting allogeneic HCT unspecified donor                  90            26.2          90,945
 source.........................................................
----------------------------------------------------------------------------------------------------------------

    The total number of cases reported in MS-DRG 014 was 854, with an 
average length of stay of 28.2 days and average costs of $91,446. For 
the subset of cases reporting procedure codes for allogeneic HCT 
related donor source, there were a total of 292 cases with an average 
length of stay of 29.5 days and average costs of $87,444. For the 
subset of cases reporting procedure codes for allogeneic HCT unrelated 
donor source, there was a total of 466 cases with an average length of 
stay of 27.9 days and average costs of $95,146. For the subset of cases 
reporting procedure codes for allogeneic HCT unspecified donor source, 
there was a total of 90 cases with an average length of stay of 26.2 
days and average costs of $90,945.
    Based on the analysis described above, the current MS-DRG 
assignment for the cases in MS-DRG 014 that identify patients who 
undergo an allogeneic HCT procedure, regardless of donor source, 
appears appropriate. The data analysis reflects that each subset of 
cases reporting a procedure code for an allogeneic HCT procedure (that 
is, related, unrelated, or unspecified donor source) has an average 
length of stay and average costs that are comparable to the average 
length of stay and average costs of all cases in MS-DRG 014. We also 
take this opportunity to note that, in deciding whether to propose to 
make further modifications to the MS-DRGs for particular circumstances 
brought to our attention, we do not consider the reported revenue 
codes. Rather, as stated previously, 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 do this by evaluating the ICD-
10-CM diagnosis and/or ICD-10-PCS procedure codes that identify the 
patient conditions, procedures, and the relevant MS-DRG(s) that are the 
subject of a request. Specifically, for this request, as noted above, 
we analyzed the cases reporting the ICD-10-PCS procedure codes that 
identify an allogeneic HCT procedure according to the donor source. We 
then evaluated patient care costs using average costs and average 
lengths of stay (based on the MedPAR data) and rely on the judgment of 
our clinical advisors to determine whether the patients are clinically 
distinct or similar to other patients represented in the MS-DRG. 
Because MS-DRG 014 is defined by patients who undergo an allogeneic HCT 
transplant procedure, our clinical advisors state they are all 
clinically similar in that regard. We also note that the ICD-10-PCS 
procedure codes that describe an allogeneic HCT procedure were revised 
effective October 1, 2016 to uniquely identify the donor source in 
response to a request and proposal that was discussed at the March 9-
10, 2016 ICD-10 Coordination and Maintenance Committee meeting. We 
refer readers to the website at: https://www.cms.gov/Medicare/Coding/ICD9Provider DiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html 
for the committee meeting materials and discussion regarding this 
proposal.
    In response to the requestor's statement that allogeneic related 
and allogeneic unrelated HCT cases are clinically different and have 
significantly different donor search and cell acquisition charges, our 
clinical advisors support maintaining the current structure for MS-DRG 
014 because they believe that MS-DRG 014 appropriately classifies all 
patients who undergo an allogeneic HCT procedures and, therefore, it is 
clinically coherent. While the requestor stated that there are clinical 
differences in the related and unrelated HCT cases, they did not 
provide any specific examples of these clinical differences. With 
regard to the donor search and cell acquisition charges, the requestor 
noted that the unrelated donor cases are more expensive than the 
related donor cases because of the donor search process, which includes 
a registry search to identify the best donor source, extensive donor 
screenings, evaluation, and cell acquisition and transportation 
services for the patient. The requestor appeared to base that belief 
according to the donor source and average charges reported with revenue 
code 0815. As noted above, we use MedPAR data and do not consider the 
reported revenue codes in deciding whether to propose to make further 
modifications to the MS-DRGs. Based on our analysis of claims data for 
MS-DRG 014, our clinical advisors stated that the resources are similar 
for patients who undergo an allogeneic HCT procedure regardless of the 
donor source.
    In reviewing this request, we also reviewed the instructions on 
billing for stem cell transplantation in Chapter 3 of the Medicare 
Claims Processing Manual and found that there appears to be inadvertent 
duplication under Section 90.3.1 and Section 90.3.3 of Chapter 3, as 
both sections provide instructions on Billing for Stem Cell 
Transplantation. Therefore, we are further reviewing the Medicare 
Claims Processing Manual to identify potential revisions to address 
this duplication. However, we also note that section 90.3.1 and section 
90.3.3 provide different instruction regarding which revenue code 
should be reported. Section 90.3.1 instructs providers to report 
revenue code 0815 and Section 90.3.3 instructs providers to report 
revenue code 0819. We note that we issued instructions as a One-Time 
Notification, Pub. No. 100-04, Transmittal 3571, Change Request 9674, 
effective January 1, 2017, which instructs that the appropriate revenue 
code to report on claims for allogeneic stem cell acquisition/donor 
services is revenue code 0815. Accordingly, we also are considering 
additional revisions as needed to conform the instructions for 
reporting these codes in the Medicare Claims Processing Manual.
    With regard to the requestor's recommendation that we create a new 
code edit through the inpatient MCE similar to the edit in the I/OCE 
which requires reporting of revenue code 0815 on the claim, we note 
that the MCE is not designed to include revenue codes for claims 
editing purposes. Rather, as stated in section II.F.16. of the preamble 
of this proposed rule, it is a software program that detects and 
reports errors in the coding of Medicare claims data. The coding of 
Medicare claims data refers to diagnosis and procedure coding, as well 
as demographic information.
    For the reasons described above, we are not proposing to change the 
current structure of MS-DRG 014. We are not proposing to split MS-DRG 
014 into two new MS-DRGs that assign cases according to whether the 
allogeneic donor source is related or unrelated, as the requestor 
suggested.
    In addition, while conducting our analysis of cases reporting ICD-
10-PCS

[[Page 19179]]

procedure codes for allogeneic HCT procedures that are assigned to MS-
DRG 014, we noted that 8 procedure codes for autologous HCT procedures 
are currently included in MS-DRG 014, as shown in the following table. 
These codes are not properly assigned because MS-DRG 014 is defined by 
cases reporting allogenic HCT procedures.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
30230X0.............................  Transfusion of autologous cord
                                       blood stem cells into peripheral
                                       vein, open approach.
30233X0.............................  Transfusion of autologous cord
                                       blood stem cells into peripheral
                                       vein, percutaneous approach.
30240X0.............................  Transfusion of autologous cord
                                       blood stem cells into central
                                       vein, open approach.
30243X0.............................  Transfusion of autologous cord
                                       blood stem cells into central
                                       vein, percutaneous approach.
30250X0.............................  Transfusion of autologous cord
                                       blood stem cells into peripheral
                                       artery, open approach.
30253X0.............................  Transfusion of autologous cord
                                       blood stem cells into peripheral
                                       artery, percutaneous approach.
30260X0.............................  Transfusion of autologous cord
                                       blood stem cells into central
                                       artery, open approach.
30263X0.............................  Transfusion of autologous cord
                                       blood stem cells into central
                                       artery, percutaneous approach.
------------------------------------------------------------------------

    The 8 ICD-10-PCS procedure codes for autologous HCT procedures were 
inadvertently included in MS-DRG 014 as a result of efforts to 
replicate the ICD-9-CM MS-DRGs. Under the ICD-9-CM MS-DRGs, procedure 
code 41.06 (Cord blood stem cell transplant) was used to identify these 
procedures and was also assigned to MS-DRG 014. As shown in the ICD-9-
CM code description, the reference to ``autologous'' is not included. 
However, because the ICD-10-PCS autologous HCT procedure codes were 
considered as plausible translations of the ICD-9-CM procedure code 
(41.06), they were inadvertently included in MS-DRG 014. We also note 
that, of these 8 procedure codes, there are 4 procedure codes that 
describe a transfusion via arterial access. As described in more detail 
below, because a transfusion procedure always uses venous access rather 
than arterial access, these codes are considered clinically invalid and 
were the subject of a proposal discussed at the March 5-6, 2019 ICD-10 
Coordination and Maintenance Committee meeting to delete these codes 
effective October 1, 2019 (FY 2020).
    The majority of ICD-10-PCS procedure codes specifying autologous 
HCT procedures are currently assigned to MS-DRGs 016 and 017 
(Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy 
and Autologous Bone Marrow Transplant without CC/MCC, respectively). 
These codes are listed in the following table.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
30230AZ.............................  Transfusion of embryonic stem
                                       cells into peripheral vein, open
                                       approach.
30230G0.............................  Transfusion of autologous bone
                                       marrow into peripheral vein, open
                                       approach.
30230Y0.............................  Transfusion of autologous
                                       hematopoietic stem cells into
                                       peripheral vein, open approach.
30233AZ.............................  Transfusion of embryonic stem
                                       cells into peripheral vein,
                                       percutaneous approach.
30233G0.............................  Transfusion of autologous bone
                                       marrow into peripheral vein,
                                       percutaneous approach.
30233Y0.............................  Transfusion of autologous
                                       hematopoietic stem cells into
                                       peripheral vein, percutaneous
                                       approach.
30240AZ.............................  Transfusion of embryonic stem
                                       cells into central vein, open
                                       approach.
30240G0.............................  Transfusion of autologous bone
                                       marrow into central vein, open
                                       approach.
30240Y0.............................  Transfusion of autologous
                                       hematopoietic stem cells into
                                       central vein, open approach.
30243AZ.............................  Transfusion of embryonic stem
                                       cells into central vein,
                                       percutaneous approach.
30243G0.............................  Transfusion of autologous bone
                                       marrow into central vein,
                                       percutaneous approach.
30243Y0.............................  Transfusion of autologous
                                       hematopoietic stem cells into
                                       central vein, percutaneous
                                       approach.
30250G0.............................  Transfusion of autologous bone
                                       marrow into peripheral artery,
                                       open approach.
30250Y0.............................  Transfusion of autologous
                                       hematopoietic stem cells into
                                       peripheral artery, open approach.
30253G0.............................  Transfusion of autologous bone
                                       marrow into peripheral artery,
                                       percutaneous approach.
30253Y0.............................  Transfusion of autologous
                                       hematopoietic stem cells into
                                       peripheral artery, percutaneous
                                       approach.
30260G0.............................  Transfusion of autologous bone
                                       marrow into central artery, open
                                       approach.
30260Y0.............................  Transfusion of autologous
                                       hematopoietic stem cells into
                                       central artery, open approach.
30263G0.............................  Transfusion of autologous bone
                                       marrow into central artery,
                                       percutaneous approach.
30263Y0.............................  Transfusion of autologous
                                       hematopoietic stem cells into
                                       central artery, percutaneous
                                       approach.
------------------------------------------------------------------------

    While we believe, as indicated, that the cases reporting ICD-10-PCS 
procedure codes for autologous HCT procedures may be improperly 
assigned to MS-DRG 014, we also examined claims data for this subset of 
cases to determine the frequency with which they were reported and the 
relative resource use as compared with all cases assigned to MS-DRGs 
016 and 017. Our findings are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 014--Cases reporting autologous cord blood stem cell                    6            23.5         $38,319
 donor source...................................................
MS-DRG 016--All cases...........................................           2,150              18          47,546
MS-DRG 017--All cases...........................................             104              11          33,540
----------------------------------------------------------------------------------------------------------------

    For the subset of cases in MS-DRG 014 reporting ICD-10-PCS codes 
for autologous HCT procedures, there was a total of 6 cases with an 
average length of stay of 23.5 days and average costs of $38,319. The 
total number of cases reported in MS-DRG 016 was 2,150, with an average 
length of stay of 18 days and average costs of $47,546. The total 
number of cases reported in MS-DRG 017 was 104, with an average length 
of

[[Page 19180]]

stay of 11 days and average costs of $33,540.
    The results of our analysis indicate that the frequency with which 
these autologous HCT procedure codes was reported in MS-DRG 014 is low 
and that average costs of cases reporting autologous HCT procedures 
assigned to MS-DRG 014 are more aligned with the average costs of cases 
assigned to MS-DRGs 016 and 017, with the average costs being lower 
than the average costs for all cases assigned to MS-DRG 016 and higher 
than the average costs for all cases assigned to MS-DRG 017. Our 
clinical advisors also indicated that the procedure codes for 
autologous HCT procedures are more clinically aligned with cases that 
are assigned to MS-DRGs 016 and 017 that are comprised of autologous 
HCT procedures. Therefore, we are proposing to reassign the following 4 
procedure codes for HCT procedures specifying autologous cord blood 
stem cell as the donor source via venous access to MS-DRGs 016 and 017 
for FY 2020.

------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
30230X0.............................  Transfusion of autologous cord
                                       blood stem cells into peripheral
                                       vein, open approach.
30233X0.............................  Transfusion of autologous cord
                                       blood stem cells into peripheral
                                       vein, percutaneous approach.
30240X0.............................  Transfusion of autologous cord
                                       blood stem cells into central
                                       vein, open approach.
30243X0.............................  Transfusion of autologous cord
                                       blood stem cells into central
                                       vein, percutaneous approach.
------------------------------------------------------------------------

    As discussed earlier in this section, the 4 procedure codes for HCT 
procedures that describe an autologous cord blood stem cell transfusion 
via arterial access currently assigned to MS-DRG 014, as listed 
previously, are considered clinically invalid. These procedure codes 
were discussed at the March 5-6, 2019 ICD-10 Coordination and 
Maintenance Committee meeting, along with additional procedure codes 
that are also considered clinically invalid, as described in the 
section below.
    During our analysis of procedure codes that describe a HCT 
procedure, we identified 128 clinically invalid codes from the 
transfusion table (table 302) in the ICD-10-PCS classification 
identifying a transfusion using arterial access, as listed in Table 
6P.1a. associated with this proposed rule (which is available via the 
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). As shown in 
Table 6P.1a., these 128 procedure codes describe transfusion procedures 
with body system/region values ``5'' Peripheral Artery and ``6'' 
Central Artery. Because a transfusion procedure always uses venous 
access rather than arterial access, these codes are considered 
clinically invalid and were proposed for deletion at the March 5-6, 
2019 ICD-10 Coordination and Maintenance Committee meeting. We refer 
the reader to the website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials.html for the Committee meeting 
materials regarding this proposal.
    We examined claims data from the September 2018 update of the FY 
2018 MedPAR file for MS-DRGs 014, 016, and 017 to determine if there 
were any cases that reported one of the 128 clinically invalid codes 
from the transfusion table in the ICD-10-PCS classification identifying 
a transfusion using arterial access, and as listed in Table 6P.1a. 
associated with this proposed rule. Our clinical advisors agree that 
because a transfusion procedure always uses venous access rather than 
arterial access, these codes are considered invalid. Because these 
procedure codes describe clinically invalid procedures, we would not 
expect these codes to be reported in any claims data. Our findings are 
shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRGs 014, 016, and 017--All cases............................           3,108            20.4         $59,140
MS-DRGs 014, 016, and 017--Cases with invalid transfusion codes.              31            19.6          52,912
----------------------------------------------------------------------------------------------------------------

    As shown in this table, we found a total of 3,108 cases across MS-
DRGs 014, 016, and 017 with an average length of stay of 20.4 days and 
average costs of $59,140. We found a total of 31 cases (0.9 percent) 
reporting a procedure code for an invalid transfusion procedure, 
identifying the body system/region value ``5'' Peripheral Artery or 
``6'' Central Artery, with an average length of stay of 19.6 days and 
average costs of $52,912. The results of the data analysis demonstrate 
that these invalid transfusion procedures represent approximately 1 
percent of all discharges across MS-DRGs 014, 016, and 017. To 
summarize, we are proposing to: (1) Reassign the four ICD-10-PCS codes 
for HCT procedures specifying autologous cord blood stem cell as the 
donor source from MS-DRG 014 to MS-DRGs 016 and 017 (procedure codes 
30230X0, 30233X0, 30240X0, 30243X0); and (2) delete the 128 clinically 
invalid codes from the transfusion table in the ICD-10-PCS 
Classification describing a transfusion using arterial access that were 
discussed at the March 5-6, 2019 ICD-10 Coordination and Maintenance 
Committee meeting and are listed in Table 6P.1a associated with this 
proposed rule. As discussed previously, we are not proposing to split 
MS-DRG 014 into the two requested new MS DRGs that would assign cases 
according to whether the allogeneic donor source is related or 
unrelated.
c. Chimeric Antigen Receptor (CAR) T-Cell Therapies
    We received a request to create a new MS-DRG for procedures 
involving CAR T-cell therapies. The requestor stated that creation of a 
new MS-DRG would improve payment for CAR T-cell therapies in the 
inpatient setting. According to the requestor, while cases involving 
CAR T-cell therapy may now be eligible for new technology add-on 
payments and outlier payments, there continue to be significant 
financial losses by providers. The requestor also suggested that CMS 
modify its existing payment mechanisms to use a CCR of 1.0 for charges 
associated with CAR T-cell therapy.
    In addition, the requestor included technical and operational 
suggestions related to CAR T-cell therapy, such as

[[Page 19181]]

the development of unique CAR T-cell therapy revenue and cost centers 
for billing and cost reporting purposes. We will consider these 
technical and operational suggestions in the development of future 
billing and cost reporting guidelines and instructions.
    Currently, procedures involving CAR T-cell therapies are 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 became effective October 1, 2017. In the 
FY 2019 IPPS/LTCH PPS final rule, we finalized 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 the FY 2019 IPPS/LTCH 
PPS final rule for a complete discussion of these final policies (83 FR 
41172 through 41174).
    As stated earlier, the current procedure codes for CAR T-cell 
therapies both became effective October 1, 2017. In the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41172 through 41174), we indicated we should 
collect more comprehensive clinical and cost data before considering 
assignment of a new MS-DRG to these therapies. While the September 2018 
update of the FY 2018 MedPAR data file does contain some claims that 
include those procedure codes that identify CAR T-cell therapies, the 
number of cases is limited, and the submitted costs vary widely due to 
differences in provider billing and charging practices for this 
therapy. Therefore, while these claims could potentially be used to 
create relative weights for a new MS-DRG, we do not have the 
comprehensive clinical and cost data that we generally believe are 
needed to do so. Furthermore, given the relative newness of CAR T-cell 
therapy and our proposal to continue new technology add-on payments for 
FY 2020 for the two CAR T-cell therapies that currently have FDA 
approval (KYMRIAHTM and YESCARTATM), as discussed 
in section II.G.4.d. of the preamble of this proposed rule, at this 
time we believe it may be premature to consider creation of a new MS-
DRG specifically for cases involving CAR T-cell therapy for FY 2020.
    Therefore, we are proposing not to modify the current MS-DRG 
assignment for cases reporting CAR T-cell therapies for FY 2020. As 
noted earlier, cases reporting ICD-10-PCS codes XW033C3 and XW043C3 
would continue to be eligible to receive new technology add-on payments 
for discharges occurring in FY 2020 if our proposal to continue such 
payments is finalized. Currently, we expect that, in future years, we 
would have additional data that exhibit more stability and greater 
consistency in charging and billing practices that could be used to 
evaluate the potential creation of a new MS-DRG specifically for cases 
involving CAR T-cell therapies.
    Alternatively, notwithstanding our concerns regarding the claims 
data, and the concerns discussed in the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41172 to 41174), we are seeking public comments on payment 
alternatives for CAR T-cell therapies, including payment under any 
potential new MS-DRG. We also are inviting public comments on how these 
payment alternatives would affect access to care, as well as how they 
affect incentives to encourage lower drug prices, which is a high 
priority for this Administration. As discussed in the FY 2019 IPPS/LTCH 
PPS final rule (83 FR 41172 through 41174), we are considering 
approaches and authorities to encourage value-based care and lower drug 
prices. We are soliciting public comments on how the effective dates of 
any potential payment methodology alternatives, if any were to be 
adopted, may intersect and affect future participation in any such 
alternative approaches.
    As part of our solicitation of public comment on the potential 
creation of a new MS-DRG for CAR T-cell therapy procedures, we are also 
seeking comment on the most appropriate way to develop the relative 
weight if we were to finalize the creation of a new MS-DRG. While the 
data are limited, it may be operationally possible to create a relative 
weight by dividing the average costs of cases that include the CAR T-
cell procedures by the average costs of all cases, consistent with our 
current methodology for setting the relative weights for FY 2020 and 
using the same applicable data sources used for other MS-DRGs (for FY 
2020, the FY 2018 MedPAR data and FY 2016 HCRIS data). We are seeking 
public comments on whether this is the most accurate method for 
determining the relative weight, given the current variation in the 
claims data for these procedures, and also on how to address the 
significant number of cases involving clinical trials. While we do not 
typically exclude cases in clinical trials when developing the relative 
weights, in this case, the absence of the drug costs on claims for 
cases involving clinical trial claims could have a significant impact 
on the relative weight. It is unclear whether a relative weight 
calculated using cases for which hospitals do and do not incur drug 
costs would accurately reflect the resource costs of caring for 
patients who are not involved in clinical trials. A different approach 
might be to develop a relative weight using an appropriate portion of 
the average sales price (ASP) for these drugs as an alternative way to 
reflect the costs involved in treating patients receiving CAR T-cell 
therapies. We are requesting public comments on these approaches or 
other approaches for setting the relative weight if we were to finalize 
a new MS-DRG. We note that any such new MS-DRG would be established in 
a budget neutral manner, consistent with section 1886(d)(4)(C)(iii) of 
the Act, which specifies that the annual DRG reclassification and 
recalibration of the relative weights must be made in a manner that 
ensures that aggregate payments to hospitals are not affected.
    Another potential consideration if we were to create a new MS-DRG 
is the extent to which it would be appropriate to geographically adjust 
the payment under any such new MS-DRG. Under the methodology for 
determining the Federal payment rate for operating costs under the 
IPPS, the labor-related proportion of the national standardized amounts 
is adjusted by the wage index to reflect the relative differences in 
labor costs among geographic areas. The IPPS Federal payment rate for 
operating costs is calculated as the MS-DRG relative weight x [(labor-
related applicable standardized amount x applicable wage index) + 
(nonlabor-related applicable standardized amount x cost-of-living 
adjustment)]. Given our understanding that the costs for CAR T-cell 
therapy drugs do not vary among geographic areas, and given that costs 
for CAR T-cell therapy would likely be an extremely high portion of the 
costs for the MS-DRG, we are seeking public comments on whether we 
should not geographically adjust the payment for cases assigned to any 
potential new MS-DRG for CAR T-cell therapy procedures. We also are 
seeking public comments on whether to instead apply the geographic 
adjustment to a lower proportion of payments under any potential new 
MS-DRG and, if so, how that lower proportion should be determined. We 
note that while the prices of other drugs may also not vary 
significantly among geographic areas, generally speaking, those other 
drugs would not have estimated costs as high

[[Page 19182]]

as those of CAR T-cell therapies, nor would they represent as 
significant a percentage of the average costs for the case. We are 
seeking public comments on the use of our exceptions and adjustments 
authority under section 1886(d)(5)(I) of the Act (or other relevant 
authorities) to implement any such potential changes.
    Section 1886(d)(5)(B) of the Act provides that prospective payment 
hospitals that have residents in an approved graduate medical education 
(GME) program receive an additional payment for a Medicare discharge to 
reflect the higher patient care costs of teaching hospitals relative to 
nonteaching hospitals. The regulations regarding the calculation of 
this additional payment, known as the indirect medical education (IME) 
adjustment, are located at 42 CFR 412.105. The formula is traditionally 
described in terms of a certain percentage increase in payment for 
every 10-percent increase in the resident-to-bed ratio. For some 
hospitals, this percentage increase can exceed an additional 25 percent 
or more of the otherwise applicable payment. Some hospitals, sometimes 
the same hospitals, can also receive a large percentage increase in 
payments due to the Medicare disproportionate hospital (DSH) adjustment 
provision under section 1886(d)(5)(F) of the Act. The regulations 
regarding the calculation of the additional DSH payment are located at 
42 CFR 412.106.
    Given that the payment for cases assigned to a new MS-DRG for CAR 
T-cell therapy could significantly exceed the historical payment for 
any existing MS-DRG, these percentage add-on payments could arguably 
result in unreasonably high additional payments for CAR T-cell therapy 
cases unrelated in any significant empirical way to the costs of the 
hospital in providing care. For example, consider a teaching hospital 
that has an IME adjustment factor of 0.25, and a DSH adjustment factor 
of 0.10. If we were to create a new MS-DRG for CAR T-cell therapy 
procedures that resulted in an average IPPS Federal payment rate for 
operating costs of $400,000, under the current payment mechanism, the 
hospital would receive an IME payment of $100,000 ($400,000 x 0.25) and 
a DSH payment of $40,000 ($400,000 x 0.10), such that the total IPPS 
Federal payment rate for operating costs including IME and DSH payments 
would be $540,000 ($400,000 + $100,000 + $40,000). We are seeking 
public comments on whether the IME and DSH payments should not be made 
for cases assigned to any new MS-DRG for CAR T-cell therapy. We also 
are seeking public comments on whether we should instead reduce the 
applicable percentages used to determine these add-ons and, if so, how 
those lower percentages should be determined. We are seeking public 
comments on the use of our exceptions and adjustments authority under 
section 1886(d)(5)(I) of the Act (or other relevant authorities) to 
implement any potential changes.
    As further discussed section II.G.7. of the preamble to this 
proposed rule, we are also requesting public comment on other payment 
alternatives for these cases, including eliminating the use of the CCR 
in calculating the new technology add-on payment for KYMRIAH[supreg] 
and YESCARTA[supreg] by making a uniform add-on payment that equals the 
proposed maximum add-on payment, that is, 65 percent of the cost of the 
technology (in accordance with the proposed increase in the calculation 
of the maximum new technology add-on payment amount), which in this 
instance would be $242,450; and/or using a higher percentage than the 
proposed 65 percent to calculate the maximum new technology add-on 
payment amount.
    We are also requesting public comments on whether, in light of the 
additional experience with billing and payment for cases involving CAR 
T-cell therapies to Medicare patients, we should consider utilizing a 
specific CCR for ICD-10-PCS procedure codes used to report the 
performance of procedures involving the use of CAR T-cell therapies; 
for example, a CCR of 1.0, when determining outlier payments, when 
determining the new technology add-on payments, and when determining 
payments to IPPS-excluded cancer hospitals for CAR T-cell therapies.
    We note that we also considered this payment alternative for FY 
2019, as discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41172 
through 41174). We indicated in that rulemaking that such a payment 
alternative might use 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[supreg] and YESCARTA[supreg] CAR 
T-cell therapies. We also indicated such a change would result in a 
higher outlier payment, higher new technology add-on payment, or the 
determination of higher costs for IPPS-excluded cancer hospital cases. 
For example, and as described in the FY 2019 IPPS LTCH PPS final rule 
(83 FR 41773), if a hospital charged $400,000 for the procedure 
described by ICD-10-PCS procedure code XW033C3, the application of a 
hypothetical CCR of 0.25 results in a cost of $100,000 (= $400,000 * 
0.25) while the application of a hypothetical CCR of 1.00 results in a 
cost of $400,000 (= $400,000 * 1.0).
3. MDC 1 (Diseases and Disorders of the Nervous System): Carotid Artery 
Stent Procedures
    The logic for case assignment to MS-DRGs 034, 035, and 036 (Carotid 
Artery Stent Procedures with MCC, with CC, and without CC/MCC, 
respectively) as displayed in the ICD-10 MS-DRG Version 36 Definitions 
Manual (which is available via the internet on the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html) is 
comprised of two lists of logic that include procedure codes for 
operating room (O.R.) procedures involving dilation of a carotid artery 
(common, internal or external) with intraluminal device(s). The first 
list of logic is entitled ``Operating Room Procedures'' and the second 
list of logic is entitled ``Operating Room Procedures with Operating 
Room Procedures''. We identified 46 ICD-10-PCS procedure codes in the 
second logic list that do not describe dilation of a carotid artery 
with an intraluminal device. Of these 46 procedure codes, we identified 
24 codes describing dilation of a carotid artery without an 
intraluminal device; 8 codes describing dilation of the vertebral 
artery; and 14 codes describing dilation of a vein (jugular, vertebral 
and face), as shown in the following table.

ICD-10 PCS Codes That Involve Dilation of a Neck Artery or Vein With and
                     Without an Intraluminal Device
------------------------------------------------------------------------
           ICD-10-PCS code                     Code description
------------------------------------------------------------------------
037H3Z6.............................  Dilation of right common carotid
                                       artery, bifurcation, percutaneous
                                       approach.
037H3ZZ.............................  Dilation of right common carotid
                                       artery, percutaneous approach.

[[Page 19183]]

 
037H4Z6.............................  Dilation of right common carotid
                                       artery, bifurcation, percutaneous
                                       endoscopic approach.
037H4ZZ.............................  Dilation of right common carotid
                                       artery, percutaneous endoscopic
                                       approach.
037J3Z6.............................  Dilation of left common carotid
                                       artery, bifurcation, percutaneous
                                       approach.
037J3ZZ.............................  Dilation of left common carotid
                                       artery, percutaneous approach.
037J4Z6.............................  Dilation of left common carotid
                                       artery, bifurcation, percutaneous
                                       endoscopic approach.
037J4ZZ.............................  Dilation of left common carotid
                                       artery, percutaneous endoscopic
                                       approach.
037K3Z6.............................  Dilation of right internal carotid
                                       artery, bifurcation, percutaneous
                                       approach.
037K3ZZ.............................  Dilation of right internal carotid
                                       artery, percutaneous approach.
037K4Z6.............................  Dilation of right internal carotid
                                       artery, bifurcation, percutaneous
                                       endoscopic approach.
037K4ZZ.............................  Dilation of right internal carotid
                                       artery, percutaneous endoscopic
                                       approach.
037L3Z6.............................  Dilation of left internal carotid
                                       artery, bifurcation, percutaneous
                                       approach.
037L3ZZ.............................  Dilation of left internal carotid
                                       artery, percutaneous approach.
037L4Z6.............................  Dilation of left internal carotid
                                       artery, bifurcation, percutaneous
                                       endoscopic approach.
037L4ZZ.............................  Dilation of left internal carotid
                                       artery, percutaneous endoscopic
                                       approach.
037M3Z6.............................  Dilation of right external carotid
                                       artery, bifurcation, percutaneous
                                       approach.
037M3ZZ.............................  Dilation of right external carotid
                                       artery, percutaneous approach.
037M4Z6.............................  Dilation of right external carotid
                                       artery, bifurcation, percutaneous
                                       endoscopic approach.
037M4ZZ.............................  Dilation of right external carotid
                                       artery, percutaneous endoscopic
                                       approach.
037N3Z6.............................  Dilation of left external carotid
                                       artery, bifurcation, percutaneous
                                       approach.
037N3ZZ.............................  Dilation of left external carotid
                                       artery, percutaneous approach.
037N4Z6.............................  Dilation of left external carotid
                                       artery, bifurcation, percutaneous
                                       endoscopic approach.
037N4ZZ.............................  Dilation of left external carotid
                                       artery, percutaneous endoscopic
                                       approach.
037P3Z6.............................  Dilation of right vertebral
                                       artery, bifurcation, percutaneous
                                       approach.
037P3ZZ.............................  Dilation of right vertebral
                                       artery, percutaneous approach.
037P4Z6.............................  Dilation of right vertebral
                                       artery, bifurcation, percutaneous
                                       endoscopic approach.
037P4ZZ.............................  Dilation of right vertebral
                                       artery, percutaneous endoscopic
                                       approach.
037Q3Z6.............................  Dilation of left vertebral artery,
                                       bifurcation, percutaneous
                                       approach.
037Q3ZZ.............................  Dilation of left vertebral artery,
                                       percutaneous approach.
037Q4Z6.............................  Dilation of left vertebral artery,
                                       bifurcation, percutaneous
                                       endoscopic approach.
037Q4ZZ.............................  Dilation of left vertebral artery,
                                       percutaneous endoscopic approach.
057M3DZ.............................  Dilation of right internal jugular
                                       vein with intraluminal device,
                                       percutaneous approach.
057M4DZ.............................  Dilation of right internal jugular
                                       vein with intraluminal device,
                                       percutaneous endoscopic approach.
057N3DZ.............................  Dilation of left internal jugular
                                       vein with intraluminal device,
                                       percutaneous approach.
057N4DZ.............................  Dilation of left internal jugular
                                       vein with intraluminal device,
                                       percutaneous endoscopic approach.
057P3DZ.............................  Dilation of right external jugular
                                       vein with intraluminal device,
                                       percutaneous approach.
057P4DZ.............................  Dilation of right external jugular
                                       vein with intraluminal device,
                                       percutaneous endoscopic approach.
057Q3DZ.............................  Dilation of left external jugular
                                       vein with intraluminal device,
                                       percutaneous approach.
057Q4DZ.............................  Dilation of left external jugular
                                       vein with intraluminal device,
                                       percutaneous endoscopic approach.
057R3DZ.............................  Dilation of left vertebral vein
                                       with intraluminal device,
                                       percutaneous approach.
057R4DZ.............................  Dilation of right vertebral vein
                                       with intraluminal device,
                                       percutaneous endoscopic approach.
057S3DZ.............................  Dilation of left vertebral vein
                                       with intraluminal device,
                                       percutaneous approach.
057S4DZ.............................  Dilation of left vertebral vein
                                       with intraluminal device,
                                       percutaneous endoscopic approach.
057T3DZ.............................  Dilation of right face vein with
                                       intraluminal device, percutaneous
                                       approach.
057T4DZ.............................  Dilation of right face vein with
                                       intraluminal device, percutaneous
                                       endoscopic approach.
------------------------------------------------------------------------

    We examined claims data from the September 2018 update of the FY 
2018 MedPAR file for MS-DRGs 034, 035, and 036 and identified cases 
reporting any one of the 46 ICD-10-PCS procedure codes listed in the 
tables above. Our findings are shown in the following table.

                                   MS-DRGs for Carotid Artery Stent Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 034--All cases...........................................             863             6.8         $27,600
MS-DRG 034--Cases with procedure code other than dilation of a                15             8.8          36,596
 carotid artery with an intraluminal device.....................
MS-DRG 035--All cases...........................................           2,369               3          16,731
MS-DRG 035--Cases with procedure code other than dilation of a                52             3.5          17,815
 carotid artery with an intraluminal device.....................
MS-DRG 036--All cases...........................................           3,481             1.4          12,637
MS-DRG 036--Cases with procedure code other than dilation of a                67             1.4          12,621
 carotid artery with an intraluminal device.....................
----------------------------------------------------------------------------------------------------------------

    As shown in the table above, we found a total of 863 cases with an 
average length of stay of 6.8 days and average costs of $27,600 in MS-
DRG 034. There were 15 cases reporting at least one of the 46 procedure 
codes that

[[Page 19184]]

do not describe dilation of the carotid artery with an intraluminal 
device in MS-DRG 034 with an average length of stay of 8.8 days and 
average costs of $36,596. For MS-DRG 035, we found a total of 2,369 
cases with an average length of stay of 3 days and average costs of 
$16,731. There were 52 cases reporting at least one of the 46 procedure 
codes that do not describe dilation of the carotid artery with an 
intraluminal device in MS-DRG 035 with an average length of stay of 3.5 
days and average costs of $17,815. For MS-DRG 036, we found a total of 
3,481 cases with an average length of stay of 1.4 days and average 
costs of $12,637. There were 67 cases reporting at least one of the 46 
procedure codes that do not describe dilation of the carotid artery 
with an intraluminal device in MS-DRG 036 with an average length of 
stay of 1.4 days and average costs of $12,621.
    Our clinical advisors stated that MS-DRGs 034, 035, and 036 are 
defined to include only those procedure codes that describe procedures 
that involve dilation of a carotid artery with an intraluminal device. 
Therefore, we are proposing to remove the procedure codes listed in the 
table above from MS-DRGs 034, 035, and 036 that describe procedures 
which (1) do not include an intraluminal device; (2) describe 
procedures performed on arteries other than a carotid; and (3) describe 
procedures performed on a vein.
    The 46 ICD-10-PCS procedure codes listed in the table above are 
also assigned to MS-DRGs 037, 038, and 039 (Extracranial Procedures 
with MCC, with CC, and without CC/MCC, respectively). Therefore, we 
also examined claims data from the September 2018 update of the FY 2018 
MedPAR file for MS-DRGs 037, 038, and 039. Our findings are shown in 
the following table.

                                       MS-DRGs for Extracranial Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 037--All cases...........................................           3,612             7.1         $23,703
MS-DRG 038--All cases...........................................          11,406             3.1          12,480
MS-DRG 039--All cases...........................................          22,938             1.5           8,400
----------------------------------------------------------------------------------------------------------------

    We found a total of 3,612 cases in MS-DRG 037 with an average 
length of stay of 7.1 days and average costs of $23,703. We found a 
total of 11,406 cases in MS-DRG 038 with an average length of stay of 
3.1 days and average costs of $12,480. We found a total of 22,938 cases 
in MS-DRG 039 with an average length of stay of 1.5 days and average 
costs of $8,400.
    During our review of claims data for MS-DRGs 037, 038, and 039, we 
also discovered 96 ICD-10-PCS procedure codes describing dilation of a 
carotid artery with an intraluminal device that were inadvertently 
included as a result of efforts to replicate the ICD-9 based MS-DRGs. 
These procedure codes are also included in the logic for MS-DRGs 034, 
035, and 036. Under ICD-9-CM, procedure codes 00.61 (Percutaneous 
angioplasty of extracranial vessel(s)) and 00.63 (Percutaneous 
insertion of carotid artery stent(s)) are both required to be reported 
on a claim to identify that a carotid artery stent procedure was 
performed and for assignment of the case to MS-DRGs 034, 035, and 036. 
Procedure code 00.61 is designated as an O.R. procedure, while 
procedure code 00.63 is designated as a non-O.R. procedure. Under ICD-
10-PCS, a carotid artery stent procedure is described by one unique 
code that includes both clinical concepts of the angioplasty (dilation) 
and the insertion of the stent (intraluminal device). This 
``combination code'' under ICD-10-PCS is designated as an O.R. 
procedure. Under ICD-9-CM, procedure code 00.61 reported in the absence 
of procedure code 00.63 results in assignment to MS-DRGs 037, 038, and 
039 according to the MS-DRG logic because procedure code 00.61 has an 
inclusion term for vertebral vessels, as well as for the carotid 
vessels. Therefore, when all of the comparable translations of 
procedure code 00.61 as an O.R. procedure were replicated from the ICD-
9 based MS-DRGs to the ICD-10 based MS-DRGs, this replication 
inadvertently results in the assignment of ICD-10-PCS procedure codes 
that identify and describe a carotid artery stent procedure to MS-DRGs 
037, 038, and 039. Therefore, we are proposing to remove the 96 ICD-10-
PCS procedure codes describing dilation of a carotid artery with an 
intraluminal device from MS-DRGs 037, 038, and 039.
    We also found 6 procedure codes describing dilation of a carotid 
artery with an intraluminal device in MS-DRGs 037, 038, and 039 that 
are not currently assigned to MS-DRGs 034, 035, and 036. Our clinical 
advisors recommended that these 6 procedure codes be reassigned from 
MS-DRGs 037, 038, and 039 to MS-DRGs 034, 035, and 036 because the 6 
procedure codes are consistent with the other procedures describing 
dilation of a carotid artery with an intraluminal device that are 
currently assigned to MS-DRGs 034, 035, and 036. We refer readers to 
Table 6P.1b. associated with this proposed rule (which is available via 
the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for the 
complete list of procedure codes that we are proposing to remove from 
MS-DRGs 037, 038, and 039.
    We also note that, as discussed in section II.F.14.f. of the 
preamble of this proposed rule, we are deleting a number of codes that 
include the ICD-10-PCS qualifier term ``bifurcation'' as the result of 
the finalized proposal discussed at the September 11-12, 2018 ICD-10 
Coordination and Maintenance Committee meeting. We refer readers to the 
website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html for 
the committee meeting materials and discussion regarding this proposal. 
We note that, of the 96 procedure codes that we are proposing to remove 
from the logic for MS-DRGs 037, 038, and 039, there are 48 procedure 
codes that include the qualifier term ``bifurcation''. Therefore, these 
48 procedure codes will be deleted effective October 1, 2019. The 48 
remaining valid procedure codes that do not include the term 
``bifurcation'' that we are proposing to remove from MS-DRGs 037, 038, 
and 039 will continue to be assigned to MS-DRGs 034, 035, and 036.
    Lastly, if the applicable proposed MS-DRG changes are finalized, we 
would make a conforming change to the ICD-10 MS-DRG Version 37 
Definitions Manual for FY 2020 by combining all the procedure codes 
identifying a carotid artery stent procedure within MS-DRGs 034, 035, 
and 036 into one list entitled ``Operating Room Procedures'' to better 
reflect the

[[Page 19185]]

definition of these MS-DRGs based on the discussion and proposals 
described above.
4. MDC 4 (Diseases and Disorders of the Respiratory System): Pulmonary 
Embolism
    We received a request to reassign three ICD-10-CM diagnosis codes 
for pulmonary embolism with acute cor pulmonale from MS-DRG 176 
(Pulmonary Embolism without MCC) to the higher severity level MS-DRG 
175 (Pulmonary Embolism with MCC). The three diagnosis codes are 
identified in the following table.

------------------------------------------------------------------------
           ICD-10-CM code                      Code description
------------------------------------------------------------------------
I26.01..............................  Septic pulmonary embolism with
                                       acute cor pulmonale.
I26.02..............................  Saddle embolus of pulmonary artery
                                       with acute cor pulmonale.
I26.09..............................  Other pulmonary embolism with
                                       acute cor pulmonale.
------------------------------------------------------------------------

    The requestor noted that, in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41231 through 41234), we finalized the 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 and deleted the 
relevant tables from the ICD-10 MS-DRG Definitions Manual Version 36, 
effective October 1, 2018. As a result of this change, cases reporting 
any one of the three ICD-10-CM diagnosis codes describing a pulmonary 
embolism with acute cor pulmonale were reassigned from MS-DRG 175 to 
MS-DRG 176, absent a secondary diagnosis code to trigger assignment to 
MS-DRG 175. The requestor stated that this change in the MS-DRG 
assignment for these cases resulted in a reduction in payment for cases 
involving pulmonary embolism with acute cor pulmonale and that the FY 
2019 payment rate for MS-DRG 176 does not appropriately account for the 
costs and resource utilization associated with these cases because the 
subset of patients with pulmonary embolism with acute cor pulmonale 
often represents a more severe set of patients with pulmonary embolism.
    The logic for case assignment to MS-DRGs 175 and 176 is displayed 
in the ICD-10 MS-DRG Version 36 Definitions Manual, which is available 
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
    We analyzed claims data from the September 2018 update of the FY 
2018 MedPAR file for MS-DRGs 175 and 176 to identify cases reporting 
diagnosis codes describing pulmonary embolism with acute cor pulmonale 
as listed above (ICD-10-CM diagnosis codes I26.01, I26.02 or I26.09) as 
the principal diagnosis or as a secondary diagnosis. Our findings are 
shown in the following table.

                                         MS-DRGs for Pulmonary Embolism
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 175--All cases...........................................          24,389             5.2         $10,294
MS-DRG 175--Cases with pulmonary embolism with acute cor                   2,326             5.7          13,034
 pulmonale......................................................
MS-DRG 176--All cases...........................................          30,215             3.3           6,356
MS-DRG 176--Cases with pulmonary embolism with acute cor                   1,821             3.9           9,630
 pulmonale......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, for MS-DRG 175, there was a total of 24,389 
cases with an average length of stay of 5.2 days and average costs of 
$10,294. Of these 24,389 cases, there were 2,326 cases reporting 
pulmonary embolism with acute cor pulmonale, with an average length of 
stay 5.7 days and average costs of $13,034. For MS-DRG 176, there was a 
total of 30,215 cases with an average length of stay of 3.3 days and 
average costs of $6,356. Of these 30,215 cases, there were 1,821 cases 
reporting pulmonary embolism with acute cor pulmonale with an average 
length of stay of 3.9 days and average costs of $9,630.
    As stated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41231 
through 41234), available ICD-10 data can now be used to evaluate other 
indicators of resource utilization and, as shown by our claims 
analysis, the data indicate that the average costs of cases reporting 
pulmonary embolism or saddle embolus with acute cor pulmonale ($9,630) 
in MS-DRG 176 are closer to the average costs for all pulmonary 
embolism cases in MS-DRG 175 ($10,294) as compared to the average costs 
for all cases in MS-DRG 176 ($6,356). Our clinical advisors also agree 
that this subset of patients with acute cor pulmonale often represents 
a more severe set of patients and that these cases are more 
appropriately assigned to the higher severity level ``with MCC'' MS-
DRG. Therefore, we are proposing to reassign cases reporting diagnosis 
code I26.01, I26.02, or I26.09 to the higher severity level MS-DRG 175 
and to revise the title for MS-DRG 175 to ``Pulmonary Embolism with MCC 
or Acute Cor Pulmonale'' to more accurately reflect the diagnoses 
assigned there.
5. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Transcatheter Mitral Valve Repair With Implant
    As we did for the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28008 
through 28010) and for the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 
24985 through 24989), for FY 2020, we received a request to modify the 
MS-DRG assignment for transcatheter mitral valve repair (TMVR) with 
implant procedures. ICD-10-PCS procedure code 02UG3JZ (Supplement 
mitral valve with synthetic substitute, percutaneous approach) 
identifies and describes this procedure. This request also included the 
suggestion that CMS give consideration to reclassifying other 
endovascular cardiac valve repair procedures. Specifically, the 
requestor recommended that cases reporting procedure codes describing 
an endovascular cardiac valve repair with implant be reassigned to MS-
DRGs 266 and 267 (Endovascular Cardiac Valve Replacement with and 
without MCC, respectively) and that the MS-DRG titles be revised to 
Endovascular Cardiac Valve Interventions with Implant with and without 
MCC, respectively. We refer readers to detailed discussions of

[[Page 19186]]

the MitraClip[supreg] System (hereafter referred to as 
MitraClip[supreg]) for transcatheter mitral valve repair in previous 
rulemakings, including the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 
25822) and final rule (76 FR 51528 through 51529), the FY 2013 IPPS/
LTCH PPS proposed rule (77 FR 27902 through 27903) and final rule (77 
FR 53308 through 53310), the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 
28008 through 28010) and final rule (79 FR 49889 through 49892), the FY 
2016 IPPS/LTCH PPS proposed rule (80 FR 24356 through 24359) and final 
rule (80 FR 49363 through 49367), and the FY 2017 IPPS/LTCH PPS 
proposed rule (81 FR 24985 through 24989) and final rule (81 FR 56809 
through 56813), in response to requests for MS-DRG reclassification, as 
well as the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27547 through 
27552), under the new technology add-on payment policy. In the FY 2014 
IPPS/LTCH PPS final rule (78 FR 50575), we were unable to consider 
further the application for a new technology add-on payment for 
MitraClip[supreg] because the technology had not received FDA approval 
by the July 1, 2013 deadline.
    In the FY 2015 IPPS/LTCH PPS final rule, we finalized our proposal 
to not create a new MS-DRG or to reassign cases reporting ICD-9-CM 
procedure code 35.97 that described procedures involving the 
MitraClip[supreg] to another MS-DRG (79 FR 49889 through 49892). Under 
a new application, the request for new technology add-on payments for 
the MitraClip[supreg] System was approved for FY 2015 (79 FR 49941 
through 49946). The new technology add-on payment for MitraClip[supreg] 
was subsequently discontinued effective FY 2017.
    In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49371), we finalized 
a modification to the MS-DRGs to which procedures involving the 
MitraClip[supreg] were assigned. For the ICD-10 based MS-DRGs to fully 
replicate the ICD-9-CM based MS-DRGs, ICD-10-PCS code 02UG3JZ 
(Supplement mitral valve with synthetic substitute, percutaneous 
approach), which identifies the MitraClip[supreg] technology and is the 
ICD-10-PCS code translation for ICD-9-CM procedure code 35.97 
(Percutaneous mitral valve repair with implant), was assigned to new 
MS-DRGs 273 and 274 (Percutaneous Intracardiac Procedures with MCC and 
without MCC, respectively) and continued to be assigned to MS-DRGs 231 
and 232 (Coronary Bypass with PTCA with MCC and without MCC, 
respectively).
    In the FY 2017 IPPS/LTCH PPS proposed and final rules, we also 
discussed our analysis of MS-DRGs 228, 229, and 230 (Other 
Cardiothoracic Procedures with MCC, with CC, and without CC/MCC, 
respectively) with regard to the possible reassignment of cases 
reporting ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve 
with synthetic substitute, percutaneous approach). We finalized our 
proposal to collapse these MS-DRGs (228, 229, and 230) from three 
severity levels to two severity levels by deleting MS-DRG 230 and 
revising the structure of MS-DRG 229. We also finalized our proposal to 
reassign ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve 
with synthetic substitute, percutaneous approach) from MS-DRGs 273 and 
274 to MS-DRG 228 and revised MS-DRG 229 (81 FR 56813).
    According to the requestor, there are substantial clinical and 
resource differences between the transcatheter mitral valve repair 
(TMVR) procedure and other procedures currently grouping to MS-DRGs 228 
and 229. The requestor noted that, currently, ICD-10-PCS procedure code 
02UG3JZ is the only endovascular valve intervention with implant 
procedure that maps to MS-DRGs 228 and 229. The requestor also noted 
that other ICD-10-PCS procedure codes describing procedures for 
endovascular (transcatheter) cardiac valve repair with implant map to 
MS-DRGs 273 and 274 or to MS-DRGs 216, 217, 218, 219, 220, and 221 
(Cardiac Valve and Other Major Cardiothoracic Procedures with and 
without Cardiac Catheterization with MCC, with CC and without CC/MCC, 
respectively). The requestor further noted that all ICD-10-PCS 
procedure codes for endovascular cardiac valve replacement procedures 
map to MS-DRGs 266 (Endovascular Cardiac Valve Replacement with MCC) 
and 267 (Endovascular Cardiac Valve Replacement without MCC).
    The ICD-10-PCS procedure codes describing a transcatheter cardiac 
valve repair procedure with an implant are listed in the following 
table.

------------------------------------------------------------------------
           ICD-10-PCS code                        Description
------------------------------------------------------------------------
02UF37J.............................  Supplement aortic valve created
                                       from truncal valve with
                                       autologous tissue substitute,
                                       percutaneous approach.
02UF37Z.............................  Supplement aortic valve with
                                       autologous tissue substitute,
                                       percutaneous approach.
02UF38J.............................  Supplement aortic valve created
                                       from truncal valve with
                                       zooplastic tissue, percutaneous
                                       approach.
02UF38Z.............................  Supplement aortic valve with
                                       zooplastic tissue, percutaneous
                                       approach.
02UF3JJ.............................  Supplement aortic valve created
                                       from truncal valve with synthetic
                                       substitute, percutaneous
                                       approach.
02UF3JZ.............................  Supplement aortic valve with
                                       synthetic substitute,
                                       percutaneous approach.
02UF3KJ.............................  Supplement aortic valve created
                                       from truncal valve with
                                       nonautologous tissue substitute,
                                       percutaneous approach.
02UF3KZ.............................  Supplement aortic valve with
                                       nonautologous tissue substitute,
                                       percutaneous approach.
02UG37E.............................  Supplement mitral valve created
                                       from left atrioventricular valve
                                       with autologous tissue
                                       substitute, percutaneous
                                       approach.
02UG37Z.............................  Supplement mitral valve with
                                       autologous tissue substitute,
                                       percutaneous approach.
02UG38E.............................  Supplement mitral valve created
                                       from left atrioventricular valve
                                       with zooplastic tissue,
                                       percutaneous approach.
02UG38Z.............................  Supplement mitral valve with
                                       zooplastic tissue, percutaneous
                                       approach.
02UG3KE.............................  Supplement mitral valve created
                                       from left atrioventricular valve
                                       with nonautologous tissue
                                       substitute, percutaneous
                                       approach.
02UG3KZ.............................  Supplement mitral valve with
                                       nonautologous tissue substitute,
                                       percutaneous approach.
02UG3JE.............................  Supplement mitral valve created
                                       from left atrioventricular valve
                                       with synthetic substitute,
                                       percutaneous approach.
02UG3JZ.............................  Supplement mitral valve with
                                       synthetic substitute,
                                       percutaneous approach.
02UH37Z.............................  Supplement pulmonary valve with
                                       autologous tissue substitute,
                                       percutaneous approach.
02UH38Z.............................  Supplement pulmonary valve with
                                       zooplastic tissue, percutaneous
                                       approach.
02UH3JZ.............................  Supplement pulmonary valve with
                                       synthetic substitute,
                                       percutaneous approach.
02UH3KZ.............................  Supplement pulmonary valve with
                                       nonautologous tissue substitute,
                                       percutaneous approach.
02UJ37G.............................  Supplement tricuspid valve created
                                       from right atrioventricular valve
                                       with autologous tissue
                                       substitute, percutaneous
                                       approach.
02UJ37Z.............................  Supplement tricuspid valve with
                                       autologous tissue substitute,
                                       percutaneous approach.
02UJ38G.............................  Supplement tricuspid valve created
                                       from right atrioventricular valve
                                       with zooplastic tissue,
                                       percutaneous approach.
02UJ38Z.............................  Supplement tricuspid valve with
                                       zooplastic tissue, percutaneous
                                       approach.
02UJ3JG.............................  Supplement tricuspid valve created
                                       from right atrioventricular valve
                                       with synthetic substitute,
                                       percutaneous approach.
02UJ3JZ.............................  Supplement tricuspid valve with
                                       synthetic substitute,
                                       percutaneous approach.

[[Page 19187]]

 
02UJ3KG.............................  Supplement tricuspid valve created
                                       from right atrioventricular valve
                                       with nonautologous tissue
                                       substitute, percutaneous
                                       approach.
02UJ3KZ.............................  Supplement tricuspid valve with
                                       nonautologous tissue substitute,
                                       percutaneous approach.
------------------------------------------------------------------------

    The ICD-10-PCS procedure codes describing a transcatheter cardiac 
valve replacement procedure are listed in the following table.

------------------------------------------------------------------------
           ICD-10-PCS code                        Description
------------------------------------------------------------------------
02RF37H.............................  Replacement of aortic valve with
                                       autologous tissue substitute,
                                       transapical, percutaneous
                                       approach.
02RF37Z.............................  Replacement of aortic valve with
                                       autologous tissue substitute,
                                       percutaneous approach.
02RF38H.............................  Replacement of aortic valve with
                                       zooplastic tissue, transapical,
                                       percutaneous approach.
02RF38Z.............................  Replacement of aortic valve with
                                       zooplastic tissue, percutaneous
                                       approach.
02RF3JH.............................  Replacement of aortic valve with
                                       synthetic substitute,
                                       transapical, percutaneous
                                       approach.
02RF3JZ.............................  Replacement of aortic valve with
                                       synthetic substitute,
                                       percutaneous approach.
02RF3KH.............................  Replacement of aortic valve with
                                       nonautologous tissue substitute,
                                       transapical, percutaneous
                                       approach.
02RF3KZ.............................  Replacement of aortic valve with
                                       nonautologous tissue substitute,
                                       percutaneous approach.
02RG37H.............................  Replacement of mitral valve with
                                       autologous tissue substitute,
                                       transapical, percutaneous
                                       approach.
02RG37Z.............................  Replacement of mitral valve with
                                       autologous tissue substitute,
                                       percutaneous approach.
02RG38H.............................  Replacement of mitral valve with
                                       zooplastic tissue, transapical,
                                       percutaneous approach.
02RG38Z.............................  Replacement of mitral valve with
                                       zooplastic tissue, percutaneous
                                       approach.
02RG3JH.............................  Replacement of mitral valve with
                                       synthetic substitute,
                                       transapical, percutaneous
                                       approach.
02RG3JZ.............................  Replacement of mitral valve with
                                       synthetic substitute,
                                       percutaneous approach.
02RG3KH.............................  Replacement of mitral valve with
                                       nonautologous tissue substitute,
                                       transapical, percutaneous
                                       approach.
02RG3KZ.............................  Replacement of mitral valve with
                                       nonautologous tissue substitute,
                                       percutaneous approach.
02RH37H.............................  Replacement of pulmonary valve
                                       with autologous tissue
                                       substitute, transapical,
                                       percutaneous approach.
02RH37Z.............................  Replacement of pulmonary valve
                                       with autologous tissue
                                       substitute, percutaneous
                                       approach.
02RH38H.............................  Replacement of pulmonary valve
                                       with zooplastic tissue,
                                       transapical, percutaneous
                                       approach.
02RH38Z.............................  Replacement of pulmonary valve
                                       with zooplastic tissue,
                                       percutaneous approach.
02RH3JH.............................  Replacement of pulmonary valve
                                       with synthetic substitute,
                                       transapical, percutaneous
                                       approach.
02RH3JZ.............................  Replacement of pulmonary valve
                                       with synthetic substitute,
                                       percutaneous approach.
02RH3KH.............................  Replacement of pulmonary valve
                                       with nonautologous tissue
                                       substitute, transapical,
                                       percutaneous approach.
02RH3KZ.............................  Replacement of pulmonary valve
                                       with nonautologous tissue
                                       substitute, percutaneous
                                       approach.
02RJ37H.............................  Replacement of tricuspid valve
                                       with autologous tissue
                                       substitute, transapical,
                                       percutaneous approach.
02RJ37Z.............................  Replacement of tricuspid valve
                                       with autologous tissue
                                       substitute, percutaneous
                                       approach.
02RJ38H.............................  Replacement of tricuspid valve
                                       with zooplastic tissue,
                                       transapical, percutaneous
                                       approach.
02RJ38Z.............................  Replacement of tricuspid valve
                                       with zooplastic tissue,
                                       percutaneous approach.
02RJ3JH.............................  Replacement of tricuspid valve
                                       with synthetic substitute,
                                       transapical, percutaneous
                                       approach.
02RJ3JZ.............................  Replacement of tricuspid valve
                                       with synthetic substitute,
                                       percutaneous approach.
02RJ3KH.............................  Replacement of tricuspid valve
                                       with nonautologous tissue
                                       substitute, transapical,
                                       percutaneous approach.
02RJ3KZ.............................  Replacement of tricuspid valve
                                       with nonautologous tissue
                                       substitute, percutaneous
                                       approach.
X2RF332.............................  Replacement of aortic valve using
                                       zooplastic tissue, rapid
                                       deployment technique,
                                       percutaneous approach, new
                                       technology group 2.
------------------------------------------------------------------------

    The requestor performed its own analyses, first comparing TMVR 
procedures (ICD-10-PCS procedure code 02UG3JZ) to other procedures 
currently assigned to MS-DRGs 228 and 229, as well as to the 
transcatheter cardiac valve replacement procedures in MS-DRGs 266 and 
267. We refer the reader to the ICD-10 MS-DRG Version 36 Definitions 
Manual for complete documentation of the logic for case assignment to 
MS-DRGs 228 and 229 (which is available via the internet on the CMS 
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html). 
According to the requestor, its findings indicate that TMVR is more 
closely aligned with MS-DRGs 266 and 267 than MS-DRGs 228 and 229 with 
regard to average length of stay and average [standardized] costs. The 
requestor also examined the impact of removing cases reporting a TMVR 
procedure (ICD-10-PCS procedure code 02UG3JZ) from MS-DRGs 228 and 229 
and adding those cases to MS-DRGs 266 and 267. The requestor noted this 
movement would have minimal impact to MS-DRGs 266 and 267 based on its 
analysis. In addition, the requestor stated that its request is in 
alignment with CMS' policy goal of creating and maintaining clinically 
coherent MS-DRGs.
    The requestor acknowledged that CMS has indicated in prior 
rulemaking that TMVR procedures are not clinically similar to 
endovascular cardiac valve replacement procedures, and the requestor 
agreed that they are distinct procedures. However, the requestor also 
believed that TMVR is more similar to the replacement procedures in MS-
DRGs 266 and 267 compared to the other procedures currently assigned to 
MS-DRGs 228 and 229. The requestor provided the following table of 
procedures in volume order (highest to lowest) to illustrate the 
clinical differences between TMVR procedures and other procedures 
currently assigned to MS-DRGs 228 and 229.

----------------------------------------------------------------------------------------------------------------
                                                                            ICD-10-PCS root
            Procedure                  Approach         Anatomy treated        operation       Implanted device
----------------------------------------------------------------------------------------------------------------
TMVR............................  Percutaneous......  Valves............  Supplement........  Substitute.
Destruction.....................  Open..............  Atria.............  Destruction.......  None.

[[Page 19188]]

 
Coronary Atherectomy............  Open..............  Coronary Artery...  Extirpation.......  None.
Insertion.......................  Percutaneous......  Atria or            Insertion.........  Pacemaker or
                                                       Ventricles.                             Intraluminal
                                                                                               Device.
Destruction.....................  Percutaneous......  Atria.............  Destructions......  None.
Structural Heart Repair.........  Open..............  Septum, Heart,      Repair............  None.
                                                       Chordae Tendinae,
                                                       or Papillary
                                                       Muscle.
Structural Heart Excision.......  Open..............  Septum, Atria,      Excision..........  None.
                                                       Ventricles,
                                                       Chordae Tendinae,
                                                       or Papillary
                                                       Muscle.
----------------------------------------------------------------------------------------------------------------

    The requestor noted that, among the procedures listed in the table, 
TMVR is the only procedure that involves treatment of a cardiac valve 
and is the only procedure that involves implanting a synthetic 
substitute.
    To illustrate the similarities between TMVR procedures and 
endovascular cardiac valve replacements in MS-DRGs 266 and 267, the 
requestor provided the following table.

----------------------------------------------------------------------------------------------------------------
                                                                            ICD-10-PCS root
            Procedure                  Approach         Anatomy treated        operation       Implanted device
----------------------------------------------------------------------------------------------------------------
TMVR............................  Percutaneous......  Valves............  Supplement........  Substitute.
Endovascular Cardiac Valve        Percutaneous......  Valves............  Replacement.......  Substitute.
 Replacement.
----------------------------------------------------------------------------------------------------------------

    The requestor noted that both TMVR procedures and endovascular 
cardiac valve replacements use a percutaneous approach, treat cardiac 
valves, and use an implanted device for purposes of improving the 
function of the specified valve. The requestor believed that the 
analyses support the request to group TMVR procedures with endovascular 
cardiac valve replacements from a resource perspective and an 
improvement to clinical coherence could be achieved because TMVR 
procedures are more similar to the endovascular cardiac valve 
replacements compared to the other procedures in MS-DRGs 228 and 229, 
where TMVR is currently assigned.
    As noted earlier in this section, the request also included the 
suggestion that CMS give consideration to reclassifying other 
endovascular cardiac valve repair with implant procedures to MS-DRGs 
266 and 267; specifically, endovascular cardiac valve repair with 
implant procedures involving the aortic, pulmonary, tricuspid and other 
non-TMVR mitral valve procedures that currently group to MS-DRGs 273 
and 274 or MS-DRGs 216, 217, 218, 219, 220 and 221. The requestor 
acknowledged that endovascular cardiac valve repair with implant 
procedures involving these other cardiac valves have lower volumes in 
comparison to the TMVR procedure (ICD-10-PCS procedure code 02UG3JZ), 
which makes analysis of these procedures a little more difficult. 
However, the requestor suggested that movement of these procedures to 
MS-DRGs 266 and 267 would enable the ability to maintain clinical 
coherence for all endovascular cardiac valve interventions. The 
requestor also stated that there is an anticipated increase in the 
volume of not only the TMVR procedure described by ICD-10-PCS procedure 
code 02UG3JZ (which has grown annually since the MitraClip[supreg] was 
approved for new technology add-on payment in FY 2015), but also for 
the other endovascular cardiac valve repair with implant procedures, 
such as those involving the tricuspid valve, which are currently under 
study in the United States and Europe. Based on this anticipated 
increase in volume for endovascular cardiac valve repair with implant 
procedures, the requestor believed that it would be advantageous to 
take this opportunity to restructure the MS-DRGs by moving all the 
endovascular cardiac valve repair with implant procedures to MS-DRGs 
266 and 267 with revised titles as noted previously, to improve 
clinical consistency beginning in FY 2020. The requestor further noted 
that while the requestor believes its request reflects the best 
approach for appropriate MS-DRG assignment for TMVR and other 
endovascular cardiac valve repair with implant procedures, the 
requestor understands that CMS may consider other alternatives.
    We analyzed claims data from the September 2018 update of the FY 
2018 MedPAR file for cases reporting ICD-10-PCS procedure code 02UG3JZ 
in MS-DRGs 228 and 229 as well as cases reporting one of the procedure 
codes listed above describing a transcatheter cardiac valve repair with 
implant procedure in MS-DRGs 216, 217, 218, 219, 220, 221, 273, and 
274. Our findings are shown in the tables below.

                     MS-DRGs for Transcatheter Cardiac Valve Repair With Implant Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 216--All cases...........................................           5,909              16         $70,435
MS-DRG 216--Cases with procedure codes for transcatheter cardiac              48            12.6          72,556
 valve repair...................................................
MS-DRG 217--All cases...........................................           2,166             9.4          47,299
MS-DRG 217--Cases with procedure codes for transcatheter cardiac              25             3.4          40,707
 valve repair...................................................
MS-DRG 218--All cases...........................................             268             6.8          39,501
MS-DRG 218--Cases with procedure codes for transcatheter cardiac               4             1.3          45,903
 valve repair...................................................
MS-DRG 219--All cases...........................................          15,105            10.9          55,423
MS-DRG 219--Cases with procedure codes for transcatheter cardiac              55             7.1          65,880
 valve repair...................................................

[[Page 19189]]

 
MS-DRG 220--All cases...........................................          15,889             6.6          38,313
MS-DRG 220--Cases with procedure codes for transcatheter cardiac              40               3          38,906
 valve repair...................................................
MS-DRG 221--All cases...........................................           2,652             4.7          33,577
MS-DRG 221--Cases with procedure codes for transcatheter cardiac              13             2.2          29,646
 valve repair...................................................
MS-DRG 228--All cases...........................................           5,583             9.2          46,613
MS-DRG 228--Cases with procedure code 02UG3JZ (Supplement mitral           1,688             5.6          49,569
 valve with synthetic substitute, percutaneous approach)........
MS-DRG 229--All cases...........................................           6,593             4.3          32,322
MS-DRG 229--Cases with procedure code 02UG3JZ (Supplement mitral           2,018             1.7          38,321
 valve with synthetic substitute, percutaneous approach)........
MS-DRG 273--All cases...........................................           7,785             6.9          27,200
MS-DRG 273--Cases with procedure codes for transcatheter cardiac               6             7.5          52,370
 valve repair...................................................
MS-DRG 274--All cases...........................................          20,434             2.3          22,771
MS-DRG 274--Cases with procedure codes for transcatheter cardiac               7             1.4          28,152
 valve repair...................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, we found a total of 5,909 cases for MS-DRG 
216 with an average length of stay of 16 days and average costs of 
$70,435. Of those 5,909 cases, there were 48 cases reporting a 
procedure code for a transcatheter cardiac valve repair with an average 
length of stay of 12.6 days and average costs of $72,556. We found a 
total of 2,166 cases for MS-DRG 217 with an average length of stay of 
9.4 days and average costs of $47,299. Of those 2,166 cases, there was 
a total of 25 cases reporting a procedure for a transcatheter cardiac 
valve repair with an average length of stay of 3.4 days and average 
costs of $40,707. We found a total of 268 cases for MS-DRG 218 with an 
average length of stay of 6.8 days and average costs of $39,501. Of 
those 268 cases, there were 4 cases reporting a procedure code for a 
transcatheter cardiac valve repair with an average length of stay of 
1.3 days and average costs of $45,903. We found a total of 15,105 cases 
for MS-DRG 219 with an average length of stay of 10.9 days and average 
costs of $55,423. Of those 15,105 cases, there were 55 cases reporting 
a procedure code for a transcatheter cardiac valve repair with an 
average length of stay of 7.1 days and average costs of $65,880. We 
found a total of 15,889 cases for MS-DRG 220 with an average length of 
stay of 6.6 days and average costs of $38,313. Of those 15,889 cases, 
there were 40 cases reporting a procedure code for a transcatheter 
cardiac valve repair with an average length of stay of 3 days and 
average costs of $38,906. We found a total of 2,652 cases for MS-DRG 
221 with an average length of stay of 4.7 days and average costs of 
$33,577. Of those 2,652 cases, there were 13 cases reporting a 
procedure code for a transcatheter cardiac valve repair with an average 
length of stay of 2.2 days and average costs of $29,646.
    For MS-DRG 228, we found a total of 5,583 cases with an average 
length of stay of 9.2 days and average costs of $46,613. Of those 5,583 
cases, there were 1,688 cases reporting ICD-10-PCS procedure code 
02UG3JZ (Supplement mitral valve with synthetic substitute, 
percutaneous approach) with an average length of stay of 5.6 days and 
average costs of $49,569. As noted previously, ICD-10-PCS procedure 
code 02UG3JZ is the only endovascular cardiac valve repair with implant 
procedure assigned to MS-DRGs 228 and 229. We found a total of 6,593 
cases for MS-DRG 229 with an average length of stay of 4.3 days and 
average costs of $32,322. Of those 6,593 cases, there were 2,018 cases 
reporting ICD-10-PCS procedure code 02UG3JZ with an average length of 
stay of 1.7 days and average costs of $38,321.
    For MS-DRG 273, we found a total of 7,785 cases with an average 
length of stay of 6.9 days and average costs of $27,200. Of those 7,785 
cases, there were 6 cases reporting a procedure code for a 
transcatheter cardiac valve repair with an average length of stay of 
7.5 days and average costs of $52,370. We found a total of 20,434 cases 
in MS-DRG 274 with an average length of stay of 2.3 days and average 
costs of $22,771. Of those 20,434 cases, there were 7 cases reporting a 
procedure code for a transcatheter cardiac valve repair with an average 
length of stay of 1.4 days and average costs of $28,152.
    We also analyzed cases reporting any one of the procedure codes 
listed above describing a transcatheter cardiac valve replacement 
procedure in MS-DRGs 266 and 267. Our findings are shown in the table 
below.

                         MS-DRGs for Transcatheter Cardiac Valve Replacement Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 266--All cases...........................................          15,079             5.6         $51,402
MS-DRG 267--All cases...........................................          20,845             2.4          41,891
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there was a total of 15,079 cases with an 
average length of stay of 5.6 days and average costs of $51,402 in MS-
DRG 266. For MS-DRG 267, there was a total of 20,845 cases with an 
average length of stay of 2.4 days and average costs of $41,891.
    As stated previously, the requestor noted that ICD-10-PCS procedure 
code 02UG3JZ describing a transcatheter mitral valve repair with 
implant procedure is the only endovascular cardiac valve intervention 
with implant procedure assigned to MS-DRGs 228 and 229. The data 
analysis shows that for the cases reporting procedure code 02UG3JZ in 
MS-DRGs 228 and 229, the average length of stay and average costs are 
aligned with the average length of stay and average costs of cases in 
MS-DRGs 266 and 267, respectively.
    The data also show that, for MS-DRGs 216, 217, 218, 219, 220, and 
221 and for

[[Page 19190]]

MS-DRG 274, the average length of stay for cases reporting a 
transcatheter cardiac valve with implant procedure is shorter than the 
average length of stay for all the cases in their assigned MS-DRG. For 
MS-DRG 273, the average length of stay for cases reporting a 
transcatheter cardiac valve with implant procedure is slightly longer 
(7.5 days versus 6.9 days). In addition, the average costs for the 
cases reporting a transcatheter cardiac valve with implant procedure 
are higher when compared to all the cases in their assigned MS-DRG with 
the exception of MS-DRG 217 ($40,707 versus $47,299) and MS-DRG 221 
($29,646 versus $33,577).
    Our clinical advisors continue to believe that transcatheter 
cardiac valve repair procedures are not the same as a transcatheter 
(endovascular) cardiac valve replacement. However, they agree with the 
requestor and, based on our data analysis, that these procedures are 
more clinically coherent in that they also describe endovascular 
cardiac valve interventions with implants and are similar in terms of 
average length of stay and average costs to cases in MS-DRGs 266 and 
267 when compared to other procedures in their current MS-DRG 
assignment. For these reasons, our clinical advisors agree that we 
should propose to reassign the endovascular cardiac valve repair 
procedures (supplement procedures) listed previously to the 
endovascular cardiac valve replacement MS-DRGs.
    We analyzed the impact of grouping the endovascular cardiac valve 
repair with implant (supplement) procedures with the endovascular 
cardiac valve replacement procedures. The following table reflects our 
findings for the proposed revised endovascular cardiac valve 
(supplement) procedures with the endovascular cardiac valve replacement 
MS-DRGs with a 2-way severity level split.

          Proposed Revised MS-DRGs for Endovascular Cardiac Valve Replacement and Supplement Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 266 (Endovascular Cardiac Valve Replacement and                    16,922             5.7         $51,564
 Supplement Procedures with MCC)................................
MS-DRG 267 (Endovascular Cardiac Valve Replacement and                    22,958             2.4         41,563.
 Supplement Procedures without MCC).............................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there was a total of 16,922 cases for the 
endovascular cardiac valve replacement and supplement procedures with 
MCC group, with an average length of stay of 5.7 days and average costs 
of $51,564. There was a total of 22,958 cases for the endovascular 
cardiac valve replacement and supplement procedures without MCC group, 
with an average length of stay of 2.4 days and average costs of 
$41,563. We applied the criteria to create subgroups for the two-way 
severity level split for the proposed revised MS-DRGs and found that 
all five criteria were met. For the proposed revised MS-DRGs, there is 
at least (1) 500 or more cases in the MCC group or in the without MCC 
subgroup; (2) 5 percent or more of the cases in the MCC group or in the 
without MCC subgroup; (3) a 20 percent difference in average costs 
between the MCC group and the without MCC group; (4) a $2,000 
difference in average costs between the MCC group and the without MCC 
group; and (5) a 3-percent reduction in cost variance, indicating that 
the proposed severity level splits increase the explanatory power of 
the base MS-DRG in capturing differences in expected cost between the 
proposed MS-DRG severity level splits by at least 3 percent and thus 
improve the overall accuracy of the IPPS payment system.
    During our review of the transcatheter cardiac valve repair 
(supplement) procedures in MS-DRGs 216, 217, 218, 219, 220, and 221, 
MS-DRGs 228 and 229, and MS-DRGs 273 and 274, our clinical advisors 
recommended that we also analyze the claims data to identify other 
(non-supplement) transcatheter (endovascular) procedures that involve 
the cardiac valves and are assigned to those same MS-DRGs to determine 
if additional modifications may be warranted, consistent with our 
ongoing efforts to refine the ICD-10 MS-DRGs.
    We analyzed the following ICD-10-PCS procedure codes that are 
currently assigned to MS-DRGs 216, 217, 218, 219, 220, and 221.

------------------------------------------------------------------------
           ICD-10-PCS code                        Description
------------------------------------------------------------------------
02QF3ZJ.............................  Repair aortic valve created from
                                       truncal valve, percutaneous
                                       approach.
02QF3ZZ.............................  Repair aortic valve, percutaneous
                                       approach.
02QG3ZE.............................  Repair mitral valve created from
                                       left atrioventricular valve,
                                       percutaneous approach.
02QG3ZZ.............................  Repair mitral valve, percutaneous
                                       approach.
02QH3ZZ.............................  Repair pulmonary valve,
                                       percutaneous approach.
02QJ3ZG.............................  Repair tricuspid valve created
                                       from right atrioventricular
                                       valve, percutaneous approach.
02QJ3ZZ.............................  Repair tricuspid valve,
                                       percutaneous approach.
02TH3ZZ.............................  Resection of pulmonary valve,
                                       percutaneous approach.
02VG3ZZ.............................  Restriction of mitral valve,
                                       percutaneous approach.
02WF38Z.............................  Revision of zooplastic tissue in
                                       aortic valve, percutaneous
                                       approach.
02WF3JZ.............................  Revision of synthetic substitute
                                       in aortic valve, percutaneous
                                       approach.
02WF3KZ.............................  Revision of nonautologous tissue
                                       substitute in aortic valve,
                                       percutaneous approach.
02WG37Z.............................  Revision of autologous tissue
                                       substitute in mitral valve,
                                       percutaneous approach.
02WG38Z.............................  Revision of zooplastic tissue in
                                       mitral valve, percutaneous
                                       approach.
02WG3JZ.............................  Revision of synthetic substitute
                                       in mitral valve, percutaneous
                                       approach.
02WG3KZ.............................  Revision of nonautologous tissue
                                       substitute in mitral valve,
                                       percutaneous approach.
02WH37Z.............................  Revision of autologous tissue
                                       substitute in pulmonary valve,
                                       percutaneous approach.
02WH38Z.............................  Revision of zooplastic tissue in
                                       pulmonary valve, percutaneous
                                       approach.
02WH3JZ.............................  Revision of synthetic substitute
                                       in pulmonary valve, percutaneous
                                       approach.
02WH3KZ.............................  Revision of nonautologous tissue
                                       substitute in pulmonary valve,
                                       percutaneous approach.
02WJ37Z.............................  Revision of autologous tissue
                                       substitute in tricuspid valve,
                                       percutaneous approach.

[[Page 19191]]

 
02WJ38Z.............................  Revision of zooplastic tissue in
                                       tricuspid valve, percutaneous
                                       approach.
02WJ3JZ.............................  Revision of synthetic substitute
                                       in tricuspid valve, percutaneous
                                       approach.
02WJ3KZ.............................  Revision of nonautologous tissue
                                       substitute in tricuspid valve,
                                       percutaneous approach.
------------------------------------------------------------------------

    We also analyzed ICD-10-PCS procedure code 02TH3ZZ (Resection of 
pulmonary valve, percutaneous approach) that is currently assigned to 
MS-DRGs 228 and 229. Lastly, we analyzed the following ICD-10-PCS 
procedure codes that are currently assigned to MS-DRGs 273 and 274.

------------------------------------------------------------------------
           ICD-10-PCS code                        Description
------------------------------------------------------------------------
025F3ZZ.............................  Destruction of aortic valve,
                                       percutaneous approach.
025G3ZZ.............................  Destruction of mitral valve,
                                       percutaneous approach.
025H3ZZ.............................  Destruction of pulmonary valve,
                                       percutaneous approach.
025J3ZZ.............................  Destruction of tricuspid valve,
                                       percutaneous approach.
027F34Z.............................  Dilation of aortic valve with drug-
                                       eluting intraluminal device,
                                       percutaneous approach.
027F3DZ.............................  Dilation of aortic valve with
                                       intraluminal device, percutaneous
                                       approach.
027F3ZZ.............................  Dilation of aortic valve,
                                       percutaneous approach.
027G34Z.............................  Dilation of mitral valve with drug-
                                       eluting intraluminal device,
                                       percutaneous approach.
027G3DZ.............................  Dilation of mitral valve with
                                       intraluminal device, percutaneous
                                       approach.
027G3ZZ.............................  Dilation of mitral valve,
                                       percutaneous approach.
027H34Z.............................  Dilation of pulmonary valve with
                                       drug-eluting intraluminal device,
                                       percutaneous approach.
027H3DZ.............................  Dilation of pulmonary valve with
                                       intraluminal device, percutaneous
                                       approach.
027H3ZZ.............................  Dilation of pulmonary valve,
                                       percutaneous approach.
027J34Z.............................  Dilation of tricuspid valve with
                                       drug-eluting intraluminal device,
                                       percutaneous approach.
027J3DZ.............................  Dilation of tricuspid valve with
                                       intraluminal device, percutaneous
                                       approach.
027J3ZZ.............................  Dilation of tricuspid valve,
                                       percutaneous approach.
02BF3ZZ.............................  Excision of aortic valve,
                                       percutaneous approach.
02BG3ZZ.............................  Excision of mitral valve,
                                       percutaneous approach.
02BH3ZZ.............................  Excision of pulmonary valve,
                                       percutaneous approach.
02BJ3ZZ.............................  Excision of tricuspid valve,
                                       percutaneous approach.
------------------------------------------------------------------------

    We analyzed claims data from the September 2018 update of the FY 
2018 MedPAR file for cases reporting any of the above listed procedure 
codes in MS-DRGs 216, 217, 218, 219, 220, and 221, MS-DRGs 228 and 229, 
and MS-DRGs 273 and 274. Our findings are shown in the following 
tables. We note that there were no cases found in MS-DRGs 228 and 229 
reporting ICD-10-PCS procedure code 02TH3ZZ (Resection of pulmonary 
valve, percutaneous approach).

                            Other Cardiac Valve Procedures in MS-DRGs 216 Through 221
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
        ICD-10-PCS code                    Description            times reported      of stay      Average costs
----------------------------------------------------------------------------------------------------------------
02QF3ZZ........................  Repair aortic valve,                         58             9.7         $33,588
                                  percutaneous approach.
02QG3ZE........................  Repair mitral valve created                   4             1.3          38,680
                                  from left atrioventricular
                                  valve, percutaneous approach.
02QG3ZZ........................  Repair mitral valve,                         40             3.4          30,160
                                  percutaneous approach.
02QH3ZZ........................  Repair pulmonary valve,                       1               1          33,014
                                  percutaneous approach.
02QJ3ZG........................  Repair tricuspid valve created                1               9          51,294
                                  from right atrioventricular
                                  valve, percutaneous approach.
02QJ3ZZ........................  Repair tricuspid valve,                      15               5          25,208
                                  percutaneous approach.
02VG3ZZ........................  Restriction of mitral valve,                 11             8.1          53,798
                                  percutaneous approach.
02WF38Z........................  Revision of zooplastic tissue                26             8.9          61,124
                                  in aortic valve, percutaneous
                                  approach.
02WF3JZ........................  Revision of synthetic                        37             7.1          26,605
                                  substitute in aortic valve,
                                  percutaneous approach.
02WF3KZ........................  Revision of nonautologous                     2               1          69,030
                                  tissue substitute in aortic
                                  valve, percutaneous approach.
02WG38Z........................  Revision of zooplastic tissue                 2             7.5          16,982
                                  in mitral valve, percutaneous
                                  approach.
02WG3JZ........................  Revision of synthetic                        31             7.3          28,682
                                  substitute in mitral valve,
                                  percutaneous approach.
02WH3JZ........................  Revision of synthetic                         1               6          30,340
                                  substitute in pulmonary valve,
                                  percutaneous approach.
02WJ3JZ........................  Revision of synthetic                         1               3          14,145
                                  substitute in tricuspid valve,
                                  percutaneous approach.
                                                                 -----------------------------------------------
    Total......................  ...............................             230             7.1          34,968
----------------------------------------------------------------------------------------------------------------


                              Other Cardiac Valve Procedures in MS-DRGs 273 and 274
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
        ICD-10-PCS code                    Description            times reported      of stay      Average costs
----------------------------------------------------------------------------------------------------------------
025F3ZZ........................  Destruction of aortic valve,                  6             4.7         $11,130
                                  percutaneous approach.

[[Page 19192]]

 
025J3ZZ........................  Destruction of tricuspid valve,              21             3.9          18,320
                                  percutaneous approach.
027F34Z........................  Dilation of aortic valve with                 1              16          53,786
                                  drug-eluting intraluminal
                                  device, percutaneous approach.
027F3DZ........................  Dilation of aortic valve with                 5             8.4          20,951
                                  intraluminal device,
                                  percutaneous approach.
027F3ZZ........................  Dilation of aortic valve,                 1,720             8.6          25,265
                                  percutaneous approach.
027G3ZZ........................  Dilation of mitral valve,                    86             6.4          19,791
                                  percutaneous approach.
027H3ZZ........................  Dilation of pulmonary valve,                  5             3.8          10,506
                                  percutaneous approach.
02BJ3ZZ........................  Excision of tricuspid valve,                  1               4          30,843
                                  percutaneous approach.
                                                                 -----------------------------------------------
    Total......................  ...............................           1,845             8.4          24,851
----------------------------------------------------------------------------------------------------------------

    We found that the overall frequency with which cases reporting at 
least one of the above ICD-10-PCS procedure codes were reflected in the 
claims data was 2,075 times with an average length of stay of 8.5 days 
and average costs of $27,838. ICD-10-PCS procedure code 027F3ZZ 
(Dilation of aortic valve, percutaneous approach) had the highest 
frequency of 1,720 times with an average length of stay of 8.6 days and 
average costs of $25,265. We also found that cases reporting ICD-10-PCS 
procedure code 02WF3KZ (Revision of nonautologous tissue substitute in 
aortic valve, percutaneous approach) had the highest average costs of 
$69,030 with an average length of stay of 1 day. While not displayed 
above, we also note that, of the 7,785 cases found in MS-DRG 273, from 
the remaining procedure codes describing procedures other than those 
performed on a cardiac valve, there were 4,920 cases reporting ICD-10-
PCS procedure code 02583ZZ (Destruction of conduction mechanism, 
percutaneous approach) with an average length of stay of 6.6 days and 
average costs of $26,800, representing approximately 63 percent of all 
the cases in that MS-DRG. In addition, of the 20,434 cases in MS-DRG 
274, from the remaining procedure codes describing procedures other 
than those performed on a cardiac valve, there were 9,268 cases 
reporting ICD-10-PCS procedure code 02583ZZ (Destruction of conduction 
mechanism, percutaneous approach) with an average length of stay of 3.2 
days and average costs of $21,689, and 8,775 cases reporting ICD-10-PCS 
procedure code 02L73DK (Occlusion of left atrial appendage with 
intraluminal device, percutaneous approach) with an average length of 
stay of 1.2 days and average costs of $25,476, representing 
approximately 88 percent of all the cases in that MS-DRG.
    After analyzing the claims data to identify the overall frequency 
with which the other (non-supplement) ICD-10-PCS procedure codes 
describing a transcatheter (endovascular) cardiac valve procedure were 
reported and assigned to MS-DRGs 216, 217, 218, 219, 220, and 221, MS-
DRGs 228 and 229, and MS-DRGs 273 and 274, our clinical advisors 
suggested that these other cardiac valve procedures should be grouped 
together because the procedure codes are describing procedures 
performed on a cardiac valve with a percutaneous (transcatheter/
endovascular) approach, they can be performed in a cardiac 
catheterization laboratory, they require that the interventional 
cardiologist have special additional training and skills, and often 
require additional ancillary procedures and equipment, such as trans-
esophageal echocardiography, be available at the time of the procedure. 
Our clinical advisors noted that these procedures are generally 
considered more complicated and resource-intensive, and form a 
clinically coherent group. They also noted that the majority of 
procedures currently being reported in MS-DRGs 273 and 274 are 
procedures other than those involving a cardiac valve and, therefore, 
believed that reassignment of the other (non-supplement) ICD-10-PCS 
procedure codes describing a transcatheter (endovascular) cardiac valve 
procedure would have minimal impact to those MS-DRGs.
    We then analyzed the impact of grouping the other transcatheter 
cardiac valve procedures. The following table reflects our findings for 
the suggested other endovascular cardiac valve procedures MS-DRGs with 
a 2-way severity level split.

                        Suggested MS-DRGs for Other Endovascular Cardiac Valve Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG XXX (Other Endovascular Cardiac Valve Procedures with               1,527             9.7         $27,801
 MCC)...........................................................
MS-DRG XXX (Other Endovascular Cardiac Valve Procedures without              560             3.9          17,027
 MCC)...........................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, there were 1,527 cases for the other 
endovascular cardiac valve procedures with MCC group, with an average 
length of stay of 9.7 days and average costs of $27,801. There was a 
total of 560 cases for the other endovascular cardiac valve procedures 
without MCC group, with an average length of stay of 3.9 days and 
average costs of $17,027. We applied the criteria to create subgroups 
for the two-way severity level split for the suggested MS-DRGs and 
found that all five criteria were met. For the suggested MS-DRGs, there 
is at least (1) 500 or more cases in the MCC group or in the without 
MCC subgroup; (2) 5 percent or more of the cases in the MCC group or in 
the without MCC subgroup; (3) a 20 percent difference in average costs 
between the MCC group and the without MCC group; (4) at least a $2,000 
difference in average costs between the MCC group and the without MCC 
group; and (5) a 3-percent reduction in cost variance, indicating that 
the proposed severity level splits increase the explanatory power of 
the base MS-DRG in capturing differences in expected cost between the 
proposed MS-DRG severity level splits by at least 3 percent and thus 
improve the overall accuracy of the IPPS payment system.

[[Page 19193]]

    For FY 2020, we are proposing to modify the structure of MS-DRGs 
266 and 267 by reassigning the procedure codes describing a 
transcatheter cardiac valve repair (supplement) procedure from the list 
above and to revise the title of these MS-DRGs. We are proposing to 
revise the title of MS-DRGs 266 from ``Endovascular Cardiac Valve 
Replacement with MCC'' to ``Endovascular Cardiac Valve Replacement and 
Supplement Procedures with MCC'' and the title of MS-DRG 267 from 
``Endovascular Cardiac Valve Replacement without MCC'' to 
``Endovascular Cardiac Valve Replacement and Supplement Procedures 
without MCC'', to reflect the proposed restructuring. We also are 
proposing to create two new MS-DRGs with a two-way severity level split 
for the remaining (non-supplement) transcatheter cardiac valve 
procedures listed above. These proposed new MS-DRGs are proposed new 
MS-DRG 319 (Other Endovascular Cardiac Valve Procedures with MCC) and 
proposed new MS-DRG 320 (Other Endovascular Cardiac Valve Procedures 
without MCC), which would also conform with the severity level split of 
MS-DRGs 266 and 267. We are proposing to reassign the procedure codes 
from their current MS-DRGs to the proposed new MS-DRGs.
b. Revision of Pacemaker Lead
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41189 through 
41190), we finalized our proposal to maintain the Version 35 ICD-10 MS-
DRG GROUPER logic for the Version 36 ICD-10 MS-DRG GROUPER logic within 
MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device 
Replacement with MCC, with CC and without CC/MCC, respectively) so that 
cases reporting any of the ICD-10-PCS procedure codes describing 
procedures involving pacemakers and related procedures and associated 
devices would continue to be assigned to those MS-DRGs under MDC 5 
because they are reported when a pacemaker device requires revision and 
they have a corresponding circulatory system diagnosis. We also 
discussed and finalized the addition of ICD-10-PCS procedure codes 
02H63MZ (Insertion of cardiac lead into right atrium, percutaneous 
approach) and 02H73MZ (Insertion of cardiac lead into left atrium, 
percutaneous approach) to the GROUPER logic as non-O.R. procedures that 
impact the MS-DRG assignment when reported as stand-alone codes for the 
insertion of a pacemaker lead within MS-DRGs 260, 261, and 262 in 
response to a commenter's suggestion.
    After publication of the FY 2019 IPPS/LTCH PPS final rule, it was 
brought to our attention that ICD-10-PCS procedure code 02H60JZ 
(Insertion of pacemaker lead into right atrium, open approach) was 
inadvertently omitted from the GROUPER logic for MS-DRGs 260, 261, and 
262. This procedure code is designated as a non-O.R. procedure. 
However, we note that, within MDC 5, in MS-DRGs 242, 243, and 244, this 
procedure code is part of a code pair that requires another procedure 
code (cluster). We are proposing to add procedure code 02H60JZ to the 
list of non-O.R. procedures that would impact MS-DRGs 260, 261, and 262 
when reported as a stand-alone procedure code, consistent with ICD-10-
PCS procedure codes 02H63JZ (Insertion of pacemaker lead into right 
atrium, percutaneous approach) and 02H64JZ (Insertion of pacemaker lead 
into right atrium, percutaneous endoscopic approach), which also 
describe the insertion of a pacemaker lead into the right atrium. If 
the proposal is finalized, we would make conforming changes to the ICD-
10 MS-DRG Definitions Manual Version 37.
6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and 
Connective Tissue)
a. Knee Procedures With Principal Diagnosis of Infection
    We received a request to add ICD-10-CM diagnosis codes M00.9 
(Pyogenic arthritis, unspecified) and A54.42 (Gonococcal arthritis) to 
the list of principal diagnoses for MS-DRGs 485, 486, and 487 (Knee 
Procedure with Principal Diagnosis of Infection with MCC, with CC, and 
without CC/MCC, respectively) in MDC 8. The requestor believed that 
adding diagnosis code M00.9 is necessary to accurately recognize knee 
procedures that are performed with a principal diagnosis of infectious 
arthritis, including those procedures performed when the specific 
infectious agent is unknown. The requestor stated that, currently, only 
diagnosis codes describing infections caused by a specific bacterium 
are included in MS-DRGs 485, 486, and 487. The requestor stated that 
additional diagnosis codes such as M00.9 are indicated for knee 
procedures performed as a result of infection because pyogenic 
arthritis can reasonably be diagnosed based on the patient's history 
and clinical symptoms, even if a bacterial infection is not confirmed 
by culture. For example, the requestor noted that a culture may present 
negative for infection if a patient has been treated with antibiotics 
prior to knee surgery, but other clinical signs may indicate a 
principal diagnosis of joint infection. In the absence of a culture 
identifying an infection by a specific bacterium, the requestor stated 
that ICD-10-CM diagnosis code M00.09 should also be included as a 
principal diagnosis in MS-DRGs 485, 486, and 487.
    The requestor also asserted that ICD-10-CM diagnosis code A54.42 
should be added to the list of principal diagnoses for MS-DRGs 485, 
486, and 487 because gonococcal arthritis is also an infectious type of 
arthritis that can be an indication for a knee procedure.
    Currently, cases reporting ICD-10-CM diagnosis codes M00.9 or 
A54.42 as a principal diagnosis group to MS-DRGs 488 and 489 (Knee 
Procedures without Principal Diagnosis of Infection with and without 
CC/MCC, respectively) when a knee procedure is also reported on the 
claim.
    We analyzed claims data from the September 2018 update of the FY 
2018 MedPAR file for ICD-10-CM diagnosis codes M00.9 and A54.42, which 
are currently assigned to medical MS-DRGs 548, 549, and 550 (Septic 
Arthritis with MCC, with CC, and without CC/MCC, respectively) in the 
absence of a surgical procedure. Our findings are shown in the 
following table.

                  MS-DRGs for Septic Arthritis With Pyogenic Arthritis or Gonococcal Arthritis
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 548--All cases...........................................             601             8.1         $13,974
MS-DRG 548--Cases with pyogenic arthritis as principal diagnosis             312             7.6          13,177
MS-DRG 549--All cases...........................................           1,169             5.0           8,547
MS-DRG 549--Cases with pyogenic arthritis as principal diagnosis             686             4.7           7,976
MS-DRG 549--Cases with gonococcal arthritis as principal                       2             8.0           7,070
 diagnosis......................................................
MS-DRG 550--All cases...........................................             402             3.5           6,317

[[Page 19194]]

 
MS-DRG 550--Cases with pyogenic arthritis as principal diagnosis             260             3.2           6,209
MS-DRG 550--Cases with gonococcal arthritis as principal                       3             2.3           3,929
 diagnosis......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, we found a total of 2,172 cases in MS-DRGs 
548, 549, and 550. A total of 601 cases were reported in MS-DRG 548, 
with an average length of stay of 8.1 days and average costs of 
$13,974. Cases in MS-DRG 548 with a principal diagnosis of pyogenic 
arthritis (ICD-10-CM diagnosis code M00.9) accounted for 312 of these 
601 cases, and reported an average length of stay of 7.6 days and 
average costs of $13,177. None of the cases in MS-DRG 548 had a 
principal diagnosis of gonococcal arthritis (ICD-10-CM diagnosis code 
A54.42).
    The total number of cases reported in MS-DRG 549 was 1,169, with an 
average length of stay of 5 days and average costs of $8,547. Within 
this MS-DRG, 686 cases had a principal diagnosis described by ICD-10-CM 
diagnosis code M00.9, with an average length of stay of 4.7 days and 
average costs of $7,976. Two of the cases reported in MS-DRG 549 had a 
principal diagnosis described by ICD-10-CM diagnosis code A54.42. These 
2 cases had an average length of stay of 8 days and average costs of 
$7,070.
    The total number of cases reported in MS-DRG 550 was 402, with an 
average length of stay of 3.5 days and average costs of $6,317. Within 
this MS-DRG, 260 cases had a principal diagnosis described by ICD-10-CM 
diagnosis code M00.9 with an average length of stay of 3.2 days and 
average costs of $6,209. Three of the cases reported in MS-DRG 550 had 
a principal diagnosis described by ICD-10-CM diagnosis code A54.42. 
These 3 cases had an average length of stay of 2.3 days and average 
costs of $3,929.
    In summary, for MS-DRGs 548, 549, and 550, there were 1,258 cases 
that reported ICD-10-CM diagnosis code M00.9 as the principal diagnosis 
and 5 cases that reported ICD-10-CM diagnosis code A54.42 as the 
principal diagnosis. We note that, overall, our data analysis suggests 
that the MS-DRG assignment for cases reporting ICD-10-CM diagnosis 
codes M00.9 and A54.42 is appropriate based on the average costs and 
average length of stay. However, it is unclear how many of these cases 
involved infected knee joints because neither ICD-10-CM diagnosis code 
M00.9 nor A54.42 is specific to the knee. We then analyzed claims data 
for MS-DRGs 485, 486, and 487 (Knee Procedures with Principal Diagnosis 
of Infection with MCC, with CC, and without CC/MCC, respectively) and 
for MS-DRGs 488 and 489 (Knee Procedures without Principal Diagnosis of 
Infection with and without CC/MCC, respectively). For MS-DRGs 488 and 
489, we also analyzed claims data for cases reporting a knee procedure 
with ICD-10-CM diagnosis code M00.9 or A54.42 as a principal diagnosis, 
as these are the MS-DRGs to which such cases would currently group. Our 
findings are shown in the following table.

                             MS-DRGs for Knee Procedures With and Without Infection
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 485--All cases...........................................           1,021             9.7         $23,980
MS-DRG 486--All cases...........................................           2,260               6          16,060
MS-DRG 487--All cases...........................................             614             4.2          12,396
MS-DRG 488--All cases...........................................           2,857             4.8          14,197
MS-DRG 488--Cases with pyogenic arthritis as principal diagnosis             524             7.1          16,894
MS-DRG 489--All cases...........................................           2,416             2.4           9,217
MS-DRG 489--Cases with pyogenic arthritis as principal diagnosis             195             4.1           9,526
MS-DRG 489--Cases with gonococcal arthritis as principal                       1               8          10,810
 diagnosis......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, we found a total of 1,021 cases reported in 
MS-DRG 485, with an average length of stay of 9.7 days and average 
costs of $23,980. We found a total of 2,260 cases reported in MS-DRG 
486, with an average length of stay of 6.0 days and average costs of 
$16,060. The total number of cases reported in MS-DRG 487 was 614, with 
an average length of stay of 4.2 days and average costs of $12,396. For 
MS-DRG 488, we found a total of 2,857 cases with an average length of 
stay of 4.8 days and average costs of $14,197. Of these 2,857 cases, we 
found 524 cases that reported a principal diagnosis of pyogenic 
arthritis (ICD-10-CM diagnosis code M00.9), with an average length of 
stay of 7.1 days and average costs of $16,894. There were no cases 
found that reported a principal diagnosis of gonococcal arthritis (ICD-
10-CM diagnosis code A54.42). For MS-DRG 489, we found a total of 2,416 
cases with an average length of stay of 2.4 days and average costs of 
$9,217. Of these 2,416 cases, we found 195 cases that reported a 
principal diagnosis of pyogenic arthritis (ICD-10-CM diagnosis code 
M00.9), with an average length of stay of 4.1 days and average costs of 
$9,526. We found 1 case that reported a principal diagnosis of 
gonococcal arthritis (ICD-10-CM diagnosis code A54.42) in MS-DRG 489, 
with an average length of stay of 8 days and average costs of $10,810.
    Upon review of the data, we noted that the average costs and 
average length of stay for cases reporting a principal diagnosis of 
pyogenic arthritis (ICD-10-CM diagnosis code M00.9) in MS-DRG 488 are 
higher than the average costs and average length of stay for all cases 
in MS-DRG 488. We found similar results for MS-DRG 489 for the cases 
reporting diagnosis code M00.9 or A54.42 as the principal diagnosis.
    As stated earlier, the requestor recommended that ICD-10-CM 
diagnosis codes M00.9 and A54.42 be added to the list of principal 
diagnoses in MS-DRGs 485, 486, and 487 to recognize knee procedures 
that are performed with a principal diagnosis of an infectious type of 
arthritis. Because these diagnosis codes are not specific to the knee 
in the code description, we

[[Page 19195]]

examined the ICD-10-CM Alphabetic Index to review the entries that 
refer and correspond to these diagnosis codes. Specifically, we 
searched the Index for codes M00.9 and A54.42 and found the following 
entries.
[GRAPHIC] [TIFF OMITTED] TP03MY19.000

    Our clinical advisors agreed that the results of our ICD-10-CM 
Alphabetic Index review combined with the data analysis results support 
the addition of ICD-10-CM diagnosis code M00.9 to the list of principal 
diagnoses of infection for MS-DRGs 485, 486, and 487. The entries for 
diagnosis code M00.9 include infection of the knee, and as discussed 
above, in our data analysis, we found cases reporting ICD-10-CM 
diagnosis code M00.9 as a principal diagnosis in MS-DRGs 488 and 489, 
indicating that knee procedures are, in fact, being performed for an 
infectious arthritis of the knee. In addition, the average costs for 
cases reporting a principal diagnosis code of pyogenic arthritis (ICD-
10-CM diagnosis code M00.9) in MS-DRG 488 are similar to the average 
costs of cases in MS-DRG 486 ($16,894 and $16,060, respectively). 
Because MS-DRG 488 includes cases with a CC or an MCC, we reviewed how 
many of the 524 cases reporting a principal diagnosis code of pyogenic 
arthritis (ICD-10-CM diagnosis code M00.9) were reported with a CC or 
an MCC. We found that there were 361 cases reporting a CC with an 
average length of stay of 6 days and average costs of $14,092 and 163 
cases reporting an MCC with an average length of stay of 9.5 days and 
average costs of $23,100. Therefore, the cases in MS-DRG 488 reporting 
a principal diagnosis code of pyogenic arthritis (ICD-10-CM diagnosis 
code M00.9) with an MCC have average costs that are consistent with the 
average costs of cases in MS-DRG 485 ($23,100 and $23,980, 
respectively), and the cases with a CC have average costs that are 
consistent with the average costs of cases in MS-DRG 486 ($14,092 and 
$16,060, respectively), as noted above.

[[Page 19196]]

We also note that the average length of stay for cases reporting a 
principal diagnosis code of pyogenic arthritis (ICD-10-CM diagnosis 
code M00.9) with an MCC in MS-DRG 488 is similar to the average length 
of stay for cases in MS-DRG 485 (9.5 days and 9.7 days, respectively), 
and the cases with a CC have an average length of stay that is 
equivalent to the average length of stay for cases in MS-DRG 486 (6 
days and 6 days, respectively). We further note that the average length 
of stay for cases reporting a principal diagnosis code of pyogenic 
arthritis (ICD-10-CM diagnosis code M00.9) in MS-DRG 489 is similar to 
the average length of stay for cases in MS DRG 487 (4.1 days and 4.2 
days, respectively). Lastly, the average costs for cases reporting a 
principal diagnosis code of pyogenic arthritis (ICD-10-CM diagnosis 
code M00.9) in MS-DRG 489 are consistent with the average costs for 
cases in MS-DRG 487 ($9,526 and $12,396, respectively), with a 
difference of $2,870. For these reasons, we are proposing to add ICD-
10-CM diagnosis code M00.9 to the list of principal diagnosis codes for 
MS-DRGs 485, 486, and 487.
    Our clinical advisors did not support the addition of ICD-10-CM 
diagnosis code A54.42 to the list of principal diagnosis codes for MS-
DRGs 485, 486, and 487 because ICD-10-CM diagnosis code A54.42 is not 
specifically indexed to include the knee or any infection in the knee. 
Therefore, we are not proposing to add ICD-10-CM diagnosis code A54.42 
to the list of principal diagnosis codes for these MS-DRGs.
    Upon review of the existing list of principal diagnosis codes for 
MS-DRGs 485, 486, and 487, our clinical advisors recommended that we 
review the following ICD-10-CM diagnosis codes currently included on 
the list of principal diagnosis codes because the codes are not 
specific to the knee.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
M86.9.....................  Osteomyelitis, unspecified.
T84.50XA..................  Infection and inflammatory reaction due to
                             unspecified internal joint prosthesis,
                             initial encounter.
T84.51XA..................  Infection and inflammatory reaction due to
                             internal right hip prosthesis, initial
                             encounter.
T84.52XA..................  Infection and inflammatory reaction due to
                             internal left hip prosthesis, initial
                             encounter.
T84.59XA..................  Infection and inflammatory reaction due to
                             other internal joint prosthesis, initial
                             encounter.
T84.60XA..................  Infection and inflammatory reaction due to
                             internal fixation device of unspecified
                             site, initial encounter.
T84.63XA..................  Infection and inflammatory reaction due to
                             internal fixation device of spine, initial
                             encounter.
T84.69XA..................  Infection and inflammatory reaction due to
                             internal fixation device of other site,
                             initial encounter.
------------------------------------------------------------------------

    These ICD-10-CM diagnosis codes are currently assigned to medical 
MS-DRGs 559, 560, and 561 (Aftercare, Musculoskeletal System and 
Connective Tissue with MCC, with CC, and without CC/MCC, respectively) 
within MDC 8 in the absence of a surgical procedure. Similar to the 
process described above, we examined the ICD-10-CM Alphabetic Index to 
review the entries that refer and correspond to the diagnosis codes 
shown in the table above. We found the following entries.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Index entries referring to M86.9: Osteomyelitis (general) (infective)
 (localized) (neonatal) (purulent) (septic) (staphylococcal)
 (streptococcal) (suppurative) (with periostitis).
Index entries referring to T84.50XA:Complication(s) (from) (of) > joint
 prosthesis, internal > infection or inflammation Infection, infected,
 infective (opportunistic) > joint NEC > due to internal joint
 prosthesis.
Index entries referring to T84.51XA: Infection, infected, infective
 (opportunistic) > hip (joint) NEC > due to internal joint prosthesis >
 right.
Index entries referring to T84.52XA: Infection, infected, infective
 (opportunistic) > hip (joint) NEC > due to internal joint prosthesis >
 left.
Index entries referring to T84.59XA: Complication(s) (from) (of) > joint
 prosthesis, internal > infection or inflammation > specified joint NEC
 Infection, infected, infective (opportunistic) > shoulder (joint) NEC >
 due to internal joint prosthesis.
Index entries referring to T84.60XA: Complication(s) (from) (of) >
 fixation device, internal (orthopedic) > infection and inflammation.
Index entries referring to T84.63XA: Complication(s) (from) (of) >
 fixation device, internal (orthopedic) > infection and inflammation >
 spine.
Index entries referring to T84.69XA: Complication(s) (from) (of) >
 fixation device, internal (orthopedic) > infection and inflammation >
 specified site NEC.
------------------------------------------------------------------------

    The Index entries for the ICD-10-CM diagnosis codes listed above 
reflect terms relating to an infection. However, none of the entries is 
specific to the knee. In addition, we note that there are other 
diagnosis codes in the subcategory T84.5- series (Infection and 
inflammatory reaction due to internal joint prosthesis) that are 
specific to the knee. For example, ICD-10-CM diagnosis code T84.53X- 
(Infection and inflammatory reaction due to internal right knee 
prosthesis) or ICD-10-CM diagnosis code T84.54X- (Infection and 
inflammatory reaction due to internal left knee prosthesis) with the 
appropriate 7th digit character to identify initial encounter, 
subsequent encounter or sequela, would be reported to identify a 
documented infection of the right or left knee due to an internal 
prosthesis. We further note that these ICD-10-CM diagnosis codes 
(T84.53X- and T84.54X-) with the 7th character ``A'' for initial 
encounter are currently already in the list of principal diagnosis 
codes for MS-DRGs 485, 486, and 487.
    Our clinical advisors support the removal of the above ICD-10-CM 
diagnosis codes from the list of principal diagnosis codes for MS-DRGs 
485, 486, and 487 because they are not specifically indexed to include 
an infection of the knee and there are other diagnosis codes in the 
subcategory T84.5- series that uniquely identify an infection and 
inflammatory reaction of the right or left knee due to an internal 
prosthesis as noted above.
    We also analyzed claims data for MS-DRGs 485, 486 and 487 to 
identify cases reporting one of the above listed ICD-10-CM diagnosis 
codes not specific to the knee as a principal diagnosis. Our findings 
are shown in the following table.

[[Page 19197]]



----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 485--Cases reporting principal diagnosis code not                      13            11.2         $30,765
 specific to the knee...........................................
MS-DRG 486--Cases reporting principal diagnosis code not                      43             6.5          15,837
 specific to the knee...........................................
MS-DRG 487--Cases reporting principal diagnosis code not                       7             2.6          11,362
 specific to the knee...........................................
----------------------------------------------------------------------------------------------------------------

    For MS-DRG 485, we found 13 cases reporting one of the diagnosis 
codes not specific to the knee as a principal diagnosis with an average 
length of stay of 11.2 days and average costs of $30,765. For MS-DRG 
486, we found 43 cases reporting one of the diagnosis codes not 
specific to the knee as a principal diagnosis with an average length of 
stay of 6.5 days and average costs of $15,837. For MS-DRG 487, we found 
7 cases reporting one of the diagnosis codes not specific to the knee 
as a principal diagnosis with an average length of stay of 2.6 days and 
average costs of $11,362.
    Overall, for MS-DRGs 485, 486, and 487, there were a total of 63 
cases reporting one of the ICD-10-CM diagnosis codes not specific to 
the knee as a principal diagnosis with an average length of stay of 7 
days and average costs of $18,421. Of those 63 cases, there were 32 
cases reporting a principal diagnosis code from the ICD-10-CM 
subcategory T84.5-series (Infection and inflammatory reaction due to 
internal joint prosthesis); 23 cases reporting a principal diagnosis 
code from the ICD-10-CM subcategory T84.6-series (Infection and 
inflammatory reaction due to internal fixation device), with 22 of the 
23 cases reporting ICD-10-CM diagnosis code T84.69XA (Infection and 
inflammatory reaction due to internal fixation device of other site, 
initial encounter) and 1 case reporting ICD-10-CM diagnosis code 
T84.63XA (Infection and inflammatory reaction due to internal fixation 
device of spine, initial encounter); and 8 cases reporting ICD-10-CM 
diagnosis code M86.9 (Osteomyelitis, unspecified) as a principal 
diagnosis.
    Our clinical advisors believe that there may have been coding 
errors among the 63 cases reporting a principal diagnosis of infection 
not specific to the knee. For example, 32 cases reported a principal 
diagnosis code from the ICD-10-CM subcategory T84.5-series (Infection 
and inflammatory reaction due to internal joint prosthesis) that was 
not specific to the knee and, as stated previously, there are other 
codes in this subcategory that uniquely identify an infection and 
inflammatory reaction of the right or left knee due to an internal 
prosthesis.
    Based on the results of our claims analysis and input from our 
clinical advisors, we are proposing to remove the following ICD-10-CM 
diagnosis codes that do not describe an infection of the knee from the 
list of principal diagnosis codes for MS-DRGs 485, 486, and 487: M86.9; 
T84.50XA; T84.51XA; T84.52XA; T84.59XA; T84.60XA; T84.63XA; and 
T84.69XA. We are not proposing to change the current assignment of 
these diagnosis codes in MS-DRGs 559, 560, and 561.
    In addition, our clinical advisors recommended that we add the 
following ICD-10-CM diagnosis codes as principal diagnosis codes for 
MS-DRGs 485, 486, and 487 because they are specific to the knee and 
describe an infection.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
A18.02....................  Tuberculous arthritis of other joints.
M01.X61...................  Direct infection of right knee in infectious
                             and parasitic diseases classified
                             elsewhere.
M01.X62...................  Direct infection of left knee in infectious
                             and parasitic diseases classified
                             elsewhere.
M01.X69...................  Direct infection of unspecified knee in
                             infectious and parasitic diseases
                             classified elsewhere.
M71.061...................  Abscess of bursa, right knee.
M71.062...................  Abscess of bursa, left knee.
M71.069...................  Abscess of bursa, unspecified knee.
M71.161...................  Other infective bursitis, right knee.
M71.162...................  Other infective bursitis, left knee.
M71.169...................  Other infective bursitis, unspecified knee.
------------------------------------------------------------------------

    ICD-10-CM diagnosis code A18.02 (Tuberculous arthritis of other 
joints) is currently assigned to medical MS-DRGs 548, 549, and 550 
(Septic Arthritis with MCC, with CC, and without CC/MCC, respectively) 
within MDC 8 and MS-DRGs 974, 975, and 976 (HIV with Major Related 
Condition with MCC, with CC, and without CC/MCC, respectively) within 
MDC 25 (Human Immunodeficiency Virus Infections) in the absence of a 
surgical procedure. ICD-10-CM diagnosis codes M01.X61 (Direct infection 
of right knee in infectious and parasitic diseases classified 
elsewhere), M01.X62 (Direct infection of left knee in infectious and 
parasitic diseases classified elsewhere), and M01.X69 (Direct infection 
of unspecified knee in infectious and parasitic diseases classified 
elsewhere) are currently assigned to medical MS-DRGs 548, 549, and 550 
(Septic Arthritis with MCC, with CC, and without CC/MCC, respectively) 
within MDC 8 in the absence of a surgical procedure. ICD-10-CM 
diagnosis codes M71.061 (Abscess of bursa, right knee), M71.062 
(Abscess of bursa, left knee), M71.069 (Abscess of bursa, unspecified 
knee), M71.161 (Other infective bursitis, right knee), M71.162 (Other 
infective bursitis, left knee), and M71.169 (Other infective bursitis, 
unspecified knee) are currently assigned to medical MS-DRGs 557 and 558 
(Tendonitis, Myositis and Bursitis with and without MCC, respectively) 
within MDC 8 in the absence of a surgical procedure.
    Similar to the process described above, we examined the ICD-10-CM 
Alphabetic Index to review the entries that refer and correspond to the 
diagnosis codes shown in the table above. We found the following 
entries.
BILLING CODE 4120-01-P

[[Page 19198]]

[GRAPHIC] [TIFF OMITTED] TP03MY19.001


[[Page 19199]]


[GRAPHIC] [TIFF OMITTED] TP03MY19.002


[[Page 19200]]


[GRAPHIC] [TIFF OMITTED] TP03MY19.003

BILLING CODE 4120-01-C
    We note that there were no Index entries specifically for ICD-10-CM 
diagnosis codes M71.061, M71.062, M71.069, M71.161, M71.162, and 
M71.169. Rather, there were Index entries at the subcategory levels of 
M71.06- and M71.16-. We found the following entries.

[[Page 19201]]



------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Index entry referring to M71.06-: (connective tissue) (embolic)
 (fistulous) (infective) (metastatic) (multiple) (pernicious) (pyogenic)
 (septic) > bursa > knee.
Index entry referring to M71.16-: Infective NEC > knee.
------------------------------------------------------------------------

    Our clinical advisors agreed that the results of our review of the 
ICD-10-CM Alphabetic Index support the addition of these ICD-10-CM 
diagnosis codes to MS-DRGs 485, 486, and 487 because the Index entries 
and/or the code descriptions clearly describe or include an infection 
that is specific to the knee.
    Therefore, we are proposing to add the following ICD-10-CM 
diagnosis codes to the list of principal diagnosis codes for MS-DRGs 
485, 486, and 487: A18.02; M01.X61; M01.X62; M01.X69; M71.061; M71.062; 
M71.069; M71.161; M71.162; and M71.169.
b. Neuromuscular Scoliosis
    We received a request to add ICD-10-CM diagnosis codes describing 
neuromuscular scoliosis to the list of principal diagnosis codes for 
MS-DRGs 456, 457, and 458 (Spinal Fusion except Cervical with Spinal 
Curvature or Malignancy or Infection or Extensive Fusions with MCC, 
with CC, and without CC/MCC, respectively). Excluding the ICD-10-CM 
diagnosis codes that address the cervical spine, the following ICD-10-
CM diagnosis codes are used to describe neuromuscular scoliosis.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
M41.40....................  Neuromuscular scoliosis, site unspecified.
M41.44....................  Neuromuscular scoliosis, thoracic region.
M41.45....................  Neuromuscular scoliosis, thoracolumbar
                             region.
M41.46....................  Neuromuscular scoliosis, lumbar region.
M41.47....................  Neuromuscular scoliosis, lumbosacral region.
------------------------------------------------------------------------

    The requestor asserted that all levels of neuromuscular scoliosis, 
except cervical, should group to the non-cervical spinal fusion MS-DRGs 
for spinal curvature (MS-DRGs 456, 457, and 458). The requestor also 
noted that the current MS-DRG logic only groups cases reporting 
neuromuscular scoliosis to MS-DRGs 456, 457, and 458 when neuromuscular 
scoliosis is reported as a secondary diagnosis. The requestor contended 
that it would be rare for a diagnosis of neuromuscular scoliosis to be 
reported as a secondary diagnosis because there is not a ``code first'' 
note in the ICD-10-CM Tabular List of Diseases and Injuries indicating 
to ``code first'' the underlying cause. According to the requestor, 
when a diagnosis of neuromuscular scoliosis is the reason for an 
admission for non-cervical spinal fusion, neuromuscular scoliosis must 
be sequenced as the principal diagnosis because it is the chief 
condition responsible for the admission. However, this sequencing, 
which adheres to the ICD-10-CM Official Guidelines for Coding and 
Reporting, prevents the admission from grouping to the non-cervical 
spinal fusion MS-DRGs for spinal curvature caused by neuromuscular 
scoliosis.
    We analyzed claims data from the September 2018 update of the FY 
2018 MedPAR file for cases reporting any of the ICD-10-CM diagnosis 
codes describing neuromuscular scoliosis (as listed previously) as a 
principal diagnosis with a non-cervical spinal fusion, which are 
currently assigned to MS-DRGs 459 and 460 (Spinal Fusion except 
Cervical with MCC and without MCC, respectively). Our findings are 
shown in the following table.

   MS-DRGs for Cases Involving Non-Cervical Spinal Fusion With Principal Diagnosis of Neuromuscular Scoliosis
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 459--All cases...........................................           3,903             8.6         $46,416
MS-DRG 459--Cases with principal diagnosis of neuromuscular                    3            15.3          95,745
 scoliosis......................................................
MS-DRG 460--All cases...........................................          52,597             3.3          28,754
MS-DRG 460--Cases with principal diagnosis of neuromuscular                    8             4.3          71,406
 scoliosis......................................................
----------------------------------------------------------------------------------------------------------------

    The data reveal that there was a total of 56,500 cases in MS-DRGs 
459 and 460. We found 3,903 cases reported in MS-DRG 459, with an 
average length of stay of 8.6 days and average costs of $46,416. Of 
these 3,903 cases, 3 reported a principal diagnosis code of 
neuromuscular scoliosis, with an average length of stay of 15.3 days 
and average costs of $95,745. We found a total of 52,597 cases in MS-
DRG 460, with an average length of stay of 3.3 days and average costs 
of $28,754. Of these 52,597 cases, 8 cases reported a principal 
diagnosis code describing neuromuscular scoliosis, with an average 
length of stay of 4.3 days and average costs of $71,406. The data 
clearly demonstrate that the average costs and average length of stay 
for the small number of cases reporting a principal diagnosis of 
neuromuscular scoliosis are higher in comparison to all the cases in 
their assigned MS-DRG.
    We also analyzed claims data for MS-DRGs 456, 457, and 458 (Spinal 
Fusion except Cervical with Spinal Curvature or Malignancy or Infection 
or Extensive Fusions with MCC, with CC, and without CC/MCC, 
respectively) to identify the spinal fusion cases reporting any of the 
ICD-10-CM codes describing neuromuscular scoliosis (as listed 
previously) as a secondary diagnosis. Our findings are shown in the 
following table.

[[Page 19202]]



   MS-DRGs for Cases Involving Non-Cervical Spinal Fusion With Spinal Curvature or Malignancy or Infection or
                      Extensive Fusions With Secondary Diagnosis of Neuromuscular Scoliosis
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 456--All cases...........................................           1,344            12.0         $66,012
MS-DRG 456--Cases with secondary diagnosis of neuromuscular                    6            18.2          79,809
 scoliosis......................................................
MS-DRG 457--All cases...........................................           3,654             6.2          47,577
MS-DRG 457--Cases with secondary diagnosis of neuromuscular                   12             4.5          31,646
 scoliosis......................................................
MS-DRG 458--All cases...........................................           1,245             3.4          34,179
MS-DRG 458--Cases with secondary diagnosis of neuromuscular                    6             3.3          31,117
 scoliosis......................................................
----------------------------------------------------------------------------------------------------------------

    The data indicate that there were 1,344 cases reported in MS-DRG 
456, with an average length of stay of 12 days and average costs of 
$66,012. Of these 1,344 cases, 6 cases reported a secondary diagnosis 
code describing neuromuscular scoliosis, with an average length of stay 
of 18.2 days and average costs of $79,809. We found a total of 3,654 
cases in MS-DRG 457, with an average length of stay of 6.2 days and 
average costs of $47,577. Twelve of these 3,654 cases reported a 
secondary diagnosis code describing neuromuscular scoliosis, with an 
average length of stay of 4.5 days and average costs of $31,646. 
Finally, the 1,245 cases reported in MS-DRG 458 had an average length 
of stay of 3.4 days and average costs of $34,179. Of these 1,245 cases, 
6 cases reported neuromuscular scoliosis as a secondary diagnosis, with 
an average length of stay of 3.3 days and average costs of $31,117.
    We reviewed the ICD-10-CM Tabular List of Diseases for subcategory 
M41.4 and confirmed there is a ``Code also underlying condition'' note. 
We also reviewed the ICD-10-CM Official Guidelines for Coding and 
Reporting for the ``code also'' note at Section 1.A.12.b., which 
states: ``A `code also' note instructs that two codes may be required 
to fully describe a condition, but this note does not provide 
sequencing direction.'' Our clinical advisors agree that the sequencing 
of the ICD-10-CM diagnosis codes is determined by which condition leads 
to the encounter and is responsible for the admission. They also note 
that there may be instances in which the underlying cause of the 
diagnosis of neuromuscular scoliosis is not treated or responsible for 
the admission.
    As discussed earlier, our review of the claims data shows that a 
small number of cases reported neuromuscular scoliosis either as a 
principal diagnosis in MS-DRGs 459 and 460 or as a secondary diagnosis 
in MS-DRGs 456, 457, and 458. Our clinical advisors agree that while 
the volume of cases is small, the average costs and average length of 
stay for the cases reporting neuromuscular scoliosis as a principal 
diagnosis with a non-cervical spinal fusion currently grouping to MS-
DRGs 459 and 460 are more aligned with the average costs and average 
length of stay for the cases reporting neuromuscular scoliosis as a 
secondary diagnosis with a non-cervical spinal fusion currently 
grouping to MS-DRGs 456, 457, and 458. Therefore, for the reasons 
described above, we are proposing to add the following ICD-10-CM codes 
describing neuromuscular scoliosis to the list of principal diagnosis 
codes for MS-DRGs 456, 457, and 458: M41.40; M41.44; M41.45; M41.46; 
and M41.47.
c. Secondary Scoliosis and Secondary Kyphosis
    We received a request to add ICD-10-CM diagnosis codes describing 
secondary scoliosis and secondary kyphosis to the list of principal 
diagnoses for MS-DRGs 456, 457, and 458 (Spinal Fusion except Cervical 
with Spinal Curvature or Malignancy or Infection or Extensive Fusions 
with MCC, with CC, and without CC/MCC, respectively). Excluding the 
ICD-10-CM diagnosis codes that address the cervical spine, the 
following ICD-10-CM diagnosis codes are used to describe secondary 
scoliosis.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
M41.50....................  Other secondary scoliosis, site unspecified.
M41.54....................  Other secondary scoliosis, thoracic region.
M41.55....................  Other secondary scoliosis, thoracolumbar
                             region.
M41.56....................  Other secondary scoliosis, lumbar region.
M41.57....................  Other secondary scoliosis, lumbosacral
                             region.
------------------------------------------------------------------------

    Excluding the ICD-10-CM diagnosis codes that address the cervical 
spine, the following ICD-10-CM diagnosis codes are used to describe 
secondary kyphosis.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
M40.10....................  Other secondary kyphosis, site unspecified.
M40.14....................  Other secondary kyphosis, thoracic region.
M40.15....................  Other secondary kyphosis, thoracolumbar
                             region.
------------------------------------------------------------------------

    The requestor stated that generally in cases of diagnoses of 
secondary scoliosis or kyphosis, the underlying cause of the condition 
is not treated or is not responsible for the admission. If a patient is 
admitted for surgery to correct non-cervical spinal curvature, it is 
appropriate to sequence the diagnosis of secondary scoliosis or 
secondary kyphosis as principal diagnosis. However, reporting a 
diagnosis of secondary scoliosis or secondary

[[Page 19203]]

kyphosis as the principal diagnosis with a non-cervical spinal fusion 
procedure results in the case grouping to MS-DRG 459 or 460 (Spinal 
Fusion except Cervical with MCC and without MCC, respectively), instead 
of the spinal fusion with spinal curvature MS-DRGs 456, 457, and 458.
    We analyzed claims data from the September 2018 update of the FY 
2018 MedPAR file for MS-DRGs 459 and 460 to determine the number of 
cases reporting an ICD-10-CM diagnosis code describing secondary 
scoliosis or secondary kyphosis as the principal diagnosis. Our 
findings are shown in the following table.

   MS-DRGs for Cases Involving Non-Cervical Spinal Fusion With a Principal Diagnosis of Secondary Scoliosis or
                                               Secondary Kyphosis
----------------------------------------------------------------------------------------------------------------
                                                                     Number of        Average
                             MS-DRG                                    cases      length of stay   Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 459--All cases...........................................           3,903             8.6         $46,416
MS-DRG 459--Cases with a principal diagnosis of secondary                      4             7.3          56,024
 scoliosis......................................................
MS-DRG 459--Cases with a principal diagnosis of secondary                      4             5.8          41,883
 kyphosis.......................................................
MS-DRG 460--All cases...........................................          52,597             3.3          28,754
MS-DRG 460--Cases with a principal diagnosis of secondary                     34             3.6          34,424
 scoliosis......................................................
MS-DRG 460--Cases with a principal diagnosis of secondary                     31             4.6          42,315
 kyphosis.......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table, we found a total of 3,903 cases in MS-DRG 
459, with an average length of stay of 8.6 days and average costs of 
$46,416. Of these 3,903 cases, we found 4 cases that reported a 
principal diagnosis of secondary scoliosis, with an average length of 
stay of 7.3 days and average costs of $56,024. We also found 4 cases 
that reported a principal diagnosis of secondary kyphosis, with an 
average length of stay of 5.8 days and average costs of $41,883. For 
MS-DRG 460, we found a total of 52,597 cases with an average length of 
stay of 3.3 days and average costs of $28,754. Of these 52,597 cases, 
we found 34 cases that reported a principal diagnosis of secondary 
scoliosis, with an average length of stay of 3.6 days and average costs 
of $34,424. We found 31 cases that reported a principal diagnosis of 
secondary kyphosis in MS-DRG 460, with an average length of stay of 4.6 
days and average costs of $42,315.
    We also analyzed claims data for MS-DRGs 456, 457, and 458 to 
determine the number of cases reporting an ICD-10-CM diagnosis code 
describing secondary scoliosis or secondary kyphosis as a secondary 
diagnosis. Our findings are shown in the following table.

   MS-DRGs for Cases Involving Non-Cervical Spinal Fusion With Spinal Curvature or Malignancy or Infection or
             Extensive Fusions With Secondary Diagnosis of Secondary Scoliosis or Secondary Kyphosis
----------------------------------------------------------------------------------------------------------------
                                                                     Number of        Average
                             MS-DRG                                    cases      length of stay   Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 456--All cases...........................................           1,344              12         $66,012
MS-DRG 456--Cases with a secondary diagnosis of secondary                     37             7.7          58,009
 scoliosis......................................................
MS-DRG 456--Cases with a secondary diagnosis of secondary                     52              12          78,865
 kyphosis.......................................................
MS-DRG 457--All cases...........................................           3,654             6.2          47,577
MS-DRG 457--Cases with a secondary diagnosis of secondary                    187             4.9          37,655
 scoliosis......................................................
MS-DRG 457--Cases with a secondary diagnosis of secondary                    114             5.2          37,357
 kyphosis.......................................................
MS-DRG 458--All cases...........................................           1,245             3.4          34,179
MS-DRG 458--Cases with a secondary diagnosis of secondary                    190             3.0          29,052
 scoliosis......................................................
MS-DRG 458--Cases with a secondary diagnosis of secondary                     39             3.7          31,015
 kyphosis.......................................................
----------------------------------------------------------------------------------------------------------------

    The data indicate that there were 1,344 cases in MS-DRG 456, with 
an average length of stay of 12 days and average costs of $66,012. Of 
these 1,344 cases, there were 37 cases that reported a secondary 
diagnosis of secondary scoliosis, with an average length of stay of 7.7 
days and average costs of $58,009. There were also 52 cases in MS-DRG 
456 reporting a secondary diagnosis of secondary kyphosis, with an 
average length of stay of 12 days and average costs of $78,865. In MS-
DRG 457, there was a total of 3,654 cases, with an average length of 
stay of 6.2 days and average costs of $47,577. Of these 3,654 cases, 
there were 187 cases that reported secondary scoliosis as a secondary 
diagnosis, with an average length of stay of 4.9 days and average costs 
of $37,655. In MS-DRG 457, there were also 114 cases that reported a 
secondary diagnosis of secondary kyphosis, with an average length of 
stay of 5.2 days and average costs of $37,357. Finally, there was a 
total of 1,245 cases in MS-DRG 458, with an average length of stay of 
3.4 days and average costs of $34,179. Of these 1,245 cases, there were 
190 cases that reported a secondary diagnosis of secondary scoliosis, 
with an average length of stay of 3 days and average costs of $29,052. 
There were 39 cases in MS-DRG 458 that reported a secondary diagnosis 
of secondary kyphosis, with an average length of stay of 3.7 days and 
average costs of $31,015.
    Our clinical advisors agree that the average length of stay and 
average costs for the small number of cases reporting secondary 
scoliosis or secondary kyphosis as a principal diagnosis with a non-
cervical spinal fusion currently grouping to MS-DRGs 459 and 460 are 
generally more aligned with the average length of stay and average 
costs for the cases reporting secondary scoliosis or secondary kyphosis 
as a secondary diagnosis with a non-cervical spinal fusion currently 
grouping to MS-DRGs 456, 457, and 458. They also note that there may be 
instances in which the underlying cause of the diagnosis of secondary 
scoliosis or secondary kyphosis is not treated or responsible for the 
admission.
    Therefore, for the reasons described above, we are proposing to add 
the following ICD-10-CM diagnosis codes describing secondary scoliosis 
and

[[Page 19204]]

secondary kyphosis to the list of principal diagnosis codes for MS-DRGs 
456, 457, and 458: M40.10; M40.14; M40.15; M41.50; M41.54; M41.55; 
M41.56; and M41.57. During our review of MS-DRGs 456, 457, and 458, we 
found the following diagnosis codes that describe conditions involving 
the cervical region.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
M40.03....................  Postural kyphosis, cervicothoracic region.
M40.202...................  Unspecified kyphosis, cervical region.
M40.203...................  Unspecified kyphosis, cervicothoracic
                             region.
M40.292...................  Other kyphosis, cervical region.
M40.293...................  Other kyphosis, cervicothoracic region.
M41.02....................  Infantile idiopathic scoliosis, cervical
                             region.
M41.03....................  Infantile idiopathic scoliosis,
                             cervicothoracic region.
M41.112...................  Juvenile idiopathic scoliosis, cervical
                             region.
M41.113...................  Juvenile idiopathic scoliosis,
                             cervicothoracic region.
M41.122...................  Adolescent idiopathic scoliosis, cervical
                             region.
M41.123...................  Adolescent idiopathic scoliosis,
                             cervicothoracic region.
M41.22....................  Other idiopathic scoliosis, cervical region.
M41.23....................  Other idiopathic scoliosis, cervicothoracic
                             region.
M41.82....................  Other forms of scoliosis, cervical region.
M41.83....................  Other forms of scoliosis, cervicothoracic
                             region.
M42.01....................  Juvenile osteochondrosis of spine, occipito-
                             atlanto-axial region.
M42.02....................  Juvenile osteochondrosis of spine, cervical
                             region.
M42.03....................  Juvenile osteochondrosis of spine,
                             cervicothoracic region.
M43.8X1...................  Other specified deforming dorsopathies,
                             occipito-atlanto-axial region.
M43.8X2...................  Other specified deforming dorsopathies,
                             cervical region.
M43.8X3...................  Other specified deforming dorsopathies,
                             cervicothoracic region.
M46.21....................  Osteomyelitis of vertebra, occipito-atlanto-
                             axial region.
M46.22....................  Osteomyelitis of vertebra, cervical region.
M46.23....................  Osteomyelitis of vertebra, cervicothoracic
                             region.
M48.51XA..................  Collapsed vertebra, not elsewhere
                             classified, occipito-atlanto-axial region,
                             initial encounter for fracture.
M48.52XA..................  Collapsed vertebra, not elsewhere
                             classified, cervical region, initial
                             encounter for fracture.
M48.53XA..................  Collapsed vertebra, not elsewhere
                             classified, cervicothoracic region, initial
                             encounter for fracture.
M40.12....................  Other secondary kyphosis, cervical region.
M40.13....................  Other secondary kyphosis, cervicothoracic
                             region.
M41.41....................  Neuromuscular scoliosis, occipito-atlanto-
                             axial region.
M4.142....................  Neuromuscular scoliosis, cervical region.
M4143.....................  Neuromuscular scoliosis, cervicothoracic
                             region.
M41.52....................  Other secondary scoliosis, cervical region.
M41.53....................  Other secondary scoliosis, cervicothoracic
                             region.
------------------------------------------------------------------------

    Our clinical advisors noted that because the diagnosis codes shown 
in the table above describe conditions involving the cervical region, 
they are not clinically appropriate for assignment to MS-DRGs 456, 457, 
and 458, which are defined by non-cervical spinal fusion procedures 
(with spinal curvature or malignancy or infection or extensive 
fusions). Therefore, our clinical advisors recommended that these codes 
be removed from the MS-DRG logic for these MS-DRGs. As such, we are 
proposing to remove the diagnosis codes that describe conditions 
involving the cervical region as shown in the table above from MS-DRGs 
456, 457, and 458.
7. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): 
Extracorporeal Shock Wave Lithotripsy (ESWL)
    We received two separate, but related requests to add ICD-10-CM 
diagnosis code N13.6 (Pyonephrosis) and ICD-10-CM diagnosis code 
T83.192A (Other mechanical complication of indwelling ureteral stent, 
initial encounter) to the list of principal diagnosis codes for MS-DRGs 
691 and 692 (Urinary Stones with ESW Lithotripsy with CC/MCC and 
without CC/MCC, respectively) in MDC 11 so that cases are assigned more 
appropriately when an Extracorporeal Shock Wave Lithotripsy (ESWL) 
procedure is performed.
    ICD-10-CM diagnosis code N13.6 currently groups to MS-DRGs 689 and 
690 (Kidney and Urinary Tract Infections with MCC and without MCC, 
respectively) and ICD-10-CM diagnosis code T83.192A currently groups to 
MS-DRGs 698, 699, and 700 (Other Kidney and Urinary Tract Diagnoses 
with MCC, with CC, and without CC/MCC, respectively).
    The ICD-10-PCS procedure codes for identifying procedures involving 
ESWL are designated as non-O.R. procedures and are shown in the 
following table.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0TF3XZZ...................  Fragmentation in right kidney pelvis,
                             external approach.
0TF4XZZ...................  Fragmentation in left kidney pelvis,
                             external approach.
OTF6XZZ...................  Fragmentation in right ureter, external
                             approach.
OTF7XZZ...................  Fragmentation in left ureter, external
                             approach.
OTFBXZZ...................  Fragmentation in bladder, external approach.
OTFCXZZ...................  Fragmentation in bladder neck, external
                             approach.
OTFDXZZ...................  Fragmentation in urethra, external approach.
------------------------------------------------------------------------


[[Page 19205]]

    Pyonephrosis can be described as an infection of the kidney with 
pus in the upper collecting system which can progress to obstruction. 
Patients with an obstruction in the upper urinary tract due to urinary 
stones (calculi), tumors, fungus balls or ureteropelvic obstruction 
(UPJ) may also have a higher risk of developing pyonephrosis. If 
pyonephrosis is not recognized and treated promptly, it can result in 
serious complications, including fistulas, septic shock, irreversible 
damage to the kidneys, and death.
    As noted above, the requestor recommended that ICD-10-CM diagnosis 
codes N13.6 and T83.192A be added to the list of principal diagnosis 
codes for MS-DRGs 691 and 692. There are currently four MS-DRGs that 
group cases for diagnoses involving urinary stones, which are 
subdivided to identify cases with and without an ESWL procedure: MS-
DRGs 691 and 692 (Urinary Stones with ESW Lithotripsy with and without 
CC/MCC, respectively) and MS-DRGs 693 and 694 (Urinary Stones without 
ESW Lithotripsy with and without MCC, respectively).
    The requestor stated that when patients who have been diagnosed 
with hydronephrosis secondary to renal and ureteral calculus 
obstruction undergo an ESWL procedure, ICD-10-CM diagnosis code N13.2 
(Hydronephrosis with renal and ureteral calculous obstruction) is 
reported and groups to MS-DRGs 691 and 692. However, if a patient with 
a diagnosis of hydronephrosis has a urinary tract infection (UTI) in 
addition to a renal calculus obstruction and undergoes an ESWL 
procedure, ICD-10-CM diagnosis code N13.6 must be coded and reported as 
the principal diagnosis, which groups to MS-DRGs 689 and 690. The 
requestor stated that ICD-10-CM diagnosis code N13.6 should be grouped 
to MS-DRGs 691 and 692 when reported as a principal diagnosis because 
this grouping will more appropriately reflect resource consumption for 
patients who undergo an ESWL procedure for obstructive urinary calculi, 
while also receiving treatment for urinary tract infections.
    With regard to ICD-10-CM diagnosis code T83.192A, the requestor 
believed that when an ESWL procedure is performed for the treatment of 
calcifications within and around an indwelling ureteral stent, it is 
comparable to an ESWL procedure performed for the treatment of urinary 
calculi. Therefore, the requestor recommended adding ICD-10-CM 
diagnosis code T83.192A to MS-DRGs 691 and 692 when reported as a 
principal diagnosis and an ESWL procedure is also reported on the 
claim.
    To analyze these separate, but related requests, we first reviewed 
the reporting of ICD-10-CM diagnosis code N13.6 within the ICD-10-CM 
classification. ICD-10-CM diagnosis code N13.6 is to be assigned for 
conditions identified in the code range N13.0-N13.5 with infection. 
(Codes in this range describe hydronephrosis with obstruction.) 
Infection may be documented by the patient's provider as urinary tract 
infection (UTI) or as specific as acute pyelonephritis. We agree with 
the requestor that if a patient with a diagnosis of hydronephrosis has 
a urinary tract infection (UTI) in addition to a renal calculus 
obstruction and undergoes an ESWL procedure, ICD-10-CM diagnosis code 
N13.6 must be coded and reported as the principal diagnosis, which 
groups to MS-DRGs 689 and 690. In this case scenario, the ESWL 
procedure is designated as a non-O.R. procedure and does not impact the 
MS-DRG assignment when reported with ICD-10-CM diagnosis code N13.6.
    The ICD-10-CM classification instructs that when both a urinary 
obstruction and a genitourinary infection co-exist, the correct code 
assignment for reporting is ICD-10-CM diagnosis code N13.6, which is 
appropriately grouped to MS-DRGs 689 and 690 (Kidney and Urinary Tract 
Infections with MCC and without MCC, respectively) because it describes 
a type of urinary tract infection. Therefore, in response to the 
requestor's suggestion that ICD-10-CM diagnosis code N13.6 be grouped 
to MS-DRGs 691 and 692 when reported as a principal diagnosis to more 
appropriately reflect resource consumption for patients who undergo an 
ESWL procedure for obstructive urinary calculi while also receiving 
treatment for urinary tract infections, we note that the ICD-10-CM 
classification provides instruction to identify the conditions reported 
with ICD-10-CM diagnosis code N13.6 as an infection, and not as urinary 
stones. Our clinical advisors agree with this classification and the 
corresponding MS-DRG assignment for diagnosis code N13.6. In addition, 
our clinical advisors noted that an ESWL procedure is a non-O.R. 
procedure and they do not believe that this procedure is a valid 
indicator of resource consumption for cases that involve an infection 
and obstruction. Our clinical advisors believe that the resources used 
for a case that involves an infection and an obstruction are clinically 
distinct from the cases that involve an obstruction only in the course 
of treatment. Therefore, our clinical advisors do not agree with the 
request to add ICD-10-CM diagnosis code N13.6 to the list of principal 
diagnoses for MS-DRGs 691 and 692.
    We also performed various analyses of claims data to evaluate this 
request. We analyzed claims data from the September 2018 update of the 
FY 2018 MedPAR file for MS-DRGs 689 and 690 to identify cases reporting 
ICD-10-CM diagnosis code N13.6 as the principal diagnosis with and 
without an ESWL procedure. Our findings are reflected in the table 
below.

       Kidney and Urinary Tract Infections With Principal Diagnosis of Pyonephrosis With and Without ESWL
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 689--All cases...........................................          68,020             4.8          $7,873
MS-DRG 689--Cases with principal diagnosis of pyonephrosis......           1,024             6.1          13,809
MS-DRG 689--Cases with principal diagnosis of pyonephrosis with                6            14.2          45,489
 ESWL...........................................................
MS-DRG 690--All cases...........................................         131,999             3.5           5,692
MS-DRG 690--Cases with principal diagnosis of pyonephrosis......           4,625             3.6           5,483
MS-DRG 690--Cases with principal diagnosis of pyonephrosis with               24             4.8          14,837
 ESWL...........................................................
----------------------------------------------------------------------------------------------------------------

    For MS-DRG 689, we found a total of 68,020 cases with an average 
length of stay of 4.8 days and average costs of $7,873. Of those 68,020 
cases, we found 1,024 cases reporting pyonephrosis (ICD-10-CM diagnosis 
code N13.6) as a principal diagnosis with an average length of stay of 
6.1 days and average costs of $13,809. Of those 1,024 cases reporting 
pyonephrosis (ICD-10-CM diagnosis code N13.6) as a principal diagnosis, 
there were 6 cases that also reported an ESWL procedure with an average 
length of stay of 14.2 days and average costs of $45,489. For MS-DRG

[[Page 19206]]

690, we found a total of 131,999 cases with an average length of stay 
of 3.5 days and average costs of $5,692. Of those 131,999 cases, we 
found 4,625 cases reporting pyonephrosis (ICD-10-CM diagnosis code 
N13.6) as a principal diagnosis with an average length of stay of 3.6 
days and average costs of $5,483. Of those 4,625 cases reporting 
pyonephrosis (ICD-10-CM diagnosis code N13.6) as a principal diagnosis, 
there were 24 cases that also reported an ESWL procedure with an 
average length of stay of 4.8 days and average costs of $14,837.
    The data indicate that the 1,024 cases reporting pyonephrosis (ICD-
10-CM diagnosis code N13.6) as a principal diagnosis in MS-DRG 689 have 
a longer average length of stay (6.1 days versus 4.8 days) and higher 
average costs ($13,809 versus $7,873) compared to all the cases in MS-
DRG 689. The data also indicate that the 6 cases reporting pyonephrosis 
(ICD-10-CM diagnosis code N13.6) as a principal diagnosis that also 
reported an ESWL procedure have a longer average length of stay (14.2 
days versus 4.8 days) and higher average costs ($45,489 versus $7,873) 
in comparison to all the cases in MS-DRG 689. We found similar results 
for cases reporting pyonephrosis (ICD-10-CM diagnosis code N13.6) as a 
principal diagnosis with an ESWL procedure in MS-DRG 690, where the 
average length of stay was slightly longer (4.8 days versus 3.5 days) 
and the average costs were higher ($14,837 versus $5,692).
    We then conducted further analysis for the six cases in MS-DRG 689 
that reported a principal diagnosis of pyonephrosis with ESWL to 
determine what factors may be contributing to the longer lengths of 
stay and higher average costs. Specifically, we analyzed the MCC 
conditions that were reported across the six cases. Our findings are 
shown in the table below.

  Secondary Diagnosis MCC Conditions Reported in MS-DRG 689 With Principal Diagnosis of Pyonephrosis with ESWL
----------------------------------------------------------------------------------------------------------------
                                                                     Number of        Average
         ICD-10-CM code                     Description           times reported  length of stay   Average costs
----------------------------------------------------------------------------------------------------------------
A41.9...........................  Sepsis, unspecified organism..               2            26.5          96,525
G82.50..........................  Quadriplegia, unspecified.....               1               7          13,782
I50.23..........................  Acute on chronic systolic                    1               7          13,304
                                   (congestive) heart failure.
J96. 01.........................  Acute respiratory failure with               1               7          13,304
                                   hypoxia.
K66.1...........................  Hemoperitoneum................               1              10          26,314
L89.153.........................  Pressure ulcer of sacral                     1               8          26,487
                                   region, stage 3.
R57.1...........................  Hypovolemic shock.............               1              10          26,314
                                                                 -----------------------------------------------
    Total.......................  ..............................               8            12.8          39,069
----------------------------------------------------------------------------------------------------------------

    We found seven secondary diagnosis MCC conditions reported among 
the six cases in MS-DRG 689 that had a principal diagnosis of 
pyonephrosis with ESWL. These MCC conditions appear to have contributed 
to the longer lengths of stay and higher average costs for those six 
cases. As shown in the table above, the overall average length of stay 
for the cases reporting these conditions is 12.8 days with average 
costs of $39,069, which is consistent with the average length of stay 
of 14.2 days and average costs of $45,489 for the cases in MS-DRG 689 
that had a principal diagnosis of pyonephrosis with ESWL.
    We then analyzed the 24 cases in MS-DRG 690 that reported a 
principal diagnosis of pyonephrosis with ESWL to determine what factors 
may be contributing to the longer lengths of stay and higher average 
costs. Specifically, we analyzed the CC conditions that were reported 
across the 24 cases. Our findings are shown in the table below.

                       Secondary Diagnosis CC Conditions Reported in MS-DRG 690 With Principal Diagnosis of Pyonephrosis With ESWL
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Number of        Average
                ICD-10-CM code                                        Description                         times reported  length of stay   Average costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
B37.0........................................  Candidal stomatitis......................................               2             9.5         $18,895
B37.49.......................................  Other urogenital candidiasis.............................               2             7.5          30,458
C79.89.......................................  Secondary malignant neoplasm of other specified sites....               1               3           5,882
E22.2........................................  Syndrome of inappropriate secretion of antidiuretic                     1               2           5,979
                                                hormone.
E44.0........................................  Moderate protein-calorie malnutrition....................               1               6           9,027
E46..........................................  Unspecified protein-calorie malnutrition.................               2             5.5           8,704
E87.0........................................  Hyperosmolality and hypernatremia........................               1               6           9,027
E87.1........................................  Hypo-osmolality and hyponatremia.........................               1               5          12,339
F11.20.......................................  Opioid dependence, uncomplicated.........................               1               1           8,209
F33.1........................................  Major depressive disorder, recurrent, moderate...........               1              12          55,034
G81.94.......................................  Hemiplegia, unspecified affecting left nondominant side..               3             9.3          25,390
G82.20.......................................  Paraplegia, unspecified..................................               1              10          15,142
G93.40.......................................  Encephalopathy, unspecified..............................               2               7          10,277
I13.0........................................  Hypertensive heart and chronic kidney disease with heart                1               4          12,348
                                                failure and stage 1 through stage 4 chronic kidney
                                                disease, or unspecified chronic kidney dis.
I48.1........................................  Persistent atrial fibrillation...........................               1              12          55,034
I50.22.......................................  Chronic systolic (congestive) heart failure..............               1              12          55,034
I50.32.......................................  Chronic diastolic (congestive) heart failure.............               2             3.5           9,115
I69.351......................................  Hemiplegia and hemiparesis following cerebral infarction                1               3           4,845
                                                affecting right dominant side.

[[Page 19207]]

 
I69.859......................................  Hemiplegia and hemiparesis following other                              1               4          18,160
                                                cerebrovascular disease affecting unspecified side.
I97.791......................................  Other intraoperative cardiac functional disturbances                    1               8           8,114
                                                during other surgery.
J44.0........................................  Chronic obstructive pulmonary disease with acute lower                  1              11          25,641
                                                respiratory infection.
J44.1........................................  Chronic obstructive pulmonary disease with (acute)                      2               5          11,283
                                                exacerbation.
J96.10.......................................  Chronic respiratory failure, unspecified whether with                   1              12          55,034
                                                hypoxia or hypercapnia.
J96.11.......................................  Chronic respiratory failure with hypoxia.................               2               7          15,243
K57.92.......................................  Diverticulitis of intestine, part unspecified, without                  1               8          12,150
                                                perforation or abscess without bleeding.
N12..........................................  Tubulo-interstitial nephritis, not specified as acute or                1              11          25,641
                                                chronic.
N13.8........................................  Other obstructive and reflux uropathy....................               1               5          32,854
N17.9........................................  Acute kidney failure, unspecified........................               1               2          21,329
N20.1........................................  Calculus of ureter.......................................               1              10          15,142
N20.2........................................  Calculus of kidney with calculus of ureter...............               1               6           9,027
R44.3........................................  Hallucinations, unspecified..............................               1               2          21,329
R47.01.......................................  Aphasia..................................................               1               4          10,161
R78.81.......................................  Bacteremia...............................................               1              11           4,849
S37.012A.....................................  Minor contusion of left kidney, initial encounter........               1               2          21,329
T83.511A.....................................  Infection and inflammatory reaction due to indwelling                   1              10          15,142
                                                urethral catheter, initial encounter.
Z68.1........................................  Body mass index (BMI) 19.9 or less, adult................               2             4.5          10,040
Z68.43.......................................  Body mass index (BMI) 50-59.9, adult.....................               1               3           6,145
                                                                                                         -----------------------------------------------
    Total....................................  .........................................................              47             6.6          18,173
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We found 37 secondary diagnosis CC conditions reported among the 24 
cases in MS-DRG 690 that had a principal diagnosis of pyonephrosis with 
ESWL. These CC conditions appear to have contributed to the longer 
length of stay and higher average costs for those 24 cases. As shown in 
the table above, the overall average length of stay for the cases 
reporting these conditions is 6.6 days with average costs of $18,173, 
which is higher, although comparable, to the average length of stay of 
4.8 days and average costs of $14,837 for the cases in MS-DRG 690 that 
had a principal diagnosis of pyonephrosis with ESWL. We note that it 
appears that 1 of the 24 cases had at least 4 secondary diagnosis CC 
conditions (F33.1, I48.1, I50.22, and J96.10) with an average length of 
stay of 12 days and average costs of $55,034, which we believe 
contributed greatly overall to the longer length of stay and higher 
average costs for those secondary diagnosis CC conditions reported 
among the 24 cases.
    Our clinical advisors agree that the resource consumption for the 6 
cases in MS-DRG 689 and the 24 cases in MS-DRG 690 that reported a 
principal diagnosis of pyonephrosis with ESWL cannot be directly 
attributed to ESWL and believe that it is the secondary diagnosis MCC 
and CC conditions that are the major contributing factors to the longer 
average length of stay and higher average costs for these cases.
    We also analyzed claims data for MS-DRGs 691 and 692 (Urinary 
Stones with ESW Lithotripsy with CC/MCC and without CC/MCC, 
respectively) and MS-DRGs 693 and 694 (Urinary Stones without ESW 
Lithotripsy with MCC and without MCC, respectively) to identify claims 
reporting pyonephrosis (ICD-10-CM diagnosis code N13.6) as a secondary 
diagnosis. Our findings are shown in the following table.

            MS-DRGs for Urinary Stones With Secondary Diagnosis of Pyonephrosis With and Without ESWL
----------------------------------------------------------------------------------------------------------------
                                                                     Number of        Average
                             MS-DRG                               times reported  length of stay   Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 691--All cases...........................................             140             3.9         $11,997
MS-DRG 691--Cases with secondary diagnosis of pyonephrosis and                 3               8          24,280
 ESWL...........................................................
MS-DRG 692--All cases...........................................             124             2.1           8,326
MS-DRG 693--All cases...........................................           1,315             5.1           9,668
MS-DRG 693--Cases with secondary diagnosis of pyonephrosis......              16             5.5           9,962
MS-DRG 694--All cases...........................................           7,240             2.7           5,263
MS-DRG 694--Cases with secondary diagnosis of pyonephrosis......              89             3.5           6,678
----------------------------------------------------------------------------------------------------------------

    As shown in the table above, in MS-DRG 691, there was a total of 
140 cases with an average length of stay of 3.9 days and average costs 
of $11,997. Of those 140 cases, there were 3 cases that reported 
pyonephrosis as a secondary diagnosis and an ESWL procedure with an 
average length of stay of 8.0 days and average costs of $24,280. There 
was a total of 124 cases found in MS-DRG 692 with an average length of 
stay of 2.1 days and average costs of $8,326. There were no cases in 
MS-DRG 692 that reported pyonephrosis as a secondary diagnosis with an 
ESWL procedure. For MS-DRG 693, there was a total of 1,315 cases with 
an average length of stay of 5.1 days and average costs of $9,668. Of

[[Page 19208]]

those 1,315 cases, there were 16 cases reporting pyonephrosis as a 
secondary diagnosis with an average length of stay of 5.5 days and 
average costs of $9,962. For MS-DRG 694, there was a total of 7,240 
cases with an average length of stay of 2.7 days and average costs of 
$5,263. Of those 7,240 cases, there were 89 cases reporting 
pyonephrosis as a secondary diagnosis with an average length of stay of 
3.5 days and average costs of $6,678.
    Similar to the process described above, we then conducted further 
analysis for the three cases in MS-DRG 691 that reported a secondary 
diagnosis of pyonephrosis with ESWL to determine what factors may be 
contributing to the longer lengths of stay and higher average costs. 
Specifically, we analyzed what other MCC and CC conditions were 
reported across the three cases. We found no other MCC conditions 
reported for those three cases. Our findings for the CC conditions 
reported for those three cases are shown in the table below.

                            Secondary Diagnosis CC Conditions Reported in MS-DRG 691
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
         ICD-10-CM code                     Description           times reported      of stay      Average costs
----------------------------------------------------------------------------------------------------------------
E44.0...........................  Moderate protein-calorie                     1              15         $52,384
                                   malnutrition.
J96.10..........................  Chronic respiratory failure,                 1               7          15,110
                                   unspecified whether with
                                   hypoxia or hypercapnia.
N13.6...........................  Pyonephrosis..................               2             8.5          28,865
N17.9...........................  Acute kidney failure,                        1               2           5,346
                                   unspecified.
N39.0...........................  Urinary tract infection, site                1               2           5,346
                                   not specified.
Q79.6...........................  Ehlers-Danlos syndrome........               1               2           5,346
                                                                 -----------------------------------------------
    Total.......................  ..............................               7             6.4          20,181
----------------------------------------------------------------------------------------------------------------

    We found six secondary diagnosis CC conditions reported among the 
three cases in MS-DRG 691 that had a secondary diagnosis of 
pyonephrosis with ESWL. These CC conditions appear to have contributed 
to the longer lengths of stay and higher average costs for those three 
cases. As shown in the table above, the overall average length of stay 
for the cases reporting these conditions is 6.4 days with average costs 
of $20,181, which is more consistent with the average length of stay of 
8.0 days and average costs of $24,280 for the cases in MS-DRG 691 that 
had a secondary diagnosis of pyonephrosis with ESWL.
    Our clinical advisors believe that the resource consumption for 
those three cases cannot be directly attributed to ESWL and that it is 
the secondary diagnosis CC conditions reported in addition to 
pyonephrosis, which is also designated as a CC condition, that are the 
major contributing factors for the longer average lengths of stay and 
higher average costs for these cases in MS-DRG 691.
    We did not conduct further analysis for the 16 cases in MS-DRG 693 
or the 89 cases in MS-DRG 694 that reported a secondary diagnosis of 
pyonephrosis because MS-DRGs 693 and 694 do not include ESWL procedures 
and the average length of stay and average costs for those cases were 
consistent with the data findings for all of the cases in their 
assigned MS-DRG.
    As discussed earlier in this section, the requestor suggested that 
ICD-10-CM diagnosis code N13.6 should be grouped to MS-DRGs 691 and 692 
when reported as a principal diagnosis because this grouping will more 
appropriately reflect resource consumption for patients who undergo an 
ESWL procedure for obstructive urinary calculi, while also receiving 
treatment for urinary tract infections. However, based on the results 
of the data analysis and input from our clinical advisors, we believe 
that cases for which ICD-10-CM diagnosis code N13.6 was reported as a 
principal diagnosis or as a secondary diagnosis with an ESWL procedure 
should not be utilized as an indicator for increased utilization of 
resources based on the performance of an ESWL procedure. Rather, we 
believe that the resource consumption is more likely the result of 
secondary diagnosis CC and/or MCC diagnosis codes.
    With respect to the requestor's concern that cases reporting ICD-
10-CM diagnosis code T83.192A (Other mechanical complication of 
indwelling ureteral stent, initial encounter) and an ESWL procedure are 
not appropriately assigned and should be added to the list of principal 
diagnoses for MS-DRGs 691 and 692 (Urinary Stones with ESW Lithotripsy 
with CC/MCC and without CC/MCC, respectively), our clinical advisors 
note that ICD-10-CM diagnosis code T83.192A is not necessarily 
indicative of a patient having urinary stones. As such, they do not 
support adding ICD-10-CM diagnosis code T83.192A to the list of 
principal diagnosis codes for MS-DRGs 691 and 692.
    We analyzed claims data to identify cases reporting ICD-10-CM 
diagnosis code T83.192A as a principal diagnosis with ESWL in MS-DRGs 
698, 699, and 700 (Other Kidney and Urinary Tract Diagnoses with MCC, 
with CC, and without CC/MCC, respectively). Our findings are shown in 
the following table.

 MS-DRGs for Other Kidney and Urinary Tract Diagnoses With Principal Diagnosis of Other Mechanical Complications
                                     of Indwelling Ureteral Stent With ESWL
----------------------------------------------------------------------------------------------------------------
                                                                     Number of        Average
                             MS-DRG                                    cases      length of stay   Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 698--All cases...........................................          56,803             6.1         $11,220
MS-DRG 698--Cases with diagnosis code T83.192A reported as                    35             7.1          14,574
 principal diagnosis............................................
MS-DRG 699--All cases...........................................          33,693             4.2           7,348
MS-DRG 699--Cases with diagnosis code T83.192A reported as                    63             4.1           7,652
 principal diagnosis............................................
MS-DRG 699--Cases with diagnosis code T83.192A reported as                     1               3           7,986
 principal diagnosis with ESWL..................................

[[Page 19209]]

 
MS-DRG 700--All cases...........................................           3,719               3           5,356
----------------------------------------------------------------------------------------------------------------

    For MS-DRG 698, there was a total of 56,803 cases reported, with an 
average length of stay of 6.1 days and average costs of $11,220. Of 
these 56,803 cases, 35 cases reported ICD-10-CM diagnosis code T83.192A 
as the principal diagnosis, with an average length of stay of 7.1 days 
and average costs of $14,574. There were no cases that reported an ESWL 
procedure with ICD-10-CM diagnosis code T83.192A as the principal 
diagnosis in MS-DRG 698. For MS-DRG 699, there was a total of 33,693 
cases reported, with an average length of stay of 4.2 days and average 
costs of $7,348. Of the 33,693 cases in MS-DRG 699, there were 63 cases 
that reported ICD-10-CM diagnosis code T83.192A as the principal 
diagnosis, with an average length of stay of 4.1 days and average costs 
of $7,652. There was only 1 case in MS-DRG 699 that reported ICD-10-CM 
diagnosis code T83.192A as the principal diagnosis with an ESWL 
procedure, with an average length of stay of 3 days and average costs 
of $7,986. For MS-DRG 700, there was a total of 3,719 cases reported, 
with an average length of stay of 3 days and average costs of $5,356. 
There were no cases that reported ICD-10-CM diagnosis code T83.192A as 
the principal diagnosis in MS-DRG 700. Of the 98 cases in MS-DRGs 698 
and 699 that reported a principal diagnosis of other mechanical 
complication of indwelling ureteral stent (diagnosis code T83.192A), 
only 1 case also reported an ESWL procedure. Based on the results of 
our data analysis and input from our clinical advisors, we are not 
proposing to add ICD-10-CM diagnosis code T83.192A to the list of 
principal diagnosis codes for MS-DRGs 691 and 692.
    In connection with these requests, our clinical advisors 
recommended that we evaluate the frequency with which ESWL is reported 
in the inpatient setting across all the MS-DRGs. Therefore, we also 
analyzed claims data from the September 2018 update of the FY 2018 
MedPAR file to identify the other MS-DRGs to which claims reporting an 
ESWL procedure were reported. Our findings are shown in the following 
table.

------------------------------------------------------------------------
          MS-DRGs                        MS-DRG description
------------------------------------------------------------------------
654.......................  Major Bladder Procedures with CC.
657.......................  Kidney and Ureter Procedures for Neoplasm
                             with CC.
659, 660, 661.............  Kidney and Ureter Procedures for Non-
                             Neoplasm with MCC, with CC, without CC/MCC,
                             respectively.
662, 663..................  Minor Bladder Procedures with MCC and with
                             CC, respectively.
665, 666..................  Prostatectomy with MCC and with CC,
                             respectively.
668, 669, 670.............  Transurethral Procedures with MCC, with CC,
                             and without CC/MCC, respectively.
671.......................  Urethral Procedures with CC/MCC.
682, 683..................  Renal Failure with MCC and with CC,
                             respectively.
689, 690..................  Kidney and Urinary Tract Infections with MCC
                             and without MCC, respectively.
691, 692..................  Urinary Stones with ESW Lithotripsy with CC/
                             MCC and without CC/MCC, respectively.
696.......................  Kidney and Urinary Tract Signs and Symptoms
                             without MCC.
698, 699, 700.............  Other Kidney and Urinary Tract Diagnoses
                             with MCC, with CC, and without CC/MCC,
                             respectively.
982.......................  Extensive O.R. Procedure Unrelated to
                             Principal Diagnosis with CC.
------------------------------------------------------------------------

    Our findings with respect to the cases reporting an ESWL procedure 
in each of these MS-DRGs, as compared to all cases in the applicable 
MS-DRG, are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of        Average
                             MS-DRG                               times reported  length of stay   Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 654--All cases...........................................           3,838             6.7         $19,805
MS-DRG 654--Cases reporting ESWL................................               1               5           9,102
MS-DRG 657--All cases...........................................           7,242             4.1          14,047
MS-DRG 657--Cases reporting ESWL................................               2               2          19,021
MS-DRG 659--All cases...........................................           7,761             8.1          18,717
MS-DRG 659--Cases reporting ESWL................................              71            11.1          26,366
MS-DRG 660--All cases...........................................          17,617             4.1          10,292
MS-DRG 660--Cases reporting ESWL................................             193               4          13,627
MS-DRG 661--All cases...........................................          12,434             2.3           7,997
MS-DRG 661--Cases reporting ESWL................................             154             2.7          12,639
MS-DRG 662--All cases...........................................             614            10.2          23,110
MS-DRG 662--Cases reporting ESWL................................               1              22          57,520
MS-DRG 663--All cases...........................................           1,349               5          11,213
MS-DRG 663--Cases reporting ESWL................................               2             3.5          15,870
MS-DRG 665--All cases...........................................             589             9.4          21,328
MS-DRG 665--Cases reporting ESWL................................               2            16.5          17,710
MS-DRG 666--All cases...........................................           1,517             5.6          13,060
MS-DRG 666--Cases reporting ESWL................................               2             9.5          16,521
MS-DRG 668--All cases...........................................           2,065               9          20,229

[[Page 19210]]

 
MS-DRG 668--Cases reporting ESWL................................               1               4          19,383
MS-DRG 669--All cases...........................................           5,259             4.9          11,217
MS-DRG 669--Cases reporting ESWL................................               5             2.4          13,006
MS-DRG 670--All cases...........................................           1,707             2.6           7,177
MS-DRG 670--Cases reporting ESWL................................               5               3          18,416
MS-DRG 671--All cases...........................................             367             6.4          13,519
MS-DRG 671--Cases reporting ESWL................................               1               3          29,731
MS-DRG 682--All cases...........................................          97,347             5.7          10,384
MS-DRG 682--Cases reporting ESWL................................               5              10          26,773
MS-DRG 683--All cases...........................................         132,206             3.9           6,450
MS-DRG 683--Cases reporting ESWL................................               4            13.3          19,706
MS-DRG 689--All cases...........................................          68,020             4.8           7,873
MS-DRG 689--Cases reporting ESWL................................              11            13.3          35,510
MS-DRG 690--All cases...........................................         131,999             3.5           5,692
MS-DRG 690--Cases reporting ESWL................................              39             4.9          13,567
MS-DRG 691--All cases...........................................             140             3.9          11,997
MS-DRG 691--Cases reporting ESWL................................             140             3.9          11,997
MS-DRG 692--All cases...........................................             124             2.1           8,326
MS-DRG 692--Cases reporting ESWL................................             124             2.1           8,326
MS-DRG 696--All cases...........................................           5,933             2.9           4,938
MS-DRG 696--Cases reporting ESWL................................               2             2.5           6,238
MS-DRG 698--All cases...........................................          56,803             6.1          11,220
MS-DRG 698--Cases reporting ESWL................................              18             9.2          27,818
MS-DRG 699--All cases...........................................          33,693             4.2           7,348
MS-DRG 699--Cases reporting ESWL................................               9             4.4          10,986
MS-DRG 700--All cases...........................................           3,719               3           5,356
MS-DRG 700--Cases reporting ESWL................................               1               1           7,580
MS-DRG 982--All cases...........................................          16,834             6.3          16,939
MS-DRG 982--Cases reporting ESWL................................               2              11          74,751
----------------------------------------------------------------------------------------------------------------

    Our data analysis indicates that, generally, the subset of cases 
reporting an ESWL procedure appear to have a longer average length of 
stay and higher average costs when compared to all the cases in their 
assigned MS-DRG. However, we note that this same subset of cases also 
reported at least one O.R. procedure and/or diagnosis designated as a 
CC or an MCC, which our clinical advisors believe are contributing 
factors to the longer average lengths of stay and higher average costs, 
with the exception of the case assigned to MS-DRG 700, which is a 
medical MS-DRG and has no CC or MCC conditions in the logic. Therefore, 
our clinical advisors do not believe that cases reporting an ESWL 
procedure should be considered as an indication of increased resource 
consumption for inpatient hospitalizations.
    Our clinical advisors also suggested that we evaluate the reporting 
of ESWL procedures in the inpatient setting over the past few years. We 
analyzed claims data for MS-DRGs 691 and 692 from the FY 2012 through 
the FY 2016 MedPAR files, which were used in our analysis of claims 
data for MS-DRG reclassification requests effective for FY 2014 through 
FY 2018. We note that the analysis findings shown in the following 
table reflect ICD-9-CM, ICD-10-CM and ICD-10-PCS coded claims data.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                FY 2014 (version 31)          FY 2015 (version 32)          FY 2016 (version 33)          FY 2017 (version 34)          FY 2018 (version 35)
                                           -----------------------------------------------------------------------------------------------------------------------------------------------------
                  MS-DRG                               Average                       Average                       Average                       Average                       Average
                                             Number    length    Average   Number    length    Average   Number    length    Average   Number    length    Average   Number    length    Average
                                            of cases   of stay    costs   of cases   of stay    costs   of cases   of stay    costs   of cases   of stay    costs   of cases   of stay    costs
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
MS-DRG 691--Urinary Stones with ESW              898      3.77   $10,274       832      3.81   $11,141       812      3.72   $11,534       750      4.06   $11,907       448       3.4   $11,502
 Lithotripsy w CC/MCC.....................
MS-DRG 692--Urinary Stones with ESW              231      2.02     7,292       197      2.14     8,041       133      2.32     9,273       103      2.39     9,398        61       2.3     8,702
 Lithotripsy without CC/MCC...............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    The data show a steady decline in the number of cases reporting 
urinary stones with an ESWL procedure for the past 5 years. As 
previously noted, the total number of cases reporting urinary stones 
with an ESWL procedure for MS-DRGs 691 and 692 based on our analysis of 
the September 2018 update of the FY 2018 MedPAR file was 264, which 
again is a decline from the prior year's figures. As discussed 
throughout this section, an ESWL procedure is a non-O.R. procedure 
which currently groups to medical MS-DRGs 691 and 692. Therefore, 
because an ESWL procedure is a non-O.R. procedure and due to decreased 
usage of this procedure in the inpatient setting for the treatment of 
urinary stones, our clinical advisors believe that there is no longer a 
clinical reason to subdivide the MS-DRGs for urinary stones (MS-DRGs 
691, 692, 693, and 694) based on ESWL procedures.
    Therefore, we are proposing to delete MS-DRGs 691 and 692 and to 
revise the titles for MS-DRGs 693 and 694 from ``Urinary Stones without 
ESW Lithotripsy with MCC'' and ``Urinary Stones without ESW Lithotripsy 
without MCC'', respectively to ``Urinary Stones with MCC'' and 
``Urinary Stones without MCC'', respectively.
8. MDC 12 (Diseases and Disorders of the Male Reproductive System): 
Diagnostic Imaging of Male Anatomy
    We received a request to review four ICD-10-CM diagnosis codes 
describing

[[Page 19211]]

body parts associated with male anatomy that are currently assigned to 
MDC 5 (Diseases and Disorders of the Circulatory System) in MS-DRGs 302 
and 303 (Atherosclerosis with MCC and Atherosclerosis without MCC, 
respectively). The four codes are listed in the following table.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
R93.811...................  Abnormal radiologic findings on diagnostic
                             imaging of right testicle.
R93.812...................  Abnormal radiologic findings on diagnostic
                             imaging of left testicle.
R93.813...................  Abnormal radiologic findings on diagnostic
                             imaging of testicles, bilateral.
R93.819...................  Abnormal radiologic findings on diagnostic
                             imaging of unspecified testicle.
------------------------------------------------------------------------

    The requestor recommended that the four diagnosis codes shown in 
the table above be considered for assignment to MDC 12 (Diseases and 
Disorders of the Male Reproductive System), consistent with other 
diagnosis codes that include the male anatomy. However, the requestor 
did not suggest a specific MS-DRG assignment within MDC 12.
    We examined claims data from the September 2018 update of the FY 
2018 MedPAR file for MS-DRGs 302 and 303 to identify any cases 
reporting a diagnosis code for abnormal radiologic findings on 
diagnostic imaging of the testicles. We did not find any such cases.
    Our clinical advisors reviewed this request and determined that the 
assignment of diagnosis codes R93.811, R93.812, R93.813, and R93.819 to 
MDC 5 in MS-DRGs 302 and 303 was a result of replication from ICD-9-CM 
diagnosis code 793.2 (Nonspecific (abnormal) findings on radiological 
and other examination of other intrathoracic organs) which was assigned 
to those MS-DRGs. Therefore, our clinical advisors support reassignment 
of these codes to MDC 12. Our clinical advisors agree that this 
reassignment is clinically appropriate because these diagnosis codes 
are specific to the male anatomy, consistent with other diagnosis codes 
in MDC 12 that include the male anatomy. Specifically, our clinical 
advisors suggest reassignment of the four diagnosis codes to MS-DRGs 
729 and 730 (Other Male Reproductive System Diagnoses with CC/MCC and 
without CC/MCC, respectively). Therefore, we are proposing to reassign 
ICD-10-CM diagnosis codes R93.811, R93.812, R93.813, and R93.819 from 
MDC 5 in MS-DRGs 302 and 303 to MDC 12 in MS-DRGs 729 and 730.
9. MDC 14 (Pregnancy, Childbirth and the Puerperium): Proposed 
Reassignment of Diagnosis Code O99.89
    We received a request to review the MS-DRG assignment for cases 
reporting ICD-10-CM diagnosis code O99.89 (Other specified diseases and 
conditions complicating pregnancy, childbirth and the puerperium). The 
requestor stated that it is experiencing MS-DRG shifts to MS-DRG 769 
(Postpartum and Post Abortion Diagnoses with O.R. Procedure) as a 
result of the new obstetric MS-DRG logic when ICD-10-CM diagnosis code 
O99.89 is reported as a principal diagnosis in the absence of a 
delivery code on the claim (to indicate the patient delivered during 
that hospitalization), or when there is no other secondary diagnosis 
code on the claim indicating that the patient is in the postpartum 
period. According to the requestor, claims reporting ICD-10-CM 
diagnosis code O99.89 as a principal diagnosis for conditions described 
as occurring during the antepartum period that are reported with an 
O.R. procedure are grouping to MS-DRG 769. In the example provided by 
the requestor, ICD-10-CM diagnosis code O99.89 was reported as the 
principal diagnosis, with ICD-10-CM diagnosis codes N13.2 
(Hydronephrosis with renal and ureteral calculous obstruction) and 
Z3A.25 (25 weeks of gestation of pregnancy) reported as secondary 
diagnoses with ICD-10-PCS procedure code 0T68DZ (Dilation of right 
ureter with intraluminal device, endoscopic approach), resulting in 
assignment to MS-DRG 769. The requestor noted that, in the FY 2019 
IPPS/LTCH PPS final rule (83 FR 41212), we stated ``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.'' In the requestor's 
example, there were not any codes reported to indicate that the patient 
was in the postpartum period, nor was there a delivery code reported on 
the claim. Therefore, the requestor suggested that a more appropriate 
assignment for ICD-10-CM diagnosis code O99.89 may be MS-DRGs 817, 818, 
and 819 (Other Antepartum Diagnoses with O.R. Procedure with MCC, with 
CC and without CC/MCC, respectively).
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41202 through 
41216), we finalized our proposal to restructure the MS-DRGs within MDC 
14 (Pregnancy, Childbirth and the Puerperium) which established new 
concepts for the GROUPER logic. As a result of the modifications made, 
ICD-10-CM diagnosis code O99.89 was classified as a postpartum 
condition and is currently assigned to MS-DRG 769 (Postpartum and Post 
Abortion Diagnoses with O.R. Procedure) and MS-DRG 776 (Postpartum and 
Post Abortion Diagnoses without O.R. Procedure) under the Version 36 
ICD-10 MS-DRGs. As also discussed and displayed in Diagram 2 in the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41212 through 41213), 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 
MS-DRG 769. If no, the logic assigns the case to MS-DRG 776. Therefore, 
the MS-DRG assignment for the example provided by the requestor is 
grouping accurately according to the current GROUPER logic.
    We analyzed claims data from the September 2018 update of the FY 
2018 MedPAR file for cases reporting diagnosis code O99.89 in MS-DRGs 
769 and 776 as a principal diagnosis or as a secondary diagnosis. Our 
findings are shown in the following table.

[[Page 19212]]



Postpartum MS-DRGs With Principal or Secondary Diagnosis of Other Specified Diseases and Conditions Complicating
                                    Pregnancy, Childbirth and the Puerperium
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 769--All cases...........................................              91             4.3         $11,015
MS-DRG 769--Cases reporting diagnosis code O99.89 as principal                 7             5.6          19,059
 diagnosis......................................................
MS-DRG 769--Cases reporting diagnosis code O99.89 as secondary                61            12.1          41,717
 diagnosis......................................................
MS-DRG 776--All cases...........................................             560             3.1           5,332
MS-DRG 776--Cases reporting diagnosis code O99.89 as principal                57             3.5           6,439
 diagnosis......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table above, we found a total of 91 cases in MS-DRG 
769 with an average length of stay of 4.3 days and average costs of 
$11,015. Of these 91 cases, 7 cases reported ICD-10-CM diagnosis code 
O99.89 as a principal diagnosis with an average length of stay of 5.6 
days and average costs of $19,059, and 61 cases reported ICD-10-CM 
diagnosis code O99.89 as a secondary diagnosis with an average length 
of stay of 12.1 days and average costs of $41,717. For MS-DRG 776, we 
found a total of 560 cases with an average length of stay of 3.1 days 
and average costs of $5,332. Of these 560 cases, 57 cases reported ICD-
10-CM diagnosis code O99.89 as a principal diagnosis with an average 
length of stay of 3.5 days and average costs of $6,439. There were no 
cases reporting ICD-10-CM diagnosis code O99.89 as a secondary 
diagnosis in MS-DRG 776.
    For MS-DRG 769, the data show that the 68 cases reporting ICD-10-CM 
diagnosis code O99.89 as a principal or secondary diagnosis have a 
longer average length of stay and higher average costs compared to all 
the cases in MS-DRG 769. For MS-DRG 776, the data show that the 57 
cases reporting a principal diagnosis of ICD-10-CM diagnosis code 
O99.89 have a similar average length of stay compared to all the cases 
in MS-DRG 776 (3.5 days versus 3.1 days) and average costs that are 
consistent with the average costs of all cases in MS-DRG 776 ($6,439 
versus $5,332).
    We note that the description for ICD-10-CM diagnosis code O99.89 
``Other specified diseases and conditions complicating pregnancy, 
childbirth and the puerperium'', describes conditions that may occur 
during the antepartum period (pregnancy), during childbirth, or during 
the postpartum period (puerperium). In addition, in the ICD-10-CM 
Tabular List of Diseases, there is an inclusion term at subcategory 
O99.8- instructing users that the reporting of any diagnosis codes in 
that subcategory is intended for conditions that are reported in 
certain ranges of the classification. Specifically, the inclusion term 
states ``Conditions in D00-D48, H00-H95, M00-N99, and Q00-Q99.'' There 
is also an instructional note to ``Use additional code to identify 
condition.'' As a result, ICD-10-CM diagnosis code O99.89 may be 
reported to identify conditions that occur during the antepartum period 
(pregnancy), during childbirth, or during the postpartum period 
(puerperium). However, it is not restricted to the reporting of 
obstetric specific conditions only. In the example provided by the 
requestor, ICD-10-CM diagnosis code O99.89 was reported as the 
principal diagnosis with ICD-10-CM diagnosis code N13.2 (Hydronephrosis 
with renal and ureteral calculous obstruction) as a secondary 
diagnosis. ICD-10-CM diagnosis code N13.2 is within the code range 
referenced earlier in this section (M00-N99) and qualifies as an 
appropriate condition for reporting according to the instruction.
    As noted earlier, ICD-10-CM diagnosis code O99.89 is intended to 
report conditions that occur during the antepartum period (pregnancy), 
during childbirth, or during the postpartum period (puerperium) and is 
not restricted to the reporting of obstetric specific conditions only. 
However, because the diagnosis code description includes three distinct 
obstetric related stages, it is not clear what stage the patient is in 
by this single code. For example, upon review of subcategory O99.8-, we 
recognized that the other ICD-10-CM diagnosis code sub-subcategories 
are expanded to include unique codes that identify the condition as 
occurring or complicating pregnancy, childbirth or the puerperium. 
Specifically, sub-subcategory O99.81- (Abnormal glucose complicating 
pregnancy, childbirth, and the puerperium) is expanded to include the 
following ICD-10-CM diagnosis codes.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
O99.810...................  Abnormal glucose complicating pregnancy.
O99.814...................  Abnormal glucose complicating childbirth.
O99.815...................  Abnormal glucose complicating the
                             puerperium.
------------------------------------------------------------------------

    The codes listed above specifically identify at what stage the 
abnormal glucose was a complicating condition. Because each code 
uniquely identifies a stage, the code can be easily classified under 
MDC 14 as an antepartum condition (ICD-10-CM diagnosis code O99.810), 
occurring during a delivery episode (ICD-10-CM diagnosis code O99.814), 
or as a postpartum condition (ICD-10-CM diagnosis code O99.815). The 
same is not true for ICD-10-CM diagnosis code O99.89 because it 
includes all three stages in the single code.
    Therefore, we examined the number and type of secondary diagnoses 
reported with ICD-10-CM diagnosis code O99.89 as a principal diagnosis 
for MS-DRGs 769 and 776 to identify how many secondary diagnoses were 
related to other obstetric conditions and how many were related to non-
obstetric conditions.

[[Page 19213]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Number of
                                                             secondary       Number of       Number of       Number of       Number of       Number of
                                                             diagnoses     secondary  OB   secondary  OB   secondary  OB   secondary  OB  secondary non-
                         MS-DRG                            reported with      related         related         related         related       OB  related
                                                            O99.89  as       diagnoses      antepartum      postpartum       delivery        diagnoses
                                                             principal                       diagnoses       diagnoses       diagnoses
--------------------------------------------------------------------------------------------------------------------------------------------------------
MS-DRG 769..............................................              59              13              11               1               1              46
MS-DRG 776..............................................             376             113              88              19               6             263
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As shown in the table above, there was a total of 59 secondary 
diagnoses reported with diagnosis code O99.89 as the principal 
diagnosis for MS-DRG 769. Of those 59 secondary diagnoses, 13 were 
obstetric (OB) related diagnosis codes (11 antepartum, 1 postpartum and 
1 delivery) and 46 were non-obstetric (Non-OB) related diagnosis codes. 
For MS-DRG 776, there was a total of 376 secondary diagnoses reported 
with diagnosis code O99.89 as the principal diagnosis. Of those 376 
secondary diagnoses, 113 were obstetric (OB) related diagnosis codes 
(88 antepartum, 19 postpartum and 6 delivery) and 263 were non-
obstetric (Non-OB) related diagnosis codes.
    The data reflect that, for MS-DRGs 769 and 776, the number of 
secondary diagnoses identified as OB-related antepartum diagnoses is 
greater than the number of secondary diagnoses identified as OB-related 
postpartum diagnoses (99 antepartum diagnoses versus 20 postpartum 
diagnoses). The data also indicate that, of the 435 secondary diagnoses 
reported with ICD-10-CM diagnosis code O99.89 as the principal 
diagnosis, 309 (71 percent) of those secondary diagnoses were non-OB-
related diagnosis codes. Because there was a greater number of 
secondary diagnoses identified as OB-related antepartum diagnoses 
compared to the OB-related postpartum diagnoses within the postpartum 
MS-DRGs when ICD-10-CM diagnosis code O99.89 was reported as the 
principal diagnosis, we performed further analysis of diagnosis code 
O99.89 within the antepartum MS-DRGs.
    Under the Version 35 ICD-10 MS-DRGs, diagnosis code O99.89 was 
classified as an antepartum condition and was assigned to MS-DRG 781 
(Other Antepartum Diagnoses with Medical Complications). Therefore, we 
also analyzed claims data for MS-DRGs 817, 818 and 819 (Other 
Antepartum Diagnoses with O.R. Procedure with MCC, with CC and without 
CC/MCC, respectively) and MS-DRGs 831, 832, and 833 (Other Antepartum 
Diagnoses without O.R. Procedure with MCC, with CC and without CC/MCC, 
respectively) for cases reporting ICD-10-CM diagnosis code O99.89 as a 
secondary diagnosis. We note that the analysis for the proposed FY 2020 
ICD-10 MS-DRGs is based upon the September 2018 update of the FY 2018 
MedPAR claims data that were grouped through the ICD-10 MS-DRG GROUPER 
Version 36. Our findings are shown in the table below.

 Antepartum MS-DRGs With Secondary Diagnosis of Other Specified Diseases and Conditions Complicating Pregnancy,
                                          Childbirth and the Puerperium
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 817--All cases...........................................              63             5.7         $14,948
MS-DRG 817--Cases reporting diagnosis code O99.89 as secondary                 8            10.8          24,359
 diagnosis......................................................
MS-DRG 818--All cases...........................................              78             4.1           9,343
MS-DRG 818--Cases reporting diagnosis code O99.89 as secondary                 7             3.4          14,182
 diagnosis......................................................
MS-DRG 819--All cases...........................................              25             2.2           5,893
MS-DRG 819--Cases reporting diagnosis code O99.89 as secondary                 1               1           4,990
 diagnosis......................................................
MS-DRG 831--All cases...........................................             747             4.8           7,714
MS-DRG 831--Cases reporting diagnosis code O99.89 as secondary               127             5.4           7,050
 diagnosis......................................................
MS-DRG 832--All cases...........................................           1,142             3.6           5,159
MS-DRG 832--Cases reporting diagnosis code O99.89 as secondary               145             4.2           5,656
 diagnosis......................................................
MS-DRG 833--All cases...........................................             537             2.6           3,807
MS-DRG 833--Cases reporting diagnosis code O99.89 as secondary                47             2.6           3,307
 diagnosis......................................................
----------------------------------------------------------------------------------------------------------------

    As shown in the table above, we found a total of 63 cases in MS-DRG 
817 with an average length of stay of 5.7 days and average costs of 
$14,948. Of these 63 cases, there were 8 cases reporting ICD-10-CM 
diagnosis code O99.89 as a secondary diagnosis with an average length 
of stay of 10.8 days and average costs of $24,359. For MS-DRG 818, we 
found a total of 78 cases with an average length of stay of 4.1 days 
and average costs of $9,343. Of these 78 cases, there were 7 cases 
reporting ICD-10-CM diagnosis code O99.89 as a secondary diagnosis with 
an average length of stay of 3.4 days and average costs of $14,182. For 
MS-DRG 819, we found a total of 25 cases with an average length of stay 
of 2.2 days and average costs of $5,893. Of these 25 cases, there was 1 
case reporting ICD-10-CM diagnosis code O99.89 as a secondary diagnosis 
with an average length of stay of 1 day and average costs of $4,990.
    For MS-DRG 831, we found a total of 747 cases with an average 
length of stay of 4.8 days and average costs of $7,714. Of these 747 
cases, there were 127 cases reporting ICD-10-CM diagnosis code O99.89 
as a secondary diagnosis with an average length of stay of 5.4 days and 
average costs of $7,050. For MS-DRG 832, we found a total of 1,142 
cases with an average length of stay of 3.6 days and average costs of 
$5,159. Of these 1,142 cases, there were 145 cases reporting ICD-10-CM 
diagnosis code O99.89 as a secondary diagnosis with an average length 
of stay of 4.2 days and average costs of $5,656. For MS-DRG 833, we 
found a total of 537 cases with an average length of stay of 2.6 days 
and average costs of $3,807. Of these 537 cases, there were 47 cases 
reporting ICD-10-CM diagnosis code O99.89 as a secondary diagnosis with 
an average length of stay of 2.6 days and average costs of $3,307.

[[Page 19214]]

    Overall, there was a total of 335 cases reporting ICD-10-CM 
diagnosis code O99.89 as a secondary diagnosis within the antepartum 
MS-DRGs. Of those 335 cases, 16 cases involved an O.R. procedure and 
319 cases did not involve an O.R. procedure. The data indicate that 
ICD-10-CM diagnosis code O99.89 is reported more often as a secondary 
diagnosis within the antepartum MS-DRGs (335 cases) than it is reported 
as a principal or secondary diagnosis within the postpartum MS-DRGs 
(125 cases).
    Our clinical advisors believe that, because ICD-10-CM diagnosis 
code O99.89 can be reported during the antepartum period (pregnancy), 
during childbirth, or during the postpartum period (puerperium), there 
is not a clear clinical indication as to which set of MS-DRGs 
(antepartum, delivery, or postpartum) would be the most appropriate 
assignment for this diagnosis code. They recommended that we 
collaborate with the National Center for Health Statistics (NCHS) at 
the Centers for Disease Control and Prevention (CDC), in consideration 
of a proposal to possibly expand ICD-10-CM diagnosis code O99.89 to 
become a sub-subcategory that would result in the creation of unique 
codes with a sixth digit character to specify which obstetric related 
stage the patient is in. For example, under subcategory O99.8-, a 
proposed new sub-subcategory for ICD-10-CM diagnosis code O99.89- could 
include the following proposed new diagnosis codes:
     O99.890 (Other specified diseases and conditions 
complicating pregnancy);
     O99.894 (Other specified diseases and conditions 
complicating childbirth); and
     O99.85 (Other specified diseases and conditions 
complicating the puerperium).
    If such a proposal to create this new sub-subcategory and new 
diagnosis codes were approved and finalized, it would enable improved 
data collection and more appropriate MS-DRG assignment, consistent with 
the current MS-DRG assignments of the existing obstetric related 
diagnosis codes. For instance, a new diagnosis code described as 
``complicating pregnancy'' would be clinically aligned with the 
antepartum MS-DRGs, a new diagnosis code described as ``complicating 
childbirth'' would be clinically aligned with the delivery MS-DRGs, and 
a new diagnosis code described as ``complicating the puerperium'' would 
be clinically aligned with the postpartum MS-DRGs. (We note that all 
requests for new diagnosis codes require that a proposal be approved 
for discussion at a future ICD-10 Coordination and Maintenance 
Committee meeting.)
    While our clinical advisors could not provide a strong clinical 
justification for classifying ICD-10-CM diagnosis code O99.89 as an 
antepartum condition versus as a postpartum condition for the reasons 
described above, they did consider the claims data to be informative as 
to how the diagnosis code is being reported for obstetric patients. In 
analyzing both the postpartum MS-DRGs and the antepartum MS-DRGs 
discussed earlier in this section, they agreed that the data clearly 
show that ICD-10-CM diagnosis code O99.89 is reported more frequently 
as a secondary diagnosis within the antepartum MS-DRGs than it is 
reported as a principal or secondary diagnosis within the postpartum 
MS-DRGs.
    Based on our analysis of claims data and input from our clinical 
advisors, we are proposing to reclassify ICD-10-CM diagnosis code 
O99.89 from a postpartum condition to an antepartum condition under MDC 
14. If finalized, ICD-10-CM diagnosis code O99.89 would follow the 
logic as described in the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41212) which 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 MS-DRG 817, 818, or 819. If no (there was not an O.R. 
procedure reported on the claim), the logic assigns the case to MS-DRG 
831, 832, or 833.
10. MDC 22 (Burns): Skin Graft to Perineum for Burn
    We received a request to add seven ICD-10-PCS procedure codes that 
describe a skin graft to the perineum to MS-DRG 927 (Extensive Burns Or 
Full Thickness Burns with MV >96 Hours with Skin Graft) and MS-DRGs 928 
and 929 (Full Thickness Burn with Skin Graft Or Inhalation Injury with 
CC/MCC and without CC/MCC, respectively) in MDC 22. The seven procedure 
codes are listed in the following table.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0HR9X73...................  Replacement of perineum skin with autologous
                             tissue substitute, full thickness, external
                             approach.
0HR9X74...................  Replacement of perineum skin with autologous
                             tissue substitute, partial thickness,
                             external approach.
0HR9XJ3...................  Replacement of perineum skin with synthetic
                             substitute, full thickness, external
                             approach.
0HR9XJ4...................  Replacement of perineum skin with synthetic
                             substitute, partial thickness, external
                             approach.
0HR9XJZ...................  Replacement of perineum skin with synthetic
                             substitute, external approach.
0HR9XK3...................  Replacement of perineum skin with non-
                             autologous tissue substitute, full
                             thickness, external approach.
0HR9XK4...................  Replacement of perineum skin with non-
                             autologous tissue substitute, partial
                             thickness, external approach.
------------------------------------------------------------------------

    These seven procedure codes are currently assigned to MS-DRGs 746 
and 747 (Vagina, Cervix and Vulva Procedures with CC/MCC and without 
CC/MCC, respectively). In addition, when reported in conjunction with a 
principal diagnosis in MDC 21 (Injuries, Poisonings and Toxic Effects 
of Drugs), these codes group to MS-DRGs 907, 908, and 909 (Other O.R. 
Procedures For Injuries with MCC, with CC and without CC/MCC, 
respectively), and when reported in conjunction with a principal 
diagnosis in MDC 24 (Multiple Significant Trauma), these codes group to 
MS-DRGs 957, 958, and 959 (Other O.R. Procedures For Multiple 
Significant Trauma with MCC, with CC and without CC/MCC, respectively). 
In addition, these procedures are designated as non-extensive O.R. 
procedures and are assigned to MS-DRGs 987, 988 and 989 (Non-Extensive 
O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and 
without CC/MCC, respectively) when a principal diagnosis that is 
unrelated to the procedure is reported on the claim.
    The requestor provided an example in which it identified one case 
where a patient underwent debridement and split thickness skin graft 
(STSG) to the perineum area (only), and expressed concern that the case 
did not route to MS-DRGs 928 and 929 to recognize operating room 
resources. (We note that the requestor did not specify the diagnosis 
associated with this case nor the MS-DRG to which this one case was 
grouped.) The requestor stated that providers may document various 
terminologies for this anatomic site,

[[Page 19215]]

including perineum, groin, and buttocks crease; therefore, when a 
provider deems a burn to affect the perineum as opposed to the groin or 
buttock crease, cases should route to MS-DRGs which compensate 
hospitals for skin grafting operating room resources. Therefore, the 
requestor recommended that the cited seven ICD-10-PCS codes be added to 
the list of procedure codes for a skin graft within MS-DRGs 927, 928, 
and 929.
    We reviewed this request by analyzing claims data from the 
September 2018 update of the FY 2018 MedPAR file for cases reporting 
any of the above seven procedure codes in MS-DRGs 746, 747, 907, 908, 
909, 957, 958, 959, 987, 988, and 989. Our findings are shown in the 
following table.

                                   Cases Involving Skin Graft to the Perineum
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 746--All cases...........................................           1,344               5         $11,847
MS-DRG 746--Cases with skin graft to the perineum procedure.....               1               2          10,830
MS-DRG 907--All cases...........................................           7,843              10          28,919
MS-DRG 907--Cases with skin graft to the perineum procedure.....               1               8          21,909
MS-DRG 908--All cases...........................................           9,286             5.3          14,601
MS-DRG 908--Cases with skin graft to the perineum procedure.....               1               6           8,410
MS-DRG 988--All cases...........................................           8,391             5.7          12,294
MS-DRG 988--Cases with skin graft to the perineum procedure.....               2               3           6,906
MS-DRG 989--All cases...........................................           1,551             3.1           8,171
MS-DRG 989--Cases with skin graft to the perineum procedure.....               1               7          14,080
----------------------------------------------------------------------------------------------------------------

    As shown in the table above, the overall volume of cases reporting 
a skin graft to the perineum procedure is low, with a total of 6 cases 
found. In MS-DRG 746, we found a total of 1,344 cases with an average 
length of stay of 5 days and average costs of $11,847. The single case 
reporting a skin graft to the perineum procedure in MS-DRG 746 had a 
length of stay of 2 days and a cost of $10,830. In MS-DRG 907, we found 
a total of 7,843 cases with an average length of stay of 10 days and 
average costs of $28,919. The single case reporting a skin graft to the 
perineum procedure in MS-DRG 907 had a length of stay of 8 days and a 
cost of $21,909. In MS-DRG 908, we found a total of 9,286 cases with an 
average length of stay of 5.3 days and average costs of $14,601. The 
single case reporting a skin graft to the perineum procedure in MS-DRG 
908 had a length of stay of 6 days and a cost of $8,410. In MS-DRG 988, 
we found a total of 8,391 cases with an average length of stay of 5.7 
days and average costs of $12,294. The 2 cases reporting a skin graft 
to the perineum procedure in MS-DRG 988 had an average length of stay 
of 3 days and average costs of $6,906. In MS-DRG 989, we found a total 
of 1,551 cases with an average length of stay of 3.1 days and average 
costs of $8,171. The single case reporting a skin graft to the perineum 
procedure in MS-DRG 989 had a length of stay of 7 day and a cost of 
$14,080. We found no cases reporting a skin graft to the perineum 
procedure in MS-DRG 747, 909, 957, 958, 959, or 987. Cases reporting a 
skin graft to the perineum procedure generally had shorter length of 
stays and lower average costs than those of their assigned MS-DRGs 
overall.
    We then analyzed claims data for MS-DRGs 927, 928, and 929 (the MS-
DRGs to which the requestor suggested that these cases group) for all 
cases reporting a procedure describing a skin graft to the perineum 
listed in the table above to consider how the resources involved in the 
cases reporting a procedure describing a skin graft to the perineum 
compared to those of all cases in MS-DRGs 927, 928, and 929. Our 
findings are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 927--All cases...........................................             146            30.9        $147,903
MS-DRG 928--All cases...........................................           1,149            15.7          45,523
MS-DRG 928--Cases with skin graft to the perineum procedure.....               5              39          64,041
MS-DRG 929--All cases...........................................             296             7.9          21,474
----------------------------------------------------------------------------------------------------------------

    As shown in the table above, for MS-DRG 927, we found a total of 
146 cases with an average length of stay of 30.9 days and average costs 
of $147,903; no cases reporting a skin graft to the perineum procedure 
were found. For MS-DRG 928, we found a total of 1,149 cases with an 
average length of stay of 15.7 days and average costs of $45,523. We 
found 5 cases reporting a skin graft to the perineum procedure with an 
average length of stay of 39 days and average costs of $64,041. For MS-
DRG 929, we found a total of 296 cases with an average length of stay 
of 7.9 days and average costs of $21,474; and no cases reporting a skin 
graft to the perineum procedure were found. We note that none of the 5 
cases reporting a skin graft to the perineum in MS-DRGs 927, 928, and 
929 reported a skin graft to the perineum procedure as the only 
operating room procedure. Therefore, it is not possible to determine 
how much of the operating room resources for these 5 cases were 
attributable to the skin graft to the perineum procedure.
    Our clinical advisors reviewed the claims data described above and 
noted that none of the cases reporting the seven identified procedure 
codes that grouped to MS-DRGs 746, 907, 908, 988, and 989 (listed in 
the table above) had a principal or secondary diagnosis of a burn, 
which suggests that these skin grafts were not performed to treat a 
burn. Therefore, our clinical advisors believe that it would not be 
appropriate for these cases that report a skin graft to the perineum 
procedure to group to MS-DRGs 927, 928, and 929, which describe burns. 
Our clinical advisors state that the seven ICD-10-PCS procedure codes 
that describe a skin graft to the perineum are more clinically aligned 
with the other procedures in MS-DRGs 746 and 747, to which they are 
currently assigned. Therefore, we are

[[Page 19216]]

not proposing to add the seven identified procedure codes to MS-DRGs 
927, 928, and 929.
11. MDC 23 (Factors Influencing Health Status and Other Contacts With 
Health Services): Proposed Assignment of Diagnosis Code R93.89
    We received a request to consider reassignment of ICD-10-CM 
diagnosis code R93.89 (Abnormal finding on diagnostic imaging of other 
specified body structures) from MDC 5 (Diseases and Disorders of the 
Circulatory System) in MS-DRGs 302 and 303 (Atherosclerosis with and 
without MCC and Atherosclerosis without MCC, respectively) to MDC 23 
(Factors Influencing Health Status and Other Contact with Health 
Services), consistent with other diagnosis codes that include abnormal 
findings. However, the requestor did not suggest a specific MS-DRG 
assignment within MDC 23.
    We examined claims data from the September 2018 update of the FY 
2018 MedPAR file for MS-DRGs 302 and 303 and identified cases reporting 
diagnosis code R93.89. Our findings are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 302--All cases...........................................           3,750             3.8          $7,956
MS-DRG 302--Cases reporting diagnosis code R93.89...............               3             7.7          10,818
MS-DRG 303--All cases...........................................          12,986             2.3           4,920
MS-DRG 303--Cases reporting diagnosis code R93.89...............              10               2           3,416
----------------------------------------------------------------------------------------------------------------

    As shown in the table, for MS-DRG 302, there was a total of 3,750 
cases with an average length of stay of 3.8 days and average costs of 
$7,956. Of these 3,750 cases, there were 3 cases reporting abnormal 
finding on diagnostic imaging of other specified body structures, with 
an average length of stay 7.7 days and average costs of $10,818. For 
MS-DRG 303, there was a total of 12,986 cases with an average length of 
stay of 2.3 days and average costs of $4,920. Of these 12,986 cases, 
there were 10 cases reporting abnormal finding on diagnostic imaging of 
other specified body structures, with an average length of stay 2 days 
and average costs of $3,416.
    Our clinical advisors reviewed this request and determined that the 
assignment of diagnosis code R93.89 to MDC 5 in MS-DRGs 302 and 303 was 
a result of replication from ICD-9-CM diagnosis code 793.2 (Nonspecific 
(abnormal) findings on radiological and other examination of other 
intrathoracic organs), which was assigned to those MS-DRGs. Therefore, 
they support reassignment of diagnosis code R93.89 to MDC 23. Our 
clinical advisors agree this reassignment is clinically appropriate as 
it is consistent with other diagnosis codes in MDC 23 that include 
abnormal findings from other nonspecified sites. Specifically, our 
clinical advisors suggest reassignment of diagnosis code R89.93 to MS-
DRGs 947 and 948 (Signs and Symptoms with and without MCC, 
respectively). Therefore, we are proposing to reassign ICD-10-CM 
diagnosis code R93.89 from MDC 5 in MS-DRGs 302 and 303 to MDC 23 in 
MS-DRGs 947 and 948.
12. Review of Procedure Codes in MS-DRGs 981 Through 983 and 987 
Through 989
a. Adding Procedure Codes and Diagnosis Codes Currently Grouping to MS-
DRGs 981 Through 983 or MS-DRGs 987 Through 989 into MDCs
    We annually conduct a review of procedures producing assignment to 
MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to 
Principal Diagnosis with MCC, with CC, and without CC/MCC, 
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. Procedure 
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, 
respectively) on the basis of volume, by procedure, to see if it would 
be appropriate to move cases reporting these 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 use this information to 
determine which procedure codes and diagnosis codes to examine.
    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. 
We also consider whether it would be more appropriate to move the 
principal diagnosis codes into the MDC to which the procedure is 
currently assigned. Based on the results of our review of the claims 
data from the September 2018 update of the FY 2018 MedPAR file, we are 
proposing to move the cases reporting the procedures and/or principal 
diagnosis codes described below 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 or procedure is assigned.
(1) Gastrointestinal Stromal Tumors With Excision of Stomach and Small 
Intestine
    Gastrointestinal stromal tumors (GIST) are tumors of connective 
tissue, and are currently assigned to MDC 8 (Diseases and Disorders of 
the Musculoskeletal System and Connective Tissue). The ICD-10-CM 
diagnosis codes describing GIST are listed in the table below.

------------------------------------------------------------------------
 ICD-10-CM  diagnosis code                Code description
------------------------------------------------------------------------
C49.A0....................  Gastrointestinal stromal tumor, unspecified
                             site.
C49.A1....................  Gastrointestinal stromal tumor of esophagus.
C49.A2....................  Gastrointestinal stromal tumor of stomach.
C49.A3....................  Gastrointestinal stromal tumor of small
                             intestine.
C49.A4....................  Gastrointestinal stromal tumor of large
                             intestine.
C49.A5....................  Gastrointestinal stromal tumor of rectum.
C49.A9....................  Gastrointestinal stromal tumor of other
                             sites.
------------------------------------------------------------------------


[[Page 19217]]

    During our review of cases that group to MS-DRGs 981 through 983, 
we noted that when procedures describing open excision of the stomach 
or small intestine (ICD-10-PCS procedure codes 0DB60ZZ (Excision of 
stomach, open approach) and 0DB80ZZ (Excision of small intestine, open 
approach)) were reported with a principal diagnosis of GIST, the cases 
group to MS-DRGs 981 through 983. These two excision codes are assigned 
to several MDCs, as listed in the table below. Whenever there is a 
surgical procedure reported on the 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''.

                       DRG Assignments for ICD-10-PCS Procedure Codes 0DB60ZZ and 0DB80ZZ
----------------------------------------------------------------------------------------------------------------
             MDC                            DRG                                DRG Description
----------------------------------------------------------------------------------------------------------------
5............................  264.........................  Other Circulatory O.R. Procedures.
6............................  326-328.....................  Stomach, Esophageal and Duodenal Procedures.
10...........................  619-621.....................  Procedures for Obesity.
17...........................  820-822.....................  Lymphoma and Leukemia with Major Procedure.
17...........................  826-828.....................  Myeloproliferative Disorders or Poorly
                                                              Differentiated Neoplasms with Major Procedure.
21...........................  907-909.....................  Other O.R. Procedures for Injuries.
24...........................  957-959.....................  Other Procedures for Multiple Significant Trauma.
----------------------------------------------------------------------------------------------------------------

    We first examined cases that reported a principal diagnosis of GIST 
and ICD-10-PCS procedure code 0DB60ZZ or 0DB80ZZ that currently group 
to MS-DRGs 981 through 983, as well as all cases in MS-DRGs 981 through 
983. Our findings are shown in the table below.

   MS-DRGs 981-983: All Cases and Cases With Principal Diagnosis of GIST and Procedure Code 0DB60ZZ or 0DB80ZZ
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--All cases...........................................          29,192            11.3         $29,862
MS-DRG 981--Cases with procedure code 0DB60ZZ...................              46            12.4          35,723
MS-DRG 981--Cases with procedure code 0DB80ZZ...................              12            10.8          28,059
MS-DRG 982--All cases...........................................          16,834             6.3          16,939
MS-DRG 982--Cases with procedure code 0DB60ZZ...................             104             6.8          17,442
MS-DRG 982--Cases with procedure code 0DB80ZZ...................              41               8          18,961
MS-DRG 983--All cases...........................................           3,166             3.3          11,872
MS-DRG 983--Cases with procedure code 0DB60ZZ...................              97             4.5          11,901
MS-DRG 983--Cases with procedure code 0DB80ZZ...................              19             4.5           9,971
----------------------------------------------------------------------------------------------------------------

    Of the MDCs to which these gastrointestinal excision procedures are 
currently assigned, our clinical advisors indicated that cases with a 
principal diagnosis of GIST that also report an open gastrointestinal 
excision procedure code would logically be assigned to MDC 6 (Diseases 
and Disorders of the Digestive System). Within MDC 6, ICD-10-PCS 
procedures codes 0DB60ZZ and 0DB80ZZ are currently assigned to MS-DRGs 
326, 327, and 328 (Stomach, Esophageal and Duodenal Procedures with 
MCC, CC, and without CC/MCC, respectively). To understand how the 
resources associated with the subset of cases reporting a principal 
diagnosis of GIST and procedure code 0DB60ZZ or 0DB80ZZ compare to 
those of cases in MS-DRGs 326, 327, and 328 as a whole, we examined the 
average costs and average length of stay for all cases in MS-DRGs 326, 
327, and 328. Our findings are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 326--All cases...........................................           9,898              13         $36,129
MS-DRG 327--All cases...........................................           9,602             6.6          18,736
MS-DRG 328--All cases...........................................           7,634             2.9          11,555
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors reviewed these data and noted that the 
average length of stay and average costs of this subset of cases were 
similar to those of cases in MS-DRGs 326, 327, and 328 in MDC 6. To 
consider whether it was appropriate to move the GIST diagnosis codes 
from MDC 8, we examined the other procedure codes reported for cases 
that report a principal diagnosis of GIST and noted that almost all of 
the O.R. procedures most frequently reported were assigned to MDC 6 
rather than MDC 8. Our clinical advisors believe that, given the 
similarity in resource use between this subset of cases and cases in 
MS-DRGs 326, 327, and 328, and that the GIST diagnosis codes are 
gastrointestinal in nature, they would be more appropriately assigned 
to MS-DRGs 326, 327, and 328 in MDC 6 than their current assignment in 
MDC 8. Therefore, we are proposing to move the GIST diagnosis codes 
listed above from MDC 8 to MDC 6 within MS-DRGs 326, 327, and 328. 
Under our proposal, cases reporting a principal diagnosis of GIST would 
group to MS-DRGs 326, 327, and 328.
(2) Peritoneal Dialysis Catheter Complications
    During our review of the cases currently grouping to MS-DRGs 981-

[[Page 19218]]

983, we noted that cases reporting a principal diagnosis of 
complications of peritoneal dialysis catheters with procedure codes 
describing removal, revision, and/or insertion of new peritoneal 
dialysis catheters group to MS-DRGs 981 through 983. The ICD-10-CM 
diagnosis codes that describe complications of peritoneal dialysis 
catheters, listed in the table below, are assigned to MDC 21 (Injuries, 
Poisonings and Toxic Effects of Drugs). These principal diagnoses are 
frequently reported with the procedure codes describing removal, 
revision, and/or insertion of new peritoneal dialysis catheters.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
T85.611A..................  Breakdown (mechanical) of intraperitoneal
                             dialysis catheter, initial encounter.
T85.621A..................  Displacement of intraperitoneal dialysis
                             catheter, initial encounter.
T85.631A..................  Leakage of intraperitoneal dialysis
                             catheter, initial encounter.
T85.691A..................  Other mechanical complication of
                             intraperitoneal dialysis catheter, initial
                             encounter.
T85.71XA..................  Infection and inflammatory reaction due to
                             peritoneal dialysis catheter, initial
                             encounter.
T85.898A..................  Other specified complication of other
                             internal prosthetic devices, implants and
                             graft, initial encounter.
------------------------------------------------------------------------

    The procedure codes in the table below describe removal, revision, 
and/or insertion of new peritoneal dialysis catheters or revision of 
synthetic substitutes and are currently assigned to MDC 6 (Diseases and 
Disorders of the Digestive System) in MS-DRGs 356, 357, and 358 (Other 
Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, 
respectively).

------------------------------------------------------------------------
ICD-10-PCS  procedure code                Code description
------------------------------------------------------------------------
0WHG03Z...................  Insertion of infusion device into peritoneal
                             cavity, open approach.
0WHG43Z...................  Insertion of infusion device into peritoneal
                             cavity, percutaneous endoscopic approach.
0WPG03Z...................  Removal of infusion device from peritoneal
                             cavity, open approach.
0WPG43Z...................  Removal of infusion device from peritoneal
                             cavity, percutaneous endoscopic approach.
0WWG03Z...................  Revision of infusion device in peritoneal
                             cavity, open approach.
0WWG0JZ...................  Revision of synthetic substitute in
                             peritoneal cavity, open approach.
0WWG43Z...................  Revision of infusion device in peritoneal
                             cavity, percutaneous endoscopic approach.
0WWG4JZ...................  Revision of synthetic substitute in
                             peritoneal cavity, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    We examined the claims data from the September 2018 update of the 
FY 2018 MedPAR file for the average costs and length of stay for cases 
that report a principal diagnosis of complications of peritoneal 
dialysis catheters with a procedure describing removal, revision, and/
or insertion of new peritoneal dialysis catheters or revision of 
synthetic substitutes. Our findings are shown in the table below. We 
note that we did not find any such cases in MS-DRG 983.

  MS-DRG 981 Through 982: Peritoneal Dialysis Catheter Procedures With Principal Diagnosis of Complications of
                                          Peritoneal Dialysis Catheters
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases reporting peritoneal dialysis catheter                   1,603             8.5         $20,676
 procedures with a principal diagnosis of complications of
 peritoneal dialysis catheters..................................
MS-DRG 982--Cases reporting peritoneal dialysis catheter                       5             8.6          11,694
 procedures with a principal diagnosis of complications of
 peritoneal dialysis catheters..................................
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors indicated that, within MDC 21, the procedures 
describing removal, revision, and/or insertion of new peritoneal 
dialysis catheters or revision of synthetic substitutes most suitably 
group to MS-DRGs 907, 908, and 909, which contain all procedures for 
injuries that are not specific to the hand, skin, and wound 
debridement. To determine how the resources for this subset of cases 
compared to cases in MS-DRGs 907, 908, and 909 as a whole, we examined 
the average costs and length of stay for cases in MS-DRGs 907, 908, and 
909. Our findings are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 907--All cases...........................................           9,482             9.7         $27,492
MS-DRG 908--All cases...........................................           9,305             5.3          14,597
MS-DRG 909--All cases...........................................           3,011               3           9,587
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors considered these data and noted that the 
average costs and length of stay for this subset of cases, most of 
which group to MS-DRG 981, are lower than the average costs and length 
of stay for cases of the same

[[Page 19219]]

severity level in MS-DRGs 907. However, our clinical advisors believe 
that the procedures describing removal, revision, and/or insertion of 
new peritoneal dialysis catheters or revision of synthetic substitutes 
are clearly related to the principal diagnosis codes describing 
complications of peritoneal dialysis catheters and, therefore, it is 
clinically appropriate for the procedures to group to the same MS-DRGs 
as the principal diagnoses. Therefore, we are proposing to add the 
eight procedure codes listed in the table above that describe removal, 
revision, and/or insertion of new peritoneal dialysis catheters or 
revision of synthetic substitutes to MDC 21 (Injuries, Poisonings & 
Toxic Effects of Drugs) in MS-DRGs 907, 908, and 909. Under this 
proposal, cases reporting a principal diagnosis of complications of 
peritoneal dialysis catheters with a procedure describing removal, 
revision, and/or insertion of new peritoneal dialysis catheters or 
revision of synthetic substitutes would group to MS-DRGs 907, 908, and 
909.
(3) Bone Excision With Pressure Ulcers
    During our review of the cases that group to MS-DRGs 981 through 
983, we noted that when procedures describing excision of the sacrum, 
pelvic bones, and coccyx (ICD-10-PCS procedure codes 0QB10ZZ (Excision 
of sacrum, open approach), 0QB20ZZ (Excision of right pelvic bone, open 
approach), 0QB30ZZ (Excision of left pelvic bone, open approach), and 
0QBS0ZZ (Excision of coccyx, open approach)) are reported with a 
principal diagnosis of pressure ulcers in MDC 9 (Diseases and Disorders 
of the Skin, Subcutaneous Tissue and Breast), the cases group to MS-
DRGs 981 through 983. The procedures describing excision of the sacrum, 
pelvic bones, and coccyx group to several MDCs, which are listed in the 
table below.

                 MS-DRG Assignments for ICD-10-PCS Codes 0QB10ZZ, 0QB20ZZ, 0QB30ZZ, and 0QBS0ZZ
----------------------------------------------------------------------------------------------------------------
             MDC                          MS-DRG                              MS-DRG description
----------------------------------------------------------------------------------------------------------------
3............................  133-134.....................  Other Ear, Nose, Mouth and Throat O.R. Procedures
                                                              with CC/MCC and without CC/MCC, respectively.
8............................  515-517.....................  Other Musculoskeletal System and Connective Tissue
                                                              O.R. Procedures with MCC, with CC, and without CC/
                                                              MCC, respectively.
10...........................  628-630.....................  Other Endocrine, Nutritional and Metabolic O.R.
                                                              Procedures with MCC, with CC, and without CC/MCC,
                                                              respectively.
21...........................  907-909.....................  Other O.R. Procedures for Injuries.
24...........................  957-959.....................  Other Procedures for Multiple Significant Trauma.
----------------------------------------------------------------------------------------------------------------

    When cases reporting procedure codes describing excision of the 
sacrum, pelvic bones, and coccyx report a principal diagnosis from MDC 
9, the ICD-10-CM diagnosis codes that are most frequently reported as 
principal diagnoses are listed below.

------------------------------------------------------------------------
 ICD-10-CM  diagnosis code                Code description
------------------------------------------------------------------------
L89.150...................  Pressure ulcer of sacral region,
                             unstageable.
L89.153...................  Pressure ulcer of sacral region, stage 3.
L89.154...................  Pressure ulcer of sacral region, stage 4.
L89.214...................  Pressure ulcer of right hip, stage 4.
L89.224...................  Pressure ulcer of left hip, stage 4.
L89.314...................  Pressure ulcer of right buttock, stage 4.
L89.324...................  Pressure ulcer of left buttock, stage 4.
L89.894...................  Pressure ulcer of other site, stage 4.
------------------------------------------------------------------------

    We examined the claims data from the September 2018 update of the 
FY 2018 MedPAR file for the average costs and length of stay for cases 
that report procedures describing excision of the sacrum, pelvic bones, 
and coccyx in conjunction with a principal diagnosis of pressure 
ulcers.

    MS-DRGs 981 Through 983: Cases Reporting Excision of the Sacrum, Pelvic Bones, and Coccyx Reported With a
                                     Principal Diagnosis of Pressure Ulcers
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases reporting excision of the sacrum, pelvic                   394            11.9         $24,398
 bones, and coccyx and a principal diagnosis of pressure ulcers.
MS-DRG 982--Cases Reporting excision of the sacrum, pelvic                   477             9.4          16,464
 bones, and coccyx and a principal diagnosis of pressure ulcers.
MS-DRG 983--Cases Reporting excision of the sacrum, pelvic                    38             4.8           8,519
 bones, and coccyx and a principal diagnosis of pressure ulcers.
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors indicated that, given the nature of these 
procedures, they could not be appropriately assigned to the specific 
surgical MS-DRGs within MDC 9, which are: Skin graft; skin debridement; 
mastectomy for malignancy; and breast biopsy, local excision, and other 
breast procedures. Therefore, our clinical advisors believe that these 
procedures would most suitably group to MS-DRGs 579, 580, and 581 
(Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with 
CC, and without CC/MCC, respectively), which contain procedures

[[Page 19220]]

assigned to MDC 9 that do not fit within the specific surgical MS-DRGs 
in MDC 9. Therefore, we examined the claims data for the average length 
of stay and average costs for MS-DRGs 579, 580, and 581 in MDC 9. Our 
findings are shown in the table below.

 
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 579......................................................           4,091             9.2         $19,873
MS-DRG 580......................................................          10,048             5.2          11,229
MS-DRG 581......................................................           4,364               3           8,987
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors reviewed these data and noted that, in this 
subset of cases, most cases group to MS-DRGs 981 and 982 and have 
greater average length of stay and average costs than those cases of 
the same severity level in MS-DRGs 579 and 580. The smaller number of 
cases that group to MS-DRG 983 have lower average costs than cases in 
MS-DRG 581. However, our clinical advisors believe that the procedure 
codes describing excision of the sacrum, pelvic bones, and coccyx are 
clearly related to the principal diagnosis codes describing pressure 
ulcers, as these procedures would be performed to treat pressure ulcers 
in the sacrum, hip, and buttocks regions. Therefore, our clinical 
advisors believe that it is clinically appropriate for the procedures 
to group to the same MS-DRGs as the principal diagnoses. Therefore, we 
are proposing to add the ICD-10-PCS procedure codes describing excision 
of the sacrum, pelvic bones, and coccyx to MDC 9 in MS-DRGs 579, 580, 
and 581. Under this proposal, cases reporting a principal diagnosis in 
MDC 9 (such as pressure ulcers) with a procedure describing excision of 
the sacrum, pelvic bones, and coccyx would group to MS-DRGs 579, 580, 
and 581.
(4) Lower Extremity Muscle and Tendon Excision
    During the review of the cases that group to MS-DRGs 981 through 
983, we noted that when several ICD-10-PCS procedure codes describing 
excision of lower extremity muscles and tendons are reported in 
conjunction with ICD-10-CM diagnosis codes in MDC 10 (Endocrine, 
Nutritional and Metabolic Diseases and Disorders), the cases group to 
MS-DRGs 981 through 983. These ICD-10-PCS procedure codes are listed in 
the table below, and are assigned to several MS-DRGs, which are also 
listed below.

----------------------------------------------------------------------------------------------------------------
   ICD-10-PCS  procedure code                      Code description
-----------------------------------------------------------------------------------
0KBN0ZZ.........................  Excision of right hip muscle, open approach.
0KBP0ZZ.........................  Excision of left hip muscle, open approach.
0KBS0ZZ.........................  Excision of right lower leg muscle, open
                                   approach.
0KBT0ZZ.........................  Excision of left lower leg muscle, open approach.
0KBV0ZZ.........................  Excision of right foot muscle, open approach.
0KBW0ZZ.........................  Excision of left foot muscle, open approach.
0LBV0ZZ.........................  Excision of right foot tendon, open approach.
0LBW0ZZ.........................  Excision of left foot tendon, open approach.
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
             MDC                          MS-DRG                              MS-DRG description
----------------------------------------------------------------------------------------------------------------
01...........................  040-042.....................  Peripheral, Cranial Nerve and Other Nervous System
                                                              Procedures with MCC, with CC or Peripheral
                                                              Neurostimulator, and without CC/MCC, respectively.
08...........................  500-502.....................  Soft Tissue Procedures with MCC, with CC, and
                                                              without CC/MCC, respectively.
09...........................  579-581.....................  Other Skin, Subcutaneous Tissue and Breast
                                                              Procedures with MCC, with CC, and without CC/MCC,
                                                              respectively.
21...........................  907-909.....................  Other O.R. Procedures for Injuries.
24...........................  957-959.....................  Other Procedures for Multiple Significant Trauma.
----------------------------------------------------------------------------------------------------------------

    The ICD-10-CM diagnosis codes in MDC 10 that are most frequently 
reported as the principal diagnosis with a procedure describing 
excision of lower extremity muscles and tendons are listed in the table 
below. The combination indicates debridement procedures for more 
complex diabetic ulcers.

------------------------------------------------------------------------
 ICD-10-CM  procedure code                Code description
------------------------------------------------------------------------
E11.621...................  Type 2 diabetes mellitus with foot ulcer.
E11.69....................  Type 2 diabetes mellitus with other
                             specified complication.
E11.628...................  Type 2 diabetes mellitus with other skin
                             complications.
E11.622...................  Type 2 diabetes mellitus with other skin
                             ulcer.
E10.621...................  Type 1 diabetes mellitus with foot ulcer.
------------------------------------------------------------------------

    To understand the resource use for the subset of cases reporting 
procedure codes describing excision of lower extremity muscles and 
tendons that are currently grouping to MS-DRGs 981 through 983, we 
examined claims data

[[Page 19221]]

for the average length of stay and average costs for these cases. Our 
findings are shown in the table below.

  MS-DRGs 981-983: Cases Reporting Procedures Describing Excision of Lower Extremity Muscles and Tendons With a
                                          Principal Diagnosis in MDC 10
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases reporting excision of lower extremity muscles              125             9.1         $19,031
 and tendons and a principal diagnosis in MDC 10................
MS-DRG 982--Cases reporting excision of lower extremity muscles              561             6.2          12,000
 and tendons and a principal diagnosis in MDC 10................
MS-DRG 983--Cases reporting excision of lower extremity muscles               16             4.8           9,003
 and tendons and a principal diagnosis in MDC 10................
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors examined cases reporting procedures 
describing excision of lower extremity muscles and tendons with a 
principal diagnosis in the MS-DRGs within MDC 10 and determined that 
these cases would most suitably group to MS-DRGs 622, 623, and 624 
(Skin Grafts and Wound Debridement for Endocrine, Nutritional and 
Metabolic Disorders with MCC, with CC, and without CC/MCC, 
respectively). Therefore, we examined the average length of stay and 
average costs for cases assigned to MS-DRGs 622, 623, and 624. Our 
findings are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 622......................................................           1,540            11.7         $25,114
MS-DRG 623......................................................           4,849             6.6          13,490
MS-DRG 624......................................................             232             3.7           7,442
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors reviewed these data and noted that most of 
the cases reporting procedures describing excision of lower extremity 
muscles and tendons group to MS-DRGs 981 and 982. For these cases, the 
average length of stay and average costs are lower than those of cases 
that currently group to MS-DRGs 622 and 623. However, our clinical 
advisors believe that these procedures are clearly related to the 
principal diagnoses in MDC 10, as they would be performed to treat 
skin-related complications of diabetes and, therefore, it is clinically 
appropriate for the procedures to group to the same MS-DRGs as the 
principal diagnoses. Therefore, we are proposing to add the procedure 
codes listed previously describing excision of lower extremity muscles 
and tendons to MDC 10. Under our proposal, cases reporting these 
procedure codes with a principal diagnosis in MDC 10 would group to MS-
DRGs 622, 623, and 624.
(5) Kidney Transplantation Procedures
    During our review of the cases that group to MS-DRGs 981 through 
983, we noted that when procedures describing transplantation of 
kidneys (ICD-10-PCS procedure codes 0TY00Z0 (Transplantation of right 
kidney, allogeneic, open approach) and 0TY10Z0 (Transplantation of left 
kidney, allogeneic, open approach)) are reported in conjunction with 
ICD-10-CM diagnosis codes in MDC 5 (Diseases and Disorders of the 
Circulatory System), the cases group to MS-DRGs 981 through 983. The 
ICD-10-CM diagnosis codes in MDC 5 that are reported with the kidney 
transplantation codes are I13.0 (Hypertensive heart and chronic kidney 
disease with heart failure and with stage 1 through stage 4 chronic 
kidney disease) and I13.2 (Hypertensive heart and chronic kidney 
disease with heart failure and with stage 5 chronic kidney disease), 
which group to MDC 5. Procedure codes describing transplantation of 
kidneys are assigned to MS-DRG 652 (Kidney Transplant) in MDC 11. We 
examined claims data to identify the average length of stay and average 
costs for cases reporting procedure codes describing transplantation of 
kidneys with a principal diagnosis in MDC 5, which are currently 
grouping to MS-DRGs 981 through 983. Our findings are shown in the 
table below. We did not find any such cases in MS-DRG 983.

    MS-DRGs 981 Through 983: Cases Reporting Procedures Describing Transplantation of Kidney With a Principal
                                               Diagnosis in MDC 5
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases reporting transplantation of kidney and a                  285             6.8         $25,340
 principal diagnosis in MDC 5...................................
MS-DRG 982--Cases reporting transplantation of kidney and a                    2             3.5          21,678
 principal diagnosis in MDC 5...................................
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors examined the MS-DRGs within MDC 5 and 
indicated that, given the nature of the procedures compared to the 
specific surgical procedures contained in the other surgical MS-DRGs in 
MDC 5, they could not be appropriately assigned to any of the specific 
surgical MS-DRGs. Therefore, they determined that these cases would 
most suitably group to MS-DRG 264 (Other Circulatory System O.R. 
Procedures), which contains a broader range of procedures related to 
MDC 5 diagnoses. We examined claims data to determine the average 
length of stay and

[[Page 19222]]

average costs for cases assigned to MS-DRG 264. We found a total of 
10,073 cases, with an average length of stay of 9.3 days and average 
costs of $22,643.
    Our clinical advisors reviewed these data and noted that the 
average costs for cases reporting transplantation of kidney with a 
diagnosis from MDC 5 are similar to the average costs of cases in MS-
DRG 264 ($22,643 in MS-DRG 264 compared to $25,340 in MS-DRG 981), 
while the average length of stay is shorter than that of cases in MS-
DRG 264 (9.3 days in MS-DRG 264 compared to 6.8 days in MS-DRG 981). 
Our clinical advisors noted that ICD-10-CM diagnosis codes describing 
hypertensive heart and chronic kidney disease without heart failure 
(I13.10 (Hypertensive heart and chronic kidney disease without heart 
failure, with stage 1 through stage 4 chronic kidney disease, or 
unspecified chronic kidney disease) and I13.11 (Hypertensive heart and 
chronic kidney disease without heart failure, with stage 5 chronic 
kidney disease, or end stage renal disease group) group to MS-DRG 652 
(Kidney Transplant) in MDC 11 (Diseases and Disorders of the Kidney and 
Urinary Tract). Our clinical advisors also noted that the counterpart 
codes describing hypertensive heart and chronic kidney disease with 
heart failure are as related to the kidney transplantation codes as the 
codes without heart failure, but because the codes with heart failure 
group to MDC 5, cases reporting a kidney transplant procedure with a 
diagnosis code of hypertensive heart and chronic kidney disease with 
heart failure currently group to MS-DRGs 981 through 983. Therefore, we 
are proposing to add ICD-10-PCS procedure codes 0TY00Z0 and 0TY10Z0 to 
MS-DRG 264 in MDC 5. Under this proposal, cases reporting a principal 
diagnosis in MDC 5 with a procedure describing kidney transplantation 
would group to MS-DRG 264 in MDC 5. We note that because MDC 5 covers 
the circulatory system, and kidney transplants generally group to MDC 
11, we are seeking public comments on whether the procedure codes 
should instead continue to group to MS-DRGs 981 through 983.
(6) Insertion of Feeding Device
    During our review of the cases that group to MS-DRGs 981 through 
983, we noted that when ICD-10-PCS procedure code 0DH60UZ (Insertion of 
feeding device into stomach, open approach) is reported with ICD-10-CM 
diagnosis codes assigned to MDC 1 (Diseases and Disorders of the 
Nervous System) or MDC 10 (Endocrine, Nutritional and Metabolic 
Diseases and Disorders), the cases group to MS-DRGs 981 through 983. 
ICD-10-PCS procedure code 0DH60UZ is currently assigned to MDC 6 
(Diseases and Disorders of the Digestive System) in MS-DRGs 326, 327, 
and 328 (Stomach, Esophageal and Duodenal Procedures) and MDC 21 
(Injuries, Poisonings and Toxic Effects of Drugs) in MS-DRGs 907, 908, 
and 909 (Other O.R. Procedures for Injuries). We also noticed that: (1) 
When ICD-10-PCS procedure code 0DH60UZ is reported with a principal 
diagnosis in MDC 1, the ICD-10-CM diagnosis codes reported with this 
procedure code describe cerebral infarctions of various etiology and 
anatomic locations and resulting complications; and (2) when ICD-10-PCS 
procedure code 0DH60UZ is reported with a principal diagnosis in MDC 
10, the ICD-10-CM diagnosis codes reported with this procedure code 
pertain to dehydration, failure to thrive, and various forms of 
malnutrition.
    We examined claims data to identify the average length of stay and 
average costs for cases in MS-DRGs 981 through 983 reporting ICD-10-PCS 
procedure code 0DH60UZ in conjunction with a principal diagnosis from 
MDC 1 or MDC 10. Our findings are shown in the table below.

  MS-DRGs 981 Through 983: Cases Reporting Procedure Code 0DH60UZ With a Principal Diagnosis in MDC 1 or MDC 10
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases reporting procedure code 0DH60UZ and a                     115            19.3         $40,598
 principal diagnosis in MDC 1...................................
MS-DRG 982--Cases reporting procedure code 0DH60UZ and a                      43            13.2          25,042
 principal diagnosis in MDC 1...................................
MS-DRG 983--Cases reporting procedure code 0DH60UZ and a                       4            14.3          26,954
 principal diagnosis in MDC 1...................................
MS-DRG 981--Cases reporting procedure code 0DH60UZ and a                      47            13.4          24,690
 principal diagnosis in MDC 10..................................
MS-DRG 982--Cases reporting procedure code 0DH60UZ and a                      20             7.2          12,792
 principal diagnosis in MDC 10..................................
MS-DRG 983--Cases reporting procedure code 0DH60UZ and a                       5             5.0           8,608
 principal diagnosis in MDC 10..................................
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors determined that the feeding tube procedure 
was related to specific diagnoses within MDC 1 and MDC 10 and, 
therefore, could be assigned to both MDCs. Therefore, they reviewed the 
MS-DRGs within MDC 1 and MDC 10. They determined that the most suitable 
MS-DRG assignment within MDC 1 would be 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), which contain procedures assigned to MDC 1 that describe 
insertion of devices into anatomical areas that are not part of the 
nervous system. Our clinical advisors determined that the most suitable 
MS-DRG assignment within MDC 10 would be MS-DRGs 628, 629, and 630 
(Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, 
with CC, and without CC/MCC, respectively), which contain the most 
clinically similar procedures assigned to MDC 10, such as those 
describing insertion of infusion pump into subcutaneous tissue and 
fascia. Therefore, we examined claims data to identify the average 
length of stay and average costs for cases assigned to MDC 1 in MS-DRGs 
040, 041, and 042 and MDC 10 in MS-DRGs 628, 629, and 630. Our findings 
are shown in the tables below.

[[Page 19223]]



----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                        MS-DRGs in MDC 1                               cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 040......................................................           4,211            10.2         $27,096
MS-DRG 041......................................................           6,153             5.1          16,917
MS-DRG 042......................................................           2,249             3.0          13,365
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                        MS-DRGs in MDC 10                              cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 628......................................................           3,004             9.9         $25,472
MS-DRG 629......................................................           5,435             7.2          16,391
MS-DRG 630......................................................             237             3.2          10,659
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors reviewed these data and noted that the 
average length of stay and average costs for the subset of cases 
reporting ICD-10-PCS procedure code 0DH60UZ with a principal diagnosis 
assigned to MDC 1 are higher than those cases in MS-DRGs 040, 041, and 
042. For example, the cases reporting ICD-10-PCS procedure code 0DH60UZ 
and a principal diagnosis in MDC 1 that currently group to MS-DRG 981 
have an average length of stay of 19.3 days and average costs of 
$40,598, while the cases in MS-DRG 040 have an average length of stay 
of 10.2 days and average costs of $27,096. Our clinical advisors noted 
that the average length of stay and average costs for the subset of 
cases reporting ICD-10-PCS procedure code 0DH60UZ with a principal 
diagnosis assigned to MDC 10 are more closely aligned with those cases 
in MS-DRGs 628, 629, and 630. In both cases, our clinical advisors 
believe that the insertion of feeding device is clearly related to the 
principal diagnoses in MDC 1 and MDC 10 and, therefore, it is 
clinically appropriate for the procedures to group to the same MS-DRGs 
as the principal diagnoses. Therefore, we are proposing to add ICD-10-
PCS procedure code 0DH60UZ to MDC 1 and MDC 10. Under this proposal, 
cases reporting procedure code 0DH60UZ with a principal diagnosis in 
MDC 1 would group to MS-DRGs 040, 041, and 042, while cases reporting 
ICD-10-PCS procedure code 0DH60UZ with a principal diagnosis in MDC 10 
would group to MS-DRGs 628, 629, and 630.
(7) Basilic Vein Reposition in Chronic Kidney Disease
    During our review of the cases that group to MS-DRGs 981 through 
983, we noted that when procedures codes describing reposition of 
basilic vein (ICD-10-PCS procedure codes 05SB0ZZ (Reposition right 
basilic vein, open approach), 05SB3ZZ (Reposition right basilic vein, 
percutaneous approach), 05SC0ZZ (Reposition left basilic vein, open 
approach), and 05SC3ZZ (Reposition left basilic vein, percutaneous 
approach)) are reported with a principal diagnosis in MDC 11 (Diseases 
and Disorders of the Kidney and Urinary Tract) (typically describing 
chronic kidney disease), the cases group to MS-DRGs 981 through 983. 
This code combination suggests a revision of an arterio-venous fistula 
in a patient on chronic hemodialysis. We examined claims data to 
identify the average length of stay and average costs for cases 
reporting procedures describing reposition of basilic vein with a 
principal diagnosis in MDC 11, which are currently grouping to MS-DRGs 
981 through 983. Our findings are shown in the table below.

  MS-DRGs 981-983: Cases Reporting Procedures Describing Reposition of Basilic Vein With Principal Diagnosis in
                                                     MDC 11
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases reporting procedures describing reposition of               48             4.6         $12,232
 basilic vein and a principal diagnosis in MDC 11...............
MS-DRG 982--Cases reporting procedures describing reposition of               10             6.9          18,481
 basilic vein and a principal diagnosis in MDC 11...............
MS-DRG 983--Cases reporting procedures describing reposition of                1             3.0           3,552
 basilic vein and a principal diagnosis in MDC 11...............
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors examined claims data for cases in the MS-DRGs 
within MDC 11 and determined that cases reporting procedures describing 
reposition of basilic vein with a principal diagnosis in MDC 11 would 
most suitably group to MS-DRGs 673, 674, and 675 (Other Kidney and 
Urinary Tract Procedures with MCC, with CC, and without CC/MCC, 
respectively), to which MDC 11 procedures describing reposition of 
veins (other than renal veins) are assigned. Therefore, we examined 
claims data to identify the average length of stay and average costs 
for cases assigned to MS-DRGs 673, 674, and 675. Our findings are shown 
in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 673......................................................          10,542            10.8         $25,842
MS-DRG 674......................................................           6,167             7.4          17,685
MS-DRG 675......................................................             437             3.9          11,858
----------------------------------------------------------------------------------------------------------------


[[Page 19224]]

    Our clinical advisors reviewed these data and noted that the 
average length of stay and average costs for cases reporting procedures 
describing reposition of basilic vein with a principal diagnosis in MDC 
11 with an MCC are significantly lower than for those cases in MS-DRG 
673. The average length of stay and average costs are similar for those 
cases with a CC, while the single case without a CC or MCC had 
significantly lower costs than the average costs of cases in MS-DRG 
675. However, our clinical advisors believe that when the procedures 
describing reposition of basilic vein are reported with a principal 
diagnosis describing chronic kidney disease, the procedure is likely 
related to arteriovenous fistulas for dialysis associated with the 
chronic kidney disease. Therefore, our clinical advisors believe that 
it is clinically appropriate for the procedures to group to the same 
MS-DRGs as the principal diagnoses. Therefore, we are proposing to add 
ICD-10-PCS procedures codes 05SB0ZZ, 05SB3ZZ, 05SC0ZZ, and 05SC3ZZ to 
MDC 11. Under our proposal, cases reporting procedure codes describing 
reposition of basilic vein with a principal diagnosis in MDC 11 would 
group to MS-DRGs 673, 674, and 675.
(8) Colon Resection With Fistula
    During our review of the cases that group to MS-DRGs 981 through 
983, we noted that when ICD-10-PCS procedure code 0DTN0ZZ (Resection of 
sigmoid colon, open approach) is reported with a principal diagnosis in 
MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract), the 
cases group to MS-DRGs 981 through 983. The principal diagnosis most 
frequently reported with ICD-10-PCS procedure code 0DTN0ZZ in MDC 11 is 
ICD-10-CM code N321 (Vesicointestinal fistula). ICD-10-PCS procedure 
code 0DTN0ZZ currently groups to several MDCs, which are listed in the 
table below.

        MS-DRG Assignments for ICD-10-PCS Procedure Code 0DTN0ZZ
------------------------------------------------------------------------
          MDC                   MS-DRG             MS-DRG description
------------------------------------------------------------------------
6.....................  329-331...............  Major Small and Large
                                                 Bowel Procedures.
17....................  820-822...............  Lymphoma and Leukemia
                                                 with Major Procedure.
17....................  826-828...............  Myeloproliferative
                                                 Disorders or Poorly
                                                 Differentiated
                                                 Neoplasms with Major
                                                 Procedure.
21....................  907-909...............  Other O.R. Procedures
                                                 for Injuries.
24....................  957-959...............  Other Procedures for
                                                 Multiple Significant
                                                 Trauma.
------------------------------------------------------------------------

    We examined claims data to identify the average length of stay and 
average costs for cases reporting procedure code 0DTN0ZZ with a 
principal diagnosis in MDC 11, which are currently grouping to MS-DRGs 
981 through 983. Our findings are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases reporting procedure code 0DTN0ZZ and a                      27           15.81         $44,743
 principal diagnosis in MDC 11..................................
MS-DRG 982--Cases reporting procedure code 0DTN0ZZ and a                      33            8.48          20,105
 principal diagnosis in MDC 11..................................
MS-DRG 983--Cases reporting procedure code 0DTN0ZZ and a                       5            3.60          12,351
 principal diagnosis in MDC 11..................................
----------------------------------------------------------------------------------------------------------------

    Our clinical advisors examined the MS-DRGs within MDC 11 and 
determined that the cases reporting procedure code 0DTN0ZZ with a 
principal diagnosis in MDC 11 would most suitably group to MS-DRGs 673, 
674, and 675, which contain procedures performed on structures other 
than kidney and urinary tract anatomy. We note that the claims data 
describing the average length of stay and average costs for cases in 
these MS-DRGs are included in a table earlier in this section. Because 
vesicointestinal fistulas involve both the bladder and the bowel, some 
procedures in both MDC 6 (Diseases and Disorders of the Digestive 
System) and MDC 11 (Diseases and Disorders of the Kidney and Urinary 
Tract) would be expected to be related to a principal diagnosis of 
vesicointestinal fistula (ICD-10-CM code N321). Our clinical advisors 
observed that procedure code 0DTN0ZZ is the second most common 
procedure reported in conjunction with a principal diagnosis of code 
N321, after ICD-10-PCS procedure code 0TQB0ZZ (Repair bladder, open 
approach), which is assigned to both MDC 6 and MDC 11. Our clinical 
advisors reviewed the data and noted that the average length of stay 
and average costs for this subset of cases are generally higher for 
this subset of cases than for cases in MS-DRGs 673, 674, and 675. 
However, our clinical advisors believe that when ICD-10-PCS procedure 
code 0DTN0ZZ is reported with a principal diagnosis in MDC 11 
(typically vesicointestinal fistula), the procedure is related to the 
principal diagnosis. Therefore, we are proposing to add ICD-10-PCS 
procedure code 0DTN0ZZ to MDC 11. Under our proposal, cases reporting 
procedure code 0DTN0ZZ with a principal diagnosis of vesicointestinal 
fistula (diagnosis code N321) in MDC 11 would group to MS-DRGs 673, 
674, and 675.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983 and 987 
Through 989
    We also review the list of ICD-10-PCS procedures that, when in 
combination with their principal diagnosis code, result in assignment 
to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether 
any of those procedures should be reassigned from one of those two 
groups of MS-DRGs to the other group of MS-DRGs based on average costs 
and the length of stay. We look at the data for trends such as shifts 
in treatment practice or reporting practice that would make the 
resulting MS-DRG assignment illogical. If we find these shifts, we 
would propose to move cases to keep the MS-DRGs clinically similar or 
to provide payment for the cases in a similar manner. Generally, we 
move only those procedures for which we have an adequate number of 
discharges to analyze the data.

[[Page 19225]]

    Based on the results of our review of claims data in the September 
2018 update of the FY 2018 MedPAR file, we are not proposing to change 
the current structure of MS-DRGs 981 through 983 and MS-DRGs 987 
through 989.
c. Proposed Additions for Diagnosis and Procedure Codes to MDCs
    Below we summarize the requests we received to examine cases found 
to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989 to 
determine if it would be appropriate to add procedure codes to one of 
the surgical MS DRGs for the MDC into which the principal diagnosis 
falls or to move the principal diagnosis to the surgical MS-DRGs to 
which the procedure codes are assigned.
(1) Stage 3 Pressure Ulcers of the Hip
    We received a request to reassign cases for a stage 3 pressure 
ulcer of the left hip when reported with procedures involving excision 
of pelvic bone or transfer of hip muscle 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-DRG 579 (Other Skin, 
Subcutaneous Tissue and Breast Procedures with MCC) in MDC 9. ICD-10-CM 
diagnosis code L89.223 (Pressure ulcer left hip, stage 3) is used to 
report this condition and is currently assigned to MDC 9 (Diseases and 
Disorders of the Skin, Subcutaneous Tissue and Breast). We refer 
readers to section II.12.a. of the preamble of this proposed rule, 
where we address ICD-10-PCS procedure code 0QB30ZZ (Excision of left 
pelvic bone, open approach), which was reviewed as part of our ongoing 
analysis of the unrelated MS-DRGs and which we are proposing to add to 
MS-DRGs 579, 580, and 581 in MDC 5. (While the requestor only referred 
to base MS-DRG 579, we believe it is appropriate to assign the cases to 
MS-DRGs 579, 580, and 581 by severity level.) ICD-10-PCS procedure 
codes 0KXP0ZZ (Transfer left hip muscle, open approach) and 0KXN0ZZ 
(Transfer right hip muscle, open approach) may be reported to describe 
transfer of hip muscle procedures and are currently assigned to MDC 1 
(Diseases and Disorders of the Nervous System) and MDC 8 (Diseases and 
Disorders of the Musculoskeletal System and Connective Tissue). We 
included ICD-10-PCS procedure code 0KXN0ZZ in our analysis because it 
describes the identical procedure on the right side.
    Our analysis of this grouping issue confirmed that, when a stage 3 
pressure ulcer of the left hip (ICD-10-CM diagnosis code L89.223) is 
reported as a principal diagnosis with ICD-10-PCS procedure code 
0KXP0ZZ or 0KXN0ZZ, 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 that 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 ICD-10-CM 
diagnosis code L89.223 describing a stage 3 pressure ulcer of left hip 
is classified to MDC 9 and because ICD-10-PCS procedure codes 0KXP0ZZ 
and 0KXN0ZZ are classified to 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 8 (Diseases 
and Disorders of the Musculoskeletal System and Connective Tissue) in 
MS-DRGs 500, 501, and 502 (Soft Tissue Procedures with MCC, with CC, 
and without CC/MCC, respectively), the GROUPER logic assigns this case 
to the ``unrelated operating room procedures'' set of MS-DRGs.
    For our review of this grouping issue and the request to have 
procedure code 0KXP0ZZ added to MDC 9, we examined claims data for 
cases reporting procedure code 0KXP0ZZ or 0KXN0ZZ in conjunction with a 
diagnosis code that typically groups to MDC 9. Our findings are shown 
in the table below.

            MS-DRGs 981 Through 983: Cases With Hip Muscle Transfer and Principal Diagnosis in MDC 9
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases with procedure code 0KXP0ZZ or 0KXN0ZZ and                  72            12.6         $25,023
 principal diagnosis in MDC 9...................................
MS-DRG 982--Cases with procedure code 0KXP0ZZ or 0KXN0ZZ and                 130            10.5          17,955
 principal diagnosis in MDC 9...................................
MS-DRG 983--Cases with procedure code 0KXP0ZZ or 0KXN0ZZ and                  16             6.5          13,196
 principal diagnosis in MDC 9...................................
----------------------------------------------------------------------------------------------------------------

    As indicated earlier, the requestor suggested that we move ICD-10-
PCS procedure code 0KXP0ZZ to MS-DRG 579. However, our clinical 
advisors believe that, within MDC 9, these procedure codes are more 
clinically aligned with the procedure codes assigned to MS-DRGs 573, 
574, and 575 (Skin Graft for Skin Ulcer or Cellulitis with MCC, with CC 
and without CC/MCC, respectively), which are more specific to the care 
of stage 3, 4 and unstageable pressure ulcers than MS-DRGs 579, 580, 
and 581. Therefore, we examined claims data to identify the average 
length of stay and average costs for cases assigned to MS-DRGs 573, 
574, and 575. Our findings are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 573......................................................             548            15.4         $34,549
MS-DRG 574......................................................           1,254             9.8          21,251
MS-DRG 575......................................................             238             5.4          12,006
----------------------------------------------------------------------------------------------------------------

    We note that the average costs for cases in MS-DRGs 573 and 574 are 
higher than the average costs of the subset of cases with the same 
severity reporting a hip muscle transfer and a principal diagnosis in 
MDC 9, while the average costs of those cases in MS-DRG 575 are similar 
to the average costs of those cases that are currently grouping

[[Page 19226]]

to MS-DRG 983. However, our clinical advisors believe that the cases of 
hip muscle transfer represent a distinct, recognizable clinical group 
similar to those cases in MS-DRGs 573, 574, and 575, and that the 
procedures are clearly related to the principal diagnosis codes. 
Therefore, they believe that it is clinically appropriate for the 
procedures to group to the same MS-DRGs as the principal diagnoses. 
Therefore, we are proposing to add ICD-10-PCS procedure codes 0KXP0ZZ 
and 0KXN0ZZ to MDC 9. Under our proposal, cases reporting ICD-10-PCS 
procedure code 0KXP0ZZ or 0KXN0ZZ with a principal diagnosis in MDC 9 
would group to MS-DRGs 573, 574, and 575.
(2) Gastrointestinal Stromal Tumor
    We received a request to reassign cases for gastrointestinal 
stromal tumor of the stomach when reported with a procedure describing 
laparoscopic bypass of the stomach to jejunum from MS-DRGs 981, 982, 
and 983 to MS-DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal 
Procedures with MCC, with CC, and without CC/MCC, respectively) by 
adding ICD-10-PCS procedure code 0D164ZA (Bypass stomach to jejunum, 
percutaneous endoscopic approach) to MDC 6. ICD-10-CM diagnosis code 
C49.A2 (Gastrointestinal stromal tumor of stomach) is used to report 
this condition and is currently assigned to MDC 8. ICD-10-PCS procedure 
code 0D164ZA is used to report the stomach bypass procedure and is 
currently assigned to MDC 5 (Diseases and Disorders of the Circulatory 
System), MDC 6 (Diseases and Disorders of the Digestive System), MDC 7 
(Diseases and Disorders of the Hepatobiliary System and Pancreas), MDC 
10 (Endocrine, Nutritional and Metabolic Diseases and Disorders), and 
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly 
Differentiated Neoplasms). We refer readers to section II.12.a. of the 
preamble of this proposed rule where we discuss our proposal to move 
the listed diagnosis codes describing gastrointestinal stromal tumors, 
including ICD-10-CM diagnosis code C49.A2, into MDC 6. Therefore, this 
proposal, if finalized, would address the cases grouping to MS-DRGs 981 
through 983 by instead moving the diagnosis codes to MDC 6, which would 
result in the diagnosis code and the procedure code referenced by the 
requestor grouping to the same MDC.
(3) Finger Cellulitis
    We received a request to reassign cases for cellulitis of the right 
finger when reported with a procedure describing open excision of the 
right finger phalanx from MS-DRGs 981, 982, and 983 to MS-DRGs 579, 
580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures 
with MCC, with CC, and without CC/MCC, respectively). Currently, ICD-
10-CM diagnosis code L03.011 (Cellulitis of right finger) is used to 
report this condition and is currently assigned to MDC 09 in MS-DRGs 
573, 574, and 575 (Skin Graft for Skin Ulcer or Cellulitis with MCC, 
CC, and without CC/MCC, respectively), 576, 577, and 578 (Skin Graft 
except for Skin Ulcer or Cellulitis with MCC, CC, and without CC/MCC, 
respectively), and 602 and 603 (Cellulitis with MCC and without MCC, 
respectively). ICD-10-PCS procedure code 0PBT0ZZ (Excision of right 
finger phalanx, open approach) is used to identify the excision 
procedure, and is currently assigned to MDC 03 (Diseases and Disorders 
of the Ear, Nose, Mouth and Throat) in MS-DRGs 133 and 134 (Other Ear, 
Nose, Mouth and Throat O.R. Procedures with CC/MCC, and without CC/MCC, 
respectively); MDC 08 (Diseases and Disorders of the Musculoskeletal 
System and Connective Tissue) in MS-DRGs 515, 516, and 517 (Other 
Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, 
with CC, and without CC/MCC, respectively); MDC 10 (Endocrine, 
Nutritional and Metabolic Diseases and Disorders) in MS-DRGs 628, 629, 
and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures 
with MCC, with CC, and without CC/MCC, respectively); 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 CC/
MCC, respectively); and MDC 24 (Multiple Significant Trauma) in MS-DRGs 
957, 958, and 959 (Other O.R. Procedures for Multiple Significant 
Trauma with MCC, with CC, and without CC/MCC, respectively).
    Our analysis of this grouping issue confirmed that when a procedure 
such as open excision of right finger phalanx (ICD-10-PCS procedure 
code 0PBT0ZZ) is reported with a principal diagnosis from MDC 9, such 
as cellulitis of the right finger (ICD-10-CM diagnosis code L03.011), 
these cases group to MS-DRGs 981, 982, and 983. During our review of 
this issue, we also examined claims data for similar procedures 
describing excision of phalanges (which are listed in the table below) 
and noted the same pattern. We further noted that the ICD-10-PCS 
procedure codes describing excision of phalanx procedures with the 
diagnostic qualifier ``X'', which are used to report these procedures 
when performed for diagnostic purposes, are already assigned to MS-DRGs 
579, 580, and 581 (to which the requestor suggested these cases group). 
Our clinical advisors also believe that procedures describing resection 
of phalanges should be assigned to the same MS-DRG as the excisions, 
because the resection procedures would also group to MS-DRGs 981, 982, 
and 983 when reported with a principal diagnosis from MDC 9.

------------------------------------------------------------------------
  ICD-10-PCS  procedure code                Code description
------------------------------------------------------------------------
0PBR0ZZ......................  Excision of right thumb phalanx, open
                                approach.
0PBR3ZZ......................  Excision of right thumb phalanx,
                                percutaneous approach.
0PBR4ZZ......................  Excision of right thumb phalanx,
                                percutaneous endoscopic approach.
0PBS0ZZ......................  Excision of left thumb phalanx, open
                                approach.
0PBS3ZZ......................  Excision of left thumb phalanx,
                                percutaneous approach.
0PBS4ZZ......................  Excision of left thumb phalanx,
                                percutaneous endoscopic approach.
0PBT0ZZ......................  Excision of right finger phalanx, open
                                approach.
0PBT3ZZ......................  Excision of right finger phalanx,
                                percutaneous approach.
0PBT4ZZ......................  Excision of right finger phalanx,
                                percutaneous endoscopic approach.
0PBV0ZZ......................  Excision of left finger phalanx, open
                                approach.
0PBV3ZZ......................  Excision of left finger phalanx,
                                percutaneous approach.
0PBV4ZZ......................  Excision of left finger phalanx,
                                percutaneous endoscopic approach.
0PTR0ZZ......................  Resection of right thumb phalanx, open
                                approach.
0PTS0ZZ......................  Resection of left thumb phalanx, open
                                approach.
0PTT0ZZ......................  Resection of right finger phalanx, open
                                approach.
0PTV0ZZ......................  Resection of left finger phalanx, open
                                approach.
0RTW0ZZ......................  Resection of right finger phalangeal
                                joint, open approach.

[[Page 19227]]

 
0RTX0ZZ......................  Resection of left finger phalangeal
                                joint, open approach.
------------------------------------------------------------------------

    As noted in the previous discussion, whenever there is a surgical 
procedure reported on the claim that 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''.
    We examined the claims data for the three codes describing 
cellulitis of the finger (ICD-10-CM diagnosis codes L03.011 (Cellulitis 
of the right finger), L03.012 (Cellulitis of left finger), and L03.019 
(Cellulitis of unspecified finger)) to identify the average length of 
stay and average costs for cases reporting a principal diagnosis of 
cellulitis of the finger in conjunction with the excision of phalanx 
procedures listed in the table above. We note that there were no cases 
reporting a principal diagnosis of cellulitis of the finger in 
conjunction with the resection of phalanx procedures listed in the 
table above.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 981--Cases with principal diagnosis of cellulitis of the                2             3.5          $7,934
 finger and excision of phalanx procedure.......................
MS-DRG 982--Cases with principal diagnosis of cellulitis of the               11             4.2           7,244
 finger and excision of phalanx procedure.......................
MS-DRG 983--Cases with principal diagnosis of cellulitis of the                4             4.8           8,058
 finger and excision of phalanx procedure.......................
----------------------------------------------------------------------------------------------------------------

    We also examined the claims data to identify the average length of 
stay and average costs for all cases in MS-DRGs 579, 580, and 581. Our 
findings are shown in the table in section II.12.A.3.of the preamble of 
this proposed rule.
    While our clinical advisors noted that the average length of stay 
and average costs for cases in MS-DRGs 579, 580, and 581 are generally 
higher than the average length of stay and average costs for the subset 
of cases reporting a principal diagnosis of cellulitis of the finger 
and a procedure describing excision of phalanx, they believe that the 
procedures are clearly related to the principal diagnosis codes and, 
therefore, it is clinically appropriate for the procedures to group to 
the same MS-DRGs as the principal diagnoses, particularly given that 
procedures describing excision of phalanx with the diagnostic qualifier 
``X'' are already assigned to these MS-DRGs. In addition, our clinical 
advisors believe it is clinically appropriate for the procedures 
describing resection of phalanx to be assigned to MS-DRGs 579, 580, and 
581 as well. Therefore, we are proposing to add the procedure codes 
describing excision and resection of phalanx listed above to MS-DRGs 
579, 580, and 581. Under this proposal, cases reporting one of the 
excision or resection procedures listed in the table above in 
conjunction with a principal diagnosis from MDC 9 would group to MS-
DRGs 579, 580, and 581.
(4) Multiple Trauma With Internal Fixation of Joints
    We received a request to reassign cases involving multiple 
significant trauma with internal fixation of joints from MS-DRGs 981, 
982, and 983 to MS-DRGs 957, 958, and 959 (Other O.R. Procedures for 
Multiple Significant Trauma with MCC, with CC, and without CC/MCC, 
respectively). The requestor provided an example of several ICD-10-CM 
diagnosis codes that together described multiple significant trauma in 
conjunction with ICD-10-PCS procedure codes beginning with the prefix 
``0SH'' and ``0RH'' that describe internal fixation of joints. The 
requestor provided several suggestions to address this assignment, 
including: Adding all ICD-10-PCS procedure codes in MDC 8 (Diseases and 
Disorders of the Musculoskeletal System and Connective Tissue) with the 
exception of codes that group to MS-DRG 956 (Limb Reattachment, Hip and 
Femur Procedures for Multiple Significant Trauma) to MS-DRGs 957, 958, 
and 959; adding codes within the ``0SH'' and ``0RH'' code ranges to MDC 
24; and adding ICD-10-PCS procedure codes from all MDCs except those 
that currently group to MS-DRG 955 (Craniotomy for Multiple Significant 
Trauma) or MS-DRG 956 (Limb Reattachment, Hip and Femur Procedures for 
Multiple Significant Trauma) to MS-DRGs 957, 958, and 959.
    While we understand the requestor's concern about these multiple 
significant trauma cases, we believe any potential reassignment of 
these cases requires significant analysis. Similar to our analysis of 
MDC 14 (initially discussed at 81 FR 56854), there are multiple logic 
lists in MDC 24 that would need to be reviewed. For example, to satisfy 
the logic for multiple significant trauma, the logic requires a 
diagnosis code from the significant trauma principal diagnosis list and 
two or more significant trauma diagnoses from different body sites. The 
significant trauma logic lists for the other body sites (which include 
head, chest, abdominal, kidney, urinary system, pelvis or spine, upper 
limb, and lower limb) allow the extensive list of diagnosis codes 
included in the logic to be reported as a principal or secondary 
diagnosis. The analysis of the reporting of all the codes as a 
principal and/or secondary diagnosis within MDC 24, combined with the 
analysis of all of the ICD-10-PCS procedure codes within MDC 8, is 
anticipated to be a multi-year effort. Therefore, we plan to consider 
this issue for future rulemaking as part of our ongoing analysis of the 
unrelated procedure MS-DRGs.
(5) Totally Implantable Vascular Access Devices
    We received a request to reassign cases for insertion of totally 
implantable vascular access devices (TIVADs) listed in the table below 
when reported with principal diagnoses in MDCs other than MDC 9 
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) 
and MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract) 
from MS-DRGs 981 through 983 to a surgical MS-DRG within the 
appropriate MDC based on the principal diagnosis. The requestor noted 
that the insertion of

[[Page 19228]]

TIVAD procedures are newly designated as O.R. procedures, effective 
October 1, 2018, and are assigned to MDCs 9 and 11. The requestor 
stated that TIVADs can be placed for a variety of purposes and are used 
to treat a wide range of malignancies at various sites and, therefore, 
would likely have a relationship to the principal diagnosis within any 
MDC. The requestor suggested that procedures describing the insertion 
of TIVADs group to surgical MS-DRGs within every MDC (other than MDCs 
2, 20, and 22, which do not contain surgical MS-DRGs). The requestor 
further stated that the surgical hierarchy should assign more 
significant O.R. procedures within each MDC to a higher position than 
procedures describing the insertion of TIVADs because these procedures 
consume less O.R. resources than more invasive procedures.

------------------------------------------------------------------------
       ICD-PCS code                       Code description
------------------------------------------------------------------------
0JH60WZ...................  Insertion of totally implantable vascular
                             access device into chest subcutaneous
                             tissue and fascia, open approach.
0JH80WZ...................  Insertion of totally implantable vascular
                             access device into abdomen subcutaneous
                             tissue and fascia, open approach.
0JHD0WZ...................  Insertion of totally implantable vascular
                             access device into right upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHF0WZ...................  Insertion of totally implantable vascular
                             access device into left upper arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHG0WZ...................  Insertion of totally implantable vascular
                             access device into right lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHH0WZ...................  Insertion of totally implantable vascular
                             access device into left lower arm
                             subcutaneous tissue and fascia, open
                             approach.
0JHL0WZ...................  Insertion of totally implantable vascular
                             access device into right upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHM0WZ...................  Insertion of totally implantable vascular
                             access device into left upper leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHN0WZ...................  Insertion of totally implantable vascular
                             access device into right lower leg
                             subcutaneous tissue and fascia, open
                             approach.
0JHP0WZ...................  Insertion of totally implantable vascular
                             access device into left lower leg
                             subcutaneous tissue and fascia, open
                             approach.
------------------------------------------------------------------------

    While we agree that TIVAD procedures may be performed in connection 
with a variety of principal diagnoses, we note that because these 
procedures are newly designated as O.R. procedures effective October 1, 
2018, we do not yet have sufficient data to analyze this request. We 
plan to consider this issue in future rulemaking as part of our ongoing 
analysis of the unrelated procedure MS-DRGs.
(6) Gastric Band Procedure Complications or Infections
    We received a request to reassign cases for infection or 
complications due to gastric band procedures when reported with a 
procedure describing revision of or removal of extraluminal device in/
from the stomach from MS-DRGs 987, 988, and 989 (Non-Extensive O.R. 
Procedure Unrelated to Principal Diagnosis with MCC, with CC and 
without MCC/CC, respectively) to MS-DRGs 326, 327, and 328 (Stomach, 
Esophageal, and Duodenal Procedures with MCC, with CC, and without CC/
MCC, respectively). ICD-10-CM diagnosis codes K95.01 (Infection due to 
gastric band procedure) and K95.09 (Other complications of gastric band 
procedure) are used to report these conditions and are currently 
assigned to MDC 6 (Diseases and Disorders of the Digestive System). 
ICD-10-PCS procedure codes 0DW64CZ (Revision of extraluminal device in 
stomach, percutaneous endoscopic approach) and 0DP64CZ (Removal of 
extraluminal device from stomach, percutaneous endoscopic approach) are 
used to report the revision of, or removal of, an extraluminal device 
in/from the stomach and are currently assigned to MDC 10 (Endocrine, 
Nutritional and Metabolic Diseases and Disorders) in MS-DRGs 619, 620, 
and 621 (O.R. Procedures for Obesity with MCC with CC, and without CC/
MCC, respectively).
    Our analysis of this grouping issue confirmed that when procedures 
describing the revision of or removal of an extraluminal device in/from 
the stomach are reported with principal diagnoses in MDC 6 (such as 
ICD-10-CM diagnosis codes K95.01 and K95.09), in the absence of a 
procedure assigned to MDC 6, these cases group to MS-DRGs 987, 988, and 
989. As noted in the previous discussion, whenever there is a surgical 
procedure reported on the claim that 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''.
    We examined the claims data to identify cases involving ICD-10-PCS 
procedure codes 0DW64CZ and 0DP64CZ reported with a principal diagnosis 
of K95.01 or K95.09 that are currently grouping to MS-DRGs 987, 988, 
and 989. Our findings are shown in the table below.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 987--All cases...........................................           8,674              11         $23,885
MS-DRG 987--Cases reporting procedure code 0DW64CZ or 0DP64CZ                 20             6.6          17,873
 and principal diagnosis code K95.01 or K95.09..................
MS-DRG 988--All cases...........................................           8,391             5.7          12,294
MS-DRG 988--Cases reporting procedure code 0DW64CZ or 0DP64CZ                105             2.2           7,253
 and principal diagnosis code K95.01 or K95.09..................
MS-DRG 989--All cases...........................................           1,551             3.1           8,171
MS-DRG 989--Cases reporting procedure code 0DW64CZ or 0DP64CZ                120             1.6           6,010
 and principal diagnosis code K95.01 or K95.09..................
----------------------------------------------------------------------------------------------------------------

    We also examined the data for cases in MS-DRGs 326, 327, and 328, 
and our findings are provided in a table presented in section II.12.a. 
of the preamble of this proposed rule. While our clinical advisors 
noted that the average length of stay and average costs of cases in MS-
DRGs 326, 327, and 328 are significantly higher than the average length 
of stay and average costs for the subset of cases reporting procedure 
code 0DW64CZ or 0DP64CZ and a principal diagnosis code of K95.01 or 
K95.09, they believe that the procedures are clearly related to the 
principal diagnosis and, therefore, it is clinically appropriate for 
the procedures to group to the same MS-DRGs as the principal

[[Page 19229]]

diagnoses. In addition, our clinical advisors believe that because 
these procedures are intended to treat a complication of a procedure 
related to obesity, rather than the obesity itself, they are more 
appropriately assigned to stomach, esophageal, and duodenal procedures 
(MS-DRGs 326, 327, and 328) in MDC 6 than to procedures for obesity 
(MS-DRGs 619, 620, and 621) in MDC 10.
    Therefore, we are proposing to add ICD-10-PCS procedure codes 
0DW64CZ and 0DP64CZ to MDC 6 in MS-DRGs 326, 327, and 328. Under this 
proposal, cases reporting procedure code 0DW64CZ or 0DP64CZ in 
conjunction with a principal diagnosis code of K95.01 or K95.09 would 
group to MS-DRGs 326, 327, and 328.
(7) Peritoneal Dialysis Catheters
    We received a request to reassign cases for complications of 
peritoneal dialysis catheters when reported with procedure codes 
describing removal, revision, and/or insertion of new peritoneal 
dialysis catheters from MS-DRGs 981 through 983 to MS-DRGs 356, 357, 
and 358 (Other Digestive System O.R. Procedures with MCC, with CC, and 
without CC/MCC, respectively) in MDC 6 by adding the diagnosis codes 
describing complications of peritoneal dialysis catheters to MDC 6. We 
refer readers to section II.12.a. of the preamble of this proposed rule 
in which we describe our analysis of this issue as part of our broader 
review of the unrelated MS-DRGs. Our clinical advisors believe it is 
more appropriate to add the procedure codes describing removal, 
revision, and/or insertion of new peritoneal dialysis catheters to MS-
DRGs 907, 908, and 909 than to move the diagnosis codes describing 
complications of peritoneal dialysis catheters to MDC 6 because the 
diagnosis codes describe complications, rather than initial placement, 
of peritoneal dialysis catheters, and therefore, are most clinically 
aligned with the diagnosis codes assigned to MDC 21 (where they are 
currently assigned). In section II.12.a. of the preamble of this 
proposed rule, we are proposing to add procedures describing removal, 
revision, and/or insertion of peritoneal dialysis catheters to MS-DRGs 
907, 908, and 909 in MDC 21.
(8) Occlusion of Left Renal Vein
    We received a request to reassign cases for varicose veins in the 
pelvic region when reported with an embolization procedure from MS-DRGs 
981, 982 and 983 (Non-Extensive O.R. Procedure Unrelated to Principal 
Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-
DRGs 715 and 716 (Other Male Reproductive System O.R. Procedures for 
Malignancy with CC/MCC and without CC/MCC, respectively) and MS-DRGs 
717 and 718 (Other Male Reproductive System O.R. Procedures Except 
Malignancy with CC/MCC and without CC/MCC, respectively) in MDC 12 
(Diseases and Disorders of the Male Reproductive System) and to MS-DRGs 
749 and 750 (Other Female Reproductive System O.R. Procedures with CC/
MCC and without CC/MCC, respectively) in MDC 13 (Diseases and Disorders 
of the Female Reproductive System). ICD-10-CM diagnosis code I86.2 
(Pelvic varices) is reported to identify the condition of varicose 
veins in the pelvic region and is currently assigned to MDC 12 and to 
MDC 13. ICD-10-PCS procedure code 06LB3DZ (Occlusion of left renal vein 
with intraluminal device, percutaneous approach) may be reported to 
describe an embolization procedure performed for the treatment of 
pelvic varices and is currently assigned to MDC 5 (Diseases and 
Disorders of the Circulatory System) in MS-DRGs 270, 271, and 272 
(Other Major Cardiovascular Procedures with MCC, with CC, and without 
CC/MCC, respectively), MDC 6 (Diseases and Disorders of the Digestive 
System) in MS-DRGs 356, 357, and 358 (Other Digestive System O.R. 
Procedures with MCC, with CC, and without CC/MCC, respectively), MDC 21 
(Injuries, Poisonings and Toxic Effects of Drugs) in MS-DRGs 907, 908, 
and 909 (Other O.R. Procedures for Injuries with MCC, CC, without CC/
MCC, respectively), and MDC 24 (Multiple Significant Trauma) in MS-DRGs 
957, 958, 959 (Other O.R. Procedures for Multiple Significant Trauma 
with MCC, with CC, and without CC/MCC, respectively). The requestor 
also noted that when this procedure is performed on the right renal 
vein (which is reported with ICD-10-PCS code 06L03DZ (Occlusion of 
inferior vena cava with intraluminal device, percutaneous approach) for 
varicose veins in the pelvic region, the case groups to MS-DRGs 715 and 
716 and MS-DRGs 717 and 718 in MDC 12 (for male patients) or MS-DRGs 
749 and 750 in MDC 13 (for female patients).
    Our analysis of this grouping issue confirmed that when ICD-10-CM 
diagnosis code I86.2 (Pelvic varices) is reported with ICD-10-PCS 
procedure code 06LB3DZ, the case groups to MS-DRGs 981, 982, and 983. 
As noted above in previous discussions, whenever there is a surgical 
procedure reported on the claim that 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.''
    We examined the claims data to identify cases involving procedure 
code 06LB3DZ in MS-DRGs 981, 982, and 983 reported with a principal 
diagnosis code of I86.2. We found no cases in the claims data.
    In the absence of data to examine, our clinical advisors reviewed 
this request and agree with the requestor that when the embolization 
procedure is performed on the left renal vein (reported with ICD-10-PCS 
procedure code 06LB3DZ), it should group to the same MS-DRGs as when it 
is performed on the right renal vein. Therefore, we are proposing to 
add ICD-10-PCS procedure code 06LB3DZ to MDC 12 in MS-DRGs 715, 716, 
717, and 718 and to MDC 13 in MS-DRGs 749 and 750. Under this proposal, 
cases reporting ICD-10-CM diagnosis code I86.2 with ICD-10-PCS 
procedure code 06LB3DZ would group to MDC 12 (for male patients) or MDC 
13 (for female patients).
13. Operating Room (O.R.) and Non-O.R. Issues
a. Background
    Under the IPPS MS-DRGs (and former CMS MS-DRGs), we have a list of 
procedure codes that are considered operating room (O.R.) procedures. 
Historically, we developed this list using physician panels that 
classified each procedure code based on the procedure and its effect on 
consumption of hospital resources. For example, generally the presence 
of a surgical procedure which required the use of the operating room 
would be expected to have a significant effect on the type of hospital 
resources (for example, operating room, recovery room, and anesthesia) 
used by a patient, and therefore, these patients were considered 
surgical. Because the claims data generally available do not precisely 
indicate whether a patient was taken to the operating room, surgical 
patients were identified based on the procedures that were performed. 
Generally, if the procedure was not expected to require the use of the 
operating room, the patient would be considered medical (non-O.R.).
    Currently, each ICD-10-PCS procedure code has designations that 
determine whether and in what way the presence of that procedure on a 
claim impacts the MS-DRG assignment. First, each ICD-10-PCS procedure 
code is either designated as an O.R. procedure for purposes of MS-DRG 
assignment

[[Page 19230]]

(``O.R. procedures'') or is not designated as an O.R. procedure for 
purposes of MS-DRG assignment (``non-O.R. procedures''). Second, for 
each procedure that is designated as an O.R. procedure, that O.R. 
procedure is further classified as either extensive or non-extensive. 
Third, for each procedure that is designated as a non-O.R. procedure, 
that non-O.R. procedure is further classified as either affecting the 
MS-DRG assignment or not affecting the MS-DRG assignment. We refer to 
these designations that do affect MS-DRG assignment as ``non-O.R. 
affecting the MS-DRG.'' For new procedure codes that have been 
finalized through the ICD-10 Coordination and Maintenance Committee 
meeting process and are proposed to be classified as O.R. procedures or 
non-O.R. procedures affecting the MS-DRG, our clinical advisors 
recommend the MS-DRG assignment which is then made available in 
association with the proposed rule (Table 6B.--New Procedure Codes) and 
subject to public comment. These proposed assignments are generally 
based on the assignment of predecessor codes or the assignment of 
similar codes. For example, 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 proposed to be newly designated as O.R. procedures. As 
discussed in section II.F.15. of the preamble of this proposed rule, we 
are making Table 6B.--New Procedure Codes--FY 2020 available on the CMS 
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. We also refer readers to the ICD-
10 MS-DRG Version 36 Definitions Manual at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html for detailed information regarding 
the designation of procedures as O.R. or non-O.R. (affecting the MS-
DRG) in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG 
Index.
    Given the long period of time that has elapsed since the original 
O.R. (extensive and non-extensive) and non-O.R. designations were 
established, the incremental changes that have occurred to these O.R. 
and non-O.R. procedure code lists, and changes in the way inpatient 
care is delivered, we plan to conduct a comprehensive, systematic 
review of the ICD-10-PCS procedure codes. This will be a multi-year 
project during which we will also review the process for determining 
when a procedure is considered an operating room procedure. For 
example, we may restructure the current O.R. and non-O.R. designations 
for procedures by leveraging the detail that is now available in the 
ICD-10 claims data. We refer readers to the discussion regarding the 
designation of procedure codes in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38066) where we stated that the determination of when a 
procedure code should be designated as an O.R. procedure has become a 
much more complex task. This is, in part, due to the number of various 
approaches available in the ICD-10-PCS classification, as well as 
changes in medical practice. While we have typically evaluated 
procedures on the basis of whether or not they would be performed in an 
operating room, we believe that there may be other factors to consider 
with regard to resource utilization, particularly with the 
implementation of ICD-10. Therefore, we are again soliciting public 
comments on what factors or criteria to consider in determining whether 
a procedure is designated as an O.R. procedure in the ICD-10-PCS 
classification system for future consideration. Commenters should 
submit their recommendations to the following email address: 
[email protected] by November 1, 2019.
    As a result of this planned review and potential restructuring, 
procedures that are currently designated as O.R. procedures may no 
longer warrant that designation, and conversely, procedures that are 
currently designated as non-O.R. procedures may warrant an O.R. type of 
designation. We intend to consider the resources used and how a 
procedure should affect the MS-DRG assignment. We may also consider the 
effect of specific surgical approaches to evaluate whether to subdivide 
specific MS-DRGs based on a specific surgical approach. We plan to 
utilize our available MedPAR claims data as a basis for this review and 
the input of our clinical advisors. As part of this comprehensive 
review of the procedure codes, we also intend to evaluate the MS-DRG 
assignment of the procedures and the current surgical hierarchy because 
both of these factor into the process of refining the ICD-10 MS-DRGs to 
better recognize complexity of service and resource utilization.
    We will provide more detail on this analysis and the methodology 
for conducting this review in future rulemaking. As we continue to 
develop our process and methodology, as noted above, we are soliciting 
public comments on other factors to consider in our refinement efforts 
to recognize and differentiate consumption of resources for the ICD-10 
MS-DRGs.
    In this proposed rule, we are addressing requests that we received 
regarding changing the designation of specific ICD-10-PCS procedure 
codes from non-O.R. to O.R. procedures, or changing the designation 
from O.R. procedure to non-O.R. procedure. Below we discuss the process 
that was utilized for evaluating the requests that were received for FY 
2020 consideration. For each procedure, our clinical advisors 
considered:
     Whether the procedure would typically require the 
resources of an operating room;
     Whether it is an extensive or a nonextensive procedure; 
and
     To which MS-DRGs the procedure should be assigned.
    We note that many MS-DRGs require the presence of any O.R. 
procedure. As a result, cases with a principal diagnosis associated 
with a particular MS-DRG would, by default, be grouped to that MS-DRG. 
Therefore, we do not list these MS-DRGs in our discussion below. 
Instead, we only discuss MS-DRGs that require explicitly adding the 
relevant procedures codes to the GROUPER logic in order for those 
procedure codes to affect the MS-DRG assignment as intended. In cases 
where we are proposing to change the designation of procedure codes 
from non-O.R. procedures to O.R. procedures, we also are proposing one 
or more MS-DRGs with which these procedures are clinically aligned and 
to which the procedure code would be assigned.
    In addition, cases that contain O.R. procedures will map to MS-DRG 
981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal 
Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-
DRG 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.
    For procedures that would not typically require the resources of an 
operating room, our clinical advisors

[[Page 19231]]

determined if the procedure should affect the MS-DRG assignment.
    We received several requests to change the designation of specific 
ICD-10-PCS procedure codes from non-O.R. procedures to O.R. procedures, 
or to change the designation from O.R. procedures to non-O.R. 
procedures. Below we detail and respond to some of those requests. With 
regard to the remaining requests, our clinical advisors believe it is 
appropriate to consider these requests as part of our comprehensive 
review of the procedure codes discussed above.
b. O.R. Procedures to Non-O.R. Procedures
(1) Bronchoalveolar Lavage
    Bronchoalveolar lavage (BAL) is a diagnostic procedure in which a 
bronchoscope is passed through the patient's mouth or nose into the 
lungs. A small amount of fluid is squirted into an area of the lung and 
then collected for examination. Two requestors identified 13 ICD-10-PCS 
procedure codes describing BAL procedures that generally can be 
performed at bedside and would not require the resources of an 
operating room. In the ICD-10 MS-DRG Version 36 Definitions Manual, 
these 13 ICD-10-PCS procedure codes are currently recognized as O.R. 
procedures for purposes of MS-DRG assignment.
    We agree with the requestors that these procedures do not typically 
require the resources of an operating room. Therefore, we are proposing 
to remove the following 13 procedure codes from the FY 2020 ICD-10 MS-
DRGs Version 37 Definitions Manual in Appendix E--Operating Room 
Procedures and Procedure Code/MS-DRG Index as O.R. procedures. Under 
this proposal, these procedures would no longer impact MS-DRG 
assignment.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0B9H8ZX...................  Drainage of lung lingula, via natural or
                             artificial opening endoscopic, diagnostic.
0B9K8ZX...................  Drainage of right lung, via natural or
                             artificial opening endoscopic, diagnostic.
0B9L8ZX...................  Drainage of left lung, via natural or
                             artificial opening endoscopic, diagnostic.
0B9M8ZX...................  Drainage of bilateral lungs, via natural or
                             artificial opening endoscopic, diagnostic.
0B9C8ZZ...................  Drainage of right upper lung lobe, via
                             natural or artificial opening endoscopic.
0B9D8ZZ...................  Drainage of right middle lung lobe, via
                             natural or artificial opening endoscopic.
0B9F8ZZ...................  Drainage of right lower lung lobe, via
                             natural or artificial opening endoscopic.
0B9G8ZZ...................  Drainage of left upper lung lobe, via
                             natural or artificial opening endoscopic.
0B9H8ZZ...................  Drainage of Lung Lingula, via natural or
                             artificial opening endoscopic.
0B9J8ZZ...................  Drainage of left lower lung lobe, via
                             natural or artificial opening endoscopic.
0B9K8ZZ...................  Drainage of right lung, via natural or
                             artificial opening endoscopic.
0B9L8ZZ...................  Drainage of left lung, via natural or
                             artificial opening endoscopic.
0B9M8ZZ...................  Drainage of bilateral lungs, via natural or
                             artificial opening endoscopic.
------------------------------------------------------------------------

(2) Percutaneous Drainage of Pelvic Cavity
    One requestor identified two ICD-10-PCS procedure codes that 
describe procedures involving percutaneous drainage of the pelvic 
cavity. The two ICD-10-PCS procedure codes are: 0W9J3ZX (Drainage of 
pelvic cavity, percutaneous approach, diagnostic) and 0W9J3ZZ (Drainage 
of pelvic cavity, percutaneous approach).
    ICD-10-PCS procedure code 0W9J3ZX is currently recognized as an 
O.R. procedure for purposes of MS-DRG assignment, while the 
nondiagnostic ICD-10-PCS procedure code 0W9J3ZZ is not recognized as an 
O.R. procedure for purposes of MS-DRG assignment. The requestor stated 
that percutaneous drainage procedures of the pelvic cavity for both 
diagnostic and nondiagnostic purposes are not complex procedures and 
both types of procedures are usually performed in a radiology suite. 
The requestor stated that both procedures should be classified as non-
O.R. procedures.
    We agree with the requestor that these procedures do not typically 
require the resources of an operating room. Therefore, we are proposing 
to remove procedure code 0W9J3ZX from the FY 2020 ICD-10 MS-DRG Version 
37 Definitions Manual in Appendix E--Operating Room Procedures and 
Procedure Code/MS-DRG Index as an O.R. procedure. Under this proposal, 
this procedure would no longer impact MS-DRG assignment.
(3) Percutaneous Removal of Drainage Device
    One requestor identified two ICD-10-PCS procedure codes that 
describe procedures involving the percutaneous placement and removal of 
drainage devices from the pancreas. These two ICD-10-PCS procedure 
codes are: 0FPG30Z (Removal of drainage device from pancreas, 
percutaneous approach) and 0F9G30Z (Drainage of pancreas with drainage 
device, percutaneous approach). ICD-10-PCS procedure code 0FPG30Z is 
currently recognized as an O.R. procedure for purposes of MS-DRG 
assignment, while ICD-10-PCS procedure code 0F9G30Z is not recognized 
as an O.R. procedure for purposes of MS-DRG assignment. The requestor 
stated that percutaneous placement of drains is typically performed in 
a radiology suite under image guidance and removal of a drain would not 
be more resource intensive than its placement.
    We agree with the requestor that these procedures do not typically 
require the resources of an operating room. Therefore, we are proposing 
to remove ICD-10-PCS procedure code 0FPG30Z from the FY 2020 ICD-10 MS-
DRG Version 37 Definitions Manual in Appendix E--Operating Room 
Procedures and Procedure Code/MS-DRG Index as an O.R. procedure. Under 
this proposal, this procedure would no longer impact MS-DRG assignment.
c. Non-O.R. Procedures to O.R. Procedures
(1) Percutaneous Occlusion of Gastric Artery
    One requestor identified two ICD-10-PCS procedure codes that 
describe percutaneous occlusion and restriction of the gastric artery 
with intraluminal device, ICD-10-PCS procedure codes 04L23DZ (Occlusion 
of gastric artery with intraluminal device, percutaneous approach) and 
04V23DZ (Restriction of gastric artery with intraluminal device, 
percutaneous approach), that the requestor stated are currently not 
recognized as O.R. procedures for purposes of MS-DRG assignment. The 
requestor noted that transcatheter endovascular embolization of the 
gastric artery with intraluminal devices uses comparable resources to 
transcatheter endovascular embolization of the gastroduodenal artery. 
The requestor stated that ICD-10-PCS procedure codes 04L33DZ (Occlusion 
of hepatic

[[Page 19232]]

artery with intraluminal device, percutaneous approach) and 04V33DZ 
(Restriction of hepatic artery with intraluminal device, percutaneous 
approach) are recognized as O.R. procedures for purposes of MS-DRG 
assignment, and ICD-10-PCS procedure codes 04L23DZ and 04V23DZ should 
therefore also be recognized as O.R. procedures for purposes of MS-DRG 
assignment. We note that, contrary to the requestor's statement, ICD-
10-PCS procedure code 04V23DZ is already recognized as an O.R. 
procedure for purposes of MS-DRG assignment.
    We agree with the requestor that ICD-10-PCS procedure code 04L23DZ 
typically requires the resources of an operating room. Therefore, we 
are proposing to add this code to the FY 2020 ICD-10 MS-DRG Version 37 
Definitions Manual in Appendix E--Operating Room Procedures and 
Procedure Code/MS-DRG Index as an O.R. procedure assigned to MS-DRGs 
270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, CC, 
without CC/MCC, respectively) in MDC 05 (Diseases and Disorders of the 
Circulatory System); MS-DRGs 356, 357, and 358 (Other Digestive System 
O.R. Procedures, with MCC, CC, without CC/MCC, respectively) in MDC 06 
(Diseases and Disorders of the Digestive System); MS-DRGs 907, 908, and 
909 (Other O.R. Procedures for Injuries with MCC, CC, 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, CC, without CC/MCC, respectively) 
in MDC 24 (Multiple Significant Trauma).
(2) Endoscopic Insertion of Endobronchial Valves
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41257), we discussed 
a comment we received in response to the FY 2019 IPPS/LTCH PPS proposed 
rule regarding 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.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
0BH38GZ...................  Insertion of endobronchial valve into right
                             main bronchus, via natural or artificial
                             opening endoscopic.
0BH48GZ...................  Insertion of endobronchial valve into right
                             upper lobe bronchus, via natural or
                             artificial opening endoscopic.
0BH58GZ...................  Insertion of endobronchial valve into right
                             middle lobe bronchus, via natural or
                             artificial opening endoscopic.
0BH68GZ...................  Insertion of endobronchial valve into right
                             lower lobe bronchus, via natural or
                             artificial opening endoscopic.
0BH78GZ...................  Insertion of endobronchial valve into left
                             main bronchus, via natural or artificial
                             opening endoscopic.
0BH88GZ...................  Insertion of endobronchial valve into left
                             upper lobe bronchus, via natural or
                             artificial opening endoscopic.
0BH98GZ...................  Insertion of endobronchial valve into
                             lingula bronchus, via natural or artificial
                             opening endoscopic.
0BHB8GZ...................  Insertion of endobronchial valve into left
                             lower lobe bronchus, via natural or
                             artificial opening endoscopic.
------------------------------------------------------------------------

    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. We noted 
that, 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 procedure 
codes be assigned to MS-DRG 163 (Major Chest Procedures with MCC) due 
to similar cost and resource use. As discussed in the FY 2019 IPPS/LTCH 
PPS final rule, our clinical advisors disagreed with the commenter that 
the eight identified procedures typically require the use of an 
operating room, and believed that these procedures would typically be 
performed in an endoscopy suite. Therefore, we did not finalize a 
change to the eight procedure codes describing endoscopic insertion of 
an endobronchial valve listed in the table above for FY 2019 under the 
ICD-10 MS-DRGs Version 36.
    After publication of the FY 2019 IPPS/LTCH PPS final rule, we 
received feedback from several stakeholders expressing continued 
concern with the designation of the eight ICD-10-PCS procedure codes 
describing the endoscopic insertion of an endobronchial valve listed in 
the table above, including requests to reconsider the designation of 
these codes for FY 2020. Some requestors stated that while they 
appreciated CMS' attention to the issue, they believed that important 
clinical and financial factors had been overlooked. The requestors 
noted that while the site of care is an important consideration for MS-
DRG assignment, there are other clinical factors such as case 
complexity, patient health risk and the need for anesthesia that also 
affect hospital resource consumption and should influence MS-DRG 
assignment. With regard to complexity, the requestors stated that many 
of these patients are high-risk, often recovering from major lung 
surgery and have significantly compromised respiratory function. 
According to one requestor, these patients may have major 
comorbidities, such as cancer or emphysema contributing to longer 
lengths of stay in the hospital. This requestor acknowledged that 
procedures performed for the endoscopic insertion of an endobronchial 
valve are often, but not always, performed in the O.R., however, the 
requestor also noted this should not preclude the designation of these 
procedures as O.R. procedures since there have been other examples of 
reclassification requests where the combination of factors, such as 
treatment difficulty, resource utilization, patient health status, and 
anesthesia administration were considered in the decision to change the 
designation for a procedure from non-O.R. to O.R. Another requestor 
stated that CMS' current designation of a procedure involving the 
endoscopic insertion of an endobronchial valve as a non-O.R. procedure 
is not reflective of actual practice and this designation has payment 
consequences that may affect access to the treatment for a vulnerable 
patient population, with limited treatment options. The requestor 
recommended that procedures involving the endoscopic insertion of an 
endobronchial valve should be designated as O.R. procedures and 
assigned to MS-DRGs 163, 164, and 165 (Major Chest Procedures with MCC, 
with CC and without CC/MCC, respectively). In addition, a few of the 
requestors also conducted their own analyses and indicated that if 
procedures involving the endoscopic insertion of an endobronchial valve 
were to be assigned to MS-DRGs 163, 164, and 165, the average costs of 
the cases reporting a procedure code describing the endoscopic 
insertion of an endobronchial valve would still be higher compared to 
all the cases in the assigned MS-DRG.
    We examined claims data from the September 2018 update of the FY 
2018 MedPAR file for MS-DRGs 163, 164 and

[[Page 19233]]

165 to identify cases reporting any one of the eight procedure codes 
listed in the above table describing the endoscopic insertion of an 
endobronchial valve. Cases reporting one of these procedure codes would 
be assigned to MS-DRG 163, 164, or 165 if at least one other procedure 
that is designated as an O.R. procedure and assigned to these MS-DRGs 
was also reported on the claim. In addition, cases reporting a 
procedure code describing the endoscopic insertion of an endobronchial 
valve with a different surgical approach are assigned to MS-DRGs 163, 
164, and 165. Our findings are shown in the following table.

         MS-DRGs for Major Chest Procedures With Endoscopic Insertion of Endobronchial Valve Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 163--All cases...........................................          10,812            11.6         $33,433
MS-DRG 163--Cases reporting a procedure for the endoscopic                    49            21.1          53,641
 insertion of an endobronchial valve............................
MS-DRG 164--All cases...........................................          14,800             5.6          18,202
MS-DRG 164--Cases reporting a procedure for the endoscopic                    23              14          37,287
 insertion of an endobronchial valve............................
MS-DRG 165--All cases...........................................           7,907             3.3          13,408
MS-DRG 165--Cases reporting a procedure for the endoscopic                     3            18.3          39,249
 insertion of an endobronchial valve............................
----------------------------------------------------------------------------------------------------------------

    We found a total of 10,812 cases in MS-DRG 163 with an average 
length of stay of 11.6 days and average costs of $33,433. Of those 
10,812 cases, we found 49 cases reporting a procedure for the 
endoscopic insertion of an endobronchial valve with an average length 
of stay of 21.1 days and average costs of $53,641. For MS-DRG 164, we 
found a total of 14,800 cases with an average length of stay of 5.6 
days and average costs of $18,202. Of those 14,800 cases, we found 23 
cases reporting a procedure for the endoscopic insertion of an 
endobronchial valve with an average length of stay of 14 days and 
average costs of $37,287. For MS-DRG 165, we found a total of 7,907 
cases with an average length of stay of 3.3 days and average costs of 
$13,408. Of those 7,907 cases, we found 3 cases reporting a procedure 
for the endoscopic insertion of an endobronchial valve with an average 
length of stay of 18.3 days and average costs of $39,249.
    We also examined claims data to identify any cases reporting any 
one of the eight procedure codes listed in the table above describing 
the endoscopic insertion of an endobronchial valve within MS-DRGs 166, 
167, and 168 (Other Respiratory System O.R. Procedures with MCC, with 
CC, and without CC/MCC, respectively). Cases reporting one of these 
procedure codes would be assigned to MS-DRG 166, 167, or 168 if at 
least one other procedure that is designated as an O.R. procedure and 
assigned to these MS-DRGs was also reported on the claim. In addition, 
MS-DRGs 166, 167, and 168 are the other surgical MS-DRGs where cases 
reporting a respiratory diagnosis within MDC 4 would be assigned. Our 
findings are shown in the following table.

      MS-DRGs for Other Respiratory System O.R. Procedures With Endoscopic Insertion of Endobronchial Valve
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 166--All cases...........................................          16,050            10.6         $26,645
MS-DRG 166--Cases reporting a procedure for the endoscopic                    11            25.7          71,700
 insertion of an endobronchial valve............................
MS-DRG 167--All cases...........................................           8,165             5.3          13,687
MS-DRG 167--Cases reporting a procedure for the endoscopic                     4              10          28,847
 insertion of an endobronchial valve............................
MS-DRG 168--All cases...........................................           2,430             2.8           9,645
----------------------------------------------------------------------------------------------------------------

    We found a total of 16,050 cases in MS-DRG 166 with an average 
length of stay of 10.6 days and average costs of $26,645. Of those 
16,050 cases, we found 11 cases reporting a procedure for the 
endoscopic insertion of an endobronchial valve with an average length 
of stay of 25.7 days and average costs of $71,700. For MS-DRG 167, we 
found a total of 8,165 cases with an average length of stay of 5.3 days 
and average costs of $13,687. Of those 8,165 cases, we found 4 cases 
reporting a procedure for the endoscopic insertion of an endobronchial 
valve with an average length of stay of 10 days and average costs of 
$28,847. For MS-DRG 168, we found a total of 2,430 cases with an 
average length of stay of 2.8 days and average costs of $9,645. Of 
those 2,430 cases, we did not find any cases reporting a procedure for 
the endoscopic insertion of an endobronchial valve.
    The results of our data analysis indicate that cases reporting a 
procedure for the endoscopic insertion of an endobronchial valve in MS-
DRGs 163, 164, 165, 166, and 167 have a longer length of stay and 
higher average costs when compared to all the cases in their assigned 
MS-DRG. Because the data are based on surgical MS-DRGs 163, 164, 165, 
166 and 167, and the procedure codes for endoscopic insertion of an 
endobronchial valve are currently designated as non-O.R. procedures, 
there was at least one other O.R. procedure reported on the claim 
resulting in case assignment to one of those MS-DRGs. Our clinical 
advisors indicated that because there was another O.R. procedure 
reported, the insertion of the endobronchial valve procedure may or may 
not have been

[[Page 19234]]

the main determinant of resource use for those cases. Therefore, we 
conducted further analysis to evaluate cases for which no other O.R. 
procedure was performed with the endoscopic insertion of an 
endobronchial valve and case assignment resulted in a medical MS-DRG. 
Our findings are shown in the following table.

                        Medical MS-DRGs With Insertion of Endobronchial Valve Procedures
----------------------------------------------------------------------------------------------------------------
                                                                     Number of    Average length
                             MS-DRG                                    cases          of stay      Average costs
----------------------------------------------------------------------------------------------------------------
MS-DRG 069 (Transient Ischemia without Thrombolytic)............               1               9         $26,002
MS-DRG 177 (Respiratory Infections and Inflammations with MCC)..              11            19.5          33,877
MS-DRG 178 (Respiratory Infections and Inflammations with CC)...               4            10.8          20,109
MS-DRG 180 (Respiratory Neoplasms with MCC).....................               2            11.5          19,273
MS-DRG 181 (Respiratory Neoplasms with MCC).....................               1               3          12,641
MS-DRG 186 (Pleural Effusion with MCC)..........................               1               8          23,609
MS-DRG 187 (Pleural Effusion with CC)...........................               1              18          49,214
MS-DRG 189 (Pulmonary Edema and Respiratory Failure)............               2            13.5          65,431
MS-DRG 190 (Chronic Obstructive Pulmonary Disease with MCC).....               2               9          39,925
MS-DRG 191 (Chronic Obstructive Pulmonary Disease with CC)......               1              15          55,958
MS-DRG 192 (Chronic Obstructive Pulmonary Disease without CC/                  1               5          10,394
 MCC)...........................................................
MS-DRG 193 (Simple Pneumonia and Pleurisy with MCC).............               1              18          27,182
MS-DRG 197 (Interstitial Lung Disease with CC)..................               1              12          11,458
MS-DRG 199 (Pneumothorax with MCC)..............................              28            16.4          38,384
MS-DRG 200 (Pneumothorax with CC)...............................              11             8.3          20,764
MS-DRG 201 (Pneumothorax without CC/MCC)........................               2              10          20,243
MS-DRG 205 (Other Respiratory System Diagnoses with MCC)........               2             4.5          10,851
MS-DRG 207 (Respiratory System Diagnosis with Ventilation                      4              20          67,299
 Support >96 Hours or Peripheral Extracorporeal Membrane
 Oxygenation (ECMO))............................................
MS-DRG 208 (Respiratory System Diagnosis with Ventilation                      8            13.6          32,533
 Support [lE]96 Hours or Peripheral Extracorporeal Membrane
 Oxygenation (ECMO))............................................
MS-DRG 815 (Reticuloendothelial and Immunity Disorders with CC).               1               5          17,379
MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical                     3              15          39,706
 Ventilation >96 Hours with MCC)................................
MS-DRG 919 (Complications of Treatment with MCC)................               2               5          36,143
MS-DRG 920 (Complications of Treatment with CC).................               1               5          14,923
                                                                 -----------------------------------------------
    Total.......................................................              91            13.7          33,377
----------------------------------------------------------------------------------------------------------------

    The data indicate that there is a wide variation in the average 
length of stay and average costs for cases reporting a procedure for 
the endoscopic insertion of an endobronchial valve, with volume 
generally low across MS-DRGs. As shown in the table, for several of the 
medical MS-DRGs, there was only one case reporting a procedure for the 
endoscopic insertion of an endobronchial valve. The highest volume of 
cases reporting a procedure for the endoscopic insertion of an 
endobronchial valve was found in MS-DRG 199 (Pneumothorax with MCC) 
with a total of 28 cases with an average length of stay of 16.4 days 
and average costs of $38,384. The highest average costs and longest 
average length of stay for cases reporting a procedure for the 
endoscopic insertion of an endobronchial valve was $67,299 in MS-DRG 
207 (Respiratory System Diagnosis with Ventilator Support >96 Hours or 
Peripheral Extracorporeal Membrane Oxygenation (ECMO)) where 4 cases 
were found with an average length of stay of 20 days. Overall, there 
was a total of 91 cases reporting the insertion of an endobronchial 
valve procedure with an average length of stay of 13.7 days and average 
costs of $33,377 across the medical MS-DRGs.
    Our clinical advisors agree that the subset of patients who undergo 
endoscopic insertion of an endobronchial procedure are complex and may 
have multiple comorbidities such as severe underlying lung disease that 
impact the hospital length of stay. They also believe that, as we begin 
the process of refining how procedure codes may be classified under 
ICD-10-PCS, including designation of a procedure as O.R. or non-O.R., 
we should take into consideration whether the procedure is driving 
resource use for the admission. (We refer the reader to section 
II.F.13.a. of the preamble of this proposed rule for the discussion of 
our plans to conduct a comprehensive review of the ICD-10-PCS procedure 
codes). Based on the claims data analysis, which show a wide variation 
in average costs for cases reporting endoscopic insertion of an 
endobronchial valve without an O.R. procedure, our clinical advisors 
are not convinced that endoscopic insertion of an endobronchial valve 
is a key contributing factor to the consumption of resources as 
reflected in the data. They also believe, in review of the procedures 
that are currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 
168, that further refinement of these MS-DRGs may be warranted. For 
these reasons, at this time, our clinical advisors do not support 
designating endoscopic insertion of an endobronchial valve as an O.R. 
procedure, nor do they support assignment of these procedures to MS-
DRGs 163, 164, and 165 until additional analyses can be performed for 
this subset of patients as part of the comprehensive procedure code 
review.
    For the reasons described above, we are not proposing to change the 
current non-O.R. designation of the eight ICD-10-PCS procedure codes 
that describe endoscopic insertion of an endobronchial valve. However, 
because we agree that endoscopic insertion of an endobronchial valve 
procedures are performed on clinically complex patients, we believe it 
may be appropriate to consider designating these procedures as non-O.R. 
affecting specific MS-DRGs for FY 2020. Therefore, we are requesting 
public comment on designating these procedure codes as non-O.R. 
procedures affecting the MS-DRG assignment, including the specific MS-
DRGs that cases reporting the endoscopic insertion

[[Page 19235]]

of an endobronchial valve should affect for FY 2020. As noted, it is 
not clear based on the claims data to what degree the endoscopic 
insertion of an endobronchial valve is a contributing factor for the 
consumption of resources for these clinically complex patients and 
given the potential refinement that may be needed for MS-DRGs 163, 164, 
165, 166, 167, and 168, we are soliciting comment on whether cases 
reporting the endoscopic insertion of an endobronchial valve should 
affect any of these MS-DRGs or other MS-DRGs.
14. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2020
a. Background of the CC List and the CC Exclusions List
    Under the IPPS MS-DRG classification system, we have developed a 
standard list of diagnoses that are considered CCs. Historically, we 
developed this list using physician panels that classified each 
diagnosis code based on whether the diagnosis, when present as a 
secondary condition, would be considered a substantial complication or 
comorbidity. A substantial complication or comorbidity was defined as a 
condition that, because of its presence with a specific principal 
diagnosis, would cause an increase in the length-of-stay by at least 1 
day in at least 75 percent of the patients. However, depending on the 
principal diagnosis of the patient, some diagnoses on the basic list of 
complications and comorbidities may be excluded if they are closely 
related to the principal diagnosis. In FY 2008, we evaluated each 
diagnosis code to determine its impact on resource use and to determine 
the most appropriate CC subclassification (non-CC, CC, or MCC) 
assignment. We refer readers to sections II.D.2. and 3. of the preamble 
of the FY 2008 IPPS final rule with comment period for a discussion of 
the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008 
(72 FR 47152 through 47171).
b. Overview of Comprehensive CC/MCC Analysis
    In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described 
our process for establishing three different levels of CC severity into 
which we would subdivide the diagnosis codes. The categorization of 
diagnoses as an MCC, 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 
completed this analysis and we are discussing our findings in this 
proposed rule. We used the same methodology utilized in FY 2008 to 
conduct this analysis, as described below.
    For each secondary diagnosis, we measured the impact in resource 
use for the following three subsets of patients:
    (1) Patients with no other secondary diagnosis or with all other 
secondary diagnoses that are non-CCs.
    (2) Patients with at least one other secondary diagnosis that is a 
CC but none that is an MCC.
    (3) Patients with at least one other secondary diagnosis that is an 
MCC.
    Numerical resource impact values were assigned for each diagnosis 
as follows:

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

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

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

    Count (Cnt) is the number of patients in each subset and C1, C2, 
and C3 are a measure of the impact on resource use of patients in each 
of the subsets. The C1, C2, and C3 values are a measure of the ratio of 
average costs for patients with these conditions to the expected 
average cost across all cases. The C1 value reflects a patient with no 
other secondary diagnosis or with all other secondary diagnoses that 
are non-CCs. The C2 value reflects a patient with at least one other 
secondary diagnosis that is a CC but none that is a major CC. The C3 
value reflects a patient with at least one other secondary diagnosis 
that is a major CC. A value close to 1.0 in the C1 field would suggest 
that the code produces the same expected value as a non-CC diagnosis. 
That is, average costs for the case are similar to the expected average 
costs for that subset and the diagnosis is not expected to increase 
resource usage. A higher value in the C1 (or C2 and C3) field suggests 
more resource usage is associated with the diagnosis and an increased 
likelihood that it is more like a CC or major CC than a non-CC. Thus, a 
value close to 2.0 suggests the condition is more like a CC than a non-
CC but not as significant in resource usage as an MCC. A value close to 
3.0 suggests the condition is expected to consume resources more 
similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8 
for a secondary diagnosis means that for the subset of patients who 
have the secondary diagnosis and have either no other secondary 
diagnosis present, or all the other secondary diagnoses present are 
non-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, a CC, or a non-CC. Our clinical advisors 
reviewed the resource use impact reports and suggested modifications to 
the initial CC subclass assignments when clinically appropriate.
c. Proposed Changes to Severity Levels
(1) Summary of Proposed Changes
    The diagnosis codes for which we are proposing a change in severity 
level designation as a result of the analysis

[[Page 19236]]

described in this proposed rule are shown in Table 6P.1c. (which is 
available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). Using the method described above to 
perform our comprehensive CC/MCC analysis, our clinical advisors 
recommended a change in the severity level designation for 1,492 ICD-
10-CM diagnosis codes. As shown in Table 6P.1c. associated with this 
proposed rule, the proposed changes to severity level resulting from 
our comprehensive analysis would move some diagnosis codes to a higher 
severity level designation and other diagnosis codes to a lower 
severity level designation, as indicated in the two columns which 
display CMS' FY 2019 classification in column C and the proposed 
changes for FY 2020 in column D.
    The table below shows the Version 36 ICD-10 MS-DRG categorization 
of diagnosis codes by severity level.

                   Current Categorization of CC Codes
                              [Version 36]
------------------------------------------------------------------------
                                                             Number of
                                                               codes
------------------------------------------------------------------------
MCC.....................................................           3,244
CC......................................................          14,528
Non-CC..................................................          54,160
                                                         ---------------
    Total...............................................          71,932
------------------------------------------------------------------------

    The following table compares the Version 36 ICD-10 MS-DRG CC list 
and the proposed Version 37 ICD-10 MS-DRG CC list. There are 17,772 
diagnosis codes on the Version 36 MCC/CC lists. The proposed MCC/CC 
severity level changes would reduce the number of diagnosis codes on 
the MCC/CC lists to 16,790 (3,099 + 13,691). Based on the Version 36 
MCC/CC lists, 81.5 percent of cases have at least one MCC/CC present, 
using claims data from the September 2018 update of the FY 2018 MedPAR 
file. Based on the proposed Version 37 MCC/CC lists, the percent of 
cases having at least one MCC/CC present would be reduced to 76.6 
percent.

           Comparison of Current CC List and Proposed CC List
------------------------------------------------------------------------
                                            Current CC      Proposed CC
                                               List            List
------------------------------------------------------------------------
Codes designated as an MCC..............           3,244           3,099
Percent of cases with one or more MCCs..           41.0%           36.3%
Average charge of cases with one or more         $16,439         $16,490
 MCCs...................................
Codes designated as a CC................          14,528          13,691
Percent of cases with one or more CCs...           40.5%           40.3%
Average charge of cases with one or more         $10,332         $10,518
 CCs....................................
Codes designated as non-CC..............          54,160          55,142
Percent of cases with no CC.............           18.5%           23.4%
Average charge of cases with no CCs.....          $9,885         $10,166
------------------------------------------------------------------------

    Using the method described above to perform our comprehensive 
analysis, we are proposing to modify the Version 36 CC subclass 
assignments for 2.1 percent of the ICD-10-CM diagnosis codes, as 
summarized in the table below.

                                                         Proposed MCC/CC Subclass Modifications
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Proposed        Proposed        Proposed
                                                            Version 36       Proposed                       version 37      version 37      Version 37
                                                          severity level    version 37                     change to MCC   change to CC   change to non-
               Severity level--CC subclass                   number of    severity level  Percent change     subclass,       subclass,     CC subclass,
                                                               codes         number of                       number of       number of       number of
                                                                               codes                           codes           codes           codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
MCC.....................................................           3,244           3,099            -4.5             N/A             136              17
CC......................................................          14,528          13,691            -5.8               8             N/A           1,148
Non-CC..................................................          54,160          55,142             1.8               0             183             N/A
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................          71,932          71,932             N/A               8             319           1,166
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As a result of these proposed changes, of the 71,932 diagnosis 
codes included in the analysis, the net result would be a decrease of 
145 (3,244-3,099) codes designated as an MCC, a decrease of 837 
(14,528-13,691) codes designated as a CC, and an increase of 982 
(55,142-54,160) codes designated as a non-CC.
(2) Illustrations of Proposed Severity Level Changes
    As noted above, based on our comprehensive CC/MCC analysis as 
described previously in this section, we are proposing changes in the 
severity level designations for 1,492 ICD-10-CM diagnosis codes, and 
the specific proposed changes to severity level designations for those 
diagnosis codes are shown in Table 6P.1.c. associated with this 
proposed rule (which is available via the internet on the CMS website 
at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). Below we provide illustrative examples 
of certain categories of codes for which we are proposing changes to 
the severity level designations as a result of our comprehensive 
analysis. As described above, these proposals are based on review of 
the data as well as consideration of the clinical nature of each of the 
secondary diagnoses and the severity level of clinically similar 
diagnoses. The first set of codes, from the Neoplasms chapter, 
encompasses more than half of all proposed severity level changes. The 
additional examples are from a variety of body systems and conditions, 
and they are illustrative of both proposed increases and proposed 
decreases in severity level designation. We note that we are making 
available a

[[Page 19237]]

supplementary file containing the data describing the impact on 
resource use when reported as a secondary diagnosis for all 1,492 ICD-
10-CM diagnosis codes for which we are proposing a change in 
designation via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
(a) Neoplasms Chapter Codes
    Of the total number of ICD-10-CM diagnosis codes for which we are 
proposing a change of severity level designation, 767 are from the 
Neoplasms chapter of the ICD-10-CM classification (C00-D49) and are 
currently designated as a CC. We note that the Neoplasms chapter 
contains a total of 1,661 ICD-10-CM diagnosis codes. In Version 36 of 
the MS-DRGs, none of the 1,661 neoplasm codes are designated as an MCC, 
767 are designated as a CC, and 894 are designated as a non-CC. For all 
767 codes currently designated as a CC, our clinical advisors 
recommended changing the severity level designation from CC to non-CC. 
The following table presents examples of some of the neoplasm codes for 
which we are proposing a severity level change to non-CC, and their 
impact on resource use when reported as a secondary diagnosis. As noted 
previously, the data analysis for the remainder of these neoplasm codes 
is included in the supplementary file that we are making available on 
the CMS website.

                                        Proposed Severity Level Changes for Neoplasm Codes as Secondary Diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass      Proposed CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
C20 (Malignant neoplasm of rectum)      2,960     1.0485      7,561     2.2169      6,492     3.0790  CC......................  Non-CC.
C22.0 (Liver cell carcinoma)......      1,672     1.2289      9,444     2.0638     12,503     3.0914  CC......................  Non-CC.
C25.0 (Malignant neoplasm of head       1,205     1.1357      3,834     2.1788      6,191     3.0229  CC......................  Non-CC.
 of pancreas).
C64.1 (Malignant neoplasm of right      1,512     1.2276      4,463     2.1600      4,593     3.1158  CC......................  Non-CC.
 kidney, except renal pelvis).
C64.2 (Malignant neoplasm of left       1,368     1.3407      4,517     2.1947      4,593     3.0947  CC......................  Non-CC.
 kidney, except renal pelvis).
C78.01 (Secondary malignant             4,149     1.0417     14,946     2.0888     20,324     3.0043  CC......................  Non-CC.
 neoplasm of right lung).
C78.02 (Secondary malignant             3,599     1.0078     13,456     2.0853     18,384     3.0024  CC......................  Non-CC.
 neoplasm of left lung).
C79.31 (Secondary malignant             7,164     1.1895     22,989     2.1330     41,387     2.9116  CC......................  Non-CC.
 neoplasm of brain).
C79.51 (Secondary malignant            26,095     1.3048     88,022     2.2020     99,670     3.0449  CC......................  Non-CC.
 neoplasm of bone).
C90.00 (Multiple myeloma not            9,947     1.1588     34,155     2.2144     33,830     3.1281  CC......................  Non-CC.
 having achieved remission).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As described in section II.F.15.b. of the preamble of this proposed 
rule, we examined the impact in resource use for three subsets of 
patients in order to evaluate the severity level designations for each 
secondary diagnosis. In the table above, the C1 values are generally 
close to 1, C2 values are generally close to 2, and C3 values are 
generally close to 3. As explained in section II.F.15.b. of the 
preamble of this proposed rule, these values suggest that when a 
neoplasm is reported as a secondary diagnosis, the resources involved 
in caring for a patient with this condition are more aligned with a 
non-CC severity level than a CC severity level. Our clinical advisors 
reviewed these data and believe the resources involved in caring for a 
patient with this condition are more aligned with a non-CC severity 
level. Our clinical advisors noted that when a neoplasm is reported as 
a secondary diagnosis, because it is not the condition that occasioned 
the patient's admission to the hospital, it does not significantly 
impact resource use. Our clinical advisors noted that if these patients 
are admitted for treatment of the neoplasm, the neoplasm is the 
principal diagnosis, and other complicating or comorbid conditions 
reported as secondary diagnoses would determine the appropriate 
severity level designation for each particular case. For example, if a 
patient is admitted for resection of malignant neoplasm of the right 
kidney, ICD-10-CM diagnosis code C64.1 (Malignant neoplasm of right 
kidney, except renal pelvis) is reported as the principal diagnosis, 
and any complicating conditions reported as secondary diagnoses during 
the hospital stay would determine the appropriate severity level 
designation for the case.
(b) Diseases of the Circulatory System Chapter Codes
    In the Diseases of the Circulatory System chapter of the ICD-10-CM 
diagnosis classification (I00-I99), based on the results of our 
comprehensive review, we are proposing to change the severity level 
designation for 13 ICD-10-CM diagnosis codes from categories I21 (Acute 
myocardial infarction) and I22 (Subsequent ST elevation (STEMI) and 
non-ST elevation (NSTEMI) myocardial infarction) from an MCC to a CC.
    The following table contains the ICD-10-CM diagnosis codes for 
which we are proposing a severity level change, and their impact on 
resource use when reported as a secondary diagnosis.

[[Page 19238]]



                                 Proposed Severity Level Changes for Myocardial Infarction Codes as Secondary Diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM  diagnosis code         Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass      Proposed CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
I21.01 (ST elevation (STEMI)                2     1.2010         17     2.9902         38     3.0195  MCC.....................  CC.
 myocardial infarction involving
 left main coronary artery).
I21.02 (ST elevation (STEMI)              149     0.9326        322     1.6565        754     3.3157  MCC.....................  CC.
 myocardial infarction involving
 left anterior descending coronary
 artery).
I21.09 (ST elevation (STEMI)              583     1.2201      1,288     2.2225      3,744     3.1094  MCC.....................  CC.
 myocardial infarction involving
 other coronary artery of anterior
 wall).
I21.11 (ST elevation (STEMI)              175     1.8486        326     2.0867        581     3.1141  MCC.....................  CC.
 myocardial infarction involving
 right coronary artery).
I21.19 (ST elevation (STEMI)              913     1.5054      1,940     2.2641      4,081     3.1996  MCC.....................  CC.
 myocardial infarction involving
 other coronary artery of inferior
 wall).
I21.21 (ST elevation (STEMI)               30     0.9445         56     2.4160        117     2.9965  MCC.....................  CC.
 myocardial infarction involving
 left circumflex coronary artery).
I21.29 (ST elevation (STEMI)              162     1.0143        417     2.2401      1,048     3.3341  MCC.....................  CC.
 myocardial infarction involving
 other sites).
I21.3 (ST elevation (STEMI)             1,271     1.6587      3,876     2.2420     10,168     3.2432  MCC.....................  CC.
 myocardial infarction of
 unspecified site).
I22.0 (Subsequent ST elevation             10     0.9199         74     1.2558        165     2.6794  MCC.....................  CC.
 (STEMI) myocardial infarction of
 anterior wall).
I22.1 (Subsequent ST elevation              4     0.0000         81     1.6022        143     3.3056  MCC.....................  CC.
 (STEMI) myocardial infarction of
 inferior wall).
I22.2 (Subsequent non-ST elevation         94     2.1034        352     2.1291      1,916     3.0157  MCC.....................  CC.
 (NSTEMI) myocardial infarction).
I22.8 (Subsequent ST elevation              5     2.2963         18     2.0589         53     3.1306  MCC.....................  CC.
 (STEMI) myocardial infarction of
 other sites).
I22.9 (Subsequent ST elevation             27     1.7140         87     1.8737        293     2.9627  MCC.....................  CC.
 (STEMI) myocardial infarction of
 unspecified site).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As shown in the table above, all of these myocardial infarction 
codes are currently assigned as MCCs. As explained earlier, values 
close to 2.0 in column C1 suggest that the condition is more like a CC 
than a non-CC but not as significant in resource usage as an MCC. The 
C1 values for the secondary diagnoses with the largest number of cases 
in this subset in the table above, ICD-10-CM codes I21.3 and I21.19, 
are closer to 2.0 than to 1.0, indicating that these secondary 
diagnoses are more aligned with a CC than either a non-CC or an MCC. 
Therefore, the data suggest that for patients for whom any of the 
myocardial infarction codes listed in the table above is reported as a 
secondary diagnosis, the resources involved in their care are not 
aligned with those of an MCC. Our clinical advisors reviewed these data 
and believe that the resources involved in caring for a patient with 
this condition are aligned with a CC. Patients with a secondary 
diagnosis of myocardial infarction may require additional diagnostic 
imaging, monitoring, medications, and additional interventions, thereby 
consuming resources that are consistent with CC status. Our clinical 
advisors noted that while, for certain codes, the number of cases shown 
in the data may not be sufficient to reliably indicate impact on 
resource use as a secondary diagnosis, these codes are clinically 
similar to other codes for which the data are sufficient to indicate 
impact on resource use. Because our clinical advisors believe that it 
is appropriate to ensure consistency across codes describing similar 
diagnoses, we are proposing to reassign the severity level for all of 
the codes in the table above from an MCC to a CC.
(c) Diseases of the Skin and Subcutaneous Tissue Chapter Codes
    In the Diseases of the Skin and Subcutaneous Tissue chapter of the 
ICD-10-CM diagnosis classification (L00-L99), based on the results of 
our comprehensive review, we are proposing a change to the severity 
level for 150 ICD-10-CM diagnosis codes describing pressure ulcers. 
Pressure ulcers, which are also known as pressure injuries, involve 
damage to the skin and soft tissue. They may result from prolonged 
pressure over a bony prominence or result from a medical device. The 
ICD-10-CM classification includes 150 diagnosis codes that describe 
pressure ulcers across various anatomical regions and across the 
various possible stages (stages 1 through 4, unspecified stage, and 
unstageable). These codes are listed in Table 6P.1.d. associated with 
this proposed rule (which is available via the internet on the CMS 
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). In the course of our 
comprehensive review of the CC/MCC lists, our clinical advisors 
reviewed the current categorization of pressure ulcers, which designate 
all stage 3 and 4 pressure ulcers as MCCs, while stage 1, stage 2, 
unspecified stage,

[[Page 19239]]

and unstageable pressure ulcers are currently designated as non-CCs.
    Our clinical advisors reviewed data on the relative contribution to 
the overall cost of hospital care for all stages of pressure ulcers 
coded as secondary diagnoses, and found (1) that there was little 
difference in the cost contribution regardless of stage, and (2) the 
cost contributions (cost weights) of all stages supported a designation 
of CC rather than MCC (for stage 3 and 4 ulcers), and CC rather than 
non-CC (for stages 1, 2, unspecified, and unstageable). Our clinical 
advisors noted that the apparent similar contribution of all pressure 
ulcer stages can be explained by the fact that pressure ulcers occur in 
patients with serious underlying illness, such as stroke, cancer, 
dementia, and end-stage cardiac or pulmonary disease that can result in 
multiple factors (frailty, immobility, paralysis, malnutrition, and 
general debility) that predispose them to pressure ulcers. It is the 
serious underlying illness and debilitated state that causes the 
pressure ulcer that is the primary driver of resource use. Although a 
pressure ulcer at any stage requires care and preventive measures that 
make additional contributions to the overall cost of care, our clinical 
advisors believe that the fact that the ulcer developed in the first 
place is more important than the stage of the ulcer itself in 
determining the impact on the costs of hospitalization. The presence of 
a pressure ulcer may indicate an increase in resource use, but that 
increase is similar regardless of the stage of the ulcer.
    The following table contains illustrations of pressure ulcer codes 
and their impact on resource use when reported as a secondary 
diagnosis. We selected secondary diagnosis codes describing pressure 
ulcer of the sacrum as examples because they account for almost half of 
all instances of pressure ulcers reported as secondary diagnoses, but 
note that the data for the codes describing pressure ulcer of other 
body parts generally show a similar pattern. As noted previously, the 
data analysis for the remainder of the pressure ulcer codes for which 
we are proposing a change in severity level designation is included in 
the supplementary file that we are making available on the CMS website.

                                     Proposed Severity Level Changes for Pressure Ulcer Codes as Secondary Diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM  diagnosis code         Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass      Proposed CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
L89.150 (Pressure ulcer of sacral         605      2.003      6,247      2.560     24,047      3.254  Non-CC..................  CC.
 region, unstageable).
L89.151 (Pressure ulcer of sacral       2,374      1.691     16,688      2.404     36,428      3.182  Non-CC..................  CC.
 region, stage 1).
L89.152 (Pressure ulcer of sacral       4,238      1.737     35,608      2.497     95,832      3.274  Non-CC..................  CC.
 region, stage 2).
L89.153 (Pressure ulcer of sacral       1,722      1.832     15,266      2.522     48,414      3.289  MCC.....................  CC.
 region, stage 3).
L89.154 (Pressure ulcer of sacral       1,237      1.755     14,306      2.438     56,619      3.196  MCC.....................  CC.
 region, stage 4).
L89.159 (Pressure ulcer of sacral       1,453      1.387     12,466      2.311     35,020      3.176  Non-CC..................  CC.
 region, unspecified stage).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As explained previously, a value in column C1 that is 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. Given that the values in 
column C1 in the table above are closer to 2.0 than to 1.0, the data 
suggest that when pressure ulcers of the sacral region are reported as 
a secondary diagnosis, the resources involved in caring for these 
patients are more consistent with a CC than either a non-CC or an MCC. 
Our clinical advisors reviewed these data and believe that it is 
appropriate to ensure consistency across codes involving similar 
diagnoses. Therefore, we are proposing to designate as CCs both the 50 
ICD-10-CM diagnosis codes that are currently designated as MCCs and the 
100 ICD-10-CM diagnosis codes currently designated as non-CCs.
    We note that, under the Hospital-Acquired Condition (HAC) payment 
provision established by section 5001(c) of the Deficit Reduction Act 
(DRA) of 2005, hospitals no longer receive additional payment for cases 
in which one of the selected conditions occurred but was not present on 
admission (POA). That is, the case is paid as though the condition were 
not present. The HAC-POA payment provision is applicable for secondary 
diagnosis code reporting only, as the selected conditions are 
designated as a CC or an MCC when reported as a secondary diagnosis. 
For the DRA HAC-POA payment provision, a payment adjustment is only 
applicable if there are no other CC/MCC conditions reported on the 
claim. Currently, there are 14 HAC categories subject to the HAC-POA 
payment provision, one of which is pressure ulcers. The pressure ulcer 
HAC category (HAC 04) specifically includes diagnosis codes describing 
a stage 3 or stage 4 pressure ulcer because they are designated as an 
MCC, as noted earlier in this section. If the proposed severity level 
designations for the pressure ulcer diagnosis codes are finalized, the 
100 ICD-10-CM diagnosis codes describing pressure ulcers currently 
designated as non-CCs would be subject to the HAC-POA payment provision 
as CCs when reported as a secondary diagnosis and not POA, effective 
beginning in FY 2020. The diagnosis codes describing a stage 3 or stage 
4 pressure ulcer would continue to be subject to the HAC-POA payment 
provision as CCs.
    In addition, consistent with the proposed changes to the severity 
level designation of the pressure ulcer codes, we are proposing to 
revise the title of the HAC 04 category from ``Pressure Ulcer--Stages 
III & IV'' to ``Pressure Ulcers''. We refer readers to the website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalAcqCond/index.html for additional information regarding the 
HAC-POA payment provision under the DRA.
(d) Diseases of the Genitourinary System Chapter Codes
    In the Diseases of the Genitourinary System chapter of the ICD-10-
CM diagnosis classification (N00-N99), based on the results of our 
comprehensive analysis, we are proposing to change the severity level 
designation for eight ICD-10-CM diagnosis codes. For these eight

[[Page 19240]]

diagnosis codes, based on their clinical judgment and for the reasons 
described below, our clinical advisors recommended that we increase the 
severity level designation from a CC to an MCC for one code, and from a 
non-CC to a CC for seven codes. The following table contains the 
Diseases of the Genitourinary System chapter codes that describe 
conditions for which we are proposing a severity level designation 
change, and their impact on resource use when reported as a secondary 
diagnosis.

                                     Proposed Severity Level Changes for Genitourinary Codes as Secondary Diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass      Proposed CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
N10 (Acute pyelonephritis)........      5,385     0.9639     20,476     1.9444     26,929     3.0413  Non-CC..................  CC.
N18.4 (Chronic kidney disease,         36,940     1.0919    219,482     2.0679    319,849     3.0840  Non-CC..................  CC.
 stage 4 (severe)).
N18.5 (Chronic kidney disease,          1,158     1.0303     30,851     2.0841     34,733     3.1508  Non-CC..................  CC.
 stage 5).
N18.6 (End stage renal disease)...     26,276     1.5755    578,587     2.3010    492,710     3.2761  CC......................  MCC.
N30.00 (Acute cystitis without         18,597     1.0576     53,820     1.9409     73,996     2.8976  Non-CC..................  CC.
 hematuria).
N30.01 (Acute cystitis with             4,872     0.9503     16,949     1.8514     24,422     2.8070  Non-CC..................  CC.
 hematuria).
N41.0 (Acute prostatitis).........        845     0.9519      3,031     1.8163      2,135     3.0450  Non-CC..................  CC.
N76.4 (Abscess of vulva)..........        368     0.8284      1,276     2.0906      1,049     3.1341  Non-CC..................  CC.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The C1, C2, and C3 values in the table above are generally close to 
1.0, 2.0, and 3.0, respectively, which would indicate that these 
conditions are more aligned with a non-CC than with either a CC or an 
MCC. However, our clinical advisors believe that patients with a 
secondary diagnosis of one of the genitourinary conditions in the table 
above may consume additional resources, including but not limited to 
monitoring for hypertension, diagnostic tests, and balancing 
electrolytes. Patients with end-stage renal disease (ICD-10-CM code 
N18.6) would typically require dialysis in addition to these resources, 
which our clinical advisors believe is more aligned with an MCC. 
Therefore, we are proposing to change the severity level designations 
for the eight codes as shown in the table above.
e. Injury, Poisoning and Certain Other Consequences of External Causes 
Chapter Codes
    In subcategory S32.5 (Fracture of pubis) of the ICD-10-CM diagnosis 
classification, based on our comprehensive analysis, we are proposing 
to change the severity level designation from CC to non-CC for 19 ICD-
10-CM diagnosis codes that specify fractures of the pubic bone. The 
following table contains the diagnosis codes for which we are proposing 
a severity level designation change, and their impact on resource use 
when reported as a secondary diagnosis.

                                      Proposed Severity Level Changes, Pubis Fracture Codes as Secondary Diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass      Proposed CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
S32.501A (Unspecified fracture of         393     1.0234      1,171     2.1215        847     3.0423  CC......................  Non-CC.
 right pubis, initial encounter
 for closed fracture).
S32.501K (Unspecified fracture of           1     1.5125         12     2.1144          2     1.8454  CC......................  Non-CC.
 right pubis, subsequent encounter
 for fracture with nonunion).
S32.502A (Unspecified fracture of         398     1.3072      1,152     2.0593        914     3.0028  CC......................  Non-CC.
 left pubis, initial encounter for
 closed fracture).
S32.502K (Unspecified fracture of           3     0.0000          7     2.8723          1     0.7401  CC......................  Non-CC.
 left pubis, subsequent encounter
 for fracture with nonunion).
S32.509A (Unspecified fracture of          49     1.1075        156     2.1066        154     3.1704  CC......................  Non-CC.
 unspecified pubis, initial
 encounter for closed fracture).
S32.509K (Unspecified fracture of           0     0.0000          1     3.4022          1     2.1306  CC......................  Non-CC.
 unspecified pubis, subsequent
 encounter for fracture with
 nonunion).
S32.511A (Fracture of superior rim        743     1.1812      2,132     2.1519      1,504     2.8763  CC......................  Non-CC.
 of right pubis, initial encounter
 for closed fracture).
S32.511K (Fracture of superior rim          2     2.0354          5     0.0000          4     2.3425  CC......................  Non-CC.
 of right pubis, subsequent
 encounter for fracture with
 nonunion).

[[Page 19241]]

 
S32.512A (Fracture of superior rim        760     1.5738      2,098     2.0828      1,590     2.9020  CC......................  Non-CC.
 of left pubis, initial encounter
 for closed fracture).
S32.512K (Fracture of superior rim          3     2.1915          3     2.4812          8     4.0000  CC......................  Non-CC.
 of left pubis, subsequent
 encounter for fracture with
 nonunion).
S32.519A (Fracture of superior rim         15     2.6829         53     1.5795         35     2.9052  CC......................  Non-CC.
 of unspecified pubis, initial
 encounter for closed fracture).
S32.519K (Fracture of superior rim          0      0.000          0      0.000          0      0.000  CC......................  Non-CC.
 of unspecified pubis, subsequent
 encounter for fracture with
 nonunion).
S32.591A (Other specified fracture      2,427     1.2524      6,513     2.0970      4,397     2.9930  CC......................  Non-CC.
 of right pubis, initial encounter
 for closed fracture).
S32.591K (Other specified fracture          7     2.7706         15     1.9772          5     0.8969  CC......................  Non-CC.
 of right pubis, subsequent
 encounter for fracture with
 nonunion).
S32.592A (Other specified fracture      2,424     1.3691      6,604     2.0921      4,922     2.9428  CC......................  Non-CC.
 of left pubis, initial encounter
 for closed fracture).
S32.592K (Other specified fracture          4     0.6970         24     2.5574         10     3.0015  CC......................  Non-CC.
 of left pubis, subsequent
 encounter for fracture with
 nonunion).
S32.599A (Other specified fracture        151     1.6748        457     2.0518        394     3.1844  CC......................  Non-CC.
 of unspecified pubis, initial
 encounter for closed fracture).
S32.599K (Other specified fracture          1     0.0000          0     0.0000          3     1.4709  CC......................  Non-CC.
 of unspecified pubis, subsequent
 encounter for fracture with
 nonunion).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The C1, C2, and C3 values in the table above are generally close to 
1.0, 2.0, and 3.0, respectively, particularly for those codes for which 
the highest number of cases were reported. This indicates that these 
conditions are more aligned with a non-CC than with either a CC or an 
MCC. Our clinical advisors reviewed these data, particularly with 
respect to ICD-10-CM diagnosis codes S32.591A and S32.592A which 
account for the majority of cases in this group, and believe the 
resources involved in caring for a patient with these conditions are 
more aligned with a non-CC. Our clinical advisors noted that, similar 
to the proposed severity level designation changes in the Neoplasms 
chapter of the ICD-10-CM diagnosis classification discussed above, if 
patients are admitted for treatment of an acute or nonunion fracture of 
the pubic bone, the fracture is the principal diagnosis, and other 
complicating or comorbid conditions reported as secondary diagnoses 
would determine the appropriate severity level for each particular 
case. For example, if a patient is admitted for surgical treatment of 
the nonunion of a right pubic fracture at the superior rim, ICD-10-CM 
diagnosis code S32.511K (Fracture of superior rim of right pubis, 
subsequent encounter for fracture with nonunion) is reported as the 
principal diagnosis. Because our clinical advisors believe that it is 
appropriate to ensure consistency across codes involving similar 
diagnoses, we are proposing to reassign the severity level for all of 
the codes in the table above from a CC to a non-CC.
    In category S72 (Fracture of femur) of the ICD-10-CM 
classification, based on our comprehensive analysis, we are proposing 
to change the severity level designation from MCC to CC for 35 ICD-10-
CM diagnosis codes specifying fractures of the hip. The following table 
contains the Injury, Poisoning and Certain Other Consequences of 
External Causes chapter codes for which we are proposing a severity 
level change, and their impact on resource use when reported as a 
secondary diagnosis.

                                       Proposed Severity Level Changes, Hip Fracture Codes as Secondary Diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass      Proposed CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
S72.011A (Unspecified                     145     2.1400        464     2.3419        700     2.9623  MCC.....................  CC.
 intracapsular fracture of right
 femur, initial encounter for
 closed fracture).
S72.012A (Unspecified                     155     2.0099        455     2.2738        754     3.0423  MCC.....................  CC.
 intracapsular fracture of left
 femur, initial encounter for
 closed fracture).

[[Page 19242]]

 
S72.019A (Unspecified                       1     0.9364          4     1.0008         10     2.7267  MCC.....................  CC.
 intracapsular fracture of
 unspecified femur, initial
 encounter for closed fracture).
S72.111A (Displaced fracture of           266     1.5110        605     2.2983        442     3.1874  MCC.....................  CC.
 greater trochanter of right
 femur, initial encounter for
 closed fracture).
S72.112A (Displaced fracture of           249     1.7779        573     2.4626        418     3.0108  MCC.....................  CC.
 greater trochanter of left femur,
 initial encounter for closed
 fracture).
S72.113A (Displaced fracture of            11     1.7739         21     2.9650         23     3.5762  MCC.....................  CC.
 greater trochanter of unspecified
 femur, initial encounter for
 closed fracture).
S72.114A (Nondisplaced fracture of        112     0.8826        339     2.1640        178     3.1028  MCC.....................  CC.
 greater trochanter of right
 femur, initial encounter for
 closed fracture).
S72.115A (Nondisplaced fracture of        118     1.3960        288     2.0607        202     2.8640  MCC.....................  CC.
 greater trochanter of left femur,
 initial encounter for closed
 fracture).
S72.116A (Nondisplaced fracture of          3     0.9472          8     1.3030          3     3.4270  MCC.....................  CC.
 greater trochanter of unspecified
 femur, initial encounter for
 closed fracture).
S72.121A (Displaced fracture of            22     2.0288         74     3.1110         49     3.1174  MCC.....................  CC.
 lesser trochanter of right femur,
 initial encounter for closed
 fracture).
S72.122A (Displaced fracture of            23     1.1648         75     2.9379         40     2.4430  MCC.....................  CC.
 lesser trochanter of left femur,
 initial encounter for closed
 fracture).
S72.123A (Displaced fracture of             0     0.0000          2     0.0000          6     2.2881  MCC.....................  CC.
 lesser trochanter of unspecified
 femur, initial encounter for
 closed fracture).
S72.124A (Nondisplaced fracture of          4     0.9792         19     2.4244          8     2.7792  MCC.....................  CC.
 lesser trochanter of right femur,
 initial encounter for closed
 fracture).
S72.125A (Nondisplaced fracture of          5     0.6759         13     1.2700          7     3.1292  MCC.....................  CC.
 lesser trochanter of left femur,
 initial encounter for closed
 fracture).
S72.126A (Nondisplaced fracture of          0     0.0000          0     0.0000          1     1.1159  MCC.....................  CC.
 lesser trochanter of unspecified
 femur, initial encounter for
 closed fracture).
S72.131A (Displaced apophyseal              1     3.4327          0     0.0000          2     4.0000  MCC.....................  CC.
 fracture of right femur, initial
 encounter for closed fracture).
S72.132A (Displaced apophyseal              0     0.0000          1     2.6423          0     0.0000  MCC.....................  CC.
 fracture of left femur, initial
 encounter for closed fracture).
S72.134A (Nondisplaced apophyseal           0      0.000          1      3.501          0      0.000  MCC.....................  CC.
 fracture of right femur, initial
 encounter for closed fracture).
S72.135A (Nondisplaced apophyseal           0      0.000          0      0.000          0      0.000  MCC.....................  CC.
 fracture of left femur, initial
 encounter for closed fracture).
S72.136A (Nondisplaced apophyseal           0      0.000          0      0.000          0      0.000  MCC.....................  CC.
 fracture of unspecified femur,
 initial encounter for closed
 fracture).

[[Page 19243]]

 
S72.141A (Displaced                       289     2.2607        894     2.6329      1,293     3.1692  MCC.....................  CC.
 intertrochanteric fracture of
 right femur, initial encounter
 for closed fracture).
S72.142A (Displaced                       347     2.2587        972     2.5641      1,405     3.1003  MCC.....................  CC.
 intertrochanteric fracture of
 left femur, initial encounter for
 closed fracture).
S72.143A (Displaced                        10     2.3446         21     1.0169         35     3.3080  MCC.....................  CC.
 intertrochanteric fracture of
 unspecified femur, initial
 encounter for closed fracture).
S72.144A (Nondisplaced                     44     1.7331        149     2.4637        168     3.1302  MCC.....................  CC.
 intertrochanteric fracture of
 right femur, initial encounter
 for closed fracture).
S72.145A (Nondisplaced                     39     1.9170        112     2.8435        170     3.2612  MCC.....................  CC.
 intertrochanteric fracture of
 left femur, initial encounter for
 closed fracture).
S72.146A (Nondisplaced                      0     0.0000          9     1.2250          2     0.0000  MCC.....................  CC.
 intertrochanteric fracture of
 unspecified femur, initial
 encounter for closed fracture).
S72.21XA (Displaced                        57     1.7697        159     2.2460        205     3.1614  MCC.....................  CC.
 subtrochanteric fracture of right
 femur, initial encounter for
 closed fracture).
S72.22XA (Displaced                        70     2.3685        160     2.6079        184     3.2178  MCC.....................  CC.
 subtrochanteric fracture of left
 femur, initial encounter for
 closed fracture).
S72.23XA (Displaced                         0     0.0000          9     3.4708          6     3.3401  MCC.....................  CC.
 subtrochanteric fracture of
 unspecified femur, initial
 encounter for closed fracture).
S72.24XA (Nondisplaced                     12     0.5442         22     2.7275         11     3.6028  MCC.....................  CC.
 subtrochanteric fracture of right
 femur, initial encounter for
 closed fracture).
S72.25XA (Nondisplaced                     13     1.7115         25     2.1005         17     3.1686  MCC.....................  CC.
 subtrochanteric fracture of left
 femur, initial encounter for
 closed fracture).
S72.26XA (Nondisplaced                      0     0.0000          1     2.0474          0     0.0000  MCC.....................  CC.
 subtrochanteric fracture of
 unspecified femur, initial
 encounter for closed fracture).
S72.301A (Unspecified fracture of          61     2.3462        156     3.0491        159     3.5567  MCC.....................  CC.
 shaft of right femur, initial
 encounter for closed fracture).
S72.302A (Unspecified fracture of          71     2.6314        186     2.4838        157     3.4436  MCC.....................  CC.
 shaft of left femur, initial
 encounter for closed fracture).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As shown in the table above, all of these secondary diagnoses are 
currently designated as MCCs. The C2 values of the codes most 
frequently reported, ICD-10-CM codes S72.142A and S72.141A, are closer 
to 3.0 than 2.0, which indicates that they are more clinically aligned 
with a CC than an MCC. Therefore, the data suggest that when fracture 
of the hip codes are reported as a secondary diagnosis, the resources 
involved in caring for patients with these conditions are more aligned 
with a CC than an MCC. Our clinical advisors reviewed these data and 
believe the resources involved in caring for patients with these 
conditions are more aligned with a CC. While we note that there is 
little to no data for some of these ICD-10-CM codes as secondary 
diagnoses, there is sufficient data for clinically similar secondary 
diagnoses. Therefore, because our clinical advisors believe that it is 
appropriate to ensure consistency across codes involving similar 
diagnoses, we are proposing to reassign the severity level for all of 
the codes in the table above from an MCC to a CC.
(f) Factors Influencing Health Status and Contact With Health Services
    The last chapter of the ICD-10-CM classification specifies other 
factors that influence a patient's health status or necessitate contact 
with health care

[[Page 19244]]

providers (Z00-Z99). Of these ICD-10-CM codes, based on our 
comprehensive review, we are proposing to change the severity level 
designation from non-CC to CC for four codes specifying anti-microbial 
drug resistance and one code specifying homelessness. Based on this 
same review, we also are proposing to change the severity level 
designation from CC to non-CC for 3 ICD-10-CM codes specifying adult 
body mass index (BMI) ranges and 13 ICD-10-CM codes indicating that the 
patient has previously undergone an organ transplant or cardiac device 
implantation with no current complications (the code indicates status 
only).
    The following table contains the five codes for which we are 
proposing a severity level change from non-CC to CC and their impact on 
resource use when reported as a secondary diagnosis.

                                       Proposed Severity Level Changes for Z Chapter Codes as Secondary Diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3        Current CC subclass      Proposed CC subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
Z16.12 (Extended spectrum beta          3,082     2.1134     19,692     2.5995     25,544     3.1752  Non-CC..................  CC.
 lactamase (ESBL) resistance).
Z16.21 (Resistance to vancomycin).        692     2.1507      6,733     2.8659     11,672     3.3365  Non-CC..................  CC.
Z16.24 (Resistance to multiple          2,970     1.5821     16,097     2.4086     20,738     3.1174  Non-CC..................  CC.
 antibiotics).
Z16.39 (Resistance to other               448     1.2003      2,326     2.2555      2,494     3.1127  Non-CC..................  CC.
 specified antimicrobial drug).
Z59.0 (Homelessness)..............     14,927     1.5964     41,328     2.3012     22,101     3.1256  Non-CC..................  CC.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As indicated above, a value close to 2.0 in column C1 suggests that 
the secondary diagnosis is more aligned with a CC than a non-CC. 
Because the C1 values in the table above are generally close to 2, the 
data suggest that when these five Z chapter diagnosis codes are 
reported as a secondary diagnosis, the resources involved in caring for 
a patient with other factors such as homelessness support increasing 
the severity level from a non-CC to a CC. Our clinical advisors 
reviewed these data and believe the resources involved in caring for 
patients with these other reported factors are more aligned with a CC.
    While we note that ICD-10-CM diagnosis code Z16.39 does not follow 
this pattern, our clinical advisors believe that this code is 
clinically similar to the other diagnoses in the table above describing 
anti-microbial drug resistance. Therefore, because our clinical 
advisors believe that it is appropriate to ensure consistency across 
codes involving similar diagnoses, we are proposing to reassign the 
severity level for all four of the codes specifying anti-microbial drug 
resistance in the table above from a non-CC to a CC.
    The following table contains the 14 BMI and transplant/cardiac 
device status codes for which we are proposing a severity level 
designation change from CC to non-CC, and their impact on resource use 
when reported as a secondary diagnosis.

                   Proposed Severity Level Changes for Z Chapter BMI and Transplant/Cardiac Device Status Codes as Secondary Diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3        Current CC subclass      Proposed CC subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
Z68.1 (Body mass index (BMI) 19.9      18,983     1.1170    244,156     2.2082    350,731     3.0733  CC......................  Non-CC.
 or less, adult).
Z68.41 (Body mass index (BMI) 40.0-   139,420     1.1139    209,300     2.0752    213,929     3.0814  CC......................  Non-CC.
 44.9, adult).
Z68.42 (Body mass index (BMI) 45.0-    60,408     1.1643    102,897     2.0783    109,928     3.0867  CC......................  Non-CC.
 49.9, adult).
Z94.0 (Kidney transplant status)..     18,649     1.0277     70,484     2.0573     45,382     3.1032  CC......................  Non-CC.
Z94.1 (Heart transplant status)...      2,311     1.0649      8,138     2.2471      5,037     3.2653  CC......................  Non-CC.
Z94.2 (Lung transplant status)....      1,461     1.0886      5,032     2.1898      3,466     3.1285  CC......................  Non-CC.
Z94.3 (Heart and lungs transplant          20     0.8287         88     3.0647         59     3.1675  CC......................  Non-CC.
 status).
Z94.4 (Liver transplant status)...      6,050     0.9811     17,556     2.0323     12,970     3.1688  CC......................  Non-CC.
Z94.81 (Bone marrow transplant          1,655     0.9778      5,447     2.0919      5,150     3.1918  CC......................  Non-CC.
 status).
Z94.82 (Intestine transplant              119     1.5661        351     2.1844        230     3.2081  CC......................  Non-CC.
 status).
Z94.83 (Pancreas transplant             1,789     1.2032      7,788     2.0739      4,536     3.1381  CC......................  Non-CC.
 status).
Z94.84 (Stem cells transplant           3,083     1.1451     10,412     2.3041      8,835     3.2932  CC......................  Non-CC.
 status).
Z95.811 (Presence of heart assist       1,053     1.6453      7,373     2.3089      5,974     3.1198  CC......................  Non-CC.
 device).
Z95.812 (Presence of fully                 45     2.0467        132     2.5603        142     2.4139  CC......................  Non-CC.
 implantable artificial heart).
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 19245]]

    The C1, C2, and C3 values in the table above are generally close to 
1.0, 2.0, and 3.0, respectively. This indicates that these conditions 
are more aligned with a non-CC than with either a CC or an MCC. 
Therefore, the data suggest that when these BMI and transplant/cardiac 
device status codes are reported as a secondary diagnosis, the 
resources involved in caring for patients with these conditions 
indicating health status are not aligned with those of a CC. Our 
clinical advisors reviewed these data and believe the resources 
involved in caring for patients with these conditions indicating health 
status are more aligned with a non-CC. Our clinical advisors noted 
that, in the absence of a diagnosis that represents a complication of 
the patient's current status, the presence of a BMI within a stated 
range or the fact that a patient has previously undergone a transplant 
or cardiac device implant is not by itself a clinical indication of 
increased severity of illness. Therefore, we are proposing to reassign 
the severity level for all of the codes in the table above from a CC to 
a non-CC.
(3) Results of Impact Analysis
    Using claims data from the September 2018 update of the FY 2018 
MedPAR file, we employed the following method to determine the impact 
of changing severity level designation for the 1,492 ICD-10-CM 
diagnosis codes. Edits and cost estimations used for relative weight 
calculations were applied, resulting in 8,908,404 IPPS claims analyzed 
for this impact evaluation of our proposed changes to severity levels. 
We refer readers to section II.G. of the preamble of this proposed rule 
for further information regarding the methodology for calculation of 
the proposed relative weights.
    First, we analyzed the 8,908,404 IPPS claims using the Version 36 
ICD-10 MS-DRG GROUPER to determine the current distribution of severity 
level designation. We identified 3,648,331 cases (41.0 percent) 
reporting one or more secondary diagnosis codes assigned to the MCC 
severity level, 3,612,600 cases (40.5 percent) reporting one or more 
secondary diagnosis codes assigned to the CC severity level, and 
1,647,473 cases (18.5 percent) not reporting a secondary diagnosis code 
assigned to the MCC or CC severity level.
    Next, we reprocessed the 8,908,404 claims using the proposed change 
in severity level designation for the 1,492 ICD-10-CM diagnosis codes 
to determine the impact on the distribution of severity level 
designation. We identified 3,236,493 cases (36.3 percent) reporting one 
or more secondary diagnosis codes that would be assigned to the MCC 
severity level, 3,589,677 cases (40.3 percent) reporting one or more 
secondary diagnosis codes that would be assigned to the CC severity 
level, and 2,082,234 cases (23.4 percent) not reporting a secondary 
diagnosis code that would be assigned to the MCC or CC severity level.
    Below we provide a summary of the steps followed for the analysis 
performed.
    Step 1.--Analyzed 8,908,404 claims to determine the current 
distribution of severity level designation.

  Severity Level Distribution Before Proposed Changes--8,908,404 Claims
                                Analyzed
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of cases reporting one or more                  3,648,331 (41.0%)
 secondary diagnosis codes assigned to the
 MCC severity level.......................
Number of cases reporting one or more                  3,612,600 (40.5%)
 secondary diagnosis codes assigned to the
 CC severity level........................
Number of cases reporting no secondary                 1,647,473 (18.5%)
 diagnosis codes assigned to the MCC or CC
 severity level...........................
------------------------------------------------------------------------

    Step 2.--Made proposed severity level changes to 1,492 ICD-10-CM 
codes.

 Step 2--Made proposed severity level changes to 1,492 ICD-10-CM codes.
------------------------------------------------------------------------
                                     Proposed version 37     Number of
 Current version 36 severity level     severity level          codes
------------------------------------------------------------------------
Non-CC............................  CC..................             183
CC................................  Non-CC..............           1,148
CC................................  MCC.................               8
MCC...............................  Non-CC..............              17
MCC...............................  CC..................             136
                                                         ---------------
    Total.........................  ....................           1,492
------------------------------------------------------------------------

    Step 3.--Reprocessed 8,908,404 claims to determine severity level 
distribution after changes.

  Severity Level Distribution after Proposed Changes--8,908,404 Claims
                                Analyzed
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of cases reporting one or more                  3,236,493 (36.3%)
 secondary diagnosis codes assigned to the
 MCC severity level.......................
Number of cases reporting one or more                  3,589,677 (40.3%)
 secondary diagnosis codes assigned to the
 CC severity level........................
Number of cases reporting no secondary                 2,082,234 (23.4%)
 diagnosis codes assigned to the MCC or CC
 severity level...........................
------------------------------------------------------------------------

    The overall statistics by CC subgroup for the proposed Version 37 
MS-DRGs are contained in the table below. Cases in the MCC subgroup 
have average costs that are 62 percent higher than the average costs 
for cases in the CC subgroup. The CC subgroup with the largest number 
of cases is the CC subgroup with 40.3 percent of the cases.

[[Page 19246]]



                                     Overall Statistics for Proposed MS-DRGs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of
                           CC subgroup                                 cases          Percent      Average costs
----------------------------------------------------------------------------------------------------------------
Major...........................................................       3,236,493            36.3         $16,890
CC..............................................................       3,589,677            40.3          10,518
Non-CC..........................................................       2,082,234            23.4          10,166
----------------------------------------------------------------------------------------------------------------

    The distribution of cases across the different types of CC 
subgroups in the proposed Version 37 MS-DRGs is contained in the table 
below. The table shows that 91 percent of the cases would be assigned 
to base MS-DRGs with three CC subgroups, and only 9 percent of the 
cases would be assigned to base MS-DRGs with no CC subgroups.

Distribution of Patient by Type of CC Subgroup in Proposed Version 37 MS-
                                  DRGs
------------------------------------------------------------------------
               CC subgroup                    Number          Percent
------------------------------------------------------------------------
None....................................              68               9
(MCC and CC), Non-CC....................              84              11
MCC, (CC and Non-CC)....................             132              17
MCC, CC, and Non-CC.....................             477              63
                                         -------------------------------
    Total...............................             761  ..............
------------------------------------------------------------------------

    We performed regression analysis to compare the variance in the MS-
DRGs with and without the proposed severity level designation changes 
and thereby the impact of payment to cost ratios. The results of the 
regression analysis showed a slight decrease in variance with the 
proposed severity level designation changes, showing an R-squared of 
35.9 percent after making the severity level changes, compared with an 
R-squared of 35.6 percent in the current Version 36 ICD-10 MS-DRG 
GROUPER. This indicates that the proposed severity level changes 
increase the explanatory power of the GROUPER in capturing differences 
in expected cost between the MS-DRGs and thus would improve the overall 
accuracy of the IPPS payment system.
    After considering the results of our data analysis, the clinical 
judgment of our clinical advisors, and the overall aggregate impact of 
these changes, we are proposing a change to the severity level 
designations for 1,492 ICD-10-CM diagnosis codes as shown in Table 
6P.1c. associated with this proposed rule (which is available via the 
internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.)
d. Requested Changes to Severity Levels
(1) Acute Right Heart Failure
    We received a request to change the severity level for ICD-10-CM 
diagnosis codes I50.811 (Acute right heart failure) and I50.813 (Acute 
on chronic right heart failure) from a non-CC to an MCC. The requestor 
stated that similar diagnosis codes in the classification are 
designated as an MCC. We used the approach outlined earlier in this 
section to evaluate this request. The following table shows the claims 
data that were used to evaluate this request:

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass     Requested CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
I50.811 Acute right heart failure.         92     1.3290        470     2.5375      1,632     3.1907  non-CC..................  MCC.
I50.813 Acute on chronic right            183     1.4412      1,189     2.6036      3,099     3.2870  non-CC..................  MCC.
 heart failure.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    For ICD-10-CM diagnosis code I50.811, the data suggest that the 
resources involved in caring for a patient with this condition are 33 
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 54 percent greater than expected 
when reported in conjunction with another secondary diagnosis that is a 
CC, and 19 percent greater than expected when reported in conjunction 
with another secondary diagnosis code that is an MCC. Our clinical 
advisors reviewed this request and agree that the resources involved in 
caring for a patient with this condition are not aligned with those of 
an MCC.
    For ICD-10-CM diagnosis code I50.813, the data suggest that the 
resources involved in caring for a patient with this condition are 44 
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 60 percent greater than expected 
when reported in conjunction with another secondary diagnosis that is a 
CC, and 28 percent greater than expected when reported in conjunction 
with another secondary diagnosis code that is an MCC. Our clinical 
advisors reviewed this request and agree that the resources involved in 
caring for a patient with this condition are not aligned with those of 
an MCC.
    However, we note that although the data suggest that the resources 
involved in caring for a patient with this condition are not aligned 
with those of an MCC, the data suggest and our clinical advisors 
believe that the resources appear to be aligned with

[[Page 19247]]

those of a CC. Therefore, we are soliciting public comment on whether a 
CC severity level designation for ICD-10-CM diagnosis codes I50.811 and 
I50.813 for FY 2020 is appropriate.
(2) Chronic Right Heart Failure
    We received a request to change the severity level for ICD-10-CM 
diagnosis code I50.812 (Chronic right heart failure) from a non-CC to a 
CC. The requestor stated that this code warrants CC classification 
because it indicates the presence and treatment of chronic heart 
failure. We used the approach outlined earlier to evaluate this 
request. The following table contains the data that we used to evaluate 
this request:

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass     Requested CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
I50.812 Chronic right heart               179     1.5114      1,533     2.1146      1,758     3.0549  non-CC..................  CC.
 failure.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    For ICD-10-CM diagnosis code I50.812, the data suggest that the 
resources involved in caring for a patient with this condition are 51 
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 11 percent greater than expected 
when reported in conjunction with another secondary diagnosis that is a 
CC, and 5 percent greater than expected when reported in conjunction 
with another secondary diagnosis code that is an MCC. Our clinical 
advisors reviewed this request and agree that the resources involved in 
caring for a patient with this condition are not aligned with those of 
a CC. Therefore, we are not proposing a change to the severity level 
for ICD-10-CM diagnosis code I50.812.
(3) Ascites in Alcoholic Liver Disease and Toxic Liver Disease
    We received a request to change the severity level for ICD-10-CM 
diagnosis codes K70.11 (Alcoholic hepatitis with ascites), K70.31 
(Alcoholic cirrhosis with ascites), and K71.51 (Toxic liver disease 
with chronic active hepatitis with ascites) from a non-CC to a CC. The 
requestor stated that these codes warrant CC classification because 
providers are not currently compensated for the ascites treatment. We 
used the approach outlined earlier to evaluate this request. The 
following table contains the data that we used to evaluate this 
request.

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass     Requested CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
K70.11 Alcoholic hepatitis with           134     1.2952      1,940     2.3444      3,331     3.3635  non-CC..................  CC.
 ascites.
K70.31 Alcoholic cirrhosis with         1,634     1.1129     18,675     2.2301     26,822     3.2479  non-CC..................  CC.
 ascites.
K71.51 Toxic liver disease with            16     0.8913        218     2.1743        274     3.1418  non-CC..................  CC.
 chronic active hepatitis with
 ascites.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    For ICD-10-CM diagnosis code K70.11, the data suggest that the 
resources involved in caring for a patient with this condition are 29 
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 34 percent greater than expected 
when reported in conjunction with another secondary diagnosis that is a 
CC, and 36 percent greater than expected when reported in conjunction 
with another secondary diagnosis code that is an MCC. Our clinical 
advisors reviewed this request and agree that the resources involved in 
caring for a patient with this condition are not aligned with those of 
a CC. Therefore, we are not proposing a change to the severity level 
for ICD-10-CM diagnosis code K70.11.
    For ICD-10-CM diagnosis code K70.31, the data suggest that the 
resources involved in caring for a patient with this condition are 11 
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 23 percent greater than expected 
when reported in conjunction with another secondary diagnosis that is a 
CC, and 25 percent greater than expected when reported in conjunction 
with another secondary diagnosis code that is an MCC. Our clinical 
advisors reviewed this request and agree that the resources involved in 
caring for a patient with this condition are not aligned with those of 
a CC. Therefore, we are not proposing a change to the severity level 
for ICD-10-CM diagnosis code K70.31.
    For ICD-10-CM diagnosis code K71.51, the data suggest that the 
resources involved in caring for a patient with this condition are 11 
percent lower 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 17 percent greater than expected 
when reported in conjunction with another secondary diagnosis that is a 
CC, and 14 percent greater than expected when reported in conjunction 
with another secondary diagnosis code that is an MCC. Our clinical 
advisors reviewed this request and agree that the resources involved in 
caring for a patient with this condition are not aligned with those of 
a CC. Therefore, we are not proposing a change to the severity level 
for ICD-10-CM diagnosis code K71.51.
(4) Factitious Disorder Imposed on Self
    We received a request to change the severity level for ICD-10-CM 
diagnosis codes F68.11 (Factitious disorder imposed on self, with 
predominantly psychological signs and symptoms) and F68.13 (Factitious 
disorder imposed on self, with combined psychological and physical 
signs and symptoms) from a

[[Page 19248]]

non-CC to a CC. The requestor stated that similar codes in the 
classification are designated as a CC. We used the approach outlined 
earlier to evaluate this request. The following table contains the data 
that we used to evaluate this request.

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
     ICD-10-CM diagnosis code          Cnt1        C1        Cnt2        C2        Cnt3        C3       Current CC  subclass     Requested CC  subclass
--------------------------------------------------------------------------------------------------------------------------------------------------------
F68.11 Factitious disorder imposed         16     1.2040         59     0.9979         15     3.2395  non-CC..................  CC.
 on self, with predominantly
 psychological signs and symptoms.
F68.13 Factitious disorder imposed          4     1.6226         32     1.9840         11     4.0000  non-CC..................  CC.
 on self, with combined
 psychological and physical signs
 and symptoms.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    For ICD-10-CM diagnosis code F68.11, the number of patients found 
in the September 2018 update of the FY 2018 MedPAR data in each of the 
subsets is 16, 59, and 15, and for ICD-10-CM diagnosis code F68.13, the 
number of patients in each of the subsets is 4, 32, and 11. Our 
clinical advisors reviewed this request and believe that due to the 
small number of cases in the data, it is not possible to use 
statistical methods to evaluate the impact on resource use of patients. 
Our clinical advisors also do not believe there is a clinical basis to 
change the severity level in the absence of data. Our clinical advisors 
noted that if a patient was diagnosed with either one of these ICD-10-
CM diagnoses (ICM-10-CM diagnosis code F68.11 or F68.13), there would 
more than likely be another diagnosis code reported that identifies the 
psychological and/or physical symptoms the patient is experiencing that 
may be a better indicator of resources utilized because these patients 
often fabricate their illness and inflict injuries on themselves to 
receive attention. For example, a patient may cut his or her finger, 
resulting in a wound which requires repair. It is the cut and need for 
repair that contribute to the resources consumed in caring for a 
patient with this diagnosis. Therefore, we are not proposing a change 
to the severity level for ICD-10-CM diagnosis codes F68.11 and F68.13 
at this time.
(5) Nonunion and Malunion of Physeal Metatarsal Fractures
    We received a request to change the severity level designations for 
the following six ICD-10-CM diagnosis codes from a non-CC to a CC: 
S99.101B (Unspecified physeal fracture of right metatarsal, initial 
encounter for open fracture); S99.101K (Unspecified physeal fracture of 
right metatarsal, subsequent encounter for fracture); S99.101P 
(Unspecified physeal fracture of right metatarsal, subsequent encounter 
for fracture with malunion); S99.132B (Salter-Harris Type III physeal 
fracture of left metatarsal, initial encounter for open fracture), 
S99.132K (Salter-Harris Type III physeal fracture of left metatarsal, 
subsequent encounter for fracture with nonunion); and S99.132P (Salter-
Harris Type III physeal fracture of left metatarsal, subsequent 
encounter for fracture with malunion with nonunion). The requestor 
stated that similar codes for open fractures, nonunions, and malunions 
of other sites currently are designated as CCs. However the requestor 
did not provide the specific ICD-10-CM diagnosis codes that are 
currently designated as CCs that the requestor believes are an 
appropriate comparator. There are a considerable number of fractures, 
nonunions, and malunions of other sites, some of which are designated 
as CCs and others that are not. In particular, in evaluating this 
request, we would want to review the appropriateness of designating 
unspecified codes (that is, ICD-10-CM diagnosis codes S99.101B, 
S99.101K, and S99.101P) as a CC, to avoid potentially discouraging more 
detailed coding. In addition, none of the other ICD-10-CM diagnosis 
codes describing Salter-Harris fractures (for example, ICD-10-CM 
diagnosis codes in sub-subcategory S99.11- (Salter-Harris Type I 
physeal fracture of metatarsal), S99.12- (Salter-Harris Type II physeal 
fracture of metatarsal), S99.13- (Salter-Harris Type III physeal 
fracture of metatarsal), and S99.14- (Salter-Harris Type IV physeal 
fracture of metatarsal)) currently have a CC designation.
    Given the lack of supporting information for this request and 
because we believe this request may require further research and 
analysis to evaluate the relevant category of fracture codes and fully 
assess the claims data, we are unable to fully evaluate this request 
for FY 2020. Therefore, at this time, we are not proposing changes to 
the severity level designations for ICD-10-CM diagnosis codes S99.101B, 
S99.101K, S99.101P, S99.132B, S99.132K, and S99.132P as the requestor 
recommended.
(6) Other Encephalopathy
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20241), we 
discussed a request that we had received to change the severity level 
designation for ICD-10-CM diagnosis code G93.40 (Encephalopathy, 
unspecified) from an MCC to a non-CC. We did not propose a change based 
on the review of the claims data and input from our clinical advisors. 
However, after a review of public comments in response to that 
proposal, we finalized a change in the severity level designation for 
ICD-10-CM diagnosis code G93.40 from an MCC to a CC (83 FR 41239).
    We received a request to reconsider the change in the severity 
level designation for ICD-10-CM diagnosis code G93.49 (Other 
encephalopathy) from an MCC to a CC, as reflected in Table 6I.2--
Deletions to the MCC List and Table 6J.--Complete CC List that were 
associated with the FY 2019 IPPS/LTCH PPS final rule, because the 
requestor noted this diagnosis code was not discussed in the FY 2019 
IPPS/LTCH PPS proposed or final rules along with the discussion of 
related ICD-10-CM diagnosis code G93.40. The requestor stated that 
diagnosis code G93.49 warrants an MCC classification to accurately 
reflect severity of illness and resources contributing to an extended 
length of stay for patients who have this condition.
    Our clinical advisors reviewed the data for ICD-10-CM diagnosis 
code G93.49 (Other encephalopathy) as set forth in the table below, and 
noted that the C1 value is close to 2.0, which indicates that the 
resource use is aligned with that of a CC, while the C2 value is about 
halfway between 2.0 and 3.0, which is also consistent with the resource 
use of a CC. They also compared the C1, C2, and C3 values of diagnosis 
code G93.49 to those of diagnosis code G93.40, as also set forth in the 
table below, and noted that the values were similar for both codes. Our 
clinical advisors noted that similar to diagnosis code G93.40, 
diagnosis code

[[Page 19249]]

G93.49 (Other encephalopathy) is poorly defined, not all 
encephalopathies are MCCs, and the MCC status may create an incentive 
for coding personnel to not pursue specificity of encephalopathy. 
Therefore, they believe that these conditions are clinically similar 
and should be assigned the same CC severity level status. Therefore, we 
are not proposing any change to the severity level for ICD 10 CM 
diagnosis code G93.49 (Other encephalopathy) for FY 2020.

----------------------------------------------------------------------------------------------------------------
           ICD-10-CM diagnosis code                Cnt1        C1        Cnt2        C2        Cnt3        C3
----------------------------------------------------------------------------------------------------------------
G93.40 (Encephalopathy, unspecified)..........     32,023      1.812    161,991      2.494    294,088      3.289
G93.49 (Other encephalopathy).................      4,258      1.758     23,203      2.536     40,836      3.349
----------------------------------------------------------------------------------------------------------------

(7) Obstetrics Chapter Codes
    We received a request to change the severity level for 94 ICD-10-CM 
diagnosis codes in the Obstetrics chapter of the ICD-10-CM diagnosis 
classification that describe a variety of complications of pregnancy, 
childbirth and the puerperium. The requestor stated that the 
reclassification of the 94 obstetric diagnosis codes would more 
appropriately reflect severity of illness and accurate MS-DRG grouping 
after CMS' FY 2019 creation of new obstetric MS-DRGs subdivided by 
severity level (with MCC, with CC, and without CC/MCC).
    The 94 obstetrics codes associated with this request and their 
current and requested severity level designation are shown in Table 
6P.1e. associated with this proposed rule (which is available via the 
internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). We are 
proposing to move some of these diagnosis codes to a higher severity 
level and some diagnosis codes to a lower severity level. Our proposals 
are shown in the table below.
    Our clinical advisors indicated that the approach outlined 
elsewhere in this section to evaluate requested changes to severity 
levels, in which each diagnosis is evaluated using Medicare cost data 
to determine the extent to which its presence as a secondary diagnosis 
resulted in increased hospital resource use, could not be used to 
evaluate this request because the number of obstetric patients in the 
Medicare data was insufficient to perform evaluation using statistical 
methods. Instead, our clinical advisors used their clinical judgment to 
evaluate the requested changes to the severity levels for the 94 
obstetrics diagnosis codes. Our clinical advisors concur with the 
requestor that changes to the severity level for some of the obstetrics 
diagnosis codes would more appropriately reflect severity of illness 
and accurate MS-DRG grouping. Specifically, our clinical advisors 
agreed with the requested change to severity from a non-CC to a CC for 
10 of the diagnosis codes identified by the requestor because they 
believe these conditions clinically warrant a CC designation. They 
noted that 6 of the 10 diagnosis codes describe gestational diabetes 
mellitus in pregnancy, gestational diabetes mellitus in childbirth, or 
gestational diabetes mellitus in the puerperium requiring control, 
either by insulin or oral hypoglycemic drugs and the condition would 
require additional monitoring and resources in the inpatient setting. 
They also noted that 2 of the 10 diagnosis codes describe maternal care 
for other isoimmunization in the first trimester for single or multiple 
gestations where the fetus is unspecified or fetus number 1 is 
specified. They indicated that although there are additional diagnosis 
codes describing maternal care for other isoimmunization in the first 
trimester that uniquely identify fetus number 2 through fetus number 5, 
as well as an ``other'' fetus beyond number 5, they do not believe 
these other diagnosis codes have any additional impact on resource use 
because treatment would be directed at the entire uterine cavity. They 
further noted that 1 of the 10 diagnosis codes describes a conjoined 
twin pregnancy in the third trimester and, while conjoined twins occur 
rarely and carry a high risk of complications and mortality, they 
believe the complexities are greatest in the third trimester. Lastly, 1 
of the 10 diagnosis codes describes unspecified diabetes mellitus in 
childbirth, and because the diagnosis codes describing unspecified 
diabetes mellitus in pregnancy and unspecified diabetes mellitus in the 
puerperium are designated as a CC, our clinical advisors agreed that 
clinically, the condition occurring in childbirth warrants a CC 
designation as well. Our clinical advisors also agreed with the 
requested change to severity level from an MCC to a CC for 4 other 
diagnosis codes identified by the requestor because, clinically, the CC 
designation is consistent with the other diagnosis codes within those 
diagnosis code families. For example, the diagnosis codes describing 
preexisting type 1 diabetes mellitus in pregnancy, preexisting type 2 
diabetes mellitus in pregnancy and unspecified preexisting diabetes 
mellitus in pregnancy, regardless of trimester (first, second, third, 
and unspecified) are all designated as CCs. Our clinical advisors 
agreed that the diagnosis codes describing these same conditions ``in 
childbirth'' also warrant a CC designation because the conditions do 
not require additional resources or reflect a greater severity of 
illness compared to the conditions when they occur ``in pregnancy''. 
Therefore, we are proposing a change to the severity level for 14 ICD-
10-CM diagnosis codes as shown in the following table.

----------------------------------------------------------------------------------------------------------------
              ICD-10-CM diagnosis code                    Current CC  subclass          Proposed CC  subclass
----------------------------------------------------------------------------------------------------------------
O24.02 (Pre-existing type 1 diabetes mellitus, in    MCC..........................  CC.
 childbirth).
O24.12 (Pre-existing type 2 diabetes mellitus, in    MCC..........................  CC.
 childbirth).
O24.32 (Unspecified pre-existing diabetes mellitus   MCC..........................  CC.
 in childbirth).
O24.414 (Gestational diabetes mellitus in            Non-CC.......................  CC.
 pregnancy, insulin controlled).
O24.415 (Gestational diabetes mellitus in            Non-CC.......................  CC.
 pregnancy, controlled by oral hypoglycemic drugs).
O24.424 (Gestational diabetes mellitus in            Non-CC.......................  CC.
 childbirth, insulin controlled).
O24.425 (Gestational diabetes mellitus in            Non-CC.......................  CC.
 childbirth, controlled by oral hypoglycemic drugs).
O24.434 (Gestational diabetes mellitus in the        Non-CC.......................  CC.
 puerperium, insulin controlled).
O24.435 (Gestational diabetes mellitus in            Non-CC.......................  CC.
 puerperium, controlled by oral hypoglycemic drugs).
O24.82 (Other pre-existing diabetes mellitus in      MCC..........................  CC.
 childbirth).
O24.92 (Unspecified diabetes mellitus in             Non-CC.......................  CC.
 childbirth).

[[Page 19250]]

 
O30.023 (Conjoined twin pregnancy, third trimester)  Non-CC.......................  CC.
O36.1910 (Maternal care for other isoimmunization,   Non-CC.......................  CC.
 first trimester, not applicable or unspecified).
O36.1911 (Maternal care for other isoimmunization,   Non-CC.......................  CC.
 first trimester, fetus 1).
----------------------------------------------------------------------------------------------------------------

    Given the limited number of cases reporting ICD-10-CM obstetrical 
codes in the Medicare claims data, we note that use of datasets other 
than MedPAR cost data for future evaluation of severity level 
designation for the ICD-10-CM diagnosis codes from the Obstetrics 
chapter of the ICD-10-CM classification is under consideration.
e. Proposed Additions and Deletions to the Diagnosis Code Severity 
Levels for FY 2020
    The following tables identify the proposed additions and deletions 
to the diagnosis code MCC severity levels list and the proposed 
additions and deletions to the diagnosis code CC severity levels list 
for FY 2020 and are available via the internet on the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    Table 6I.1--Proposed Additions to the MCC List--FY 2020;
    Table 6I.2--Proposed Deletions to the MCC List--FY 2020;
    Table 6J.1--Proposed Additions to the CC List--FY 2020; and
    Table 6J.2--Proposed Deletions to the CC List--FY 2020.
f. Proposed CC Exclusions List for FY 2020
    In the September 1, 1987 final notice (52 FR 33143) concerning 
changes to the DRG classification system, we modified the GROUPER logic 
so that certain diagnoses included on the standard list of CCs would 
not be considered valid CCs in combination with a particular principal 
diagnosis. We created the CC Exclusions List for the following reasons: 
(1) To preclude coding of CCs for closely related conditions; (2) to 
preclude duplicative or inconsistent coding from being treated as CCs; 
and (3) to ensure that cases are appropriately classified between the 
complicated and uncomplicated DRGs in a pair.
    In the May 19, 1987 proposed notice (52 FR 18877) and the September 
1, 1987 final notice (52 FR 33154), we explained that the excluded 
secondary diagnoses were established using the following five 
principles:
     Chronic and acute manifestations of the same condition 
should not be considered CCs for one another;
     Specific and nonspecific (that is, not otherwise specified 
(NOS)) diagnosis codes for the same condition should not be considered 
CCs for one another;
     Codes for the same condition that cannot coexist, such as 
partial/total, unilateral/bilateral, obstructed/unobstructed, and 
benign/malignant, should not be considered CCs for one another;
     Codes for the same condition in anatomically proximal 
sites should not be considered CCs for one another; and
     Closely related conditions should not be considered CCs 
for one another.
    The creation of the CC Exclusions List was a major project 
involving hundreds of codes. We have continued to review the remaining 
CCs to identify additional exclusions and to remove diagnoses from the 
master list that have been shown not to meet the definition of a CC. We 
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 
through 50544) for detailed information regarding revisions that were 
made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
    In this FY 2020 IPPS/LTCH PPS proposed rule, for FY 2020, we are 
proposing changes to the ICD-10 MS-DRGs Version 37 CC Exclusion List. 
Therefore, we have developed Table 6G.1.--Proposed Secondary Diagnosis 
Order Additions to the CC Exclusions List--FY 2020; Table 6G.2.--
Proposed Principal Diagnosis Order Additions to the CC Exclusions 
List--FY 2020; Table 6H.1.--Proposed Secondary Diagnosis Order 
Deletions to the CC Exclusions List--FY 2020; and Table 6H.2.--Proposed 
Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2020. 
For Table 6G.1, each secondary diagnosis code proposed for addition to 
the CC Exclusion List is shown with an asterisk and the principal 
diagnoses proposed to exclude the secondary diagnosis code are provided 
in the indented column immediately following it. For Table 6G.2, each 
of the principal diagnosis codes for which there is a CC exclusion is 
shown with an asterisk and the conditions proposed for addition to the 
CC Exclusion List that will not count as a CC are provided in an 
indented column immediately following the affected principal diagnosis. 
For Table 6H.1, each secondary diagnosis code proposed for deletion 
from the CC Exclusion List is shown with an asterisk followed by the 
principal diagnosis codes that currently exclude it. For Table 6H.2, 
each of the principal diagnosis codes is shown with an asterisk and the 
proposed deletions to the CC Exclusions List are provided in an 
indented column immediately following the affected principal diagnosis. 
Tables 6G.1., 6G.2., 6H.1., and 6H.2. associated with this proposed 
rule are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
15. Proposed Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
    To identify new, revised and deleted diagnosis and procedure codes, 
for FY 2020, we have developed Table 6A.--New Diagnosis Codes, Table 
6B.--New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 
6D.--Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, 
and Table 6F.--Revised Procedure Code Titles for this proposed rule.
    These tables are not published in the Addendum to this proposed 
rule but are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the 
Addendum to this proposed rule. As discussed in section II.F.18. of the 
preamble of this proposed rule, the code titles are adopted as part of 
the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee 
process. Therefore, although we publish the code titles in the IPPS 
proposed and final rules, they are not subject to comment in the 
proposed or final rules.
    We are proposing 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, the proposed 
severity level designations for the new diagnosis codes are set forth 
in Table 6A. and the proposed O.R. status for the new procedure codes 
are set forth in Table 6B.
    We are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html

[[Page 19251]]

the following tables associated with this proposed rule:
     Table 6A.--New Diagnosis Codes--FY 2020;
     Table 6B.--New Procedure Codes--FY 2020;
     Table 6C.--Invalid Diagnosis Codes--FY 2020;
     Table 6D.--Invalid Procedure Codes--FY 2020;
     Table 6E.--Revised Diagnosis Code Titles--FY 2020;
     Table 6F.--Revised Procedure Code Titles--FY 2020;
     Table 6G.1.--Proposed Secondary Diagnosis Order Additions 
to the CC Exclusions List--FY 2020;
     Table 6G.2.--Proposed Principal Diagnosis Order Additions 
to the CC Exclusions List--FY 2020;
     Table 6H.1.--Proposed Secondary Diagnosis Order Deletions 
to the CC Exclusions List--FY 2020;
     Table 6H.2.--Proposed Principal Diagnosis Order Deletions 
to the CC Exclusions List--FY 2020;
     Table 6I.1.--Proposed Additions to the MCC List--FY 2020;
     Table 6I.2.-Proposed Deletions to the MCC List--FY 2020;
     Table 6J.1.--Proposed Additions to the CC List--FY 2020; 
and
     Table 6J.2.--Proposed Deletions to the CC List--FY 2020.
16. Proposed Changes to the Medicare Code Editor (MCE)
    The Medicare Code Editor (MCE) is a software program that detects 
and reports errors in the coding of Medicare claims data. Patient 
diagnoses, procedure(s), and demographic information are entered into 
the Medicare claims processing systems and are subjected to a series of 
automated screens. The MCE screens are designed to identify cases that 
require further review before classification into an MS-DRG.
    As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41220), 
we made available the FY 2019 ICD-10 MCE Version 36 manual file. The 
link to this MCE manual file, along with the link to the mainframe and 
computer software for the MCE Version 36 (and ICD-10 MS-DRGs) are 
posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
    For this FY 2020 IPPS/LTCH PPS proposed rule, below we address the 
MCE requests we received by the November 1, 2018 deadline. We also 
discuss the proposals we are making based on our internal review and 
analysis.
a. Age Conflict Edit: Maternity Diagnoses
    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 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.
    We received a request to reconsider the age range associated with 
the maternity diagnoses category for the Age conflict edit. According 
to the requestor, pregnancies can and do occur prior to age 12 and 
after age 55. The requestor suggested that a more appropriate age range 
would be from age 9 to age 64 for the maternity diagnoses category.
    We agree with the requestor that pregnancies can and do occur prior 
to the age of 12 and after the age of 55. We also agree that the 
suggested range, age 9 to age 64, is an appropriate age range. 
Therefore, we are proposing to revise the maternity diagnoses category 
for the Age conflict edit to consider the new age range of 9 to 64 
years inclusive.
b. Sex Conflict Edit: Diagnoses for Females Only Edit
    In the MCE, the Sex conflict edit detects inconsistencies between a 
patient's sex and any diagnosis or procedure on the patient's record; 
for example, a male patient with cervical cancer (diagnosis) or a 
female patient with a prostatectomy (procedure). In both instances, the 
indicated diagnosis or the procedure conflicts with the stated sex of 
the patient. Therefore, the patient's diagnosis, procedure, or sex is 
presumed to be incorrect.
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6A.--New Diagnosis Codes which is associated with this 
proposed rule (and is available via the internet on the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes that have 
been approved to date which will be effective with discharges on and 
after October 1, 2019. ICD-10-CM diagnosis code N99.85 (Post 
endometrial ablation syndrome) is a new code that describes a condition 
consistent with the female sex. We are proposing to add this diagnosis 
code to the Diagnoses for Females Only edit code list under the Sex 
conflict edit.
c. Unacceptable Principal Diagnosis Edit
    In the MCE, there are select codes that describe a circumstance 
that 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.
    ICD-10-CM diagnosis codes I46.2 (Cardiac arrest due to underlying 
cardiac condition) and I46.8 (Cardiac arrest due to other underlying 
condition) are codes that clearly specify cardiac arrest as being due 
to an underlying condition. Also, in the ICD-10-CM Tabular List, there 
are instructional notes to ``Code first underlying cardiac condition'' 
at ICD-10-CM diagnosis code I46.2 and to ``Code first underlying 
condition'' at ICD-10-CM diagnosis code I46.8. Therefore, we are 
proposing to add ICD-10-CM diagnosis codes I46.2 and I46.8 to the 
Unacceptable Principal Diagnosis Category edit code list.
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6A.--New Diagnosis Codes associated with this proposed rule 
(which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis

[[Page 19252]]

codes that have been approved to date that will be effective with 
discharges occurring on and after October 1, 2019.
    We are proposing to add the new ICD-10-CM diagnosis codes listed in 
the following table to the Unacceptable Principal Diagnosis Category 
edit code list, as these codes are consistent with other ICD-10-CM 
diagnosis codes currently included on the Unacceptable Principal 
Diagnosis Category edit code list.

------------------------------------------------------------------------
      ICD-10-CM code                      Code description
------------------------------------------------------------------------
T50.915A..................  Adverse effect of multiple unspecified
                             drugs, medicaments and biological
                             substances, initial encounter.
T50.915D..................  Adverse effect of multiple unspecified
                             drugs, medicaments and biological
                             substances, subsequent encounter.
T50.915S..................  Adverse effect of multiple unspecified
                             drugs, medicaments and biological
                             substances, sequela.
T50.916A..................  Underdosing of multiple unspecified drugs,
                             medicaments and biological substances,
                             initial encounter.
T50.916D..................  Underdosing of multiple unspecified drugs,
                             medicaments and biological substances,
                             subsequent encounter.
T50.916S..................  Underdosing of multiple unspecified drugs,
                             medicaments and biological substances,
                             sequela.
Z11.7.....................  Encounter for testing for latent
                             tuberculosis infection.
Z22.7.....................  Latent tuberculosis.
Z71.84....................  Encounter for health counseling related to
                             travel.
Z86.002...................  Personal history of in-situ neoplasm of
                             other and unspecified genital organs.
Z86.003...................  Personal history of in-situ neoplasm of oral
                             cavity, esophagus and stomach.
Z86.004...................  Personal history of in-situ neoplasm of
                             other and unspecified digestive organs.
Z86.005...................  Personal history of in-situ neoplasm of
                             middle ear and respiratory system.
Z86.006...................  Personal history of melanoma in-situ.
------------------------------------------------------------------------

d. Non-Covered Procedure Edit
    In the MCE, the Non-Covered Procedure edit identifies procedures 
for which Medicare does not provide payment. Payment is not provided 
due to specific criteria that are established in the National Coverage 
Determination (NCD) process. We refer readers to the website at: 
https://www.cms.gov/Medicare/Coverage/Determination Process/
howtorequestanNCD.html for additional information on this process. In 
addition, there are procedures that would normally not be paid by 
Medicare but, due to the presence of certain diagnoses, are paid.
    As discussed in section II.F.15. of the preamble of this proposed 
rule, Table 6D.--Invalid Procedure Codes associated with this proposed 
rule (which is available via the internet on the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatient PPS/index.html) lists the procedure codes that are no 
longer effective as of October 1, 2019. Included in this table are the 
following ICD-10-PCS procedure codes listed on the Non-Covered 
Procedure edit code list.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
037G3Z6...................  Dilation of intracranial artery,
                             bifurcation, percutaneous approach.
037G4Z6...................  Dilation of intracranial artery,
                             bifurcation, percutaneous endoscopic
                             approach.
------------------------------------------------------------------------

    We are proposing to remove these codes from the Non-Covered 
Procedure edit code list. In addition, as discussed in section 
II.F.2.b. of the preamble of this proposed rule, a number of ICD-10-PCS 
procedure codes describing bone marrow transplant procedures were the 
subject of a proposal discussed at the March 5-6, 2019 ICD-10 
Coordination and Maintenance Committee meeting, to be deleted effective 
October 1, 2019. We are proposing that if the applicable proposal is 
finalized, we would delete the subset of those ICD-10-PCS procedure 
codes that are currently listed on the Non-Covered Procedure edit code 
list as shown in the following table.

------------------------------------------------------------------------
      ICD-10-PCS code                     Code description
------------------------------------------------------------------------
30250G0...................  Transfusion of autologous bone marrow into
                             peripheral artery, open approach.
30250Y0...................  Transfusion of autologous hematopoietic stem
                             cells into peripheral artery, open
                             approach.
30253G0...................  Transfusion of autologous bone marrow into
                             peripheral artery, percutaneous approach.
30253Y0...................  Transfusion of autologous hematopoietic stem
                             cells into peripheral artery, percutaneous
                             approach.
30260G0...................  Transfusion of autologous bone marrow into
                             central artery, open approach.
30260Y0...................  Transfusion of autologous hematopoietic stem
                             cells into central artery, open approach.
30263G0...................  Transfusion of autologous bone marrow into
                             central artery, percutaneous approach.
30263Y0...................  Transfusion of autologous hematopoietic stem
                             cells into central artery, percutaneous
                             approach.
------------------------------------------------------------------------

e. Future Enhancement
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through 
38054), we noted the importance of ensuring accuracy of the coded data 
from the reporting, collection, processing, coverage, payment, and 
analysis aspects. We have engaged a contractor to assist in the review 
of the limited coverage and noncovered procedure edits in the MCE that 
may also be present in other claims processing systems that are 
utilized by our MACs. The MACs must adhere to criteria specified within 
the National Coverage Determinations (NCDs) and may implement their own 
edits in addition to what are already incorporated into the MCE, 
resulting in duplicate edits. The objective of this review is to 
identify where duplicate edits may exist and to determine what the 
impact might be if these edits were to be removed from the MCE.
    We have noted that the purpose of the MCE is to ensure that errors 
and inconsistencies in the coded data are recognized during Medicare 
claims processing. As we indicated in the FY 2019 IPPS/LTCH PPS final 
rule (83 FR

[[Page 19253]]

41228), 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 have discussed in prior rulemaking, we recognize a need to further 
examine the current list of edits and the definitions of those edits. 
We continue to encourage public comments on whether there are 
additional concerns with the current edits, including specific edits or 
language that should be removed or revised, edits that should be 
combined, or new edits that should be added to assist in detecting 
errors or inaccuracies in the coded data. Comments should be directed 
to the MS-DRG Classification Change Mailbox located at: 
[email protected] by November 1, 2019 for the FY 
2021 rulemaking.
17. Proposed Changes to Surgical Hierarchies
    Some inpatient stays entail multiple surgical procedures, each one 
of which, occurring by itself, could result in assignment of the case 
to a different MS-DRG within the MDC to which the principal diagnosis 
is assigned. Therefore, it is necessary to have a decision rule within 
the GROUPER by which these cases are assigned to a single MS-DRG. The 
surgical hierarchy, an ordering of surgical classes from most resource-
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 proposed 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 cases involving multiple 
procedures, this result is sometimes unavoidable.
    We note that, notwithstanding the foregoing discussion, there are a 
few instances when a surgical class with a lower average cost is 
ordered above a surgical class with a higher average cost. For example, 
the ``other O.R. procedures'' surgical class is uniformly ordered last 
in the surgical hierarchy of each MDC in which it occurs, regardless of 
the fact that the average costs for the MS-DRG or MS-DRGs in that 
surgical class may be higher than those for other surgical classes in 
the MDC. The ``other O.R. procedures'' class is a group of procedures 
that are only infrequently related to the diagnoses in the MDC, but are 
still occasionally performed on patients with cases assigned to the MDC 
with these diagnoses. Therefore, assignment to these surgical classes 
should only occur if no other surgical class more closely related to 
the diagnoses in the MDC is appropriate.
    A second example occurs when the difference between the average 
costs for two surgical classes is very small. We have found that small 
differences generally do not warrant reordering of the hierarchy 
because, as a result of reassigning cases on the basis of the hierarchy 
change, the average costs are likely to shift such that the higher-
ordered surgical class has lower average costs than the class ordered 
below it.
    Based on the changes that we are proposing to make in this FY 2020 
IPPS/LTCH PPS proposed rule, as discussed in section II.F.5. of this 
preamble of this proposed rule, we are proposing to revise the surgical 
hierarchy for MDC 5 (Diseases and Disorders of the Circulatory System) 
as follows: In MDC 5, we are proposing to sequence proposed new MS-DRGs 
319 and 320 (Other Endovascular Cardiac Valve Procedures with and 
without MCC, respectively) above MS-DRGs 222, 223, 224, 225, 226, and 
227 (Cardiac Defibrillator Implant with and without Cardiac 
Catheterization with and without AMI/HF/Shock with and without MCC, 
respectively) and below MS-DRGs 266 and 267 (Endovascular Cardiac Valve 
Replacement with and without MCC, respectively). We also note that, as 
discussed in section II.F.5.a. of this preamble of this proposed rule, 
we are proposing to revise the titles for MS-DRGs 266 and 267 to 
``Endovascular Cardiac Valve Replacement and Supplement Procedures with 
MCC'' and ``Endovascular Cardiac Valve Replacement and Supplement 
Procedures without MCC'', respectively.
    Our proposal for Appendix D--MS-DRG Surgical Hierarchy by MDC and 
MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 37 is 
illustrated in the following table.

                   Proposed Surgical Hierarchy: MDC 5
------------------------------------------------------------------------
 
------------------------------------------------------------------------
MS-DRG 215.............................  Other Heart Assist System
                                          Implant.
MS-DRGs 216-221........................  Cardiac Valve and Other Major
                                          Cardiothoracic Procedures.
MS-DRGs 266 and 267....................  Endovascular Cardiac Valve
                                          Procedures.
Proposed New MS-DRGs 319 and 320.......  Other Endovascular Cardiac
                                          Valve Procedures.
MS-DRGs 222-227........................  Cardiac Defibrillator Implant.
------------------------------------------------------------------------


[[Page 19254]]

    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: [email protected] by November 1, 2019 
for consideration for FY 2021.
18. Maintenance of the ICD-10-CM and ICD-10-PCS Coding Systems
    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: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official 
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website 
at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.
    The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM 
diagnosis codes included in the Tabular List and Alphabetic Index for 
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index 
for Procedures.
    The Committee encourages participation in the previously mentioned 
process by health-related organizations. In this regard, the Committee 
holds public meetings for discussion of educational issues and proposed 
coding changes. These meetings provide an opportunity for 
representatives of recognized organizations in the coding field, such 
as the American Health Information Management Association (AHIMA), the 
American Hospital Association (AHA), and various physician specialty 
groups, as well as individual physicians, health information management 
professionals, and other members of the public, to contribute ideas on 
coding matters. After considering the opinions expressed at the public 
meetings and in writing, the Committee formulates recommendations, 
which then must be approved by the agencies.
    The Committee presented proposals for coding changes for 
implementation in FY 2020 at a public meeting held on September 11-12, 
2018, and finalized the coding changes after consideration of comments 
received at the meetings and in writing by November 13, 2018.
    The Committee held its 2019 meeting on March 5-6, 2019. The 
deadline for submitting comments on these code proposals is scheduled 
for April 5, 2019. It was announced at this meeting that any new 
diagnosis and procedure codes for which there was consensus of public 
support and for which complete tabular and indexing changes would be 
made by May 2019 would be included in the October 1, 2019 update to the 
ICD-10-CM diagnosis and ICD-10-PCS procedure code sets. As discussed in 
earlier sections of the preamble of this proposed rule, there are new, 
revised, and deleted ICD-10-CM diagnosis codes and ICD-10-PCS procedure 
codes that are captured in Table 6A.--New Diagnosis Codes, Table 6B.--
New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--
Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and 
Table 6F.--Revised Procedure Code Titles for this proposed rule, which 
are available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. The code titles are adopted as part of 
the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee 
process. Therefore, although we make the code titles available for the 
IPPS proposed rule, they are not subject to comment in the proposed 
rule. Because of the length of these tables, they are not published in 
the Addendum to the proposed rule. Rather, they are available via the 
internet as discussed in section VI. of the Addendum to this proposed 
rule.
    Live Webcast recordings of the discussions of the diagnosis and 
procedure codes at the Committee's September 11-12, 2018 meeting can be 
obtained from the CMS website at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/03_meetings.asp. The live webcast 
recordings of the discussions of the diagnosis and procedure codes at 
the Committee's March 5-6, 2019 meeting can be obtained from the CMS 
website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials.html.
    The materials for the discussions relating to diagnosis codes at 
the September 11-12 2018 meeting and March 5-6, 2019 meeting can be 
found at: http://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These 
websites also provide detailed information about the Committee, 
including information on requesting a new code, attending a Committee 
meeting, and timeline requirements and meeting dates.
    We encourage commenters to address suggestions on coding issues 
involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-10 
Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo 
Road, Hyattsville, MD 20782. Comments may be sent by Email to: 
[email protected].
    Questions and comments concerning the procedure codes should be 
submitted via Email to: ICDProcedure [email protected].
    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

[[Page 19255]]

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 3 months prior to the meeting. This 
requirement allows time for staff to review and research the coding 
issues and prepare material for discussion at the meeting. It also 
allows time for the topic to be publicized in meeting announcements in 
the Federal Register as well as on the CMS website. A complete addendum 
describing details of all diagnosis and procedure coding changes, both 
tabular and index, is published on the CMS and NCHS websites in June of 
each year. Publishers of coding books and software use this information 
to modify their products that are used by health care providers. This 
5-month time period has proved to be necessary for hospitals and other 
providers to update their systems.
    A discussion of this timeline and the need for changes are included 
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance 
Committee Meeting minutes. The public agreed that there was a need to 
hold the fall meetings earlier, in September or October, in order to 
meet the new implementation dates. The public provided comment that 
additional time would be needed to update hospital systems and obtain 
new code books and coding software. There was considerable concern 
expressed about the impact this April update would have on providers.
    In the FY 2005 IPPS final rule, we implemented section 
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 
108-173, by developing a mechanism for approving, in time for the April 
update, diagnosis and procedure code revisions needed to describe new 
technologies and medical services for purposes of the new technology 
add-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 requestor 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 materials and live webcast are 
provided the opportunity to comment on this expedited request. All 
other topics are considered for the October 1 update. Participants at 
the Committee meeting are encouraged to comment on all such requests. 
There were not any requests approved for an expedited April l, 2019 
implementation of a code at the September 11-12, 2018 Committee 
meeting. Therefore, there were not any new codes for implementation on 
April 1, 2019.
    ICD-9-CM addendum and code title information is published on the 
CMS website at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and 
ICD-10-PCS addendum and code title information is published on the CMS 
website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html. CMS 
also sends copies of all ICD-10-CM and ICD-10-PCS coding changes to its 
Medicare contractors for use in updating their systems and providing 
education to providers.
    Information on ICD-10-CM diagnosis codes, along with the Official 
ICD-10-CM Coding Guidelines, can also be found on the CDC website at: 
http://www.cdc.gov/nchs/icd/icd10.htm. Additionally, information on 
new, revised, and deleted ICD-10-CM diagnosis and ICD-10-PCS procedure 
codes is provided to the AHA for publication in the Coding Clinic for 
ICD-10. AHA also distributes coding update information to publishers 
and software vendors.
    The following chart shows the number of ICD-10-CM and ICD-10-PCS 
codes and code changes since FY 2016 when ICD-10 was implemented.

  Total Number of Codes and Changes in Total Number of Codes per Fiscal
                   Year ICD-10-CM and ICD-10-PCS Codes
------------------------------------------------------------------------
                     Fiscal year                       Number    Change
------------------------------------------------------------------------
FY 2016:
  ICD-10-CM.........................................    69,823  ........
  ICD-10-PCS........................................    71,974  ........
FY 2017:
  ICD-10-CM.........................................    71,486    +1,663
  ICD-10-PCS........................................    75,789    +3,815
FY 2018:
  ICD-10-CM.........................................    71,704      +218
  ICD-10-PCS........................................    78,705    +2,916
FY 2019:
  ICD-10-CM.........................................    71,932      +228
  ICD-10-PCS........................................    78,881      +176
FY 2020 (Proposed):
  ICD-10-CM.........................................    72,184      +252
  ICD-10-PCS........................................    77,221    -1,660
------------------------------------------------------------------------

    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.
19. Replaced Devices Offered Without Cost or With a Credit
a. Background
    In the FY 2008 IPPS final rule with comment period (72 FR 47246 
through 47251), we discussed the topic of Medicare payment for devices 
that are replaced without cost or where credit for a replaced device is 
furnished to the hospital. We implemented a policy to reduce a 
hospital's IPPS payment for certain MS-DRGs where the implantation of a 
device that subsequently failed or was recalled determined the base MS-
DRG assignment. At that time, we specified that we will reduce a 
hospital's IPPS payment for those MS-DRGs where the hospital received a 
credit for a replaced device equal to 50 percent or more of the cost of 
the device.
    In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 
51557), we clarified this policy to state that the policy applies if 
the hospital received a credit equal to 50 percent or more of the cost 
of the replacement device and issued instructions to hospitals 
accordingly.
b. Proposed Changes for FY 2020
    As discussed in section II.F.5.a. of the preamble of this proposed 
rule, for FY 2020, we are proposing to create new MS-DRGs 319 and 320 
(Other Endovascular Cardiac Valve Procedures with and without MCC, 
respectively) and to revise the title for MS-DRG 266 from 
``Endovascular Cardiac Valve Replacement with MCC'' to

[[Page 19256]]

``Endovascular Cardiac Valve Replacement and Supplement Procedures with 
MCC'' and the title for MS-DRG 267 from ``Endovascular Cardiac Valve 
Replacement without MCC'' to ``Endovascular Cardiac Valve Replacement 
and Supplement Procedures without MCC''.
    As stated in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24409), 
we generally map new MS-DRGs onto the list when they are formed from 
procedures previously assigned to MS-DRGs that are already on the list. 
Currently, MS-DRGs 216 through 221 are on the list of MS-DRGs subject 
to the policy for payment under the IPPS for replaced devices offered 
without cost or with a credit as shown in the table below. A subset of 
the procedures currently assigned to MS-DRGs 216 through 221 is being 
proposed for assignment to proposed new MS-DRGs 319 and 320. Therefore, 
we are proposing that if the applicable proposed MS-DRG changes are 
finalized, we also would add proposed new MS-DRGs 319 and 320 to the 
list of MS-DRGs subject to the policy for payment under the IPPS for 
replaced devices offered without cost or with a credit and make 
conforming changes to the titles of MS-DRGs 266 and 267 as reflected in 
the table below. We also are proposing to continue to include the 
existing MS-DRGs currently subject to the policy as also displayed in 
the table below.

------------------------------------------------------------------------
            MDC                 MS-DRG              MS-DRG title
------------------------------------------------------------------------
Pre-MDC...................             001  Heart Transplant or Implant
                                             of Heart Assist System with
                                             MCC.
Pre-MDC...................             002  Heart Transplant or Implant
                                             of Heart Assist System
                                             without MCC.
1.........................             023  Craniotomy with Major Device
                                             Implant or Acute Complex
                                             CNS Principal Diagnosis
                                             with MCC or Chemotherapy
                                             Implant or Epilepsy with
                                             Neurostimulator.
1.........................             024  Craniotomy with Major Device
                                             Implant or Acute Complex
                                             CNS Principal Diagnosis
                                             without MCC.
1.........................             025  Craniotomy & Endovascular
                                             Intracranial Procedures
                                             with MCC.
1.........................             026  Craniotomy & Endovascular
                                             Intracranial Procedures
                                             with CC.
1.........................             027  Craniotomy & Endovascular
                                             Intracranial Procedures
                                             without CC/MCC.
1.........................             040  Peripheral, Cranial Nerve &
                                             Other Nervous System
                                             Procedures with MCC.
1.........................             041  Peripheral, Cranial Nerve &
                                             Other Nervous System
                                             Procedures with CC or
                                             Peripheral Neurostimulator.
1.........................             042  Peripheral, Cranial Nerve &
                                             Other Nervous System
                                             Procedures without CC/MCC.
3.........................             129  Major Head & Neck Procedures
                                             with CC/MCC or Major
                                             Device.
3.........................             130  Major Head & Neck Procedures
                                             without CC/MCC.
5.........................             215  Other Heart Assist System
                                             Implant.
5.........................             216  Cardiac Valve & Other Major
                                             Cardiothoracic Procedure
                                             with Cardiac
                                             Catheterization with MCC.
5.........................             217  Cardiac Valve & Other Major
                                             Cardiothoracic Procedure
                                             with Cardiac
                                             Catheterization with CC.
5.........................             218  Cardiac Valve & Other Major
                                             Cardiothoracic Procedure
                                             with Cardiac
                                             Catheterization without CC/
                                             MCC.
5.........................             219  Cardiac Valve & Other Major
                                             Cardiothoracic Procedure
                                             without Cardiac
                                             Catheterization with MCC.
5.........................             220  Cardiac Valve & Other Major
                                             Cardiothoracic Procedure
                                             without Cardiac
                                             Catheterization with CC.
5.........................             221  Cardiac Valve & Other Major
                                             Cardiothoracic Procedure
                                             without Cardiac
                                             Catheterization without CC/
                                             MCC.
5.........................             222  Cardiac Defibrillator
                                             Implant with Cardiac
                                             Catheterization with AMI/
                                             Heart Failure/Shock with
                                             MCC.
5.........................             223  Cardiac Defibrillator
                                             Implant with Cardiac
                                             Catheterization with AMI/
                                             Heart Failure/Shock without
                                             MCC.
5.........................             224  Cardiac Defibrillator
                                             Implant with Cardiac
                                             Catheterization without AMI/
                                             Heart Failure/Shock with
                                             MCC.
5.........................             225  Cardiac Defibrillator
                                             Implant with Cardiac
                                             Catheterization without AMI/
                                             Heart Failure/Shock without
                                             MCC.
5.........................             226  Cardiac Defibrillator
                                             Implant without Cardiac
                                             Catheterization with MCC.
5.........................             227  Cardiac Defibrillator
                                             Implant without Cardiac
                                             Catheterization without
                                             MCC.
5.........................             242  Permanent Cardiac Pacemaker
                                             Implant with MCC.
5.........................             243  Permanent Cardiac Pacemaker
                                             Implant with CC.
5.........................             244  Permanent Cardiac Pacemaker
                                             Implant without CC/MCC.
5.........................             245  AICD Generator Procedures.
5.........................             258  Cardiac Pacemaker Device
                                             Replacement with MCC.
5.........................             259  Cardiac Pacemaker Device
                                             Replacement without MCC.
5.........................             260  Cardiac Pacemaker Revision
                                             Except Device Replacement
                                             with MCC.
5.........................             261  Cardiac Pacemaker Revision
                                             Except Device Replacement
                                             with CC.
5.........................             262  Cardiac Pacemaker Revision
                                             Except Device Replacement
                                             without CC/MCC.
5.........................             265  AICD Lead Procedures.
5.........................             266  Endovascular Cardiac Valve
                                             Replacement and Supplement
                                             Procedures with MCC.
5.........................             267  Endovascular Cardiac Valve
                                             Replacement and Supplement
                                             Procedures without MCC.
5.........................             268  Aortic and Heart Assist
                                             Procedures Except Pulsation
                                             Balloon with MCC.
5.........................             269  Aortic and Heart Assist
                                             Procedures Except Pulsation
                                             Balloon without MCC.
5.........................             270  Other Major Cardiovascular
                                             Procedures with MCC.
5.........................             271  Other Major Cardiovascular
                                             Procedures with CC.
5.........................             272  Other Major Cardiovascular
                                             Procedures without CC/MCC.
5.........................             319  Other Endovascular Cardiac
                                             Valve Procedures with MCC.
5.........................             320  Other Endovascular Cardiac
                                             Valve Procedures without
                                             MCC.
8.........................             461  Bilateral or Multiple Major
                                             Joint Procedures of Lower
                                             Extremity with MCC.
8.........................             462  Bilateral or Multiple Major
                                             Joint Procedures of Lower
                                             Extremity without MCC.
8.........................             466  Revision of Hip or Knee
                                             Replacement with MCC.
8.........................             467  Revision of Hip or Knee
                                             Replacement with CC.
8.........................             468  Revision of Hip or Knee
                                             Replacement without CC/MCC.
8.........................             469  Major Hip and Knee Joint
                                             Replacement or Reattachment
                                             of Lower Extremity with MCC
                                             or Total Ankle Replacement.
8.........................             470  Major Hip and Knee Joint
                                             Replacement or Reattachment
                                             of Lower Extremity without
                                             MCC.
------------------------------------------------------------------------

    The final list of MS-DRGs subject to the IPPS policy for replaced 
devices offered without cost or with a credit will be included in the 
FY 2020 IPPS/LTCH PPS final rule and also will be issued to

[[Page 19257]]

providers in the form of a Change Request (CR).

G. Recalibration of the Proposed FY 2020 MS-DRG Relative Weights

1. Data Sources for Developing the Proposed Relative Weights
    In developing the proposed FY 2020 system of weights, we are 
proposing to use two data sources: Claims data and cost report data. As 
in previous years, the claims data source is the MedPAR file. This file 
is based on fully coded diagnostic and procedure data for all Medicare 
inpatient hospital bills. The FY 2018 MedPAR data used in this proposed 
rule include discharges occurring on October 1, 2017, through September 
30, 2018, based on bills received by CMS through December 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 2018 MedPAR file used in calculating the proposed 
relative weights includes data for approximately 9,480,820 Medicare 
discharges from IPPS providers. Discharges for Medicare beneficiaries 
enrolled in a Medicare Advantage managed care plan are excluded from 
this analysis. These discharges are excluded when the MedPAR ``GHO 
Paid'' indicator field on the claim record is equal to ``1'' or when 
the MedPAR DRG payment field, which represents the total payment for 
the claim, is equal to the MedPAR ``Indirect Medical Education (IME)'' 
payment field, indicating that the claim was an ``IME only'' claim 
submitted by a teaching hospital on behalf of a beneficiary enrolled in 
a Medicare Advantage managed care plan. In addition, the December 31, 
2018 update of the FY 2018 MedPAR file complies with version 5010 of 
the X12 HIPAA Transaction and Code Set Standards, and includes a 
variable called ``claim type.'' Claim type ``60'' indicates that the 
claim was an inpatient claim paid as fee-for-service. Claim types 
``61,'' ``62,'' ``63,'' and ``64'' relate to encounter claims, Medicare 
Advantage IME claims, and HMO no-pay claims. Therefore, the calculation 
of the proposed relative weights for FY 2020 also excludes claims with 
claim type values not equal to ``60.'' The data exclude CAHs, including 
hospitals that subsequently became CAHs after the period from which the 
data were taken. We note that the proposed FY 2020 relative weights are 
based on the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes 
from the FY 2018 MedPAR claims data, grouped through the ICD-10 version 
of the proposed FY 2020 GROUPER (Version 37).
    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 December 
31, 2018 update of the FY 2017 HCRIS for calculating the proposed FY 
2020 cost-based relative weights.
2. Methodology for Calculation of the Proposed Relative Weights
    As we explain in section II.E.2. of the preamble of this proposed 
rule, we calculated the proposed FY 2020 relative weights based on 19 
CCRs, as we did for FY 2019. The methodology we are proposing to use to 
calculate the FY 2020 MS-DRG cost-based relative weights based on 
claims data in the FY 2018 MedPAR file and data from the FY 2017 
Medicare cost reports is as follows:
     To the extent possible, all the claims were regrouped 
using the proposed FY 2020 MS-DRG classifications discussed in sections 
II.B. and II.F. of the preamble of this proposed rule.
     The transplant cases that were used to establish the 
proposed relative weights for heart and heart-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 2018 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 92.3 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

[[Page 19258]]

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. For additional information on the BPCI initiative, we refer 
readers to the CMS' Center for Medicare and Medicaid Innovation's 
website at: http://innovation.cms.gov/initiatives/Bundled-Payments/index.html and to section IV.H.4. of the preamble of the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53341 through 53343).
    The participation of hospitals in the BPCI initiative concluded on 
September 30, 2018. The participation of hospitals in the Bundled 
Payments for Care Improvement (BPCI) Advanced model started 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: https://innovation.cms.gov/initiatives/bpci-advanced/. Consistent with our 
policy for FY 2019, and consistent with how we have treated hospitals 
that participated in the BPCI Initiative, for FY 2020, we continue to 
believe it is appropriate to include all applicable data from the 
subsection (d) hospitals participating in the BPCI Advanced model in 
our IPPS payment modeling and ratesetting calculations because, as 
noted above, these hospitals are still receiving IPPS payments under 
section 1886(d) of the Act.
    The charges for each of the proposed 19 cost groups for each claim 
were standardized to remove the effects of differences in proposed area 
wage levels, IME and DSH payments, and for hospitals located in Alaska 
and Hawaii, the applicable proposed cost-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 
proposed 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 proposed 19 cost groups so that each MS-DRG 
had 19 standardized charge totals. Statistical outliers were then 
removed. These charges were then adjusted to cost by applying the 
proposed national average CCRs developed from the FY 2017 cost report 
data.
    The proposed 19 cost centers that we used in the proposed relative 
weight calculation are shown in the following table. The table shows 
the lines on the cost report and the corresponding revenue codes that 
we used to create the proposed 19 national cost center CCRs. If 
stakeholders have comments about the groupings in this table, we may 
consider those comments as we finalize our policy.
    We are inviting public comments on our proposals related to 
recalibration of the proposed FY 2020 relative weights and the changes 
in relative weights from FY 2019.
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BILLING CODE 4120-01-C
3. Development of Proposed National Average CCRs
    We developed the proposed national average CCRs as follows:
    Using the FY 2017 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

[[Page 19272]]

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 proposed 19 cost centers by the corresponding national average CCR, 
we summed the 19 ``costs'' across each proposed MS-DRG to produce a 
total standardized cost for the proposed MS-DRG. The average 
standardized cost for each proposed MS-DRG was then computed as the 
total standardized cost for the proposed MS-DRG divided by the 
transfer-adjusted case count for the proposed MS-DRG. The average cost 
for each proposed MS-DRG was then divided by the national average 
standardized cost per case to determine the proposed relative weight.
    The proposed FY 2020 cost-based relative weights were then 
normalized by a proposed adjustment factor of 1.788337 so that the 
average case weight after recalibration was equal to the average case 
weight before recalibration. The proposed normalization adjustment is 
intended to ensure that recalibration by itself neither increases nor 
decreases total payments under the IPPS, as required by section 
1886(d)(4)(C)(iii) of the Act.
    The proposed 19 national average CCRs for FY 2020 are as follows:

------------------------------------------------------------------------
                          Group                                 CCR
------------------------------------------------------------------------
Routine Days............................................           0.433
Intensive Days..........................................           0.362
Drugs...................................................           0.191
Supplies & Equipment....................................           0.301
Implantable Devices.....................................           0.308
Therapy Services........................................           0.297
Laboratory..............................................           0.109
Operating Room..........................................           0.175
Cardiology..............................................           0.099
Cardiac Catheterization.................................           0.106
Radiology...............................................           0.140
MRIs....................................................           0.073
CT Scans................................................           0.035
Emergency Room..........................................           0.154
Blood and Blood Products................................           0.282
Other Services..........................................           0.344
Labor & Delivery........................................           0.369
Inhalation Therapy......................................           0.151
Anesthesia..............................................           0.077
------------------------------------------------------------------------

    Since FY 2009, the relative weights have been based on 100 percent 
cost weights based on our MS-DRG grouping system.
    When we recalibrated the DRG weights for previous years, we set a 
threshold of 10 cases as the minimum number of cases required to 
compute a reasonable weight. We are proposing to use that same case 
threshold in recalibrating the proposed MS-DRG relative weights for FY 
2020. Using data from the FY 2018 MedPAR file, there were 8 MS-DRGs 
that contain fewer than 10 cases. For FY 2020, because we do not have 
sufficient MedPAR data to set accurate and stable cost relative weights 
for these low-volume MS-DRGs, we are proposing to compute relative 
weights for the proposed low-volume MS-DRGs by adjusting their final FY 
2019 relative weights by the percentage change in the average weight of 
the cases in other MS-DRGs from FY 2019 to FY 2020. The crosswalk table 
is shown below.

------------------------------------------------------------------------
    Low-volume  MS-DRG         MS-DRG title        Crosswalk to MS-DRG
------------------------------------------------------------------------
338......................  Appendectomy with    Final FY 2019 relative
                            Complicated          weight (adjusted by
                            Principal            percent change in
                            Diagnosis with MCC.  average weight of the
                                                 cases in other MS-
                                                 DRGs).
789......................  Neonates, Died or    Final FY 2019 relative
                            Transferred to       weight (adjusted by
                            Another Acute Care   percent change in
                            Facility.            average weight of the
                                                 cases in other MS-
                                                 DRGs).
790......................  Extreme Immaturity   Final FY 2019 relative
                            or Respiratory       weight (adjusted by
                            Distress Syndrome,   percent change in
                            Neonate.             average weight of the
                                                 cases in other MS-
                                                 DRGs).
791......................  Prematurity with     Final FY 2019 relative
                            Major Problems.      weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
792......................  Prematurity without  Final FY 2019 relative
                            Major Problems.      weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
793......................  Full-Term Neonate    Final FY 2019 relative
                            with Major           weight (adjusted by
                            Problems.            percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
794......................  Neonate with Other   Final FY 2019 relative
                            Significant          weight (adjusted by
                            Problems.            percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
795......................  Normal Newborn.....  Final FY 2019 relative
                                                 weight (adjusted by
                                                 percent change in
                                                 average weight of the
                                                 cases in other MS-
                                                 DRGs).
------------------------------------------------------------------------

H. Proposed Add-On Payments for New Services and Technologies for FY 
2020

1. Background
    Sections 1886(d)(5)(K) and (L) of the Act establish a process of 
identifying and ensuring adequate payment for new medical services and 
technologies (sometimes collectively referred to in this section as 
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the 
Act specifies that a medical service or technology will be considered 
new if it meets criteria established by the Secretary after notice and 
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act 
specifies that a new medical service or technology may be considered 
for new technology add-on payment if, based on the estimated costs 
incurred with respect to discharges involving such service or 
technology, the DRG prospective payment rate otherwise applicable to 
such discharges under this subsection is inadequate. We note that, 
beginning with discharges occurring in FY 2008, CMS transitioned from 
CMS-DRGs to MS-DRGs. The regulations at 42 CFR 412.87 implement these 
provisions and specify three criteria for a new medical service or 
technology to receive the additional payment: (1) The medical service 
or technology must be new; (2) the medical service or technology must 
be costly such that the

[[Page 19273]]

DRG rate otherwise applicable to discharges involving the medical 
service or technology is determined to be inadequate; and (3) the 
service or technology must demonstrate a substantial clinical 
improvement over existing services or technologies. Below we highlight 
some of the major statutory and regulatory provisions relevant to the 
new technology add-on payment criteria, as well as other information. 
For a complete discussion on the new technology add-on payment 
criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 
FR 51572 through 51574).
    Under the first criterion, as reflected in Sec.  412.87(b)(2), a 
specific medical service or technology will be considered ``new'' for 
purposes of new medical service or technology add-on payments until 
such time as Medicare data are available to fully reflect the cost of 
the technology in the MS-DRG weights through recalibration. We note 
that we do not consider a service or technology to be new if it is 
substantially similar to one or more existing technologies. That is, 
even if a medical product 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 
another medical product that was approved or cleared by FDA and has 
been on the market for more than 2 to 3 years. In the FY 2010 IPPS/RY 
2010 LTCH PPS final rule (74 FR 43813 through 43814), we established 
criteria for evaluating whether a new technology is substantially 
similar to an existing technology, specifically: (1) Whether a product 
uses the same or a similar mechanism of action to achieve a therapeutic 
outcome; (2) whether a product is assigned to the same or a different 
MS-DRG; and (3) whether the new use of the technology involves the 
treatment of the same or similar type of disease and the same or 
similar patient population. If a technology meets all three of these 
criteria, it would be considered substantially similar to an existing 
technology and would not be considered ``new'' for purposes of new 
technology add-on payments. For a detailed discussion of the criteria 
for substantial similarity, we refer readers to the FY 2006 IPPS final 
rule (70 FR 47351 through 47352), and the FY 2010 IPPS/LTCH PPS final 
rule (74 FR 43813 through 43814).
    Under the second criterion, Sec.  412.87(b)(3) further provides 
that, to be eligible for the add-on payment for new medical services or 
technologies, the MS-DRG prospective payment rate otherwise applicable 
to discharges involving the new medical service or technology must be 
assessed for adequacy. Under the cost criterion, consistent with the 
formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess 
the adequacy of payment for a new technology paid under the applicable 
MS-DRG prospective payment rate, we evaluate whether the charges for 
cases involving the new technology exceed certain threshold amounts. 
The MS-DRG threshold amounts used in evaluating new technology add-on 
payment applications for FY 2020 are presented in a data file that is 
available, along with the other data files associated with the FY 2019 
IPPS/LTCH PPS final rule and correction notice, on the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2019-IPPS-Final-Rule-Home-Page-Items/FY2019-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending. As 
finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41275), 
beginning with FY 2020, we include the thresholds applicable to the 
next fiscal year (previously included in Table 10 of the annual IPPS/
LTCH PPS proposed and final rules) in the data files associated with 
the prior fiscal year. Accordingly, the proposed thresholds for 
applications for new technology add-on payments for FY 2021 are 
presented in a data file that is available on the CMS website, along 
with the other data files associated with this FY 2020 proposed rule, 
by clicking on the FY 2020 IPPS Proposed Rule Home Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
    In the September 7, 2001 final rule that established the new 
technology add-on payment regulations (66 FR 46917), we discussed the 
issue of whether the Health Insurance Portability and Accountability 
Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims 
information that providers submit with applications for new medical 
service or technology add-on payments. We refer readers to the FY 2012 
IPPS/LTCH PPS final rule (76 FR 51573) for complete information on this 
issue.
    Under the third criterion, Sec.  412.87(b)(1) of our existing 
regulations provides that a new technology is an appropriate candidate 
for an additional payment when it represents an advance that 
substantially improves, relative to technologies previously available, 
the diagnosis or treatment of Medicare beneficiaries. For example, a 
new technology represents a substantial clinical improvement when it 
reduces mortality, decreases the number of hospitalizations or 
physician visits, or reduces recovery time compared to the technologies 
previously available. (We refer readers to the September 7, 2001 final 
rule for a more detailed discussion of this criterion (66 FR 46902). We 
also refer readers to section II.H.8. of the preamble of this proposed 
rule for a discussion of our proposed alternative inpatient new 
technology add-on payment pathway for transformative new devices.)
    The new medical service or technology add-on payment policy under 
the IPPS provides additional payments for cases with relatively high 
costs involving eligible new medical services or technologies, while 
preserving some of the incentives inherent under an average-based 
prospective payment system. The payment mechanism is based on the cost 
to hospitals for the new medical service or technology. Under Sec.  
412.88, if the costs of the discharge (determined by applying cost-to-
charge ratios (CCRs) as described in Sec.  412.84(h)) exceed the full 
DRG payment (including payments for IME and DSH, but excluding outlier 
payments), Medicare will make an add-on payment equal to the lesser of: 
(1) 50 percent of the estimated costs of the new technology or medical 
service (if the estimated costs for the case including the new 
technology or medical service exceed Medicare's payment); or (2) 50 
percent of the difference between the full DRG payment and the 
hospital's estimated cost for the case. Unless the discharge qualifies 
for an outlier payment, the additional Medicare payment is limited to 
the full MS-DRG payment plus 50 percent of the estimated costs of the 
new technology or medical service. We refer readers to section II.H.9. 
of the preamble of this proposed rule for a discussion of our proposed 
change to the calculation of the new technology add-on payment 
beginning in FY 2020, including our proposed amendments to Sec.  412.88 
of the regulations.
    Section 503(d)(2) of Public Law 108-173 provides that there shall 
be no reduction or adjustment in aggregate payments under the IPPS due 
to add-on payments for new medical services and technologies. 
Therefore, in accordance with section 503(d)(2) of Public Law 108-173, 
add-on payments for new medical services or technologies for FY 2005 
and later years have not been subjected to budget neutrality.
    In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we 
modified our regulations at Sec.  412.87 to codify our longstanding 
practice of how CMS evaluates the eligibility criteria for new

[[Page 19274]]

medical service or technology add-on payment applications. That is, we 
first determine whether a medical service or technology meets the 
newness criterion, and only if so, do we then make a determination as 
to whether the technology meets the cost threshold and represents a 
substantial clinical improvement over existing medical services or 
technologies. We amended Sec.  412.87(c) to specify that all applicants 
for new technology add-on payments must have FDA approval or clearance 
by July 1 of the year prior to the beginning of the fiscal year for 
which the application is being considered.
    The Council on Technology and Innovation (CTI) at CMS oversees the 
agency's cross-cutting priority on coordinating coverage, coding and 
payment processes for Medicare with respect to new technologies and 
procedures, including new drug therapies, as well as promoting the 
exchange of information on new technologies and medical services 
between CMS and other entities. The CTI, composed of senior CMS staff 
and clinicians, was established under section 942(a) of Public Law 108-
173. The Council is co-chaired by the Director of the Center for 
Clinical Standards and Quality (CCSQ) and the Director of the Center 
for Medicare (CM), who is also designated as the CTI's Executive 
Coordinator.
    The specific processes for coverage, coding, and payment are 
implemented by CM, CCSQ, and the local Medicare Administrative 
Contractors (MACs) (in the case of local coverage and payment 
decisions). The CTI supplements, rather than replaces, these processes 
by working to assure that all of these activities reflect the agency-
wide priority to promote high-quality, innovative care. At the same 
time, the CTI also works to streamline, accelerate, and improve 
coordination of these processes to ensure that they remain up to date 
as new issues arise. To achieve its goals, the CTI works to streamline 
and create a more transparent coding and payment process, improve the 
quality of medical decisions, and speed patient access to effective new 
treatments. It is also dedicated to supporting better decisions by 
patients and doctors in using Medicare-covered services through the 
promotion of better evidence development, which is critical for 
improving the quality of care for Medicare beneficiaries.
    To improve the understanding of CMS' processes for coverage, 
coding, and payment and how to access them, the CTI has developed an 
``Innovator's Guide'' to these processes. The intent is to consolidate 
this information, much of which is already available in a variety of 
CMS documents and in various places on the CMS website, in a user 
friendly format. This guide was published in 2010 and is available on 
the CMS website at: https://www.cms.gov/Medicare/Coverage/CouncilonTechInnov/Downloads/Innovators-Guide-Master-7-23-15.pdf.
    As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we 
invite any product developers or manufacturers of new medical services 
or technologies to contact the agency early in the process of product 
development if they have questions or concerns about the evidence that 
would be needed later in the development process for the agency's 
coverage decisions for Medicare.
    The CTI aims to provide useful information on its activities and 
initiatives to stakeholders, including Medicare beneficiaries, 
advocates, medical product manufacturers, providers, and health policy 
experts. Stakeholders with further questions about Medicare's coverage, 
coding, and payment processes, or who want further guidance about how 
they can navigate these processes, can contact the CTI at 
[email protected].
    We note that applicants for add-on payments for new medical 
services or technologies for FY 2021 must submit a formal request, 
including a full description of the clinical applications of the 
medical service or technology and the results of any clinical 
evaluations demonstrating that the new medical service or technology 
represents a substantial clinical improvement, along with a significant 
sample of data to demonstrate that the medical service or technology 
meets the high-cost threshold. Complete application information, along 
with final deadlines for submitting a full application, will be posted 
as it becomes available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. To allow interested parties to identify the new medical 
services or technologies under review before the publication of the 
proposed rule for FY 2021, the CMS website also will post the tracking 
forms completed by each applicant. We note that the burden associated 
with this information collection requirement is the time and effort 
required to collect and submit the data in the formal request for add-
on payments for new medical services and technologies to CMS. The 
aforementioned burden is subject to the PRA; it is currently approved 
under OMB control number 0938-1347, which expires on December 31, 2020.
2. Public Input Before Publication of a Notice of Proposed Rulemaking 
on Add-On Payments
    Section 1886(d)(5)(K)(viii) of the Act, as amended by section 
503(b)(2) of Public Law 108-173, provides for a mechanism for public 
input before publication of a notice of proposed rulemaking regarding 
whether a medical service or technology represents a substantial 
clinical improvement or advancement. The process for evaluating new 
medical service and technology applications requires the Secretary to--
     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 2020 prior 
to publication of this FY 2020 IPPS/LTCH PPS proposed rule, we 
published a notice in the Federal Register on October 5, 2018 (83 FR 
50379), and held a town hall meeting at the CMS Headquarters Office in 
Baltimore, MD, on December 4, 2018. In the announcement notice for the 
meeting, we stated that the opinions and presentations provided during 
the meeting would assist us in our evaluations of applications by 
allowing public discussion of the substantial clinical improvement 
criterion for each of the FY 2020 new medical service and technology 
add-on payment applications before the publication of the FY 2020 IPPS/
LTCH PPS proposed rule.
    Approximately 100 individuals registered to attend the town hall 
meeting in person, while additional individuals listened over an open

[[Page 19275]]

telephone line. We also live-streamed the town hall meeting and posted 
the morning and afternoon sessions of the town hall on the CMS YouTube 
web page at: https://www.youtube.com/watch?v=4z1AhEuGHqQ and https://www.youtube.com/watch?v=m26Xj1EzbIY, respectively. We considered each 
applicant's presentation made at the town hall meeting, as well as 
written comments submitted on the applications that were received by 
the due date of December 14, 2018, in our evaluation of the new 
technology add-on payment applications for FY 2020 in this FY 2020 
IPPS/LTCH PPS proposed rule.
    In response to the published notice and the December 4, 2018 New 
Technology Town Hall meeting, we received written comments regarding 
the applications for FY 2020 new technology add-on payments. We note 
that we do not summarize comments that are unrelated to the 
``substantial clinical improvement'' criterion. As explained earlier 
and in the Federal Register notice announcing the New Technology Town 
Hall meeting (83 FR 50379 through 50381), the purpose of the meeting 
was specifically to discuss the substantial clinical improvement 
criterion in regard to pending new technology add-on payment 
applications for FY 2020. Therefore, we are not summarizing those 
written comments in this proposed rule that are unrelated to the 
substantial clinical improvement criterion. In section II.H.5. of the 
preamble of this FY 2020 IPPS/LTCH PPS proposed rule, we are 
summarizing comments regarding individual applications, or, if 
applicable, indicating that there were no comments received in response 
to the New Technology Town Hall meeting notice, at the end of each 
discussion of the individual applications.
    Comment: One commenter expressed appreciation for CMS' statements 
in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20278 through 20279) 
relating to the similarity between data that satisfy the FDA's 
designations and data that satisfy the substantial clinical improvement 
criterion under the new technology add-on payment policy. The commenter 
stated that clarity was provided that will help future applicants 
understand which types of data can serve as the foundation for 
satisfying the substantial clinical improvement criterion. The 
commenter also expressed its appreciation that CMS further clarified 
that it accepts a wide range of data that would support the conclusion 
that the technology represents a substantial clinical improvement. The 
commenter explained that it interpreted CMS' statements to mean that 
CMS appreciates and considers the patient's experience and point-of-
view in its determination of a technology's substantial clinical 
improvement with respect to existing technologies, and stated that it 
hopes the agency will confirm this rationale in upcoming rulemaking.
    Response: We appreciate the commenter's support of our clarifying 
statements in the FY 2019 IPPS/LTCH PPS proposed rule. Additionally, we 
refer the commenter to the September 7, 2001 final rule for a more 
detailed discussion of the substantial clinical improvement criterion 
(66 FR 46902). We also refer readers to section II.H.8. of the preamble 
of this proposed rule for a discussion of our proposed alternative 
inpatient new technology add-on payment pathway for transformative new 
devices, and sections II.H.6. and II.H.7. of the preamble of this 
proposed rule for a discussion of and request for comment on potential 
revisions to the new technology add-on payment substantial clinical 
improvement criterion.
    Comment: Another commenter stated that the criteria for priority 
FDA review are very similar to the criteria to substantiate a 
technology's substantial clinical improvement under the new technology 
add-on payment policy and, therefore, devices used in the inpatient 
setting that are determined to be eligible for expedited review and 
approved by the FDA should automatically be considered as representing 
a substantial clinical improvement with respect to existing 
technologies, without further consideration by CMS.
    Response: We refer readers to our response to this and similar 
comments in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20278 
through 20279).
    Comment: One commenter stated that an entity submitting an 
application for new technology add-on payments should be entitled to 
administrative review of an adverse determination by an official of the 
Department of Health and Human Services other than an official of the 
CMS. The commenter believed that this will provide a safeguard both for 
the manufacturer submitting an application, as well as for 
beneficiaries who would benefit from access to the innovative 
technology that is the subject of the new technology add-on payment 
application. The commenter further recommended that administrative 
review of an adverse determination should not preclude resubmission of 
a modified application at a later point in the future.
    Response: As discussed previously, the public has an opportunity at 
the New Technology Town Hall meeting to provide input regarding the 
substantial clinical improvement criterion for each new technology add-
on payment application under review for the upcoming fiscal year. We 
summarize each application in the IPPS/LTCH PPS proposed rule, and 
consider the public comments received in response to the proposed rule 
in determining whether to approve an application for new technology 
add-on payments. Furthermore, we also accept additional supplemental 
information on all new technology add-on payment applications 
summarized in the proposed rule through the end of the comment period 
for the annual IPPS/LTCH PPS proposed rule. We conduct a thorough 
review of all applications and, as described above, allow a wide range 
of data that would support the conclusion of a representation of 
substantial clinical improvement. We also note that an applicant may 
always resubmit an application for new technology add-on payments for a 
subsequent year following a denial of an application submitted for a 
prior fiscal year.
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and 
Technologies
    As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49434), 
the ICD-10-PCS includes a new section containing the new Section ``X'' 
codes, which began being used with discharges occurring on or after 
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section 
``X'' codes will be handled in the same manner as the decisions for all 
of the other ICD-10-PCS code changes. That is, proposals to create, 
delete, or revise Section ``X'' codes under the ICD-10-PCS structure 
will be referred to the ICD-10 Coordination and Maintenance Committee. 
In addition, several of the new medical services and technologies that 
have been, or may be, approved for new technology add-on payments may 
now, and in the future, be assigned a Section ``X'' code within the 
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS 
website at: http://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS Section ``X'' codes. 
We encourage providers to view the material provided on ICD-10-PCS 
Section ``X'' codes.

[[Page 19276]]

4. Proposed FY 2020 Status of Technologies Approved for FY 2019 New 
Technology Add-On Payments
a. Defitelio[supreg] (Defibrotide)
    Jazz Pharmaceuticals submitted an application for new technology 
add-on payments for FY 2017 for defibrotide (Defitelio[supreg]), a 
treatment for patients who have been diagnosed with hepatic veno-
occlusive disease (VOD) with evidence of multi-organ 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 who have received treatment 
involving 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[supreg] improves the survival rate of patients who have been 
diagnosed with VOD with multi-organ failure by 23 percent.
    Defitelio[supreg] 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[supreg] received FDA approval on March 
30, 2016. The applicant confirmed that Defitelio[supreg] 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[supreg] was finalized with FDA 
approval, and that commercial shipments of Defitelio[supreg] to 
hospitals and treatment centers began on April 4, 2016. Therefore, we 
agreed that, based on this information, the newness period for 
Defitelio[supreg] 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[supreg], with an effective date 
of October 1, 2016. The approved ICD-10-PCS 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[supreg] and consideration of the public comments we received 
in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved 
Defitelio[supreg] 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[supreg] 
technology would incur an average cost per case of $151,800 (70 kg 
adult x 25 mg/kg/day x 21 days = 36,750 mg per patient/200 mg vial = 
184 vials per patient x $825 per vial = $151,800). Under existing Sec.  
412.88(a)(2), we limit new technology add-on payments to the lesser of 
50 percent of the average cost of the technology or 50 percent of the 
costs in excess of the MS-DRG payment for the case. As a result, the 
maximum new technology add-on payment amount for a case involving the 
use of Defitelio[supreg] is $75,900 for FY 2019.
    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[supreg], we 
considered the beginning of the newness period to commence on the first 
day Defitelio[supreg] was commercially available (April 4, 2016). 
Because the 3-year anniversary date of the entry of the 
Defitelio[supreg] onto the U.S. market (April 4, 2019) will occur 
during FY 2019, we are proposing to discontinue new technology add-on 
payments for this technology for FY 2020. We are inviting public 
comments on our proposal to discontinue new technology add-on payments 
for Defitelio[supreg] for FY 2020.
b. Ustekinumab (Stelara[supreg])
    Janssen Biotech submitted an application for new technology add-on 
payments for the Stelara[supreg] induction therapy for FY 2018. 
Stelara[supreg] received FDA approval on September 23, 2016 as an 
intravenous (IV) infusion treatment for adult patients who have been 
diagnosed with moderately to severely 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. Stelara[supreg] IV is intended for induction--
subcutaneous prefilled syringes are intended for maintenance dosing. 
Stelara[supreg] must be administered intravenously by a health care 
professional in either an inpatient hospital setting or an outpatient 
hospital setting.
    Stelara[supreg] 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 55 kg or less 
than (<) 55 kg are administered 260 mg of Stelara[supreg] (2 vials); 
patients weighing more than (>) 55 kg, but 85 kg or less than (<) 85 kg 
are administered 390 mg of Stelara[supreg] (3 vials); and patients 
weighing more than (>) 85 kg are administered 520 mg of Stelara[supreg] 
(4 vials). An average dose of Stelara[supreg] administered through IV 
infusion is 390 mg (3 vials). Maintenance doses of Stelara[supreg] 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. Most commonly used pharmacologic 
treatments for CD include antibiotics, mesalamines, corticosteroids, 
immunomodulators, tumor necrosis alpha (TNF[alpha]) inhibitors, and 
anti-integrin agents. Surgery may be necessary for some patients who 
have been diagnosed with CD in which conventional therapies have 
failed. After evaluation of the newness, costs,

[[Page 19277]]

and substantial clinical improvement criteria for new technology add-on 
payments for Stelara[supreg] and consideration of the public comments 
we received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we 
approved Stelara[supreg] for new technology add-on payments for FY 2018 
(82 FR 38129). Cases involving Stelara[supreg] 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 existing Sec.  412.88(a)(2), we 
limit new technology add-on payments to the lesser of 50 percent of the 
average cost of the technology or 50 percent of the costs in excess of 
the MS-DRG payment for the case. As a result, the maximum new 
technology add-on payment amount for a case involving the use of 
Stelara[supreg] is $2,400 for FY 2019.
    With regard to the newness criterion for Stelara[supreg], we 
considered the beginning of the newness period to commence when 
Stelara[supreg] received FDA approval as an IV infusion treatment for 
Crohn's disease (CD) on September 23, 2016. Because the 3-year 
anniversary date of the entry of Stelara[supreg] onto the U.S. market 
(September 23, 2019) will occur during FY 2019, we are proposing to 
discontinue new technology add-on payments for this technology for FY 
2020. We are inviting public comments on our proposal to discontinue 
new technology add-on payments for Stelara[supreg] for FY 2020.
c. Bezlotoxumab (ZINPLAVATM)
    Merck & Co., Inc. submitted an application for new technology add-
on payments for ZINPLAVATM for FY 2018. 
ZINPLAVATM is indicated as a treatment to reduce recurrence 
of Clostridium difficile infection (CDI) in adult patients who are 
receiving antibacterial drug treatment for a diagnosis of CDI and who 
are at high risk for CDI recurrence. ZINPLAVATM is not 
indicated for the treatment of the presenting episode of CDI and is not 
an antibacterial drug. ZINPLAVATM should only be used in 
conjunction with an antibacterial drug treatment for CDI.
    Clostridium difficile (C-diff) is a disease-causing anaerobic, 
spore forming bacterium that affects the gastrointestinal (GI) tract. 
Some people carry the C-diff bacterium in their intestines, but never 
develop symptoms of an infection. The difference between asymptomatic 
colonization and disease is caused primarily by the production of an 
enterotoxin (Toxin A) and/or a cytotoxin (Toxin B). The presence of 
either or both toxins can lead to symptomatic CDI, which is defined as 
the acute onset of diarrhea with a documented infection with toxigenic 
C-diff. The GI tract contains millions of bacteria, commonly referred 
to as ``normal flora'' or ``good bacteria,'' which play a role in 
protecting the body from infection. Antibiotics can kill these good 
bacteria and allow C-diff to multiply and release toxins that damage 
the cells lining the intestinal wall, resulting in a CDI. CDI is a 
leading cause of hospital-associated gastrointestinal illnesses. 
Persons at increased risk for CDI include people who are currently on 
or who have recently been treated with antibiotics, people who have 
encountered current or recent hospitalization, people who are older 
than 65 years, immunocompromised patients, and people who have recently 
had a diagnosis of CDI. CDI symptoms include, but are not limited to, 
diarrhea, abdominal pain, and fever. CDI symptoms range in severity 
from mild (abdominal discomfort, loose stools) to severe (profuse, 
watery diarrhea, severe abdominal pain, and high fevers). Severe CDI 
can be life-threatening and, in rare cases, can cause bowel rupture, 
sepsis and organ failure. CDI is responsible for 14,000 deaths per year 
in the United States.
    C-diff produces two virulent, pro-inflammatory toxins, Toxin A and 
Toxin B, which target host colonic endothelial cells by binding to 
endothelial cell surface receptors via combined repetitive oligopeptide 
(CROP) domains. These toxins cause the release of inflammatory 
cytokines leading to intestinal fluid secretion and intestinal 
inflammation. The applicant asserted that ZINPLAVATM targets 
Toxin B sites within the CROP domain rather than the C-diff organism 
itself. According to the applicant, by targeting C-diff Toxin B, 
ZINPLAVATM neutralizes Toxin B, prevents large intestine 
endothelial cell inflammation, symptoms associated with CDI, and 
reduces the recurrence of CDI. ZINPLAVATM received FDA 
approval on October 21, 2016, as a treatment to reduce the recurrence 
of CDI in adult patients receiving antibacterial drug treatment for CDI 
and who are at high risk of CDI recurrence. As previously stated, 
ZINPLAVATM is not indicated for the treatment of CDI. 
ZINPLAVATM is not an antibacterial drug, and should only be 
used in conjunction with an antibacterial drug treatment for CDI. 
ZINPLAVATM became commercially available on February 10, 
2017. Therefore, the newness period for ZINPLAVATM began on 
February 10, 2017. The applicant submitted a request for a unique ICD-
10-PCS procedure code and was granted approval for the following 
procedure codes: XW033A3 (Introduction of bezlotoxumab monoclonal 
antibody, into peripheral vein, percutaneous approach, new technology 
group 3) and XW043A3 (Introduction of bezlotoxumab monoclonal antibody, 
into central vein, percutaneous approach, new technology group 3).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
ZINPLAVATM and consideration of the public comments we 
received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we 
approved ZINPLAVATM for new technology add-on payments for 
FY 2018 (82 FR 38119). With the new technology add-on payment 
application, the applicant estimated that the average Medicare 
beneficiary would require a dosage of 10 mg/kg of ZINPLAVATM 
administered as an IV infusion over 60 minutes as a single dose. 
According to the applicant, the WAC for one dose is $3,800. Under 
existing Sec.  412.88(a)(2), we limit new technology add-on payments to 
the lesser of 50 percent of the average cost of the technology or 50 
percent of the costs in excess of the MS-DRG payment for the case. As a 
result, the maximum new technology add-on payment amount for a case 
involving the use of ZINPLAVATM is $1,900 for FY 2019.
    With regard to the newness criterion for ZINPLAVATM, we 
considered the beginning of the newness period to commence on February 
10, 2017. 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 ZINPLAVATM onto the 
U.S. market (February 10, 2020) will occur in the first half of FY 
2020, we are proposing to discontinue new technology add-on payments 
for this technology for FY 2020. We are inviting public comments on our 
proposal to discontinue new technology add-on payments for 
ZINPLAVATM for FY 2020.

[[Page 19278]]

d. KYMRIAH[supreg] (Tisagenlecleucel) and YESCARTA[supreg] 
(Axicabtagene Ciloleucel)
    Two manufacturers, Novartis Pharmaceuticals Corporation and Kite 
Pharma, Inc., submitted separate applications for new technology add-on 
payments for FY 2019 for KYMRIAH[supreg] (tisagenlecleucel) and 
YESCARTA[supreg] (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).
    On May 1, 2018, Novartis Pharmaceuticals Corporation received FDA 
approval for KYMRIAH[supreg]'s second indication, the treatment of 
adult patients with relapsed or refractory (r/r) large B-cell lymphoma 
after two or more lines of systemic therapy including diffuse large B-
cell lymphoma (DLBCL) not otherwise specified, high grade B-cell 
lymphoma and DLBCL arising from follicular lymphoma. On October 18, 
2017, Kite Pharma, Inc. received FDA approval for the use of 
YESCARTA[supreg] indicated 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, primary mediastinal large B-
cell lymphoma, high grade B-cell lymphoma, and DLBCL arising from 
follicular lymphoma.
    Procedures involving the KYMRIAH[supreg] and YESCARTA[supreg] 
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). In 
the FY 2019 IPPS/LTCH PPS final rule, we finalized 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 the FY 2019 
IPPS/LTCH PPS final rule for a complete discussion of these final 
policies (83 FR 41172 through 41174).
    With respect to the newness criterion, according to both 
applicants, KYMRIAH[supreg] and YESCARTA[supreg] are the first CAR T-
cell immunotherapies of their kind. As discussed in the FY 2019 IPPS/
LTCH PPS proposed and final rules, because potential cases representing 
patients who may be eligible for treatment using KYMRIAH[supreg] and 
YESCARTA[supreg] 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[supreg] or YESCARTA[supreg]), 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 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, 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[supreg] and 
YESCARTA[supreg].
    As summarized in the FY 2019 IPPS/LTCH PPS final rule, we received 
comments from the applicants for KYMRIAH[supreg] and YESCARTA[supreg] 
regarding whether KYMRIAH[supreg] and YESCARTA[supreg] were 
substantially similar to each other. The applicant for YESCARTA[supreg] 
stated that it believed 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[supreg] as a separate new technology add-on 
payment application and approve separate new technology add-on payments 
for YESCARTA[supreg], 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[supreg] 
and KYMRIAH[supreg]. The applicant for KYMRIAH[supreg] indicated that, 
based on FDA's approval, it agreed with CMS that KYMRIAH[supreg] is 
substantially similar to YESCARTA[supreg], as defined by the new 
technology add-on payment application evaluation criteria. We refer 
readers to the FY 2019 IPPS/LTCH PPS final rule for a more detailed 
summary of these and other public comments we received regarding 
substantial similarity for KYMRIAH[supreg] and YESCARTA[supreg].
    After consideration of the public comments we received and for the 
reasons discussed in the FY 2019 IPPS/LTCH PPS final rule, we stated 
that we believed that KYMRIAH[supreg] and YESCARTA[supreg] are 
substantially similar to one another. We also noted that for FY 2019, 
there was no payment impact regarding this determination of substantial 
similarity because the cost of the technologies is the same. However, 
we stated that we welcomed additional comments in future rulemaking 
regarding whether KYMRIAH[supreg] and YESCARTA[supreg] are 
substantially similar and intended to revisit this issue in the FY 2020 
IPPS/LTCH PPS proposed rule. For the reasons discussed in the FY 2019 
IPPS/LTCH PPS final rule, we continue to believe that KYMRIAH[supreg] 
and YESCARTA[supreg] are substantially similar to each other. We note 
that for FY 2020, the pricing for KYMRIAH[supreg] and YESCARTA[supreg] 
remains the same and, therefore, for FY 2020, there would continue to 
be no payment impact regarding the determination that the two 
technologies are substantially similar to each other. Similar to last 
year, we welcome public comments regarding whether KYMRIAH[supreg] and 
YESCARTA[supreg] are substantially similar to each other. We refer 
readers to the FY 2019 IPPS/LTCH PPS final rule for a complete 
discussion on newness and substantial similarity regarding 
KYMRIAH[supreg] and YESCARTA[supreg].
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
KYMRIAH[supreg] and YESCARTA[supreg] and consideration of the public 
comments we received in response to the FY 2019 IPPS/LTCH PPS proposed 
rule, we approved new technology add-on payments for KYMRIAH[supreg] 
and YESCARTA[supreg] for FY 2019 (83 FR 41299). Cases involving 
KYMRIAH[supreg] or YESCARTA[supreg] that are eligible for new 
technology add-on payments are identified by ICD-10-PCS procedure codes 
XW033C3 or XW043C3. The applicants for both KYMRIAH[supreg] and 
YESCARTA[supreg] estimated that the average cost for an administered 
dose of KYMRIAH[supreg] or YESCARTA[supreg] is $373,000. Under existing 
Sec.  412.88(a)(2), we limit new technology add-on payments to the 
lesser of 50 percent of the average cost of the technology or 50 
percent of the costs in excess of the MS-DRG payment for the case. As a 
result, for FY 2019, the maximum new technology add-on payment for a 
case involving the use of KYMRIAH[supreg] or YESCARTA[supreg] is 
$186,500.
    As stated above, 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. With regard to the newness criterion for 
KYMRIAH[supreg] and YESCARTA[supreg], as discussed in the FY

[[Page 19279]]

2019 IPPS/LTCH PPS final rule, according to the applicant for 
YESCARTA[supreg], the first commercial shipment of YESCARTA[supreg] was 
received by a certified treatment center on November 22, 2017. As 
stated above, we use the earliest market availability date submitted as 
the beginning of the newness period for both KYMRIAH[supreg] and 
YESCARTA[supreg]. Therefore, we consider the beginning of the newness 
period for both KYMRIAH[supreg] and YESCARTA[supreg] to commence 
November 22, 2017. Because the 3-year anniversary date of the entry of 
the technology onto the U.S. market (November 22, 2020) will occur 
after FY 2020, we are proposing to continue new technology add-on 
payments for KYMRIAH[supreg] and YESCARTA[supreg] for FY 2020. Under 
the proposed change to the calculation of the new technology add-on 
payment amount discussed in section II.H.9. of the preamble of this 
proposed rule, we are proposing that the maximum new technology add-on 
payment amount for a case involving the use of KYMRIAH[supreg] and 
YESCARTA[supreg] would be increased to $242,450 for FY 2020; that is, 
65 percent of the average cost of the technology. However, if we do not 
finalize the proposed change to the calculation of the new technology 
add-on payment amount, we are proposing that the maximum new technology 
add-on payment for a case involving KYMRIAH[supreg] or YESCARTA[supreg] 
would remain at $186,500 for FY 2020. We are inviting public comments 
on our proposals to continue new technology add-on payments for 
KYMRIAH[supreg] and YESCARTA[supreg] for FY 2020.
    For the reasons discussed in section II.F.2.c. of this proposed 
rule, we are proposing not to modify the current MS-DRG assignment for 
cases reporting CAR T-cell therapies for FY 2020. Alternatively, we are 
seeking public comments on payment alternatives for CAR T-cell 
therapies. We also are inviting public comments on how these payment 
alternatives would affect access to care, as well as how they affect 
incentives to encourage lower drug prices, which is a high priority for 
this Administration. As discussed in the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41172 through 41174), we are considering approaches and 
authorities to encourage value-based care and lower drug prices. We are 
soliciting public comments on how the effective dates of any potential 
payment methodology alternatives, if any were to be adopted, may 
intersect and affect future participation in any such alternative 
approaches. Such payment alternatives could include adjusting the CCRs 
used to calculate new technology add-on payments for cases involving 
the use of KYMRIAH[supreg] and YESCARTA[supreg]. We note that we also 
considered this payment alternative for FY 2019, as discussed in the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41172 through 41174), and are 
revisiting this approach given the additional experience with CAR T-
cell therapy being provided in hospitals paid under the IPPS and in 
IPPS-excluded cancer hospitals. We also are requesting public comments 
on other payment alternatives for these cases, including eliminating 
the use of CCRs in calculating the new technology add-on payments for 
cases involving the use of KYMRIAH[supreg] and YESCARTA[supreg] by 
making a uniform add-on payment that equals the proposed maximum add-on 
payment, that is, 65 percent of the cost of the technology (in 
accordance with the proposed increase in the calculation of the maximum 
new technology add-on payment amount), which in this instance would be 
$242,450; and/or using a higher percentage than the proposed 65 percent 
to calculate the maximum new technology add-on payment amount. If we 
were to finalize any such changes to the new technology add-on payment 
for cases involving the use of KYMRIAH[supreg] and YESCARTA[supreg], we 
would also revise our proposed amendments to Sec.  412.88 accordingly.
e. VYXEOSTM (Cytarabine and Daunorubicin Liposome for 
Injection)
    Jazz Pharmaceuticals, Inc. submitted an application for new 
technology add-on payments for the VYXEOSTM technology for 
FY 2019. VYXEOSTM was approved by FDA on August 3, 2017, for 
the treatment of adults with newly diagnosed therapy-related acute 
myeloid leukemia (t-AML) or AML with myelodysplasia-related changes 
(AML-MRC).
    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.
    VYXEOSTM is a nano-scale liposomal formulation 
containing a fixed combination of cytarabine and daunorubicin in a 5:1 
molar ratio. This formulation was developed by the applicant using a 
proprietary system known as CombiPlex. According to the applicant, 
CombiPlex addresses several fundamental shortcomings of conventional 
combination regimens, specifically the conventional ``7+3'' free drug 
dosing, as well as the challenges inherent in combination drug 
development, by identifying the most effective synergistic molar ratio 
of the drugs being combined in vitro, and fixing this ratio in a nano-
scale drug delivery complex to maintain the optimized combination after 
administration and ensuring exposure of this ratio to the tumor.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
VYXEOSTM and consideration of the public comments we 
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we 
approved VYXEOSTM for new technology add-on payments for FY 
2019 (83 FR 41304). Cases involving VYXEOSTM that are 
eligible for new technology add-on payments are identified by ICD-10-
PCS procedure codes XW033B3 (Introduction of cytarabine and 
caunorubicin liposome antineoplastic into peripheral vein, percutaneous 
approach, new technology group 3) or XW043B3 (Introduction of 
cytarabine and daunorubicin liposome antineoplastic into central vein, 
percutaneous approach, new technology group 3). In its application, the 
applicant estimated that the average cost of a single vial for 
VYXEOSTM is $7,750 (daunorubicin 44 mg/m\2\ and cytarabine 
100 mg/m\2\). As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 
FR 41305), we computed a maximum average of 9.4 vials used in the 
inpatient hospital setting with the maximum average cost for 
VYXEOSTM used in the inpatient hospital setting equaling 
$72,850 ($7,750 cost per vial * 9.4 vials). Under existing Sec.  
412.88(a)(2), we limit new technology add-on payments to the lesser of 
50 percent of the average cost of the technology or 50 percent of the 
costs in excess of the MS-DRG payment for the case. As a result, the 
maximum new technology add-on payment for a case involving the use of 
VYXEOSTM is $36,425 for FY 2019.
    With regard to the newness criterion for VYXEOSTM, we 
consider the beginning of the newness period to commence when 
VYXEOSTM was approved by the FDA (August 3, 2017). As 
discussed previously in this section,

[[Page 19280]]

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 
VYXEOSTM onto the U.S. market (August 3, 2020) will occur in 
the second half of FY 2020, we are proposing to continue new technology 
add-on payments for this technology for FY 2020. Under the proposed 
change to the calculation of the new technology add-on payment amount 
discussed in section II.H.9. of the preamble of this proposed rule, we 
are proposing that the maximum new technology add-on payment amount for 
a case involving the use of VYXEOSTM would be $47,353.50 for 
FY 2020; that is, 65 percent of the average cost of the technology. 
However, if we do not finalize the proposed change to the calculation 
of the new technology add-on payment amount, we are proposing that the 
maximum new technology add-on payment for a case involving 
VYXEOSTM would remain at $36,425 for FY 2020. We are 
inviting public comments on our proposals to continue new technology 
add-on payments for VYXEOSTM for FY 2020.
f. VABOMERETM (Meropenem-Vaborbactam)
    Melinta Therapeutics, Inc., submitted an application for new 
technology add-on payments for VABOMERETM for FY 2019. 
VABOMERETM is indicated for use in the treatment of adult 
patients who have been diagnosed with complicated urinary tract 
infections (cUTIs), including pyelonephritis, caused by designated 
susceptible bacteria. VABOMERETM received FDA approval on 
August 29, 2017.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
VABOMERETM and consideration of the public comments we 
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we 
approved VABOMERETM for new technology add-on payments for 
FY 2019 (83 FR 41311). We noted in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41311) that the applicant did not request approval for the use 
of a unique ICD-10-PCS procedure code for VABOMERETM for FY 
2019 and that as a result, hospitals would be unable to uniquely 
identify the use of VABOMERETM on an inpatient claim using 
the typical coding of an ICD-10-PCS procedure code. We noted that in 
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53352), with regard to the 
oral drug DIFICIDTM, we revised our policy to allow for the 
use of an alternative code set to identify oral medications where no 
inpatient procedure is associated for the purposes of new technology 
add-on payments. We established the use of a NDC as the alternative 
code set for this purpose and described our rationale for this 
particular code set. This change was effective for payments for 
discharges occurring on or after October 1, 2012. In the FY 2019 IPPS/
LTCH PPS final rule, we acknowledged that VABOMERETM is not 
an oral drug and is administered by IV infusion, but it was the first 
approved new technology aside from an oral drug with no uniquely 
assigned inpatient procedure code. Therefore, we believed that the 
circumstances with respect to the identification of eligible cases 
using VABOMERETM are similar to those addressed in the FY 
2013 IPPS/LTCH PPS final rule with regard to DIFICIDTM 
because we did not have current ICD-10-PCS code(s) to uniquely identify 
the use of VABOMERETM to make the new technology add-on 
payment. We stated that because we have determined that 
VABOMERETM has met all of the new technology add-on payment 
criteria and cases involving the use of VABOMERETM would be 
eligible for such payments for FY 2019, we needed to use an alternative 
coding method to identify these cases and make the new technology add-
on payment for use of VABOMERETM in FY 2019. Therefore, for 
the reasons discussed in the FY 2019 IPPS/LTCH PPS final rule and 
similar to the policy in the FY 2013 IPPS/LTCH PPS final rule, cases 
involving VABOMERETM that are eligible for new technology 
add-on payments for FY 2019 are identified by National Drug Codes (NDC) 
65293-0009-01 or 70842-0120-01 (VABOMERETM Meropenem-
Vaborbactam Vial).
    According to the applicant, the cost of VABOMERETM is 
$165 per vial. A patient receives two vials per dose and three doses 
per day. Therefore, the per-day cost of VABOMERETM is $990 
per patient. The duration of therapy, consistent with the Prescribing 
Information, is up to 14 days. Therefore, the estimated cost of 
VABOMERETM to the hospital, per patient, is $13,860. We 
stated in the FY 2019 IPPS/LTCH PPS final rule that based on the 
limited data from the product's launch, approximately 80 percent of 
VABOMERETM's usage would be in the inpatient hospital 
setting, and approximately 20 percent of VABOMERETM's usage 
may take place outside of the inpatient hospital setting. Therefore, 
the average number of days of VABOMERETM administration in 
the inpatient hospital setting is estimated at 80 percent of 14 days, 
or approximately 11.2 days. As a result, the total inpatient cost for 
VABOMERETM is $11,088 ($990 * 11.2 days). Under existing 
Sec.  412.88(a)(2), we limit new technology add-on payments to the 
lesser of 50 percent of the average cost of the technology or 50 
percent of the costs in excess of the MS-DRG payment for the case. As a 
result, the maximum new technology add-on payment for a case involving 
the use of VABOMERETM is $5,544 for FY 2019.
    With regard to the newness criterion for VABOMERETM, we 
consider the beginning of the newness period to commence when 
VABOMERETM received FDA approval (August 29, 2017). 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 VABOMERETM onto the U.S. 
market (August 29, 2020) will occur during the second half of FY 2020, 
we are proposing to continue new technology add-on payments for this 
technology for FY 2020. Under the proposed change to the calculation of 
the new technology add-on payment amount discussed in section II.H.9. 
of the preamble of this proposed rule, we are proposing that the 
maximum new technology add-on payment amount for a case involving the 
use of VABOMERETM would be $7,207.20 for FY 2020; that is, 
65 percent of the average cost of the technology. However, if we do not 
finalize the proposed change to the calculation of the new technology 
add-on payment amount, we are proposing that the maximum new technology 
add-on payment for a case involving VABOMERETM would remain 
at $5,544 for FY 2020.
    As noted above, because there was no ICD-10-PCS code(s) to uniquely 
identify the use of VABOMERETM, we indicated in the FY 2019 
IPPS/LTCH PPS final rule that FY 2019 cases involving the use of 
VABOMERETM that are eligible for the FY 2019 new technology 
add-on payments would be identified using an NDC code. Subsequent to 
the issuance of that final rule, new ICD-10-PCS codes XW033N5 
(Introduction of Meropenem-vaborbactam Anti-infective into Peripheral 
Vein, Percutaneous Approach, New Technology Group 5) and XW043N5 
(Introduction of Meropenem-vaborbactam Anti-infective

[[Page 19281]]

into Central Vein, Percutaneous Approach, New Technology Group 5) were 
finalized to identify cases involving the use of VABOMERETM, 
effective October 1, 2019, as shown in Table 6B--New Procedure Codes, 
associated with this proposed rule and available via the internet on 
the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Therefore, for FY 2020, 
we will use these two ICD-10-PCS codes (XW033N5 and XW043N5) to 
identify cases involving the use of VABOMERETM that are 
eligible for the new technology add-on payments.
    While these newly approved ICD-10-PCS procedure codes can be used 
to uniquely identify cases involving the use of VABOMERETM 
for FY 2020, we are concerned that limiting new technology add-on 
payments only to cases reporting these new ICD-10-PCS codes for FY 2020 
could cause confusion because it is possible that some providers may 
inadvertently continue to bill some claims with the NDC codes rather 
than the new ICD-10-PCS codes. Therefore, for FY 2020, we are proposing 
that in addition to using the new ICD-10-PCS codes to identify cases 
involving the use of VABOMERETM, we would also continue to 
use the NDC codes to identify cases and make the new technology add-on 
payments. As a result, we are proposing that cases involving the use of 
VABOMERETM that are eligible for new technology add-on 
payments for FY 2020 would be identified by ICD-10-PCS codes XW033N5 or 
XW043N5 or NDCs 65293-0009-01 or 70842-0120-01.
    We are inviting public comments on our proposal to continue new 
technology add-on payments for VABOMERETM for FY 2020 and 
our proposals for identifying and making new technology add-on payments 
for cases involving the use of VABOMERETM.
g. remed[emacr][supreg] System
    Respicardia, Inc. submitted an application for new technology add-
on payments for the remed[emacr][supreg] System for FY 2019. According 
to the applicant, the remed[emacr][supreg] System is indicated for use 
as a transvenous phrenic nerve stimulator in the treatment of adult 
patients who have been diagnosed with moderate to severe central sleep 
apnea. The remed[emacr][supreg] 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. On October 6, 2017, the 
remed[emacr][supreg] System was approved by the FDA as an implantable 
phrenic nerve stimulator indicated for the use in the treatment of 
adult patients who have been diagnosed with moderate to severe CSA. The 
device was available commercially upon FDA approval. Therefore, the 
newness period for the remed[emacr][supreg] System is considered to 
begin on October 6, 2017.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for the 
remed[emacr][supreg] System and consideration of the public comments we 
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we 
approved the remed[emacr][supreg] System for new technology add-on 
payments for FY 2019. Cases involving the use of the 
remed[emacr][supreg] System that are eligible for new technology add-on 
payments are 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 05H43MZ (Insertion of neurostimulator lead into left innominate 
vein, percutaneous approach). According to the application, the cost of 
the remed[emacr][supreg] System is $34,500 per patient. Under existing 
Sec.  412.88(a)(2), we limit new technology add-on payments to the 
lesser of 50 percent of the average cost of the technology or 50 
percent of the costs in excess of the MS-DRG payment for the case. As a 
result, the maximum new technology add-on payment for a case involving 
the use of the remed[emacr][supreg] System is $17,250 for FY 2019 (83 
FR 41320).
    With regard to the newness criterion for the remed[emacr][supreg] 
System, we consider the beginning of the newness period to commence 
when the remed[emacr][supreg] System was approved by the FDA on October 
6, 2017. Because the 3-year anniversary date of the entry of the 
remed[emacr][supreg] System onto the U.S. market (October 6, 2020) will 
occur after FY 2020, we are proposing to continue new technology add-on 
payments for this technology for FY 2020. Under the proposed change to 
the calculation of the new technology add-on payment amount discussed 
in section II.H.9. of the preamble of this proposed rule, we are 
proposing that the maximum new technology add-on payment amount for a 
case involving the use of the remed[emacr][supreg] System would be 
$22,425 for FY 2020; that is, 65 percent of the average cost of the 
technology. However, if we do not finalize the proposed change to the 
calculation of the new technology add-on payment amount, we are 
proposing that the maximum new technology add-on payment for a case 
involving the remed[emacr][supreg] System would remain at $17,250 for 
FY 2020. We are inviting public comments on our proposals to continue 
new technology add-on payments for the remed[emacr][supreg] System for 
FY 2020.
h. ZEMDRITM (Plazomicin)
    Achaogen, Inc. submitted an application for new technology add-on 
payments for ZEMDRITM (Plazomicin) for FY 2019. According to 
the applicant, ZEMDRITM (Plazomicin) is a next-generation 
aminoglycoside antibiotic, which has been found in vitro to have 
enhanced activity against many multi-drug resistant (MDR) gram-negative 
bacteria. The applicant received approval from the FDA on June 25, 
2018, for use in the treatment of adults who have been diagnosed with 
cUTIs, including pyelonephritis. After evaluation of the newness, 
costs, and substantial clinical improvement criteria for new technology 
add-on payments for ZEMDRITM and consideration of the public 
comments we received in response to the FY 2019 IPPS/LTCH PPS proposed 
rule, we approved ZEMDRITM for new technology add-on 
payments for FY 2019 (83 FR 41334). Cases involving ZEMDRITM 
that are eligible for new technology add-on payments are identified by 
ICD-10-PCS procedure codes XW033G4 (Introduction of Plazomicin anti-
infective into peripheral vein, percutaneous approach, new technology 
group 4) or XW043G4 (Introduction of Plazomicin anti-infective into 
central vein, percutaneous approach, new technology group 4). 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 ZEMDRITM per day for an average 
duration of 5.5 days. Therefore, the total cost of ZEMDRITM 
per patient is $5,445. Under existing Sec.  412.88(a)(2), we limit new 
technology add-on payments to the

[[Page 19282]]

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 ZEMDRITM is $2,722.50 for FY 2019. With regard to 
the newness criterion for ZEMDRITM, we consider the 
beginning of the newness period to commence when ZEMDRITM 
was approved by the FDA on June 25, 2018. Because the 3-year 
anniversary date of the entry of ZEMDRITM onto the U.S. 
market (June 25, 2021) will occur after FY 2020, we are proposing to 
continue new technology add-on payments for this technology for FY 
2020. Under the proposed change to the calculation of the new 
technology add-on payment amount discussed in section II.H.9. of the 
preamble of this proposed rule, we are proposing that the maximum new 
technology add-on payment amount for a case involving the use of 
ZEMDRITM would be $3,539.25 for FY 2020; that is, 65 percent 
of the average cost of the technology. However, if we do not finalize 
the proposed change to the calculation of the new technology add-on 
payment amount, we are proposing that the maximum new technology add-on 
payment for a case involving ZEMDRITM would remain at 
$2,722.50 for FY 2020. We are inviting public comments on our proposals 
to continue new technology add-on payments for ZEMDRITM for 
FY 2020.
i. GIAPREZATM
    The La Jolla Pharmaceutical Company submitted an application for 
new technology add-on payments for GIAPREZATM for FY 2019. 
GIAPREZATM, a synthetic human angiotensin II, is 
administered through intravenous infusion to raise blood pressure in 
adult patients who have been diagnosed with septic or other 
distributive shock.
    GIAPREZATM was granted a Priority Review designation 
under FDA's expedited program and received FDA approval on December 21, 
2017, for the use in the treatment of adults who have been diagnosed 
with septic or other distributive shock as an intravenous infusion to 
increase blood pressure. After evaluation of the newness, costs, and 
substantial clinical improvement criteria for new technology add-on 
payments for GIAPREZATM and consideration of the public 
comments we received in response to the FY 2019 IPPS/LTCH PPS proposed 
rule, we approved GIAPREZATM for new technology add-on 
payments for FY 2019 (83 FR 41342). Cases involving 
GIAPREZATM that are eligible for new technology add-on 
payments are identified by ICD-10-PCS procedure codes XW033H4 
(Introduction of synthetic human angiotensin II into peripheral vein, 
percutaneous approach, new technology, group 4) or XW043H4 
(Introduction of synthetic human angiotensin II into central vein, 
percutaneous approach, new technology group 4). In its application, the 
applicant estimated that the average Medicare beneficiary would require 
a dosage of 20 ng/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 existing Sec.  412.88(a)(2), we limit new technology 
add-on payments to the lesser of 50 percent of the average cost of the 
technology or 50 percent of the costs in excess of the MS-DRG payment 
for the case. As a result, the maximum new technology add-on payment 
for a case involving the use of GIAPREZATM is $1,500 for FY 
2019.
    With regard to the newness criterion for GIAPREZATM, we 
consider the beginning of the newness period to commence when 
GIAPREZATM was approved by the FDA (December 21, 2017). 
Because the 3-year anniversary date of the entry of 
GIAPREZATM onto the U.S. market (December 21, 2020) would 
occur after FY 2020, we are proposing to continue new technology add-on 
payments for this technology for FY 2020. Under the proposed change to 
the calculation of the new technology add-on payment discussed in 
section II.H.9. of the preamble of this proposed rule, we are proposing 
that the maximum new technology add-on payment amount for a case 
involving the use of GIAPREZATM would be $1,950 for FY 2020; 
that is, 65 percent of the average cost of the technology. However, if 
we do not finalize the proposed change to the calculation of the new 
technology add-on payment amount, we are proposing that the maximum new 
technology add-on payment for a case involving GIAPREZATM 
would remain at $1,500 for FY 2020. We are inviting public comments on 
our proposals to continue new technology add-on payments for 
GIAPREZATM for FY 2020.
j. Cerebral Protection System (Sentinel[supreg] Cerebral Protection 
System)
    Claret Medical, Inc. submitted an application for new technology 
add-on payments for the Cerebral Protection System (Sentinel[supreg] 
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[supreg] Cerebral Protection System was 
granted by FDA on June 1, 2017 (DEN160043).
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for the 
Sentinel[supreg] Cerebral Protection System and consideration of the 
public comments we received in response to the FY 2019 IPPS/LTCH PPS 
proposed rule, we approved the Sentinel[supreg] Cerebral Protection 
System for new technology add-on payments for FY 2019 (83 FR 41348). 
Cases involving the Sentinel[supreg] Cerebral Protection System that 
are eligible for new technology add-on payments are identified by ICD-
10-PCS code X2A5312 (Cerebral embolic filtration, dual filter in 
innominate artery and left common carotid artery, percutaneous 
approach). In its application, the applicant estimated that the cost of 
the Sentinel[supreg] Cerebral Protection System is $2,800. Under 
existing Sec.  412.88(a)(2), we limit new technology add-on payments to 
the lesser of 50 percent of the average cost of the technology or 50 
percent of the costs in excess of the MS-DRG payment for the case. As a 
result, the maximum new technology add-on payment for a case involving 
the use of the Sentinel[supreg] Cerebral Protection System is $1,400 
for FY 2019.
    With regard to the newness criterion for the Sentinel[supreg] 
Cerebral Protection System, we consider the beginning of the newness 
period to commence when the FDA granted the De Novo request for the 
Sentinel[supreg] Cerebral Protection System (June 1, 2017). 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 Sentinel[supreg] Cerebral 
Protection System onto the U.S. market (June 1, 2020) will occur in the 
second half of FY 2020, we are proposing to continue new technology 
add-on payments for this technology for FY 2020. Under the proposed 
change to the calculation of the new technology add-on payment amount 
discussed in section II.H.9. of the preamble of this proposed rule, we 
are proposing that the maximum new technology add-on payment amount for

[[Page 19283]]

a case involving the use of the Sentinel[supreg] Cerebral Protection 
System would be $1,820 for FY 2020; that is, 65 percent of the average 
cost of the technology. However, if we do not finalize the proposed 
change to the calculation of the new technology add-on payment amount, 
we are proposing that the maximum new technology add-on payment for a 
case involving the Sentinel[supreg] Cerebral Protection System would 
remain at $1,400 for FY 2020. We are inviting public comments on our 
proposals to continue new technology add-on payments for the 
Sentinel[supreg] Cerebral Protection System for FY 2020.
k. The AQUABEAM System (Aquablation)
    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.
    The FDA granted the AQUABEAM System's De Novo request on December 
21, 2017, for use in the resection and removal of prostate tissue in 
males suffering from lower urinary tract symptoms (LUTS) due to benign 
prostatic hyperplasia. The applicant stated that the AQUABEAM System 
was made available on the U.S. market immediately after the FDA granted 
the De Novo request.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for the 
AQUABEAM System and consideration of the public comments we received in 
response to the FY 2019 IPPS/LTCH PPS proposed rule, we approved the 
AQUABEAM System for new technology add-on payments for FY 2019 (83 FR 
41355). Cases involving the AQUABEAM System that are eligible for new 
technology add-on payments are identified by ICD-10-PCS code XV508A4 
(Destruction of prostate using robotic waterjet ablation, via natural 
or artificial opening endoscopic, new technology group 4). 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 existing Sec.  412.88(a)(2), we limit new 
technology add-on payments to the lesser of 50 percent of the average 
cost of the technology or 50 percent of the costs in excess of the MS-
DRG payment for the case. As a result, the maximum new technology add-
on payment for a case involving the use of the AQUABEAM System's 
Aquablation System is $1,250 for FY 2019.
    With regard to the newness criterion for the AQUABEAM System, we 
consider the beginning of the newness period to commence on the date 
the FDA granted the De Novo request (December 21, 2017). As noted above 
and in the FY 2019 rulemaking, the applicant stated that the AQUABEAM 
System was made available on the U.S. market immediately after the FDA 
granted the De Novo request.
    We note that in the FY 2019 IPPS/LTCH PPS final rule, we 
inadvertently misstated the newness period beginning date as April 19, 
2018 (83 FR 41351). As discussed in the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41350), in its public comment in response to the FY 2019 
IPPS/LTCH PPS proposed rule, the applicant explained that, while the 
AQUABEAM System received approval from the FDA for its De Novo request 
on December 21, 2017, local non-coverage determinations in the Medicare 
population resulted in the first case being delayed until April 19, 
2018. Therefore, the applicant believed that the newness period should 
begin on April 19, 2018, instead of the date FDA granted the De Novo 
request. In the final rule, we responded that with regard to the 
beginning of the technology's newness period, as discussed in the FY 
2005 IPPS final rule (69 FR 49003), the timeframe that a new technology 
can be eligible to receive new technology add-on payments begins when 
data begin to become available. While local non-coverage determinations 
may limit the use of a technology in different regions in the country, 
a technology may be available in regions where no local non-coverage 
decision existed (with data beginning to become available). We also 
explained that under our historical policy we do not consider how 
frequently the medical service or technology has been used in the 
Medicare population in our determination of newness (as discussed in 
the FY 2006 IPPS final rule (70 FR 47349)). Consistent with this 
response, and as indicated in the proposed rule and elsewhere in the 
final rule, we believe the beginning of the newness period to commence 
on the first day the AQUABEAM System was commercially available 
(December 21, 2017). As noted, the later statement that the newness 
period beginning date for the AQUABEAM System is April 19, 2018 was an 
inadvertent error. As we indicated in the FY 2019 IPPS/LTCH PPS final 
rule, we welcome further information from the applicant for 
consideration regarding the beginning of the newness period.
    Because the 3-year anniversary date of the entry of the AQUABEAM 
System onto the U.S. market (December 21, 2020) will occur after FY 
2020, we are proposing to continue new technology add-on payments for 
this technology for FY 2020. Under the proposed change to the 
calculation of the new technology add on payment amount discussed in 
section II.H.9. of the preamble of this proposed rule, we are proposing 
that the maximum new technology add-on payment amount for a case 
involving the use of the AQUABEAM System would be $1,625 for FY 2020; 
that is, 65 percent of the average cost of the technology. However, if 
we do not finalize the proposed change to the calculation of the new 
technology add-on payment amount, we are proposing that the maximum new 
technology add-on payment for a case involving the AQUABEAM System 
would remain at $1,250 for FY 2020. We are inviting public comments on 
our proposals to continue new technology add-on payments for the 
AQUABEAM System for FY 2020.
l. AndexXaTM (Andexanet alfa)
    Portola Pharmaceuticals, Inc. (Portola) submitted an application 
for new technology add-on payments for FY 2019 for the use of 
AndexXaTM (Andexanet alfa).
    AndexXaTM received FDA approval on May 3, 2018, and is 
indicated for use in the treatment of patients who are

[[Page 19284]]

receiving treatment with rivaroxaban and apixaban, when reversal of 
anticoagulation is needed due to life-threatening or uncontrolled 
bleeding.
    After evaluation of the newness, costs, and substantial clinical 
improvement criteria for new technology add-on payments for 
AndexXaTM and consideration of the public comments we 
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we 
approved AndexXaTM for new technology add-on payments for FY 
2019 (83 FR 41362). Cases involving the use of AndexXaTM 
that are eligible for new technology add-on payments are identified by 
ICD-10-PCS procedure codes XW03372 (Introduction of Andexanet alfa, 
Factor Xa inhibitor reversal agent into peripheral vein, percutaneous 
approach, new technology group 2) or XW04372 (Introduction of Andexanet 
alfa, Factor Xa inhibitor reversal agent into central vein, 
percutaneous approach, new technology group 2). The applicant explained 
that the WAC for 1 vial is $2,750, with the use of an average of 10 
vials for the low dose and 18 vials for the high dose. The applicant 
noted that per the clinical trial data, 90 percent of cases were 
administered a low dose and 10 percent of cases were administered the 
high dose. The weighted average between the low and high dose is an 
average of 10.22727 vials. Therefore, the cost of a standard dosage of 
AndexXaTM is $28,125 ($2,750 x 10.22727). Under existing 
Sec.  412.88(a)(2), we limit new technology add-on payments to the 
lesser of 50 percent of the average cost of the technology or 50 
percent of the costs in excess of the MS-DRG payment for the case. As a 
result, the maximum new technology add-on payment for a case involving 
the use of AndexXaTM is $14,062.50 for FY 2019.
    With regard to the newness criterion for AndexXaTM, we 
consider the beginning of the newness period to commence when 
AndexXaTM received FDA approval (May 3, 2018). Because the 
3-year anniversary date of the entry of AndexXaTM onto the 
U.S. market (May 3, 2021) will occur after FY 2020, we are proposing to 
continue new technology add-on payments for this technology for FY 
2020. Under the proposed change to the calculation of the new 
technology add-on payment amount discussed in section II.H.9. of the 
preamble of this proposed rule, we are proposing that the maximum new 
technology add-on payment amount for a case involving the use of 
AndexXaTM would be $18,281.25 for FY 2020; that is, 65 
percent of the average cost of the technology. However, if we do not 
finalize the proposed change to the calculation of the new technology 
add-on payment amount, we are proposing that the maximum new technology 
add-on payment for a case involving AndexXaTM would remain 
at $14,062.50 for FY 2020. We are inviting public comments on our 
proposals to continue new technology add-on payments for 
AndexXaTM for FY 2020.
5. Proposed FY 2020 Applications for New Technology Add-On Payments
    We received 18 applications for new technology add-on payments for 
FY 2020. In accordance with the regulations under Sec.  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 for which the application is being considered. One applicant 
withdrew its application prior to the issuance of this proposed rule. A 
discussion of the 17 remaining applications is presented below.
a. AZEDRA[supreg] (Ultratrace[supreg] iobenguane Iodine-131) Solution
    Progenics Pharmaceuticals, Inc. submitted an application for new 
technology add-on payments for AZEDRA[supreg] (Ultratrace[supreg] 
iobenguane Iodine-131) for FY 2020. (We note that Progenics 
Pharmaceuticals, Inc. previously submitted an application for new 
technology add-on payments for AZEDRA[supreg] for FY 2019, which was 
withdrawn prior to the issuance of the FY 2019 IPPS/LTCH PPS final 
rule.) AZEDRA[supreg] is a drug solution formulated for intravenous 
(IV) use in the treatment of patients who have been diagnosed with 
obenguane avid malignant and/or recurrent and/or unresectable 
pheochromocytoma and paraganglioma. AZEDRA[supreg] contains a small 
molecule ligand consisting of meta-iodobenzylguanidine (MIBG) and 
\131\Iodine (\131\I) (hereafter referred to as ``\131\I-MIBG''). The 
applicant noted that iobenguane Iodine-131 is also known as \131\I-
MIBG.
    The applicant reported that pheochromocytomas and paragangliomas 
are rare tumors with an incidence of approximately 2 to 8 people per 
million per year.1 2 Both tumors are catecholamine-secreting 
neuroendocrine tumors, with pheochromocytomas being the more common of 
the two and comprising 80 to 85 percent of cases. While 10 percent of 
pheochromocytomas are malignant, whereby ``malignant'' is defined by 
the World Health Organization (WHO) as ``the presence of distant 
metastases,'' paragangliomas have a malignancy frequency of 25 
percent.3 4 Approximately one-half of malignant tumors are 
pronounced at diagnosis, while other malignant tumors develop slowly 
within 5 years.\5\ Pheochromocytomas and paragangliomas tend to be 
indistinguishable at the cellular level and frequently at the clinical 
level. For example catecholamine-secreting paragangliomas often present 
clinically like pheochromocytomas with hypertension, episodic headache, 
sweating, tremor, and forceful palpitations.\6\ Although 
pheochromocytomas and paragangliomas can share overlapping 
histopathology, epidemiology, and molecular pathobiology 
characteristics, there are differences between these two neuroendocrine 
tumors in clinical behavior, aggressiveness and metastatic potential, 
biochemical findings and association with inherited genetic syndrome 
differences, highlighting the importance of distinguishing between the 
presence of malignant pheochromocytoma and the presence of malignant 
paraganglioma. At this time, there is no curative treatment for 
malignant pheochromocytomas and paragangliomas. Successful management 
of these malignancies requires a multidisciplinary approach of 
decreasing tumor burden, controlling endocrine activity, and treating 
debilitating symptoms. According to the applicant, decreasing 
metastatic tumor burden would address the leading cause of mortality in 
this patient population, where the 5-year survival rate is 50 percent 
for patients with untreated malignant pheochromocytomas and 
paragangliomas.\7\ The applicant stated that controlling catecholamine

[[Page 19285]]

hypersecretion (for example, severe paroxysmal or sustained 
hypertension, palpitations and arrhythmias) would also mean decreasing 
morbidity associated with hypertension (for example, risk of stroke, 
myocardial infarction and renal failure), and begin to address the 30-
percent cardiovascular mortality rate associated with malignant 
pheochromocytomas and paragangliomas.
---------------------------------------------------------------------------

    \1\ Beard, C.M., Sheps, S.G., Kurland, L.T., Carney, J.A., Lie, 
J.T., ``Occurrence of pheochromocytoma in Rochester, Minnesota'', 
pp. 1950-1979.
    \2\ Stenstr[ouml]m, G., Sv[auml]rdsudd, K., ``Pheochromocytoma 
in Sweden 1958-1981. An analysis of the National Cancer Registry 
Data,'' Acta Medica Scandinavica, 1986, vol. 220(3), pp. 225-232.
    \3\ Fishbein, Lauren, ``Pheochromocytoma and Paraganglioma,'' 
Hematology/Oncology Clinics 30, no. 1, 2016, pp. 135-150.
    \4\ Lloyd, R.V., Osamura, R.Y., Kl[ouml]ppel, G., & Rosai, J. 
(2017). World Health Organization (WHO) Classification of Tumours of 
Endocrine Organs. Lyon, France: International Agency for Research on 
Center (IARC).
    \5\ Kantorovich, Vitaly, and Karel Pacak. ``Pheochromocytoma and 
paraganglioma.'' Progress in Brain Research., 2010, vol. 182, pp. 
343-373.
    \6\ Carty, SE, Young, W.F., Elfky, A., ``Paraganglioma and 
pheochromocytoma: Management of malignant disease,'' UpToDate. 
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
    \7\ Kantorovich, Vitaly, and Karel Pacak. ``Pheochromocytoma and 
paraganglioma.'' Progress in Brain Research., 2010, vol. 182, pp. 
343-373.
---------------------------------------------------------------------------

    The applicant reported that, prior to the introduction of 
AZEDRA[supreg], controlling catecholamine activity in pheochromocytomas 
and paragangliomas was medically achieved with administration of 
combined alpha and beta-adrenergic blockade, and surgically with tumor 
tissue reduction. Because there is no curative treatment for malignant 
pheochromocytomas and paragangliomas, resecting both primary and 
metastatic lesions whenever possible to decrease tumor burden \8\ 
provides a methodology for controlling catecholamine activity and 
lowering cardiovascular mortality risk. Besides surgical removal of 
tumor tissue for lowering tumor burden, there are other treatment 
options that depend upon tumor type (that is, pheochromocytoma tumors 
versus paraganglioma tumors), anatomic location, and the number and 
size of the metastatic tumors. These treatment options include: (1) 
Radiation therapy; (2) nonsurgical local ablative therapy with 
radiofrequency ablation, cryoablation, and percutaneous ethanol 
injection; (3) transarterial chemoembolization for liver metastases; 
and (4) radionuclide therapy using metaiodobenzylguanidine (MIBG) or 
somatostatin. Regardless of the method to reduce local tumor burden, 
periprocedural medical care is needed to prevent massive catecholamine 
secretion and hypertensive crisis.\9\
---------------------------------------------------------------------------

    \8\ Noda, T., Nagano, H., Miyamoto, A., et al., ``Successful 
outcome after resection of liver metastasis arising from an 
extraadrenal retroperitoneal paraganglioma that appeared 9 years 
after surgical excision of the primary lesion,'' Int J Clin Oncol, 
2009, vol. 14, pp. 473.
    \9\ Carty, SE, Young, W.F., Elfky, A., ``Paraganglioma and 
pheochromocytoma: Management of malignant disease,'' UpToDate. 
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
---------------------------------------------------------------------------

    The applicant stated that AZEDRA[supreg] specifically targets 
neuroendocrine tumors arising from chromaffin cells of the adrenal 
medulla (in the case of pheochromocytomas) and from neuroendocrine 
cells of the extra-adrenal autonomic paraganglia (in the case of 
paragangliomas).\10\ According to the applicant, AZEDRA[supreg] is a 
more consistent form of 131I-MIBG compared to compounded 
formulations of 131I-MIBG that are not approved by the FDA. 
AZEDRA[supreg] (iobenguane I 131) (AZEDRA) was approved by the FDA on 
July 30, 2018, and according to the applicant, is the first and only 
drug indicated for the treatment of adult and pediatric patients 12 
years and older who have been diagnosed with iobenguane scan positive, 
unresectable, locally advanced or metastatic pheochromocytoma or 
paraganglioma who require systemic anticancer therapy. Among local 
tumor tissue reduction options, use of external beam radiation therapy 
(EBRT) at doses greater than 40 Gy can provide local pheochromocytoma 
and paraganglioma tumor control and relief of symptoms for tumors at a 
variety of sites, including the soft tissues of the skull base and 
neck, abdomen, and thorax, as well as painful bone metastases.\11\ 
However, the applicant stated that EBRT irradiated tissues are 
unresponsive to subsequent treatment with 131I-MIBG 
radionuclide.\12\ MIBG was initially used for the imaging of 
paragangliomas and pheochromocytomas because of its similarity to 
noradrenaline, which is taken up by chromaffin cells. Conventional MIBG 
used in imaging expanded to off-label use in patients who had been 
diagnosed with malignant pheochromocytomas and paragangliomas. Because 
131I-MIBG is sequestered within pheochromocytoma and 
paraganglioma tumors, subsequent malignant cell death occurs from 
radioactivity. Approximately 50 percent of tumors are eligible for 
treatment involving 131I-MIBG therapy based on having MIBG 
uptake with diagnostic imaging. According to the applicant, despite 
uptake by tumors, studies have also found that 131I-MIBG 
therapy has been limited by total radiation dose, hematologic side 
effects, and hypertension. While the pathophysiology of total radiation 
dose and hematologic side effects are more readily understandable, 
hypertension is believed to be precipitated by large quantities of non-
iodinated MIBG or ``cold'' MIBG being introduced along with radioactive 
\131\I-MIBG therapy.\13\ The ``cold'' MIBG blocks synaptic reuptake of 
norepinephrine, which can lead to tachycardia and paroxysmal 
hypertension within the first 24 hours, the majority of which occur 
within 30 minutes of administration and can be dose-limiting.\14\
---------------------------------------------------------------------------

    \10\ Ibid.
    \11\ Ibid.
    \12\ Fitzgerald, P.A., Goldsby, R.E., Huberty, J.P., et al., 
``Malignant pheochromocytomas and paragangliomas: a phase II study 
of therapy with high-dose 131I-metaiodobenzylguanidine (131I-
MIBG),'' Ann N Y Acad Sci, 2006, vol. 1073, pp. 465.
    \13\ Loh, K.C., Fitzgerald, P.A., Matthay, K.K., Yeo, P.P., 
Price, DC, ``The treatment of malignant pheochromocytoma with 
iodine-131 metaiodobenzylguanidine (\131\I-MIBG): a comprehensive 
review of 116 reported patients,'' J Endocrinol Invest, 1997, vol. 
20(11), pp. 648-658.
    \14\ Gonias, S, et al., ``Phase II Study of High-Dose [\131\I 
]Metaiodobenzylguanidine Therapy for Patients With Metastatic 
Pheochromocytoma and Paraganglioma,'' J of Clin Onc, July 27, 2009.
---------------------------------------------------------------------------

    The applicant asserted that its new proprietary manufacturing 
process called Ultratrace[supreg] allows AZEDRA[supreg] to be 
manufactured without the inclusion of unlabeled or ``cold'' MIBG in the 
final formulation. The applicant also noted that targeted radionuclide 
MIBG therapy to reduce tumor burden is one of two treatments that have 
been studied the most. The other treatment is cytotoxic chemotherapy 
and, specifically, Carboplatin, Vincristine, and Dacarbazine (CVD). The 
applicant stated that cytotoxic chemotherapy is an option for patients 
who experience symptoms with rapidly progressive, non-resectable, high 
tumor burden, and that cytotoxic chemotherapy is another option for a 
large number of metastatic bone lesions.\15\ According to the 
applicant, CVD was believed to have an effect on malignant 
pheochromocytomas and paragangliomas due to the embryonic origin being 
similar to neuroblastomas. The response rates to CVD have been variable 
between 25 percent and 50 percent.16 17 These patients 
experience side effects consistent with chemotherapeutic treatment with 
CVD, with the added concern of the precipitation of hormonal 
complications such as hypertensive crisis, thereby requiring close 
monitoring during cytotoxic chemotherapy.\18\ According to the 
applicant, use of CVD relative to other tumor burden reduction options 
is not

[[Page 19286]]

an ideal treatment because of nearly 100 percent recurrence rates, and 
the need for chemotherapy cycles to be continually readministered at 
the risk of increased systemic toxicities and eventual development of 
resistance. Finally, there is a subgroup of patients that are 
asymptomatic and have slower progressing tumors where frequent follow-
up is an option for care.\19\ Therefore, the applicant believed that 
AZEDRA[supreg] offers cytotoxic radioactive therapy for the indicated 
population that avoids harmful side effects that typically result from 
use of low-specific activity products.
---------------------------------------------------------------------------

    \15\ Carty, SE, Young, W.F., Elfky, A., ``Paraganglioma and 
pheochromocytoma: Management of malignant disease,'' UpToDate. 
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
    \16\ Niemeijer, N.D., Alblas, G., Hulsteijn, L.T., Dekkers, O.M. 
and Corssmit, E.P. M., ``Chemotherapy with cyclophosphamide, 
vincristine and dacarbazine for malignant paraganglioma and 
pheochromocytoma: systematic review and meta[hyphen]analysis,'' 
Clinical endocrinology, 2014, vol 81(5), pp. 642-651.
    \17\ Ayala-Ramirez, Montserrat, et al., ``Clinical Benefits of 
Systemic Chemotherapy for Patients with Metastatic Pheochromocytomas 
or Sympathetic Extra-Adrenal Paragangliomas: Insights from the 
Largest Single Institutional Experience,'' Cancer, 2012, vol. 
118(11), pp. 2804-2812.
    \18\ Wu, L.T., Dicpinigaitis, P., Bruckner, H., et al., 
``Hypertensive crises induced by treatment of malignant 
pheochromocytoma with a combination of cyclophosphamide, 
vincristine, and dacarbazine,'' Med Pediatr Oncol, 1994, vol. 22(6), 
pp. 389-392.
    \19\ Carty, SE, Young, W.F., Elfky, A., ``Paraganglioma and 
pheochromocytoma: Management of malignant disease,'' UpToDate. 
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
---------------------------------------------------------------------------

    The applicant reported that the recommended AZEDRA[supreg] dosage 
and frequency for patients receiving treatment involving \131\I-MIBG 
therapy for a diagnosis of avid malignant and/or recurrent and/or 
unresectable pheochromocytoma and paraganglioma tumors is:
     Dosimetric Dosing--5 to 6 micro curies (mCi) (185 to 222 
MBq) for a patient weighing more than or equal to 50 kg, and 0.1 mCi/kg 
(3.7 MBq/kg) for patients weighing less than 50 kg. Each recommended 
dosimetric dose is administered as an IV injection.
     Therapeutic Dosing--500 mCi (18.5 GBq) for patients 
weighing more than 62.5 kg, and 8 mCi/kg (296 MBq/kg) for patients 
weighing less than or equal to 62.5 kg. Therapeutic doses are 
administered by IV infusion, in ~50 mL over a period of ~30 minutes 
(100 mL/hour), administered approximately 90 days apart.
    With respect to the newness criterion, the applicant indicated that 
FDA granted Orphan Drug designation for AZEDRA[supreg] on January 18, 
2006, followed by Fast Track designation on March 8, 2006, and 
Breakthrough Therapy designation on July 26, 2015. The applicant's New 
Drug Application (NDA) proceeded on a rolling basis, and was completed 
on November 2, 2017. AZEDRA[supreg] was approved by the FDA on July 30, 
2018, for the treatment of adult and pediatric patients 12 years and 
older who have been diagnosed with iobenguane scan positive, 
unresectable, locally advanced or metastatic pheochromocytoma or 
paraganglioma who require systemic anticancer therapy through a New 
Drug Approval (NDA) filed under Section 505(b)(1) of the Federal Food, 
Drug and Cosmetic Act and 21 CFR 314.50. Currently, there are no 
approved ICD-10-PCS procedure codes to uniquely identify procedures 
involving the administration of AZEDRA[supreg]. We note that the 
applicant submitted a request for approval for a unique ICD-10-PCS code 
for the administration of AZEDRA[supreg] beginning in FY 2020.
    As discussed earlier, if a technology meets all three of the 
substantial similarity criteria, it would be considered substantially 
similar to an existing technology and would not be considered ``new'' 
for purposes of new technology add-on payments.
    With regard to the first criterion, whether a product uses the same 
or similar mechanism of action, the applicant stated that while 
AZEDRA[supreg] and low-specific activity conventional I-131 MIBG both 
target the same transporter sites on the tumor cell surface, the 
therapies' safety and efficacy outcomes are different. These 
differences in outcomes are because AZEDRA[supreg] is manufactured 
using the proprietary Ultratrace[supreg] technology, which maximizes 
the molecules that carry the tumoricidal component (I-131 MIBG) and 
minimizes the extraneous unlabeled component (MIBG, free ligands), 
which could cause cardiovascular side effects. Therefore, according to 
the applicant, AZEDRA[supreg] is designed to increase efficacy and 
decrease safety risks, whereas conventional I-131 MIBG uses existing 
technologies and results in a product that overwhelms the normal 
reuptake system with excess free ligands, which leads to safety issues 
as well as decreasing the probability of the \131\I-MIBG binding to the 
tumor cells.
    With regard to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant noted that there are 
no specific MS-DRGs for the assignment of cases involving the treatment 
of patients who have been diagnosed with pheochromocytoma and 
paraganglioma. We believe that potential cases representing patients 
who may be eligible for treatment involving the administration of 
AZEDRA[supreg] would be assigned to the same MS-DRGs as cases 
representing patients who receive treatment for a diagnosis of 
iobenguane avid malignant and/or recurrent and/or unresectable 
pheochromocytoma and paraganglioma. We also refer readers to the cost 
criterion discussion below, which includes the applicant's list of the 
MS-DRGs to which potential cases involving treatment with the 
administration of AZEDRA[supreg] most likely would map.
    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, according to the 
applicant, AZEDRA[supreg] is the only FDA-approved drug indicated for 
use in the treatment of patients who have been diagnosed with malignant 
pheochromocytoma and paraganglioma tumors that avidly take up \131\I-
MIBG and are recurrent and/or unresectable. The applicant stated that 
these patients face serious mortality and morbidity risks if left 
untreated, as well as potentially suffer from side effects if treated 
by available off-label therapies.
    The applicant also contended that AZEDRA[supreg] can be 
distinguished from other currently available treatments because it 
potentially provides the following advantages:
     AZEDRA[supreg] will have a very limited impact on normal 
norepinephrine reuptake due to the negligible amount of unlabeled MIBG 
present in the dose. Therefore, AZEDRA[supreg] is expected to pose a 
much lower risk of acute drug-induced hypertension.
     There is minimal unlabeled MIBG to compete for the 
norepinephrine transporter binding sites in the tumor, resulting in 
more effective delivery of radioactivity.
     Current off-label therapeutic use of \131\I is compounded 
by individual pharmacies with varied quality and conformance standards.
     Because of its higher specific activity (the activity of a 
given radioisotope per unit mass), AZEDRA[supreg] infusion times are 
significantly shorter than conventional \131\I administrations.
    Therefore, with these potential advantages, the applicant 
maintained that AZEDRA[supreg] represents an option for the treatment 
of patients who have been diagnosed with malignant and/or recurrent 
and/or unresectable pheochromocytoma and paraganglioma tumors, where 
there is a clear, unmet medical need.
    For the reasons cited earlier, the applicant believed that 
AZEDRA[supreg] is not substantially similar to other currently 
available therapies and/or technologies and meets the ``newness'' 
criterion. We are inviting public comments on whether AZEDRA[supreg] is 
substantially similar to other currently available therapies and/or 
technologies and meets the ``newness'' criterion.
    With regard to the cost criterion, the applicant conducted an 
analysis using FY 2015 MedPAR data to demonstrate that AZEDRA[supreg] 
meets the cost criterion.
    The applicant searched for potential cases representing patients 
who may be eligible for treatment involving AZEDRA[supreg] that had one 
of the following ICD-9-CM diagnosis codes (which the applicant believed 
is indicative of

[[Page 19287]]

diagnosis appropriate for treatment involving AZEDRA[supreg]): 194.0 
(Malignant neoplasm of adrenal gland), 194.6 (Malignant neoplasm of 
aortic body and other paraganglia), 209.29 (Malignant carcinoid tumor 
of other sites), 209.30 (Malignant poorly differentiated neuroendocrine 
carcinoma, any site), 227.0 (Benign neoplasm of adrenal gland), 237.3 
(Neoplasm of uncertain behavior of paraganglia)--in combination with 
one of the following ICD-9-CM procedure codes describing the 
administration of a radiopharmaceutical: 00.15 (High-dose infusion 
interleukin-2); 92.20 (Infusion of liquid brachytherapy radioisotope); 
92.23 (Radioisotopic teleradiotherapy); 92.27 (Implantation or 
insertion of radioactive elements); 92.28 (Injection or instillation of 
radioisotopes). The applicant reported that the potential cases used 
for this analysis mapped to MS-DRGs 054 and 055 (Nervous System 
Neoplasms with and without MCC, respectively), MS-DRG 271 (Other Major 
Cardiovascular Procedures with CC), MS-DRG 436 (Malignancy of 
Hepatobiliary System or Pancreas with CC), MS-DRG 827 
(Myeloproliferative Disorders or Poorly Differentiated Neoplasms with 
Major O.R. Procedure with CC), and MS-DRG 843 (Other Myeloproliferative 
Disorders or Poorly Differentiated Neoplastic Diagnosis with MCC). Due 
to patient privacy concerns, because the number of cases under each MS-
DRG was less than 11 in total, the applicant assumed an equal 
distribution between these 6 MS-DRGs. Based on the FY 2019 IPPS/LTCH 
PPS final rule correction notice data file thresholds, the average 
case-weighted threshold amount was $60,136. Using the identified cases, 
the applicant determined that the average unstandardized charge per 
case ranged from $21,958 to $152,238 for the 6 evaluated MS-DRGs. After 
removing charges estimated to be associated with precursor agents, the 
applicant used a 3-year inflation factor of 1.1436 (a yearly inflation 
factor of 1.04574 applied over 3 years), based on the FY 2018 IPPS/LTCH 
PPS final rule (82 FR 38527), to inflate the charges from FY 2015 to FY 
2018. The applicant provided an estimated average of $151,000 per 
therapeutic dose per patient, based on the wholesale acquisition cost 
of the drug and the average dosage amount for most patients, with a 
total cost per patient estimated to be approximately $980,000. After 
including the cost of the technology, the applicant determined an 
inflated average case-weighted standardized charge per case of 
$1,078,631.
    We are concerned with the limited number of cases the applicant 
analyzed. However, we acknowledge the difficulty in obtaining cost data 
for such a rare condition. We are inviting public comments on whether 
the AZEDRA[supreg] technology meets the cost criterion.
    With regard to substantial clinical improvement, the applicant 
maintained that the use of AZEDRA[supreg] has been shown to reduce the 
incidence of hypertensive episodes and use of antihypertensive 
medications, reduce tumor size, improve blood pressure control, and 
reduce secretion of tumor biomarkers. In addition, the applicant 
asserted that AZEDRA[supreg] provides a treatment option for those 
outlined in its indication patient population. The applicant asserted 
that AZEDRA[supreg] meets the substantial clinical improvement 
criterion based on the results from two clinical studies: (1) MIP-IB12 
(IB12): A Phase I Study of Iobenguane (MIBG) I-131 in Patients With 
Malignant Pheochromocytoma/Paraganglioma; \20\ and (2) MIP-IB12B 
(IB12B): A Study Evaluating Ultratrace[supreg] Iobenguane I-131 in 
Patients With Malignant Relapsed/Refractory Pheochromocytoma/
Paraganglioma. The applicant explained that the IB12B study is similar 
to the IB12 study in that both studies evaluated two open-label, 
single-arm studies. The applicant reported that both studies included 
patients who had been diagnosed with malignant and/or recurrent and/or 
unresectable pheochromocytoma and paraganglioma tumors, and both 
studies assessed objective tumor response, biochemical tumor response, 
overall survival rates, occurrence of hypertensive crisis, and the 
long-term benefit of AZEDRA[supreg] treatment relative to the need for 
antihypertensives. However, according to the applicant, the study 
designs differed in dose regimens (1 dose administered to patients in 
the IB12 study, and 2 doses administered to patients in the IB12B 
study) and primary study endpoints. Differences in the designs of the 
studies prevented direct comparison of study endpoints and pooling of 
the data. In addition, the applicant stated that results from safety 
data from the IB12 study and the IB12B study were pooled and used to 
support substantial clinical improvement assertions. We note that 
neither the IB12 study nor the IB12B study compared the effects of the 
use of AZEDRA[supreg] to any of the other treatment options to decrease 
tumor burden (for example, cytotoxic chemotherapy, radiation therapy, 
and surgical debulking).
---------------------------------------------------------------------------

    \20\ Noto, Richard B., et. al., ``Phase 1 Study of High-
Specific-Activity I-131 MIBG for Metastatic and/or Recurrent 
Pheochromocytoma or Paraganglioma (IB12 Phase 1 Study),'' J Clin 
Endocrinol Metab, vol. 103(1), pp. 213-220.
---------------------------------------------------------------------------

    Regarding the data results from the IB12 study, the applicant 
asserted that, based on the reported safety and tolerability, and 
primary endpoint of radiological response at 12 months, high-specific-
activity I-131 MIBG may be an effective alternative therapeutic option 
for patients who have been diagnosed with iobenguane-avid, metastatic 
and/or recurrent pheochromocytoma and paraganglioma tumors for whom 
there are no other approved therapies and for those patients who have 
failed available treatment options. In addition, the applicant used the 
exploratory finding of decreased or discontinuation of anti-
hypertensive medications relative to baseline medications as evidence 
that AZEDRA[supreg] has clinical benefit and positive impact on the 
long-term effects of hypertension induced norepinephrine producing 
malignant pheochromocytoma and paraganglioma tumors. We understand that 
the applicant used antihypertensive medications as a proxy to assess 
the long-term effects of hypertension such as renal, myocardial, and 
cerebral end organ damage. The applicant reported that it studied 15 of 
the original IB12 study's 21-patient cohort, and found 33 percent (n=5) 
had decreased or discontinuation of antihypertensive medications during 
the 12 months of follow-up. However, the applicant did not provide 
additional data on the incidence of renal insufficiency/failure, 
myocardial ischemic/infarction events, or transient ischemic attacks or 
strokes. Therefore, it is unclear to us if these five patients also had 
decreased urine metanephrines, changed their diet, lost significant 
weight, or if other underlying comorbidities that influence 
hypertension were resolved, making it difficult to understand the 
significance of this exploratory finding.
    Regarding the applicant's assertion that the use of AZEDRA[supreg] 
is safer and more effective than alternative therapies, we note that 
the IB12 study was a dose-escalating study and did not compare current 
therapies with the use of AZEDRA[supreg]. We also note the following: 
(1) The average age of the 21 enrolled patients in the IB12 study was 
50.4 years old (a range of 30 to 72 years old); (2) the gender 
distribution was 61.9 percent (n=13) male and 38.1 percent (n=8) 
female; and (3) 76.2 percent (n=16) were white, 14.3 percent (n=3) were 
black or African American, and 9.5 percent (n=2) were Asian. We

[[Page 19288]]

agree with the study's conductor \21\ that the size of the study is a 
limitation, and with a younger, predominately white, male patient 
population, generalization of study results to a more diverse 
population may be difficult. The applicant reported that one other 
aspect of the patient population indicated that all 21 patients 
received prior anti-cancer therapy for treatment of malignant 
pheochromocytoma and paraganglioma tumors, which included the 
following: 57.1 percent (n=12) received radiation therapy including 
external beam radiation and conventional MIBG; 28.6 percent (n=6) 
received cytotoxic chemotherapy (for example, CVD and other 
chemotherapeutic agents); and 14.3 percent (n=3) received 
Octreotide.\22\ Although this study's patient population illustrates a 
population that has failed some of the currently available therapy 
options, which may potentially support a finding of substantial 
clinical improvement for those with no other treatment options, we are 
unclear which patients benefited from treatment involving 
AZEDRA[supreg], especially in view of the finding of a Fitzgerald, et 
al. study cited earlier \23\ that concluded tissues previously 
irradiated by EBRT were found to be unresponsive to subsequent 
treatment with \131\I-MIBG radionuclide. It was not clear in the 
application how previously EBRT-treated patients who failed EBRT fared 
with the Response Evaluation Criteria in Solid Tumors (RECIST) scores, 
biotumor marker results, and reduction in antihypertensive medications. 
We also lacked information to draw the same correlation between 
previously CVD-treated patients and their RECIST scores, biotumor 
marker results, and reduction in antihypertensive medications.
---------------------------------------------------------------------------

    \21\ Noto, Richard B., et al., ``Phase 1 Study of High-Specific-
Activity I-131 MIBG for Metastatic and/or Recurrent Pheochromocytoma 
or Paraganglioma (IB12 Phase 1 Study),'' J Clin Endocrinol Metab, 
vol. 103(1), pp. 213-220.
    \22\ Ibid.
    \23\ Fitzgerald, P.A., Goldsby, R.E., Huberty, J.P., et al., 
``Malignant pheochromocytomas and paragangliomas: a phase II study 
of therapy with high-dose 131I-metaiodobenzylguanidine (131I-
MIBG).'' Ann N Y Acad Sci, 2006, vol. 1073, pp. 465.
---------------------------------------------------------------------------

    The applicant asserted that the use of AZEDRA[supreg] reduces tumor 
size and reduces the secretion of tumor biomarkers, thereby providing 
important clinical benefits to patients. The IB12 study assessed the 
overall best tumor response based on RECIST.\24\ Tumor biomarker 
response was assessed as complete or partial response for serum 
chromogranin A and total metanephrines in 80 percent and 64 percent of 
patients, respectively. The applicant noted that both the overall best 
tumor response based on RECIST and tumor biomarker response favorable 
results are at doses higher than 500 mCi. We noticed that tumor burden 
improvement, as measured by RECIST criteria, showed that none of the 21 
patients achieved a complete response. In addition, although 4 patients 
showed partial response, these 4 patients also experienced dose-
limiting toxicity with hematological events, and all 4 patients 
received administered doses greater than 18.5 GBq (500 mCi). We also 
note that, regardless of total administered activity (for example, 
greater than or less than 18.5 GBq (500 mCi)), 61.9 percent (n=13) of 
the 21 patients enrolled in the study had stable disease and 14.3 
percent (n=2) of the 14 patients who received greater than administered 
doses of 18.5 GBq (500 mCi) had progressive disease. Finally, we also 
noticed that, for most tumor biomarkers, there were no dose 
relationship trends. While we appreciate the applicant's contention 
that there is no other FDA-approved drug therapy for patients who have 
been diagnosed with \131\I-MIBG avid malignant and/or recurrent and/or 
unresectable pheochromocytoma and paraganglioma tumors, we have 
questions as to whether the overall tumor best response and overall 
best tumor biomarker data results from the IB12 study support a finding 
that the use of the AZEDRA[supreg] technology represents a substantial 
clinical improvement.
---------------------------------------------------------------------------

    \24\ Therasse, P., Arbuck, S.G., Eisenhauer, J.W., Kaplan, R.S., 
Rubinsten, L., Verweij, J., Van Blabbeke, M., Van Oosterom, A.T., 
Christian, M.D., and Gwyther, S.G., ``New guidelines to evaluate the 
response to treatment in solid tumors,'' J Natl Cancer Inst, 2000, 
vol. 92(3), pp. 205-16. Available at: http://www.eortc.be/Services/Doc/RECIST.pdf.
---------------------------------------------------------------------------

    Finally, regarding the applicant's assertion that, based on the 
IB12 study data, AZEDRA[supreg] provides a safe alternative therapy for 
those patients who have failed other currently available treatment 
therapies, we note that none of the patients experienced hypertensive 
crisis, and that 76 percent (n=16) of the 21 patients enrolled in the 
study experienced Grade III or IV adverse events. Although the 
applicant indicated the adverse events were related to the study drug, 
the applicant also noted that there was no statistically significant 
difference between the greater than or less than 18.5 GBq administered 
doses; both groups had adverse events rates greater than 75 percent. 
Specifically, 5 of 7 patients (76 percent) who received less than or 
equal to 18.5 GBq administered doses, and 11 of 14 patients (79 
percent) who received greater than 18.5 GBq administered doses 
experienced Grade III or IV adverse advents. The most common (greater 
than or equal to 10 percent) Grade III and IV adverse events were 
neutropenia, leukopenia, thrombocytopenia, nausea, and vomiting. We 
also note that: (1) There were 5 deaths during the study that occurred 
from approximately 2.5 months up to 22 months after treatment and there 
was no detailed data regarding the 5 deaths, especially related to the 
total activity received during the study; (2) there was no information 
about which patients received prior radiation therapy with EBRT and/or 
conventional MIBG relative to those who experienced Grade III or IV 
adverse events; and (3) the total lifetime radiation dose was not 
provided by the applicant. We are inviting public comments on whether 
the safety data profile from the IB12 study supports a finding that the 
use of AZEDRA[supreg] represents a substantial clinical improvement for 
patients who received treatment with \131\I-MIBG for a diagnosis of 
avid malignant and/or recurrent and/or unresectable pheochromocytoma 
and paraganglioma tumors, given the risks for Grade III or IV adverse 
events.
    The applicant provided study data results from the IB12B study 
(MIP-IB12B), an open-label, prospective 5-year follow-up, single-arm, 
multi-center, Phase II pivotal study to evaluate the safety and 
efficacy of the use of AZEDRA[supreg] for the treatment of patients who 
have been diagnosed with malignant and/or recurrent pheochromocytoma 
and paraganglioma tumors to support the assertion of substantial 
clinical improvement. The applicant reported that the IB12B's primary 
endpoint is the proportion of patients with a reduction (including 
discontinuation) of all anti-hypertensive medication by at least 50 
percent for at least 6 months. Seventy-four patients who received at 
least 1 dosimetric dose of AZEDRA[supreg] were evaluated for safety and 
68 patients who received at least 1 therapeutic dose of AZEDRA[supreg], 
each at 500 mCi (or 8 mCi/kg for patients weighing less than or equal 
to 62.5 kg), were assessed for specific clinical outcomes. The 
applicant asserted that results from this prospective study met the 
primary endpoint (reduction or discontinuation of anti-hypertensive 
medications), as well as demonstrated strong supportive evidence from 
key secondary endpoints (overall tumor response, tumor biomarker 
response, and overall survival rates) that confers important clinical 
relevance to patients

[[Page 19289]]

who have been diagnosed with malignant pheochromocytoma and 
paraganglioma tumors. The applicant also indicated that the use of 
AZEDRA[supreg] was shown to be generally well tolerated at doses 
administered at 8 mCi/kg. We note that the data results from the IB12B 
study did not have a comparator arm, making it difficult to interpret 
the clinical outcome data relative to other currently available 
therapies.
    As discussed for the IB12 study, the applicant reported that 
antihypertension treatment was a proxy for effectiveness of the use of 
AZEDRA[supreg] on norepinephrine induced hypertension producing tumors. 
In the IB12B study, 25 percent (17/68) of patients met the primary 
endpoint of having a greater than 50 percent reduction in anti-
hypertensive agents for at least 6 months. The applicant further 
indicated that an additional 16 patients showed a greater than 50 
percent reduction in anti-hypertensive agents for less than 6 months, 
and by pooling data results from these 33 patients the applicant 
concluded that 49 percent (33/68) of patients achieved a greater than 
50 percent reduction at any time during the study's 12-month follow-up 
period. The study's primary endpoint data also revealed that 11 percent 
of the 88 patients who received a therapeutic dose of AZEDRA[supreg] 
experienced a worsening of preexisting hypertension defined as an 
increase in systolic blood pressure to >=160 mmHg with an increase of 
20 mmHg or an increase in diastolic blood pressure >= 00 mmHg with an 
increase of 10 mmHg. All changes in blood pressure occurred within the 
first 24 hours post infusion. The applicant further compared its data 
results from the IB12B study regarding antihypertension medication and 
the frequency of post-infusion hypertension with published studies on 
MIBG and CVD therapy. The applicant noted a retrospective analysis of 
CVD therapy of 52 patients who had been diagnosed with metastatic 
pheochromocytoma and paraganglioma tumors that found only 15 percent of 
CVD-treated patients achieved a 50-percent reduction in anti-
hypertensive agents. The applicant also compared its data results for 
post-infusion hypertension with literature reporting on MIBG and found 
14 and 19 percent (depending on the study) of patients receiving MIBG 
experience hypertension within 24 hours of infusion. Comparatively, the 
applicant stated that the use of AZEDRA[supreg] had no acute events of 
hypertension following infusion. We are inviting public comments on 
whether these data results regarding hypertension support a finding 
that the use of the AZEDRA[supreg] technology represents a substantial 
clinical improvement, and if anti-hypertensive medication reduction is 
an adequate proxy for improvement in renal, cerebral, and myocardial 
end organ damage.
    Regarding reduction in tumor burden (as defined by RECIST scores), 
the applicant indicated that at the conclusion of the IB12B study's 12-
month follow-up period, 23.4 percent (n=15) of the 68 patients showed a 
partial response, 68.8 percent (n=44) of the 68 patients achieved 
stable disease, and 4.7 percent (n=3) of the 68 patients showed 
progressive disease. None of the patients showed completed response. 
The applicant maintained that achieving stable disease is important for 
patients who have been treated for malignant pheochromocytoma and 
paraganglioma tumors because this is a progressive disease without a 
cure at this time. The applicant also indicated that literature shows 
that stable disease is maintained in approximately 47 percent of 
treatment na[iuml]ve patients who have been diagnosed with metastatic 
pheochromocytoma and paraganglioma tumors at 1 year due to the indolent 
nature of the disease.\25\ In the IB12B study, the data results equated 
to 23 percent of patients achieving partial response and 69 percent of 
patients achieving stable disease. According to the applicant, this 
compares favorably to treatment with both conventional radiolabeled 
MIBG and CVD chemotherapy.
---------------------------------------------------------------------------

    \25\ Hescot, S., Leboulleux, S., Amar, L., Vezzosi, D., Borget, 
I., Bournaud-Salinas, C., de la Fouchardiere, C., Lib[eacute], R., 
Do Cao, C., Niccoli, P., Tabarin, A., ``One-year progression-free 
survival of therapy-naive patients with malignant pheochromocytoma 
and paraganglioma,'' The J Clin Endocrinol Metab, 2013, vol. 98(10), 
pp. 4006-4012.
---------------------------------------------------------------------------

    The applicant stated that the data results demonstrated effective 
tumor response rates. The applicant reported that the IB12 and IB12B 
study data showed overall tumor response rates of 80 percent and 92 
percent, respectively. In addition, the applicant contended that the 
study data across both trials show that patients demonstrated improved 
blood pressure control, reductions in tumor biomarker secretion, and 
strong evidence in overall survival rates. The overall median time to 
death from the first dose was 36.7 months in all treated patients. 
Patients who received 2 therapeutic doses had an overall median 
survival rate of 48.7 months, compared to 17.5 months for patients who 
only received a single dose. We note that the IB12B study reported 12-
month Kaplan-Meier estimate of survival of 91 percent, while the drug 
dosing study IB12 reported overall subject survival of 86 percent at 12 
months, 62 percent at 24 months, 38 percent at 36 months, and 4.8 
percent at 48 months. We also note that only 45 of 68 patients who 
received at least 1 therapeutic dose completed the 12-month efficacy 
phase.
    The applicant indicated that comparison of the IB12B study data 
regarding overall survival rate with historical data is difficult due 
to the differences in the retrospective nature of the published 
clinical studies and heterogeneous patient characteristics, especially 
when overall survival is calculated from the time of initial diagnosis. 
We agree with the applicant regarding the difficulties in comparing the 
results of the published clinical studies, and also believe that the 
differences in these studies may make it more difficult to evaluate 
whether the use of the AZEDRA[supreg] technology improves overall 
survival rates relative to other therapies.
    We acknowledge the challenges with constructing robust clinical 
studies due to the extremely rare occurrence of patients who have been 
diagnosed with pheochromocytoma and paraganglioma tumors. However, we 
are concerned that because the data for both of these studies is mainly 
based upon retrospective studies and small, heterogeneous patient 
cohorts, it is difficult to draw precise conclusions regarding 
efficacy. Only very limited nonpublished data from two, single-arm, 
noncomparative studies are available to evaluate the safety and 
effectiveness of AZEDRA[supreg], leading to a comparison of outcomes 
with historical controls.
    We are inviting public comments on whether the use of the 
AZEDRA[supreg] technology meets the substantial clinical improvement 
criterion, including with respect to the specific concerns we have 
raised. We did not receive any written comments in response to the New 
Technology Town Hall meeting notice published in the Federal Register 
regarding the substantial clinical improvement criterion for 
AZEDRA[supreg] or at the New Technology Town Hall meeting.
b. CABLIVI[supreg] (caplacizumab-yhdp)
    The Sanofi Company submitted an application for new technology add-
on payments for CABLIVI[supreg] (caplacizumab-yhdp) for FY 2020. The 
applicant described CABLIVI[supreg] as a humanized bivalent nanobody 
consisting of two identical building blocks joined by a tri alanine 
linker, which is administered through intravenous and subcutaneous

[[Page 19290]]

injection to inhibit microclot formation in adult patients who have 
been diagnosed with acquired thrombotic thrombocytopenic purpura 
(aTTP). The applicant stated that aTTP is a life-threatening, immune-
mediated thrombotic microangiopathy characterized by severe 
thrombocytopenia, hemolytic anemia, and organ ischemia with an 
estimated 3 to 11 cases per million per year in the U.K. and 
U.S.26 27 28 Further, the applicant stated that aTTP is an 
ultra-orphan disease caused by inhibitory autoantibodies to von 
Willebrand Factor-cleaving protease (vWFCP) also known as ``a 
disintegrin and metalloprotease with thrombospondin type 1 motif, 
member 13 (ADAMTS13),'' resulting in a severe deficiency in WFCP. The 
applicant further explained that von Willebrand Factor (vWF) is a key 
protein in hemostasis and is an adhesive, multimeric plasma 
glycoprotein with a pivotal role in the recruitment of platelets to 
sites of vascular injury. According to the applicant, more than 90 
percent of circulating vWF is expressed by endothelial cells and 
secreted into the systemic circulation as ultra-large von Willebrand 
Factor (ULvWF) multimers. The applicant stated that decreased ADAMTS13 
activity leads to an accumulation of ULvWF multimers, which bind to 
platelets and induce platelet aggregation. According to the applicant, 
the consumption of platelets in these microthrombi causes severe 
thrombocytopenia, tissue ischemia and organ dysfunction (commonly 
involving the brain, heart, and kidneys) and may result in acute 
thromboembolic events such as stroke, myocardial infarction, venous 
thrombosis, and early death. The applicant indicated that the 
aforementioned tissue and organ damage resulting from the ischemia 
leads to increased levels of lactate dehydrogenase (LDH), troponins, 
and creatinine (organ damage markers) and that faster normalization of 
these organ damage markers and platelet counts is believed to be linked 
with faster resolution of the ongoing microthrombotic process and the 
associated tissue ischemia. According to the applicant, in diagnoses of 
aTTP there is no consensual, validated surrogate marker that defines 
the subpopulation at greatest risk of death or significant morbidity. 
Therefore, the applicant stated that all patients who have been 
diagnosed with aTTP should be considered severe cases and treated in 
order to prevent death and significant morbidity.
---------------------------------------------------------------------------

    \26\ Scully, M., et al., ``Regional UK TTP registry: correlation 
with laboratory ADAMTS 13 analysis and clinical Features,'' Br. J. 
Haematol., 2008, vol. 142(5), pp. 819-26.
    \27\ Reese, J.A., et al., ``Children and adults with thrombotic 
thrombocytopenic purpura associated with severe, acquired Adamts13 
deficiency: comparison of incidence, demographic and clinical 
features,'' Pediatr. Blood Cancer, 2013, vol. 60(10), pp. 1676-82.
    \28\ Terrell, D.R., et al., ``The incidence of thrombotic 
thrombocytopenic purpura-hemolytic uremic syndrome: all patients, 
idiopathic patients, and patients with severe ADAMTS-13 
deficiency,'' J. Thromb. Haemost., 2005, vol. 3(7), pp. 1432-6.
---------------------------------------------------------------------------

    The applicant explained that the two standard-of-care (SOC) 
treatment options for a diagnosis of aTTP are plasma exchange (PE), in 
which a patient's blood plasma is removed through apheresis and is 
replaced with donor plasma, and immunosuppression (for example, 
corticosteroids and increasingly also rituximab), which is often 
administered as adjunct to plasma exchange in the treatment for a 
diagnosis of aTTP.29 30 According to the applicant, despite 
the current SOC treatment options, acute aTTP episodes are still 
associated with a mortality rate of up to 20 percent, which generally 
occurs within the first weeks of diagnosis. The applicant asserted 
that, although the 20-percent mortality rate reflects substantial 
improvement because of PE treatment, in spite of greater understanding 
of disease pathogenesis and the use of newer immunosuppressants, the 
mortality rate has not been further 
improved.31 32 33 34 35 36 The applicant also noted that 
another important limitation of the currently available therapies (PE 
and immunosuppression) is the delayed onset of effect of days to weeks 
of these therapies because such therapies do not directly address the 
pathophysiological platelet aggregation that leads to the formation of 
microthrombi, which is ultimately associated with death or with the 
severe outcomes reported with diagnoses of aTTP. The applicant 
explained that despite current treatment, exacerbation and relapse 
occur and frequently lead to hospitalization and the need to restart 
daily PE treatment and optimize immunosuppression. In addition, the 
applicant noted that patients may experience exacerbations after 
discontinuing plasma exchange treatment due to continuing formation of 
microthrombi as a result of unresolved underlying autoimmune disease, 
and patients remain at risk of thrombotic complications or early death 
until the episode is completely resolved.\37\
---------------------------------------------------------------------------

    \29\ Scully, M., et al., ``Guidelines on the diagnosis and 
management of thrombotic thrombocytopenic purpura and other 
thrombotic microangiopathies,'' Br. J. Haematol., 2012, vol. 158(3), 
pp. 323-35.
    \30\ George, J.N., ``Corticosteroids and rituximab as adjunctive 
treatments for thrombotic thrombocytopenic Purpura,'' Am. J. 
Hematol., 2012, vol. 87 Suppl 1, pp. S88-91.
    \31\ Form for Notification of a Compassionate Use Programme to 
the Paul-Ehrlich-Institut.
    \32\ Benhamou, Y., et al., ``Cardiac troponin-I on diagnosis 
predicts early death and refractoriness in acquired thrombotic 
thrombocytopenic purpura. Experience of the French Thrombotic 
Microangiopathies Reference Center,'' J. Thromb. Haemost., 2015, 
vol. 13(2), pp. 293-302.
    \33\ Han, B., et al., ``Depression and cognitive impairment 
following recovery from thrombotic thrombocytopenic purpura,'' Am. 
J. of Hematol., 2015, vol. 90(8), pp. 709-14.
    \34\ Rajan, S.K., ``BMJ Best Practice; Thrombotic 
thrombocyopenic purpura,'' May 27, 2016.
    \35\ Goel, R., et al., ``Prognostic risk-stratified score for 
predicting mortality in hospitalized patients with thrombotic 
thrombocytopenic purpura: nationally representative data from 2007 
to 2012,'' Transfusion, 2016, vol. 56(6), pp. 1451-8.
    \36\ Rock, G.A., Shumak, K.H., Buskard, N.A., et al., 
``Comparison of plasma exchange with plasma infusion in the 
treatment of thrombotic thrombocytopenic purpura. Canadian Apheresis 
Study Group,'' N Engl J Med, 1991, vol. 325, pp. 393-397.
    \37\ Goel, R., et al., ``Prognostic risk-stratified score for 
predicting mortality in hospitalized patients with thrombotic 
thrombocytopenic purpura: nationally representative data from 2007 
to 2012,'' Transfusion, 2016, vol. 56(6), pp. 1451-8.
---------------------------------------------------------------------------

    According to the information provided by the applicant, 
CABLIVI[supreg] is administered as an adjunct to PE treatment and 
immunosuppressive therapy immediately upon diagnosis of aTTP through a 
bolus intraveneous injection for the first dose and subcutaneous 
injection for all subsequent doses. The recommended treatment regimen 
and dosage of CABLIVI[supreg] consists of administering 10 mg on the 
first day of treatment via intravenous injection prior to the standard 
plasma exchange treatment. After completion of PE treatment on the 
first day, a 10 mg subcutaneous injection is administered. After the 
first day, and for the rest of the plasma exchange treatment period, a 
daily 10 mg subcutaneous injection is administered following each day's 
PE treatment. After the PE treatment period is completed, a daily 10 mg 
subcutaneous injection is administered for 30 days. If the underlying 
immunological disease (aTTP) is not resolved, the treatment period 
should be extended beyond 30 days and be accompanied by optimization of 
immunosuppression (another SOC treatment option, in addition to PE 
treatment). According to the applicant and as discussed later, the use 
of CABLIVI[supreg] produces faster normalization of platelet count 
response compared to that of SOC treatment options alone. The applicant 
indicated that this contributes to a decrease in the

[[Page 19291]]

length of the SOC treatment period with respect to the number of days 
of PE treatment, the mean length of intensive care unit stays, and the 
mean length of hospitalizations.
    With respect to the newness criterion, CABLIVI[supreg] received FDA 
approval on February 6, 2019, for the treatment of adult patients who 
have been diagnosed with aTTP, in combination with plasma exchange and 
immunosuppressive therapy. According to information provided by the 
applicant, CABLIVI[supreg] was previously granted Fast Track and Orphan 
Drug designations in the United States for the treatment of aTTP by the 
FDA and Orphan Drug designation in Europe for the treatment of aTTP. 
Currently, there are no ICD-10-PCS procedure codes to uniquely identify 
procedures involving CABLIVI[supreg]. We note that the applicant 
submitted a request for approval for a unique ICD-10-PCS procedure code 
for the administration of CABLIVI[supreg] beginning in FY 2020.
    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, CABLIVI[supreg] is a first-in-class therapy 
with an innovative mechanism of action. The applicant explained that 
CABLIVI[supreg] binds to the A1 domain of vWF and specifically inhibits 
the interaction between vWF and platelets. Furthermore, the applicant 
indicated that in patients who have been diagnosed with aTTP, 
proteolysis of ULvWF multimers by ADAMTS13 is impaired due to the 
presence of inhibiting or clearing anti-ADAMTS13 auto-antibodies, 
resulting in the persistence of the constitutively active A1 domain 
and, as a consequence, platelets spontaneously bind to ULvWF and 
generate microvascular blood clots in high shear blood vessels. The 
applicant noted that CABLIVI[supreg] is able to interact with vWF in 
both its active (that is, ULvWF multimers or normal multimers activated 
through immobilization or shear stress) and inactive forms (that is, 
multimers prior to conformational change of the A1 domain), thereby 
immediately blocking the interaction of vWF with the platelet receptor 
(GPIb-IX-V) and further preventing spontaneous interaction of ULvWF 
with platelets that would lead to platelet microthrombi formation in 
the microvasculature, local schemia and platelet consumption. The 
applicant highlighted that this immediate platelet-protective effect 
differentiates CABLIVI[supreg] from slower-acting therapies, such as PE 
and immunosuppressants, which need days to exert their effect. The 
applicant explained that PE acts by removing ULvWF and the circulating 
auto-antibodies against ADAMTS13, thereby replenishing blood levels of 
ADAMTS13, while immunosuppressants aim to stop or reduce the formation 
of auto-antibodies against ADAMTS13.
    With respect to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant believed that 
potential cases representing patients who may be eligible for treatment 
involving CABLIVI[supreg] would be assigned to the same MS- DRGs as 
cases representing patients who receive SOC treatment for a diagnosis 
of aTTP. As explained below in the discussion of the cost criterion, 
the applicant believed that potential cases representing patients who 
may be eligible for treatment involving CABLIVI[supreg] would be 
assigned to MS-DRGs that contain cases representing patients who were 
diagnosed with aTTP and received therapeutic PE procedures during 
hospitalization.
    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, there are no other specific therapies approved for the 
treatment of patients diagnosed with aTTP. As stated earlier, according 
to the applicant, patients who have been diagnosed with aTTP have two 
currently available SOC treatment options: PE, in which a patient's 
blood plasma is removed through apheresis and is replaced with donor 
plasma, and immunosuppression (for example, corticosteroids and 
increasingly rituximab), which is administered as an adjunct to PE in 
the treatment of aTTP. The applicant further explained that 
immunosuppression consisting of glucocorticoids is often administered 
as adjunct to PE in the initial treatment of a diagnosis of 
aTTP,38 39 but their use is based on historical evidence 
that some patients with limited symptoms might respond to 
corticosteroids alone.40 41 The applicant noted that there 
have been no studies specifically comparing treatment involving the 
combination of PE with corticosteroids, versus PE alone; that they are 
not specifically approved for the treatment of a diagnosis of aTTP, and 
that other immunosuppressive agents used to treat a diagnosis of aTTP, 
such as rituximab, have not been studied in properly controlled, 
double-blind studies. The applicant also noted that rituximab, aside 
from not being licensed for the treatment of a diagnosis of aTTP, is 
not fully effective during the first 2 weeks of treatment, with a 
reported delay of onset of its effect that may extend up to 27 days, 
with at least 3 to 7 days needed to achieve adequate B-cell depletion 
(given the B-cells may also contain ADAMTS13 antibodies), and even 
longer to restore ADAMTS13 activity levels.42 43
---------------------------------------------------------------------------

    \38\ Scully, M., et al., ``Guidelines on the diagnosis and 
management of thrombotic thrombocytopenic purpura and other 
thrombotic microangiopathies,'' Br. J. Haematol., 2012, vol. 158(3), 
pp. 323-35.
    \39\ George, J.N., ``Corticosteroids and rituximab as adjunctive 
treatments for thrombotic thrombocytopenic Purpura,'' Am. J. 
Hematol., 2012, vol. 87 Suppl 1, pp. S88-91.
    \40\ Bell, W.R., et al., ``Improved survival in thrombotic 
thrombocytopenic purpura-hemolytic uremic Syndrome. Clinical 
experience in 108 patients,'' N. Engl. J. Med., 1991, vol. 325(6), 
pp. 398-403.
    \41\ Phillips, E.H., et al., ``The role of ADAMTS-13 activity 
and complement mutational analysis in differentiating acute 
thrombotic microangiopathies,'' J. Thromb. Haemost., 2016, vol. 
14(1), pp. 175-85.
    \42\ Coppo, P., ``Management of thrombotic thrombocytopenic 
purpura,'' Transfus Clin Biol., Sep 2017, vol. 24(3), pp. 148-153.
    \43\ Froissart, A., et al., ``Rituximab in autoimmune thrombotic 
thrombocytopenic purpura: A success story,'' Eur. J. Intern. Med., 
2015, vol. 26(9), pp. 659-65.
---------------------------------------------------------------------------

    Based on the applicant's statements as summarized above, the 
applicant believes that CABLIVI[supreg] provides a new treatment option 
for patients who have been diagnosed with aTTP. However, it is not 
clear that CABLIVI[supreg] would involve the treatment of a different 
type of disease or a different patient population. As stated earlier, 
according to the applicant, patients who have been diagnosed with aTTP 
have two SOC treatment options for a diagnosis of aTTP: PE, in which a 
patient's blood plasma is removed through apheresis and is replaced 
with donor plasma, and immunosuppression (for example, corticosteroids 
and increasingly also rituximab), which is administered as an adjunct 
to PE in the initial treatment for a diagnosis of aTTP. Therefore, it 
appears that CABLIVI[supreg] is used to treat the same or similar type 
of disease (a diagnosis of aTTP) and a similar patient population as 
currently available treatment options.
    We are inviting public comments on whether CABLIVI[supreg] is 
substantially similar to other technologies and whether CABLIVI[supreg] 
meets the newness criterion.

[[Page 19292]]

    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion. In order to identify the range of MS-DRGs that cases 
representing potential patients who may be eligible for treatment using 
CABLIVI[supreg] may map to, the applicant identified all MS-DRGs for 
patients who had been hospitalized for a diagnosis of aTTP. 
Specifically, the applicant searched the FY 2017 MedPAR file for 
Medicare fee-for-service inpatient hospital claims submitted between 
October 1, 2016 and September 30, 2017, and identified potential cases 
by ICD-10-CM diagnosis code M31.1 (Thrombotic microangiopathy) and ICD-
10-PCS procedure codes 6A550Z3 (Pheresis of plasma, single) and 6A551Z3 
(Pheresis of plasma, multiple). The applicant noted that it excluded 
cases with an ICD-10-CM diagnosis code of D59.3 (Hemolytic-uremic 
syndrome).
    This resulted in 360 cases spanning 61 MS-DRGs, with approximately 
67.2 percent of all potential cases mapping to the following 5 MS-DRGs:

------------------------------------------------------------------------
               MS-DRG                            MS-DRG title
------------------------------------------------------------------------
MS-DRG 545..........................  Connective Tissue Disorders with
                                       MCC.
MS-DRG 546..........................  Connective Tissue Disorders
                                       without CC.
MS-DRG 547..........................  Connective Tissue Disorders
                                       without CC/MCC.
MS-DRG 682..........................  Renal Failure with MCC.
MS-DRG 698..........................  Other Kidney and Urinary Tract
                                       Diagnoses with MCC.
------------------------------------------------------------------------

    Using the 242 identified cases that mapped to the top 5 MS-DRGs 
above, the average case-weighted unstandardized charge per case was 
$188,765. The applicant then standardized the charges and then removed 
historic charges for items that are expected to be avoided for patients 
who receive treatment involving CABLIVI[supreg]. The applicant 
determined that 31 percent of historical routine bed charges, 65 
percent of historical ICU charges, and 38 percent of historical blood 
administration charges (which includes charges for therapeutic PE) 
would be reduced because of the use of CABLIVI[supreg], based on the 
findings from the Phase III clinical study HERCULES. The applicant 
indicated it used the FY 2017 MedPAR file to determine the appropriate 
amount of charges to remove. The applicant then inflated the adjusted 
standardized charges by 8.864 percent utilizing the 2-year inflation 
factor published by CMS in the FY 2019 IPPS/LTCH PPS final rule to 
adjust the outlier threshold (83 FR 41722). (We note that this figure 
was revised in the FY 2019 IPPS/LTCH PPS final rule correction notice. 
The corrected final 2-year inflation factor is 1.08986 (83 FR 49844). 
We further note that even when using the corrected final rule values to 
inflate the charges, the average case-weighted standardized charge per 
case exceeded the average case-weighted threshold amount.) The 
applicant explained that the anticipated price for CABLIVI[supreg]'s 
indication for the treatment of patients who have been diagnosed with 
aTTP, in combination with plasma exchange and immunosuppressive 
therapy, has yet to be determined and, therefore, no charges for 
CABLIVI[supreg] were added in the analysis. Based on the FY 2019 IPPS/
LTCH PPS final rule correction notice data file thresholds for FY 2020, 
the applicant determined the average case-weighted threshold amount was 
$49,904. The final inflated average case-weighted standardized charge 
per case was $145,543. Because the final inflated average case-weighted 
standardized charge per case exceeds the average case-weighted 
threshold amount, the applicant maintained that the technology meets 
the cost criterion. We are inviting public comments on whether 
CABLIVI[supreg] meets the cost criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that it believes that CABLIVI[supreg] represents a 
substantial clinical improvement compared to the use of currently 
available treatments (PE and immunosuppressants) because it: (1) 
Significantly reduces time to platelet count response, which is 
consistent with the halting of platelet consumption in microthrombi; 
(2) significantly reduces the number of patients with aTTP-related 
death, recurrence of aTTP-related episodes, or a major thromboembolic 
event; (3) reduces mortality; (4) reduces the proportion of patients 
with recurrence of aTTP diagnoses; (5) reduces the proportion of 
patients who develop refractory disease; (6) reduces the number of days 
of PE; (7) reduces the mean length of intensive care unit stay and the 
mean length of hospitalization; and (8) shows a trend of more rapid 
normalization of organ damage markers. The applicant provided further 
detail regarding these assertions, referencing the results of Phase II 
and Phase III studies and an integrated efficacy analysis of both 
studies.
    The applicant reported that the Phase II study was a randomized, 
single-blind, placebo controlled study entitled ALX-0681-2.1/10 (TITAN) 
that examined the efficacy and safety of the use of CABLIVI[supreg] 
compared to a placebo, with the primary endpoint being achievement of a 
statistically significant reduction in time to platelet count response. 
Seventy-five patients, 66 of which were white, (19 to 72 years old, 
with a mean of 41.6 years old; 44 women and 31 men) with an episode of 
aTTP were randomized 1:1 to receive either CABLIVI[supreg] (n=36) or 
placebo (n=39), in addition to daily PE.\44\ Patients received their 
first dose of CABLIVI[supreg] administered through intravenous 
injection prior to the first PE, followed by daily doses administered 
subcutaneously after each PE. After discontinuing PE, daily doses of 
CABLIVI[supreg] administered through subcutaneous injection were 
continued for 30 days. The median treatment duration with 
CABLIVI[supreg] was 36 days.
---------------------------------------------------------------------------

    \44\ Peyvandi, F., Scully, M., Kremer Hovinga, J.A., Cataland, 
S., Kn[ouml]bl, P., Wu, H., Artoni, A., Westwood, J.P., Mansouri 
Taleghani, M., Jilma, B., Callewaert, F., Ulrichts, H., Duby, C., 
Tersago, D., TITAN Investigators, ``Caplacizumab for Acquired 
Thrombotic Thrombocytopenic Purpura,'' N Engl J Med., February 11, 
2016, vol. 374(6), pp. 511-22. PMID: 26863353.
---------------------------------------------------------------------------

    According to the applicant, significantly more patients in the 
treatment arm met the primary endpoint [95 percent Confidence Interval 
(CI) (3.78, 1.28)]. The applicant indicated that the time to platelet 
count response improvement constitutes a significant substantial 
clinical improvement because it demonstrated that patients treated with 
CABLIVI[supreg] were 2.2 times more likely to achieve an acceptable 
time to platelet count response than patients receiving treatment with 
the placebo. Additionally, the applicant noted that exacerbation of 
aTTP occurred in fewer patients who were treated with CABLIVI[supreg] 
(8.3 percent) than placebo (28.2 percent). During the 1-month follow-up 
period, 8 relapses (defined as a recurrence more than 30 days after 
discontinuing PE) occurred in the CABLIVI[supreg] group with 7 of the 
relapses occurring within 10 days of

[[Page 19293]]

discontinuing the study drug. In all seven of the relapses, ADAMTS13 
activity was still severely suppressed at the end of the treatment 
period, evidence of ongoing underlying immunological disease and 
indicating an imminent risk of another relapse. The applicant explained 
that according to post-hoc analyses, the group of patients who were 
treated with CABLIVI[supreg] compared to placebo showed a decrease in 
the percentage of patients with refractory disease (0 percent versus 
10.8 percent), a reduction in the number of days of PE (7.7 days versus 
11.7 days) and a trend to more rapid normalization of organ damage 
markers (lactate dehydrogenase, cardiac troponin I and serum 
creatinine). Finally, the applicant noted that there were no deaths in 
the group of patients who were treated with CABLIVI[supreg]. However, 2 
of the 39 placebo-treated patients (5.1 percent) died.
    The applicant explained that the Phase III study was a randomized, 
double-blind, placebo controlled study entitled ALX0681-C301 (HERCULES) 
that examined the efficacy and safety of the use of CABLIVI[supreg] 
compared to a placebo, with the primary endpoint being achievement of a 
statistically significant reduction in time to platelet count response. 
One hundred forty-five patients (18 to 79 years old, with a mean of 46 
years old, 100 women and 45 men), with an episode of aTTP were 
randomized 1:1 to receive either CABLIVI[supreg] (n=72) or placebo 
(n=73) in addition to daily PE and immunosuppression.\45\ The applicant 
explained that patients received a single 10 mg CABLIVI[supreg] 
intravenous injection or placebo prior to the first PE, followed by a 
daily CABLIVI[supreg] 10 mg subcutaneous injection or placebo after 
completion of PE, for the duration of the daily PE treatment period and 
for 30 days thereafter. According to the applicant, if at the end of 
this treatment period (daily PE treatment period and 30 days after) 
there was evidence of persistent underlying immunological disease 
activity (indicative of an imminent risk for recurrence), treatment 
could be extended weekly for a maximum of 4 weeks, together with 
optimization of immunosuppression. The applicant indicated that 
patients who experienced a recurrence while undergoing study drug 
treatment were switched to open-label CABLIVI[supreg] and they were 
again treated for the duration of daily PE treatment and for 30 days 
thereafter. If at the end of this treatment period (daily PE treatment 
period and 30 days after) there was evidence of ongoing underlying 
immunological disease, open-label treatment with CABLIVI[supreg] could 
be extended weekly for a maximum of 4 weeks, together with optimization 
of immunosuppression. Patients were followed for 28 days after 
discontinuation of treatment. Upon recurrence during the follow-up 
period (that is, after all study drug treatment had been discontinued), 
there was no re-initiation of the study drug because recurrence at this 
point was treated according to the SOC. The median treatment duration 
with CABLIVI[supreg] in the double-blind period was 35 days.
---------------------------------------------------------------------------

    \45\ Scully, M., et al., ``Treatment of Acquired Thrombotic 
Thrombocytopenic Purpura with Caplacizumab,'' N. Engl. J. Med., (In 
Press).
---------------------------------------------------------------------------

    According to the applicant, patients in the treatment arm were more 
likely to achieve platelet count response at any given time point, 
compared to the placebo [95 percent CI (1.1, 2.2)]. The applicant 
believed that this constitutes a significant substantial clinical 
improvement because patients who were treated with CABLIVI[supreg] were 
1.55 times more likely to achieve platelet count response at any given 
time point, compared to placebo. The applicant also indicated that, 
compared to placebo, treatment with CABLIVI[supreg] resulted in a 74 
percent reduction in the number of patients with aTTP-related death, 
recurrence of aTTP diagnosis, or a major thromboembolic event, during 
the study drug treatment period (p<0.0001).
    The applicant noted that the proportion of patients with a 
recurrence of an aTTP diagnosis in the Phase III study period (that is, 
the drug treatment period plus the 28-day follow-up after 
discontinuation of the drug treatment) was 67 percent lower in the 
CABLIVI[supreg] group (12.7 percent) compared to the placebo group 
(38.4 percent) (p<0.001). The applicant also indicated that in all 6 
patients in the CABLIVI[supreg] group who experienced a recurrence of 
an aTTP diagnosis during the follow-up period (that is, a relapse), 
ADAMTS13 activity levels were less than 10 percent at the end of the 
study drug treatment, indicating that the underlying immunological 
disease was still active at the time CABLIVI[supreg] was discontinued. 
Furthermore, the applicant stated that there were no patients who were 
treated with CABLIVI[supreg] that had refractory disease (defined as 
absence of platelet count doubling after 4 days of standard treatment 
and elevated LDH), compared to 3 patients (4.2 percent) who had 
refractory disease that were treated with placebo. The applicant also 
explained that a trend to faster normalization of the organ damage 
markers lactate dehydrogenase, cardiac troponin I and serum creatinine 
was observed in patients who were treated with CABLIVI[supreg]. The 
applicant noted that during the study drug treatment, there were no 
deaths in patients who were treated with CABLIVI[supreg], while 3 of 
the 73 placebo-treated patients (4.1 percent) died. Finally, the 
applicant stated that during the Phase III study drug treatment period, 
treatment with CABLIVI[supreg] resulted in a 38 percent reduction in 
the mean number of PE treatment days versus placebo (reduction of 3.6 
days) and a 41 percent reduction in the mean volume of PE (reduction of 
14.6L). Furthermore, treatment with CABLIVI[supreg] resulted in a 65 
percent reduction in the mean length of ICU stay (reduction of 6.3 
days) and a 31 percent reduction in the mean length of hospitalization 
(reduction of 4.5 days) during the Phase III study drug treatment 
period.
    The applicant submitted integrated data from the blinded periods of 
the Phase II and Phase III studies that show a statistically 
significant difference in favor of CABLIVI[supreg] (n=108) in time to 
platelet count response compared to placebo (n=112). The applicant 
indicated that patients who were treated with CABLIVI[supreg] were 1.65 
times more likely to achieve platelet count response at any given time 
point during the blinded period than patients who were treated with 
placebo (95 percent CI: 1.23, 2.20; p<0.001). Additionally, according 
to the applicant, integrated data from the blinded periods of the Phase 
II and Phase III studies showed that compared to placebo, treatment 
with CABLIVI[supreg] resulted in a 72.6 percent reduction in the 
percentage of patients with aTTP-related death, a recurrence of a aTTP 
diagnosis, or at least one treatment-emergent major thromboembolic 
event during the blinded treatment period (p<0.0001). More 
specifically, the applicant indicated that during the blinded treatment 
period no aTTP-related deaths occurred in the CABLIVI[supreg] group 
compared to 4 aTTP-related deaths in the placebo group (p<0.05), 
treatment with CABLIVI[supreg] resulted in an 84.0 percent reduction in 
the proportion of patients with a recurrence of a aTTP diagnosis 
(exacerbation, relapse) during the blinded treatment period (p<0.0001), 
and treatment with CABLIVI[supreg] resulted in a reduction of 40.8 
percent in the proportion of patients with at least one treatment-
emergent major thromboembolic event during the blinded treatment 
period.
    According to the applicant, pooled data from the two studies showed 
that none of the patients who were treated with CABLIVI[supreg] 
developed refractory disease (that is, absence of platelet count 
doubling after 4 days of standard

[[Page 19294]]

treatment and elevated LDH) compared to 7 patients (6.3 percent; 7/112) 
who were treated with placebo during the blinded period (p<0.01). 
Finally, the applicant noted that across both studies, treatment with 
CABLIVI[supreg] resulted in a 37.5 percent reduction in the mean number 
of days of PE treatment (reduction of 3.9 days).
    Although the applicant asserts that CABLIVI[supreg] represents a 
substantial clinical improvement compared to the use of currently 
available treatments (PE and immunosuppressants), we are concerned that 
the Phase II TITAN and Phase III HERCULES studies may not provide 
enough evidence to support that the use of CABLIVI[supreg] represents a 
substantial clinical improvement.
    Regarding the Phase II TITAN study, we are concerned that because 
66 of the 75 patients in the study population were white, the results 
of the study may not be generalizable to a more diverse population that 
may be at risk for diagnosis of aTTP. Additionally, we note that 
CABLIVI[supreg] was associated with fewer aTTP exacerbations during 
therapy, but was associated with more aTTP exacerbations after therapy 
was discontinued, suggesting a lack of effect on long-term anti-
ADAMTS13 antibody levels. Although this is consistent with 
CABLIVI[supreg]'s mechanism of action, we are concerned that without 
long-term data to determine the impact of adjunct use of 
CABLIVI[supreg] on exacerbations and relapse it may be difficult to 
determine if the use of CABLIVI[supreg] represents a substantial 
clinical improvement over existing therapy.
    Based on data from the Oklahoma TTP-HUS Registry, the incidence of 
aTTP is approximately three cases per 1 million adults per year.\46\ 
Additionally, the median age for a diagnosis of aTTP is 41, with a wide 
range between 9 years old and 78 years old. We acknowledge the 
challenges with constructing robust clinical studies due to the 
extremely rare occurrence of patients who have been diagnosed with 
aTTP. However, regarding the Phase III HERCULES study, we are 
nonetheless concerned that the study population was small, 145 people. 
Additionally, it is unclear if the response rate may differ in those 
who have a de novo diagnosis versus those with recurrent disease. We 
note that PE treatment alone has been attributed to an 80 percent 
survival rate,\47\ and because CABLIVI[supreg] is given in combination 
with or after SOC therapies, we are concerned that we may not have 
sufficient information to determine the extent to which the study 
results are attributable to the use of CABLIVI[supreg]. Furthermore, 
with the follow-up period for the Phase III HERCULES study being only 
28 days, we are concerned that there is a lack of long-term data. In 
the absence of long-term data, we are concerned about the impact of the 
use of CABLIVI[supreg] on the relapse rate beyond the overall study 
period, including the 28-day follow-up period.
---------------------------------------------------------------------------

    \46\ Reese, J.A., Muthurajah, D.S., Kremer-Hovinga, J.A., 
Vesely, S.K., Terrell, D.R., George, J.N., ``Children and adults 
with thrombotic thrombocytopenic purpura associated with severe, 
acquired Adamts13 deficiency: comparison of incidence, demographic 
and clinical features,'' Pediatr Blood Cancer, October 2013, vol. 
60(10), pp. 1676-82, Epub June 1, 2013.
    \47\ Rock, G.A., Shumak, K.H., Buskard, N.A., et al., 
``Comparison of plasma exchange with plasma infusion in the 
treatment of thrombotic thrombocytopenic purpura. Canadian Apheresis 
Study Group,'' N Engl J Med, 1991, vol. 325, pp. 393-397.
---------------------------------------------------------------------------

    Finally, although both the Phase II and III studies consisted of 
key secondary endpoints such as death or major thromboembolic events, 
we are concerned that these endpoints were not clearly defined. We also 
are concerned that the studies did not appear to account for other 
clearly defined endpoints such as heart attack, stroke, a bleeding 
episode, and power calculations for the expected differences in such 
endpoints that would be biologically important.
    We are inviting public comments on whether CABLIVI[supreg] meets 
the substantial clinical improvement criterion.
    Below we summarize and respond to a written comment we received in 
response to the New Technology Town Hall meeting notice published in 
the Federal Register regarding the substantial clinical improvement 
criterion for CABLIVI[supreg].
    Comment: The applicant stated that during the New Technology Town 
Hall meeting questions were asked regarding the design of the Phase III 
HERCULES study, specifically regarding treatments that were 
administered during the different arms of the study. To address those 
questions, the applicant summarized the methodology of the Phase III 
HERCULES study by indicating that 145 patients with an acute episode of 
aTTP who had received one PE treatment were randomized 1:1 to placebo 
(73 patients), or 10 mg of CABLIVI[supreg] (72 patients), in addition 
to receiving daily PE treatment and corticosteroids. The applicant 
explained that a single intravenous dose of 10 mg of the study drug was 
given before the first PE performed during the study and a single 10 mg 
subcutaneous dose was given the same day following completion of that 
day's PE treatment. The applicant further stated that a subcutaneous 
dose was given daily during the PE treatment period and 30 days 
thereafter. The applicant noted that, if at the end of this period 
there was evidence of ongoing disease, such as suppressed ADAMTS13 
activity, investigators were encouraged to extend the blinded treatment 
for a maximum of 4 weeks in combination with optimization of 
immunosuppression. In addition, the applicant indicated that all 
patients entered a 28-day treatment-free follow-up period after the 
last dose of the study drug. The applicant explained that the primary 
endpoint was time to platelet count response, defined as platelet count 
greater than or equal to 150 x 10/L with discontinuation of daily PE 
treatment within 5 days. Further, the applicant stated that there were 
four key secondary endpoints, hierarchically ranked: (1) The proportion 
of patients with aTTP-related death, aTTP recurrence, or at least one 
major thromboembolic event during the study drug treatment period (a 
blinded, independent committee adjudicated aTTP-related deaths and 
major thromboembolic events); (2) the proportion of patients with a 
recurrence during the entire study period, including the follow-up 
period; (3) the proportion of patients with refractoriness to therapy, 
defined as absence of platelet count doubling after 4 days of treatment 
and LDH still above normal; and (4) the time to normalization of 3 
organ damage markers: LDH, cardiac troponin I and serum creatinine.
    Response: We appreciate the information provided by the applicant. 
We will take this information into consideration when deciding whether 
to approve new technology add-on payments for CABLIVI[supreg] for FY 
2020.
c. CivaSheet[supreg]
    CivaTech Oncology, Inc. submitted an application for new technology 
add-on payments for CivaSheet[supreg] for FY 2020. CivaSheet[supreg] 
received FDA clearance of a 510(k) premarket notification on August 29, 
2014. CivaSheet[supreg] was approved as a ``sealed source'' by the 
Nuclear Regulatory Commission (NRC) and added to the Registry of 
Radioactive Sealed Source and Devices on October 24, 2014. On May 9, 
2018, CivaSheet[supreg] was registered by the American Association of 
Physicists in Medicine (AAPM) on the ``Joint AAPM/IROC Houston Registry 
of Brachytherapy Sources Complying with AAPM Dosimetric 
Prerequisites.'' According to the applicant, inclusion on this AAPM 
registry is a long-standing requirement imposed on brachytherapy 
sources used

[[Page 19295]]

in all National Cancer Institute clinical trials and that all other 
available brachytherapy sources are included on this registry. 
According to the applicant, CivaSheet[supreg] was not commercially 
distributed among IPPS hospitals until May 2018, after meeting the 
requirements for inclusion in the AAPM registry. Therefore, according 
to the applicant the ``newness'' period for the CivaSheet[supreg], if 
approved for FY 2020 new technology add-on payments, should commence on 
May 9, 2018. Based on this information, we believe the newness period 
for CivaSheet[supreg] would begin on May 9, 2018. However, we are 
seeking public comments on whether inclusion on the AAPM registry is an 
appropriate indicator of the first availability of the 
CivaSheet[supreg] brachytherapy sources on the U.S. market and whether 
the date of inclusion on the AAPM registry is appropriate to consider 
as the beginning of the newness period for CivaSheet[supreg].
    CivaSheet[supreg] is intended for medical purposes to be placed 
into a body cavity or tissue as a source for the delivery of radiation 
therapy. CivaSheet[supreg] is indicated for use as a brachytherapy 
source for the treatment of selected localized tumors. The device may 
be used either for primary treatment or for the treatment of residual 
disease after excision of the primary tumor. CivaSheet[supreg] may be 
used concurrently, or sequentially, with other treatment modalities, 
such as external beam radiation therapy or chemotherapy. We note that 
the applicant has submitted a request for approval for a unique ICD-10-
PCS procedure code to describe procedures involving the use the 
CivaSheet[supreg] device, beginning in FY 2020.
    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, therefore, 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, CivaSheet[supreg] does not have a similar 
mechanism of action in comparison to existing brachytherapy 
technologies. The applicant asserted that the unique construction and 
configuration of the CivaSheet[supreg] device permits delivery of 
radiation intra-operatively in a highly targeted fashion. The applicant 
explained that the CivaSheet[supreg] is cut to size in the operation 
room (OR) and conformed to the patient's anatomy and surgical site, 
which allows radiation to be delivered to the resected tumor bed 
margins at the time of the original surgery. The applicant further 
explained that, it is generally believed that ``hot'' spots should be 
avoided in the delivery of radiotherapy because they lead to 
complications, citing the finding that ``[i]n brachytherapy, dose 
homogeneity is difficult to achieve, but efforts to minimize ``hot'' 
spots have been regarded as virtuous and implant-planning guidelines 
were developed to assist in this regard.'' \48\ The applicant stated 
that implants are rarely geometrically perfect and, to avoid under-
dosing some parts of the target volume, it may be necessary to create 
``hot spots'' in other parts of the anatomy. However, as a result, a 
``hotter'' dose compared to that achievable with external beam 
technologies can be delivered to the intended area. In contrast, the 
applicant indicated that CivaSheet[supreg]'s unidirectional 
configuration substantially reduces the dose delivered to neighboring 
radiosensitive structures. The applicant further stated that other 
forms of radiation delivery do not have these capabilities, and no 
other shielded low-dose radiation (LDR) sources are currently available 
on the market. According to the applicant, external beam radiation 
generally cannot be delivered intra-operatively, partly because dosage 
requirements make this impractical and potentially risky and because 
appropriate aiming cannot be computed in the timeframe of a performed 
surgery.
---------------------------------------------------------------------------

    \48\ Bhadrasain, M.D., Vikram, Shivaji, Ph.D., Deore, Beitler, 
M.D., Jonathan J., Sood, M.D., Brij, Mullokandov, Ph.D., Eduard, 
Kapulsky, Ph.D., Alexander, Fontenla, Ph,d, Doracy P, ``The 
relationship between dose heterogeneity (``hot'' spots) and 
complications following high-dose rate brachytherapy,'' Int. J. 
Radiation Oncology Biol. Phys., 1999, vol. 43, no. 5, pp. 983-987.
---------------------------------------------------------------------------

    The applicant believed that, in the absence of the use of the 
CivaSheet[supreg] device, a patient requiring radiation therapy to 
accompany surgery would most likely receive radiation therapy as an 
outpatient service following the inpatient hospitalization after 
surgery. Moreover, the applicant stated that not only does this 
typically require multiple, fractionated treatments, in some cases, 
outpatient external beam radiation may not be possible due to excessive 
toxicity to normal surrounding tissues. According to the applicant, 
radiation therapy can be delivered intra-operatively directly to 
surgical margins through use of a linear accelerator. However, the 
applicant stated that these technologies deliver radiation in a single 
``flash,'' whereas the CivaSheet[supreg] device enables the delivery of 
radiation over time, increasing the efficacy of the radiation therapy.
    Further, the applicant stated that external beam radiation devices 
have a fixed ball or cone-shaped applicator, which does not necessarily 
conform well to the irregular shapes of surgical cavities or permit 
effective screening of adjacent tissues. Additionally, the applicant 
stated that this form of radiation therapy requires a specialized 
linear accelerator and a specially shielded operating room, which the 
applicant believes restricts its use to IPPS-exempt cancer centers.
    The applicant further stated that, in the past, cylindrical 
brachytherapy seeds have been used with various mesh products as a form 
of intra-operative radiation therapy (IORT). However, according to the 
applicant, the use of cylindrical brachytherapy seeds used with various 
mesh products has not developed as part of standard clinical practice. 
According to the applicant, patients treated with previous cylindrical 
brachytherapy seeds faced considerable challenges with toxicity from 
the unfocused, unshielded seed sources when placed in proximity of 
sensitive organs.\49\ Additionally the surgical meshes previously used 
were not designed to maximize source orientation and spacing, and also 
ran the risk of source dispersion as the mesh degraded.\50\
---------------------------------------------------------------------------

    \49\ Rivard, Mark J., ``Low energy brachytherapy sources for 
pelvic sidewall treatment,'' abstract presented at the ABS 2016 
Annual Meeting.
    \50\ Seneviratne, Danushka, et al., ``The CivaSheet: The new 
frontier of intraoperative radiation therapy or a pricer alternative 
to LDR brachytherapy,'' Advances in Radiation Oncology, 2018, vol. 
3, pp. 87-91.
---------------------------------------------------------------------------

    The applicant maintains that the CivaSheet[supreg] is the first 
low-dose radiation (LDR) brachytherapy device designed specifically for 
the delivery of IORT. CivaSheet[supreg]'s individual brachytherapy 
sources are flat with a gold shielding on one side of the seed, a 
design that focuses radiation in one direction, in contrast to the 
cylindrical shape of LDR brachytherapy seeds, which emit radiation in 
all directions. According to the applicant, properties of the flat, 
gold-shielded sources and the bioabsorbable polymer encapsulation make 
the CivaSheet[supreg] uniquely suited for intra-operative delivery. As 
such, the applicant asserted that the CivaSheet[supreg] does not have a 
similar mechanism of action when compared to existing LDR 
brachytherapies.
    With regard to the second criterion, whether a product is assigned 
to the same or similar MS-DRG, the applicant

[[Page 19296]]

asserted that patients who may be eligible for treatment using the 
CivaSheet[supreg] include hospitalized patients having tumors removed 
from the pancreas, colon and anus, pelvic area, head and neck, soft 
tissue sarcomas, non-small-cell lung cancer, ocular melanoma, atypical 
meningioma and retroperitoneum and that cases involving the use of the 
CivaSheet[supreg] would map primarily into the following MS-DRGs:

------------------------------------------------------------------------
          MS-DRG                            MS-DRG title
------------------------------------------------------------------------
11........................  Tracheostomy for Face, Mouth and Neck
                             Diagnoses or Laryngectomy with MCC.
12........................  Tracheostomy for Face, Mouth and Neck
                             Diagnoses or Laryngectomy with CC.
13........................  Tracheostomy for Face, Mouth and Neck
                             Diagnoses or Laryngectomy without CC/MCC.
129.......................  Major Head and Neck Procedures with CC/MCC
                             or Major Device.
130.......................  Major Head and Neck Procedures without CC/
                             MCC.
133.......................  Other Ear, Nose, Mouth and Throat O.R.
                             Procedures with CC/MCC.
134.......................  Other Ear, Nose, Mouth and Throat O.R.
                             Procedures without CC/MCC.
326.......................  Stomach, Esophageal and Duodenal Procedures
                             with MCC.
327.......................  Stomach, Esophageal and Duodenal Procedures
                             with CC.
328.......................  Stomach, Esophageal and Duodenal Procedures
                             without CC/MCC.
329.......................  Major Small and Large Bowel Procedures with
                             MCC.
330.......................  Major Small and Large Bowel Procedures with
                             CC.
331.......................  Major Small and Large Bowel Procedures
                             without CC/MCC.
332.......................  Rectal Resection with MCC.
334.......................  Rectal Resection without CC/MCC.
405.......................  Pancreas, Liver and Shunt Procedures with
                             MCC.
406.......................  Pancreas, Liver and Shunt Procedures with
                             CC.
407.......................  Pancreas, Liver and Shunt Procedures without
                             CC/MCC.
576.......................  Skin Graft Except for Skin Ulcer or
                             Cellulitis with MCC.
577.......................  Skin Graft Except for Skin Ulcer or
                             Cellulitis with CC.
578.......................  Skin Graft Except for Skin Ulcer or
                             Cellulitis without CC/MCC.
653.......................  Major Bladder Procedures with MCC.
654.......................  Major Bladder Procedures with CC.
734.......................  Pelvic Evisceration, Radical Hysterectomy
                             and Radical Vulvectomy with CC/MCC.
735.......................  Pelvic Evisceration, Radical Hysterectomy
                             and Radical Vulvectomy without CC/MCC.
736.......................  Uterine and Adnexa Procedures for Ovarian or
                             Adnexal Malignancy with MCC.
739.......................  Uterine, Adnexa Procedures for Non-Ovarian/
                             Adnexal Malignancy with MCC.
740.......................  Uterine, Adnexa Procedures for Non-Ovarian/
                             Adnexal Malignancy with CC.
741.......................  Uterine, Adnexa Procedures for Non-Ovarian/
                             Adnexal Malignancy without CC/MCC.
826.......................  Myeloproliferative Disorders or Poorly
                             Differentiated Neoplasms with Major O.R.
                             Procedure with MCC.
827.......................  Myeloproliferative Disorders or Poorly
                             Differentiated Neoplasms with Major O.R.
                             Procedure with CC.
828.......................  Myeloproliferative Disorders or Poorly
                             Differentiated Neoplasms with Major O.R.
                             Procedure without CC/MCC.
------------------------------------------------------------------------

    We believe that cases involving the use of existing technologies 
would be assigned to these same MS-DRGs listed above.
    With regard 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, according to the 
applicant, clinical conditions that may require use of the 
CivaSheet[supreg] include treatment of the same patient population as 
those who have been diagnosed with a variety of types of cancer, 
including pancreatic cancer, colorectal cancer, anal cancer, pelvic 
area/gynecological cancer, retroperitoneal sarcoma and head and neck 
cancers.
    The applicant asserted that the CivaSheet[supreg] device is not 
substantially similar to any existing technology because it uses a 
unique mechanism of action, when compared to existing LDR brachytherapy 
technologies, to achieve a therapeutic outcome and, therefore, meets 
the newness criterion.
    We are inviting public comments on whether the CivaSheet[supreg] 
device meets the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion. To determine the MS-DRGs that potential cases representing 
patients who may be eligible for treatment involving CivaSheet[supreg] 
would map to, the applicant identified all MS-DRGs for cases that 
included ICD-10-CM diagnosis codes for either pancreatic cancer, 
colorectal cancer, anal cancer, pelvic area/gynecological cancer, 
retroperitoneal sarcoma and head and neck cancers as a primary or 
secondary diagnosis. Based on the FY 2017 MedPAR Hospital Limited Data 
Set (LDS), the applicant identified a total of 22,835 potential cases. 
The applicant limited its analyses to the most relevant 32 MS-DRGs, 
which represented 80 percent of all the cases. The applicant excluded 
the following cases: Statistical outliers which the applicant defined 
as 3 standard deviations from the geometric mean, HMO cases and claims 
submitted only for graduate medical education payments and cases at 
hospitals that were not included in the FY 2019 IPPS/LTCH PPS final 
rule impact file (the applicant noted that these are predominately 
cancer hospitals not subject to the IPPS). After applying the trims 
above, the applicant identified 17,173 remaining cases.
    Using the 17,173 cases, the applicant determined an average case-
weighted unstandardized charge per case of $122,565. The applicant 
standardized the charges for each case and inflated each case's charges 
from FY 2017 to FY 2019 by applying the outlier charge inflation factor 
of 1.085868 from the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20581). 
The applicant indicated that the current average cost of the 
CivaSheet[supreg] device is $24,132.86. The applicant then added 
charges for CivaSheet[supreg] by taking the cost of the device and 
converting it to a charge by dividing the costs by the national average 
CCR of 0.309 for implants from the FY 2019 IPPS/LTCH PPS final rule (83 
FR 41273). The applicant calculated an average case-weighted 
standardized charge per case of $188,897 using the percent distribution 
of MS-DRGs as case weights. Based on this analysis, the applicant 
determined that the final inflated average case-weighted

[[Page 19297]]

standardized charge per case for CivaSheet[supreg] exceeded the average 
case-weighted threshold amount of $87,446 by $101,451.
    We note that the inflation factor used by the applicant was the 
proposed 2-year inflation factor, which was discussed in the FY 2019 
IPPS/LTCH PPS final rule summation of the calculation of the FY 2019 
IPPS outlier charge inflation factor for the proposed rule (83 FR 41718 
through 41722). The final 2-year inflation factor published in the FY 
2019 IPPS/LTCH PPS final rule was 1.08864 (83 FR 41722), which was 
revised in the FY 2019 IPPS/LTCH PPS final rule correction notice to 
1.08986 (83 FR 49844). However, we note that even when using either the 
final rule values or the corrected final rule values published in the 
correction notice to inflate the charges, the final inflated average 
case-weighted standardized charge per case for CivaSheet[supreg] would 
exceed the average case-weighted threshold amount. We are inviting 
public comments on whether the CivaSheet[supreg] meets the cost 
criterion.
    With regard to the substantial clinical improvement criterion, the 
applicant asserted that CivaSheet[supreg] represents a substantial 
clinical improvement over existing technologies because it provides the 
following: (1) Improved local control of different cancers; \51\ (2) 
reduced rate of device-related complications; \52\ (3) reduced rate of 
radiation toxicity; \53\ (4) decreased future hospitalizations; \54\ 
(5) decreased rate of subsequent therapeutic interventions; \55\ (6) 
improvement in back pain and appetite in pancreatic cancer patients 
\56\ and (7) improved local control for pancreatic cancer patients.\57\
---------------------------------------------------------------------------

    \51\ Castaneda SA, Emrich J, Bowne WB, Kemmerer EJ, Sangani R, 
Khalili M, Rivard MJ, Poli J. ``Clinical outcomes using a novel 
directional Pd-103 brachytherapy device: 20-month report of a 
patient with leiomyosarcoma of the pelvic sidewall.'' ACRO 2018 
Annual Meeting.
    \52\ Seneviratne, D., McLaughlin, C., Todor, D., Kaplan, B., 
Fields, E., ``The CivaSheet: The new frontier of intraoperative 
radiation therapy or a pricier alternative to LDR brachytherapy?,'' 
Advances in Radiation Oncology, 2018, vol. 3, pp. 87-91.
    \53\ Howell, K.J., Meyer, J.E., Rivard, M.J., et al., ``Initial 
Clinical Experience with Directional LDR Brachytherapy for 
Retroperitoneal Sarcoma,'' submitted Int J of Rad Onc Biol Phys, 
2018.
    \54\ Cavanaugh, S.X., Rothley, D.J., Richman, C., ``Directional 
LDR Intraoperative Brachytherapy for Head and Neck Cancer,'' 
Presented at ABS 2017 Annual Meeting.
    \55\ On file at CivaTech.
    \56\ Ibid.
    \57\ Yoo, S.S., Todor, D.A., Myers, J.M., Kaplan, B.J., Fields, 
E.C., ``Widening the therapeutic window using an implantable, uni-
directional LDR brachytherapy sheet as a boost in pancreatic 
cancer,'' ASTRO 2018 Annual Meeting San Antonio, TX.
---------------------------------------------------------------------------

    With regard to improved local control of different cancers, the 
applicant provided the clinical outcomes results of a 20-month report 
of a patient who had been diagnosed with leiomyosarcoma of the pelvic 
sidewall.\58\ According to the report, the purpose of the report was to 
document the experience of using the CivaSheet[supreg] implant as 
adjuvant intraoperative treatment in a patient who had been diagnosed 
with locally advanced leiomyosarcoma of the lateral pelvic sidewall. 
The patient analyzed in this report is a 62-year-old African American 
male who was found to have a mass incidentally in the left pelvic 
sidewall. The patient presented with lower abdominal pain, hematuria, 
and lower left flank pain radiating to the left groin. A CT scan 
revealed a mass in the left pelvic sidewall that measured 8.1 x 6.4 x 
3.7 cm, with encasement of the left common iliac vein and no distant 
metastasis. A biopsy revealed a high-grade leiomyosarcoma. Given his 
advanced clinical stage and iliac vein encasement, neoadjuvant pelvic 
radiotherapy with IMRT, surgical resection with reconstruction, and a 
boost with intraoperative LDR brachytherapy were performed. The patient 
was treated with pelvic IMRT (50.4 Gy/28 fractions). The patient then 
underwent gross total resection and the CivaSheet[supreg] was implanted 
intraoperatively. The patient recovered well from the interventions, 
according to the report. At 20 months after implantation of the LDR 
brachytherapy device, clinical evaluations and CT imaging surveillance 
demonstrated no evidence of residual disease, according to the report.
---------------------------------------------------------------------------

    \58\ Castaneda, S.A., Emrich, J., Bowne, W.B., Kemmerer, E.J., 
Sangani, R., Khalili, M., Rivard, M.J., Poli, J., ``Clinical 
outcomes using a novel directional Pd-103 brachytherapy device: 20-
month report of a patient with leiomyosarcoma of the pelvic 
sidewall,'' ACRO 2018 Annual Meeting.
---------------------------------------------------------------------------

    With regard to reducing the rate of device-related complications, 
the applicant summarized four case series. In the four case series, the 
CivaSheet[supreg] device was used to treat: (1) Axillary squamous cell 
carcinoma; \59\ (2) retroperitoneal sarcoma; 60 61 62 (3) 
gastric signet ring adenocarcinoma; (4) pancreatic cancer; and (5) 
other abdominal malignancies. There were 13 patients associated with 
these 4 case series.
---------------------------------------------------------------------------

    \59\ Seneviratne, D., McLaughlin, C., Todor, D., Kaplan, B., 
Fields, E., ``The CivaSheet: The new frontier of intraoperative 
radiation therapy or a pricier alternative to LDR brachytherapy?,'' 
Advances in Radiation Oncology, 2018, vol. 3, pp. 87-91.
    \60\ Zhen, H., Turian, J.V., Sen, N., et al.,''Initial clinical 
experience using a novel Pd-103 surface applicator for the treatment 
of retroperitoneal and abdominal wall malignancies,'' Advances in 
Radiation Oncology, 2018, vol. 3, pp. 216-220.
    \61\ Howell, K.J., Meyer, J.E., Rivard, M.J., et al., ``Initial 
Clinical Experience with Directional LDR Brachytherapy for 
Retroperitoneal Sarcoma,'' submitted Int J of Rad Onc Biol Phys, 
2018.
    \62\ Turian, J.V., ``Emerging Technologies for IORT: 
Unidirectional Planar Brachytherapy Sources,'' Presented at AAPM 
2017 Annual Meeting.
---------------------------------------------------------------------------

    Seneviratne, et al.'s case series report documented experience with 
the use of the CivaSheet[supreg] device in a 78 year old male patient 
who had been diagnosed with axillary squamous cell carcinoma. According 
to the case series report, prior to surgery a dose of 58 Gy, prescribed 
to the 95 percent isodose line (5 percent), was delivered 
in 2 Gy fractions with 3-dimensional conformal EBRT with concurrent 
weekly administration of cisplatin 40 mg/m2 at an outside facility. 
Magnetic resonance imaging scans obtained 3 months post-treatment 
revealed that the mass had decreased in size to 3.8 cm x 2.5 cm x 3.9 
cm, but maintained encasement of the axillary artery, axillary vein, 
and several inferior branches of the brachial plexus. Concerns with 
regard to increased toxicity to the axillary structures discouraged 
further EBRT, and the CivaSheet[supreg] device was implanted 
immediately post tumor resection. Given that microscopic disease within 
formerly irradiated tissue was being treated, a prescription dose of 20 
Gy at 5 mm from the surface of the mesh was considered adequate because 
of its delivery of a biologically effective dose (BED)-10 of 39.8 Gy 
and equivalent dose (EQD)-2 of 33.2 Gy to the tumor bed, while limiting 
the D2cc for the brachial plexus to a BED3 of 27.9 Gy and EQD2 of 16.7 
Gy, based on post implant analysis. According to the Seneviratne, et 
al. analysis, this approach allowed for a significantly limited dose to 
be delivered to the brachial plexus. A composite dose constraint of 
D2cc of 75 Gy was selected on the basis of recent data showing elevated 
clinical brachial plexopathy rates beyond this threshold. This 
constraint was met with an estimated composite EQD2 of 74.7 Gy, which, 
according to the applicant, would not have been obtainable with EBRT to 
a tumor bed EQD2 of greater than or equal to 30 Gy. The patient was 
discharged on the same day with instructions on wound care and 
radiation safety. According to the applicant, the incision healed well, 
with no signs of infection, seroma, or lymphadenopathy during monthly 
follow-up visits. At the 8-month follow-up visit, the patient was 
documented to only have minor shoulder pain. Seneviratne, et al., also 
discussed their views on the advantages of the use of

[[Page 19298]]

the CivaSheet[supreg] device, which include its bio-absorbability, ease 
of visualization with imaging, potential for intra-operative 
customization, ability to complement various treatment approaches 
including EBRT and surgical resection, and ease of implantation with 
minimal training.
    To further substantiate its assertions of a reduced rate of device-
related complications regarding the CivaSheet[supreg] device, the 
applicant stated that its malleability is likely to be particularly 
useful in treating irregularly shaped surgical cavities, such as those 
created after breast lumpectomies or pelvic side wall resections. 
According to the applicant, the CivaSheet[supreg] device also overcomes 
several shortcomings observed even among those LDR mesh devices that 
use the same isotope. According to the applicant, as the vicryl sutures 
of traditional LDR mesh devices bend and curve around irregular 
surfaces during placement, the spacing and orientation of the 
radioactive seeds may be altered, leading to unpredictable variations 
in isodose geometry. The applicant stated that, in contrast, the 
polymer encapsulation of the Pd-103 Civa seeds before embedding within 
the membrane allows the sources to maintain their orientation in space 
and deliver radiation in accordance with the predetermined geometry. 
According to the applicant, additionally, unlike older LDR mesh devices 
that run the risk of source dispersion after mesh degradation, the 
polymer encapsulation allows the seeds to maintain their placement even 
as the membrane is absorbed over time. In this same case study, 
Seneviratne, et al., stated that a 3-month post implantation imaging of 
the CivaSheet[supreg] device demonstrated that the radioactive source 
geometry had remained stable since the initial implantation.
    The applicant also provided Howell, et al.'s case series results of 
six patients diagnosed with recurrent retroperitoneal sarcoma who had 
been treated with the use of the CivaSheet[supreg] device to support 
its claims of reduced rate of toxicity and improved local control. 
Similar to the Seneviratne, et al. case series report, Howell, et al.'s 
case series' report also noted concerns regarding prior EBRT, costs 
associated with intra-operative radiation therapy both for the patient 
and the hospital, and concerns of at-risk surrounding anatomic 
structures. Given these concerns, Howell, et al.'s case series report 
also investigated LDR brachytherapy using CivaSheet[supreg]. Amongst 
the six patients observed, five patients had diagnoses of recurrent 
disease in the retroperitoneum or pelvic side wall; one patient had a 
diagnosis of locally-advanced leiomyosarcoma with no previous 
treatment. Regarding prior treatment, two patients had prior EBRT at 
first diagnosis. Four patients received neoadjuvant EBRT prior to 
surgery in addition to treatment involving CivaSheet[supreg] 
brachytherapy. The LDR brachytherapy dose was determined using 
radiobiological calculations of biological effective dose (BED) based 
on the linear-quadratic model and EQD2 values. An LDR brachytherapy 
dose of 20 to 60 Gy (36 Gy mean) was administered, corresponding to BED 
values of 15 to 53 Gy (29 Gy mean) and EQD2 values of 12 to 43 Gy (23 
Gy mean). Because the goal was to provide a conformal radiation boost 
for an additional 15 to 20 Gy EQD2, the prescribed absorbed doses were 
considered appropriate. All patients were followed by CT scan to assess 
implant migration, observed radiation-related toxicities, and evidence 
for local recurrence between 2.5 weeks and 3 months. No evidence of 
implant migration or radiation-related toxicities was found. Based on 
these results, the study concluded that LDR directional brachytherapy 
delivered a targeted dose distribution that was successfully used to 
treat retroperitoneal sarcoma, and that the utilized device is an 
important option for the treatment of patients who have been diagnosed 
with retroperitoneal sarcoma having close/positive surgical margins 
and/or in combination with EBRT to optimize local control.
    Two other case series, by Zhen, H. et al.,\63\ and Turian, et 
al.,\64\ were submitted by the applicant to support the assertion of 
reduced rate of device-related complications. Both case series assessed 
the use of LDR brachytherapy using the CivaSheet[supreg] device in the 
tumor bed given the same clinical challenges outlined in case series 
observed and investigated in the Seneviratne, et al., and Howell, et 
al. analyses in patients previously treated with chemoradiation 
protocols and in patients who had been diagnosed with recurrent tumors 
close to important functional tissues. Both case series assessed LDR 
brachytherapy using the CivaSheet[supreg] device in the treatment of 
different cancers like retroperitoneal sarcomas, pancreatic cancers, 
and gastric singnet ring adenocarcinoma or other abdominal carcinomas. 
Both case series followed the patients with CT imaging sometime between 
2.5 weeks and 86 weeks. Both case series' study concluded that LDR 
brachytherapy with the use of the CivaSheet[supreg] device was a 
feasible alternative treatment modality for the cancers treated in each 
case series. According to Zhen, et al., an advantage of using the 
CivaSheet[supreg] device is that the CivaDot sheets can be easily cut 
to any size and shape at the time of implant. The author further stated 
that the CivaDot sheet is malleable and can conform to curved surfaces. 
This device characteristic, according to the author, gives the 
physician more flexibility to treat tumor beds with irregular shapes 
and surface curvatures compared with electron beam cylindrical 
applicators, thereby reducing the rate of device-related complications. 
However, the analysis by Zhen, et al. also indicated that a limitation 
in dosimetric evaluation using CT imaging is related to the inability 
to identify the orientation of the individual CivaDot mainly because of 
limited resolution and metal artifact caused by the gold plating. 
CivaDot orientation is inferred from the fact that all dots are 
embedded in a membrane that is sutured to the tumor bed and because the 
post-implant CT scan shows the shape of the CivaSheet[supreg] seeds 
being maintained. Also, Zhen, et al. noted that surgical clips could be 
mistakenly identified as CivaDots. The analysis by Zhen, et al. 
recommended that the use of surgical clips should be minimized.
---------------------------------------------------------------------------

    \63\ Zhen, H., Turian, J.V., Sen, N., et al.,''Initial clinical 
experience using a novel Pd-103 surface applicator for the treatment 
of retroperitoneal and abdominal wall malignancies'', Advances in 
Radiation Oncology, 2018, vol. 3, pp. 216-220.
    \64\ Turian, J.V., ``Emerging Technologies for IORT: 
Unidirectional Planar Brachytherapy Sources,'' Presented at AAPM 
2017 Annual Meeting.
---------------------------------------------------------------------------

    With regard to the reduced rate of toxicity, the applicant provided 
a clinical case series by Howell, et al.\65\ to show that shielding 
healthy tissues while irradiating the tumor bed after surgical 
resection was achieved by providing a conformal radiotherapy, a novel 
Pd-103 low-dose rate (LDR) brachytherapy device. Methods and materials 
of the case include the following: The LDR brachytherapy device was 
considered for patients who had been diagnosed with recurrent 
retroperitoneal sarcoma, had received prior radiotherapy to the area, 
and/or had anatomy concerning for high-risk margins predicted for 
recurrence after resection. The case series included the clinical 
conclusions for five patients who had been diagnosed with recurrent 
disease in the retroperitoneum or pelvic side wall, one patient who had 
been diagnosed with locally-advanced leiomyosarcoma with no previous 
treatment, two patients who had prior

[[Page 19299]]

EBRT at first diagnosis, and four patients who received neoadjuvant 
EBRT prior to surgery in combination with brachytherapy. The LDR 
brachytherapy dose was determined using radiobiological calculations of 
biological effective dose (BED) based on the linear-quadratic model and 
EQD2 values. An LDR brachytherapy dose of 20 to 60 Gy (36 Gy mean) was 
administered, corresponding to BED values of 15 to 53 Gy (29 Gy mean) 
and EQD2 values of 12 to 43 Gy (23 Gy mean). Because the goal was to 
provide a conformal radiation boost for an additional 15 to 20 Gy EQD2, 
the prescribed absorbed doses were considered appropriate. According to 
the applicant, results showed that radiation was delivered to the at-
risk tissues with minimal irradiation of adjacent healthy structures or 
structures occupying the surgical cavity after tumor resection. 
According to the applicant, clinical outcomes indicated feasibility for 
surgical implantation and promising results in comparison to current 
standards-of-care. The device did not migrate over the course of 
follow-up and there were no observed radiation-related toxicities.
---------------------------------------------------------------------------

    \65\ Howell, K.J., Meyer, J.E.,Rivard, M.J. et al., ``Initial 
Clinical Experiences with Directional LDR Brachytherapy for 
Retroperitoneal Sarcomo, submitted to Int J of Rad Onc Biol Phys, 
2018.
---------------------------------------------------------------------------

    The Howell, et al. clinical case series concluded that LDR 
directional brachytherapy delivered a targeted dose distribution that 
was successfully used to treat retroperitoneal sarcoma and that the 
utilized device is an important option for the treatment of patients 
who have been diagnosed with retroperitoneal sarcoma having close/
positive surgical margins and/or in combination with EBRT to optimize 
local control.
    The applicant also cited three additional case series to support 
their assertions of reduced rate of device-related complications and 
reduced rate of radiation toxicity. The first is on file at CivaTech in 
which they indicated that more than 60 patients, since 2015, had 
CivaSheet[supreg] implanted with no reported device-related toxicity in 
patients previously treated with maximal EBRT. No other details were 
provided by the applicant. The second case series by Taunk, et al.\66\ 
assessed the use of CivaSheet[supreg] in three patients who had been 
diagnosed with colorectal adenocarcinoma who had undergone prior 
induction chemotherapy and neoadjuvant chemoradiation. 
CivaSheet[supreg] was placed in the tumor bed and patients were 
followed with CT imaging to assess implant migration, 30- and 90-day 
radiation toxicity and local recurrence. One patient was deemed not a 
feasible candidate because the CivaSheet[supreg] could not be uniformly 
opposed to the sacrum due to the degree of concavity. The other two 
patients underwent successful CivaSheet[supreg] implantation, and at 30 
days showed stability of the device and no apparent toxicity. In the 
final additional case series from Rivard, et al.,\67\ a single patient 
who had been diagnosed with pelvic side wall cancer (type not 
indicated) was implanted with CivaSheet[supreg] and the 
CivaSheet[supreg] dose distributions were compared to those of 
conventional low-dose rate, low-energy photon-emitting brachytherapy 
seeds (that is, palladium 103, Iodine-125, and Cesium-131). According 
to the applicant, results suggest gold-shielding CivaDots attenuate 
radiation for directional brachytherapy and CivaSheet[supreg] provides 
a therapeutic target dose, while substantially minimizing critical 
structure doses. In this specific case study, the applicant stated that 
the use of CivaSheet[supreg] showed decreased radiation to adjacent 
organs, such as the bowel and the bladder.
---------------------------------------------------------------------------

    \66\ Taunk, N.K., Cohen, G., Taggar, A.S., et al., ``Preliminary 
Clinical Experience from a Phase I Feasibility Study of a Novel 
Permanent Unidirectional Intraoperative Brachytherapy Device,'' ABS 
2017 Annual Meeting.
    \67\ Rivard, M.J., ``Low-energy brachytherapy sources for pelvic 
sidewall treatment,'' Presented at ABS 2016 Annual Meeting.
---------------------------------------------------------------------------

    With regard to decreasing the number of future hospital visits, the 
applicant provided a poster presentation presented at the American 
Brachytherapy Society 2017 Annual Meeting. The purpose of this study 
was to investigate the feasibility of using intra-operative directional 
brachytherapy for the treatment of squamous cell carcinoma of the 
oropharynx. The study included a single patient who had received a 
prior course of external beam radiation therapy of 70 Gy in 2015. Due 
to positive margins near the carotid after the resection, and the 
increased risk of additional external radiation, brachytherapy was 
considered as a treatment option. CivaSheet[supreg] was used for the 
implant. The Pd-103 sources were spaced 8 mm apart on a rectangular 
grid. Unidirectional dose was achieved by a 0.05 mm thick gold disk-
shaped foil on the reverse side of each source. A dose of 120 Gy at 5 
mm depth was prescribed. After the resection, the entire polymer sheet 
was placed on the treatment area to determine the needed dimensions. 
The CivaSheet[supreg] device was then removed and cut to size with 
scissors leaving 26 Pd-103 sources remaining. The surgeon used 3.0 
vicryl sutures for attachment in a concave shape over the carotid 
artery, where there was a positive margin. The gold foil was positioned 
to protect the neck flap and closure. The surgical team completed the 
procedure and the patient recovered without any complications.
    Results of the study showed that the sources remained in position 
in a concave array pattern. Due to the dose fall-off of Pd-103, the 
calculated dose to critical structures was minimized. Because the 
surgical implant of the CivaDot sheet proceeded as expected with no 
complications and the post-implant plan indicated that the 
CivaSheet[supreg] remained in position with the radioactive side 
contacting the treatment area, the applicant asserts that future 
hospital visits will be decreased because the patient will not return 
for EBRT.
    With regard to decreases in the rate of subsequent therapeutic 
interventions, the applicant stated that the standard-of-care for most 
patients undergoing surgery is typically preceded or followed by a form 
of external beam radiation therapy. A typical course of intensity 
modulated radiation therapy (IMRT) is 25 to 30 fractions (separate 
treatments) delivered over the course of 3 to 6 weeks. The applicant 
stated that, for some patients, CivaSheet[supreg] will be the only form 
of radiation therapy they will receive. CivaSheet[supreg] is implanted 
in one procedure and radiation is locally delivered over the course of 
several weeks, while the sources provide a continuous dose and later 
decay. The device is not removed and no additional follow-up visits are 
required for the patient to receive therapeutic intervention. According 
to the applicant, use of CivaSheet[supreg] can avoid the time and 
expense of dozens of radiation therapy visits over the course of 
several weeks as compared to EBRT. The applicant further stated that 
the published clinical data provided with its application \68\ shows 
that the use of CivaSheet[supreg] is an effective and safe 
combinational treatment to external beam radiation therapy. According 
to the applicant, radiation oncologists can use CivaSheet[supreg] to 
increase the dose of radiation that can be delivered to a tumor margin, 
without increasing toxicity and that this may reduce the odds that a 
patient experiences cancer recurrence.69 70 71 The applicant 
also

[[Page 19300]]

asserted that the targeted radiation approach has demonstrated no toxic 
effects for patients. The applicant further stated that other forms of 
radiation have a known rate of complications and toxicity that result 
in the need for additional therapies and interventions (for example, 
topical creams for skin reddening, and medicine for pain). The 
applicant indicated that there has been no change in concomitant 
medications prescribed because of the use of the CivaSheet[supreg] 
implant either on or off trial. The applicant did not link these claims 
to any of the studies provided with its application. In addition, the 
applicant asserts that, of the case studies they provided, there have 
been no instances of therapeutic interventions to resolve an issue that 
was induced by the use of the CivaSheet[supreg] device to deliver 
radiation.72 73 74
---------------------------------------------------------------------------

    \68\ Taunk, N.K., Cohen, G., Taggar, A.S., et al., ``Preliminary 
Clinical Experience from a Phase I Feasibility Study of a Novel 
Permanent Unidirectional Intraoperative Brachytherapy Device,'' ABS 
2017 Annual Meeting.
    \69\ Rivard, Mark J., ``Low energy brachytherapy sources for 
pelvic sidewall treatment,'' abstract presented at the ABS 2016 
Annual Meeting.
    \70\ Yoo, S.S., Todor, D.A., Myers, J.M., Kaplan, B.J., Fields, 
E.C., ``Widening the therapeutic window using an implantable, uni-
directional LDR brachytherapy sheet as a boost in pancreatic 
cancer,'' ASTRO 2018 Annual Meeting San Antonio, TX.
    \71\ Howell, K.J., Meyer, J.E., Rivard, M.J., et al., ``Initial 
Clinical Experience with Directional LDR Brachytherapy for 
Retroperitoneal Sarcoma,'' submitted Int J of Rad Onc Biol Phys, 
2018.
    \72\ Ibid.
    \73\ Rivard, Mark J., ``Low energy brachytherapy sources for 
pelvic sidewall treatment,'' abstract presented at the ABS 2016 
Annual Meeting.
    \74\ Yoo, S.S., Todor, D.A., Myers, J.M., Kaplan, B.J., Fields, 
E.C., ``Widening the therapeutic window using an implantable, uni-
directional LDR brachytherapy sheet as a boost in pancreatic 
cancer,'' ASTRO 2018 Annual Meeting San Antonio, TX.
---------------------------------------------------------------------------

    With regard to improvement in back pain and appetite (compared to 
baseline) in pancreatic cancer patients, the applicant asserted that 
patients answered standardized, international questionnaire EORTC QLQ-
C30 and PANC26 and that these results are on file at CivaTech. The 
applicant provided the baseline, 70 days post-operative and 98 days 
postoperative patient responses to ``Have you ever had back pain?'' 
Baseline response: 1.5; 70 days post-operative response: 1.0 and 98 
days post-operative response: 1.0. The applicant also provided 
baseline, 70 days post-operative and 98 days post-operative patient 
responses to ``Were you restricted in the amounts of food you could eat 
as a result of your disease or treatment?'' Baseline response: 2.5; 70 
days postoperative response: 1.0 and 98 days postoperative response: 
1.0. (Response Values: 1.0 = ``Not at all''; 2.0 = ``A little''; 3.0 = 
``Quite a bit''; 4.0 = ``Very much'').
    With regard to improved local control for pancreatic cancer 
patients, the applicant provided the results of a dosimetric study 
entitled, ``Widening the Therapeutic Window Using an Implantable, Uni-
directional LDR Brachytherapy Sheet as a Boost in Pancreatic Cancer 
Case Series,'' a poster presented at the ASTRO 2018 Annual Meeting. 
According to background information in the applicant's poster, 
pancreatic patients often undergo neoadjuvant chemotherapy and 
chemoradiation in preparation for surgical resection of the tumor. In 
addition, oftentimes after neoadjuvant therapy there are inflammatory 
changes that, unfortunately, hinder pre-operative imaging and create 
the potential for unreliable determination of tumor resection. 
Accompanying the potentially unreliable determination of tumor 
resectability are patient concerns when positive retroperitoneal 
margins have close proximity to major vasculature. The applicant noted 
that additional EBRT boost, initiated post operatively, is an option, 
but difficult given bowel constraints and the difficulty in identifying 
the area at highest risk. Given these constraints associated with 
treating pancreatic cancers, the purpose of this study was to 
demonstrate the ability of the LDR brachytherapy CivaSheet[supreg] 
device to deliver a focal high-dose boost, targeted to the area at 
highest risk in patients who received neoadjuvant chemoradiation. This 
dosimetric case series consisted of four patients who had been 
diagnosed with borderline resectable pancreatic cancer who received 
neoadjuvant FOLFIRINOX followed by gemcitabine-based 
chemoradiotherapy (chemoRT) to 50.4 Gy in 28 fractions with dose 
prescribed to the gross tumor plus a 1 cm margin. According to the 
poster provided by the applicant, after neoadjuvant therapy, the 
multidisciplinary team was concerned for close or positive margin 
resection. Using the CivaSheet[supreg] device, a 38 Gy EQD2 dose to 5 
mm depth was implanted in these patients and a total dose of 88.4 Gy 
was delivered to the targeted tissue. Post-operatively, patients had a 
CT scan to identify the tumor bed contour, as well as the contour of 
surrounding at-risk organs; the small bowel (SB) was contoured as the 
bowel bag and included the entire peritoneal cavity. Following the CT 
scan, brachytherapy plans, as well as EBRT boost plans, were created 
for each patient. A dose-volume histogram (DVH) from initial 3D 
treatment plans for all patients showed the SB volume receiving 45 Gy 
(V45) was a median of 78.2 cc (range 61.7-107.1 ccs) and maximum bowel 
doses were a median of 53.2 Gy, range 53.1-53.6 Gy. According to the 
applicant, the V45 for SB should be less than 195 cc, with a maximum of 
less than or equal to 58 Gy to prevent SB obstruction, fistula and 
perforation. According to the applicant, with the CivaSheet[supreg] 
device, the boost dose was dramatically increased while SB exposure was 
marginal at about 1/10th of the prescription dose. For the target, the 
CivaSheet[supreg] delivered the prescription dose to 5 mm depth with a 
large inhomogeneous dose throughout the tumor bed with the minimum dose 
of 38 Gy. Dosimetric comparison of a CivaSheet[supreg] tumor bed boost 
and a Stereotactic Body Radiation Therapy (SBRT) tumor bed boost to the 
SB was 9.6 Gy compared to 24 Gy for external beam plan. According to 
the applicant, the conclusions from this case series are that applying 
a brachytherapy uni-directional source to the area at highest risk can 
serve to improve the therapeutic index by improving the local control 
and minimizing toxicities in pancreatic cancer patients after 
neoadjuvant therapy.
    With regard to whether CivaSheet[supreg] represents a substantial 
clinical improvement relative to other brachytherapy technologies 
currently available, we are concerned that all of the supporting data 
appear to be feasibility studies substantiating the use of the 
CivaSheet[supreg] in different cancers and difficult anatomic 
locations. We also are concerned that there do not appear to be any 
comparisons to other current treatments, nor any long-term follow-up 
with comparisons to currently available therapies. We are inviting 
public comments on whether CivaSheet[supreg] meets the substantial 
clinical improvement criterion.
    We did not receive any written comments in response to the New 
Technology Town Hall meeting notice published in the Federal Register 
regarding the substantial clinical improvement criterion for the 
CivaSheet[supreg] or at the New Technology Town Hall meeting.
d. CONTEPOTM (Fosfomycin for Injection)
    Nabriva Therapeutics U.S., Inc. submitted an application for new 
technology add-on payments for CONTEPOTM for FY 2020. 
CONTEPOTM is intended to treat complicated urinary tract 
infections (cUTIs) caused by multi-drug resistant (MDR) pathogens in 
hospitalized patients. CONTEPOTM has not yet received FDA 
approval. The FDA has accepted the applicant's New Drug Application 
(NDA) using its Priority Review expedited program.
    Complicated urinary tract infections are characterized by chills, 
rigors, or fever (temperature of greater than or equal to 38.0 [deg]C); 
elevated white blood cell count (greater than 10,000/mm\3\), or

[[Page 19301]]

left shift (greater than 15 percent immature PMNs); nausea or vomiting; 
dysuria, increased urinary frequency, or urinary urgency; and lower 
abdominal pain or pelvic pain. A related condition, acute 
pyelonephritis (AP), is characterized by chills, rigors, or fever 
(temperature of greater than or equal to 38.0 [deg]C); elevated white 
blood cell count (greater than 10,000/mm\3\), or left shift (greater 
than 15 percent immature PMNs); nausea or vomiting; dysuria, increased 
urinary frequency, or urinary urgency; flank pain; and costo-vertebral 
angle tenderness on physical examination. Risk factors for infection 
with drug-resistant organisms do not, on their own, indicate a 
cUTI.\75\ The applicant stated that CONTEPOTM would offer a 
new potential first-line treatment for patients with cUTIs suspected to 
be caused by MDR pathogens in the United States.
---------------------------------------------------------------------------

    \75\ Hooton, T. and Kalpana, G., 2018, ``Acute complicated 
urinary tract infection (including pyelonephritis) in adults,'' In 
A. Bloom (Ed.), UpToDate. Available at: https://www.uptodate.com/contents/acute-complicated-urinary-tract-infectionincluding-pyelonephritis-in-adults.
---------------------------------------------------------------------------

    The applicant stated that CONTEPOTM is an epoxide 
intravenous antibiotic that eradicates bacteria by inhibiting the 
bacteria's ability to form cell walls, which are critical for a cell's 
survival and growth. The applicant asserted that CONTEPOTM 
offers a broad spectrum of bactericidal Gram-negative and Gram-positive 
activity, including activity against Extended-spectrum [beta]-lactamase 
(ESBL)-producing Enterobacteriaceae, as well as other contemporary MDR 
organisms.
    The applicant noted that there are currently no ICD-10-PCS 
procedure codes that could be used to uniquely identify the use of 
CONTEPOTM. However, the applicant stated that potential 
cases representing patients who may be eligible to receive treatment 
through the administration of CONTEPOTM could be identified 
with ICD-10-PCS codes 3E03329 (Introduction of Other Anti-infective 
into Peripheral Vein, Percutaneous Approach) or 3E04329 (Introduction 
of Other Anti-infective into Central Vein, Percutaneous Approach). The 
applicant has submitted a request for approval for a new ICD-10-PCS 
procedure code to uniquely identify CONTEPOTM administration 
in FY 2020.
    The applicant has recommended that CONTEPOTM be 
administered as follows: 6 g every 8 hours by intravenous (IV) infusion 
over 1 hour for up to 14 days for patients 18 years of age or older, 
with an estimated creatinine clearance (CrCl) greater than or equal to 
50 mL/min. Dosage adjustment is required for patients whose creatinine 
clearance is 50 mL/min or less.
    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 the product uses a 
similar mechanism of action, the applicant stated that 
CONTEPOTM's mechanism of action differentiates it from other 
approved injectable antibiotics. The applicant reports that 
CONTEPOTM, as an injectable epoxide and sole antibiotic 
class member, inhibits an early step in peptidoglycan biosynthesis by 
covalently binding to MurA, an enzyme that catalyzes the first 
committed critical step in a bacteria's ability to form a cell wall 
and, therefore, the cell's survival and growth. The applicant indicated 
that CONTEPOTM's mechanism of action is unique in comparison 
to all other injectable antibiotics by working at a different and 
earlier stage of cell wall synthesis inhibition, such that the cell 
wall lacks suitable integrity and the bacteria die quickly. The 
applicant further stated that because of this unique mechanism of 
action, CONTEPOTM lacks cross resistance with other existing 
classes of intravenous antibiotics.
    With respect to the second criterion, whether the product is 
assigned to the same or a different MS-DRG, the applicant asserted that 
patients who may be eligible to receive treatment involving 
CONTEPOTM include hospitalized patients who have been 
diagnosed with a cUTI. The applicant noted that the relevant existing 
ICD-10-PCS procedure codes (3E3329 and 3E04329) map to many existing 
MS-DRGs. The applicant lists the most common of these MS-DRGs as MS-DRG 
871 (Septicemia or Severe Sepsis without MV >96 Hours with MCC); MS-DRG 
690 (Kidney and Urinary Tract Infections without MCC); MS-DRG 698 
(Other Kidney and Urinary Tract Diagnoses with MCC); MS-DRG 872 
(Septicemia or Severe Sepsis without MV >96 hours without MCC); MS-DRG 
689 (Kidney and Urinary Tract Infections with MCC); MS-DRG 699 (Other 
Kidney and Urinary Tract Diagnoses with CC); MS-DRG (683 Renal Failure 
with CC); MS-DRG 682 (Renal Failure with MCC); MS-DRG 853 (Infectious 
and Parasitic Diseases with O.R. Procedure with MCC); and MS-DRG 291 
(Heart Failure and Shock with MCC). Cases involving the use of 
CONTEPOTM would likely be assigned to the same MS-DRGs to 
which cases involving treatment with comparator drugs are assigned.
    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 CONTEPOTM would treat a different 
patient population than existing and currently available treatment 
options. While many drugs treat the broad population of patients who 
have been diagnosed with cUTIs, the applicant asserts that increasing 
rates of Enterobacteriaceae resistance to fluoroquinolones and ESBLs 
have limited both classes use as first-line therapies among inpatients 
with infections caused by suspected or confirmed MDR pathogens. The 
applicant cited a study, which estimates the prevalence of drug 
resistance among uropathogens isolated from hospitalized patients in 
the United States. According to the study, there is a more than a two-
fold increase in ESBL-producing E. coli (from 3.3 percent to 8 
percent), ESBL-producing K. pneumoniae (from 9.1 percent to 18.6 
percent), and CRE (from 0 percent to 2.3 percent) causing UTIs in the 
period between 2000 and 2009.\76\ The applicant further asserts that 
the use of CONTEPOTM will also treat a different diseased 
patient population than the currently available therapies. According to 
the applicant, CONTEPOTM's unique mechanism of action 
amongst injectable antibiotics and novel class allows the use of 
CONTEPOTM to reach different and expanded patient 
populations, particularly those patients who have been diagnosed with a 
cUTI that may have pathogens resistant or suspected resistance to ESBL 
and CRE, or fluoroquinolone resistance. Further, the applicant stated 
that CONTEPOTM's stewardship value to clinicians is as a 
carbapenem-sparing potential therapy that may result in real world 
reductions in CRE resistance, further sparing a last-line of defense 
for critically ill patient populations, which due to unique resistance 
profiles, the applicant asserts constitute a different population than 
is currently treated.
---------------------------------------------------------------------------

    \76\ Shorr, A.F., Zilberberg, M.D., Micek, S.T., Kollef, M.H., 
``Prediction of Infection Due to Antibiotic-Resistant Bacteria by 
Select Risk Factors for Health Care-Associated Pneumonia,'' Arch 
Intern Med, 2008, vol. 168(20), pp. 2205-10.
---------------------------------------------------------------------------

    Based on the applicant's statements as summarized above, the 
applicant believes that CONTEPOTM is not substantially 
similar to any existing intravenous antibiotic treatment. However, we 
are concerned with respect to the first criterion as to whether the 
mechanism of action described by the

[[Page 19302]]

applicant is unique to CONTEPOTM or whether it may be 
similar to other drugs that inhibit cell wall development, including 
penicillins, cephalosporins, and carbapenems. With respect to the 
second criterion, we believe that potential cases involving the use of 
CONTEPOTM would be assigned to the same MS-DRGs as cases 
involving comparator antibiotics. Finally, with respect to the third 
criterion, we are concerned whether CONTEPOTM treats a 
unique patient population, as the applicant asserts. While the variety 
of antibiotic resistance patterns certainly warrants a varied 
armamentarium for clinicians, there are many existing antimicrobials 
that are approved to generally treat cUTIs and MDR pathogens. We are 
concerned as to whether hospitalized patients who have been diagnosed 
with cUTIs, including those with MDR pathogens, would constitute a 
unique patient population, given that there are existing treatment 
options for these patients. This concern as to whether the technology 
may be considered to treat a new patient population seems particularly 
relevant for an antibiotic due to the evolving nature of global 
bacterial resistance patterns, and, specifically, the applicant's 
assertion that the use of CONTEPOTM would be a new tool in 
the growing battle against MDR bacteria infections. We are inviting 
public comments on whether CONTEPOTM is substantially 
similar to any existing technologies and whether it meets the newness 
criterion, including with respect to the concerns we have raised.
    With regard to the cost criterion, the applicant used the FY 2017 
MedPAR Limited Data Set (LDS) to assess the MS-DRGs to which potential 
cases representing hospitalized patients who may be eligible for 
treatment involving CONTEPOTM would most likely be mapped. 
According to the applicant, CONTEPOTM is anticipated to be 
indicated for the treatment of hospitalized patients who have been 
diagnosed with cUTIs. The applicant identified 199 ICD-10-CM diagnosis 
code combinations that identify hospitalized patients who have been 
diagnosed with a cUTI. Searching the FY 2017 MedPAR data file for these 
ICD-10-CM diagnosis codes resulted in a total of 508,821 potential 
cases that span 559 unique MS-DRGs, 510 of which contained more than 10 
cases. The applicant excluded MS-DRGs with minimal volume (that is, 10 
cases or less) from the cohort of the analysis (a total of 201 cases 
and 49 MS-DRGs), and this resulted in a total of 508,620 cases across 
461 MS-DRGs.
    Using 100 percent of the potential cases (508,620), the applicant 
determined an average case-weighted unstandardized charge per case of 
$59,009. The applicant standardized the charges for each case and 
inflated each case's charges by applying the FY 2019 IPPS/LTCH PPS 
final rule outlier charge inflation factor of 1.08864 (83 FR 41722). 
(We note that the 2-year inflation factor was revised in the FY 2019 
IPPS/LTCH PPS final rule correction notice to 1.08986 (83 FR 49844). 
However, we further note that even when using the corrected final rule 
values to inflate the charges, the average case-weighted standardized 
charge per case for each scenario exceeded the average case-weighted 
threshold amount.) The applicant examined associated charges per MS-DRG 
and removed charges for potential antibiotics that may be replaced by 
the use of CONTEPOTM. Specifically, the applicant identified 
5 antibiotics currently used for the treatment of patients who have 
been diagnosed with a cUTI and calculated the cost of each of these 
drugs for administration over a 14-day inpatient hospitalization. 
Because patients who have been diagnosed with a cUTI would typically 
only be treated with one of these antibiotics at a time, the applicant 
estimated an average of the 14-day cost for the 5 antibiotics. The 
applicant then took this cost and converted it to a charge by dividing 
the costs by the national average CCR of 0.191 for drugs from the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41273). The applicant calculated 
an average case-weighted standardized charge per case of $71,333 using 
the percent distribution of MS-DRGs as case-weights. Based on this 
analysis, the applicant determined that the final inflated average 
case-weighted standardized charge per case for CONTEPOTM 
exceeded the average case-weighted threshold amount of $52,203 by 
$19,130.
    Because of the large number of cases included in this cost 
analysis, the applicant conducted sensitivity analyses. In these 
analyses, the applicant repeated the cost analysis above using only the 
top 75 percent of cases, the top 20 MS-DRGs, and the top 10 MS-DRGs. In 
these three additional sensitivity analyses, the final inflated average 
case-weighted standardized charge per case for CONTEPOTM 
exceeded the average case-weighted threshold amount by $14,949, 
$14,230, and $13,620, respectively. We are inviting public comments on 
whether CONTEPOTM meets the cost criterion.
    With regard to the substantial clinical improvement criterion, the 
applicant asserted that the results from the CONTEPOTM 
clinical trial clearly establish that CONTEPOTM represents a 
substantial clinical improvement in the treatment of antibiotic 
resistant infections as compared to currently available treatments. 
Specifically, the applicant asserted that the use of 
CONTEPOTM offers a treatment option for a patient population 
unresponsive to, or ineligible for, currently available treatments, and 
the use of CONTEPOTM significantly improves clinical 
outcomes for this patient population compared to currently available 
treatments. The applicants cited the ZEUS Study, a multi-center, 
randomized, parallel-group, double-blind Phase II/III trial of 464 
patients designed to evaluate safety, tolerability, efficacy and 
pharmacokinetics of the use of CONTEPOTM in the treatment of 
hospitalized adults who have been diagnosed with a cUTI or AP at 92 
global sites in 16 countries. Hospitalized adults who have been 
diagnosed with suspected or microbiologically confirmed cUTI/AP were 
randomized 1:1 to receive treatment with either CONTEPOTM or 
piperacillin-tazobactam (PIP-TAZ) for a fixed 7-day course (no oral 
switch); patients who had been diagnosed with concomitant bacteremia 
could receive up to 14 days. Diagnosis was based on pyuria and cUTI or 
AP with at least two of the following signs and symptoms: Chills, 
rigors, or warmth associated with fever, nausea or vomiting, dysuria, 
lower abdominal pain or pelvic pain, or acute flank pain. Patients who 
had been diagnosed with a cUTI had at least one of the following: Use 
of intermittent or indwelling bladder catheterization, functional or 
anatomical abnormality of urogenital tract, complete or partial 
obstructive uropathy, azotemia or chronic urinary retention in men. 
Baseline urine culture specimen was obtained within 48 hours prior to 
randomization. Indwelling bladder catheters were required to be removed 
or replaced, unless considered unsafe or contraindicated, before or 
within 24 hours after randomization.
    The applicant stated that the primary endpoint of the ZEUS Study 
was to demonstrate that CONTEPOTM was non-inferior to PIP-
TAZ in overall success based on clinical cure (complete resolution or 
significant improvement of signs and symptoms such that no further 
antimicrobial therapy is warranted) and microbiologic eradication 
(baseline pathogen was reduced to <10\4\ CFU/mL on urine culture and if 
applicable, negative on repeat blood culture) in the microbiologic 
modified intent-to-treat

[[Page 19303]]

(m-MITT) population at the test-of-cure visit (TOC), which occurred on 
the 19th to 21st day after completion of a fixed 7 days of treatment 
with the study drug, or up to 14 days of treatment for patients 
diagnosed with concurrent bacteremia to comply with current treatment 
guidelines in these patients.
    Patients with any missing or presumed eradications post-baseline 
urine sample were classified as indeterminates, and conservatively 
deemed as failures in overall success analysis.77 78 The 
applicant also reported that the study had two secondary endpoints. 
Secondary objectives were to compare: (1) Clinical cure rates in the 
two treatment groups in the MITT, m-MITT, Clinical Evaluable (CE), and 
Microbiologic Evaluable (ME) populations at TOC, and (2) 
microbiological eradication rates in m-MITT and ME populations at TOC.
---------------------------------------------------------------------------

    \77\ Eckburg, et al., ``Phenotypic Antibiotic Resistance in 
ZEUS: Multi-center, Randomized, Double-Blind Phase II/III Study of 
ZTI-01 versus Piperacillin-Tazobactam (P-T) in the Treatment of 
Patients with Complicated Urinary Tract Infections (cUTI) including 
Acute Pyelonephritis (AP) Poster,'' 2017.
    \78\ Kaye, et al., ``Intravenous Fosfomycin (ZTI-01) for the 
Treatment of Complicated Urinary Tract Infections (cUTI) including 
Acute Pyelonephritis (AP): Results from a Multi-center, Randomized, 
Double-Blind Phase II/III Study in Hospitalized Adults (ZEUS),'' 
2017.
---------------------------------------------------------------------------

    The applicant also included evidence from a post-hoc study wherein 
all pathogens isolated from patients who had a baseline and TOC 
pathogen underwent blinded, post-hoc, pulsed-field gel electrophoresis 
(PFGE) molecular typing analysis. Microbiologic outcome was also 
defined utilizing the PFGE results, whereby microbiologic persistence 
required the same genus and species of baseline and post-baseline 
pathogens, as well as PFGE-confirmed genetic identity.
    The applicant stated that the ZEUS Study met its primary objective 
of showing non-inferiority of CONTEPOTM compared to PIP-TAZ 
with overall success rates (that is, clinical cure and microbiological 
eradication of baseline pathogen) of 64.7 percent (119/184 
CONTEPOTM patients) versus 54.5 percent (97/178 PIP-TAZ 
patients) in the m-MITT population at TOC (treatment difference 10.2 
percent, 95 percent CI: -0.4, 20.8). We note that, based on the 95 
percent confidence interval reported at the primary endpoint, 
CONTEPOTM's success rates were not found to be different 
from PIP-TAZ in a statistically significant manner. The applicant 
reports that the identity and frequency of pathogens recovered at 
baseline from patients in the ZEUS Study were similar in both the 
CONTEPOTM and PIP-TAZ treatment groups. The most common 
pathogens identified were Enterobacteriaceae, identified in 96.2 
percent of the CONTEPOTM patients and 94.9 percent of the 
PIP-TAZ patients, including E. coli, identified in 72.3 percent of the 
CONTEPOTM patients and 74.7 percent of the PIP-TAZ patients; 
K. pneumoniae, identified in 14.7 percent of the CONTEPOTM 
patients and 14.0 percent of the PIP-TAZ patients; Enterobacter cloacae 
species complex, identified in 4.9 percent of the CONTEPOTM 
patients and 1.7 percent of the PIP-TAZ patients; and Proteus 
mirabilis, identified in 4.9 percent of the CONTEPOTM 
patients and 2.8 percent of the PIP-TAZ patients. Gram-negative aerobes 
other than Enterobacteriaceae included Pseudomonas aeruginosa, which 
was identified in 4.3 percent of the CONTEPOTM patients and 
5.1 percent of the PIP-TAZ patients, and Acinetobacter baumannii-
calcoaceticus species complex, identified in 1.1 percent of the 
CONTEPOTM patients and none of the PIP-TAZ patients. The 
applicant indicated that these pathogens are representative of the 
pathogens that have been recovered in other studies of patients who 
have been diagnosed with a cUTI or AP.
    In terms of secondary endpoints, the applicant stated that clinical 
cure rates were greater than 90 percent in both treatment groups at TOC 
in the MITT, m-MITT, CE, and ME analysis groups. In addition to the 
findings discussed above, with the post-hoc analysis adjusting for PFGE 
results in both treatment arms, CONTEPOTM demonstrated a 
10.5 percent treatment difference compared to PIP-TAZ with a 
microbiological response rate of 70.7 percent versus 60.1 percent, 
respectively, in the m-MITT population at TOC (95 percent CI: 0.2, 
20.8). The applicant indicated that by specifying the genus and species 
of the bacteria present at the start of treatment, the post-hoc PFGE 
analysis shows that when measuring microbiological eradication rates 
CONTEPOTM demonstrated a positive difference significant at 
the 95 percent confidence level.\79\
---------------------------------------------------------------------------

    \79\ Skarinsky, et al., ``Per Pathogen Outcomes from the ZEUS 
study, a Multi-center, Randomized, Double-Blind Phase II/III Study 
of ZTI-01 (fosfomycin for injection) versus Piperacillin-Tazobactam 
(P-T) in the Treatment of Patients with Complicated Urinary Tract 
Infections (cUTI) including Acute Pyelonephritis (AP),'' 2017.
---------------------------------------------------------------------------

    With respect to safety, the applicant reports that in the ZEUS 
Study a total of 42.1 percent of the CONTEPOTM patients and 
32.0 percent of the PIP-TAZ patients experienced at least one 
treatment-emergent adverse event, or TEAE. Most TEAEs were mild or 
moderate in severity, and severe TEAEs were uncommon (2.1 percent of 
the CONTEPOTM patients and 1.7 percent of the PIP-TAZ 
patients). The most common TEAEs in both treatment groups were 
transient, asymptomatic laboratory abnormalities and gastrointestinal 
events. Treatment-emergent serious adverse events, or SAEs, were 
uncommon in both treatment groups. There were no deaths in the study 
and one SAE in each treatment group was deemed related to the study 
drug (hypokalemia in a CONTEPOTM patient and renal 
impairment in a PIP-TAZ patient), leading to study drug discontinuation 
in the PIP-TAZ patient. Study drug discontinuations due to TEAEs were 
infrequent and similar between treatment groups (3.0 percent of 
CONTEPOTM patients and 2.6 percent of PIP-TAZ patients). The 
applicant further stated that the most common laboratory abnormality 
TEAEs were increases in the levels of alanine aminotransferase (8.6 
percent of CONTEPOTM patients and 2.6 percent of PIP-TAZ 
patients) and aspartate transaminase (7.3 percent of 
CONTEPOTM patients and 2.6 percent of PIP-TAZ patients). 
None of the aminotransferase elevations were symptomatic or treatment-
limiting, and none of the patients met the criteria for Hy's Law (a 
method of assessing a patient's risk of fatal drug-induced liver 
injury). Outside of the United States, elevated liver aminotransferases 
are listed among undesirable effects in labeling for the use of IV 
fosfomycin. Finally, the applicant stated that hypokalemia occurred in 
71 of the 232 (30.6 percent) CONTEPOTM patients and 29 of 
the 230 (12.6 percent) PIP-TAZ patients. Most decreases in potassium 
levels were mild to moderate in severity. Shifts in potassium levels 
from normal at baseline to hypokalemia, as determined by worst post-
baseline hypokalemia values, were more frequent in the patients in the 
CONTEPOTM group than the patients in the PIP-TAZ group for 
mild (17.7 percent compared to 11.3 percent), moderate (11.2 percent 
compared to 0.9 percent), and severe (1.7 percent compared to 0.4 
percent) categories of hypokalemia. Hypokalemia was deemed a TEAE in 
6.4 percent of the patients receiving CONTEPOTM and 1.3 
percent of the patients receiving PIP-TAZ, and all cases were transient 
and asymptomatic. The applicant noted that post-baseline QT intervals 
calculated using Fridericia's formula, or QTcF, of greater than 450 to 
less than

[[Page 19304]]

or equal to 480 msec (baseline QTcF of less than or equal to 450 msec) 
occurred at a higher frequency in CONTEPOTM patients (7.3 
percent) compared to PIP-TAZ patients (2.5 percent). In the 
CONTEPOTM arm, these results appear to be associated with 
the hypokalemia associated with the salt load of the IV formulation. 
Only 1 patient in the PIP-TAZ group had a baseline QTcF of less than or 
equal to 500 msec and a post-baseline QTcF of greater than 500 msec.
    In addition to the assertions of clinical improvement based on its 
pivotal study, the applicant stated that CONTEPO\TM\ provides a broad 
spectrum of in vitro activity against a variety of clinically important 
MDR Gram-negative pathogens, including ESBL-producing 
Enterobacteriaceae, CRE, and Gram-positive pathogens, including 
methicillin-resistant Staphylococcus aureus, or MRSA, and vancomycin-
resistant enterococci.80 81 82 83 The applicant also 
believes that CONTEPO\TM\, due to its unique mechanism of action, has 
demonstrated synergistic or additive activity in in vitro studies when 
used in combination with other antibiotic classes in preclinical 
studies.84 85 86 The applicant further stated that the use 
of CONTEPO\TM\ has the potential to spare the use of carbapenems and 
other last-line therapies and, thereby, has the potential to reduce the 
development of resistance to existing antibiotic classes.\87\ 
Additionally, the applicant believes that the use of CONTEPO\TM\ has 
the potential to reduce patients' hospital lengths of stay and patient 
morbidity due to the ability to provide early appropriate therapy in 
patients who have been diagnosed with suspected or confirmed MDR 
pathogens.88 89 The applicant also stated that the submitted 
literature provides cases wherein the use of CONTEPO\TM\ could provide 
an important treatment option for patients who have been diagnosed with 
infections caused by pathogens resistant to all other available IV 
antibiotics.90 91 Finally, the applicant asserted that the 
use of CONTEPO\TM\ has immunomodulating activities that potentially may 
improve outcomes for serious infections,\92\ and may protect against 
gentamicin induced nephrotoxicity.\93\
---------------------------------------------------------------------------

    \80\ Flamm, R., et al., ``Activity of fosfomycin when tested 
against US contemporary bacterial isolates,'' Diagnostic 
Microbiology and Infectious Disease, 2018.
    \81\ Mendes, R.E., et al., ``Molecular Characterization of 
Clinical Trial Isolates Exhibiting Increased MIC Results during 
Fosfomycin (ZTI-01) Treatment in a Phase II/III Clinical Trial for 
Complicated Urinary Tract Infections (ZEUS),'' 2018.
    \82\ Rhomberg, P., et al., ``Evaluation of Fosfomycin Activity 
When Combined with Selected Antimicrobial Agents and Tested against 
Bacterial Isolates Using Checkerboard Methods,'' 2017.
    \83\ Falagas, M., et al., ``Antimicrobial susceptibility of 
multidrug-resistant (MDR) and extensively drug-resistant (XDR) 
Enterobacteriaceae isolates to fosfomycin,'' International Journal 
of Antimicrobial Agents, 2010.
    \84\ Flamm, R., et al., ``Time Kill Analyses of Concerning Gram-
Negative Bacteria with Fosfomycin Alone and in Combination with 
Select Antimicrobial Agents,'' 2017.
    \85\ Avery & Nicolau, ``In Vitro Synergy of Fosfomycin and 
Parenteral Antimicrobials Against Carbapenem-Nonsusceptible 
Pseudomonas aeruginosa,'' 2018.
    \86\ Albiero, J., et al., ``Pharmacodynamic Evaluation of the 
Potential Clinical Utility of Fosfomycin and Meropenem in 
Combination Therapy against KPC-2-Producing Klebsiella pneumonia,'' 
Antimicrobial Agents and Chemotherapy, 2016.
    \87\ Hayden, M.K. & Won, S.Y., ``Carbapenem-Sparing Therapy for 
Extended-Spectrum [beta]-Lactamase-Producing E coli and Klebsiella 
pneumoniae Bloodstream Infection,'' JAMA, 2018.
    \88\ Mocarski, et al., ``Economic Burden Associated with Key 
Gram-negative Pathogens among Patients with Complicated Urinary 
Tract Infections across US Hospitals,'' 2014.
    \89\ Lodise, et al., ``Carbapenem-resistant Enterobacteriaceae 
(CRE) or Delayed Appropriate Therapy (DAT)--Does One Affect Outcomes 
More Than the Other Among Patients With Serious Infections Due to 
Enterobacteriaceae?,'' 2017.
    \90\ Chen, L., et al., ``Pan-Resistant New Delhi Metallo-Beta-
Lactamase-Producing Klebsiella pneumonia--Washoe County, Nevada, 
2016,'' 2017.
    \91\ Rios, P., et al., ``Extensively drug-resistant (XDR) 
Pseudomonas aeruginosa identified in Lima, Peru co-expressing a VIM-
2 metallo-blactamase, OXA-1 b-lactamase and GES-1 extended-spectrum 
b-lactamase,'' JMM Case Reports, 2018.
    \92\ Zeitlinger, et al., ``Immunomodulatory effects of 
fosfomycin in an endotoxin model in human blood.'' Journal of 
Antimicrobial Chemotherapy, 2007.
    \93\ Yanagida, et al., ``Protective effect of fosfomycin on 
gentamicin-induced lipid peroxidation of rat renal tissue,'' Chem 
Biol Interact, 2004.
---------------------------------------------------------------------------

    We have several concerns regarding whether CONTEPO\TM\ meets the 
substantial clinical improvement criterion. First, we are concerned 
that we are unable to identify if any of the patients enrolled in the 
ZEUS Study were from the United States. As we have noted in previous 
rulemaking (83 FR 41309), given the geographic variability of 
antibiotic resistance, we are unsure to what extent results from 
studies utilizing an international cohort of patients generate 
inferences that are applicable to the U.S. context and, in particular, 
to the Medicare-eligible population.
    Second, we are unsure if PIP-TAZ is the only proper comparator for 
CONTEPO\TM\, or if other treatments should have been considered as 
well. There are a number of additional antimicrobials with similar 
indications that are available for patients who have been diagnosed 
with cUTIs. Such treatments might include meropenem-vaborbactam or 
plazomicin. Prior studies include a meta-analysis of 10 studies (7 
randomized) comparing the clinical efficacy of IV fosfomycin against 
other antibiotics including sulbenicillin, sulbactam/cefoperazone, 
cefotaxime, fosfomycin/colistin, and minocycline/cefuzonam. This meta-
analysis did not observe a difference in clinical efficacy between 
fosfomycin and respective comparators (odds ratio (OR) 1.44, 95 percent 
CI (0.96, 2.15)) irrespective of monotherapy (OR 1.41, 95 percent CI 
(0.83, 2.39)) or combination therapy (OR 1.48, 95 percent CI (0.81, 
2.71.)). The same results were obtained when studies with poor quality 
were excluded (OR 1.45, 95 percent CI (0.94, 2.24)).\94\
---------------------------------------------------------------------------

    \94\ Grabien, et al., ``Intravenous fosfomycin--Back to the 
Future; Systematic Review and Meta-analysis of the Clinical 
Literature,'' Clinical Microbiology and Infection, 2017.
---------------------------------------------------------------------------

    Third, we have two methodological concerns regarding the 
applicant's assertions based on the ZEUS Study. There does not appear 
to be any statistical comparison of the patients in each arm in terms 
of demographics and, therefore, it is difficult to assess whether the 
two intervention arms are balanced as the applicant inferred. We 
acknowledge that use of a double-blinded, randomized study design 
(which was used in the ZEUS Study) should minimize bias and control for 
unmeasured variables between treatment arms. However, we are concerned 
about a lack of detail on the different dropout rates of patients 
within each arm of the ZEUS Study, including data on causes and 
treatment of patients that dropped out and any bias that might 
introduce. We also are concerned that the ZEUS Study did not 
demonstrate a superior clinical outcome with statistical significance 
in its primary endpoint. Rather, the applicant is asserting the 
technology represents a substantial clinical improvement on the basis 
of meeting a secondary endpoint, the cure rates based on additional 
PFGE analysis. In addition, we are concerned that the use of m-MITT, 
rather than ITT, may have biased the results upwards by focusing on a 
subset of the treatment group, rather than the entire random 
sample.\95\
---------------------------------------------------------------------------

    \95\ Beckett, R.D., Loeser, K.C., Bowman, K.R., Towne, T.G., 
``Intention-to-treat and transparency of related practices in 
randomized, controlled trials of anti-infectives,'' BMC Med Res 
Methodol, 2016, vol. 16(1), pp. 106, Published August 24, 2016, 
doi:10.1186/s12874-016-0215-2.
---------------------------------------------------------------------------

    Finally, we are concerned that many of the assertions the applicant 
has made regarding the efficacy of CONTEPOTM on MDR gram-
negative pathogens and broader public health benefits come from in 
vitro studies or may be speculative in nature. It may be helpful

[[Page 19305]]

to have further evidence, particularly prospectively collected and 
tested clinical data, to support the assertions that the use of 
CONTEPOTM reduces hospital lengths of stay and patient 
morbidity, and enhances antibiotic stewardship.
    We are inviting public comments on whether CONTEPOTM 
meets the substantial clinical improvement criterion.
    Below we summarize and respond to a written public comment received 
in response to the New Technology Town Hall meeting notice published in 
the Federal Register regarding the substantial clinical improvement 
criterion for CONTEPOTM.
    Comment: In response to a question presented at the New Technology 
Town Hall meeting, the applicant explained why the post-hoc reanalysis 
of the primary endpoint (overall success, a composite of clinical cure 
and microbiologic eradication) from the ZEUS Study using pulse-field 
gel electrophoresis, which the applicant asserted demonstrated a 
statistically significant difference between CONTEPOTM and 
PIP-TAZ, is clinically important. The applicant stated that the post-
hoc analysis was able to differentiate the patients who had eradication 
of the identified and treated baseline pathogen from those patients who 
developed or were likely to develop another infection from a newly 
acquired pathogen (different strain) following the ~2-week period 
between the end of IV therapy and the test-of-cure evaluation. However, 
the applicant indicated that there are many reasons why patients may 
acquire another pathogen and/or develop new infections after completing 
IV therapy, including indwelling urinary catheters or instrumentation 
(for example, nephrostomy tubes, ureteric stents, etc.) or anatomical 
abnormalities. The applicant stated that because of these confounding 
factors, the PFGE reanalysis allowed for the differentiation of the 
true persistence of the same pathogen that was present at baseline from 
a different pathogen that might look the same, but was clearly 
genetically distinct.
    Response: We appreciate the applicant's further explanation of the 
PFGE analysis. We will take this information into consideration when 
deciding whether to approve new technology add-on payments for 
CONTEPOTM.
e. DuraGraft[supreg] Vascular Conduit Solution
    Somahlution, Inc. submitted an application for new technology add-
on payments for DuraGraft[supreg] for FY 2020. (We note that the 
applicant previously submitted applications for new technology add-on 
payments for DuraGraft[supreg] for FY 2018 and FY 2019, which were 
withdrawn.) According to the applicant, DuraGraft[supreg] is designed 
to protect the endothelium of the vein graft by mitigating ischemic 
reperfusion injury (IRI), the basis of vein graft disease (VGD) and 
vein graft failure (VGF), both of which are intimately linked to graft 
and patient outcomes.\96\ \97\ \98\ According to the applicant, 
specific VGD and VGF clinical outcomes affected by the use of 
DuraGraft[supreg] include reductions in myocardial infarction (MI), 
repeat revascularization and major adverse cardiovascular events 
(MACE). The applicant stated that DuraGraft[supreg] is a preservation 
solution, not a storage solution, used during standard graft handling, 
flushing, and bathing steps.
---------------------------------------------------------------------------

    \96\ Salvadori, M., Rosso, G., and Bertoni, E., ``Update on 
Ischemia-reperfusion Injury in Kidney Transplantation: Pathogenesis 
and Treatment,'' World Transplant, June 24, 2015, vol. 5(2), pp. 52-
67.
    \97\ Osgood, M.J., Hocking, K.M., Voskresensky, I.V., et al., 
``Surgical vein graft preparation promotes cellular dysfunction, 
oxidative stress, and intimal hyperplasia in human saphenous vein,'' 
J Vasc Surg, 2014, vol. 60, pp. 202-211.
    \98\ Shuhaiber, J.H., Evans, A.N., Massad, M.G., and Geha, A.S., 
``Mechanisms and Future Directions for Prevention of Vein Graft 
Failure in Coronary Bypass Surgery,'' European Journal of Cardio-
Thoracic Surgery, vol. 22, Issue 3, September 1, 2002, pp. 387-396.
---------------------------------------------------------------------------

    The applicant indicated that vein graft endothelial damage is the 
principal mediator of VGD following grafting in bypass surgeries.\99\ 
\100\ According to the applicant, the endothelium can be destroyed or 
damaged intraoperatively through the acute physical stress of 
harvesting, storage, and handling, and through more insidious processes 
such as those associated with ischemic injury, metabolic stress and 
oxidative damage. The applicant also noted that vein graft solutions 
can independently damage the endothelium during the harvesting and 
storage stages prior to vein grafting. The applicant also referred to 
more recent information to depict that damage associated with the use 
of graft storage solutions has the highest correlation with the 
development of 12-month VGF following coronary artery bypass grafting 
(CABG).\101\ More specifically regarding vein graft solutions, the 
applicant asserted that there are two processes associated with current 
vein graft solutions that lead to IRI and ultimately VGD: (1) Current 
vein graft solutions cause ``solution damage;'' and (2) current vein 
graft solutions do not protect against IRI, the basis for VGD.\102\ 
\103\ \104\ \105\ \106\ \107\ \108\ According to the applicant, current 
vein graft solutions are used to flush and store vascular grafts during 
the ex vivo ischemic interval of the surgical procedure. However, these 
solutions do not protect the graft from ischemia reperfusion injury and 
have no preservation ability. Further, the applicant asserted that some 
of the solutions are incompatible with graft tissue resulting in 
ischemic damage that is compounded by ``solution damage''.\109\ \110\ 
\111\
---------------------------------------------------------------------------

    \99\ Harskamp, R.E., Alexander, J.H., Schulte, P.J., Brophy, 
C.M., Mack, M.J., Peterson, E.D., Williams, J.B., Gibson, C.M., 
Califf, R.M., Kouchoukos, N.T., Harrington, R.A., Ferguson, Jr., 
T.B., Lopes, R.D., ``Vein Graft Preservation Solutions, Patency, and 
Outcomes After Coronary Artery Bypass Graft Surgery Follow-up From 
PREVENT IV Randomized Clinical Trial,'' JAMA Surg., 2014, vol. 
149(8), pp. 798-805.
    \100\ Testa, L., Bedogni, F., ``Treatment of Saphenous Vein 
Graft Disease: Never Ending Story of the Eternal Return,'' Res 
Cardiovasc Med., 2014, vol. 3(3), e21092.
    \101\ Ibid.
    \102\ Shinjo, H., et al., ``Effect of irrigation solutions for 
arthroscopic surgery on intraarticular tissue: comparison in human 
meniscus-derived primary cell culture between lactate Ringer's 
solution and saline solution,'' Journal of Orthopaedic Research, 
2002, vol. 20, pp. 1305-1310.
    \103\ Breborowicz, A. and Oreopoulos, D.G., ``Is normal saline 
harmful to the peritoneum?'', Perit Dial Int., 2005 Apr; 25 Suppl 
4:S67-70.
    \104\ Pusztaszeri, M.P., Seelentag, Walter, Bosman, F.T., 
``Immunohistochemical Expression of Endothelial Markers CD31, CD34, 
von Willebrand Factor, and Fli-1 in Normal Human Tissues,'' Journal 
of Histochemistry & Cytochemistry, 2006, vol. 54(4), pp. 385-395.
    \105\ Polubinska, A., et al., ``Normal Saline induces oxidative 
stress in peritoneal mesoyhelial cells,'' Journel of Pediatric 
Surgery, 2008, vol. 43, pp. 1821-1826.
    \106\ Sengupta, S., Prabhat, K., Gupta, V., Vij, H., Vij, R., 
Sharma, V., ``Artefacts Produced by Normal Saline When Used as a 
Holding Solution for Biopsy Tissues in Transit,'' J. Maxillofac. 
Oral Surg., (Apr-June 2014), vol. 13(2), pp. 148-151.
    \107\ Wilbring, M., Tugtekin, S.M., Zatschler, B., Ebner, A., 
Reichenspurner, H., Matschke, K., Deussen, A., ``Even short-time 
storage in physiological saline solution impairs endothelial 
vascular function of saphenous vein grafts,'' Eur J Cardiothorac 
Surg., 2011 Oct, vol. 40(4), pp. 811-815.
    \108\ Weiss, D.R., et al., ``Extensive deendothelialization and 
thrombogenicity in routinely prepared vein grafts for coronary 
bypass operations: facts and remedy,'' Int J Clin Exp Med, 2009, 
vol. 2, pp. 95-113.
    \109\ Weiss, D.R., et al., ``Extensive deendothelialization and 
thrombogenicity in routinely prepared vein grafts for coronary 
bypass operations: facts and remedy,'' Int J Clin Exp Med, 2009, 
vol. 2, pp. 95-113.
    \110\ Ibid.
    \111\ Thatte, H.S., Biswas, K.S., Najjar, S.F., Birjiniuk, V., 
Crittenden, M.D., Michel, T., and Khuri, S.F., ``Multi-Photon 
Microscopic valuation of Saphenous Vein Endothelium and Its 
Preservation With a New Solution, GALA,'' Annals Thoracic Surgery, 
2003, vol. 75, pp. 1145-52.
---------------------------------------------------------------------------

    The applicant explained that there are two mechanisms leading to 
VGD: (1) Endothelial damage associated with the

[[Page 19306]]

harvesting and storage processes; and (2) VGD pathophysiological 
changes that occur in damaged vein grafts following reperfusion at the 
time of graft anastomosis. According to the applicant, these changes 
are apparent within minutes to hours of grafting and are manifested as 
endothelial dysfunction, death and/or denudation and include pro-
inflammatory, pro-thrombogenic and aberrant proliferative changes 
within the graft. The applicant further characterized these changes as 
initial endothelial reperfusion phase responses, which set in motion a 
damage-response domino-like effect thereby perpetuating a cycle of 
prolonged reperfusion phase injury with subsequent VGD.
    The applicant further noted that endothelial dysfunction and 
inflammation results not only in the diminished ability of the graft to 
respond appropriately to new blood flow patterns, but also may thwart 
positive adaptive vein graft remodeling. According to the applicant, 
this is because proper vein graft remodeling is dependent upon a 
functional endothelial response to shear stress that involves the 
production of remodeling factors by the endothelium including nitro 
vasodilators, prostaglandins, lipoxyoxygenases, hyperpolarizing factors 
and other growth factors.\112\ Therefore, damaged, missing and/or 
dysfunctional endothelial cells prevent graft adaption, which makes the 
graft susceptible to shear mediated endothelial damage. The applicant 
explained that the collective damage results in intimal hyperplasia or 
graft wall thickening that is the basis for atheroma development, 
stenosis and subsequent lumen narrowing leading to the end state of 
VGD, VGF.\113\ The applicant also noted that the pathologic changes 
leading to VGD, occlusion and loss of vasomotor function, are well 
documented.\114\ \115\ \116\ \117\ \118\ \119\ \120\ Presenting an 
intact functional endothelial layer at the time of grafting is, 
therefore, critical to protecting the graft and its associated 
endothelium from damage that occurs post-grafting, in turn conferring 
protection against graft failure.\121\ The applicant stated that given 
the low success rate of VGF intervention after surgery (for example, 
percutaneous coronary intervention and saphenous vein graft 
intervention \122\), addressing graft endothelial protection at the 
time of surgery is critical.
---------------------------------------------------------------------------

    \112\ Owens, C.D., ``Adaptive changes in autogenous vein grafts 
for arterial reconstruction: Clinical Implications,'' J Vasc Surg., 
2010 March; vol. 51(3), pp. 736-746.
    \113\ Murphy, G.J. and Angelini, G.D., ``Insights into the 
pathogenesis of vein graft disease: lessons from intravascular 
ultrasound,'' Cardiovascular Ultrasound, 2004, 2:8.
    \114\ Verrier, E.D., Boyle, E.M., ``Endothelial cell injury in 
cardiovascular surgery: an overview,'' AnnThorac Surg, 1996, vol. 
64, pp. S2-S8.
    \115\ Harskamp, R.E., Lopes, R.D., Baisden, C.E., et al., 
``Saphenous vein graft failure after coronary artery bypass surgery: 
pathophysiology, management, and future directions,'' Ann Surg., 
2013 May, vol. 257(5), pp. 824-33.
    \116\ Sellke, F.W., Boyle, E.M., Verrier, E.D., ``The 
pathophysiology of vasomotor dysfunction,'' Ann Thorac Surg, 1996, 
vol. 64, pp. S9-S15.
    \117\ Motwani, J.G., Topol, E.J., ``Aortocoronary saphenous vein 
graft disease: pathogenesis, predisposition and prevention,'' 
Circulation, 1998, vol. 97(9), pp. 916-31.
    \118\ Mills, N.L., Everson, C.T., ``Vein graft failure,'' Curr 
Opin Cardiol, 1995, vol. 10, pp. 562-8.
    \119\ Davies, M.G., Hagen, P.O., ``Pathophysiology of vein graft 
failure: a review,'' Eur J Vasc Endovasc Surg, 1995, vol. 9, pp. 7-
18.
    \120\ Edmunds, L.H., ``Techniques of myocardial 
revascularization. In: Edmunds LH, ed. Cardiac surgery in the 
adult,'' New York: McGraw-Hill, 1997, pp. 481-534.
    \121\ Kim FY, Marhefka G, Ruggiero NJ, et al. Saphenous vein 
graft disease: review of pathophysiology, prevention, and treatment. 
Cardiol Rev, 2013;21(2):101-9.
    \122\ Testa, L., Bedogni, F., ``Treatment of Saphenous Vein 
Graft Disease: Never Ending Story of the Eternal Return,'' Res 
Cardiovasc Med., 2014, vol. 3(3), e21092.
---------------------------------------------------------------------------

    With respect to the newness criterion, DuraGraft[supreg] has not 
received FDA approval as of the time of the development of this 
proposed rule. The applicant indicated that it anticipates FDA approval 
of its premarket application by July 1, 2019. The applicant also 
indicated that ICD-10-PCS code XY0VX83 (Extracorporeal introduction of 
endothelial damage inhibitor to vein graft, New Technology Group 3) 
would identify procedures involving the use of the DuraGraft[supreg] 
technology.
    As discussed earlier, if a technology meets all three of the 
substantial similarity criteria, it would be considered substantially 
similar to an existing technology and would, therefore, not be 
considered ``new'' for purposes of new technology add-on payments.
    With regard to the first criterion, whether a product uses the same 
or similar mechanism of action to achieve a therapeutic outcome, 
according to the applicant, there are currently no other treatment 
options available with the same mechanism of action as that of 
DuraGraft[supreg]. According to the applicant, the currently available 
vein graft solutions, which consist of saline, buffered saline, blood, 
and electrolyte solutions, are not preservation solutions but 
``storage'' solutions that do not protect the graft vascular 
endothelium nor mitigate IRI, the basis of VGD.\123\ \124\ \125\ \126\ 
The applicant stated that these solutions are used merely to keep 
grafts wet from the time they are harvested until the time they are 
used in CABG. According to the applicant, exposure of saphenous vein 
grafts to these solutions has been shown to cause significant damage to 
the graft within minutes.\127\ \128\ \129\ \130\
---------------------------------------------------------------------------

    \123\ Salvadori, M., Rosso, G., and Bertoni, E., ``Update on 
Ischemia-reperfusion Injury in Kidney Transplantation: Pathogenesis 
and Treatment,'' World Transplant, June 24, 2015, vol. 5(2), pp. 52-
67.
    \124\ Lee, J.C. and Christie, J.D., ``Primary Graft 
Dysfunction,'' Proc Am Thorac Soc., 2009, vol. 6, pp 39-46.
    \125\ Osgood, M.J., Hocking, K.M., Voskresensky, I.V., et al., 
``Surgical vein graft preparation promotes cellular dysfunction, 
oxidative stress, and intimal hyperplasia in human saphenous vein,'' 
J Vasc Surg, 2014, vol. 60, pp. 202-211.
    \126\ Shuhaiber, J.H., Evans, A.N., Massad, M.G., and Geha, 
A.S., ``Mechanisms and Future Directions for Prevention of Vein 
Graft Failure in Coronary Bypass Surgery,'' European Journal of 
Cardio-Thoracic Surgery, vol. 22, Issue 3, September 1, 2002, pp. 
387-396.
    \127\ Weiss, D.R., et al., ``Extensive deendothelialization and 
thrombogenicity in routinely prepared vein grafts for coronary 
bypass operations: facts and remedy,'' Int J Clin Exp Med, 2009, 
vol. 2, pp. 95-113.
    \128\ Wilbring, M., Tugtekin, S.M., Zatschler, B., Ebner, A., 
Reichenspurner, H., Matschke, K., Deussen, A., ``Even short-time 
storage in physiological saline solution impairs endothelial 
vascular function of saphenous vein grafts,'' Eur J Cardiothorac 
Surg., 2011 Oct, vol. 40(4), pp. 811-815.
    \129\ Tsakok, M., Montgomery-Taylor, S. and Tsakok, T., 
``Storage of saphenous vein grafts prior to coronary artery bypass 
grafting: is autologous whole blood more effective than saline in 
preserving graft function?'' Inter Cardiovasc Thorac Surg, 2012, 
vol. 15, pp. 720-25.
    \130\ Thatte, H.S., Biswas, K.S., Najjar S.F., Birjiniuk, V., 
Crittenden, M.D., Michel, T., and Khuri, S.F., ``Multi-Photon 
Microscopic valuation of Saphenous Vein Endothelium and Its 
Preservation With a New Solution, GALA.'' Annals Thoracic Surgery, 
2003, vol. 75, pp. 1145-52.
---------------------------------------------------------------------------

    The applicant explained that DuraGraft[supreg] is a formulated 
``preservation'' solution that can be used during handling, flushing, 
and bathing steps without changing standard surgical practice. 
According to the applicant, the handling step includes using an 
atraumatic surgical technique, avoiding over pressurization and 
checking for leakage, excessive handling and distortion. The applicant 
further noted that vascular segments (that become vascular grafts) are 
comprised of a number of different cell types that function together in 
an integrated manner post-grafting and, therefore, protection of all 
cell types during graft flushing and storage is critical for 
maintenance of graft viability and normal graft functioning.
    The applicant indicated that DuraGraft[supreg] separates itself 
from current vein graft solutions through its unique

[[Page 19307]]

composition of ingredients, a physiologic saline solution that combines 
free radical scavengers and antioxidants (glutathione, ascorbic acid) 
and nitric oxide synthase substrate (L-arginine), as discussed later in 
this section. According to a summary of ex vivo performance data and 
studies provided by the applicant, the use of DuraGraft[supreg] has 
been shown to preserve vascular graft viability, as well as graft 
functional and structural integrity during ex vivo storage and 
flushing.\131\ \132\ \133\ The applicant noted that these studies 
evaluated graft cellular viability and structural integrity and 
assessed molecular and biochemical markers of normal endothelial 
functioning. Specifically, endothelial and smooth muscle cells were 
assessed.
---------------------------------------------------------------------------

    \131\ Thatte, H.S., Biswas, K.S., Najjar S.F., Birjiniuk, V., 
Crittenden, M.D., Michel, T., and Khuri, S.F., ``Multi-Photon 
Microscopic valuation of Saphenous Vein Endothelium and Its 
Preservation With a New Solution, GALA.'' Annals Thoracic Surgery, 
2003, vol. 75, pp. 1145-52.
    \132\ Hussaini, B.E., Lu, X.G., Wolfe, A., Thatte, H.S., 
``Evaluation of Endoscopic Vein extraction on Structural and 
Functional Viability of Saphenous Vein Endothelium,'' J Cardothorac 
Surg, 2011, vol. 6, pp. 82-89.
    \133\ Rousou, L.J., Taylor, K.B., Lu, X.G., et al., ``Saphenous 
vein conduits harvested by endoscopic technique exhibit structural 
and functional damage,'' Ann Thorac Surg, 2009, vol. 87, pp. 62-70.
---------------------------------------------------------------------------

    All veins used in these studies were collected from patients 
undergoing cardiac bypass surgery at the Boston VA or Saint Joseph's 
Hospital of Atlanta. Veins were harvested using the ``Open Saphenous 
Vein Harvest'' (OSVH) technique.\134\ \135\ \136\ Segments of the 
collected veins not being used for the bypass surgery were used for the 
performance bench studies.
---------------------------------------------------------------------------

    \134\ Ibid.
    \135\ Hussaini, B.E., Lu, X.G., Wolfe, A., Thatte, H.S., 
``Evaluation of Endoscopic Vein extraction on Structural and 
Functional Viability of Saphenous Vein Endothelium,'' J Cardothorac 
Surg, 2011, vol. 6, vol. 82-89.
    \136\ Thatte, H.S., Biswas, K.S., Najjar, S.F., Birjiniuk, V., 
Crittenden, M.D., Michel, T., and Khuri, S.F., ``Multi-Photon 
Microscopic valuation of Saphenous Vein Endothelium and Its 
Preservation With a New Solution, GALA.'' Annals Thoracic Surgery, 
2003, vol. 75, pp. 1145-52.
---------------------------------------------------------------------------

    According to the applicant, viability studies conducted in 
conjunction with multi-photon microscopy demonstrated a protective 
effect from the use of DuraGraft[supreg] on vascular endothelial 
viability and graft structural integrity for storage times of up to 5 
hours at room temperature (21 [deg]C).\137\ The applicant also stated 
that, conversely, vascular segments were not able to be maintained in a 
viable condition when stored for as short a time as 15 minutes in 
standard-of-care solutions consistent with what has been published by 
others. According to the applicant, DuraGraft[supreg] demonstrated its 
ability to preserve the viability, structure and function of 
endothelium in radial and internal mammary arteries, as well as 
saphenous veins for extended periods.\138\
---------------------------------------------------------------------------

    \137\ Ibid.
    \138\ Ibid.
---------------------------------------------------------------------------

    According to the information submitted by the applicant, the 
ingredients found in DuraGraft[supreg] play a primary role in 
DuraGraft[supreg] exhibiting a different mechanism of action from other 
solutions that are commonly used to treat the same disease process and 
patient population. According to the study cited by the applicant, the 
rapid loss of endothelial cell structural and functional integrity in 
saphenous veins stored in standard storage solutions can be avoided by 
incorporating a physiologic saline solution that combines free radical 
scavengers and antioxidants (glutathione, ascorbic acid) and nitric 
oxide synthase substrate (L-arginine) providing a favorable environment 
and cellular support during ex vivo storage.\139\ The same study also 
indicated that these three ingredients were chosen because of their 
putative effect on endothelial cell function and that their use may act 
synergistically to enhance the cell preservation properties of the 
solution. The authors of the study asserted that glutathione increases 
L-arginine transport in endothelial cells and may lead to the formation 
of biologically active S-nitrosoglutathione and to the stimulation of 
endothelial nitric oxide synthase (eNOS) activity, nitric oxide 
generation, and coronary vasodilatation. According to the authors, 
ascorbic acid also increases eNOS activity by preserving endothelium-
derived nitric oxide bioactivity by possibly scavenging superoxide 
anions and preventing oxidative destruction of tetrahydrobiopterin, an 
eNOS cofactor. Furthermore, according to the study, the presence of 
ascorbic acid in a physiologic saline solution may prevent the 
oxidation of this eNOS cofactor during vessel storage and help maintain 
eNOS function and nitric oxide generation in vascular endothelium. The 
study authors also noted that ascorbic acid, by its reducing property, 
may assist sustained long-term release of nitric oxide from these 
compounds in vessels preserved in a physiologic saline solution and, 
therefore, help maintain the patency and tone of the vessels during 
storage. Additionally, according to the authors of the study, ascorbic 
acid mediated reversal of endothelial dysfunction, reduced platelet 
activation and leukocyte adhesion, inhibited smooth muscle cell 
proliferation and lipid peroxidation, and increased prostacyclin 
production which have been demonstrated in numerous cardiovascular 
pathologies. Finally, the authors stated that L-arginine is a known 
substrate of nitric oxide synthase and has been shown to decrease 
neutrophil-endothelial cell interactions in inflamed vessels.\140\
---------------------------------------------------------------------------

    \139\ Thatte, H.S., Biswas, K.S., Najjar, S.F., Birjiniuk, V., 
Crittenden, M.D., Michel, T., and Khuri, S.F., ``Multi-Photon 
Microscopic valuation of Saphenous Vein Endothelium and Its 
Preservation With a New Solution, GALA.'' Annals Thoracic Surgery, 
2003, vol. 75, pp. 1145-52.
    \140\ Ibid.
---------------------------------------------------------------------------

    Regarding the second criterion, whether a product is assigned to 
the same or different MS-DRG, according to the applicant, cases 
involving patients who may be eligible to receive treatment involving 
DuraGraft[supreg] would be assigned to the same MS-DRGs as patients who 
received treatment involving heparinized blood, saline, and electrolyte 
solutions.
    Regarding 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 heparinized blood, saline and electrolyte solutions 
involve treatment of the same disease process and the same patient 
population as DuraGraft[supreg].
    Based on the applicant's statements presented above, we are 
concerned that the mechanism of action of DuraGraft[supreg] may be the 
same or similar to other vein graft storage solutions. Specifically, we 
are concerned that current solutions used in vein graft surgical 
procedures may be similar to DuraGraft[supreg] in composition and 
treatment indication and, therefore, have the same or similar mechanism 
of action. We are inviting public comments on whether the 
DuraGraft[supreg] meets the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion. In order to identify the range of MS-DRGs that cases 
representing potential patients who may be eligible for treatment using 
DuraGraft[supreg] may map to, the applicant identified all MS-DRGs for 
patients who underwent CABG. Specifically, the applicant searched the 
FY 2017 MedPAR file for Medicare fee-for-service inpatient hospital 
claims submitted between October 1, 2016 and September 30, 2017, and 
identified potential cases that may be eligible for treatment using 
DuraGraft[supreg] by the following ICD-10-PCS procedure codes:

[[Page 19308]]



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

    This resulted in potential eligible cases spanning 100 MS-DRGs, 
with approximately 93 percent of all of these potential cases, 66,553, 
mapping to the following 10 MS-DRGs:

------------------------------------------------------------------------
          MS-DRG                            MS-DRG title
------------------------------------------------------------------------
MS-DRG 003................  Extracorporeal Membrane Oxygenation (ECMO)
                             or Tracheostomy with Mechanical Ventilation
                             >96 Hours or Principal Diagnosis Except
                             Face, Mouth & Neck with Major Operating
                             Room Procedure.
MS-DRG 216................  Cardiac Valve and Other Major Cardiothoracic
                             Procedures with Cardiac Catheterization
                             with MCC.
MS-DRG 219................  Cardiac Valve and Other Major Cardiothoracic
                             Procedures without Cardiac Catheterization
                             with MCC.
MS-DRG 220................  Cardiac Valve and Other Major Cardiothoracic
                             Procedures without Cardiac Catheterization
                             with CC.
MS-DRG 228................  Other Cardiothoracic Procedures with MCC.
MS-DRG 229................  Other Cardiothoracic Procedures without CC.
MS-DRG 233................  Coronary Bypass with Cardiac Catheterization
                             with MCC.
MS-DRG 234................  Coronary Bypass with Cardiac Catheterization
                             without MCC.
MS-DRG 235................  Coronary Bypass without Cardiac
                             Catheterization with MCC.
MS-DRG 236................  Coronary Bypass without Cardiac
                             Catheterization without MCC.
------------------------------------------------------------------------

    Using the 66,553 identified cases, the average case-weighted 
unstandardized charge per case was $212,885. The applicant then 
standardized the charges. The applicant did not remove charges for any 
current treatment because the applicant indicated that there are no 
other current treatment options available. The applicant noted that it 
did not provide an inflation factor to project future charges. The 
applicant added $2,751 in charges for the costs of the 
DuraGraft[supreg] technology. This charge was created by assuming the 
DuraGraft[supreg] technology will cost $850 per unit as estimated by 
the applicant, and by applying the national average CCR for implantable 
devices of 0.309 from the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41273) to the cost of the device. According to the applicant, no 
further charges or related charges were added. Based on the FY 2019 
IPPS/LTCH PPS final rule correction notice data file thresholds, the 
average case-weighted threshold amount was $172,965. The final average 
case-weighted standardized charge per case was $195,799. Because the 
final average case-weighted standardized charge per case exceeds the 
average case-weighted threshold amount, the applicant maintained that 
the technology meets the cost criterion. We are inviting public 
comments on whether DuraGraft[supreg] meets the cost criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that the use of DuraGraft[supreg] significantly 
reduces clinical complications, such as MI, repeat revascularization 
and MACE, associated with VGF following CABG surgery. The applicant 
cited the following studies and report, each of which is summarized 
below, to substantiate its assertions regarding substantial clinical 
improvement: (1) Project of Ex-vivo Vein Graft Engineering via 
Transfection (PREVENT IV) Subanalysis; (2) European Retrospective Pilot 
Study (unpublished); (3) U.S. Department of Veterans Affairs (USDVA) 
Hospital Retrospective Study; and (4) the SWEDEHEART 2016 Annual 
Report.
    PREVENT IV is a prospective study that enrolled 3,000 patients and 
included protocol driven angiograms at 12 months post-CABG, as opposed 
to clinically-driven angiograms to evaluate the true incidence of VGF 
following CABG surgery where standard-of-care solutions were used.\141\ 
Harskamp, et al. conducted subanalyses of the study data and found from 
dozens of factors evaluated for impact on the development of 12-month 
VGF (VGF was defined as a stenosis of the vein graft diameter of 75 
percent or greater) that exposure to solutions used in PREVENT IV 
(saline, blood, or buffered saline) for intra-operative graft wetting 
and storage have the largest correlation with the development of 
VGF.142 143

[[Page 19309]]

According to the applicant, short-term exposure of free vascular grafts 
to these solutions is routine in CABG operations, where 10 minutes to 3 
hours may elapse between the vein harvest and 
reperfusion.144 145 According to Harskamp, et al., the 
results of the PREVENT IV study showed that the majority of patients 
had grafts preserved in saline, 1,339 patients (44.4 percent), followed 
by 971 patients (32.2 percent) with grafts preserved in blood, and 507 
patients (16.8 percent) with grafts preserved in buffered saline. One-
year VGF rates were much lower in the patients who were treated in the 
buffered saline group than in the patients who were treated in the 
saline group (patient-level odds ratio [OR], 0.59 [95 percent CI, 0.45-
0.78; P<.001]; graft-level OR, 0.63 [95 percent CI, 0.49-0.79; P<.001]) 
or in the patients who were treated in the blood group (patient-level 
OR, 0.62 [95 percent CI, 0.46-0.83; P=.001]; graft-level OR, 0.63 [95 
percent CI, 0.48-0.81; P<.001]), and the use of buffered saline 
solution also tended to be associated with a lower 5-year risk for 
death, MI or subsequent revascularization compared with saline (hazard 
ratio, 0.81 [95 percent CI, 0.46-0.83; P=.001]; graft-level OR, 0.63 
[95 percent CI, 0.48-0.81; P<.001]).\146\ The applicant asserted that 
the results from the PREVENT IV subanalyses support the notion that 
unlike DuraGraft[supreg], standard-of-care solutions heparinized saline 
and heparinized autologous blood used for intra-operative graft wetting 
and storage, were never designed to protect vascular grafts and have 
also demonstrated an inability to protect against ischemic injury, 
actively harming the graft endothelium as 
well.147 148 149 150
---------------------------------------------------------------------------

    \141\ Alexander, J.H., Hafley, G., Harrington, R.A., et al., 
``Efficacy and safety of Edifoligide, an E2F Transcription Factor 
Decoy, for Prevention of Vein Graft Failure Following Coronary 
Artery Bypass Graft Surgery: PREVENT IV: A Randomized Controlled 
Trial,'' JAMA, 2005, vol. 294, pp. 2446-54.
    \142\ Harskamp, R.E., Alexander, J.H., Schulte, P.J., Brophy, 
C.M., Mack, M.J., Peterson, E.D., Williams, J.B., Gibson, C.M., 
Califf, R.M., Kouchoukos, N.T., Harrington, R.A., Ferguson, Jr., 
T.B., Lopes, R.D., ``Vein Graft Preservation Solutions, Patency, and 
Outcomes After Coronary Artery Bypass Graft Surgery Follow-up From 
PREVENT IV Randomized Clinical Trial,'' JAMA Surg., 2014, vol. 
149(8), pp. 798-805.
    \143\ Hess, C.N., Lopes, R.D., Gibson, C.M., et al., ``Saphenous 
vein graft failure after coronary artery bypass surgery: insights 
from PREVENT IV,'' Circulation, 2014 Oct 21, vol. 130(17), pp. 1445-
51.
    \144\ Motwani, J.G., Topol, E.J., ``Aortocoronary saphenous vein 
graft disease: pathogenesis, predisposition and prevention,'' 
Circulation, 1998, vol. 97(9), pp. 916-31.
    \145\ Mills, N.L., Everson, C.T., ``Vein graft failure,'' Curr 
Opin Cardiol, 1995, vol. 10, pp. 562-8.
    \146\ Harskamp, R.E., Alexander, J.H., Schulte, P.J., Brophy, 
C.M., Mack, M.J., Peterson, E.D., Williams, J.B., Gibson, C.M., 
Califf, R.M., Kouchoukos, N.T., Harrington, R.A., Ferguson, Jr., 
T.B., Lopes, R.D., ``Vein Graft Preservation Solutions, Patency, and 
Outcomes After Coronary Artery Bypass Graft Surgery Follow-up From 
PREVENT IV Randomized Clinical Trial,'' JAMA Surg., 2014, vol. 
149(8), pp. 798-805.
    \147\ Ibid.
    \148\ Weiss, D.R., et al., ``Extensive deendothelialization and 
thrombogenicity in routinely prepared vein grafts for coronary 
bypass operations: facts and remedy,'' Int J Clin Exp Med, 2009; 
vol. 2, pp. 95-113.
    \149\ Wilbring, M., Tugtekin, S.M., Zatschler, B., Ebner, A., 
Reichenspurner, H., Matschke, K., Deussen, A., ``Even short-time 
storage in physiological saline solution impairs endothelial 
vascular function of saphenous vein grafts,'' Eur J Cardiothorac 
Surg., 2011 Oct, vol. 40(4), pp. 811-815.
    \150\ Thatte, H.S., Biswas, K.S., Najjar, S.F., Birjiniuk, V., 
Crittenden, M.D., Michel, T., and Khuri, S.F., ``Multi-Photon 
Microscopic valuation of Saphenous Vein Endothelium and Its 
Preservation With a New Solution, GALA.'' Annals Thoracic Surgery, 
2003, vol. 75, pp. 1145-52.
---------------------------------------------------------------------------

    In order to assess clinical outcomes associated with the use of 
DuraGraft[supreg], the applicant opted to use readily available 
databases associated with two hospitals that had noncommercial access 
to the product through hospital pharmacies and, therefore, had real 
world use of DuraGraft[supreg] treatment. The two retrospective cohort 
studies, the European Retrospective Pilot Study and the USDVA Hospital 
Retrospective Study, used these data bases to evaluate the 
effectiveness and safety of the use of DuraGraft[supreg] during CABG 
surgical procedures for post-CABG clinical complications associated 
with VGF, including MI, repeat revascularization and MACE.
    The European Retrospective Pilot Study (which was a feasibility 
study) was a retrospective study conducted to assess the safety and 
efficacy of DuraGraft[supreg] treatment on both short (less than 30 
days) and long-term (greater than or equal to 30 days and up to 5 
years) clinical outcomes. This study became the basis for the design of 
a larger retrospective study conducted at the USDVA Hospital, discussed 
below. The feasibility study is unpublished.
    The European Retrospective Pilot study is a single-center clinical 
study of CABG patients to evaluate the potential benefits of 
DuraGraft[supreg] treatment as compared to a no-treatment control group 
(saline). The investigator, who prepared the analysis, remained blinded 
to individual patient data. A total of 630 patients who underwent 
elective and isolated CABG surgery with at least one saphenous vein 
graft between January 2002 and December 2008 were included. Eligibility 
criteria were: (1) Patients with first-time CABG surgery in which at 
least one vein graft was used; and (2) patients with in-situ internal 
mammary artery (IMA) graft(s) only (no saphenous vein or free arterial 
grafts). The single patient exclusion criteria were concomitant valve 
surgery and/or aortic aneurysm repair. The institutional review board 
of the University Health Alliance (UHA) approved the protocol, and 
patients gave written informed consent for their follow-up. The no-
treatment control group (saline) included 375 patients who underwent 
CABG surgery from January 2002 to May 2005, and the DuraGraft[supreg] 
treatment group included 255 patients who underwent CABG surgery from 
June 2005 to December 2008. During long-term follow-up, 5 patients were 
lost to follow-up, and 10 patients died before the 30-day follow-up. 
Therefore, a total of 247 patients from the DuraGraft[supreg] treatment 
group (97 percent) and 368 patients from the no-treatment control group 
(saline) (98 percent) were available for the long-term analysis. 
Patients undergoing CABG surgery whose vascular grafts were treated 
intra-operatively with DuraGraft[supreg] demonstrated no statistically 
significant differences in MACE within the first 30 days following CABG 
surgery. According to the applicant, these data suggest that 
DuraGraft[supreg] treatment is at least as safe as the standard-of-care 
used in CABG surgeries. Long-term outcomes between the two groups were 
not statistically different. However, also according to the applicant, 
a consistent numerical trend toward improved clinical outcomes for the 
DuraGraft[supreg] treatment group compared to the no-treatment control 
(saline) group was clearly identified. Although statistically 
insignificant, there was a consistent reduction observed in the rates 
for multiple endpoints such as all-cause death, MI, MACE, and 
revascularization. This study found reductions in DuraGraft[supreg]-
treated grafts relative to saline for revascularization (57 percent), 
MI (70 percent), MACE (37 percent), and all-cause death (23 percent) 
compared to standard-of-care (heparinized saline/blood) through 5 years 
follow-up. According to the applicant, based on the small sample size 
for this evaluation of less than 630 patients and the known frequencies 
of these events following CABG surgeries, statistical differences were 
not expected. A subsequent post-hoc analysis also was performed by the 
researchers at CHU Angers to evaluate whether any long-term clinical 
variables (such as dual antiplatelet therapy, beta-blockers, 
angiotensin receptor-blockers, statins, diabetes, lifestyle and other 
factors) had any impact on the clinical outcomes of the study. The 
conclusions of the post-hoc analyses were that the assessed long-term 
clinical variables did not impact the clinical study outcomes.
    The second study, the USDVA Hospital Retrospective Study, was an 
unpublished, independent PI initiated, single-center, multi-surgeon, 
retrospective, comparative (DuraGraft[supreg] vs. Saline) clinical 
trial, which was conducted to assess the safety and impact of 
DuraGraft[supreg] treatment on both short and long-term clinical 
outcomes in patients who underwent isolated CABG surgery with saphenous 
vein grafts (SVGs) at the Boston (West Roxbury) VA

[[Page 19310]]

Medical Center between 1996 and 2004. From 1996 through 1999, 
DuraGraft[supreg] treatment was not available and heparinized saline 
was routinely used to wet and store grafts. From 2001 through 2004, the 
Boston VA Medical Center began exclusively using DuraGraft[supreg], 
which was prepared by the hospital's pharmacy. The applicant 
highlighted that 2000 data was omitted from this analysis by the PI due 
to the transition into the use of DuraGraft[supreg] and the uncertainty 
of whether DuraGraft[supreg] or heparinized saline was used in CABG 
patients during the transition period. Short-term clinical outcomes 
were defined as perioperative and early post-operative events occurring 
within the first 30 days after CABG including perioperative MI, 
prolonged ventilation time (greater than 48 hours), prolonged time in a 
coma (greater than 24 hours), renal failure, and death. Long-term 
clinical outcomes were defined as events occurring greater than 30 days 
after CABG including the need for repeat revascularization (that is, 
repeat CABG or percutaneous coronary intervention [PCI]), non-fatal 
acute MI (NFMI), all-cause death, and a composite of these MACE. The 
primary study outcome was repeat revascularization, and the secondary 
outcomes included MACE, NFMI, and all cause death.
    According to the applicant, although the study represents the non-
contemporaneous use of saline and DuraGraft[supreg], the potential 
effect of ``time of CABG'' on outcomes was minimized in large part by 
the fact that this was a single-center study in which the same surgeons 
performed surgeries throughout the timeframe of this study. 
Additionally, the applicant explained that published evidence 
(including evidence collected from the same center) indicates that 
outcomes from CABG surgery such as mortality, MI, and repeat 
revascularization have not changed significantly between the time of 
this study and the present day, suggesting that surgical and medical 
improvements, differences in patient selection, and other factors which 
may have occurred over the timeframe of the study likely had little 
influence over the study results and, therefore, the statistically 
significant differences that were observed are due to ``study article'' 
effect.151 152 153
---------------------------------------------------------------------------

    \151\ Goldman, S., Zadina, K., Mortiz, T., et al., ``Long-term 
patency of saphenous vein and left internal mammary grafts after 
coronary artery bypass surgery: results from a Department of 
Veterans Affairs Cooperative Study,'' J Am Coll Cardiol, 2004, vol. 
44, pp. 2149-2156.
    \152\ Granger, D.N. and Kvietys, P.R., ``Reperfusion Injury and 
Reactive Oxygen Species: The Evolution of a Concept.'' Redox Biol. 
2015 Dec; 6: 524-551. Published online 2015 Oct 8. doi: 10.1016/
j.redox.2015.08.020.
    \153\ Guibert, E.E., Petrenko, A.Y., Balaban, C.L., Somov, A.Y., 
Rodriguez, J.V., and Fuller, B.J., ``Organ Preservation: Current 
Concepts and New Strategies for the Next Decade,'' Transfus Med 
Hemother, 2011, vol. 38, pp. 125-142.
---------------------------------------------------------------------------

    Data were extracted from a total of 2,436 patients who underwent a 
CABG procedure with at least 1 SVG from 1996 through 1999 (saline 
control n=1,400 patients) and 2001 through 2004 (DuraGraft[supreg] 
treatment n=1,036 patients). Patients were excluded from the study if 
they had a prior history of CABG, had no use of SVG, or underwent 
additional procedures during the CABG surgery.
    Review of patient characteristics between the two treatment arms 
found the median age for the control group was 66 years old and 67 
years old for the DuraGraft[supreg] treatment group. Mean follow-up in 
the control treatment group was 9.95.6 years and 8.54.2 years for the DuraGraft[supreg] treatment group.
    Short-term clinical outcomes showed frequencies for individual 
outcomes were low, at less than 5 percent for both treatment groups. 
However, according to the applicant, there was a statistically 
significant 77 percent reduction of perioperative MI in the 
DuraGraft[supreg] group compared to the saline group, which may have 
indicated a potential short-term benefit related to preserving the 
endothelium.
    Long-term clinical outcomes for patients treated with 
DuraGraft[supreg] compared to saline showed DuraGraft[supreg] patients 
with significantly lower risk of repeat revascularization (primary 
endpoint), non-fatal MI, and MACE outcomes. According to the applicant, 
the frequency of repeat revascularization was significantly lower after 
DuraGraft[supreg] treatment starting at 1,000 days onwards with a 
statistically significant adjusted 35 percent risk reduction. 
Additionally, the applicant noted that the use of DuraGraft[supreg] was 
associated with significantly lower risk for non-fatal MI beginning at 
30 days post CABG with an adjusted risk reduction of 36 percent 
(HR:0.687; 95 percent CI: 0.499, 0.815; p=0.0003). This effect was even 
more profound at 1,000 days onward, with a statistically significant 
risk reduction of up to 45 percent. Finally, the applicant noted that 
the occurrence of MACE was significantly reduced after 
DuraGraft[supreg] treatment, with an adjusted risk reduction of 19 
percent starting at 1,000 days after CABG. Both crude and inverse 
probability weighting (IPW) adjusted models for these long-term 
outcomes were summarized. Long-term mortality was comparable between 
treatment groups: neither the crude nor IPW-adjusted model showed a 
significant association between DuraGraft[supreg] exposure and time to 
death, either beginning 30 days or 1,000 days after initial CABG 
surgery. According to the applicant, this study supports not only 
safety, but also improved long-term clinical outcomes in 
DuraGraft[supreg]-treated CABG patients.
    According to the applicant, the data collected from this 
statistically-powered USDVA Hospital Retrospective Study are consistent 
with data collected in the European Retrospective Pilot Study in which 
trend toward reductions of MI, repeat revascularization, and MACE were 
observed in the DuraGraft[supreg] treatment group, lending confidence 
that the observed trends in this study, as well as the European 
Retrospective Pilot Study, represent real differences associated with 
DuraGraft[supreg] use.
    The applicant also referenced data from the SWEDEHEART 2016 Annual 
Report, a report on data extracted from the Swedish Cardiac Surgery 
Registry, to assess whether changes in the surgical procedure and post-
op medications over the timeline of the USDVA Hospital Retrospective 
Study could have impacted the clinical outcomes. The applicant believed 
that these mortality data, which overlapped with the timeframe of the 
USDVA Hospital Retrospective Study, would provide an indication of 
whether such changes in the CABG procedure occurred over the relevant 
time period.
    The applicant stated that the SWEDEHEART 2016 Annual Report was 
published in 2017 and documented a fairly constant mortality rate 
between 1995 and 2005 (we refer readers to the table below), which 
overlapped the timeframe of the USDVA Hospital Retrospective Study 
(1996 through 2004). The applicant noted that the data from the 
SWEDEHEART 2016 Annual Report was extracted from the Swedish Cardiac 
Surgery Registry, which collects data from all centers that are 
performing, or have been performing, cardiac surgery in Sweden since 
1992 and maintains 100 percent of the data covering the number of adult 
cardiac surgery procedures. The applicant indicated that mortality data 
are derived from the Swedish national population registry and, 
therefore, are considered 100 percent complete and accurate. The 
applicant noted that the 30-day mortality rate between 1996 and 2004 
(the timeframe of the USDVA Hospital Retrospective Study) remained 
fairly constant, even with CABG procedures performed by several 
different hospitals and surgeons. According to the applicant, these 
data indicate that

[[Page 19311]]

changes in the CABG procedure itself over the USDVA Hospital 
Retrospective Study time period were not significant enough to impact 
post-op mortality.

30-Day Mortality Rate (%) Between 1995 and 2005 Based on SWEDEHEART 2016
                              Annual Report
------------------------------------------------------------------------
                                                              30-day
                  Year                     Isolated CABD  mortality rate
                                              volume            (%)
------------------------------------------------------------------------
1995....................................           6,001             1.9
1996....................................           6,283             2.2
1997....................................           5,076             1.7
1998....................................           5,797               2
1999....................................           5,504             1.9
2000....................................           5,478             2.2
2001....................................           5,696             1.8
2002....................................           5,645             1.9
2003....................................           5,245             1.9
2004....................................           4,868               2
2005....................................           4,264             1.7
------------------------------------------------------------------------

    According to the applicant, the European Retrospective Pilot Study 
and the USDVA Hospital Study demonstrated an association of reduced 
risk of non-fatal MI, repeat revascularization, and MACE with 
DuraGraft[supreg] treatment. However, we have a number of concerns 
relating to whether these results support a finding of substantial 
clinical improvement. We note that these studies are unpublished and 
consist of a retrospective design, which may contribute to potential 
sources of error such as confounding and bias. Moreover, the studies do 
not account for other variables that may affect vein integrity such as 
method of vein harvest, vein distention pressure, and controlling for 
the use of glycoprotein (GP) IIb/IIIa inhibitors.154 155
---------------------------------------------------------------------------

    \154\ King, S., Short, M., Harmon, C., ``Glycoprotein IIb/IIIa 
inhibitors: the resurgence of tirofiban,'' Vascul Pharmacol, 2016 
March; vol. 78, pp. 10-16.
    \155\ Harskamp, R.E., Hoedemaker, N., Newby, L.K., Woudstra, P., 
Grundeken, M.J., Beijk, M.A., Piek, J.J., Tijssen, J.G., Mehta, 
R.H., de Winter, R.J., ``Procedural and clinical outcomes after use 
of the glycoprotein IIb/IIIa inhibitor abciximab for saphenous vein 
graft interventions,'' Cardiovasc Revasc Med, 2016 Jan-Feb, vol. 
17(1), pp. 19-23. Epub 2015 Oct 31. PMID: 26626961.
---------------------------------------------------------------------------

    With regard to the European Retrospective Pilot study, 
specifically, we are concerned that there are no defined primary and 
secondary long-term outcomes, no statistical plans to incorporate 
adjustments for multiple comparisons, and no power calculations for the 
expected differences in endpoints that would be biologically important. 
Furthermore, we are concerned that saline was used as the control, as 
opposed to buffered saline, which at the time was considered to be more 
effective than saline and, therefore, may have been a more optimal 
comparator.\156\ We also are concerned that certain information was not 
available, including mean follow-up, patient-years follow-up and loss-
to-follow-up. Finally, the study did not appear to convey any 
statistical differences for any of the short-term or long-term 
endpoints.
---------------------------------------------------------------------------

    \156\ Williams, J.B., Harskamp, R.E., Bose, S., Lawson, J.H., 
Alexander, J.H., Smith, P.K., Lopes, R.D., ``The Preservation and 
Handling of Vein Grafts in Current Surgical Practice: Findings of a 
Survey Among Cardiovascular Surgeons of Top-Ranked US Hospitals,'' 
JAMA Surg, 2015 Jul, vol. 150(7), pp. 681-3. PMID: 25970819.
---------------------------------------------------------------------------

    With regard to the USDVA Hospital Retrospective Study, we note that 
this study used heparinized saline as the comparator rather than 
buffered saline. According to a survey published in 2015 of 90 major 
U.S. medical centers, 40 percent were using buffered saline.\157\ Also, 
we are concerned that the study population was limited to USDVA 
hospital patients and was overwhelmingly white (95 percent) males (99 
percent), due to the demographics available through the USDVA hospital 
data source. We are concerned that this may affect the completeness of 
the study and raise questions as to whether the data and results are 
generalizable to other patient groups, to include, as acknowledged by 
the applicant, nonveterans, women, and other racial/ethnic groups. We 
also note that patients in the heparinized saline arm appeared to have 
more comorbidities, more vein grafts, fewer arterial grafts and more 
time on cardiopulmonary bypass as compared to the DuraGraft[supreg] 
treatment arm suggesting there may have been differences in the health 
of the patients in the two treatment arms prior to participation in the 
study. Without more context explaining the cause of each of these 
characteristics it may be difficult to substantiate the validity of the 
study results. We also believe that it would have been helpful to 
include coronary imaging studies with the results of the USDVA Hospital 
Retrospective Study to correlate MI and revascularizations with vein 
grafts. Without data from such studies, it is more difficult to 
associate the solutions with the repeat revascularization outcomes.
---------------------------------------------------------------------------

    \157\ Ibid.
---------------------------------------------------------------------------

    Furthermore, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20308) we noted our concern regarding the timeframe differences in the 
saline and DuraGraft[supreg] arms in the USDVA Hospital Retrospective 
Study. As discussed earlier in this section, the applicant expressed 
that, although the USDVA Hospital Retrospective Study represents the 
non-contemporaneous use of saline and DuraGraft[supreg], the potential 
effect of ``time of CABG'' on outcomes was minimized in large part by 
the fact that this was a single-center study in which the same surgeons 
performed surgeries throughout the timeframe of this study. The 
applicant also expressed that outcomes from CABG surgery such as 
mortality, MI, and repeat revascularization have not changed 
significantly between the time of the USDVA Hospital Retrospective 
Study and the present day, suggesting that surgical and medical 
improvements that may have occurred over the timeframe of the study 
likely had little influence over the study results and, therefore, the 
statistically significant differences that were observed are due to 
``study article'' effect.158 159 160 We appreciate the

[[Page 19312]]

applicant identifying and speaking to this concern, as it was raised by 
CMS in the FY 2019 IPPS/LTCH PPS proposed rule. However, we remain 
concerned that the timeframe differences between the saline and 
DuraGraft[supreg] arms in the USDVA Hospital Retrospective Study were 
not accounted for in the analysis of the retrospective data taken from 
the study.
---------------------------------------------------------------------------

    \158\ Goldman, S., Zadina, K., Mortiz, T., et al., ``Long-term 
patency of saphenous vein and left internal mammary grafts after 
coronary artery bypass surgery: results from a Department of 
Veterans Affairs Cooperative Study,'' J Am Coll Cardiol, 2004, vol. 
44, pp. 2149-2156.
    \159\ Granger, D.N. and Kvietys, P.R., ``Reperfusion Injury and 
Reactive Oxygen Species: The Evolution of a Concept,'' Redox Biol, 
2015 Dec, vol. 6, pp. 524-551. Published online 2015 Oct 8. doi: 
10.1016/j.redox.2015.08.020.
    \160\ Guibert, E.E., Petrenko, A.Y., Balaban, C.L., Somov, A.Y., 
Rodriguez, J.V., and Fuller, B.J., ``Organ Preservation: Current 
Concepts and New Strategies for the Next Decade,'' Transfus Med 
Hemother, 2011, vol. 38, pp. 125-142.
---------------------------------------------------------------------------

    Additionally, although the applicant provided an explanation about 
how to match patients via propensity scores, we are concerned that the 
statistical plan did not include adjustments for multiple comparisons 
nor did it include power calculations for the expected differences in 
endpoints that would be biologically important.
    The applicant also provided information from the USDVA Hospital 
Retrospective Study that suggested there are a significant number of 
MACE-type events in the first 3 years after CABG. However, much of the 
long-term data for the control group was missing, in particular, data 
related to the first 30 to 999 days post-CABG. Finally, regarding the 
secondary long-term-outcome of MACE, we are concerned the study did not 
appear to include coronary cardiac mortality, non-coronary cardiac 
mortality, and other cardiac morbidity within the definition of MACE.
    Also, as discussed above, the applicant referenced data from the 
SWEDEHEART 2016 Annual Report, which noted a decline in the number of 
CABG procedures (by approximately \1/3\) between 1996 and 2005. It is 
unclear what contributed to the decline in CABG procedures during this 
time period, particularly because, as the applicant indicated, 
mortality rates remained fairly constant throughout this timeframe. We 
believe the decline in the number of CABG procedures may also reflect 
time-related differences in surgical management.
    We are inviting public comments on whether DuraGraft[supreg] meets 
the substantial clinical improvement criterion. We did not receive any 
written comments in response to the New Technology Town Hall meeting 
notice published in the Federal Register regarding the substantial 
clinical improvement criterion for DuraGraft[supreg] or at the New 
Technology Town Hall meeting.
f. EluviaTM Drug-Eluting Vascular Stent System
    Boston Scientific Corporation submitted an application for new 
technology add-on payments for the EluviaTM Drug-Eluting 
Vascular Stent System for FY 2020. EluviaTM, a drug-eluting 
stent for the treatment of lesions in the femoropopliteal arteries, 
received FDA premarket approval (PMA) on September 18, 2018.
    According to the applicant, the EluviaTM system is a 
sustained-release drug-eluting stent indicated for improving luminal 
diameter in the treatment of peripheral artery disease (PAD) with 
symptomatic de novo or restenotic lesions in the native superficial 
femoral artery (SFA) and or proximal popliteal artery (PPA) with 
reference vessel diameters (RVD) ranging from 4.0 to 6.0 mm and total 
lesion lengths up to 190 mm.
    The applicant stated that PAD is a circulatory condition in which 
narrowed arteries reduce blood flow to the limbs, usually in the legs. 
Symptoms of PAD may include lower extremity pain due to varying degrees 
of ischemia, claudication which is characterized by pain induced by 
exercise and relieved with rest. According to the applicant, risk 
factors for PAD include individuals who are age 70 years old and older; 
individuals who are between the ages of 50 years old and 69 years old 
with a history of smoking or diabetes; individuals who are between the 
ages of 40 years old and 49 years old with diabetes and at least one 
other risk factor for atherosclerosis; leg symptoms suggestive of 
claudication with exertion, or ischemic pain at rest; abnormal lower 
extremity pulse examination; known atherosclerosis at other sites (for 
example, coronary, carotid, renal artery disease); smoking; 
hypertension, hyperlipidemia, and homocysteinemia.\161\ PAD is 
primarily caused by atherosclerosis--the buildup of fatty plaque in the 
arteries. PAD can occur in any blood vessel, but it is more common in 
the legs than the arms. Approximately 8.5 million people in the United 
States have PAD, including 12 to 20 percent of individuals who are age 
60 years old and older.\162\
---------------------------------------------------------------------------

    \161\ Neschis, David G. & MD, Golden, M., ``Clinical features 
and diagnosis of lower extremity peripheral artery disease.'' 
Available at: https://www.uptodate.com/contents/clinical-features-and-diagnosis-of-lower-extremity-peripheral-artery-disease.
    \162\ Centers for Disease Control and Prevention, ``Peripheral 
Arterial Disease (PAD) Fact Sheet,'' 2018, Retrieved from https://www.cdc.gov/DHDSP/data_statistics/fact_sheets/fs_PAD.htm.
---------------------------------------------------------------------------

    A diagnosis of PAD is established with the measurement of an ankle-
brachial index (ABI) less than or equal to 0.9. The ABI is a comparison 
of the resting systolic blood pressure at the ankle to the higher 
systolic brachial pressure. Duplex ultrasonography is commonly used, in 
conjunction with the ABI, to identify the location and severity of 
arterial obstruction.\163\
---------------------------------------------------------------------------

    \163\ Berger, J. & Davies, M., ``Overview of lower extremity 
peripheral artery disease,'' Retrieved October 29, 2018, from 
https://www.uptodate.com/contents/overview-of-lower-extremity-peripheral-artery-disease.
---------------------------------------------------------------------------

    Management of the disease is aimed at improving symptoms, improving 
functional capacity, and preventing amputations and death. Management 
of patients who have been diagnosed with lower extremity PAD may 
include medical therapies to reduce the risk for future cardiovascular 
events related to atherosclerosis, such as myocardial infarction, 
stroke, and peripheral arterial thrombosis. Such therapies may include 
antiplatelet therapy, smoking cessation, lipid-lowering therapy, and 
treatment of diabetes and hypertension. For patients with significant 
or disabling symptoms unresponsive to lifestyle adjustment and 
pharmacologic therapy, intervention (percutaneous, surgical) may be 
needed. Surgical intervention includes angioplasty, a procedure in 
which a balloon-tip catheter is inserted into the artery and inflated 
to dilate the narrowed artery lumen. The balloon is then deflated and 
removed with the catheter. For patients with limb-threatening ischemia 
(for example, pain while at rest and or ulceration), revascularization 
is a priority to reestablish arterial blood flow. According to the 
applicant, treatment of the SFA is problematic due to multiple issues 
including high rate of restenosis and significant forces of 
compression.
    The applicant describes EluviaTM Drug-Eluting Vascular 
Stent System as a sustained-release drug-eluting self-expanding, nickel 
titanium alloy (nitinol) mesh stent used to reestablish blood flow to 
stenotic arteries. According to the applicant, the EluviaTM 
stent is coated with the drug paclitaxel, which helps prevent the 
artery from restenosis. The applicant stated that EluviaTM's 
polymer-based drug delivery system is uniquely designed to sustain the 
release of paclitaxel beyond 1 year to match the restenotic process in 
the SFA. According to the applicant, the EluviaTM Stent 
System is comprised of: (1) The implantable endoprosthesis; and (2) the 
stent delivery system (SDS). On both the proximal and distal ends of 
the stent, radiopaque markers made of tantalum increase visibility of 
the stent to aid in placement. The tri-axial designed delivery system 
consists of an outer shaft to stabilize the stent delivery system, a 
middle shaft to protect and constrain the stent, and an inner shaft to 
provide a guide wire lumen. The delivery system is compatible with

[[Page 19313]]

0.035 in (0.89 mm) guide wires. The EluviaTM stent is 
available in a variety of diameters and lengths. The delivery system is 
offered in 2 working lengths (75 cm and 130 cm).
    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, therefore, 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, EluviaTM uses a unique mechanism 
of action which has not been utilized by previously available medical 
devices for treating stenotic lesions in the SFA. The applicant 
asserted that the EluviaTM Drug-Eluting Vascular Stent 
System is a device/drug combination product composed of an implantable 
stent, combined with a polybutyl methacrylate (PBMA) primer layer, a 
paclitaxel/polyvinylidene difluoride (PVDF) polymer, and a stent 
delivery system. According to the applicant, the polymer carries and 
protects the drug before and during the procedure and ensures that the 
drug is released into the tissue in a controlled, sustained manner to 
prevent restenosis of the vessel. According to the applicant, the 
EluviaTM system continues to deliver paclitaxel to combat 
restenosis for 12 to 15 months, which involves a novel and distinct 
mechanism of action different than other drug-coated balloons or drug-
coated stents that only deliver the drug to the artery for about 2 
months. According to the applicant, the PBMA polymer is clinically 
proven to permit the sustained release of paclitaxel to achieve a 
therapeutic outcome. We note that, the applicant submitted a request 
for consideration for approval at the March 2019 ICD-10 Coordination 
and Maintenance Committee Meeting for a unique ICD-10-PCS procedure 
code to describe procedures which use the EluviaTM stent 
system.
    With regard to the second criterion, whether a technology is 
assigned to the same or a different MS-DRG, the applicant asserted that 
patients who may be eligible for treatment using the 
EluviaTM system include hospitalized patients who have been 
diagnosed with PAD. According to the applicant, these potential cases 
may map to multiple MS-DRGs, the most likely being MS-DRGs 252 (Other 
Vascular Procedures With MCC), 253 (Other Vascular Procedures With CC) 
and 254 (Other Vascular Procedures Without CC/MCC). Potential cases 
representing patients who may be eligible for treatment using the 
EluviaTM system would be assigned to the same MS-DRGs as 
cases representing hospitalized patients who have been diagnosed with 
PAD and treated with currently available technologies.
    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 when compared to an 
existing technology, according to the applicant, clinical conditions 
that may require use of the EluviaTM stent system include 
treatment of the same patient population as cases identified with a 
variety of diagnosis codes from the ICD-10-CM category I70 
(Atherosclerosis) as listed in the table below:

------------------------------------------------------------------------
      ICD-10-CM  diagnosis code                Code description
------------------------------------------------------------------------
I70.201.............................  Unspecified atherosclerosis of
                                       native arteries of extremities,
                                       right leg.
I70.202.............................  Unspecified atherosclerosis of
                                       native arteries of extremities,
                                       left leg.
I70.203.............................  Unspecified atherosclerosis of
                                       native arteries of extremities,
                                       bilateral legs.
I70.208.............................  Unspecified atherosclerosis of
                                       native arteries of extremities,
                                       other extremity.
I70.209.............................  Unspecified atherosclerosis of
                                       native arteries of extremities,
                                       unspecified extremity.
I70.211.............................  Atherosclerosis of native arteries
                                       of extremities with intermittent
                                       claudication, right leg.
I70.212.............................  Atherosclerosis of native arteries
                                       of extremities with intermittent
                                       claudication, left leg.
I70.213.............................  Atherosclerosis of native arteries
                                       of extremities with intermittent
                                       claudication, bilateral legs.
I70.218.............................  Atherosclerosis of native arteries
                                       of extremities with intermittent
                                       claudication, other extremity.
I70.219.............................  Atherosclerosis of native arteries
                                       of extremities with intermittent
                                       claudication, unspecified
                                       extremity.
I70.221.............................  Atherosclerosis of native arteries
                                       of extremities with rest pain,
                                       right leg.
I70.222.............................  Atherosclerosis of native arteries
                                       of extremities with rest pain,
                                       left leg.
I70.223.............................  Atherosclerosis of native arteries
                                       of extremities with rest pain,
                                       bilateral legs.
I70.228.............................  Atherosclerosis of native arteries
                                       of extremities with rest pain,
                                       other extremity.
I70.229.............................  Atherosclerosis of native arteries
                                       of extremities with rest pain,
                                       unspecified extremity.
I70.231.............................  Atherosclerosis of native arteries
                                       of right leg with ulceration of
                                       thigh.
I70.232.............................  Atherosclerosis of native arteries
                                       of right leg with ulceration of
                                       calf.
I70.233.............................  Atherosclerosis of native arteries
                                       of right leg with ulceration of
                                       ankle.
I70.234.............................  Atherosclerosis of native arteries
                                       of right leg with ulceration of
                                       heel and midfoot.
I70.235.............................  Atherosclerosis of native arteries
                                       of right leg with ulceration of
                                       other part of foot.
I70.238.............................  Atherosclerosis of native arteries
                                       of right leg with ulceration of
                                       other part of lower right leg.
I70.239.............................  Atherosclerosis of native arteries
                                       of right leg with ulceration of
                                       unspecified site.
I70.241.............................  Atherosclerosis of native arteries
                                       of left leg with ulceration of
                                       thigh.
I70.242.............................  Atherosclerosis of native arteries
                                       of left leg with ulceration of
                                       calf.
I70.243.............................  Atherosclerosis of native arteries
                                       of left leg with ulceration of
                                       ankle.
I70.244.............................  Atherosclerosis of native arteries
                                       of left leg with ulceration of
                                       heel and midfoot.
I70.245.............................  Atherosclerosis of native arteries
                                       of left leg with ulceration of
                                       other part of foot.
I70.248.............................  Atherosclerosis of native arteries
                                       of left leg with ulceration of
                                       other part of lower left leg.
I70.249.............................  Atherosclerosis of native arteries
                                       of left leg with ulceration of
                                       unspecified site.
I70.25..............................  Atherosclerosis of native arteries
                                       of other extremities with
                                       ulceration.
I70.261.............................  Atherosclerosis of native arteries
                                       of extremities with gangrene,
                                       right leg.
I70.262.............................  Atherosclerosis of native arteries
                                       of extremities with gangrene,
                                       left leg.
I70.263.............................  Atherosclerosis of native arteries
                                       of extremities with gangrene,
                                       bilateral legs.
I70.268.............................  Atherosclerosis of native arteries
                                       of extremities with gangrene,
                                       other extremity.
I70.269.............................  Atherosclerosis of native arteries
                                       of extremities with gangrene,
                                       unspecified extremity.
I70.291.............................  Other atherosclerosis of native
                                       arteries of extremities, right
                                       leg.
I70.292.............................  Other atherosclerosis of native
                                       arteries of extremities, left
                                       leg.
I70.293.............................  Other atherosclerosis of native
                                       arteries of extremities,
                                       bilateral legs.

[[Page 19314]]

 
I70.298.............................  Other atherosclerosis of native
                                       arteries of extremities, other
                                       extremity.
I70.299.............................  Other atherosclerosis of native
                                       arteries of extremities.
------------------------------------------------------------------------

    The applicant asserted that the EluviaTM stent is not 
substantially similar to any existing technology because it uses a 
unique mechanism of action, when compared to existing technologies, to 
achieve a therapeutic outcome and, therefore, meets the newness 
criterion.
    We are concerned as to whether the polymer drug carrier system that 
the EluviaTM system uses is, in fact, a new mechanism of 
action as compared to stents that contain paclitaxel without the 
carrier polymer. We are concerned that the EluviaTM device 
may have a mechanism of action similar to the paclitaxel-coated 
Zilver[supreg] Drug-Eluting Peripheral Stent, which is indicated for 
improving luminal diameter for the treatment of de novo or restenotic 
symptomatic lesions in native vascular disease of the above-the-knee 
femoropopliteal arteries having reference vessel diameter from 4 mm to 
7 mm and total lesion lengths up to 300 mm per patient. We are inviting 
public comments on whether the EluviaTM system is 
substantially similar to existing technology and whether it meets the 
newness criterion, including with respect to the concerns we have 
raised. With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion.
    As noted earlier, the applicant asserted that cases involving the 
treatment of PAD, involving treatment of lesions in the femoropopliteal 
arteries typically, map to MS-DRGs 252, 253, and 254. The applicant 
searched the FY 2017 MedPAR data file in MS-DRGs 252, 253 and 254 for 
cases reporting an ICD-10-PCS procedure code for the treatment of 
Peripheral BMS or DES, which the applicant believed would represent 
cases potentially eligible for the use of the EluviaTM stent 
system. The applicant identified 109,747 claims for cases representing 
patients who may be eligible for treatment involving the 
EluviaTM stent system. The applicant applied the following 
trims: Claims paid under GHO (that is, Medicare beneficiaries enrolled 
in a Medicare Advantage managed care plan), claims for CAHs, IPFs, 
IRFs, LTCHs, Children's, Cancer, and RHNCI hospitals excluding Maryland 
acute-care hospitals, claims with total charges or lengths-of-stay of 
less than or equal to zero, claims with total charge differing from sum 
of charges of the 19 cost groups by greater than $30, providers that do 
not have charges greater than $0 for at least 14 of the 19 cost groups, 
claims with total charges for the MS-DRG +/-3 standard deviations from 
the log mean total charges or charges per day, ``IME only'' claims 
submitted by a teaching hospital on behalf of a beneficiary enrolled in 
a Medicare Advantage plan, claims with claim types ``61 to 64'' (that 
is, claim types that refer to encounter claims, Medicare Advantage IME, 
and HMO no-pay claims), and claims for which the applicant was unable 
to calculate standardized charges (because the Provider Number 
associated with the claim does not appear in the FY 2017 impact file). 
This resulted in 73,861 claims across MS-DRGs 252, 253, and 254.
    Using the 73,861 claims, the applicant determined an average case-
weighted unstandardized charge per case of $96,232. The applicant 
removed all device-related charges and then standardized the charges 
for each case and inflated each case's charges by applying the FY 2019 
IPPS/LTCH PPS final rule outlier charge inflation factor of 1.08864 (83 
FR 41722). (We note that the 2-year charge inflation factor was revised 
in the FY 2019 IPPS/LTCH PPS final rule correction notice to 1.08986 
(83 FR 49844). We further note that even when using the corrected final 
rule values to inflate the charges, the average case-weighted 
standardized charge per case for each scenario exceeded the average 
case-weighted threshold amount.) The applicant then added charges for 
EluviaTM by taking the cost of the device and converting it 
to a charge by dividing the costs by the national average CCR of 0.309 
for devices from the FY 2019 IPPS/LTCH PPS final rule (83 FR 41273). 
The applicant calculated an average case-weighted standardized charge 
per case of $86,950 using the percent distribution of MS-DRGs as case-
weights. Based on this analysis, the applicant determined that the 
final inflated average case-weighted standardized charge per case for 
EluviaTM exceeded the average case-weighted threshold of 
$81,518 by $5,432.
    The applicant conducted additional analyses to demonstrate it meets 
the cost criterion. In these analyses, the applicant repeated the cost 
analysis above with one analysis of cases reporting the ICD-10-PCS 
procedures codes for Peripheral DES procedures and the other analysis 
with cases reporting the ICD-10-PCS procedures codes for Peripheral BMS 
procedures. In each of these additional sensitivity analyses, the final 
inflated average case-weighted standardized charge per case exceeded 
the average case-weighted cost threshold amount. We are inviting public 
comments on whether EluviaTM meets the cost criterion.
    With regard to the substantial clinical improvement criterion, the 
applicant asserted that the EluviaTM Drug-Eluting Vascular 
Stent System represents a substantial clinical improvement over 
existing technologies because it achieves superior primary patency; 
reduces the rate of subsequent therapeutic interventions; decreases the 
number of future hospitalizations or physician visits; reduces hospital 
readmission rates; reduces the rate of device-related complications; 
and achieves similar functional outcomes and EQ-5D index values while 
associated with half the rate of target lesion revascularizations 
(TLRs).
    The applicant submitted the results of the MAJESTIC study, a 
single-arm, first-in-human study of EluviaTM. The MAJESTIC 
\164\ study is a prospective, multi-center, single-arm, open-label 
study. According to the applicant, the MAJESTIC study demonstrated 
long-term treatment durability among patients whose femoropopliteal 
arteries were treated with the EluviaTM stent. The applicant 
asserts that the MAJESTIC study demonstrates the sustained impact of 
the EluviaTM stent on primary patency. The MAJESTIC study 
enrolled 57 patients who had been diagnosed with symptomatic lower limb 
ischemia and lesions in the superficial femoral artery or proximal 
popliteal artery. Efficacy measures at 2 years included primary 
patency, defined as duplex ultrasound peak systolic velocity ratio of 
less than 2.5 and the absence of target lesion revascularization (TLR) 
or bypass. Safety monitoring through 3 years included adverse events 
and TLR. The

[[Page 19315]]

24-month clinic visit was completed by 53 patients; 52 had Doppler 
ultrasound evaluable by the core laboratory, and 48 patients had 
radiographs taken for stent fracture analysis. The 3-year follow-up was 
completed by 54 patients. At 2 years, 90.6 percent (48/53) of the 
patients had improved by 1 or more Rutherford categories as compared 
with the pre-procedure level without the need for TLR (when those with 
TLR were included, 96.2 percent sustained improvement); only 1 patient 
exhibited a worsening in level, 66.0 percent (35/53) of the patients 
exhibited no symptoms (category 0) and 24.5 percent (13/53) had mild 
claudication (category 1) at the 24-month visit. Mean ABI improved from 
0.73  0.22 at baseline to 1.02  0.20 at 12 
months and 0.93  0.26 at 24 months. At 24 months, 79.2 
percent (38/48) of the patients had an ABI increase of at least 0.1 
compared with baseline or had reached an ABI of at least 0.9. The 
applicant also noted that at 12 months the Kaplan-Meier estimate of 
primary patency was 96.4 percent.
---------------------------------------------------------------------------

    \164\ M[uuml]ller-H[uuml]lsbeck, S., et al., ``Long-Term Results 
from the MAJESTIC Trial of the Eluvia Paclitaxel-Eluting Stent for 
Femoropopliteal Treatment: 3-Year Follow-up,'' Cardiovasc Intervent 
Radiol, December 2017, vol. 40(12), pp. 1832-1838.
---------------------------------------------------------------------------

    With regard to the EluviaTM stent achieving superior 
primary patency, the applicant submitted the results of the IMPERIAL 
\165\ study in which the EluviaTM stent is compared, head-
to-head, to the Zilver[supreg] PTX Drug-Eluting stent. The IMPERIAL 
study is a global, multi-center, randomized controlled trial consisting 
of 465 subjects. Eligible patients were aged 18 years old or older and 
had a diagnosis of symptomatic lower-limb ischaemia, defined as 
Rutherford Category 2, 3, or 4 and stenotic, restenotic (treated with a 
drug-coated balloon greater than 12 months before the study or standard 
percutaneous transluminal angioplasty only), or occlusive lesions in 
the native superficial femoral artery or proximal popliteal artery, 
with at least 1 infrapopliteal vessel patent to the ankle or foot. 
Patients had to have stenosis of 70 percent or more (via angiographic 
assessment), vessel diameter between 4 mm and 6 mm, and total lesion 
length between 30 mm and 140 mm.
---------------------------------------------------------------------------

    \165\ Gray, W.A., et al., ``A polymer-coated, paclitaxel-eluting 
stent (Eluvia) versus a polymer-free, paclitaxel-coated stent 
(Zilver PTX) for endovascular femoropopliteal intervention 
(IMPERIAL): A randomised, non-inferiority trial,'' Lancet, September 
24, 2018.
---------------------------------------------------------------------------

    Patients who had previously stented target lesion/vessels treated 
with drug-coated balloon less than 12 months prior to randomization/
enrollment and patients who had undergone prior surgery of the SFA/PPA 
in the target limb to treat atherosclerotic disease were excluded from 
the study. Two concurrent single-group (EluviaTM only) sub-
studies were done: A non-blinded, non-randomized pharmacokinetic sub-
study and a non-blinded, non-randomized study of patients who had been 
diagnosed with long lesions (greater than 140 mm in diameter). The 
IMPERIAL study is a prospective, multi-center, single-blinded 
randomized, controlled (RCT) non-inferiority trial. Patients were 
randomized (2:1) to implantation of either a paclitaxel-eluting polymer 
stent (EluviaTM) or a paclitaxel-coated stent 
(Zilver[supreg] PTX) after the treating physician had successfully 
crossed the target lesion with a guide wire. The primary endpoints of 
the study are Major Adverse Events defined as all causes of death 
through 1 month, Target Limb Major Amputation through 12 months and/or 
Target Lesion Revascularization (TLR) through 12 months and primary 
vessel patency at 12 months post-procedure. Secondary endpoints 
included the Rutherford categorization, Walking Impairment 
Questionnaire, and EQ-5D assessments at 1 month and 6 months post-
procedure. Patient demographic and characteristics were balanced 
between EluviaTM stent and Zilver[supreg] PTX stent groups.
    The applicant noted that lesion characteristics for the patients in 
the EluviaTM stent versus the Zilver[supreg] PTX stent arms 
were comparable. Clinical follow-up visits related to the study were 
scheduled for 1 month, 6 months, and 12 months after the procedure, 
with follow-up planned to continue through 5 years, including clinical 
visits at 24 months and 5 years and clinical or telephone follow-up at 
3 and 4 years.
    The applicant asserted that in the IMPERIAL study the 
EluviaTM stent demonstrated superior primary patency over 
the Zilver[supreg] PTX stent, 86.8 percent versus 77.5 percent, 
respectively (p=0.0144). The non-inferiority primary efficacy endpoint 
was also met. The applicant asserts that the SFA presents unique 
challenges with respect to maintaining long-term patency. There are 
distinct pathological differences between the SFA and coronary 
arteries. The SFA tends to have higher levels of calcification and 
chronic total occlusions when compared to coronary arteries. Following 
an intervention within the SFA, the SFA produces a healing response 
which often results in restenosis or re-narrowing of the arterial 
lumen. This cascade of events leading to restenosis starts with 
inflammation, followed by smooth muscle cell proliferation and matrix 
formation.\166\ Because of the unique mechanical forces in the SFA, 
this restenotic process of the SFA can continue well beyond 300 days 
from the initial intervention. Results from the IMPERIAL study showed 
that primary patency at 12 months, by Kaplan-Meier estimate, was 
significantly greater for EluviaTM than for Zilver[supreg] 
PTX, 88.5 percent and 79.5 percent, respectively (p=0.0119). According 
to the applicant, these results are consistent with the 96.4 percent 
primary patency rate at 12 months in the MAJESTIC study.
---------------------------------------------------------------------------

    \166\ Forrester, J.S., Fishbein, M., Helfant, R., Fagin, J., ``A 
paradigm for restenosis based on cell biology: clues for the 
development of new preventive therapies,'' J Am Coll Cardiol, March 
1, 1991, vol. 17(3), pp. 758-69.
---------------------------------------------------------------------------

    The IMPERIAL study included two concurrent single-group 
(EluviaTM only) sub-studies: A non-blinded, non-randomized 
pharmacokinetic sub-study and a non-blinded, non-randomized study of 
patients with long lesions (greater than 140 mm in diameter). For the 
pharmacokinetic sub-study, patients had venous blood drawn before stent 
implantation and at intervals ranging from 10 minutes to 24 hours post 
implantation, and again at either 48 hours or 72 hours post 
implantation. The pharmacokinetics sub-study confirmed that plasma 
paclitaxel concentrations after EluviaTM stent implantation 
were well below thresholds associated with toxic effects in studies in 
patients who had been diagnosed with cancer (0.05 [mu]M or ~43 ng/mL).
    The IMPERIAL sub-study long lesion subgroup consisted of 50 
patients with average lesion length of 162.8 mm that were each treated 
with two EluviaTM stents. According to the applicant, 12-
month outcomes for the long lesion subgroup are 87 percent primary 
patency and 6.5 percent Target Lesion Revascularization (TLR). 
According to the applicant, in a separate subgroup analysis of patients 
65 years old and older (Medicare population), the primary patency rate 
in the EluviaTM stent group is 92.6 percent, compared to 
75.0 percent for the Zilver[supreg] PTX stent group (p=0.0386).
    With regard to reducing the rate of subsequent therapeutic 
interventions, secondary outcomes in the IMPERIAL study included repeat 
re-intervention on the same lesion, target lesion revascularization 
(TLR). The rate of subsequent interventions, or TLRs, in the 
EluviaTM stent group was 4.5 percent compared to 9.0 percent 
in the Zilver[supreg] PTX stent group. The applicant asserted that the 
TLR rate in the EluviaTM group represents a substantial 
reduction in re-intervention on the target lesion compared to that of 
the Zilver[supreg] PTX stent group.

[[Page 19316]]

    With regard to decreasing the number of future hospitalizations or 
physician visits, the applicant asserted that the substantial reduction 
in the lesion revascularization rate led to a reduced need to provide 
additional intensive care, distinguishing the EluviaTM group 
from the Zilver[supreg] PTX stent group. In the IMPERIAL study, 
EluviaTM-treated patients required fewer days of re-
hospitalization. Patients in the EluviaTM group averaged 
13.9 days of re-hospitalization for all adverse events compared to 17.7 
days of re-hospitalization for patients in the Zilver[supreg] PTX stent 
group. Patients in the EluviaTM group were re-hospitalized 
for 2.8 days for TLR/Total Vessel Revascularization (TVR) compared to 
7.1 days in the Zilver[supreg] PTX stent group. And lastly, patients in 
the EluviaTM group were re-hospitalized for 2.7 days for 
procedure/device-related adverse events compared to 4.5 days from the 
Zilver[supreg] PTX stent group.
    With regard to reducing hospital readmission rates, the applicant 
asserted that patients treated in the EluviaTM group 
experienced reduced rates of hospital readmission following the index 
procedure compared to those in the Zilver[supreg] PTX stent group. 
Hospital readmission rates at 12 months were 3.9 percent for the 
EluviaTM group compared to 7.1 percent for the 
Zilver[supreg] PTX stent group. Similar results were noted at 1 and 6 
months; 1.0 percent versus 2.6 percent and 2.4 percent versus 3.8 
percent, respectively.
    With regard to reducing the rate of device-related complications, 
the applicant asserted that while the rates of adverse events were 
similar in total between treatment arms in the IMPERIAL study, there 
were measurable differences in device-related complications. Device-
related adverse-events were reported in 8 percent of the patients in 
the EluviaTM group compared to 14 percent of the patients in 
the Zilver[supreg] PTX stent group.
    Lastly, with regard to achieving similar functional outcomes and 
EQ-5D index values, while associated with half the rate of TLRs, the 
applicant asserted that narrowed or blocked arteries within the SFA can 
limit the supply of oxygen-rich blood throughout the lower extremities, 
causing pain or discomfort when walking (claudication). The applicant 
further asserted that performing physical activities is often 
challenging because of decreased blood supply to the legs, typically 
causing symptoms to become more challenging over time unless treated. 
While functional outcomes appear similar between the 
EluviaTM and Zilver[supreg] PTX stent groups at 12 months, 
these improvements for the Zilver[supreg] PTX stent group are 
associated with twice as many TLRs to achieve similar EQ-5D index 
values.\167\ Secondary endpoints improved after stent implantation and 
were generally similar between the groups. At 12 months, of the 
patients with complete Rutherford assessment data, 241 (86 percent) of 
281 patients in the EluviaTM group and 120 (85 percent) of 
142 patients in the Zilver[supreg] PTX group had symptoms reported as 
Rutherford Category 0 or 1 (none to mild claudication). The mean ankle-
brachial index was 1.0 (SD 0.2) in both groups at 12 months (baseline 
mean ankle-brachial index 0.7 [SD 0.2] for EluviaTM; 0.8 
[0.2] for Zilver[supreg] PTX), with sustained hemodynamic improvement 
for approximately 80 percent of the patients in both groups. Walking 
function improved significantly from baseline to 12 months in both 
groups, as measured with the Walking Impairment Questionnaire and the 
6-minute walk test. In both groups, the majority of patients had 
sustained improvement in the mobility dimension of the EQ-5D and 
roughly half had sustained improvement in the pain or discomfort 
dimension. No significant between-group differences were observed in 
the Walking Impairment Questionnaire, 6-minute walk test, or EQ-5D. 
Secondary endpoint results for the EluviaTM stent and 
Zilver[supreg] PTX stent groups are as follows:
---------------------------------------------------------------------------

    \167\ Gray, W.A., Keirse, K., Soga, Y., et al., ``A polymer-
coated, paclitaxel-eluting stent (Eluvia) versus a polymer-free, 
paclitaxel-coated stent (Zilver PTX) for endovascular 
femoropopliteal intervention (IMPERIAL): a randomized, non-
inferiority trial,'' Lancet, 2018, published online Sept 22, http://dx.doi.org/10.1016/S0140-6736(18)32262-1.
---------------------------------------------------------------------------

     Hemodynamic improvement in walking--80.8 percent versus 
78.7 percent;
     Walking impairment questionnaire scores (change from 
baseline)--40.8 (36.5) versus 35.8 (39.5);
     Distance (change from baseline)--33.2 (38.3) versus 29.5 
(38.2);
     Speed (change from baseline)--18.3 (29.5) versus 18.1 
(28.7);
     Stair climbing (change from baseline)--19.4 (36.7) versus 
21.1 (34.6); and
     6-Minute walk test distance (m) (change from baseline)--
44.5 (119.5) versus 51.8 (130.5).
    We are concerned that the IMPERIAL study, which showed significant 
differences in primary patency at 12 months, was designed for non-
inferiority and not superiority. We also note the results of a recently 
published meta-analysis of randomized controlled trials of the risk of 
death associated with the use of paclitaxel-coated balloons and stents 
in the femoropopliteal artery of the leg, which found that there is 
increased risk of death following application of paclitaxel-coated 
balloons and stents in the femoropopliteal artery of the lower limbs 
and that further investigations are urgently warranted,\168\ although 
the EluviaTM system was not included in the meta-analysis. 
We are inviting public comments on whether the EluviaTM 
system meets the substantial clinical improvement criterion, including 
the implications of the conclusion of the meta-analysis results with 
respect to a finding of substantial clinical improvement for 
EluviaTM.
---------------------------------------------------------------------------

    \168\ Katsanos, K., et al., ``Risk of Death Following 
Application of Paclitaxel-Coated Balloons and Stents in the 
Femoropopliteal Artery of the Leg: A Systematic Review and Meta-
Analysis of Randomized Controlled Trials,'' JAHA, vol. 7(24).
---------------------------------------------------------------------------

    Below we summarize and respond to a written public comment we 
received in response to the New Technology Town Hall meeting notice 
published in the Federal Register regarding the substantial clinical 
improvement criterion for EluviaTM.
    Comment: With regard to the applicant's assertion that the 
EluviaTM stent achieves statistically superior primary 
patency over the Zilver[supreg] PTX stent, the commenter noted that the 
non-inferior primary patency of EluviaTM as compared to the 
Zilver[supreg] PTX stent was the primary efficacy endpoint of the 
IMPERIAL study. The commenter stated that the authors of the IMPERIAL 
study published a paper in The Lancet that noted a post-hoc analysis 
that suggested that EluviaTM's primary patency was superior 
to Zilver[supreg] PTX stent. The commenter further noted that in the FY 
2020 New Technology Add-On Payment Town Hall presentation, the 
EluviaTM Drug-Eluting Vascular Stent System's presenter used 
this analysis as a predicator to substantiate the substantial clinical 
improvement provided by the use of the EluviaTM stent. The 
commenter questioned the basis of the applicant's assertion of 
substantial clinical improvement contingent upon this rationale 
because, according to the commenter, primary patency in this study was 
measured by duplex ultrasound obtained on each enrollee at 12 months. 
The commenter indicated that this is an endpoint based on imaging, and 
in and of itself, may not have any direct clinical significance. The 
commenter suggested that a loss of patency alone, without an associated 
recurrence or increase of clinical signs or symptoms (pain, walking 
impairment, ulcer development, etc.,) is

[[Page 19317]]

not a clinically-relevant measure. As such, the commenter believed that 
the rationale used in that post-hoc analysis to determine superiority 
in primary patency does not offer support for an assertion of clinical 
improvement. The commenter noted that it is an interesting finding, but 
as discussed further below, the commenter does not believe this 
translates into a representation of substantial clinical improvement. 
The commenter further stated that ``the pre-specified primary endpoint 
of the study indicated non-inferiority of primary patency of 
EluviaTM when compared to the Zilver[supreg] PTX stent, with 
a non-significant difference of 5.3 percent (95 percent confidence 
interval: -2.5 percent, 13.1 percent); and this information was not 
included in the New Technology Town Hall presentation''.
    With regard to the applicant's assertion that the 
EluviaTM stent reduces the rate of subsequent therapeutic 
interventions by 50 percent, the commenter noted that ``Subsequent 
Therapeutic Interventions'' was not further defined in the New 
Technology Town Hall presentation nor in the IMPERIAL study. The 
commenter stated that it would appear from the presentation materials, 
however, that it is referring specifically to ``target lesion 
revascularizations (TLR)''.
    The commenter referred to the EluviaTM New Technology 
Town Hall presentation slide deck, and stated that the presenter 
displayed graphs showing ``Clinically-driven TLR Rates'' for both the 
EluviaTM stent and the Zilver[supreg] PTX stent. The 
commenter stated that the graph showed a TLR rate for 
EluviaTM of 4.5 percent, and a corresponding TLR rate of 9.0 
percent for the Zilver[supreg] PTX stent, with that slide also 
displaying a p-value of 0.0672. The commenter explained that because a 
p-value of less than 0.05 is widely accepted in the scientific and 
clinical communities as a threshold to establish a statistically 
significant difference, a p-value of 0.0672 suggests that the 
difference between the devices' TLR rates is not statistically 
significant. The commenter believed that, given that the difference in 
TLR rates is not statistically significant, no conclusions can or 
should be drawn regarding substantial clinical improvement based on 
these TLR rates. The commenter stated that the Lancet study paper 
itself reported a TLR rate of 4.5 percent for EluviaTM and 
8.7 percent for the Zilver[supreg] PTX stent, with an even higher p-
value of 0.0746,\169\ and the commenter believes that the difference in 
TLR rates is more questionably meaningful. With regard to the 
applicant's assertion that EluviaTM achieves similar 
functional outcomes with half as many TLRs (repeat procedures) at 1 
year, the commenter stated that based on the data presented during the 
New Technology Town Hall presentation and discussed at length in the 
Lancet study paper, ``functional'' clinical outcomes between the 
EluviaTM and the Zilver[supreg] PTX patients were similar. 
These clinical outcome measures included walking function (assessed 
with the Walking Impairment Questionnaire and 6-minute walk test), 
Rutherford scores, EQ-5D quality of life scores, and ankle-brachial 
index measures. The commenter believed that these similar results 
dispute the conclusion that EluviaTM represents a 
substantial clinical improvement compared to the Zilver[supreg] PTX 
stent. Further, the commenter stated that this section of the 
presentation once again references and is based on the difference in 
TLR rates. As noted above, the commenter believed that this difference 
in rates was not demonstrated to be significant and, therefore, should 
not be the basis for a conclusion of clinical improvement. 
Additionally, the commenter also noted that, although not described in 
the New Technology Town Hall presentation, the Lancet publication 
indicates that the calculations of clinical improvement and hemodynamic 
improvement already account for TLR as a failure. Therefore, the 
commenter believed that stating that the outcomes are similar with half 
as many TLRs is misleading. The commenter further stated that similar 
clinical outcomes and TLR rates do support the study's conclusions of 
non-inferiority, but should not form the basis for an assertion of 
superiority.
---------------------------------------------------------------------------

    \169\ Gray, W.A., et al., ``A polymer-coated, paclitaxel-eluting 
stent (Eluvia) versus a polymer-free, paclitaxel-coated stent 
(Zilver PTX) for endovascular femoropopliteal intervention 
(IMPERIAL): a randomised, non-inferiority trial,'' Lancet, September 
24, 2018.
---------------------------------------------------------------------------

    With regard to the applicant's assertion that the use of the 
EluviaTM stent reduces hospital readmission rates, the 
commenter noted that during the New Technology Town Hall presentation, 
the presenter noted that the EluviaTM group had a hospital 
readmission rate at 12 months of 3.9 percent compared to the 
Zilver[supreg] PTX group's rate of 7.1 percent, and that no p-value was 
included on the slide used for the presentation to offer an assessment 
of the statistical significance of this difference. The commenter noted 
that this particular data comparison was not discussed in the main body 
of the Lancet paper, but could be found in the online appendix. The 
commenter further noted that as with the presentation slide, no p-value 
was offered in the appendix. The commenter indicated that its 
statistics team did, however, calculate a p-value of 0.17 for this 
comparison. The commenter noted that a p-value of 0.17 is well above 
the standard p-value threshold of 0.05 needed to draw a conclusion of 
statistical significance. Given that this difference is not 
statistically significant, the commenter believed that based on this 
submitted data, this assertion should also not be used to substantiate 
a representation of substantial clinical improvement for the 
EluviaTM stent.
    With regards to longer-term data on the Zilver[supreg] PTX stent 
and the EluviaTM stent, the commenter noted that in the 
commentary in The Lancet paper accompanying the IMPERIAL study, Drs. 
Salvatore Cassese and Robert Byrne write that a follow-up duration of 
12 months is insufficient to assess late failure, which is not 
infrequently observed. According to Drs. Cassese and Byrne, the 
preclinical models of restenosis after stenting of peripheral arteries 
have shown that stents permanently overstretch the arterial wall, thus 
stimulating persistent neointimal growth, which might cause a catch-up 
phenomenon and late failure. The paper noted that in this regard, data 
on outcomes beyond 1 year will be important to confirm the durability 
of the efficacy of the EluviaTM stent.\170\ The commenter 
stated that at this point in time, very limited longer-term data is 
available on the use of the EluviaTM stent and that the 
IMPERIAL study offers only 12-month data, although data out to 3 years 
has been published from the relatively small 57-patient single-arm 
MAJESTIC study. The commenter noted that the MAJESTIC study 
demonstrates a decrease in primary patency from 96.4 percent at 1 year 
to 83.5 percent at 2 years; and a doubling in TLR rates from 1 year to 
2 years (3.6 percent to 7.2 percent) and again from 2 years to 3 years 
(7.2 percent to 14.7 percent). The commenter stated that this is not 
inconsistent with Drs. Cassese and Byrne's commentary regarding late 
failure, and that the relatively small, single-arm design of the study 
does not lend itself well to direct comparison to other SFA treatment 
options such as the Zilver[supreg] PTX stent.
---------------------------------------------------------------------------

    \170\ Cassese, S., & Byrne, R.E., ``Endovascular stenting in 
femoropopliteal arteries,'' The Lancet, 2018, vol. 392(10157), pp. 
1491-1493.
---------------------------------------------------------------------------

    The commenter stated that EluviaTM's lack of long-term 
data contrasts with 5-year data that is available from the 
Zilver[supreg] PTX stent's pivotal 479-patient

[[Page 19318]]

RCT comparing the use of the Zilver[supreg] PTX stent to angioplasty 
(with a sub-randomization comparing provisional use of Zilver[supreg] 
PTX stenting to bare metal Zilver stenting in patients experiencing an 
acute failure of percutaneous transluminal angioplasty (PTA)). The 
commenter believed that these 5-year data demonstrate that the 
superiority of the use of the Zilver[supreg] PTX stent demonstrated at 
12 and 24 months is maintained through 5 years compared to PTA and 
provisional bare metal stenting, and actually increases rather than 
decreases over time. The commenter also believed that, given that these 
stent devices are permanent implants and they are used to treat a 
chronic disease, long-term data is important to fully understand an SFA 
stent's clinical benefits. The commenter stated that with 5-year data 
available to support the ongoing safety and effectiveness of the use of 
the Zilver[supreg] PTX stent, but no such corresponding data available 
for the use of the EluviaTM stent, it seems incongruous to 
suggest that the use of the EluviaTM stent results in a 
substantial clinical improvement compared to the Zilver[supreg] PTX 
stent.
    The commenter further stated that, in addition to the very limited 
long-term data available for the EluviaTM stent, there is 
also a lack of clinical data for the use of the EluviaTM 
stent to confirm the benefit of the device outside of a strictly 
controlled clinical study population. The commenter stated that in 
contrast, the Zilver[supreg] PTX stent has demonstrated comparable 
outcomes across a broad patient population, including a 787-patient 
study conducted in Europe with 2-year follow-up and a 904-patient study 
of all-comers (no exclusion criteria) in Japan with 5-year follow-up 
completed. The commenter believed that with no corresponding data for 
the use of the EluviaTM stent in a broad patient population, 
it seems unreasonable to suggest that the use of the 
EluviaTM stent results in a substantial clinical improvement 
compared to the Zilver[supreg] PTX stent.
    Response: We appreciate the information provided by the commenter. 
We will take these comments into consideration when deciding whether to 
approve new technology add-on payments for the EluviaTM 
Drug-Eluting Vascular Stent System for FY 2020.
g. ELZONRISTM (tagraxofusp, SL-401)
    Stemline Therapeutics submitted an application for new technology 
add-on payments for ELZONRISTM for FY 2020. 
ELZONRISTM (tagraxofusp, SL-401) is a targeted therapy for 
the treatment of blastic plasmacytoid dendritic cell neoplasm (BPDCN) 
administered via infusion. The applicant stated that BPDCN, previously 
known as blastic natural killer (NK) cell leukemia/lymphoma, is a rare, 
highly aggressive hematologic malignancy with a median overall survival 
of 8 to 14 months from diagnosis that occurs predominantly in the 
elderly (median age at diagnosis is 67 years old) and in male patients 
(75 percent). The applicant cited data from the Surveillance, 
Epidemiology, and End Results Program (SEER) registry that the 
estimated incidence of BPDCN is less than 100 new cases per year in the 
U.S. However, the applicant believes that registries likely 
underestimate the true incidence of BPDCN due to changing nomenclature 
and lack of a standardized disease characterization prior to 2008, and 
that additional patients may be eligible for treatment.
    According to the applicant, ELZONRISTM is a targeted 
therapy directed to the interleukin-3 receptor (IL-3 receptor). The IL-
3 receptor is composed of two chains: An alpha chain, also known as 
CD123, and a [beta] chain. Together, the two chains form a high-
affinity cell surface receptor for interleukin-3 (IL-3). The binding of 
IL-3 to the IL-3 receptor initiates signaling that stimulates the 
proliferation and differentiation of certain hematopoietic cells. The 
alpha unit of the IL-3 receptor (also known as CD123) has also been 
found to be expressed in a variety of cancers, including BPDCN, a 
malignancy derived from plasmacytoid dendrite cells (pDCs).
    The applicant explained that ELZONRISTM is a recombinant 
protein composed of human IL-3 genetically fused to a truncated 
diphtheria toxin (DT) payload. The applicant stated that 
ELZONRISTM binds with high affinity to the IL-3 receptor and 
is engineered such that IL-3 replaces the native receptor-binding 
domain of DT and thereby acts like a homing device, targeting the DT 
cytotoxic payload specifically to CD123-expressing cells. Upon binding 
to the IL-3 receptor, ELZONRISTM is internalized into 
endosomes, where the low pH environment enables proteolytic cleavage 
and release of the catalytic domain of DT into the cytoplasm. The 
target of DT's catalytic domain is elongation factor 2 (EF-2), a key 
protein involved in protein translation. Inactivation of EF-2 leads to 
termination of protein synthesis, which ultimately results in cell 
death. The applicant asserted that ELZONRISTM is engineered 
such that IL-3 targets the cytotoxic payload specifically to CD123-
expressing cells.
    The applicant indicated that the regimens historically employed for 
the treatment of patients who have been diagnosed with BPDCN have 
generally consisted of those regimens, or modified versions of those 
regimens, used for aggressive hematologic malignancies, including 
regimens normally used in the treatment of acute lymphoblastic 
leukemia, acute myeloid leukemia, and lymphoma. The applicant 
summarized the mechanisms of various drugs and regimens currently used 
to treat BPDCN, including:
     Etoposide, which the applicant explained works by 
inhibiting topoisomerase II, which in turn disrupts the ligation step 
of the cell cycle, leading to apoptosis and cell death.
     Hyper CVAD, which the applicant explained is a regimen 
consisting of cyclophosphamide, vincristine and doxorubicin, 
dexamethasone, methotrexate, and cytarabine. Cyclophosphamide damages 
DNA by binding to it and causing the formation of cross-links. 
Vincristine prevents cell duplication by binding to the protein 
tubulin. Dexamethasone is a steroid to counteract side effects. 
Methotrexate is an antimetabolite that competitively inhibits an enzyme 
that is used in in folate synthesis, arresting cell reproduction.
     CHOP, which the applicant explained is a regimen of 
cyclophosphamide, doxorubicin, vincristine, and prednisone.
     AspaMetDex L-asparaginase, Methotrexate, Dexamethasone. 
The applicant explained that L-asparaginase catalyzes the conversion of 
L-asparagine to aspartic acid and ammonia, depriving leukemic cells of 
L-asparagine, leading to cell death.
     Ara-C regimen (cytarabine), which the applicant explained 
interferes with synthesis of DNA by altering the sugar component of 
nucleosides.
    The applicant stated that there are no approved therapies or 
established standards of care for the treatment of patients who have 
been diagnosed with BPDCN, either for treatment-naive or previously-
treated patients. The applicant asserted that current treatments for 
patients who have been diagnosed with BPDCN might temporarily help to 
slow disease progression, but they fail to eradicate cancer stem cells 
(CSCs), and no specific treatment regimen has been shown to be 
effective or is recommended. According to the applicant, only half of 
reported patients show initial response to the regimens historically 
employed for treatment of a diagnosis of BPDCN, and these reported 
responses do not generally appear to be

[[Page 19319]]

durable, with many patients experiencing a quick relapse. Overall 
survival is typically low, ranging from 8 to 14 months across various 
treatment regimens.
    With respect to the newness criterion, according to the applicant, 
the FDA accepted the applicant's Biologics License Application (BLA) 
filing for ELZONRISTM in August 2018 for the treatment of 
patients who have been diagnosed with blastic plasmacytoid dendritic 
cell neoplasm. The FDA granted this application Breakthrough Therapy, 
Priority Review, and Orphan Drug designations, and on December 21, 
2018, approved ELZONRISTM for the treatment of blastic 
plasmacytoid dendritic cell neoplasm in adults and in pediatric 
patients 2 years old and older. Currently, there are no ICD-10-PCS 
procedure codes to uniquely identify procedures involving 
ELZONRISTM. We note that the applicant has submitted a 
request for approval for a unique ICD-10-PCS code for the 
administration of ELZONRISTM beginning in FY 2020.
    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, ELZONRISTM treats BPDCN via 
target antigen specificity, attacking cells with the IL-3 receptor 
(CD123) overexpressed in cancer stem cells (CSCs) and tumor bulk, but 
minimally expressed or absent on normal hematopoietic stem cells. The 
applicant indicated that ELZONRISTM's mechanism of action 
involves a receptor-mediated endocytosis, inhibition of protein 
synthesis, and interference with IL-3 signal transduction pathways, 
leading to growth arrest and apoptosis in leukemia blasts and CSCs. The 
applicant asserted that current BPDCN treatments are not targeted, and 
their mechanisms of action aim to arrest quickly-dividing cells through 
DNA alkylation and intercalation, as well as through protein binding to 
prevent cell duplication. The applicant also asserted that current 
treatments for patients who have been diagnosed with BPDCN might 
temporarily help to slow disease progression, but they fail to 
eradicate CSCs. The applicant stated that in contrast, 
ELZONRISTM utilizes a payload that is not cell cycle-
dependent and, therefore, it is able to kill not just highly 
proliferative tumor bulk, but also the relatively quiescent CSCs. The 
applicant noted that there are similar targeted therapies currently 
under investigation, although the applicant asserted that these other 
therapies are all in much earlier stages of development. Therefore, the 
applicant asserted that ELZONRISTM utilizes a different 
mechanism of action than currently available treatment options.
    With respect to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant stated that because 
BPDCN is a distinct and rare hematologic malignancy and there are no 
other approved therapies or established standard-of-care, cases 
representing patients receiving treatment involving 
ELZONRISTM would not be assigned to the same MS-DRG(s) when 
compared to cases representing patients receiving treatment involving 
existing technologies. We note that, as explained below in the 
discussion of the cost criterion, the applicant stated that potential 
cases representing patients who may be eligible for treatment involving 
ELZONRISTM would be assigned to MS-DRGs that contain cases 
representing patients who are receiving chemotherapy without acute 
leukemia as a secondary diagnosis.
    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 use of ELZONRISTM would involve treatment of 
a dissimilar patient population as compared to other therapies. The 
applicant stated that the World Health Organization standardized the 
current name and specific category of disease for BPDCN in 2016, 
designating it as a distinct entity within the acute myeloid neoplasms 
and acute leukemias. The applicant indicated that no BPDCN standard-of-
care has been established and currently patients who have been 
diagnosed with BPDCN are being treated with therapies used for other 
diseases. Therefore, the applicant asserted that ELZONRISTM 
would be used in the treatment of a new patient population because the 
patient population in question is distinguishable from others by the 
ICD-10-CM diagnosis code specific to BPDCN: C86.4 (Blastic NK-cell 
lymphoma), for which there is no specific treatment regimen that has 
been shown to be effective or is recommended, as stated above.
    As summarized above, the applicant maintains that 
ELZONRISTM meets the newness criterion and is not 
substantially similar to existing technologies because it has a unique 
mechanism of action; potential cases representing patients who may be 
eligible for treatment involving the use of ELZONRISTM would 
be assigned to a different MS-DRG when compared to existing 
technologies; and the use of the technology would treat a new patient 
population. We are inviting public comments on whether 
ELZONRISTM is substantially similar to any existing 
technologies and whether ELZONRISTM meets the newness 
criterion.
    With regard to the cost criterion, the applicant used the FY 2017 
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 ELZONRISTM would most 
likely be assigned. The applicant identified these potential cases 
using the ICD-10-CM diagnosis code C86.4 (Blastic NK-cell lymphoma), 
which the applicant stated is another name for BPDCN. The applicant 
identified 65 cases reporting ICD-10-CM diagnosis code C86.4 spanning 
28 different MS-DRGs. The applicant asserted that cases representing 
patients hospitalized who may be eligible to receive treatment 
involving ELZONRISTM would most likely appear in MS-DRGs 847 
(Chemotherapy without Acute Leukemia as Secondary Diagnosis with CC) 
and 846 (Chemotherapy without Acute Leukemia as Secondary Diagnosis 
with MCC). Therefore, the applicant limited the analysis to the cases 
in MS-DRG 847 and MS-DRG 846 that also reported the ICD-10-CM diagnosis 
code C86.4. The cases identified in these two MS-DRGs accounted for 24 
(37 percent) of the 65 cases reporting ICD-10-CM diagnosis code C86.4.
    The applicant indicated that because the number of cases reporting 
ICD-10-CM diagnosis code C86.4 is so low and it was difficult to 
discern the costs of the predecessor therapies that would be replaced 
by the use of ELZONRISTM, the applicant performed the cost 
criterion analysis under two different scenarios. Both scenarios use 
the 24 cases identified in the FY 2017 MedPAR data and increase the 
sample size by using an additional 18 cases identified in the FY 2016 
MedPAR data mapping to the same MS-DRGs and reporting the same ICD-10-
CM diagnosis code, for a combined total of 42 cases with an average 
case-weighted unstandardized charge per case of $67,947. For the first 
scenario, because the applicant was unable to determine the appropriate 
costs for the predecessor therapies, the applicant did not remove any 
predecessor charges from the cases analyzed, although the applicant 
noted that it might be extreme

[[Page 19320]]

to assume that no products or services would be replaced if 
ELZONRISTM were used. For the second scenario, the applicant 
removed all charges from the cases so that only ELZONRISTM 
was used as the cost of the case. The applicant characterized this as a 
conservative assumption, as it assumes that the only charges related to 
these cases would be the cost of ELZONRISTM.
    The applicant then standardized the FY 2017 charges using the FY 
2017 impact file and then inflated the charges to FY 2019 using the 2-
year inflation factor of 8.59 percent (1.085868) that the applicant 
indicated was published in the FY 2019 IPPS/LTCH PPS final rule. The 
applicant standardized FY 2016 charges using the FY 2016 impact file 
and then inflated the charges to FY 2019 using a 3-year inflation 
factor of 13.15 percent (1.131529), which was calculated based on the 
1-year inflation factor (1.04205) that the applicant indicated was 
listed in the FY 2019 IPPS/LTCH PPS final rule. We note that the 
inflation factors used by the applicant were the proposed 1-year and 2-
year inflation factors, which were published in the FY 2019 IPPS/LTCH 
PPS final rule in the summary of FY 2019 IPPS proposals (83 FR 41718). 
The final 1-year and 2-year inflation factors published in the FY 2019 
IPPS/LTCH PPS final rule are 1.04338 and 1.08864, respectively (83 FR 
41722), and a 3-year inflation factor calculated based on these numbers 
is 1.13587. We note that these figures were revised in the FY 2019 
IPPS/LTCH PPS final rule correction notice. The corrected final 1-year 
and 2-year inflation factors are 1.04396 and 1.08986, respectively (83 
FR 49844), and a 3-year inflation factor calculated based on the 
corrected final numbers is 1.13776.
    The applicant then added charges for ELZONRISTM in both 
scenarios. To determine the charges for ELZONRISTM, the 
applicant calculated the average per discharge cost of 
ELZONRISTM inflated by the inverse of the national average 
CCR for pharmacy costs of 0.191. The applicant then calculated an 
average case-weighted standardized charge per case for each scenario 
and compared it with the average case-weighted threshold amount. The 
applicant stated that ELZONRISTM exceeded the average-case-
weighted threshold amount under each scenario and, therefore, meets the 
cost criterion. Results of the analyses of both scenarios are 
summarized in the table below:

----------------------------------------------------------------------------------------------------------------
                                                              Average  case-
                                                               weighted  new    Final inflated
                                                 Number of      technology          average           Amount
                                              Medicare cases      add-on      case[dash]weighted     exceeded
                                                                  payment        standardized        threshold
                                                                 threshold      charge per case
----------------------------------------------------------------------------------------------------------------
FY 2016 and FY 2017 MedPAR Data; No                       42         $52,049        $1,066,195        $1,014,146
 Predecessor Charges Removed................
FY 2016 and FY 2017 MedPAR Data; All                      42          52,049         1,010,455           958,406
 Predecessor Charges Removed................
----------------------------------------------------------------------------------------------------------------

    We note that the applicant used the proposed rule values to inflate 
the standardized charges. However, we further note that even when using 
either the final rule values or corrected final rule values to inflate 
the charges, the average case-weighted standardized charge per case for 
each scenario exceeded the average case-weighted threshold amount. We 
are inviting public comments on whether ELZONRISTM meets the 
cost criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant stated that it believes ELZONRISTM represents a 
substantial clinical improvement because: (1) ELZONRISTM is 
the only treatment indicated specifically for the treatment of patients 
who have been diagnosed with BPDCN, a disease without a defined 
standard-of-care; (2) ELZONRISTM offers a treatment option 
for a patient population ineligible for aggressive chemotherapy 
regimens used to treat BPDCN; (3) ELZONRISTM exhibits high 
complete remission rates, potentially superior to other regimens used 
to treat a diagnosis of BPDCN; (4) ELZONRISTM significantly 
improves overall survival (OS) in the treatment of patients diagnosed 
with BPDCN as compared to currently available treatment regimens; (5) 
ELZONRISTM significantly improves clinical outcomes in the 
BPDCN patient population because it may allow more patients to bridge 
to stem cell transplantation, an effective treatment not currently 
administered to most patients due to their inability to tolerate the 
requisite conditioning therapies; (6) ELZONRISTM exhibits a 
manageable profile that is consistent over increasing patient exposure 
and experience, demonstrating a well-tolerated targeted therapy 
suitable for the majority of patients who are unable to receive 
intensive chemotherapy; and (7) ELZONRISTM is more efficient 
than other chemotherapeutic drugs at killing BPDCN in preclinical 
studies, suggesting clinical benefit would also be exhibited if head-
to-head comparison was pursued.
    In support of the claim that ELZONRISTM is the only 
treatment indicated specifically for the treatment of patients who have 
been diagnosed with BPDCN, the applicant submitted a 2016 review 
article which indicated that no standardized therapeutic approach has 
been established yet for the treatment of BPDCN, and the optimal 
therapy remains to be defined.\171\
---------------------------------------------------------------------------

    \171\ Pagano, L., Valentini, C.G., Grammatico, S., Pulsoni, A., 
``Blastic plasmacytoid dendritic cell neoplasm: diagnostic criteria 
and therapeutical approaches,'' British Journal of Haematology, 
2016, vol. 174(2), pp. 188-202.
---------------------------------------------------------------------------

    Second, in support of the claim that ELZONRISTM offers a 
treatment option for a patient population ineligible for aggressive 
chemotherapy regimens used to treat BPDCN, the applicant submitted a 
2016 review of treatment modalities for patients who have been 
diagnosed with BPDCN to establish that there is a clear unmet need for 
targeted treatment. The study reported that seven BPDCN patients 
treated with Hyper-CVAD, an aggressive chemotherapy regimen, achieved 
an overall response of 86 percent and complete remission of 67 percent; 
\172\ however, the applicant noted that the evidence is limited to a 
small number of patients. Another 2016 review article indicated that 
supportive care or palliative chemotherapy is used in the treatment of 
many patients who have been diagnosed with BPDCN because of their age 
or comorbidities, and may be the only option for elderly patients with 
a low performance status or characterized by the presence of relevant 
co-morbidities, suggesting that targeted therapy has the potential for 
improving patient outcomes.\173\
---------------------------------------------------------------------------

    \172\ Falcone, U., Sibai, H., Deotare, U., ``A critical review 
of treatment modalities for blastic plasmacytoid dendritic cell 
neoplasm,'' Critical Reviews in Oncology/Hematology, 2016, vol. 107, 
pp. 156-162.
    \173\ Pagano, L., Valentini, C.G., Grammatico, S., Pulsoni, A., 
``Blastic plasmacytoid dendritic cell neoplasm: diagnostic criteria 
and therapeutical approaches,'' British Journal of Haematology, 
2016, vol. 174(2), pp. 188-202.

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

[[Page 19321]]

    Third, the applicant maintained that ELZONRISTM exhibits 
high complete remission rates, potentially superior to other regimens 
used to treat patients who have been diagnosed with BPDCN. The 
applicant submitted a 2013 retrospective case study of patients who had 
been diagnosed with BPDCN, in which 15/41 (37 percent) of evaluable 
patients achieved CR with induction therapies; 2 partial responders 
subsequently became complete responders with consolidation therapy (17/
41: 41 percent). This study noted a high death rate of 17 percent 
following induction treatment.\174\ The applicant reported prospective 
clinical trial data from ELZONRISTM's pivotal trial 
(ELZONRISTM 12 [micro]g/kg/day), which observed a complete 
response plus a complete clinical response of 72 percent in treatment-
naive patients (21/29 patients).\175\
---------------------------------------------------------------------------

    \174\ Pagano, L., Valentini, C.G., Pulsoni, A., et al., for 
GIMEMA-ALWP (Gruppo Italiano Malattie EMatologiche dell'Adulto, 
Acute Leukemia Working Party), ``Blastic plasmacytoid dendritic cell 
neoplasm with leukemic presentation: an Italian multicenter study,'' 
Haematologica, 2013, vol. 98(2), pp. 239-246.
    \175\ Pemmaraju, N., et al., ``Results of Pivotal Phase 2 Trial 
of SL-401 in Patients with Blastic Plasmacytoid Dendritic Cell 
Neoplasm (BPDCN),'' Proceedings from the 2018 European Hematology 
Association Congress, 2018, Abstract 214438.
---------------------------------------------------------------------------

    Fourth, the applicant maintained that ELZONRISTM 
significantly improves overall survival (OS) in patients who have been 
diagnosed with BPDCN as compared to currently available treatment 
regimens. The applicant submitted a 2013 retrospective case study of 
patients who have been diagnosed with BPDCN, which found that the 
median overall survival was just 8.7 months in 43 patients.\176\ The 
applicant reported prospective clinical trial data from 
ELZONRISTM's pivotal trial (ELZONRISTM 12 
[micro]g/kg/day), which found that median overall survival has not yet 
been reached, with a median follow-up of 23 months [0.2-41 + 
months].\177\
---------------------------------------------------------------------------

    \176\ Pagano, L., Valentini, C.G., Pulsoni, A., et al., for 
GIMEMA-ALWP (Gruppo Italiano Malattie EMatologiche dell'Adulto, 
Acute Leukemia Working Party), ``Blastic plasmacytoid dendritic cell 
neoplasm with leukemic presentation: an Italian multicenter study,'' 
Haematologica, 2013, vol. 98(2), pp. 239-246.
    \177\ Pemmaraju, N., et al., ``Results of Pivotal Phase 2 
Clinical Trial of Tagraxofusp (SL-401) in Patients with Blastic 
Plasmacytoid Dendritic Cell Neoplasm (BPDCN),'' Proceedings from the 
2018 American Society of Hematology (ASH), 2018, Abstract S765.
---------------------------------------------------------------------------

    Fifth, the applicant maintained that ELZONRISTM 
significantly improves clinical outcomes in the treatment of the BPDCN 
patient population because it may allow more patients to bridge to stem 
cell transplantation, an effective treatment not currently administered 
to most patients due to their inability to tolerate the requisite 
conditioning therapies. The applicant submitted a 2011 retrospective 
study that included 6 cases of elderly patients who had been diagnosed 
with BPDCN in which 4 patients underwent allogenic stem cell 
transplantation (SCT) following moderately reduced intensity of 
conditioning chemotherapy regimens; 2 patients who received stem cell 
transplant while in remission lived disease free 57 months and 16 
months post-SCT, and 2 patients transplanted with active disease 
achieved complete remission but relapsed 6 and 18 months after 
transplantation. Conditioning chemotherapy regimens were reduced in 
intensity due to the patients' elderly age.\178\ The applicant also 
submitted a 2015 retrospective study of 25 BPDCN cases in which 
patients were treated with SCT. Of 11 BPDCN patients treated with 
autologous SCT and 14 patients treated with allogenic SCT, overall 
survival (OS) at 4 years was 82 percent and 69 percent, respectively, 
and no relapses were observed.\179\ The applicant also submitted a 2013 
retrospective study of 43 BPDCN cases in which only 6 out of 43 
patients (14 percent) received allogenic SCT.\180\ The applicant 
submitted a 2010 retrospective study of BPDCN cases in which only 10 
out of 47 patients (21 percent) received SCT.\181\ The applicant 
submitted a 2016 review article which concluded that early results from 
clinical trials for ELZONRISTM indicate that it could be 
used to consolidate the effects of first-line chemotherapy and/or 
reduce minimal residual disease before allogenic SCT.\182\ The 
applicant reported prospective clinical trial data from 
ELZONRISTM's pivotal trial (ELZONRISTM 12 [mu]g/
kg/day), for which the median age among the patients with BPDCN who 
received treatment involving ELZONRISTM was 70 years old, in 
which 45 percent (13/29) of treatment-na[iuml]ve patients treated with 
ELZONRISTM (12 [micro]g/kg/day) were bridged to SCT in 
remission.\183\
---------------------------------------------------------------------------

    \178\ Dietrich, S., et al., ``Blastic plasmacytoid dendritic 
cell neoplasia (BPDC) in elderly patients: results of a treatment 
algorithm employing allogeneic stem cell transplantation with 
moderately reduced conditioning intensity,'' Biology of Blood and 
Marrow Transplantation, 2011, vol. 17, pp. 1250-1254.
    \179\ Aoki, T., et al., ``Long-term survival following 
autologous and allogenic stem cell transplantation for Blastic 
plasmacytoid dendritic cell neoplasm,'' Blood, 2015, vol. 125(23), 
pp. 3559-3562.
    \180\ Pagano, L., Valentini, C.G., Pulsoni, A., et al., for 
GIMEMA-ALWP (Gruppo Italiano Malattie EMatologiche dell'Adulto, 
Acute Leukemia Working Party), ``Blastic plasmacytoid dendritic cell 
neoplasm with leukemic presentation: an Italian multicenter study,'' 
Haematologica, 2013, vol. 98(2), pp. 239-246.
    \181\ Dalle, S., et al., ``Blastic plasmacytoid dendritic cell 
neoplasm: is transplantation the treatment of choice?,'' The British 
Journal of Dermatology, 2010, vol. 162, pp. 74-79.
    \182\ Pagano, L., Valentini, C.G., Grammatico, S., Pulsoni, A., 
``Blastic plasmacytoid dendritic cell neoplasm: diagnostic criteria 
and therapeutical approaches,'' British Journal of Haematology, 
2016, vol. 174(2), pp. 188-202.
    \183\ Pemmaraju, N., et al., ``Results of Pivotal Phase 2 Trial 
of SL-401 in Patients with Blastic Plasmacytoid Dendritic Cell 
Neoplasm (BPDCN),'' Proceedings from the 2018 European Hematology 
Association Congress, 2018, Abstract 214438.
---------------------------------------------------------------------------

    Sixth, the applicant maintained that ELZONRISTM exhibits 
a manageable profile that demonstrates a well-tolerated targeted 
therapy suitable for the majority of patients who are unable to receive 
intensive chemotherapy. The prospective clinical trial data from 
ELZONRISTM's pivotal trial (ELZONRISTM 12 
[micro]g/kg/day) found that ELZONRISTM's side effect profile 
remained consistent over increasing patient exposure and experience. No 
evidence of cumulative toxicity was seen over multiple cycles of 
ELZONRISTM.
    Myelosuppression (thrombocytopenia, anemia, neutropenia) was 
modest, reversible, and was not dose-limiting for any patient. The most 
common treatment-related adverse events included increased alanine 
aminotransferase levels, increased aspartate aminotransferase levels 
and hypoalbuminemia, mostly restricted to the first cycle of therapy. 
The most serious side effect was capillary leak syndrome; most reports 
were Grade II in severity.\184\
---------------------------------------------------------------------------

    \184\ Ibid.
---------------------------------------------------------------------------

    Lastly, the applicant asserts that ELZONRISTM is more 
efficient than other chemotherapeutic drugs at killing BPDCN in 
preclinical studies, suggesting clinical benefit would also be 
exhibited if head-to-head comparison to cytotoxic agents commonly used 
for the treatment of hematologic malignancies was pursued. The 
applicant submitted a 2015 preclinical study that found malignant cells 
from patients who had been diagnosed with BPDCN were more sensitive to 
ELZONRISTM than to a wide variety of cytotoxic agents 
commonly used for treatment of hematologic malignancies, including 
drugs such as cytosine arabinoside, cyclophosphamide, vincristine, 
dexamethasone, methotrexate, Erwinia L-asparaginase, and 
asparaginase.\185\
---------------------------------------------------------------------------

    \185\ Angelot-Delettre, F., Roggy, A., Frankel, A.E., Lamarthee, 
B., Seilles, E., Biichle, S., et al., ``In vivo and in vitro 
sensitivity of blastic plasmacytoid dendritic cell neoplasm to SL-
401, an interleukin-3 receptor targeted biologic agent,'' 
Haematologica, 2015, vol. 100(2), pp. 223-30.

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

[[Page 19322]]

    After reviewing the information submitted by the applicant as part 
of its FY 2020 new technology add-on payment application for 
ELZONRISTM, we are concerned that some of the evidence 
submitted by the applicant to demonstrate substantial clinical 
improvement over existing technologies is based on preclinical studies. 
We also are unsure if the study populations in the 2013 retrospective 
study that the applicant used to compare remission rates are composed 
of treatment-na[iuml]ve, previously-treated, or a mix of patients.
    In addition, the applicant reported that the interim results of the 
Phase II trial of treatment of BPDCN with ELZONRIS TM 
demonstrated high response rates in BPDCN, including: 90 percent 
overall response in treatment na[iuml]ve patients (26/29) and 69 
percent overall response in relapse/refractory patients (9/13); 72 
percent complete response plus complete clinical response in treatment 
na[iuml]ve patients (21/29) and 38 percent complete response plus 
complete clinical response in relapse/refractory patients (5/13); and 
45 percent of patients treated in first-line setting were bridged to 
stem cell transplant in remission (13/29).\186\ However, we are 
concerned that the small number of patients in the study and the lack 
of baseline data against which to compare this technology may make it 
more difficult to determine whether these interim results support a 
finding of substantial clinical improvement. We also note that because 
the clinical trial is ongoing and the final outcomes are not available, 
we are concerned that there may not be enough information on the 
efficacy to determine substantial clinical improvement at this time. We 
also note that the applicant's December 2018 New Technology Town Hall 
meeting presentation includes information that differs slightly from 
the application materials, and we are not clear whether the study 
results submitted with the application reflect the most current 
information available. We are inviting public comments on whether 
ELZONRIS TM meets the substantial clinical improvement 
criterion, including with respect to the concerns we have raised.
---------------------------------------------------------------------------

    \186\ Pemmaraju, N., et al., ``Results of Pivotal Phase 2 Trial 
of SL-401 in Patients with Blastic Plasmacytoid Dendritic Cell 
Neoplasm (BPDCN),'' Proceedings from the 2018 European Hematology 
Association Congress, 2018, Abstract 214438.
---------------------------------------------------------------------------

    We did not receive any written comments in response to the New 
Technology Town Hall meeting notice published in the Federal Register 
regarding the substantial clinical improvement criterion for ELZONRIS 
TM or at the New Technology Town Hall meeting.
h. Erdafitinib
    Johnson & Johnson Health Care Systems, Inc. (on behalf of Janssen 
Oncology, Inc.) submitted an application for new technology add-on 
payments for Erdafitinib for FY 2020. The proposed indication for the 
use of Erdafitinib is the second-line treatment of adult patients who 
have been diagnosed with locally advanced or metastatic urothelial 
carcinoma whose tumors exhibit certain fibroblast growth factor 
receptor (FGFR) genetic alterations as detected by an FDA-approved 
test, and who have disease progression during or following at least one 
line of prior chemotherapy including within 12 months of neoadjuvant or 
adjuvant chemotherapy.
    According to the applicant, Erdafitinib is an oral pan-fibroblast 
growth factor receptor (FGFR) tyrosine kinase inhibitor being evaluated 
in Phase II and III clinical trials in patients who have been diagnosed 
with advanced urothelial cancer. FGFRs are a family of receptor 
tyrosine kinases, which may be upregulated in various tumor cell types 
and may be involved in tumor cell differentiation and proliferation, 
tumor angiogenesis, and tumor cell survival. Erdafitinib is a pan-
fibroblast FGFR inhibitor with potential antineoplastic activity. Upon 
oral administration, Erdafitinib binds to and inhibits FGFR, which may 
result in the inhibition of FGFR-related signal transduction pathways 
and, therefore, the inhibition of tumor cell proliferation and tumor 
cell death in FGFR-overexpressing tumor cells.
    The applicant indicated that urothelial cancer (also known as 
transitional cell cancer or bladder cancer) is the sixth most common 
type of cancer diagnosed in the U.S. In 2018, an estimated 81,190 new 
cases of bladder cancer were expected to be diagnosed (approximately 
62,380 in men and 18,810 in women), and result in 17,240 deaths 
(approximately 1 out of 5 diagnosed men and 1 out of 4 diagnosed 
women).\187\ According to the applicant, for patients with metastatic 
disease, outcomes can be dire due to the often rapid progression of the 
tumor and the lack of efficacious treatments, especially in cases of 
relapsed or refractory disease. The applicant further stated that the 
relative 5-year survival rate for patients with metastatic disease is 5 
percent.
---------------------------------------------------------------------------

    \187\ American Cancer Society, ``Key Statistics for Bladder 
Cancer,'' www.cancer.org/cancer/bladder-cancer/about/key-statistics.html.
---------------------------------------------------------------------------

    According to the applicant, in regard to current second-line 
treatment, patients who have been diagnosed with locally advanced or 
metastatic urothelial cancer have limited options and favor anti-
programmed death ligand 1/anti-programmed death 1 (anti-PD-L1/anti-PD-
1) therapies (also known as checkpoint inhibitors) as opposed to 
conventional cytotoxic chemotherapy. With objective response rates 
ranging from approximately 20 to 25 percent with currently approved 
therapies and treatments, the applicant stated that new effective 
treatment options are needed for this patient population. Although 
there are five FDA-approved immune checkpoint inhibitors, the applicant 
stated that studies have shown that not all patients benefit from PD-1 
blockade. The applicant explained that patients harboring FGFR 
alternates, which occurs at a frequency of approximately 20 percent, 
are thought to have immunologically ``cold tumors'' that are less 
likely to benefit from PD-1 blockade therapy.
    The applicant noted that Erdafitinib was granted Breakthrough 
Therapy designation by the FDA on March 15, 2018, for the treatment of 
patients who have been diagnosed and treated for urothelial cancer 
whose tumors have certain FGFR genetic alterations. Erdafitinib has not 
received FDA premarket approval as of the time of the development of 
this proposed rule. Although there are no currently approved ICD-10-PCS 
procedure codes to uniquely identify the use of Erdafitnib, facilities 
can report the oral administration of Erdafitinib with the use of the 
following ICD-10-PCS code: 3E0DX05 (Introduction of Other 
Antineoplastic into Mouth and Pharynx, External Approach). We note that 
the applicant has submitted a request for approval at the March 2019 
ICD-10 Coordination and Maintenance Committee Meeting for a unique ICD-
10-PCS procedure code to specifically identify cases involving the 
administration of Erdafitinib. According to the applicant, this request 
was discussed at the September 11, 2018 ICD-10 Coordination and 
Maintenance Committee meeting, and at that meeting CMS recommended the 
establishment of a New Technology Section ``X'' code to distinctly 
identify cases involving the administration of Erdafitinib.
    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

[[Page 19323]]

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 Erdafitinib is not substantially similar to any 
existing treatment options because its inhibitory mechanism of action 
is novel. Specifically, the applicant stated that Erdafitinib is a pan-
fibroblast FGFR inhibitor with potential antineoplastic activity. Upon 
oral administration, Erdafitinib binds to and inhibits FGFR, which may 
result in the inhibition of FGFR-related signal transduction pathways 
and, therefore, the inhibition of tumor cell proliferation and tumor 
cell death in FGFR-overexpressing tumor cells. The applicant stated 
that Erdafitinib is a potent pan-FGFR (1-4) tyrosine kinase inhibitor 
with IC50 (drug concentration at which 50 percent of target enzyme 
activity is inhibited) in the single-digit nanomolar range. According 
to the applicant, Erdafitinib will, therefore, represent a first-in-
class FGFR inhibitor because of its novel mechanism of action.
    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 patients who may be eligible for treatment involving 
Erdafitinib are likely to be assigned to a wide variety of MS-DRGs 
because patients who may receive treatment involving Erdafitinib in the 
inpatient setting would likely be hospitalized due to other conditions 
than urothelial cancer. The applicant stated that potential cases 
representing patients who may be eligible for treatment involving the 
use of Erdafitinib may be assigned to the same MS-DRGs as cases 
representing patients treated with currently available treatment 
options for urothelial cancer.
    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 the treatment involving Erdafitnib is specific to a 
select subset of patients who have been diagnosed with locally advanced 
or metastatic urothelial carcinoma and previously treated, but 
subsequently present with FGFR alterations. According to the applicant, 
while patients who have been diagnosed with metastatic or unresectable 
urothelial cancer may be offered second-line therapy options of a 
checkpoint inhibitor or systemic chemotherapy, treatment involving 
Erdafitinib is specific to a subset of patients with certain FGFR-
genetic alterations. Therefore, the applicant believes that Erdafitinib 
treats a different patient population than currently available 
treatments.
    We are inviting public comments on whether Erdafitinib is 
substantially similar to any existing technology and whether it meets 
the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis. The applicant searched the FY 2017 MedPAR Hospital 
Limited Data Set (LDS) for inpatient hospital claims for potential 
cases representing patients who may be eligible for treatment using 
Erdafitinib. The applicant noted that because the inpatient admission 
for the potential cases identified would likely be unrelated to the 
proposed indication for the use of Erdafitinib, it is unlikely that the 
administration of Erdafitinib would be initiated during an inpatient 
hospitalization. In addition, the applicant assumed that most hospitals 
would not utilize Erdafitinib for short-stay inpatient hospitalization, 
and the applicant therefore eliminated all identified potential cases 
representing inpatient hospitalizations of 3 days or fewer from its 
analysis. The applicant also assumed that any inpatient hospitalization 
of 4 days or longer would involve the daily administration of 
Erdafitinib and calculated the drug's costs on a case-by-case basis, 
multiplying the length-of-stay times the cost of the drug.
    The applicant used a combination of ICD-10-CM diagnosis codes to 
identify these potential cases. The applicant first identified claims 
with one of the following ICD-10-CM diagnosis codes listed in the table 
below.

------------------------------------------------------------------------
 ICD-10-CM diagnosis code                 Code description
------------------------------------------------------------------------
C67.8.....................  Malignant neoplasm of overlapping sites of
                             bladder.
C67.9.....................  Malignant neoplasm of bladder, unspecified.
C68.8.....................  Malignant neoplasm of overlapping sites of
                             urinary organs.
C68.9.....................  Malignant neoplasm of urinary organ,
                             unspecified.
------------------------------------------------------------------------

    The applicant then searched the MedPAR data file for inpatient 
hospital claims that also had one of the following ICD-10-CM diagnosis 
codes listed in the table below to identify a combination of applicable 
codes.

------------------------------------------------------------------------
 ICD-10-CM diagnosis code                 Code description
------------------------------------------------------------------------
C77.2.....................  Secondary and unspecified malignant neoplasm
                             of intra-abdominal lymphnodes.
C77.4.....................  Secondary and unspecified malignant neoplasm
                             of inguinal and lower limb lymph nodes.
C77.5.....................  Secondary and unspecified malignant neoplasm
                             of intrapelvic lymph nodes.
C77.8.....................  Secondary and unspecified malignant neoplasm
                             of lymph nodes of multiple regions.
C77.9.....................  Secondary and unspecified malignant neoplasm
                             of lymph node, unspecified.
C78.00....................  Secondary malignant neoplasm of unspecified
                             lung.
C78.7.....................  Secondary malignant neoplasm of unspecified
                             lung.
C79.00....................  Secondary malignant neoplasm of unspecified
                             kidney and renal pelvis.
C79.19....................  Secondary malignant neoplasm of other
                             urinary organs.
C79.51....................  Secondary malignant neoplasm of bone.
C79.82....................  Secondary malignant neoplasm of genital
                             organs.
------------------------------------------------------------------------

    Based on this search, the applicant identified 2,844 cases mapping 
to a wide range of MS-DRGs. The applicant identified and used in its 
analysis those MS-DRGs to which more than 1 percent of the total 
identified cases were assigned, as listed in the table below.

[[Page 19324]]



------------------------------------------------------------------------
          MS-DRG                            MS-DRG title
------------------------------------------------------------------------
871.......................  Septicemia or Severe Sepsis without MV >96
                             Hours with MCC.
654.......................  Major Bladder Procedures with CC.
687.......................  Kidney & Urinary Tract Neoplasms with CC.
686.......................  Kidney & Urinary Tract Neoplasms with MCC.
872.......................  Septicemia or Severe Sepsis without MV >96
                             Hours without MCC.
683.......................  Renal Failure with CC.
698.......................  Other Kidney & Urinary Tract Diagnoses with
                             MCC.
669.......................  Transurethral Procedures with CC.
690.......................  Kidney & Urinary Tract Infections without
                             MCC.
682.......................  Renal Failure with MCC.
699.......................  Other Kidney & Urinary Tract Diagnoses with
                             CC.
653.......................  Major Bladder Procedures with MCC.
853.......................  Infectious & Parasitic Diseases with O.R.
                             Procedure with MCC.
543.......................  Pathological Fractures & Musculoskeletory &
                             Connective Tissue Malignancy with CC.
948.......................  Signs & Symptoms without MCC.
668.......................  Transurethral Procedures with MCC.
542.......................  Pathological Fractures & Musculoskeletory &
                             Connective Tissue Malignacy with MCC.
657.......................  Kidney & Ureter Procedures For Neoplasm with
                             CC.
641.......................  Miscellaneous Disorders of Nutrition,
                             Metabolism, Fluids/Electrolytes without
                             MCC.
180.......................  Respiratory Neoplasms with MCC.
291.......................  Heart Failure & Shock with MCC or Peripheral
                             Extracorporeal Membrane Oxygenation (ECMO).
------------------------------------------------------------------------

    Using 100 percent of the cases assigned to these MS-DRGs, the 
applicant determined an average case-weighted unstandardized charge per 
case of $86,302. The applicant did not remove any charges for prior 
therapies because the applicant indicated that the use of Erdafitinib 
would not replace any other therapies. The applicant standardized the 
charges for each case and inflated each case's charges by applying the 
FY 2019 IPPS/LTCH PPS final rule outlier charge inflation factor of 
1.08864 (83 FR 41722). (We note that the 2-year charge inflation factor 
was revised in the FY 2019 IPPS/LTCH PPS final rule correction notice. 
The revised factor is 1.08986 (83 FR 49844). However, we note that even 
when using either the revised final rule values or the corrected final 
rule values published in the correction notice to inflate the charges, 
the final inflated average case-weighted standardized charge per case 
for Erdafitinib would exceed the average case-weighted threshold 
amount.) The applicant then added the charges for the cost of 
Erdafitinib. To determine the charges for the cost of Erdafitinib, the 
applicant used the inverse of the FY 2019 IPPS/LTCH PPS final rule 
pharmacy national average CCR of 0.191. The applicant's reported 
average case-weighted threshold amount was $62,435 and its reported 
final inflated average case-weighted standardized charge per case was 
$111,713. Based on this analysis, the applicant believes Erdafitinib 
meets the cost criterion because the final inflated average case-
weighted standardized charge per case exceeds the average case-weighted 
threshold amount. We are inviting public comments on whether 
Erdafitinib meets the cost criterion.
    The applicant asserts that Erdafitinib represents a substantial 
clinical improvement over existing technologies because it offers a 
treatment option for a patient population unresponsive to or ineligible 
for currently available treatments. The applicant stated that 
Erdafitinib provides a substantial clinical improvement for a select 
group of patients who have been diagnosed with locally advanced or 
metastatic urothelial carcinoma who have failed first-line treatment 
and have limited second-line treatment options, despite the recent 
introduction of checkpoint inhibitors. The applicant further stated 
that the use of Erdafitinib will be the first available treatment 
option specific for the subset of patients who have certain fibroblast 
growth factor receptor (FGFR) genetic alterations that are detected by 
an FDA-approved test. The applicant also believes that Erdafitinib 
represents a significant clinical improvement because the technology 
reduces mortality, decreases pain, and reduces recovery time.
    To support its assertions of substantial clinical improvement, the 
applicant submitted the results of a Phase I dose-escalation study for 
the use of Erdafitinib in the target patient population for which the 
applicant asserts Erdafitinib would be the first available treatment 
option and represents a substantial clinical improvement, which is 
patients who had been diagnosed with advanced solid tumors for which 
standard curative treatment appeared no longer effective. With a sample 
size of 65 patients, patients received escalating oral doses of 
Erdafitinib ranging from 0.5 mg to 12 mg, administered continuously 
daily, or oral doses of Erdafitinib of 10 mg or 12 mg administered on a 
7-days-on/7-days-off intermittent schedule. The study intended to 
identify the Recommended Phase II Dose (RP2D) and investigate the 
safety and pharmacodynamics of the drug. The applicant stated that the 
initial RP2D was considered 9 mg continuous daily dosing and 10 mg for 
intermitted dosing on the basis of improved tolerability.
    The applicant also provided data from a multi-center, open-label 
Phase II study of 99 patients, ages 36 years old to 87 years old, with 
the median age being 68 years old, who had been diagnosed with 
metastatic or unresectable urothelial carcinoma that had specific FGFR 
alterations and were treated with a starting daily dose of Erdafitinib 
of 8 mg. The applicant noted the study included 87 patients who 
progressed after at least or more than 1 line of prior chemotherapy or 
within 12 months of (neo) adjuvant chemotherapy. According to the 
applicant, the objective response rate (ORR) measured by Response 
Evaluation Criteria in Solid Tumors (RECIST) version 1.1 criteria was 
40.4 percent (95 percent confidence interval [CI], 30.7 percent to 50.1 
percent; 3.0 percent complete responses and 37.4 percent partial 
responses). The disease control rate (complete responses, partial 
responses, and stable disease) was 79.8 percent. The ORRs were similar 
in chemotherapy-na[iuml]ve patients versus patients who progressed/
relapsed after chemotherapy (41.7 percent versus 40.2 percent) and in 
patients who had visceral metastases versus those who did not (38.5 
percent versus 47.6 percent). The median time to response was 1.4 
months, and the median duration of response was 5.6

[[Page 19325]]

months (95 percent CI, 4.2 months to 7.2 months). The applicant noted 
that the results demonstrated a median progression-free survival of 5.5 
months (95 percent CI, 4.2 months to 6.0 months) and a median overall 
survival of 13.8 months (95 percent CI, 9.8 months-not estimable). In 
an exploratory analysis of 22 patients previously treated with 
immunotherapy, the ORR was 59 percent; response to prior immunotherapy 
(per investigator) in these patients was 5 percent.188 189
---------------------------------------------------------------------------

    \188\ Nishina, T., Takahashi, S., Iwasawa, R., et al., ``Safety, 
pharmacokinetic, and pharmacodynamics of erdafitinib, a pan-
fibroblast growth factor receptor (FGFR) tyrosine kinase inhibitor, 
in patients with advanced or refractory solid tumors,'' Invest New 
Drugs, 2018, vol. 36, pp. 424-434.
    \189\ Tabernero, J., Bahleda, R., Dienstmann, R., et al., 
``Phase I Dose-Escalation Study of JNJ-42756493, an Oral Pan-
Fibroblast Growth Factor Receptor Inhibitor, in Patients With 
Advanced Solid Tumors,'' J Clin Onc, Vol. 33(30), October 20, 2015, 
pp. 3001-3008.
---------------------------------------------------------------------------

    The applicant also referenced an ongoing Phase III study, but 
indicated that the data was not available at the time of the 
application's submission.
    We have the following concerns with regard to whether the 
technology meets the substantial clinical improvement criterion. First, 
the applicant did not provide substantial data comparing Erdafitinib to 
existing therapies. Additionally, the studies that were provided were 
based on small sample sizes, open-labeled, and presented without a 
complete comparison to existing therapies. Due to the limited nature of 
available data, we have concerns that we may not have enough 
information to determine if Erdafitinib represents a substantial 
clinical improvement over existing technologies.
    We are inviting public comments on whether Erdafitinib meets the 
substantial clinical improvement criterion.
    We did not receive any written public comments in response to the 
New Technology Town Hall meeting notice published in the Federal 
Register regarding the substantial clinical improvement criterion for 
Erdafitinib or at the New Technology Town Hall meeting.
i. ERLEADATM (Apalutamide)
    Johnson & Johnson Health Care Systems Inc., on behalf of Janssen 
Products, LP, Inc., submitted an application for new technology add-on 
payments for ERLEADATM (apalutamide) for FY 2020. 
ERLEADATM received FDA approval on February 14, 2018. This 
oral drug is an androgen receptor inhibitor indicated for the treatment 
of patients who have been diagnosed with non-metastatic castration-
resistant prostate cancer (nmCRPC).
    Prostate cancer is the second leading cause of cancer death in 
men.\190\ Androgens, a type of hormone that includes testosterone, can 
promote tumor growth. Androgen-deprivation therapy (ADT) is initially 
an effective way to treat prostate cancer. However, almost all men with 
prostate cancer eventually develop castration-resistant disease, or 
cancer that continues to grow despite treatment with hormone therapy or 
surgical castration.\191\ Non-metastatic castration-resistant prostate 
cancer (nmCRPC) is a clinical state in which cancer has not spread to 
other parts of the body, but continues to grow despite treatment with 
ADT, either medical or surgical, that lowers testosterone levels. 
Delaying metastases, or extending metastasis-free survival (MFS), may 
delay symptomatic progression, morbidity, mortality, and healthcare 
resource utilization. According to the applicant, nearly all men who 
die from prostate cancer have antecedent metastases to bone or other 
sites. ERLEADATM blocks the effect of androgens on the tumor 
in order to delay metastases, a major cause of complications and death 
among men with prostate cancer. Prior to ERLEADATM, there 
were no FDA-approved treatments for nmCRPC to delay the onset of 
metastatic castration-resistant prostate cancer (mCRPC).\192\ The U.S. 
incidence of nmCRPC is estimated to be 50,000 to 60,000 cases per 
year.\193\
---------------------------------------------------------------------------

    \190\ American Cancer Society. https://www.cancer.org/research/cancer-facts-statistics/all-cancer-facts-figures/cancer-facts-figures-2019.html.
    \191\ Dai, C., Heemers, H., Sharifi, N., ``Androgen signaling in 
prostate cancer,'' Cold Spring Harb Perspect Med, 2017, vol. 7(9), 
pp. a030452.
    \192\ Center for Drug Evaluation and Research. NDA/BLA Multi-
Disciplinary Review and Evaluation (Summary Review, Office Director, 
Cross Discipline Team Leader Review, Clinical Review, Non-Clinical 
Review, Statistical Review and Clinical Pharmacology Review) NDA 
210951--ERLEADA (apalutamide)--Reference ID: 4221387. Available at: 
https://www.accessdata.fda.gov/drugsatfda_docs/nda/2018/210951Orig1s000MultidisciplineR.pdf. Published March 19, 2018.
    \193\ Beaver, Julia A., Kluetz, Paul, Pazdur, Richard, 
``Metastasis-free Survival--A New End Point in Prostate Cancer 
Trials,'' 2018, N Eng J of Med, vol. 378, pp. 2458-2460, 10.1056/
NEJMp1805966.
---------------------------------------------------------------------------

    With respect to the newness criterion, ERLEADATM 
(apalutamide) was granted Fast Track and Priority Review designations 
under FDA's expedited programs, and received FDA approval on February 
14, 2018 for the treatment of patients who have been diagnosed with 
non-metastatic castration-resistant prostate cancer. Currently, there 
are no ICD-10-PCS procedure codes to uniquely identify the 
administration of ERLEADATM. We note that the applicant 
submitted a request for approval for a unique ICD-10-PCS code for the 
administration of ERLEADATM beginning in FY 2020.
    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, the 
applicant maintained that ERLEADATM is new because it was 
the first drug approved by the FDA with its mechanism of action. 
Specifically, ERLEADATM is an androgen receptor (AR) 
inhibitor that binds directly to the ligand-binding domain of the AR. 
It has a trifold mechanism of action. Apalutamide inhibits AR nuclear 
translocation, inhibits DNA binding, and impedes AR-mediated 
transcription, which together inhibit tumor cell growth.\194\ According 
to the applicant, in non-clinical studies, apalutamide administration 
caused decreased tumor cell proliferation and increased apoptosis 
leading to decreased tumor volume in mouse xenograft models of prostate 
cancer. Furthermore, the applicant asserted that in additional non-
clinical studies, apalutamide was shown to have a higher binding 
affinity to the androgen receptor than bicalutamide (CASODEX), a first-
generation anti-androgen that has been used in clinical practice for 
the treatment of nmCRPC. However, the applicant noted that bicalutamide 
is not FDA-approved for this indication nor is there Phase III data 
available on its use in this population. In addition, according to the 
applicant, apalutamide has a different mechanism of action than 
bicalutamide because it does not show antagonist-to-antagonist switch 
like bicalutamide.
---------------------------------------------------------------------------

    \194\ Clegg, N.J., Wongvipat, J., Joseph, J.D., et al., ``ARN-
509: a novel antiandrogen for prostate cancer treatment,'' Cancer 
Res, 2012, vol. 72(6), pp. 1494-503.
---------------------------------------------------------------------------

    With regard to the second criterion, whether a product is assigned 
to the same or different MS-DRG, the applicant noted that patients who 
may be eligible to receive treatment involving ERLEADATM in 
the inpatient setting will likely be hospitalized due to other 
conditions. Therefore, the applicant explained that potential cases 
eligible to receive treatment involving ERLEADATM are likely 
to be assigned to a wide variety of MS-DRGs, and

[[Page 19326]]

ERLEADATM is similar to existing technologies in this 
respect.
    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 
maintained that ERLEADATM was the first FDA-approved 
treatment option for patients who have been diagnosed with nmCRPC. 
According to the applicant, there are a number of therapies currently 
available for patients who have been diagnosed with mCRPC, including 
chemotherapy, continuous ADT, immunotherapy, radiation therapy, 
radiopharmaceutical therapy, and androgen pathway treatments, including 
secondary hormonal therapies and supportive care. However, prior to 
ERLEADATM, there were no FDA-approved treatment options for 
patients who have been diagnosed with nmCRPC to delay the onset of 
mCRPC. Therefore, according to the applicant, ERLEADATM 
provides a treatment option to patients who have been diagnosed with a 
stage of prostate cancer that previously had no other approved 
treatment options available, and the standard approach was ``watch and 
wait/observation.'' The applicant stated that both the National 
Comprehensive Cancer Network[supreg] (NCCN[supreg]) guidelines for 
prostate cancer and American Urological Association (AUA) guidelines 
for castration-resistant prostate cancer note the limited treatment 
options for nmCRPC as compared to mCRPC. The applicant pointed out that 
apalutamide is highly recommended, as one of the two treatments with a 
Category 1 recommendation included in the NCCN[supreg] guidelines and 
standard treatment options for asymptomatic nmCRPC based on evidence 
level Grade A in the AUA guidelines.195 196 Therefore, the 
applicant posited that ERLEADATM involves the treatment of a 
new patient population because it is a new treatment option for 
patients who have been diagnosed with nmCRPC and have limited available 
treatment options.
---------------------------------------------------------------------------

    \195\ NCCN Clinical Practice Guidelines in Oncology (NCCN 
Guidelines[supreg]): Prostate Cancer (Version 4.2018). National 
Comprehensive Cancer Network. Available at: www.nccn.org. Published 
August 15, 2018.
    \196\ Lowrance, W.T., Murad, M.H., Oh, W.K., et al., 
``Castration-Resistant Prostate Cancer: AUA Guideline Amendment 
2018,'' J Urol, 2018, pii: S0022-5347(18)43671-3.
---------------------------------------------------------------------------

    As summarized above, the applicant maintained that 
ERLEADATM meets the newness criterion and is not 
substantially similar to existing technologies because it has a unique 
mechanism of action and offers an effective treatment option to a new 
patient population with limited available treatment options. We are 
inviting public comments on whether ERLEADATM meets the 
newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion. In order to identify the range of MS-DRGs to which cases 
representing potential patients who may be eligible for treatment using 
ERLEADATM may map, the applicant identified cases that would 
be eligible for use of ERLEADATM by the presence of two ICD-
10-CM diagnosis code combinations: C61 (Malignant neoplasm of prostate) 
in combination with R97.21 (Rising PSA following treatment for 
malignant neoplasm of prostate); or C61 in combination with Z19.2 
(Hormone resistant malignancy status). The applicant searched the FY 
2017 MedPAR final rule file (claims from FY 2015) for claims with the 
presence of the two code combinations above. Cases identified mapped to 
a wide variety of MS-DRGs. The applicant eliminated all hospital stays 
of fewer than 4 days from its analysis because of its assumption that 
most hospitals would not provide ERLEADATM for short-stay 
inpatients. The applicant also assumed that any hospital stay 4 days or 
longer would involve the daily provision of ERLEADATM. This 
resulted in 493 cases across 152 MS-DRGs, with approximately 33 percent 
of all cases mapping to the following 9 MS-DRGs: MS-DRG 871 (Septicemia 
or Severe Sepsis without MV >96 Hours with MCC); MS-DRG 543 
(Pathological Fractures and Musculoskeletal and Connective Tissue 
Malignancy with CC); MS-DRG 683 (Renal Failure with CC); MS-DRG 723 
(Malignancy, Male Reproductive System with CC); MS-DRG 722 (Malignancy, 
Male Reproductive System with MCC); MS-DRG 698 (Other Kidney and 
Urinary Tract Diagnoses with MCC); MS-DRG 699 (Other Kidney and Urinary 
Tract Diagnoses with CC); MS-DRG 682 (Renal Failure with MCC); and MS-
DRG 948 (Signs and Symptoms without MCC).
    For the 493 identified cases, the average case-weighted 
unstandardized charge per case was $66,559. The applicant then 
standardized the charges using the FY 2017 IPPS/LTCH PPS final rule 
Impact file. Because ERLEADATM would not replace any other 
therapies occurring during the inpatient stay, the applicant did not 
remove any charges for the current treatment. The applicant then 
applied the 2-year inflation factor of 8.59 percent (1.085868) 
published in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41718) to 
inflate the charges from FY 2017 to FY 2019. We note that the inflation 
factors were revised in the FY 2019 IPPS/LTCH PPS final rule correction 
notice. The corrected final 2-year inflation factor is 1.08986 (83 FR 
49844). The applicant converted the costs of ERLEADATM to 
charges using the inverse of the FY 2019 IPPS/LTCH PPS final rule 
pharmacy national average CCR of 0.191 (83 FR 41273) to include the 
charges in its estimate. Based on the FY 2019 IPPS/LTCH PPS final rule 
correction notice data file thresholds, the average case-weighted 
threshold amount was $52,362. The average case-weighted standardized 
charge per case was $76,901. Because the average case-weighted 
standardized charge per case exceeds the average case-weighted 
threshold amount, the applicant maintained that the technology meets 
the cost criterion.
    The applicant submitted an additional cost analysis including 
hospital stays shorter than 4 days to demonstrate that 
ERLEADATM also meets the cost criterion using all discharges 
in the analysis, regardless of length of stay. While the applicant 
maintained that ERLEADATM is unlikely to be administered by 
the hospital for inpatient stays fewer than 4 days, the applicant 
demonstrated that the average case-weighted standardized charge per 
case ($57,150) continues to exceed the average case-weighted threshold 
amount ($50,225) using all discharges (932 cases).
    We note that the applicant used the proposed rule values to inflate 
the standardized charges above. However, we further note that even when 
using either the final rule values or the corrected final rule values 
to inflate the charges, the average case-weighted standardized charge 
per case exceeded the average case-weighted threshold amount in each 
analysis. We are inviting public comments on whether 
ERLEADATM meets the cost criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that ERLEADATM represents a substantial 
clinical improvement because: (1) The technology offers a treatment 
option for a patient population previously ineligible for treatments, 
because ERLEADATM is the first FDA-approved treatment for 
patients who have been diagnosed with nmCRPC; and (2) use of the 
technology significantly improves clinical outcomes for a patient 
population because ERLEADATM was shown to significantly 
improve a number of clinical outcomes in the

[[Page 19327]]

randomized Phase III SPARTAN trial,\197\ including significant 
improvement in metastasis-free survival (MFS).
---------------------------------------------------------------------------

    \197\ Smith, M.R., et al., ``Apalutamide Treatment and 
Metastasis-free Survival in Prostate Cancer,'' N Engl J Med, 2018, 
vol. 12;378(15), pp. 1408-1418.
---------------------------------------------------------------------------

    First, the applicant stated that there were no FDA-approved 
treatments to delay metastasis for patients who have been diagnosed 
with nmCRPC, a small but important clinical state within the spectrum 
of prostate cancer, prior to the FDA approval of ERLEADATM. 
The applicant emphasized that until the FDA approved the use of 
ERLEADATM, Medicare patients who have been diagnosed with 
nmCRPC had extremely limited treatment options, and the standard 
approach was ``watch and wait/observation.'' The applicant asserted 
that ERLEADATM offers a promising new treatment option and 
has been shown to improve MFS in a Phase III trial \198\ with a 
demonstrated safety and tolerability profile and no negative impact to 
health-related quality of life based on patient-reported outcomes. 
Therefore, the applicant stated that the ``robust results'' of the 
clinical trial demonstrate that ERLEADATM is a substantial 
clinical improvement over existing technologies because it provides an 
effective treatment option for a patient population previously 
ineligible for treatments.
---------------------------------------------------------------------------

    \198\ Ibid.
---------------------------------------------------------------------------

    Second, the applicant maintained that ERLEADATM is a 
substantial clinical improvement because ERLEADATM was shown 
to significantly improve a number of clinical outcomes, most notably 
MFS. Metastases are a major cause of complications and death among men 
with prostate cancer. Therefore, according to the applicant, delaying 
metastases may delay symptomatic progression, morbidity, mortality, and 
healthcare resource utilization. ERLEADATM was approved by 
the FDA based on a prostate cancer trial using the primary endpoint of 
MFS, with overall survival used as a secondary endpoint.
    The SPARTAN trial was a randomized, double-blind, placebo-
controlled, Phase III trial which included men who had been diagnosed 
with nmCRPC and a prostate-specific antigen doubling time of 10 months 
or less. Patients were randomly assigned, in a 2:1 ratio, to receive 
apalutamide (240 mg per day) or placebo. A total of 1,207 men underwent 
randomization (806 to the apalutamide group and 401 to the placebo 
group). All of the patients continued to receive androgen-deprivation 
therapy. The primary end point of MFS was defined as the time from 
randomization to the first detection of distant metastasis on imaging 
or death. The study team calculated that a sample of 1,200 patients 
with 372 primary end-point events would provide the trial with 90 
percent power to detect a hazard ratio for metastasis or death in the 
apalutamide group versus the placebo group of 0.70, at a two-sided 
significance level of 0.05. The Kaplan-Meier method was used to 
estimate medians for each trial group. The primary statistical method 
of comparison for time-to-event end points was a log-rank test with 
stratification according to the pre-specified factors. Cox 
proportional-hazards models were used to estimate the hazard ratios and 
95 percent confidence intervals.
    According to the applicant, results of the primary endpoint 
analysis for MFS were both statistically significant and clinically 
meaningful. Median MFS was 40.5 months in the apalutamide group as 
compared with 16.2 months in the placebo group (hazard ratio [HR]=0.28; 
95 percent confidence interval [CI]: 0.23, 0.35; P<0.0001). In other 
words, ERLEADATM significantly prolonged MFS by 2 years in 
men who had been diagnosed with nmCRPC. In a multi-variate analysis, 
treatment with ERLEADATM was an independent predictor for 
longer MFS (HR: 0.26; 95 percent CI: 0.21-0.32; P<0.0001). The 
treatment effect of ERLEADATM on MFS was consistently 
favorable across pre-specified subgroups, including patients with 
Prostate Specific Antigen doubling time (PSADT) of less than 6 months 
versus more than 6 months (short PSA doubling time is a predictor of 
metastasis), use of bone-sparing agents, and local-regional disease.
    Additionally, the applicant stated that the validity of the primary 
endpoint results is supported by improvements in all secondary 
endpoints, with significant improvement observed in time to metastasis, 
progression-free survival (PFS), and time to symptomatic progression 
(all P<0.001) for ERLEADATM compared to placebo.
    According to the applicant, treatment with ERLEADATM 
significantly extended time to metastasis by almost 2 years (40.5 
months versus 16.6 months, P<0.001). In addition, time to bone 
metastasis and nodal metastasis in particular were both significantly 
longer (P<0.0001) in the ERLEADATM group compared to the 
placebo group.
    According to the applicant, ERLEADATM was also 
associated with a significant improvement in the secondary endpoint of 
PFS, at 40.5 months for the ERLEADATM group versus 14.7 
months for the placebo group (P<0.001). In a multi-variate analysis of 
patients treated in the SPARTAN study, treatment with 
ERLEADATM was an independent predictor for longer time to 
symptomatic progression (reached versus not reached; P<0.001).
    The applicant also included the results of additional secondary 
endpoints for CMS consideration as evidence of substantial clinical 
improvement, including a suggested overall survival (OS) benefit; 
demonstrated safety profile; maintained quality of life; and decreased 
prostate specific antigen (PSA) levels.
    While OS data were not mature at the time of final MFS analysis 
(only 24 percent of the required number of OS events were available for 
analysis), the applicant asserted that OS results suggested a benefit 
of treatment using ERLEADATM as compared to placebo. The 
applicant explained that, according to a statistical analysis model 
correlating the proportion of variability of OS attributable to the 
variability of MFS, patients who developed metastases at 6, 9, and 12 
months had significantly shorter median OS compared with those patients 
without metastasis.
    The applicant also stated that treatment using ERLEADATM 
provides an effective option with a demonstrated safety profile and 
tolerability for patients who have been diagnosed with nmCRPC. The 
safety of the use of ERLEADATM was assessed in the SPARTAN 
trial, and adverse events (AEs) that occurred at >=15 percent in either 
group included: Fatigue, hypertension, rash, diarrhea, nausea, weight 
loss, arthralgia, and falls. The applicant asserted that in considering 
the risks and benefits of treatment involving the use of 
ERLEADATM for patients who have been diagnosed with nmCRPC, 
the FDA noted that there were no FDA-approved treatments for the 
indication and that ERLEADATM had a favorable risk-benefit 
profile.
    Next, the applicant stated that the use of ERLEADATM 
also has a substantial clinical improvement benefit of maintaining 
quality of life. According to the applicant, patients who have been 
diagnosed with nmCRPC are generally asymptomatic, so it is a positive 
outcome if the addition of a therapy does not cause degradation of 
health-related quality of life. The applicant maintained that in 
asymptomatic men who have been diagnosed with high-risk nmCRPC, health-
related quality of life (HRQOL) was maintained after

[[Page 19328]]

initiation of the use of ERLEADATM.\199\ According to the 
applicant, patient-reported outcomes using the Functional Assessment of 
Cancer Therapy-Prostate [FACT-P] questionnaire and European Quality of 
Life-5 Dimensions-3 Levels [EQ-5D-3L] questionnaire results indicated 
that patients who received treatment involving ERLEADATM 
maintained stable overall HRQOL outcomes over time from both treatment 
groups.
---------------------------------------------------------------------------

    \199\ Saad, F., et al., ``Effect of apalutamide on health-
related quality of life in patients with non-metastatic castration-
resistant prostate cancer: an analysis of the SPARTAN randomized, 
placebo- controlled, phase 3 trial,'' Lancet Oncology, 2018 Oct; 
Epub 2018 Sep 10.
---------------------------------------------------------------------------

    Additionally, the applicant discussed prostate specific antigen 
(PSA) outcomes as another secondary result demonstrating substantial 
clinical improvement. PSA, a protein produced by the prostate gland, is 
often present at elevated levels in men who have been diagnosed with 
prostate cancer and PSA tests are used to monitor the progression of 
the disease. According to the applicant, at 12 weeks after 
randomization, the median PSA level had decreased by 89.7 percent in 
the ERLEADATM group versus an increase of 40.2 percent in 
the placebo group. In an exploratory analysis performed by the 
applicant of patients treated in the SPARTAN study, the use of 
ERLEADATM decreased the risk of PSA progression by 94 
percent compared with the patients in the placebo group (not reached vs 
3.71 months; HR: 0.064; 95 percent CI: 0.052-0.080; P<0.0001). Overall, 
a >=90 percent maximum decline in PSA from baseline at any time during 
the study was reported in 66 percent of the patients in the 
ERLEADATM group and 1 percent of the patients in the placebo 
group, according to the applicant. The applicant noted that increase in 
time to PSA progression is relevant from a clinical standpoint for 
clinicians and patients alike because PSA monitoring, rather than the 
use of regularly scheduled surveillance imaging, as was the case with 
SPARTAN, is often the most practical method of screening for 
progression of nmCRPC.
    We have the following concerns regarding the applicant's assertions 
of substantial clinical improvement:
     Regarding the SPARTAN trial design, we are concerned that 
the study enrollment may not be representative of the U.S. population 
considering that North American enrollment was only 35 percent of 
patients overall, and only approximately 6 percent of enrolled patients 
were black. Underrepresentation of black patients is of particular 
concern considering that, in the United States, African-American 
patients are disproportionately affected by prostate cancer. According 
to the CDC,\200\ the rate of new prostate cancers by race is 158.3 per 
100,000 men for African-Americans, compared to 90.2 for whites, 78.8 
for Hispanics, 51.0 for Asian/Pacific Islanders, and 49.6 for American 
Indians/Alaska Natives. We are concerned that, based on an exploratory 
subgroup analysis performed by the applicant, black patients may not 
have performed better in the treatment group; while the hazard ratio of 
0.63 (95 percent confidence interval: 0.23, 1.72) suggests a benefit to 
the group treated with ERLEADATM, the median MFS for this 
subgroup was reported as shorter for the ERLEADATM group at 
25.8 months than for the placebo group, at 36.8 months.\201\ 
Additionally, we note that 23 percent of the patients in the SPARTAN 
trial did not have definitive local therapy at baseline for their 
diagnosis of prostate cancer, which is accepted standard-of-care in the 
United States.
---------------------------------------------------------------------------

    \200\ U.S. Department of Health and Human Services, Centers for 
Disease Control and Prevention and National Cancer Institute, U.S. 
Cancer Statistics Working Group, U.S. Cancer Statistics Data 
Visualizations Tool, based on November 2017 submission data (1999-
2015), Availavle at: www.cdc.gov/cancer/dataviz, June 2018.
    \201\ Smith, M.R., et al., ``Apalutamide Treatment and 
Metastasis-free Survival in Prostate Cancer,'' N Engl J Med, 2018, 
vol. 12;378(15), pp. 1408-1418.
---------------------------------------------------------------------------

    In response to this concern about low North American enrollment and 
subgroup underrepresentation, the applicant submitted additional 
information claiming a consistent treatment effect across all 
subpopulations and regions. The applicant also pointed to the low 
hazard ratio for the subgroup of black patients as support for the 
benefit of the use of ERLEADATM. We welcome additional 
information and public comments on whether the SPARTAN trial results 
are generalizable to the U.S. population, and in particular, African-
American patients.
     We also note regarding the SPARTAN trial that a total of 
7.0 percent of the patients in the ERLEADATM group and 10.6 
percent of the patients in the placebo group withdrew consent from the 
trial. Additional explanation from the applicant of how those that 
withdrew were considered in the analysis, and whether there was any 
analysis of potential impact of withdrawals on the study results would 
be helpful.
     We also have concerns about the primary endpoint used for 
the SPARTAN trial, MFS. The applicant explained that MFS was determined 
to be a reasonable end point for patients who have been diagnosed with 
nmCRPC because of the difficulty in using OS as a primary endpoint; 
multiple drugs can be used sequentially for advanced disease, 
necessitating larger and longer trials and potentially confounding 
interpretation of results if attempting to prove that a prostate cancer 
drug lengthens OS. Nevertheless, because MFS is not identical to OS and 
data on OS was not mature at the time of the study's results, we note 
that it may be difficult to conclude based on the current data whether 
the use of ERLEADATM improves OS.
    To address this concern, the applicant submitted additional 
information on MFS as a surrogate clinical endpoint for OS, including a 
recent study by the International Clinical Endpoints for Cancer of the 
Prostate (ICECaP) Working Group showing a correlation between MFS and 
OS in several prostate cancer studies.\202\ The applicant explained 
that based on review of 19 randomized, controlled trials evaluating 21 
study units in 12,712 men with localized prostate cancer, the 
correlation between OS and MFS was 0.91 (95 percent CI: 0.91-0.91) at 
the patient level, as measured by Kendall's [tau]. To demonstrate that 
MFS is closely linked with OS, the applicant cited a retrospective 
analysis of electronic health record database for patients who have 
been diagnosed with nmCRPC in which MFS independently predicted 
mortality risk; patients developing metastasis within 1 year had 4.4-
fold greater risk for mortality (95 percent CI: 2.2-8.8) than those who 
remained metastasis-free at year 3.\203\ The applicant also reiterated 
that a significant positive correlation between MFS and OS was observed 
in the SPARTAN trial (Pearson's correlation coefficient=0.66; 
Spearman's correlation coefficient=0.62, P<0.0001; and Kendall [tau] 
statistic=0.52, parametric Fleischer's statistical model correlation 
coefficient of 0.69 (standard error, 0.002; 95 percent CI: 0.69-0.70)).
---------------------------------------------------------------------------

    \202\ ICECaP Working Group, Sweeney, C., Nakabayashi, M., et 
al., ``The development of intermediate clinical endpoints in cancer 
of the prostate (ICECaP)'', J Natl Cancer Inst, 2015, vol. 107(12), 
pp. djv261.
    \203\ Li S, Ding Z, Lin J.H., et al., ``Association of prostate-
specific antigen (PSA) trajectories with risk for metastasis and 
mortality in nonmetastatic castration-resistant prostate cancer 
(nmCRPC),'' Abstract presented at: 2018 Genitorurinary Cancers 
Symposium, February 8-10, 2018, San Francisco, CA.
---------------------------------------------------------------------------

    We are inviting public comments on whether ERLEADATM 
meets the substantial clinical improvement criterion for patients who 
have been

[[Page 19329]]

diagnosed with nmCRPC. We did not receive any written comments in 
response to the New Technology Town Hall meeting notice published in 
the Federal Register regarding the substantial clinical improvement 
criterion for ERLEADATM or at the New Technology Town Hall 
meeting.
j. SPRAVATO (Esketamine)
    Johnson & Johnson Health Care Systems, Inc., on behalf of Janssen 
Pharmaceuticals, Inc., submitted an application for new technology add-
on payments for SPRAVATO (Esketamine) nasal spray for FY 2020. The FDA 
indication for SPRAVATO is treatment-resistant depression (TRD).
    According to the applicant, major depressive disorder affects 
nearly 300 million people of all ages globally and is the leading cause 
of disability worldwide. People with major depressive disorder (MDD) 
suffer from a serious, biologically-based disease which has a 
significant negative impact on all aspects of life, including quality 
of life and function.\204\ Although currently available anti-
depressants are effective for many of these patients, approximately 
one-third do not respond to treatment.\205\ Patients who have not 
responded to at least two different anti-depressant treatments of 
adequate dose and duration for their current depressive episode are 
considered to have been diagnosed with TRD. MDD in older age is marked 
by lower response and remission rates, greater disability and 
functional decline, decreased quality of life, and greater mortality 
from suicide.206 207 208
---------------------------------------------------------------------------

    \204\ World Health Organization. (2018, March). Depression. 
Available at: http://www.who.int/mediacentre/factsheets/fs369/en/.
    \205\ National Institute of Mental Health. (2006, January). 
Questions and Answers about the NIMH Sequenced Treatment 
Alternatives to Relieve Depression (STAR*D)--Background. Available 
at: https://www.nimh.nih.gov/funding/clinical-research/practical/stard/backgroundstudy.shtml.
    \206\ Manthorpe, J., & Iliffe, S., ``Suicide in later life: 
Public health and practitioner perspectives,'' International Journal 
of Geriatric Psychiatry, 2010, vol. 25(12), pp. 1230-1238.
    \207\ Lenze, E., Sheffrin, M., Driscoll, H., Mulsant, B., 
Pollock, B., Dew, M., Reynolds, C., ``Incomplete response in late-
life depression: Getting to remission,'' Dialogues in Clinical 
Neuroscience, 2008, vol. 10(4), pp. 419-430.
    \208\ Alexopoulos, G., & Kelly, R., ``Research advances in 
geriatric depression,'' World Psychiatry, 2009, vol. 8(3), pp. 140-
149.
---------------------------------------------------------------------------

    According to the applicant, currently available pharmacologic 
treatments for depression include Selective Serotonin Reuptake 
Inhibitors (SSRIs), Serotonin-norepinephrine reuptake inhibitors 
(SNRIs), monoamine oxidase inhibitors (MAOIs), tricyclic anti-
depressants (TCAs), other atypical anti-depressants, and adjunctive 
atypical antipsychotics. In addition to SPRAVATO, the only 
pharmacologic treatment currently approved for treatment-resistant 
depression is a combination of two drugs: An antipsychotic and an SSRI 
(fluoxetine/olanzapine combination). Currently available non-
pharmacological medical treatments include electroconvulsive therapy, 
vagal nerve stimulation, deep brain stimulation (DBS), transcranial 
direct current stimulation (tDCS), and repetitive transcranial magnetic 
stimulation (rTMS).
    According to the applicant, SPRAVATO is a non-competitive, subtype 
non-selective, activity-dependent glutamate receptor modulator. The 
applicant indicates that SPRAVATO works through increased glutamate 
release resulting in downstream neurotrophic signaling facilitating 
synaptic plasticity, thereby bringing about rapid and sustained 
improvement in people who have been diagnosed with TRD. The applicant 
explained that, through glutamate receptor modulation, SPRAVATO helps 
to restore connections between brain cells in people who have been 
diagnosed with TRD.\209\
---------------------------------------------------------------------------

    \209\ Sanacora, G., et. al., ``Targeting the Glutamatergic 
System to Develop Novel, Improved Therapeutics for Mood Disorders,'' 
Nat Rev Drug Discov., 2008, pp. 426-437.
---------------------------------------------------------------------------

    According to the applicant, the nasal spray device is a single-use 
device that delivers a total of 28 mg of SPRAVATO in two sprays (one 
spray per nostril). The applicant has approved dosages of 56 mg (two 
devices) or 84 mg (three devices), with a 28 mg (one device) available 
for patients 65 years old and older. The treatment session consists of 
healthcare supervision of the patient's self-administration of SPRAVATO 
HCL to ensure proper usage and post-administration observation to 
ensure patient stability. Specifically, clinicians will need to monitor 
blood pressure and mental status changes. The applicant states that 
monitoring will be required at every administration session.
    With respect to the newness criterion, the applicant submitted a 
New Drug Application (NDA) for SPRAVATO HCL Nasal Spray based on a 
recently completed Phase III clinical development program for 
treatment-resistant depression. According to the applicant, SPRAVATO 
was granted a Breakthrough Therapy designation in 2013. SPRAVATO HCL 
Nasal Spray was approved by the FDA with an effective date of March 5, 
2019. Currently there are no ICD-10-PCS procedure codes to uniquely 
identify the administration of SPRAVATO HCL Nasal Spray. The applicant 
has submitted a request for approval for a unique ICD-10-PCS procedure 
code to specifically identify cases involving the administration of 
SPRAVATO HCL, beginning in FY 2020.
    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 similar mechanism of action, the applicant asserts that SPRAVATO has 
a unique mechanism of action. The applicant stated that SPRAVATO's 
unique mechanism of action is the first new approach in 30 years for 
the treatment of major depressive disorder, including treatment-
resistant depression.210 211 According to the applicant, 
unlike existing approved anti-depressant pharmacotherapies, SPRAVATO's 
anti-depressant activity does not primarily modulate monoamine systems 
(norepinephrine, serotonin, or dopamine). The applicant asserts that 
SPRAVATO restores connections between brain cells in people with 
treatment-resistant depression through glutamate receptor modulation, 
which results in downstream neurotropic signaling.\212\
---------------------------------------------------------------------------

    \210\ Duman, R. (2018). Ketamine and rapid-acting anti-
depressants: a new era in the battle against depression and suicide. 
F1000Research, 7, 659. doi:10.12688/f1000research.14344.1.
    \211\ Dubovsky, S., ``What Is New about New Anti-depressants?,'' 
Psychotherapy and Psychosomatics, 2018, vol. 87(3), pp. 129-139, 
doi:10.1159/000488945.
    \212\ Sanacora, G., et al., ``Targeting the Glutamatergic System 
to Develop Novel, Improved Therapeutics for Mood Disorders,'' Nat 
Rev Drug Discov., 2008, pp. 426-437.
---------------------------------------------------------------------------

    With regard to the second criterion, whether the technology is 
assigned to the same or different MS-DRG, the applicant asserts that it 
is likely that potential cases representing patients who may be 
eligible for treatment involving the use of SPRAVATO HCL Nasal Spray 
would be assigned to the same MS-DRGs as patients who receive treatment 
involving currently available anti-depressants (AD).
    With regard to the third criterion, whether the technology treats 
the same or a similar disease or the same or similar patient 
population, the applicant asserts that potential patients who may be 
eligible to receive treatment involving SPRAVATO will be comprised of a 
subset of patients who are receiving treatment involving currently 
available anti-depressants. The applicant did not specifically

[[Page 19330]]

address the application of this criterion to SPRAVATO.
    We are inviting public comments on whether SPRAVATO is 
substantially similar to any existing technologies and whether it meets 
the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion. To identify cases eligible for SPRAVATO, the applicant 
searched the FY 2017 MedPAR data file for claims with the presence of 
one of the following ICD-10-CM diagnosis codes: F33 (Major depressive 
disorder, recurrent), F33.2 (Major depressive disorder, recurrent 
severe without psychotic features), F33.3 (Major depressive disorder, 
recurrent, severe with psychotic symptoms), and F33.9 (Major depressive 
disorder, recurrent, unspecified). Claims from the FY 2017 MedPAR data 
file with the presence of one of these ICD-10-CM diagnosis codes mapped 
to a wide variety of MS-DRGs. The applicant excluded claims if they had 
one or more diagnoses from the following list: (1) Aneurysmal vascular 
disease; (2) intracerebral hemorrhage; (3) dementia; (4) 
hyperthyroidism; (5) pulmonary insufficiency; (6) uncontrolled brady- 
or tachyarrhythmias; (7) history of brain injury; (8) hypertensive; (9) 
encephalopathy; (10) other conditions associated with increased 
intracranial pressure; and (10) pregnancy. The applicant believed that 
these conditions would preclude the use of SPRAVATO HCL. The applicant 
also assumed that hospitals would not allow administration of SPRAVATO 
HCL for short-stay inpatient hospitalizations and, therefore, excluded 
all hospitalizations of fewer than 5 days. The applicant assumed that 
patients would be allowed to administer their first dose on the 5th day 
and every 7 days thereafter. Lastly, the applicant assumed that, based 
on clinical data, patients would use 2.5 spray devices per treatment, 
once a week.
    After applying the inclusion and exclusion criteria described 
above, the applicant identified a total of 3,437 potential cases 
mapping to 439 MS-DRGs, with approximately 54.7 percent of cases 
mapping to MS-DRGs 885 (Psychoses), 871 (Septicemia or Severe Sepsis 
without MV >96 Hours with MCC), 917 (Poisoning & Toxic Effects of Drugs 
with MCC), 897 (Alcohol/Drug Abuse or Dependence without Rehabilitation 
Therapy without MCC), 291 (Heart Failure & Shock with MCC or Peripheral 
Extracorporeal Membrane Oxygenation (ECMO)), 918 (Poisoning & Toxic 
Effects of Drugs without MCC), 190 (Chronic Obstructive Pulmonary 
Disease with MCC), 853 (Infectious & Parasitic Diseases with O.R. 
Procedure with MCC), 683 (Renal Failure with CC), and 682 (Renal 
Failure with MCC). The applicant further defined the potential cases 
representing patients who may be eligible for treatment involving the 
use of SPRAVATO HCL in the cost criterion analysis by reducing the 
number of cases in each MS-DRG by one-third due to clinical data 
indicating that approximately one-third of patients who have been 
diagnosed with MDD also have been diagnosed with TRD.213 214
---------------------------------------------------------------------------

    \213\ National Institute of Mental Health. (2006, January). 
Questions and Answers about the NIMH Sequenced Treatment 
Alternatives to Relieve Depression (STAR*D)--Background. Available 
at: https://www.nimh.nih.gov/funding/clinical-research/practical/stard/backgroundstudy.shtml.
    \214\ Rush, A.J., Trivedi, M., Wisniewski, S., Nierenberg, A., 
Steward, J., Warden, D., Fava, M., ``Acute and Longer-term Outcomes 
in Depressed Outpatients Requiring One or Several Treatment Steps: A 
STAR*D report,'' American Journal of Psychiatry, 2006, vol, 163(11), 
pp. 1905-1917.
---------------------------------------------------------------------------

    The applicant calculated the average case-weighted unstandardized 
charge per case to be $73,119. Because the use of SPRAVATO HCL is not 
expected to replace prior treatments, the applicant did not remove any 
charges for the prior technology. The applicant then standardized the 
charges and applied a 2-year inflation factor of 1.08986 obtained from 
the FY 2019 IPPS/LTCH PPS final rule correction notice (83 FR 49844). 
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 $74,738 
and an average case-weighted threshold amount of $48,864. 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, we are concerned whether it is 
appropriate to reduce the number of cases to one-third of the total 
potential cases identified. While the supporting statistical data 
provided by the applicant suggest that one-third of patients who have 
been diagnosed with MDD often also receive diagnoses of TRD, it is 
unclear which cases representing patients should be removed. It is 
possible that patients who have been diagnosed with MDD are covered by 
all 439 MS-DRGs, but patients who have been diagnosed with TRD only 
exist in a certain subset of these same MS-DRGs. Further, those 
patients who have been diagnosed with TRD could account for the most 
costly of patients who have been diagnosed with MDD. Ultimately, 
without further evidence, we may not be able to verify that the 
assumption that patients who have been diagnosed with TRD comprise one-
third of the identified cases representing patients who have been 
diagnosed with MDD and are evenly distributed across all of the MS-DRG 
identified cases is appropriate. We are inviting public comments on 
this issue and whether the SPRAVATO HCL Nasal Spray meets the cost 
criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that SPRAVATO HCL Nasal Spray represents a 
substantial clinical improvement over existing treatments because it 
provides a treatment option for a patient population that failed 
available treatments and who have shown inadequate response to at least 
two anti-depressants in their current episode of MDD.\215\ According to 
the applicant, in addition to SPRAVATO HCL, there is currently only one 
other pharmacotherapy used for the treatment for diagnoses of TRD that 
is approved by the FDA (Symbyax[supreg], a fluoxetine-olanzapine 
combination), but its use is limited by tolerability concerns.\216\ In 
support of its assertions of substantial clinical improvement, the 
applicant provided several studies regarding SPRAVATO HCL.
---------------------------------------------------------------------------

    \215\ Rush, A.J., Trivedi, M., Wisniewski, S., Nierenberg, A., 
Steward, J., Warden, D., Fava, M., ``Acute and Longer-term Outcomes 
in Depressed Outpatients Requiring One or Several Treatment Steps: A 
STAR*D report,'' American Journal of Psychiatry, 2006, vol. 163(11), 
pp. 1905-1917.
    \216\ Cristancho, M., & Thase, M, ``Drug safety evaluation of 
olanzapine/fluoxetine combination,'' Expert Opinion on Drug Safety, 
2014, vol. 13(8), pp. 1133-1141.
---------------------------------------------------------------------------

    The first study is a Phase II, double-blind, doubly-randomized, 
placebo-controlled, multi-center study in adults aged 20 years old to 
64 years old.\217\ This study consisted of the following four phases: 
The screening, double-blind treatment, the optional open-label 
treatment, and post-treatment follow-up. During the treatment phase, 
two periods of treatment occurred between the 1st and the 8th day and 
the 8th and the 15th day. At the beginning of first treatment period, 
participants were randomized 3:1:1:1 to an intranasal placebo, SPRAVATO 
HCL 28 mg, 56 mg, or 84 mg twice weekly, respectively. During the 
second treatment period,

[[Page 19331]]

patients who were initially randomized to treatment groups remained on 
the treatment regimen until the 15th day. Patients initially assigned 
to the placebo group and who had moderate to severe symptoms (as 
measured by the 16-item quick inventory of depressive symptomatology-
self report total score) were re-randomized 1:1:1:1 to placebo, 
SPRAVATO HCL 28 mg, 56 mg, or 84 mg twice weekly groups, respectively.
---------------------------------------------------------------------------

    \217\ Daly, E., Singh, J., Fedgchin, M., Cooper, K., Lim, P., 
Shelton, R., Drevets, W., ``Efficacy and Safety of Intranasal 
Esketamine Adjunctive to Oral Anti-depressant Therapy in Treatment-
Resistant Depression,'' JAMA Psychiatry, 2018, vol. 75(2), pp. 139-
148.
---------------------------------------------------------------------------

    Of the 126 patients screened, 67 were randomized at the beginning 
of the first treatment period, with 33 patients receiving placebo, 11 
patients receiving 28 mg of SPRAVATO HCL, 11 patients receiving 56 mg 
of SPRAVATO HCL, and 12 patients receiving 84 mg of SPRAVATO HCL in 
dosages. At the beginning of the second treatment period, those in the 
treated group remained on the same treatment regimen, while the 33 
placebo patients were re-randomized. Of the placebo group in the first 
treatment period, 6 patients were added to the 4 who remained on 
placebo, 8 patients received 28 mg of SPRAVATO HCL, 9 patients received 
56 mg of SPRAVATO HCL, and 5 patients received 84 mg SPRAVATO HCL in 
dosages. Of the 67 respondents randomized, 63 (94 percent) completed 
the first treatment phase and 60 (90 percent) completed the first and 
second treatment phases. During both treatment phases patients were 
assessed at baseline, 2 hours, 24 hours, and at the study period 
endpoints for the Montgomery-Asberg Depression Rating Scale (MADRS) 
score, Clinical Global Impression of Severity scale score, adverse 
events and other safety assessments including the Clinician 
Administered Dissociative States Scale (CADSS). The primary efficacy 
endpoint, change from baseline to endpoint in MADRS total score, was 
analyzed using the analysis of covariance model including treatment and 
country as factors and period baseline MADRS total score as a 
covariate.\218\
---------------------------------------------------------------------------

    \218\ Daly, E., Singh, J., Fedgchin, M., Cooper, K., Lim, P., 
Shelton, R., Drevets, W., ``Efficacy and Safety of Intranasal 
Esketamine Adjunctive to Oral Anti-depressant Therapy in Treatment-
Resistant Depression,'' JAMA Psychiatry, 2018, vol. 75(2), pp. 139-
148.
---------------------------------------------------------------------------

    At the end of the first treatment period, the least square mean 
change (standard error) for the placebo group was -4.9 (1.74). As 
compared to the placebo, the least square mean difference from placebo 
(standard error) for the SPRAVATO HCL treatment groups was -5.0 (2.99) 
for 28 mg of SPRAVATO HCL in dosage, -7.6 (2.91) for 56 mg of SPRAVATO 
HCL in dosage, and -10.5 (2.79) for 84 mg of SPRAVATO HCL in dosage; 
these differences were statistically significant at or beyond p<0.05. 
Similar differences were seen at 2 hours and 24 hours for these groups 
with the only non-significant difference occurring for 56 mg of 
SPRAVATO HCL in dosage at 2 hours as compared to baseline. At the end 
of the second treatment period, the least square mean change (standard 
error) for the placebo group was -4.5 (2.92), for the SPRAVATO HCL-
treated groups was -3.1 (2.99) from the placebo for 28 mg of SPRAVATO 
HCL in dosage, -4.4 (3.06) from the placebo for 56 mg of SPRAVATO HCL 
in dosage, and -6.9 (3.41) from the placebo for 84 mg of SPRAVATO HCL 
in dosage. Only the 84 mg of SPRAVATO HCL dosage difference from the 
mean was statistically significant (p<.05). When the results from the 
first and second treatment periods were pooled, all three groups had 
statistically significant differences from the placebo. Based on these 
results, the applicant asserts that all three SPRAVATO HCL treatment 
groups were superior to the placebo.
    When considering the safety profile of the use of SPRAVATO HCL, the 
study reports that 3 (5 percent) of the treated patients and 1 (2 
percent) open-label patient experienced adverse events leading to 
discontinuation (syncope, headache, dissociative syndrome, ectopic 
pregnancy). There was a noted dose response for the adverse events of 
dizziness and nausea only. Most of the treated patients experienced 
transient elevations in blood pressure and heart rate on dosing days, 
as well as perceptual changes and/or dissociate symptoms (as measured 
by CADSS) that began shortly after dosing and typically resolved by 2 
hours.\219\
---------------------------------------------------------------------------

    \219\ Daly, E., Singh, J., Fedgchin, M., Cooper, K., Lim, P., 
Shelton, R., Drevets, W., ``Efficacy and Safety of Intranasal 
Esketamine Adjunctive to Oral Anti-depressant Therapy in Treatment-
Resistant Depression,'' JAMA Psychiatry, 2018, vol. 75(2), pp. 139-
148.
---------------------------------------------------------------------------

    The study titled Transform One submitted by the applicant is a 
Phase III, randomized, double-blind, active controlled, multi-center 
study which enrolled patients 18 years old to 64 years old who had been 
diagnosed with treatment-resistant depression for 28 days.\220\ 
Patients were randomized (1:1:1) to receive SPRAVATO HCL 56 mg, 84 mg, 
or a placebo nasal spray administered twice weekly combined with a 
newly initiated, open-label oral anti-depressant (AD) administered 
daily (duloxetine, escitalopram, sertraline, or venlafaxine extended 
release), which was dosed according to a fixed titration schedule. 
Patients were assessed on the MADRS, CADSS, and discharge readiness as 
measured by overall clinical status and the Global Assessment of 
Discharge Readiness (CGADR). Discharge status was assessed at 1 and 1.5 
hours. MADRS was assessed at 24 hours post initial dose and weekly 
thereafter. CADSS was assessed at baseline and all dosing visits.
---------------------------------------------------------------------------

    \220\ Fedgchin, M., Trivedi, M., Daly, E., Melkote, R., Lane, 
R., Lim, P., Singh, J., ``Randominzed, Double-blind Study of Fixed-
dosed Intranasal Esketamine Plus Oral Anti-depressant vs. Active 
Control in Treatment-resistant Depression,'' 9th Biennial Conference 
of the International Society for Affective Disorders (ISAD) and the 
Houston Mood Disorders Conference, September 2018.
---------------------------------------------------------------------------

    Three hundred and fifteen patients of the 346 were randomized and 
completed the treatment phase; 115 patients were randomized to the 56 
mg of SPRAVATO HCL dosage group along with 114 to the 84 mg of SPRAVATO 
HCL dosage group and 113 to the placebo group. The withdrawal rate was 
3-fold higher in the 84 mg of SPRAVATO HCL dosage group (16.4 percent) 
than the 56 mg of SPRAVATO HCL dosage group (5.1 percent) and the 
placebo group (5.3 percent). Eleven of the 19 84 mg of SPRAVATO HCL 
dosage withdrawals withdrew after only receiving the first 56 mg 
SPRAVATO HCL dose; the withdrawal rate was not a dose-related safety 
finding. Baseline statistics show few differences between groups: The 
56 mg of SPRAVATO HCL dosage group has a higher proportion of patients 
who have 1 or 2 previous AD medications (69 percent) as compared to the 
patients in the 84 mg of SPRAVATO HCL dosage group (51.8 percent) and 
placebo group (59.3 percent), and the placebo group (193.1) has a 
notably shorter duration of the current episode of depression in weeks 
as compared to the 56 mg of SPRAVATO HCL dosage group (202.8) and 84 mg 
of SPRAVATO HCL dosage group (212.7). The MADRS score was assessed by a 
mixed model for repeated measures with change from baseline as the 
response variable and the fixed effect model terms for treatment 
dosage, day, region, class of oral AD, a treatment-by-day moderating 
effect, and baseline value as a covariate.
    The primary efficacy measure was assessed by change in MADRS score 
from baseline at 28 days. At the end of the study the 56 mg and 84 mg 
of SPRAVATO HCL dosage groups had a difference of least square means of 
-4.1 and -3.2, respectively. Neither of these were statistically 
significant differences as compared to the placebo. The least square 
mean treatment difference of MADRS score as compared to the placebo 
were also assessed longitudinally at baseline and the 2nd day (-3.0 for 
the 56 mg of SPRAVATO

[[Page 19332]]

HCL dosage group and -2.2 for the 84 mg of SPRAVATO HCL dosage group), 
the 8th day (-3.0 for the 56 mg of SPRAVATO HCL dosage group and -2.7 
for the 84 mg of SPRAVATO HCL dosage group), the 15th day (-3.8 for the 
56 mg of SPRAVATO HCL dosage group and -3.6 for the 84 mg of SPRAVATO 
HCL dosage group), the 22nd day (-5.0 for the 56 mg of SPRAVATO HCL 
dosage group and -3.7 for the 84 mg of SPRAVATO HCL dosage group), and 
the 28th day (-4.0 for the 56 mg of SPRAVATO HCL dosage group and -3.6 
for the 84 mg of SPRAVATO HCL dosage group). In a graph provided by the 
applicant, the lines plus standard errors plotted for the 56 mg and 84 
mg of SPRAVATO HCL dosage groups overlap with each other at each time 
point, but do not appear to overlap with the placebo group (calculated 
confidence intervals would necessarily be wider and would possibly 
overlap).
    A secondary efficacy measure was the rate of patients who are 
responders and remitters. Response is defined as greater than or equal 
to 50 percent improvement on MADRS from baseline. Remission is defined 
as a MADRS total score less than or equal to 12. The 56 mg and 84 mg of 
SPRAVATO HCL dosage treatment groups, 54.1 percent and 53.1 percent, 
respectively, had higher response rates than the placebo treatment 
group at 38.9 percent. The 56 mg and 84 mg of SPRAVATO HCL dosage 
treatment groups, 36.0 percent and 38.8 percent, had higher remission 
rates than the placebo treatment group at 30.6 percent.
    Lastly, safety was assessed by adverse events and CADSS. Both the 
56 mg and 84 mg of SPRAVATO HCL dosage treatment groups had spikes of 
CADSS scores, which spiked approximately 40 minutes post dose and 
resolved at 90 minutes. These post dose spikes gradually decreased from 
day 1 to day 25, but remained higher than the placebo group. The 84 mg 
of SPRAVATO HCL dosage treatment group had higher CADSS score spikes 
than the 56 mg of SPRAVATO HCL dosage treatment group at all periods 
except day 1. The top 5 of 12 pooled treatment group adverse events and 
percentages experienced are as follows: Nausea (29.4 percent), 
dissociation (26.8 percent), dizziness (25.1 percent), vertigo (20.8 
percent), and headache (20.3 percent).
    The study titled Transform Two is a Phase III, randomized (1:1), 
control trial, multi-center study enrolling patients 18 years old to 64 
years old who had been diagnosed with treatment-resistant 
depression.\221\ One hundred and fourteen patients were randomized to 
the treatment group and 109 to the control group; 101 and 100 of the 
treated and control groups respectively finished the study. For the 
treatment group, doses of SPRAVATO HCL began at 56 mg on the 1st day, 
with potential increases up to 84 mg until the 15th day at which point 
the dose remained stable. Two-thirds of the SPRAVATO HCL-treated 
patients were receiving the 84 mg dosage at the end of the study. For 
both the placebo and treatment groups, a newly-initiated AD was 
assigned by the investigator (duloxetine, escitalopram, sertraline, and 
venlafaxine extended release) following a fixed titration dosing.
---------------------------------------------------------------------------

    \221\ Popova, V., Daly, E., Trivedi, M., Cooper, K., Lane, R., 
Lim, P., Singh, J., ``Randomized, Double-blind Study of Flexibly-
dosed Intranasal Esketamine Pus Oral Anti-depressant vs. Active 
Control in Treatment-resistant Depression,'' Canadian College of 
Neuropsychopharmacology (CCNP) 41st Annual Meeting, 2018.
---------------------------------------------------------------------------

    The primary efficacy endpoint was the change from baseline at day 
28 in MADRS total score, which was analyzed using a mixed-effects model 
using repeated measures (MMRM). The model included baseline MADRS total 
score as a covariate, and treatment, country, class of AD (SNRI or 
SSRI), day, and day-by-treatment moderator as fixed effects, and a 
random patient effect. The key secondary efficacy endpoints were as 
follows: The proportion of patients showing onset of clinical response 
by the 2nd day that was maintained for the duration of the treatment 
phase, the change from baseline in socio-occupational disability using 
the Sheehan Disability Scale (SDS) using the MMRM model, and the change 
from baseline in depressive symptoms using the patient health 
questionnaire 9-item (PHQ-9) using the MMRM model.
    There were no apparent differences between the SPRAVATO HCL 
treatment and placebo groups at baseline. At day 28, the difference of 
least square means (standard error) for the SPRAVATO HCL-treated group 
was -4.0 (1.69) as compared to the placebo-treated group (p<0.05). 
Similar to Transform One, the difference of least square means for the 
SPRAVATO HCL-treated group as compared to the placebo-treated group 
were plotted for baseline and the 2nd, 8th, 15th, 22nd, and 28th day. 
At all treatment periods, except baseline and the 15th day, the 
SPRAVATO HCL treatment group had statistically significant lower scores 
than the placebo-treated group as indicated by 95 percent confidence 
intervals. The difference between the SPRAVATO HCL-treated and placebo-
treated groups for the early onset of sustained clinical response was 
substantively similar and not statistically different. The difference 
of least square means (standard error) in socio-occupational disability 
as measured by SDS was -4.0 (1.17) for those in the SPRAVATO HCL-
treated group as compared to the placebo-treated group (p<0.05). The 
difference of least square means (standard error) for the PHQ-9 total 
score for the SPRAVATO HCL-treated group compared to the placebo-
treated group was -2.4 (0.88) (p<0.05). Lastly, 69.3 percent of the 
SPRAVATO HCL-treated patients as compared to 52.0 percent of the 
placebo-treated patients were considered responders and 52.5 percent of 
the SPRAVATO HCL-treated patients as compared to 31.0 percent of the 
placebo patients were considered remitters. The adverse events list, 
post dosing blood pressure increase, and post dosing CADSS spike were 
similar to those seen in the previous Transform One study.\222\
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    \222\ Fedgchin, M., Trivedi, M., Daly, E., Melkote, R., Lane, 
R., Lim, P., Singh, J., ``Randominzed, Double-blind Study of Fixed-
dosed Intranasal Esketamine Plus Oral Anti-depressant vs. Active 
Control in Treatment-resistant Depression,'' 9th Biennial Conference 
of the International Society for Affective Disorders (ISAD) and the 
Houston Mood Disorders Conference, September 2018.
---------------------------------------------------------------------------

    A post-hoc analysis based on Transform Two, which included 46 
SPRAVATO HCL-treated and 44 placebo-treated patients was conducted to 
assess for differences in efficacy and safety between the U.S. 
population and the overall study population.\223\ Efficacy was again 
assessed by MADRS, SDS, and PHQ-9 scores using the MMRM and with safety 
assessments for treatment-emergent adverse events (TEAEs), serious 
adverse events (SAEs), CADSS and other measures. At baseline the 
treated group of SPRAVATO HCL plus an AD was similar to the placebo-
treated group who took only an AD on most measures to include average 
age, sex, race, class of oral ADs, MADRS, CGI-S, SDS, and PHQ-9 scores. 
The placebo-treated group had a longer average duration of current 
episode at 177.6 days as compared to 132.2 days for the SPRAVATO HCL-
treated group; the placebo-treated group had a higher proportion of 
patients having 3 or more previous AD medications (50.1 percent) as 
compared to the SPRAVATO HCL treatment group (32.7 percent).
---------------------------------------------------------------------------

    \223\ Alphs, L., Cooper, K., Starr, L., DiBernardo, A., Shawi, 
M., Jamieson, C., Singh, J., ``Clinical Efficacy and Safety of 
Flexibly Dosed Esketamine Nasal Spray in a US Population of Patients 
With Treatment-Resistant Depression,'' American Psychiatry 
Association, 2018, Chicago.
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    Both the SPRAVATO HCL-treated and placebo-treated groups showed

[[Page 19333]]

improvement on the efficacy measures after 28 days. At the endpoint of 
28 days, the SPRAVATO HCL treatment group had a statistically 
significant MADRS total score least square mean difference of -5.5 
(p<0.05) from the placebo treatment group. At the endpoint the median 
scores on the clinician-rated severity of depressive illness as 
measured by CGI-S were -1.5 and -1.0 for the SPRAVATO HCL-treated and 
placebo-treated groups respectively (one-sided p value >0.07). For the 
measure of patient-rated severity of depressive illness, the SPRAVATO 
HCL treatment group had a least square mean difference in PHQ-9 of -3.1 
(p<0.05) as compared to the placebo treatment group. On the measure of 
functional impairment, the SPRAVATO HCL treatment group had a least 
square mean difference in SDS of -5.2 (p<0.01) as compared to the 
placebo treatment group. Overall treatment-emergent adverse events were 
observed in 91.3 percent of SPRAVATO HCL-treated patients and 77.3 
percent of placebo-treated patients. One SPRAVATO HCL-treated patient 
experienced a serious adverse event of cerebral hemorrhage. Lastly, the 
top five most common adverse events were dizziness, nausea, headache, 
dysgeusia, and throat irritation.
    The study titled Transform Three is a randomized (1:1), double-
blind, active-controlled, multi-center study in elderly patients 65 
years old and older who had been diagnosed with TRD.\224\ Randomization 
was stratified by country and class of oral AD (SNRI and SSRI). All 
treatment patients started on a 28 mg dosage of SPRAVATO HCL and 
flexibly increased dosages of 56 mg or 84 mg based on investigator's 
determination of efficacy and tolerability. Both SPRAVATO HCL-treated 
(n=72) and placebo-treated (n=66) patients were started on a newly 
initiated AD (duloxetine, escitalopram, sertraline, and venlafaxine 
extended release). One hundred and twenty-two patients completed the 
double-blind phase, with 63 patients in the SPRAVATO HCL-treated group 
and 60 patients in the placebo-treated group.
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    \224\ Ochs-Ross, R., Daly, E., Lane, R., Zhang, Y., Lim, P., 
Foster, K., Sign, J., ``Efficacy and Safety of Esketamine Nasal 
Spray Plus an Oral Anti-depressant in Elderly Patients with 
Treatment-resistant Depression,'' 2018 Annual Meeting of the 
American Psychiatric Association (APA), 2018, New York.
---------------------------------------------------------------------------

    The primary endpoint was the change in MADRS total score from the 
1st day to the 28th day. Secondary endpoints included the evaluation of 
response and remission rates by group and the Clinical Global 
Impression--Severity (CGI-S) scores. The safety endpoints were 
evaluated by adverse event occurrence, laboratory tests, vital sign 
measurements, physical exams, and other exams.
    At baseline, there were substantive differences between the 
placebo-treated and SPRAVATO HCL treatment groups in three measures. 
Patients from the SPRAVATO HCL treatment group (48.6 percent) were more 
likely to be from the European Union as compared to the placebo-treated 
group (36.9 percent). Patients from the SPRAVATO HCL treatment group 
were more likely to have 1 (20.8 percent versus 9.2 percent) to 4 (16.7 
percent versus 6.2 percent) previous ADs as compared to the placebo-
treated group. On the measure of duration of current episode of 
depression in weeks, the SPRAVATO HCL-treated group had an average 
(standard deviation) of 163.1 (277.04) as compared to the placebo-
treated group with 274.1 (395.47). The primary endpoint, the change 
from baseline to Day 28 of MADRS score difference of least square means 
(95 percent CI) for the SPRAVATO HCL treatment group was -3.6 (-
7.20,0.07) as compared to the placebo group. As with previous studies, 
the longitudinal change in MADRS total score is presented for baseline 
and at the 8th, 15th, 22nd, and 28th day. The results for the SPRAVATO 
HCL-treated group overlap with the placebo-treated group at each time 
point. At Day 28, 27.0 percent of the SPRAVATO HCL-treated patients as 
compared to 13.3 percent of the placebo-treated patients were 
considered responders and 17.5 percent of the SPRAVATO HCL-treated 
patients as compared to 6.7 percent of the placebo-treated patients 
were considered remitters. At baseline and the end of the study, 83.4 
percent and 38.1 percent, respectively, of the SPRAVATO HCL-treated 
patients were rated as experiencing severe or marked symptoms on the 
CGI-S scale as compared to 66.1 percent and 54.4 percent, respectively, 
for those on the placebo.
    Of the 72 patients who were treated with SPRAVATO HCL, 51 (70.8 
percent) experienced a treatment-emergent adverse event (TEAE) as 
compared to 39 of the 65 (60.0 percent) placebo-treated patients. Five 
patients reported serious adverse events during the double-blind phase, 
three of whom were SPRAVATO HCL-treated patients and two of whom were 
placebo-treated patients. The top 5 of the 16 adverse events among the 
treated patients are dizziness (20.8 percent), nausea (18.1 percent), 
blood pressure increase (12.5 percent), fatigue (12.5 percent), and 
headache (12.5 percent).
    A post-hoc analysis, which included 34 SPRAVATO HCL-treated 
patients and 36 placebo-treated patients from the Transform Three 
study, was performed to examine the response and remission associated 
with treatments in a subset of respondents 65 years old and older in 
the United States.\225\ The MADRS, CGI-S, PHQ-9, and adverse event data 
were utilized to assess clinical outcomes. Remission was defined as a 
50 percent or greater decrease in MADRS baseline score and remission 
was defined as a MADRS score of 12 or lower or a PHQ-9 score of less 
than 5. At baseline the SPRAVATO HCL-treated and placebo-treated groups 
were similar on the measures of age, sex, race, class of oral AD, age 
at major depressive disorder diagnosis, MADRS score, and CGI-S score. 
The SPRAVATO HCL treatment group differed from the placebo treatment 
group on the measures of mean duration of current depressive episode in 
weeks (187.6 versus 420.9) and mean PHQ-9 score (15.2 versus 18.2).
---------------------------------------------------------------------------

    \225\ Starr, L., Ochs-Ross, R., Zhang, Y., Singh, J., Lim, P., 
Lane, R., Alphs, L., ``Clinical Response, Remission, and Safety of 
Esketamine Nasal Spray in a US Population of Geriatric Patients With 
Treatment-Resistant Depression,'' American Psychiatric Association, 
2018, New York.
---------------------------------------------------------------------------

    At the 28-day endpoint, response rates based on MADRS scores were 
26.7 percent (n=30) for the SPRAVATO HCL-treated group and 14.7 percent 
(n=34) for the placebo-treated group. At the endpoint, remission rates 
based on MADRS scores were 16.7 percent (n=30) for the SPRAVATO HCL-
treated group and 2.9 percent (n=34) for the placebo-treated group. 
Patient remission rates based on the PHQ-9 scores for SPRAVATO HCL-
treated and placebo-treated patients were 9.4 percent (n=32) and 22.6 
percent (n=31), respectively. Clinically meaningful response as 
measured by a one point or greater decrease in the CGI-S score was 63.3 
percent (n=30) for the SPRAVATO HCL-treated group and 29.4 percent 
(n=34) for those on the placebo. Clinically significant response as 
measured by a decrease of two or greater on the CGI-S scale was 43.3 
percent (n=30) for the SPRAVATO HCL-treated group and 11.8 percent 
(n=34) for those on the placebo. Lastly, 67.7 percent of the SPRAVATO 
HCL-treated patients and 58.3 percent of placebo-treated patients 
experienced a treatment-emergent adverse event. There was one serious 
adverse event in the SPRAVATO HCL-treated group (hip fracture) and 
placebo-treated group (dizziness) each. The top 5 most common adverse 
events in the 34

[[Page 19334]]

SPRAVATO HCL-treated patients were dysphoria (11.8 percent), fatigue 
(11.8 percent), headache (11.8 percent), insomnia (11.8 percent), and 
nausea (11.8 percent).
    The study titled Sustain One concerns a double-blind, randomized 
withdrawal, multi-center study entering either directly or after 
completing the double-blind phase of an acute, short-term study.\226\ A 
total of 705 patients were enrolled in this study of which 437 entered 
directly into the study and the remainder transferred from one of two 
short-term SPRAVATO HCL studies (fixed dose, n=150; flexible dose, 
n=118). During the maintenance phase of this study, analyses were 
performed on two mutually exclusive groups: (1) On the stable remitters 
who were those randomized patients who were in stable remission at the 
end of the optimization phase and who received at least one dose of the 
study drug with one dose of an AD; and (2) on the stable responders who 
were those randomized patients who were stable responders at the end of 
optimization and who received at least one dose of the study drug with 
one dose of an AD. A relapse was defined as a MADRS total score of 22 
or greater for 2 consecutive assessments separated by 5 to 15 days or 
hospitalization for worsening depression or any other clinically 
relevant event suggestive of relapse.
---------------------------------------------------------------------------

    \226\ Daly, E., Trivedi, M., Janik, A., Li, H., Zhang, Y., Li, 
X., Singh, J., ``A Randomized Withdrawal, Double-blind, Multicenter 
Study of Esketamine Nasal Spray Plus an Oral Anti-depressant for 
Relapse Prevent in Treatment-resistant Depression,'' 2018 Annual 
Meeting of the American Society of Clinical Psychopharmacology 
(ASCP), 2018, Miami.
---------------------------------------------------------------------------

    Of those classified in stable remission, 90 patients were receiving 
treatment with SPRAVATO HCL in combination with an AD and 86 patients 
were receiving treatment with the placebo in combination with an AD. Of 
those classified in stable response, 62 patients were receiving 
treatment with SPRAVATO HCL in combination with an AD and 59 patients 
were receiving treatment with the placebo in combination with an AD. At 
baseline, between group and within group randomization seems 
substantively successful, except for a lower proportion of placebo-
treated stable responders being male (28.8 percent) as compared to 
SPRAVATO HCL-treated stable responders (38.7 percent), placebo-treated 
stable remitters (31.4 percent), and SPRAVATO HCL-treated stable 
remitters (35.6 percent).
    Kaplan-Meier estimates of patients who remained relapse free were 
performed for both study groups. For both remitters and responders, the 
SPRAVATO HCL-treated had a higher percent of patients without relapse 
for longer than the control group. Overall, among the stable remitters, 
24 (26.7 percent) of the patients in the SPRAVATO HCL-treated group and 
39 (45.3 percent) of the patients in the placebo-treated group 
experienced a relapse event during the maintenance phase; among stable 
responders, 16 (25.8 percent) of the patients and 34 (57.6 percent) of 
the patients in the respective groups relapsed. Treatment with SPRAVATO 
HCL in combination with an AD decreased the risk of relapse by 51 
percent (estimated hazard ratio = 0.49; 95 percent CI: 0.29, 0.84) 
among stable remitters and by 70 percent (hazard ratio = 0.30; 95 
percent CI: 0.16, 0.55) among stable responders, as compared to the 
placebo.
    Safety and adverse events were presented similarly to the 
previously discussed study data. The top 5 of the 22 adverse events 
were dysgeusia (27.0 percent), vertigo (25.0 percent), dissociation 
(22.4 percent), somnolence (21.1 percent), and dizziness (20.4 
percent). The applicant stated that most adverse events were mild to 
moderate, observed post dose on dosing days, and generally resolved in 
the same day. Serious adverse events considered related to the study 
drug were reported for six patients in the SPRAVATO HCL treatment group 
(disorientation, hypothermia, lacunar stroke, sedation, and suicidal 
ideation for one patient each, and autonomic nervous system imbalance 
and simple partial seizure for one patient). The investigator 
considered the lacunar infarct as probably related to the treatment, 
while the sponsor considered the events of lacunar infarct and 
hypothermia as doubtfully related to the treatment. As with the 
previous studies, present-state dissociative symptoms and transient 
perceptual effects measured by the CADSS total score began shortly 
after the start of SPRAVATO HCL dosing, peaked at 40 minutes, and 
resolved by 1.5 hours.
    The next study presented by the applicant titled Sustain Two 
concerns an open-label, long-term (up to 1 year of exposure), multi-
center, single-arm, Phase III study for patients who had been diagnosed 
with TRD who entered into the study as either direct-entry or 
transferred-entry (patients who completed the double-blind, randomized, 
4-week, Phase III, efficacy and safety study in elderly patients).\227\ 
A total of 802 patients were enrolled; 779 entered in the induction 
phase (691 as direct-entry and 88 as transferred-entry non-responders). 
A total of 603 patients entered the optimization/maintenance phase (580 
from the induction phase and 23 were transferred-entry responders). A 
total of 150 (24.9 percent) of the patients completed the optimization/
maintenance phase. At that time, the predefined total patient exposure 
was met and the study was stopped by the sponsor; 331 (54.9 percent) of 
the patients were still receiving treatment and, therefore, 
discontinued the study. Patients treated had a starting dose of 56 mg 
of SPRAVATO HCL, or 28 mg for patients who were 65 years old or older, 
followed by flexible dosing increases (28 mg to 84 mg per clinical 
judgment) twice a week for 4 weeks. Dosages became stable at 15 days 
for those under 65 years old, and at 18 days for those 65 years old and 
older.
---------------------------------------------------------------------------

    \227\ Wajs, E., Aluisio, L., Morrison, R., Daly, E., Lane, R., 
Lim, P., Singh, J., ``Long-term Safety of Esketamine Nasal Spray 
Plus Oral Anti-depressant in Patients with Treatment-resistant 
Depression: Phase III, Open-label, Safety and Efficacy Study 
(SUSTAIN-2),'' 2018 Annual Meeting of the American Society of 
Clinical Psychopharmacology (ASCP), 2018, Miami.
---------------------------------------------------------------------------

    At baseline, 802 respondents had an average age of 52.2 years old, 
62.6 percent were women, 85.5 percent were white, an average BMI of 
27.9 percent, and 43.1 percent with a family history of depression. The 
anti-depressants prescribed to these respondents were duloxetine (31.1 
percent), escitalopram (29.6 percent), sertraline (19.6 percent), and 
venlafaxine extended release (19.5 percent). Of the respondents at 
baseline, 39.9 percent had used 3 or more ADs prior to the study with 
no response. Safety measures were reported at 4 weeks, 48 weeks, and 
pooled. For TEAEs, 83.8 percent of patients experienced at least one at 
4 weeks and 85.6 percent at 48 weeks. TEAEs occurred in 90.1 percent 
(n=723) of all patients and led to discontinuation in 9.5 percent of 
both the pooled 4 and 48 week patient samples. TEAEs caused 2 deaths 
(acute respiratory and cardiac failure, and completed suicide; neither 
death considered as related by investigator) at 48 weeks. The top 5 
most common TEAEs for the 4-week and 48-week time points were dizziness 
(29.3 percent and 22.4 percent), dissociation (23.1 percent and 18.6 
percent), nausea (20.2 percent and 13.9 percent), headache (17.6 
percent and 18.9 percent), and somnolence (12.1 percent and 14.1 
percent). At 4 weeks, 2.2 percent of the patients experienced at least 
1 serious adverse event and 6.3 percent at 48 weeks. Of the 68 serious 
adverse events, 63 were assessed as not related or doubtfully related 
to

[[Page 19335]]

treatment involving SPRAVATO HCL by the investigator. Five of the 
serious adverse events (anxiety, delusion, delirium, suicidal ideation 
and suicide attempt) were considered as treatment related. Overall, 
performance on multiple cognitive domains including visual learning and 
memory, as well as spatial memory/executive function either improved or 
remained stable post baseline in both elderly and younger patients.
    Based on all of the above, the applicant concluded that the use of 
SPRAVATO HCL represents a substantial clinical improvement over 
existing technologies. CMS has the following concerns regarding whether 
SPRAVATO HCL meets the substantial clinical improvement criterion.
    First, we are concerned that the use of the placebo in combination 
with a newly prescribed anti-depressant may not be the most appropriate 
comparator when assessing the clinical improvement of the use of 
SPRAVATO HCL as compared to existing therapies. In its application, the 
applicant listed multiple treatment options aside from the use of anti-
depressants, which are currently available to treat diagnoses of TRD. 
It is possible that other treatments approved for diagnoses of TRD may 
obtain better treatment outcomes than changing to a new single anti-
depressant (as was the method used in the studies submitted in support 
of this application). Comparisons with existing treatments for 
treatment-resistant major depressive disorders would help us better 
evaluate the clinical improvements offered by the use of SPRAVATO HCL.
    Second, we are not certain that the results in the studies 
submitted consistently show that the use of SPRAVATO HCL represents a 
substantial clinical improvement when compared to existing therapies. 
There does not appear to be a consistent statistically significant 
positive primary efficacy outcome for SPRAVATO HCL-treated patients 
compared to placebo-treated patients. Based on the data provided, we 
also are uncertain of the extent to which the findings from the 
submitted studies apply to the broader Medicare population. We are 
particularly concerned that there are few substantive and statistically 
significant improvements in depression outcomes with SPRAVATO HCL 
treatment among the Medicare-aged participants of the study samples. In 
addition, the studies which limit their analyses to Medicare-aged study 
participants have limited racial diversity amongst small samples. In 
addition, we note that the submitted studies excluded patients with 
significant medical and psychiatric comorbidities through exclusion 
criteria. However, the likelihood of having multiple chronic comorbid 
conditions is increased amongst those with a mental health disorder 
228 229 and for the elderly.230 231 The existence 
of comorbidities increases the likelihood that the negative effects of 
poly-pharmacy and drug-drug interactions could be experienced among the 
Medicare population. Given that the provided studies utilized exclusion 
criteria, which excluded those with serious comorbidities, we are 
concerned that the limited results do not adequately represent the 
average or even the majority of the Medicare population.
---------------------------------------------------------------------------

    \228\ Thorpe, K., Jain, S., & Joski, P., ``Prevalence and 
Spending Associated with Patients Who have a Behavioral Health 
Disorder and Other Conditions,'' Health Affairs, 2017, vol. 36(1), 
pp. 124-132, doi:10.1377/hlthaff.2016.0875.
    \229\ Druss, B., & Walker, E., 2011, ``Mental Disorders and 
Medical Comorbidity,'' Robert Wood Johnson Foundation, 2011. 
Available at: http://www.policysynthesis.org.
    \230\ Kim, J., & Parish, A., ``Polypharmcy and Medication 
Management in Older Adults,'' Nurs Clin N Am, 2017, vol. 52, pp. 
457-468, doi:http://dx.doi.org/10.1016/j.cnur.2017.04.007.
    \231\ Kim, L., Koncilja, K., & Nielsen, C., ``Medication 
Management in Older Adults,'' Cleveland Clinic Journal of Medicine, 
2018, vol. 85(2), pp. 129-135, doi:10.3949/ccjm.85a.16109.
---------------------------------------------------------------------------

    Third, we have concerns regarding the primary and secondary 
endpoints for several of these studies. It is unclear whether the 
primary endpoint of these studies (change in baseline MADRS) is the 
most appropriate endpoint to assess substantial clinical improvement, 
particularly as it unclear what threshold degree of change was defined 
as meeting the definition of change from baseline in the analyses, and 
whether this degree of change translates to clinical improvement (for 
example, response and remissions rates). In addition, we have concerns 
regarding the potential for physician behavior to have introduced bias, 
which could impact the study results. The studies state that anti-
depressants are physician assigned and not randomized. Some of the 
provided studies control for the type of anti-depressant prescribed 
(SSRI and SNRI). We believe there is the potential for an interaction 
effect between the prescribed anti-depressant and SPRAVATO HCL. It is 
possible that one particular anti-depressant (of the anti-depressants 
used in the studies)/SPRAVATO HCL combination accounts for the entirety 
of the differences seen between the treated groups and the control 
groups. Without consistently controlling for the specific anti-
depressants prescribed in multivariate analyses, we may not be able to 
parse this potentially complex relation apart.
    Fourth, given that SPRAVATO HCL is comprised of the drug ketamine, 
we are concerned with the potential for abuse. Ketamine is accepted as 
a medication for which there is a strong possibility for 
abuse.232 233 234 As one publication finds, current abuse of 
intravenous ketamine occurs intranasally.\235\ While clinical trials 
assess the short-term benefits of ketamine treatment, there exists a 
paucity of long-term studies to assess whether chronic usage of this 
product may increase the likelihood of abuse.\236\ In light of the 
potential for addictive behavior, we are concerned that despite any 
demonstrated short-term clinical benefits, there may be potential 
negatives for the use of this drug in the longer term.
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    \232\ Schak, K., Vande Voort, J., Johnson, E., Kung, S., Leung, 
J., Rasmussen, K., Frye, M., ``Potential Risks of Poorly Monitored 
Ketamine Use in Depression Treatment,'' American Journal of 
Psychiatry, 2016, vol. 173(3), pp. 215-218. Available at: http://www.ajp.psychiatryonline.org.
    \233\ Freedman, R., Brown, A., Cannon, T., Druss, B., Earls, F., 
Escobar, J., Xin, Y., ``Can a Framework be Established for the Safe 
Use of Ketamine?,'' American Journal of Psychiatry, 2018, vol. 7, 
pp. 587-589. Available at: http://www.ajp.psychiatryonline.org.
    \234\ Sanacora, G., Frye, M., McDonald, W., Mathew, S., Turner, 
M., Schatzberg, A., Nemeroff, C., ``A Consensus Statement on the Use 
of Ketamine in the Treatment of Mood Disorders,'' JAMA Psychiatry, 
2017, Special Communication, E1-E6. doi:10.1001/
jamapsychiatry.2017.0080.
    \235\ Schak, K., Vande Voort, J., Johnson, E., Kung, S., Leung, 
J., Rasmussen, K., Frye, M., ``Potential Risks of Poorly Monitored 
Ketamine Use in Depression Treatment,'' American Journal of 
Psychiatry, 2016, vol. 173(3), pp. 215-218. Available at: http://www.ajp.psychiatryonline.org.
    \236\ Sanacora, G., Frye, M., McDonald, W., Mathew, S., Turner, 
M., Schatzberg, A., Nemeroff, C., ``A Consensus Statement on the Use 
of Ketamine in the Treatment of Mood Disorders,'' JAMA Psychiatry, 
2017, Special Communication, E1-E6. doi:10.1001/
jamapsychiatry.2017.0080.
---------------------------------------------------------------------------

    We are inviting public comments on whether SPRAVATO HCL meets the 
substantial clinical improvement criterion. We did not receive any 
written comments in response to the New Technology Town Hall meeting 
notice published in the Federal Register regarding the substantial 
clinical improvement criterion for SPRAVATO HCL or at the New 
Technology Town Hall meeting.
k. XOSPATA
    Astellas Pharma U.S., Inc. submitted an application for new 
technology add-on payments for XOSPATA[supreg] (gilteritinib) for FY 
2020. XOSPATA[supreg] received FDA approval November 28, 2018, and is 
indicated for the treatment of adult patients who have been diagnosed 
with relapsed or refractory acute myeloid leukemia (AML) with a

[[Page 19336]]

FMS-like tyrosine kinase 3 (FLT3) mutation as detected by an FDA-
approved test.
    According to the applicant, XOSPATA[supreg] is an oral, small 
molecule FMS-like tyrosine kinase 3 (FLT3). The applicant states that 
XOSPATA[supreg] inhibits FLT3 receptor signaling and proliferation in 
cells exogenously expressing FLT3, including FLT3 internal tandem 
duplication (ITD), tyrosine kinase domain mutations (TKD) FLT3D835Y and 
FLT3-ITD-D835Y and that it induces apoptosis in leukemic cells 
expressing FLT3-ITD. FLT3 is a member of the class III receptor 
tyrosine kinase family that is normally expressed on the surface of 
hematopoietic progenitor cells, but it is over expressed in the 
majority of AML cases.
    The applicant states that AML is a type of cancer in which the bone 
marrow makes abnormal myeloblasts (a type of white blood cell), red 
blood cells, or platelets. According to the applicant, AML is a rare 
and rapidly progressing form of cancer of the blood and bone marrow, 
characterized by the proliferation of immature white blood cells known 
as blast cells. The applicant states that while the specific cause of 
AML is unknown, AML is generally characterized by aberrant 
differentiation and increased proliferation of malignantly transformed 
myeloid progenitor cells. It is considered a heterogeneous disease 
state with various molecular and genetic abnormalities, which result in 
variable clinical outcomes. When untreated or refractory to available 
treatments, AML results in the accumulation of these transformed cells 
within the bone marrow and suppression of the production of normal 
blood cells (resulting in severe neutropenia and/or thrombocytopenia). 
AML may be associated with infiltration of these cells into other 
organs and tissues and can be rapidly fatal.
    Almost 90 percent of leukemia cases are diagnosed in adults 20 
years of age and older, among whom the most common types are chronic 
lymphocytic leukemia and AML.\237\ AML accounts for approximately 80 
percent of acute leukemias diagnosed in adults, with a median age at 
diagnosis of 66 years old. It has been estimated that 19,520 people are 
diagnosed annually with AML in the United States.\238\ In general, the 
incidence of AML increases with advancing age; the prognosis is poorer 
in older patients, and the tolerability of the currently available 
standard-of-care treatment for patients who have been diagnosed with 
AML is much poorer for older patients.\239\
---------------------------------------------------------------------------

    \237\ Atlanta: American Cancer Society; 2017 [cited October 
2018]. Available from: https://www.cancer.org/content/dam/cancerorg/research/cancer-facts-and-statistics/cancer-treatment-and-survivorship-facts-and-figures/cancer-treatment-and-survivorshipfacts-and-figures-2016-2017.pdf.
    \238\ Siegel, R.L., Miller, K.D., Jemal, A., ``Cancer 
statistics, 2018,'' CA Cancer J Clin, 2018, vol. 68(1), pp. 7-30.
    \239\ Tallman, M.S., ``New strategies for the treatment of acute 
myeloid leukemia including antibodies and other novel agents,'' 
Hematology Am Soc Hematol Educ Program, 2005, pp. 143-50.
---------------------------------------------------------------------------

    According to the applicant, approximately 30 percent of adult 
patients who have been diagnosed with AML are refractory, meaning 
unresponsive, to induction therapy. Furthermore, of those who achieve 
complete response (CR), approximately 75 percent will relapse. These 
patients are then determined to have relapsed/refractory (R/R) AML. 
According to the applicant, several chemotherapy regimens have been 
used for the treatment of patients who have been diagnosed with 
resistant or relapsed disease; however, the chemotherapy combinations 
are universally dose-intensive and cannot always be easily administered 
to older patients because of a high-risk of unacceptable toxicity. The 
applicant indicated that, while these regimens may generate second 
remission rates of up to 50 percent in patients with a first remission 
of more than 1 year, toxicity is high in most patients who are frail or 
over 60 years old.240 241 242 Additionally, the applicant 
stated that if patients (including younger patients) relapse within 6 
months of their initial CR, the chance of attaining a second remission 
is less than 20 percent with chemotherapy alone.\243\ Furthermore, 5-
year survival after first relapse is approximately 10 percent, 
demonstrating the lack of an effective cure for patients who have been 
diagnosed with relapsed AML.\244\ Salvage therapy utilizing low-dose 
chemotherapy provides a therapy that is more tolerable; however, the 
low response rates (17 to 21 percent) makes the benefit of these agents 
limited.245 246 Patients who are in second relapse or are 
refractory to first salvage, meaning unresponsive to both the preferred 
treatment, as well as the secondary choice of treatment, have an 
extremely poor prognosis, with survival measured in weeks.\247\ 
Additionally, patients who have been diagnosed with R/R AML have poor 
quality of life, higher hospitalization and total resource use burden, 
and higher total healthcare costs.248 249 250 251
---------------------------------------------------------------------------

    \240\ Rowe, J.M., Tallman, M.S., ``How I treat acute myeloid 
leukemia,'' Blood, 2010, vol. 116(17), pp. 3147-56.
    \241\ Breems, D.A., Van Putten, W.L., Huijgens, P.C., 
Ossenkoppele, G.J., Verhoef, G.E., Verdonck, L.F., et al., 
``Prognostic index for adult patients with acute myeloid leukemia in 
first relapse,'' J Clin Oncol, 2005, vol. 23(9), pp. 1969-78.
    \242\ Karanes, C., Kopecky, K.J., Head, D.R., Grever, M.R., 
Hynes, H.E., Kraut, E.H., et al., ``A Phase III comparison of high 
dose ARA-C (HIDAC) versus HIDAC plus mitoxantrone in the treatment 
of first relapsed of refractory acute myeloid leukemia Southwest 
Oncology Group Study,'' Leuk Res, 1999, vol. 23(9), pp. 787-94.
    \243\ Forman, S.J., Rowe, J.M., ``The myth of the second 
remission of acute leukemia in the adult,'' Blood, 2013, vol. 
121(7), pp. 1077-82.
    \244\ Rowe, J.M., Tallman, M.S., ``How I treat acute myeloid 
leukemia,'' Blood, 2010, vol. 116(17), pp. 3147-56.
    \245\ Itzykson, R., Thepot, S., Berthon, C., et al., 
``Azacitidine for the treatment of relapsed and refractory AML in 
older patients,'' Leuk Res, 2015, vol. 39, pp. 124-130.
    \246\ Khan, N., Hantel, A., Knoebel, R., et al., ``Efficacy of 
single-agent decitabine in relapsed and refractory acute myeloid 
leukemia,'' Leuk Lymphoma, 2017, vol. 58, pp. 1-7.
    \247\ Giles, F., O'Brien, S., Cortes, J., Verstovsek, S., Bueso-
Ramos, C., Shan, J., et al., ``Outcome of patients with acute 
myelogenous leukemia after second salvage therapy,'' Cancer, 2005, 
vol. 104(3), pp. 547-54.
    \248\ Goldstone, A.H., et al., ``Attempts to improve treatment 
outcomes in acute myeloid leukemia (AML) in older patients: the 
results of the United Kingdom Medical Research Council AML11 
trial,'' Blood, 2001, vol. 98(5), pp. 1302-1311.
    \249\ Pandya, B.J., et al., ``Quality of life of Acute Myeloid 
Leukemia Patients in a Real-World Setting,'' JCO, 2017, vol. 35(15) 
suppl., e18525.
    \250\ Medeiros, B.C., et al., ``Economic Burden of Treatment 
Episodes in Acute Myeloid Leukemia (AML) Patients in the US: A 
Retrospective Analysis of a Commercial Payer Database,'' ASH, 2017 
Poster.
    \251\ Aly, A., et al., ``Economic Burden of Relapsed/Refractory 
AML in the U.S.,'' ASH, 2017 Poster.
---------------------------------------------------------------------------

    The applicant indicated that patients who have been diagnosed with 
AML with FLT3 positive mutations are a well-established subpopulation 
of AML patients, but there are no approved therapies for patients who 
have been diagnosed with R/R AML with FLT3 mutations. Approximately 30 
percent of patients newly diagnosed with AML have mutations in the FLT3 
gene.252 253 FLT3 is a member of the class III receptor 
tyrosine kinase family that is normally expressed on the surface of 
hematopoietic progenitor cells. FLT3 and its ligand play an important 
role in proliferation, survival, and differentiation of multipotent 
stem cells. The applicant explained that FLT3 is overexpressed in the 
majority of patients diagnosed with AML. In addition, activated FLT3 
with internal tandem duplication (ITD) or tyrosine kinase domain (TKD) 
mutations at around D835 in the activation loop are present in 20 
percent to 25 percent and

[[Page 19337]]

5 percent to 10 percent of AML cases, respectively.\254\ These 
activated mutations in FLT3 are oncogenic and show transforming 
activity in cells.\255\
---------------------------------------------------------------------------

    \252\ The Cancer Genome Atlas Research Network, ``Genomic and 
Epigenomic Landscapes of Adult De Novo Acute Myeloid Leukemia,'' N 
Engl J Med, 2013, vol. 368(22), pp. 2059-2074.
    \253\ Leukemia and Lymphoma Society Facts 2016-2017. Available 
at: https://www.lls.org/facts-and-statistics/facts-and-statistics-overview, [Last accessed March 7, 2018].
    \254\ Kindler, T., Lipka, D.B., Fischer, T., ``FLT3 as a 
therapeutic target in AML: still challenging after all these 
years,'' Blood, 2010, vol. 116(24), pp. 5089-102.
    \255\ Yamamoto, Y., Kiyoi, H., Nakano, Y., Suzuki, R., Kodera, 
Y., Miyawaki, S., et al., ``Activating mutation of D835 within the 
activation loop of FLT3 in human hematologic malignancies,'' Blood,. 
2001, vol. 97, pp. 2434-9.En
---------------------------------------------------------------------------

    Compared to patients with wild-type FLT3, AML patients with FLT3 
mutation experience shorter remission duration at 2 years, according to 
the applicant. Approximately 30 percent of FLT3-ITD patients relapse 
versus approximately 16 percent of other AML patients.\256\ 
Additionally, these patients experience poorer survival outcomes. The 
estimated median OS for patients who have been newly diagnosed with 
FLT3 mutations is 15.2 to 15.5 months compared to 19.3 to 28.6 months 
for patients with wild-type FLT3.\257\ Patients who have been diagnosed 
with R/R FLT3 mutation positive AML have lower remission rates with 
salvage chemotherapy, shorter durations of remission to second relapse 
and decreased overall survival relative to FLT3 mutation negative 
patients.258 259 260 According to the applicant, patients 
who have been diagnosed with FLT3 mutation positive R/R AML have a 
substantial unmet medical need for treatment.
---------------------------------------------------------------------------

    \256\ Brunet, S., et al., ``Impact of FLT3 Internal Tandem 
Duplication on the Outcome of Related and Unrelated Hematopoietic 
Transplantation for Adult Acute Myeloid Leukemia in First Remission: 
A Retrospective Analysis,'' J Clin Oncol, March 1, 2012, vol. 30(7), 
pp. 735-41.
    \257\ Sotak, M.L., et al., ``Burden of Illness of FLT3 Mutated 
Acute Myeloid Leukemia (AML),'' Blood, 2011, vol. 118(21), pp. 4765 
4765.
    \258\ Konig, H., Levis, M., ``Targeting FLT3 to treat leukemia. 
Expert Opin Ther Targets,'' 2015, vol. 19(1), pp. 37-54.
    \259\ Chevallier, P., Labopin, M., Turlure, P., Prebet, T., 
Pigneux, A., Hunault, M., et al., ``A new Leukemia Prognostic 
Scoring System for refractory/relapsed adult acute myelogeneous 
leukaemia patients: a GOELAMS study,'' Leukemia, 2011, vol. 25(6), 
pp. 939-44.
    \260\ Levis, M., Ravandi, F., Wang, E.S., Baer, M.R., Perl, A., 
Coutre, S., et al., ``Results from a randomized trial of salvage 
chemotherapy followed by lestaurtinib for patients with FLT3 mutant 
AML in first relapse,'' Blood, 2011, vol. 117(12), pp. 3294-301.
---------------------------------------------------------------------------

    The applicant asserts that currently there are no unique ICD-10-PCS 
codes to describe the administration of XOSPATA[supreg]. We note that 
the applicant has submitted a request to the ICD-10 Coordination and 
Maintenance Committee for approval for a unique ICD-10-PCS code to 
identify procedures involving the use of XOSPATA[supreg], beginning in 
FY 2020.
    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, therefore, 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 XOSPATA[supreg] has a unique mechanism of 
action and, therefore, should be considered new under this criterion. 
The applicant stated that XOSPATA[supreg] is an oral, small molecule 
FMS-like tyrosine kinase 3 (FLT3) inhibitor. According to the 
applicant, XOSPATA[supreg] inhibits FLT3 receptor signaling and 
proliferation in cells exogenously expressing FLT3, including FLT3 
internal tandem duplication (ITD), tyrosine kinase domain mutations 
(TKD) FLT3-D835Y and FLT3-ITD D835Y, and it induces apoptosis in 
leukemic cells expressing FLT3-ITD. The applicant asserted that 
XOSPATA[supreg] is the only FLT3-targeting agent approved by the FDA 
for the treatment of relapsed or refractory FLT3mut+ AML.
    With regard to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant asserted that cases 
involving patients being medically treated for the type of AML 
indicated for XOSPATA[supreg] would map to the following MS-DRGs: 834 
(Acute Leukemia without Major O.R. Procedure with MCC), 835 (Acute 
Leukemia without Major O.R. Procedure with CC), and 836 (Acute Leukemia 
without Major O.R. Procedure without CC/MCC). Under current coding 
conventions, it appears likely that cases involving treatment with the 
use of XOSPATA[supreg] would map to the same MS-DRGs as existing 
therapies.
    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 when compared to an 
existing technology, the applicant stated that XOSPATA[supreg] is FDA-
approved for the treatment of adult patients who have relapsed or 
refractory AML with a FLT3 mutation. Cases representing potential 
patients that may be eligible for treatment involving XOSPATA[supreg] 
would be identified by ICD-10-CM diagnostic codes C92.02 (Acute 
myeloblastic leukemia, in relapse) and C92.A2 (Acute myeloid leukemia 
with multilineage dysplasia, in relapse). The applicant further 
asserted that there are currently no other FLT3-targeting agents 
approved for the treatment of patients who have been diagnosed with 
relapsed or refractory FLT3mut+ AML. Therefore, the applicant asserted 
that XOSPATA[supreg] is indicated to treat a new patient population for 
which there are no other technologies currently available.
    We are inviting public comments on whether XOSPATA[supreg] is 
substantially similar to any existing technologies, and whether it 
meets the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion.
    The applicant searched the FY 2017 MedPAR data file for cases 
reporting ICD-10-CM diagnosis codes C92.02 (Acute myeloblastic 
leukemia, in relapse) and C92.A2 (Acute myeloid leukemia with 
multilineage dysplasia, in relapse) listed as a primary or secondary 
diagnosis that mapped to MS-DRGs 834, 835, and 836. The applicant 
applied the following trims to the cases:
     Excluded Health Maintenance Organization (HMO) and IME 
Only claims;
     Excluded cases for bone marrow transplant because 
potential eligible patients who may receive treatment involving 
XOSPATA[supreg] would not receive a bone marrow transplant during the 
same admission as they received chemotherapy;
     Excluded cases indicating an O.R. procedure;
     Excluded cases treated at 8 providers that were not listed 
in the FY 2019 IPPS/LTCH PPS final rule correction notice impact file 
(these are predominately cancer hospitals).
    After applying the trims above, 407 potential cases remained. The 
applicant noted that it used only departmental charges that are used by 
CMS for ratesetting.
    Using the 407 cases, the applicant determined an average case-
weighted unstandardized charge per case of $166,389. The applicant then 
removed all pharmacy charges because the applicant believed that 
patients would typically receive other pharmaceuticals such as anti-
emetics during the hospital stay and patients receiving treatment 
involving the use of XOSPATA[supreg] would continue to receive those 
receive other pharmaceuticals. Additionally, according to the 
applicant, blood charges were reduced because some patients receiving 
treatment involving the use of XOSPATA[supreg] became infusion 
independent in the clinical trial. The applicant standardized the 
charges for each case and inflated each case's charges by applying the 
proposed outlier charge inflation factor of 1.085868 (included in the 
FY 2019

[[Page 19338]]

IPPS/LTCH PPS proposed rule (83 FR 20581)). The applicant calculated an 
average case-weighted standardized charge per case of $157,034 using 
the percent distribution of MS-DRGs as case-weights. Based on this 
analysis, the applicant determined that the technology met the cost 
criterion because the final inflated average case-weighted standardized 
charge per case for XOSPATA[supreg] exceeded the average case-weighted 
threshold amount of $88,479 by $68,555. As noted, the inflation factor 
used by the applicant was the proposed 2-year inflation factor, which 
was discussed in the FY 2019 IPPS/LTCH PPS final rule summation of the 
calculation of the FY 2019 IPPS outlier charge inflation factor for the 
proposed rule (83 FR 41718 through 41722). The final 2-year inflation 
factor published in the FY 2019 IPPS/LTCH PPS final rule was 1.08864 
(83 FR 41722), which was revised in the FY 2019 IPPS/LTCH PPS final 
rule correction notice to 1.08986 (83 FR 49844).
    We note that, although the applicant used the proposed rule value 
to inflate the standardized charges, even when using the final rule 
value or the corrected final rule value revised in the correction 
notice to inflate the charges, the final inflated average case-weighted 
standardized charge per case for XOSPATA[supreg] would exceed the 
average case-weighted threshold amount. We are inviting public comments 
on whether XOSPATA[supreg] meets the cost criterion.
    With regard to substantial clinical improvement, the applicant 
submitted one central study to support its assertion that 
XOSPATA[supreg] represents a substantial clinical improvement over 
existing technologies because it offers a treatment option for FLT3mut+ 
AML patients ineligible for currently available treatments. The 
applicant also asserted that XOSPATA[supreg] represents a substantial 
clinical improvement because the technology reduces mortality, 
decreases the number of subsequent diagnostic or therapeutic 
interventions, and reduces the number of future hospitalizations due to 
adverse events as shown by its studies.\261\
---------------------------------------------------------------------------

    \261\ Astellas, ``A Phase 3 Open-label, Multicenter, Randomized 
Study of ASP2215 versus Salvage Chemotherapy in Patients with 
Relapsed or Refractory Acute Myeloid Leukemia (AML) with FLT3 
Mutation, Clinical Study Report,'' March 2018.
---------------------------------------------------------------------------

    According to the applicant, the efficacy of XOSPATA[supreg] in the 
treatment of patients who have been diagnosed with R/R AML has been 
demonstrated in a U.S.-based, multi-national, active-controlled, Phase 
III study (ADMIRAL, 2215-CL-0301). This study was designed to determine 
the clinical benefit of the use of XOSPATA[supreg] in patients who have 
been diagnosed with FMS-like tyrosine kinase (FLT3) mutated AML who are 
refractory to, or have relapsed, after first-line AML therapy as shown 
with overall survival (OS) compared to salvage chemotherapy, and to 
determine the efficacy of the use of XOSPATA[supreg] as assessed by the 
rate of complete remission and complete remission with partial 
hematological recovery (CR/CRh) in these patients.\262\
---------------------------------------------------------------------------

    \262\ Ibid.
---------------------------------------------------------------------------

    In the ADMIRAL (2215-CL-0301) study, the applicant noted that 
XOSPATA[supreg] demonstrated clinically meaningful CR and CRh rates, as 
well as a clinically meaningful duration of CR/CRh in the patients 
studied. The CR/CRh rate was 21.8 percent, with 31/142 patients 
achieving a CR/CRh, 18/142 patients achieving CR (12.7 percent) and 13/
142 patients achieving a CRh (9.2 percent). Of the 31 patients (21.8 
percent) who achieved CR/CRh, the median duration of remission was 4.5 
months. For the 18 patients who achieved CR and the 13 patients who 
achieved CRh, the median duration of response was 8.7 months and 2.9 
months, respectively.\263\
---------------------------------------------------------------------------

    \263\ Draft XOSPATA[supreg] (package insert) Northbrook, IL, 
Astellas Pharma US, Inc., 2018.
---------------------------------------------------------------------------

    The safety evaluation of XOSPATA[supreg] is based on 292 patients 
who had been diagnosed with relapsed or refractory AML treated with 120 
mg of XOSPATA[supreg] daily. The applicant noted that when looking at 
the ADMIRAL study, the most common serious adverse events (SAEs) (Grade 
III or above) were lab abnormalities of elevation of liver 
transaminases in 43 (15 percent) of patients, fatigue in 14 (5 percent) 
of patients, myalgia or arthralgia in 13 (5 percent) of patients, and 
gastrointestinal disorders of diarrhea in 8 (3 percent) of patients and 
nausea in 4 (1 percent) of patients. Due to the number and type of SAEs 
reported, the applicant believed that XOSPATA[supreg] has the potential 
to decrease the number of subsequent future hospitalizations or 
physician visits as a result of management of adverse events, in 
particular serious adverse events.
    Transfusion dependence was also evaluated in the XOSPATA[supreg]-
treated patients. In some hematologic disorders, becoming transfusion 
independent or receiving fewer transfusions over a specified interval 
is defined as improvement or response depending on whether therapy is 
given.\264\
---------------------------------------------------------------------------

    \264\ Gale, R.P., Barosi, G., Barbui, T., Cervantes, F., Dohner, 
K., Dupriez, B., et al., ``What are RBC-transfusion-dependence and -
independence?,'' Leuk. Res, 2011, vol. 35(1).
---------------------------------------------------------------------------

    In the ADMIRAL study, at baseline prior to therapy initiation, 34 
patients in the XOSPATA[supreg] arm were classified as transfusion 
independent and 107 patients were classified as transfusion dependent. 
Of these transfusion dependent patients, 34 (31.8 percent) patients 
became transfusion independent during XOSPATA[supreg] treatment. Of the 
34 patients who were transfusion independent at baseline, 18 (52.9 
percent) patients maintained transfusion independence during 
XOSPATA[supreg] treatment.
    The applicant asserted that the use of XOSPATA[supreg] addresses a 
medical need in a patient population that has been difficult to manage 
in the past due to limited treatment options. In the ADMIRAL study, the 
applicant provided data specific to reduced mortality rate compared to 
historical data. Because of the small number of SAEs, the applicant 
stated that it anticipates reduction of subsequent diagnostic and 
therapeutic interventions, as well as decreased number of future 
physician visits and hospitalization as noted previously. However, the 
applicant did not provide direct numbers for the comparator arm of the 
ADMIRAL study in its application. Because of this, we are concerned 
that it may be difficult to determine XOSPATA[supreg]'s comparative 
effectiveness. We note that, the ADMIRAL study was designed to evaluate 
efficacy and head-to-head trials are lacking. Until the comparative 
data for both randomized arms are available, we are concerned that 
there may be insufficient evidence to determine that XOSPATA[supreg] 
provides a substantial clinical improvement over existing technologies.
    We are inviting public comments on whether XOSPATA[supreg] meets 
the substantial clinical improvement criterion. We did not receive any 
written public comments in response to the New Technology Town Hall 
meeting notice published in the Federal Register regarding the 
substantial clinical improvement criterion for XOSPATA[supreg] or at 
the New Technology Town Hall meeting.
l. GammaTileTM
    GT Medical Technologies, Inc. submitted an application for new 
technology add-on payments for FY 2020 for the GammaTileTM. 
We note that Isoray Medical, Inc. and GammaTile, LLC previously 
submitted an application for new technology add-on payments for 
GammaTileTM for FY

[[Page 19339]]

2018, which was withdrawn, and also for FY 2019, however the technology 
did not receive FDA approval or clearance by July 1, 2018 and, 
therefore, was not eligible for consideration for new technology add-on 
payments. The GammaTileTM is a brachytherapy technology for 
use in the treatment of patients who have been diagnosed with brain 
tumors, which uses cesium-131 radioactive sources embedded in a 
collagen matrix. GammaTileTM is designed to provide adjuvant 
radiation therapy to eliminate remaining tumor cells in patients who 
required surgical resection of brain tumors. According to the 
applicant, the GammaTileTM technology is a new vehicle of 
delivery for and inclusive of cesium-131 brachytherapy sources embedded 
within the product. The applicant stated that the technology has been 
manufactured for use in the setting of a craniotomy resection site 
where there is a high chance of local recurrence of a CNS or dual-based 
tumor. The applicant asserted that the use of the 
GammaTileTM technology provides a new, unique modality for 
treating patients who require radiation therapy to augment surgical 
resection of malignancies of the brain. By offsetting the radiation 
sources with a 3mm gap of a collagen matrix, the applicant asserted 
that the use of the GammaTileTM technology resolves issues 
with ``hot'' and ``cold'' spots associated with brachytherapy, improves 
safety, and potentially offers a treatment option for patients with 
limited, or no other, available options. The GammaTileTM is 
biocompatible and bioabsorbable, and is left in the body permanently 
without need for future surgical removal. The applicant asserted that 
the commercial manufacturing of the product will significantly improve 
on the process of constructing customized implants with greater speed, 
efficiency, and accuracy than is currently available, and requires less 
surgical expertise in placement of the radioactive sources, allowing a 
greater number of surgeons to utilize brachytherapy techniques in a 
wider variety of hospital settings.
    The GammaTileTM technology received FDA clearance under 
section 510(k) as a Class II medical device on July 6, 2018. The FDA 
application included the indication for GammaTileTM to be 
used to provide radiation therapy for patients who have been diagnosed 
with recurrent intercranial neoplasms. The applicant submitted a 
request for approval for a unique ICD-10-PCS code for the use of the 
GammaTileTM technology, which was approved effective October 
1, 2017 (FY 2018). The ICD-10-PCS procedure code used to identify 
procedures involving the use of the GammaTileTM technology 
is 00H004Z (Insertion of radioactive element, cesium-131 collagen 
implant into brain, open approach).
    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 stated that when compared to treatment using external beam 
radiation therapy, GammaTileTM uses a new and unique 
mechanism of action to achieve a therapeutic outcome. The applicant 
explained that the GammaTileTM technology is fundamentally 
different in structure, function, and safety from all external beam 
radiation therapies, and delivers treatment through a different 
mechanism of action. In contrast to external beam radiation modalities, 
the applicant further explained that the GammaTileTM is a 
form of internal radiation termed brachytherapy. According to the 
applicant, brachytherapy treatments are performed using radiation 
sources positioned very close to the area requiring radiation treatment 
and deliver radiation to the tissues that are immediately adjacent to 
the margin of the surgical resection. Conversely, external beam 
radiation therapy travels inward and typically exposes radiation to a 
large volume of normal brain tissue. As a result, the common clinical 
practice to avoid radiation toxicity is to reduce dosage ranges, 
limiting overall efficacy.
    Due to the custom positioning of the radiological sources and the 
use of the cesium-131 isotope, the applicant noted that the 
GammaTileTM technology focuses therapeutic levels of 
radiation on an extremely small area of the brain. Unlike all external 
beam techniques, the applicant stated that this radiation does not pass 
externally inward through the skull and healthy areas of the brain to 
reach the targeted tissue and, therefore, may limit neurocognitive 
deficits seen with the use of external beam techniques. Because of the 
rapid reduction in radiation intensity that is characteristic of 
cesium-131, the applicant asserted that the GammaTileTM 
technology can target the margin of the excision with greater precision 
than any alternative treatment option, while sparing healthy brain 
tissue from unnecessary and potentially damaging radiation exposure.
    The applicant also stated that, when compared to other types of 
brain brachytherapy, GammaTileTM uses a new and unique 
mechanism of action to achieve a therapeutic outcome. The applicant 
explained that cancerous cells at the margins of a tumor resection 
cavity can also be irradiated with the placement of brachytherapy 
sources in the tumor cavity. However, the applicant asserted that the 
GammaTileTM technology is a pioneering form of brachytherapy 
for the treatment of brain tumors that uses the isotope cesium-131 
embedded in a collagen implant that is customized to the geometry of 
the brain cavity. According to the applicant, the use of cesium-131 and 
the custom distribution of seeds offset in a three-dimensional collagen 
matrix results in a unique and highly effective delivery of radiation 
therapy to brain tissue. Specifically, the applicant asserted that the 
offset radiation source permits only a prescribed radiation dose to 
reach the target surface, reducing the potential for radiation induced 
necrosis and the need for reoperation. Additionally, the applicant 
stated that because the half-life of cesium-131 used in 
GammaTileTM is shorter compared to other brachytherapy 
isotopes, this results in a more rapid and effective energy deposition 
than other isotopes with longer half-lives. Therefore, applicant 
believes that GammaTileTM is unique due to the greater 
relative biological effectiveness compared to other brachytherapy 
options.
    With regard to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the GammaTileTM 
technology is a treatment option for patients who have been diagnosed 
with brain tumors that progress locally after initial treatment with 
external beam radiation therapy, and cases involving this technology 
are assigned to the same MS-DRG (MS-DRG 023 (Craniotomy with Major 
Device Implant/Acute Complex CNS PDX with MCC or Chemotherapy Implant)) 
as other current treatment forms of brachytherapy and external beam 
radiation therapy.
    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 GammaTileTM technology offers a treatment 
option for a patient population with limited, or no other, available 
treatment options. The applicant explained that treatment options for 
patients who have been

[[Page 19340]]

diagnosed with brain tumors that progress locally after initial 
treatment with external beam radiation therapy are limited, and there 
is no current standard-of-care in this setting. According to the 
applicant, surgery alone for recurrent tumors may provide symptom 
relief, but does not remove all of the cancerous cells. The applicant 
further stated that repeating external beam radiation therapy for 
adjuvant treatment is hampered by an increasing risk of brain injury 
because additional external beam radiation therapy will increase the 
total dose of radiation to brain tissue, as well as increase the total 
volume of irradiated brain tissue. Secondary treatment with external 
beam radiation therapy is often performed with a reduced and, therefore 
less effective, dose. The applicant stated that the technique of 
implanting cesium-131 seeds in a collagen matrix is currently only 
available to patients in one location and requires a high degree of 
expertise to implant. The manufacturing process of the 
GammaTileTM will greatly expand the availability of 
treatment beyond research programs at highly specialized cancer 
treatment centers.
    Based on the above, the applicant concluded that the 
GammaTileTM technology is not substantially similar to other 
existing technologies and meets the newness criterion.
    However, we are concerned that the mechanism of action of the 
GammaTileTM may be the same or similar to current forms or 
radiation therapy or brachytherapy. Specifically, while the placement 
of the cesium-131 source (or any radioactive source) in a collagen 
matrix offset may constitute a new delivery vehicle, we are concerned 
that this sort of improvement in brachytherapy for the use in the 
salvage treatment of radiosensitive malignancies of the brain may not 
represent a new mechanism of action. We also question whether the 
technology treats a new patient population, as maintained by the 
applicant, because of the availability of other implantable treatment 
devices that treat the same patient population as the patients treated 
by the GammaTileTM.
    We are inviting public comments on whether the 
GammaTileTM technology is substantially similar to any 
existing technologies and whether it meets the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis. The applicant worked with the Barrow Neurological 
Institute at St. Joseph's Hospital and Medical Center (St. Joseph's) to 
obtain actual claims from mid-2015 through mid-2016 for craniotomies 
that did not involve placement of the GammaTileTM 
technology. The cases were assigned to MS-DRGs 025 through 027 
(Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, 
and without CC/MCC, respectively). For the 460 claims, the average 
case-weighted unstandardized charge per case was $143,831. The 
applicant standardized the charges for each case and inflated each 
case's charges by applying the outlier charge inflation factor of 
1.04205 included in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41718) 
by the age of each case (that is, the factor was applied to 2015 claims 
3 times and 2016 claims 2 times). The applicant then calculated an 
estimate for ancillary charges associated with placement of the 
GammaTileTM device, as well as standardized charges for the 
GammaTileTM device itself. The applicant determined it meets 
the cost criterion because the final inflated average case-weighted 
standardized charge per case (including the charges associated with the 
GammaTileTM device) of $253,876 exceeds the average case-
weighted threshold amount of $143,749 for MS-DRG 023, the MS-DRG that 
would be assigned for cases involving the GammaTileTM 
device.
    The applicant also noted, in response to a concern expressed by CMS 
in the FY 2018 IPPS/LTCH PPS proposed rule, that its analysis does not 
include a reduction in costs due to reduced operating room times. The 
applicant stated that, while the use the device will reduce operating 
times relative to the freehand placement of seeds in other brain 
brachytherapy procedures, none of the claims in the cost analysis 
involve such freehand placement. We are inviting public comments on 
whether the GammaTileTM technology meets the cost criterion.
    With regard to substantial clinical improvement, the applicant 
stated that the GammaTileTM technology offers a treatment 
option for a patient population unresponsive to, or ineligible for, 
currently available treatments for recurrent CNS malignancies and 
significantly improves clinical outcomes when compared to currently 
available treatment options. The applicant explained that therapeutic 
options for patients who have been diagnosed with large or recurrent 
brain metastases are limited (for example, stereotactic radiotherapy, 
additional EBRT, or systemic immunochemotherapy). However, according to 
the applicant, the GammaTileTM technology provides a 
treatment option for patients who have been diagnosed with 
radiosensitive recurrent brain tumors that are not eligible for 
treatment with any other currently available treatment option. 
Specifically, the applicant stated that the GammaTileTM 
device may provide the only radiation treatment option for patients who 
have been diagnosed with tumors located close to sensitive vital brain 
sites (for example, brain stem) and patients who have been diagnosed 
with recurrent brain tumors who may not be eligible for additional 
treatment involving the use of external beam radiation therapy. There 
is a lifetime limit for the amount of radiation therapy a specific area 
of the body can receive. Patients whose previous treatment includes 
external beam radiation therapy may be precluded from receiving high 
doses of radiation associated with subsequent external beam radiation 
therapy, and the GammaTileTM technology can also be used to 
treat tumors that are too large for treatment with external beam 
radiation therapy. Patients who have been diagnosed with these large 
tumors are not eligible for treatment with external beam radiation 
therapy because the radiation dose to healthy brain tissue would be too 
high.
    The applicant summarized how the GammaTileTM technology 
improves clinical outcomes compared to existing treatment options, 
including external beam radiation therapy and other forms of brain 
brachytherapy as: (1) Providing a treatment option for patients with no 
other available treatment options; (2) reducing the rate of mortality 
compared to alternative treatment options; (3) reducing the rate of 
radiation necrosis; (4) reducing the need for re-operation; (5) 
reducing the need for additional hospital visits and procedures; and 
(6) providing more rapid beneficial resolution of the disease process 
treatment.
    The applicant cited several sources of data to support these 
assertions. The applicant referenced a paper by Brachman, Dardis et 
al., which was published in the Journal of Neurosurgery on December 21, 
2018.\265\ This study, a follow-up on the progress of 20 patients with 
recurrent previously irradiated meningiomasis, is a feasibility or 
superior progression-free survival study comparing the patient's own 
historical control rate against subsequent treatment with 
GammaTileTM.
---------------------------------------------------------------------------

    \265\ Brachman, D., et al., ``Resection and permanent 
intracranial brachytherpay using modular, biocompatible cesium-131 
implants: Results in 20 recurrent previously irradiated 
meningiomas,'' J Neurosurgery, December 21, 2018.
---------------------------------------------------------------------------

    An additional source of clinical data is from Gamma Tech's internal 
review of data from two centers treating brain tumors with 
GammaTileTM; the two

[[Page 19341]]

centers are the Barrow Neurological Institute (BNI) at St. Joseph's 
Hospital and St. Joseph's Medical Center, Phoenix, AZ, and this 
internal review is referred to herein as the ``BNI'' study.\266\ The 
BNI study summarized Gamma Tech's experience with the 
GammaTileTM technology. Another source of data that the 
applicant cited to support its assertions regarding substantial 
clinical improvement is an abstract by Pinnaduwage, D., et al. Also 
submitted in the application were abstracts from 2014 through 2018 in 
which updates from the progression-free survival study and the BNI 
study were presented at specialty society clinical conferences. The 
following summarizes the findings cited by the applicant to support its 
assertions regarding substantial clinical improvement.
---------------------------------------------------------------------------

    \266\ Brachman, D., et al., ``Surgery and Permanent 
Intraoperative Brachytherapy Improves Time to Progress of Recurrent 
Intracranial Neoplasms,'' Society for Neuro-Oncology Conference on 
Meningioma, June 2016.
---------------------------------------------------------------------------

    Regarding the assertion of local control, the 2018 article which 
was published in the Journal of Neurosurgery found that, with a median 
follow-up of 15.4 months (range 0.03-47.5 months), there were 2 
reported cases of recurrence out of 20 meningiomas, with median 
treatment site progression time after surgery and brachytherapy with 
the GammaTileTM precursor and prototype devices not yet 
being reached, compared to 18.3 months in prior instances. Median 
overall survival after resection and brachytherapy was 26 months, with 
9 patient deaths. In a presentation at the Society for Neuro-Oncology 
in November 2014,\267\ the outcomes of 20 patients who were diagnosed 
with 27 tumors covering a variety of histological types treated with 
the GammaTileTM prototype were presented. The applicant 
noted the following with regard to the patients: (1) All tumors were 
intracranial, supratentorial masses and included low and high-grade 
meningiomas, metastases from various primary cancers, high-grade 
gliomas, and others; (2) all treated masses were recurrent following 
treatment with surgery and/or radiation and the group averaged two 
prior craniotomies and two prior courses of external beam radiation 
treatment; and (3) following surgical excision, the prototype 
GammaTileTM were placed in the resection cavity to deliver a 
dose of 60 Gray to a depth of 5 mm of tissue; and (4) all patients had 
previously experienced regrowth of their tumors at the site of 
treatment and the local control rate of patients entering the study was 
0 percent.
---------------------------------------------------------------------------

    \267\ Dardis, C., ``Surgery and Permanent Intraoperative 
Brachytherapy Improves Times to Progression of Recurrent 
Intracranial Neoplasms,'' Society for Neuro-Oncology, November 2014.
---------------------------------------------------------------------------

    With regard to outcomes, the applicant stated that, after their 
initial treatment, patients had a median progression-free survival time 
of 5.8 months; post treatment with the prototype 
GammaTileTM, at the time of this analysis, only 1 patient 
had progressed at the treatment site, for a local control rate of 96 
percent; and median progression-free survival time, a measure of how 
long a patient lives without recurrence of the treated tumor, had not 
been reached (as this value can only be calculated when more than 50 
percent of treated patients have failed the prescribed treatment).
    The applicant also cited the findings from Brachman, et al. to 
support local control of recurrent brain tumors. At the Society for 
Neuro-Oncology Conference on Meningioma in June 2016,\268\ a second set 
of outcomes on the prototype GammaTileTM was presented. This 
study enrolled 16 patients with 20 recurrent Grade II or III 
meningiomas, who had undergone prior surgical excision external beam 
radiation therapy. These patients underwent surgical excision of the 
tumor, followed by adjuvant radiation therapy with the prototype 
GammaTileTM. The applicant noted the following outcomes: (1) 
Of the 20 treated tumors, 19 showed no evidence of radiographic 
progression at last follow-up, yielding a local control rate of 95 
percent; 2 of the 20 patients exhibited radiation necrosis (1 
symptomatic, 1 asymptomatic); and (2) the median time to failure from 
the prior treatment with external beam radiation therapy was 10.3 
months and after treatment with the prototype GammaTileTM 
only 1 patient failed at 18.2 months. Therefore, the median treatment 
site progression-free survival time after the prototype 
GammaTileTM treatment had not yet been reached (average 
follow-up of 16.7 months, range 1 to 37 months).
---------------------------------------------------------------------------

    \268\ Brachman, D., et al, ``Surgery and Permanent 
Intraoperative Brachytherapy Improves Time to Progress of Recurrent 
Intracranial Neoplasms,'' Society for Neuro-Oncology Conference on 
Meningioma, June 2016.
---------------------------------------------------------------------------

    A third prospective study was accepted for presentation at the 
November 2016 Society for Neuro-Oncology annual meeting.\269\ In this 
study, 13 patients who were diagnosed with recurrent high-grade gliomas 
(9 with glioblastoma and 4 with Grade III astrocytoma) were treated in 
an identical manner to the cases described above. Previously, all 
patients had failed the international standard treatment for high-grade 
glioma, a combination of surgery, radiation therapy, and chemotherapy 
referred to as the ``Stupp regimen.'' For the prior therapy, the median 
time to failure was 9.2 months (range 1 to 40 months). After therapy 
with a prototype GammaTileTM, the applicant noted the 
following: (1) The median time to same site local failure had not been 
reached and 1 failure was seen at 18 months (local control 92 percent); 
and (2) with a median follow-up time of 8.1 months (range 1 to 23 
months) 1 symptomatic patient (8 percent) and 2 asymptomatic patients 
(15 percent) had radiation-related MRI changes. However, no patients 
required re-operation for radiation necrosis or wound breakdown. Dr. 
Youssef was accepted to present at the 2017 Society for Neuro-Oncology 
annual meeting, where he provided an update of 58 tumors treated with 
the GammaTileTM technology. At a median whole group follow-
up of 10.8 months, 12 patients (20 percent) had a local recurrence at 
an average of 11.33 months after implant. Six and 18 month recurrence 
free survival was 90 percent and 65 percent, respectively. Five 
patients had complications, at a rate that was equal to or lower than 
rates previously published for patients without access to the 
GammaTileTM technology.
---------------------------------------------------------------------------

    \269\ Youssef, E., ``C-131 Implants for Salvage Therapy of 
Recurrent High Grade Gliomas,'' Society for Neuro-Oncology Annual 
Meeting, November 2016.
---------------------------------------------------------------------------

    In support of its assertion of a reduction in radiation necrosis, 
the applicant also included discussion of a presentation by D.S. 
Pinnaduwage, Ph.D., at the August 2017 annual meeting of the American 
Association of Physicists in Medicine. Dr. Pinnaduwage compared the 
brain radiation dose of the GammaTileTM technology with 
other radioactive seed sources. Iodine-125 and palladium-103 were 
substituted in place of the cesium-131 seeds. The study reported 
findings that other radioactive sources reported higher rates of 
radiation necrosis and that ``hot spots'' increased with larger tumor 
size, further limiting the use of these isotopes. The study concluded 
that the larger high-dose volume with palladium-103 and iodine-125 
potentially increases the risk for radiation necrosis, and the 
inhomogeneity becomes more pronounced with increasing target volume. 
The applicant also cited a presentation by Dr. Pinnaduwage at the 
August 2018 annual meeting of the American Association of Physicists in 
Medicine, in which research findings demonstrated that seed migration 
in

[[Page 19342]]

collagen tile implantations was relatively small for all tested 
isotopes, with Cesium-13 showing the least amount of seed migration.
    The applicant asserted that, when considered in total, the data 
reported in these presentations and studies and the intermittent data 
presented in their abstracts support the conclusion that a significant 
therapeutic effect results from the addition of GammaTileTM 
radiation therapy to the site of surgical removal. According to the 
applicant, the fact that these patients had failed prior best available 
treatments (aggressive surgical and adjuvant radiation management) 
presents the unusual scenario of a salvage therapy outperforming the 
current standard-of-care. The applicant noted that follow-up data 
continues to accrue on these patients.
    Regarding the assertion that GammaTileTM reduces 
mortality, the applicant stated that the use of the 
GammaTileTM technology reduces rates of mortality compared 
to alternative treatment options. The applicant explained that studies 
on the GammaTileTM technology have shown improved local 
control of tumor recurrence. According to the applicant, the results of 
these studies showed local control rates of 92 percent to 96 percent 
for tumor sites that had local control rates of 0 percent from previous 
treatment. The applicant noted that these studies also have not reached 
median progression-free survival time with follow-up times ranging from 
1 to 37 months. Previous treatment at these same sites resulted in 
median progression-free survival times of 5.8 to 10.3 months.
    The applicant further stated that the use of the 
GammaTileTM technology reduces rates of radiation necrosis 
compared to alternative treatment options. The applicant explained that 
the rate of symptomatic radiation necrosis in the 
GammaTileTM clinical studies of 5 to 8 percent is 
substantially lower than the 26 percent to 57 percent rate of 
symptomatic radiation necrosis requiring re-operation historically 
associated with brain brachytherapy, and lower than the rates reported 
for initial treatment of similar tumors with modern external beam and 
stereotactic radiation techniques. The applicant indicated that this is 
consistent with the customized and ideal distribution of radiation 
therapy provided by the GammaTileTM technology.
    The applicant also asserted that the use of the 
GammaTileTM technology reduces the need for re-operation 
compared to alternative treatment options. The applicant explained that 
patients receiving a craniotomy, followed by external beam radiation 
therapy or brachytherapy, could require re-operation in the following 
three scenarios:
     Tumor recurrence at the excision site could require 
additional surgical removal;
     Symptomatic radiation necrosis could require excision of 
the affected tissue; and
     Certain forms of brain brachytherapy require the removal 
of brachytherapy sources after a given period of time.
    However, according to the applicant, because of the high local 
control rates, low rates of symptomatic radiation necrosis, and short 
half-life of cesium-131, the GammaTileTM technology will 
reduce the need for re-operation compared to external beam radiation 
therapy and other forms of brain brachytherapy.
    Additionally, the applicant stated that the use of the 
GammaTileTM technology reduces the need for additional 
hospital visits and procedures compared to alternative treatment 
options. The applicant noted that the GammaTileTM technology 
is placed during surgery, and does not require any additional visits or 
procedures. The applicant contrasted this improvement with external 
beam radiation therapy, which is often delivered in multiple fractions 
that must be administered over multiple days. The applicant provided an 
example where whole brain radiotherapy (WBRT) is delivered over 2 to 3 
weeks, while the placement of the GammaTileTM technology 
occurs during the craniotomy and does not add any time to a patient's 
recovery.
    Based on consideration of all of the data presented above, the 
applicant believed that the use of the GammaTileTM 
technology represents a substantial clinical improvement over existing 
technologies.
    We are concerned that the clinical efficacy and safety data 
provided by the applicant may be limited. The findings presented appear 
to be derived from relatively small case-studies and not data from FDA 
approved clinical trials. While the applicant described increases in 
median time to disease recurrence in support of clinical improvement, 
we are concerned with the lack of analysis, meta-analysis, or 
statistical tests that indicated that seeded brachytherapy procedures 
represented a statistically significant improvement over alternative 
treatments, such as external beam radiation or other forms of 
brachytherapy. We also are concerned with the lack of studies involving 
the actual manufactured device. Finally, while the FDA cleared 
GammaTileTM under section 510(k), authorization to market 
the device for the cleared indications, we note that the FDA's issuance 
of a ``substantially equivalent determination'' did not indicate a 
review of any specific superiority claims to a predicate device.
    We are inviting public comments on whether the 
GammaTileTM technology meets the substantial clinical 
improvement criterion. We did not receive any written comments in 
response to the New Technology Town Hall meeting notice published in 
the Federal Register regarding the substantial clinical improvement 
criterion for GammaTileTM or at the New Technology Town Hall 
meeting.
m. Imipenem, Cilastatin, and Relebactam (IMI/REL) Injection
    Merck & Co., Inc. submitted an application for new technology add-
on payments for IMI/REL for FY 2020. The applicant is seeking an 
indication for IMI/REL for the treatment of patients 18 years of age 
and older who have been diagnosed with: (a) Complicated intra-abdominal 
infections (cIAI) caused by susceptible gram-negative microorganisms 
where limited or no alternative therapies are available; and (b) 
complicated urinary tract infections (cUTIs), including pyelonephritis, 
caused by susceptible gram-negative microorganisms where limited or no 
alternative therapies are available. The applicant stated that IMI/REL 
does not currently have a trade name, although an NDA was accepted and 
is being reviewed for IMI/REL.
    The applicant reported that complicated intra-abdominal infections 
are a subset of intra-abdominal infections, a term which includes a 
diverse set of diseases. It is broadly defined as peritoneal 
inflammation in response to micro-organisms, resulting in purulence in 
the peritoneal cavity. Complicated intra-abdominal infections extend 
beyond the source organ into the peritoneal space. These infections 
cause peritoneal inflammation, and are associated with localized or 
diffuse peritonitis. Localized peritonitis often manifests as an 
abscess with tissue debris, bacteria, neutrophils, macrophages, and 
exudative fluid contained in a fibrous capsule. Diffuse peritonitis is 
categorized as primary, secondary, or tertiary peritonitis.\270\
---------------------------------------------------------------------------

    \270\ Lopez, N., Kobayashi, L., Coimbra, R., ``A Comprehensive 
review of abdominal infections,'' World J Emerg Surg, 2011, vol. 6, 
pp. 7, Published February 23, 2011, doi:10.1186/1749-7922-6-7.
---------------------------------------------------------------------------

    In addition, the applicant stated that complicated intra-abdominal 
infections

[[Page 19343]]

are characterized by chills, rigors, or fever (temperature of greater 
than or equal to 38.0 [deg]C); elevated white blood cell count (greater 
than 10,000/mm\3\), or left shift (greater than 15 percent immature 
PMNs); nausea or vomiting; dysuria, increased urinary frequency, or 
urinary urgency; and lower abdominal pain or pelvic pain. Acute 
pyelonephritis is characterized by chills, rigors, or fever 
(temperature of greater than or equal to 38.0 [deg]C); elevated white 
blood cell count (greater than 10,000/mm\3\), or left shift (greater 
than 15 percent immature PMNs); nausea or vomiting; dysuria, increased 
urinary frequency, or urinary urgency; flank pain; and costo-vertebral 
angle tenderness on physical examination. Risk factors for infection 
with drug-resistant organisms do not, on their own, indicate a 
cUTI.\271\
---------------------------------------------------------------------------

    \271\ Hooton, T. and Kalpana, G., ``Acute complicated urinary 
tract infection (including pyelonephritis) in adults,'' In A. Bloom 
(Ed.), UpToDate. Available at: https://www.uptodate.com/contents/acute-complicated-urinary-tract-infectionincluding-pyelonephritis-in-adults.
---------------------------------------------------------------------------

    According to the applicant, IMI/REL is a fixed-dose combination of 
imipenem/cilastatin (IMI), a [beta]-lactam (BL) antibacterial 
(specifically, a carbapenem), and relebactam (REL), a novel [beta]-
lactamase inhibitor (BLI). The applicant stated that IMI was the first 
marketed carbapenem when approved by the FDA in 1985. It is a sterile 
formulation of imipenem (a thienamycin antibacterial) and cilastatin 
sodium (inhibitor of the renal dipeptidase, dehydropeptidase-l). The 
applicant asserted that IMI is stable against hydrolysis by many 
extended spectrum [beta]-lactamases (ESBLs) and is frequently used for 
the treatment of serious bacterial infections in which gram-negative 
bacteria and/or anaerobes play a significant role. The applicant 
additionally stated that REL is a non-[beta]-lactam, small molecule 
diazabicyclooctane (DABCO) BLI with inhibitory activity against various 
[beta]-lactamases: Class A carbapenemases (such as KPC), Class C 
cephalosporinases (including AmpC), and ESBLs.
    The applicant stated that procedures involving the administration 
of IMI/REL could be, generally, identified with ICD-10-PCS codes 
3E03329 (Introduction of other anti-infective into peripheral vein, 
percutaneous approach) or 3E04329 (Introduction of other anti-infective 
into central vein, percutaneous approach). However, neither code would 
uniquely identify procedures involving the administration of IMI/REL. 
The applicant has submitted a request to the ICD-10 Coordination and 
Maintenance Committee for approval for an ICD-10-PCS procedure code to 
distinctly identify procedures involving the administration of IMI/REL.
    The applicant anticipates that the recommended dosage of IMI/REL 
will be 500 mg imipenem/500 mg cilastatin/250 mg relebactam, via 
intravenous infusion over 30 minutes every 6 hours. The applicant 
anticipates that the dosage will be decreased proportionally with 
decreases in the renal creatinine clearance category.
    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 the product uses the 
same or a similar mechanism of action as an existing technology to 
achieve the same therapeutic outcome, the applicant stated that IMI/
REL's mechanism of action differentiates it from other approved 
injectable antibiotics. The applicant noted that there are three other 
BL/BLI antibiotics that have recently been FDA-approved, including 
Zerbaxa[supreg], Avycaz[supreg], and VABOMERETM. However, 
the applicant stated that the properties of REL, a non-[beta]-lactam, 
small molecule diazabicyclooctane (DABCO) BLI with inhibitory activity 
against various [beta]-lactamases including: Class A carbapenemases 
(such as KPC), Class C cephalosporinases (including AmpC), and ESBLs, 
when combined with imipenem and cilastatin, used as [beta]-lactams, 
gives IMI/REL a different mechanism of action from that of the 
aforementioned BL/BLI antibiotics. The applicant provided comparisons 
of efficacy with other BL/BLI antibiotics as evidence of IMI/REL's 
unique mechanism of action, and asserted that the combination of REL 
and IMI would be efficacious in most imipenem-resistant strains at 
clinically achievable doses and concentrations, and that both IMI and 
REL are not subject to efflux pumps in P. aeruginosa. The applicant 
additionally submitted several studies that noted that REL, as a non-
[beta]-lactam, small-molecule BLI with dual Class A/C activity, is 
suited to inactivate [beta]-lactamase subtypes involved in carbapenem 
resistance.272 273 By inhibiting these [beta]-lactamases, 
the applicant claims that REL has the potential to restore IMI's 
efficacy against MDR pathogens previously expressing resistance to IMI.
---------------------------------------------------------------------------

    \272\ Sims, et al., ``Prospective, randomized, double-blind, 
Phase 2 dose-ranging study comparing efficacy and safety of 
imipenem/cilastatin plus relebactam with imipenem/cilastatin alone 
in patients with complicated urinary tract infections.'' Journal of 
Antimicrobial Chemotherapy. 2017.
    \273\ Rhee, et al., ``Pharmacokinetics, Safety, and Tolerability 
of Single and Multiple Doses of Relebactam, a b-LactamaseInhibitor, 
in Combination with Imipenem and Cilastatin in Healthy 
Participants.'' Antimicrobial Agents and Chemotherapy, 2018.
---------------------------------------------------------------------------

    With respect to the second criterion, whether the product is 
assigned to the same or a different MS-DRG as existing technologies, 
the applicant asserted that patients who may be eligible to receive 
treatment involving IMI/REL include hospitalized patients who have been 
diagnosed with a cUTI or cIAI. We expect that cases involving IMI/REL 
would most likely be assigned to the same MS-DRGs to which cases 
involving comparator treatments are assigned.
    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 the use of IMI/REL would treat a different patient 
population than existing and currently available treatment options. As 
previously noted, the applicant submitted several studies that noted 
REL, as a non-[beta]-lactam, small-molecule BLI with dual Class A/C 
activity, is suited to inactivate [beta]-lactamase subtypes involved in 
carbapenem resistance.274 275 By inhibiting these [beta]-
lactamases, the applicant asserts that REL has the potential to restore 
IMI's efficacy against MDR pathogens previously expressing resistance 
to IMI and, therefore, to extend treatment to patient populations that 
might have previously been resistant to IMI. Additionally, the 
applicant compared the administration of IMI/REL to other comparator 
antibiotics to demonstrate its unique place in the armamentarium, 
beginning with three older antibiotics. First, in comparison to 
polymyxins, the applicant asserts that even in colistin-derived 
preparations of polymyxins, nephrotoxicity is still evident and is the 
potential adverse experience of most

[[Page 19344]]

concern to prescribing clinicians,\276\ and further asserted that 
neither polymyxin B nor colistin have been subjected to contemporary 
drug development procedures.\277\ Second, the applicant asserted that 
clinical data for fosfomycin in the treatment of MDR bacterial 
infections are very scarce. Third, the applicant stated that 
tigecycline does not have activity against Pseudomonas spp.\278\ 
Furthermore, in a safety announcement released by the FDA in 2013, it 
was noted that an increased risk of death was observed with tigecycline 
compared to other antibacterials used to treat similar infections.\279\
---------------------------------------------------------------------------

    \274\ Sims, et al., ``Prospective, randomized, double-blind, 
Phase 2 dose-ranging study comparing efficacy and safety of 
imipenem/cilastatin plus relebactam with imipenem/cilastatin alone 
in patients with complicated urinary tract infections.'' Journal of 
Antimicrobial Chemotherapy, 2017.
    \275\ Rhee, et al., ``Pharmacokinetics, Safety, and Tolerability 
of Single and Multiple Doses of Relebactam, a b-LactamaseInhibitor, 
in Combination with Imipenem and Cilastatin in Healthy 
Participants.'' Antimicrobial Agents and Chemotherapy, 2018.
    \276\ Dalfino, L, et al., ``High-Dose, extended-interval 
colistin administration in critically ill patients: is this the 
right dosing strategy? A preliminary study,'' Clin Infect Dis, 2012, 
vol. 54(12), pp. 1720-6.
    \277\ American Thoracic Society, Infectious Diseases Society of 
America, ``Guidelines for the management of adults with hospital 
lacquired, ventilator-associated, and healthcare-associated 
pneumonia,'' Am J Respir Crit Care Med, 2005, vol. 171, pp. 388-416.
    \278\ Giamarellou, H., Poulakou, G., ``Multidrug-resistant gram-
negative infections; what are the treatment options? Drugs,'' Drugs, 
2009, vol, 69(14), pp. 1879-1901.
    \279\ FDA Drug Safety Communication: ``FDA warns of increased 
risk of death with IV antibacterial Tygacil (tigecycline) and 
approves new Boxed Warning'', Accessed at https://www.fda.gov/Drugs/DrugSafety/ucm369580.htm on 11/10/2018.
---------------------------------------------------------------------------

    The applicant also compared the administration of IMI/REL to the 
three other aforementioned BL/BLI antibiotics. First, the applicant 
asserted that the use of tazobactam in Zerbaxa[supreg] is not effective 
against KPC-producing bacteria \280\ and some highly drug-resistant 
strains of P. aeruginosa, including some carbapenem-resistant (CR) 
strains, which are able to escape the antipseudomonal activity of 
Zerbaxa[supreg]. Second, the applicant asserted that there have been 
recent reports of resistance to Avycaz[supreg],281 282 
including in a recent report published by the European Centre for 
Disease Prevention and Control (ECDC).\283\ The applicant reports that 
additionally, avibactam has been shown to be subject to efflux in P. 
aeruginosa, which the applicant asserts casts further concerns 
regarding its utility.284 285 Third, the applicant asserted 
that the use of vaborbactam in VABOMERETM has little impact 
on the activity of meropenem in vitro against CR P. aeruginosa, 
arguably due to vaborbactam being subject to efflux.286 287 
In addition, the applicant stated that the U.S. Prescribing Information 
(USPI) for VABOMERETM indicates that vaborbactam has no 
effect on meropenem activity against meropenem-susceptible 
isolates.\288\
---------------------------------------------------------------------------

    \280\ Papp-Wallace, K.M., et al., ``Substrate selectivity and a 
novel role in inhibitor discrimination by residue 237 in the KPC-2 
betalactamase,'' Antimicrob Agents Chemother, Jul 2010, vol. 54(7). 
pp. 2867-77, doi: 10.1128/AAC.00197-10, Epub 2010, Apr 26.
    \281\ Shields, R.K., et al., ``Emergence of ceftazidime-
avibactam resistance due to plasmid-borne blaKPC-3 mutations during 
treatment of carbapenem-resistant Klebsiella pneumoniae 
infections,'' Antimicrob Agents Chemother, Feb 23, 2017, vol. 
;61(3), pii: e02097-16, doi: 10.1128/AAC.02097-16, Print 2017 Mar.
    \282\ Haidar, G,, et al., ``Identifying spectra of activity and 
therapeutic niches for ceftazidime-avibactam and imipenem relebactam 
against carbapenemresistant Enterobacteriaceae,'' Antimicrob Agents 
Chemother, 2017, vol. 61, pp. e00642-17.
    \283\ European Centre for Disease Prevention and Control, 
``Emergence of resistance to ceftazidime-avibactam in carbapenem-
resistant Enterobacteriaceae, 12 June 2018,'' Stockholm; ECDC; 2018.
    \284\ Poster presented at ECCMID 2017 (Apr 22-25), Vienna 
(Austria). EP0469: Avibactam is a substrate for MexAB-OprM in 
P.aeruginosa.
    \285\ Chalhoub, H., et al., ``Loss of activity of ceftazidime-
avibactam due to Mex-AB-OprM efflux and overproduction of AmpC 
cephalosporinase in Pseudomonas aeruginosa isolated from patients 
suffering from cystic fibrosis,'' Int J Antimicrob Agents, August 3, 
2018, pii: S0924-8579(18)30226-7, doi: 10.1016/
j.ijantimicag.2018.07.027. [Epub ahead of print].
    \286\ Castanheira, M., et al., ``Meropenem-Vaborbactam Tested 
against contemporary gram-negative isolates collected worldwide 
during 2014, including carbapenem-resistant, KPC-producing, 
multidrug-resistant, and extensively drug-resistant 
Enterobacteriaceae,'' Antimicrob Agents Chemother. August, 24, 2017, 
vol. 61(9), pii: e00567-17, doi: 10.1128/AAC.00567-17, Print 
September 2017.
    \287\ Zhanel, G.G., et al., ``Imipenem-relebactam and meropenem-
vaborbactam: two novel carbapenem-[beta]-lactamase inhibitor 
combinations,'' Drugs, January 2018, vol. 78(1), pp. 65-98, doi: 
10.1007/s40265-017-0851-9.
    \288\ USPI for VABOMERETM.
---------------------------------------------------------------------------

    Finally, the applicant compared the administration of IMI/REL to 
two additional antibiotics. First, the applicant asserted that 
XeravaTM has no activity against P. aeruginosa.\289\ Second, 
the applicant asserted that aminoglycosides, including 
ZemdriTM, usually have minimal lung penetration, limiting 
potential efficacy in HABP/VABP. The applicant stated that currently 
used aminoglycosides are associated with nephrotoxicity and 
ototoxicity, and, outside of UTI, are rarely given as single agents in 
the treatment of serious bacterial infections. The applicant stated 
that the approved USPI for ZemdriTM includes black-box 
warnings for nephrotoxicity, ototoxicity, neuromuscular blockade, and 
fetal harm.\290\
---------------------------------------------------------------------------

    \289\ USPI for XeravaTM.
    \290\ USPI for ZemdriTM.
---------------------------------------------------------------------------

    We are concerned that the mechanism of action of IMI/REL may be 
similar to the mechanism of action of other BL/BLI antibiotics. While 
we recognize that REL is used as a unique molecular structure with 
respect to other BLIs in BL/BLI combination, the fundamental mechanism 
of action of IMI/REL may be similar to that of other BL/BLIs. 
Additionally, with respect to whether the use of IMI/REL would treat a 
different patient population than existing treatment options, we note 
that, while the variety of antibiotic resistance-patterns certainly 
warrants a varied armamentarium for clinicians, there are existing 
antimicrobials that are approved to, generally, treat diagnoses of 
cUTIs, cIAIs, and MDR pathogens. We are concerned that non-uniform 
resistance patterns among patients, necessitating a range of drugs to 
treat the same diseases, may not constitute a new patient population. 
We are inviting public comments on whether the IMI/REL technology is 
substantially similar to any existing technologies and whether it meets 
the newness criterion, including with respect to the concerns we have 
raised.
    The applicant conducted the following analysis to demonstrate that 
the technology meets the cost criterion. To determine the MS-DRGs that 
potential cases representing patients who may be eligible for treatment 
involving the administration of IMI/REL would map to, the applicant 
identified all MS-DRGs containing cases that reported ICD-10-CM 
diagnosis codes for cUTI or cIAI, as a primary or secondary diagnosis, 
as well as a diagnosis code(s) for CRE resistance. Based on the FY 2017 
MedPAR data file and Hospital Limited Data Set (LDS), the applicant 
identified a total of 21,111 cases representing patients who may be 
eligible for treatment with the administration of IMI/REL, which mapped 
to 441 unique MS-DRGs. There were 307 MS-DRGs with very minimal 
frequencies (fewer than 11 cases), and a total of 1,138 cases 
associated with these low-volume MS-DRGs. After trimming the cases that 
were mapped to low-volume MS-DRGS, the applicant identified 19,973 
cases that were mapped to 134 unique MS-DRGs, with the top 10 MS-DRGs 
covering approximately 74.3 percent of all identified cases.
    Using 100 percent of the 19,973 cases considered, the applicant 
determined an average case-weighted unstandardized charge per case of 
$60,506. The applicant standardized the charges for each case and 
inflated each case's charges by applying the FY 2019 IPPS/LTCH PPS 
final rule outlier charge inflation factor of 1.08864 (83 FR 41722). 
(We note that this 2-year charge inflation factor was revised in the FY 
2019 IPPS/LTCH PPS final rule correction notice. The corrected factor 
is 1.08986 (83 FR 49844). However, we further note that even when using 
the corrected final rule values to inflate the

[[Page 19345]]

charges, the average case-weighted standardized charge per case for 
each scenario exceeded the average case-weighted threshold amount.) The 
applicant then removed 100 percent of the drug charges from the 
relevant cases to estimate the charges for drugs that potentially may 
be replaced or avoided by the administration of IMI/REL. The applicant 
then added charges for the administration of IMI/REL by taking the cost 
of the drug and converting it to a charge by dividing the costs by the 
national average CCR of 0.191 for drugs from the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41273). The applicant calculated an average case-
weighted standardized charge per case of $74,778, using the percent 
distribution of MS-DRGs as case-weights. Based on this analysis, the 
applicant determined that the final inflated average case-weighted 
standardized charge per case for cases involving the administration of 
IMI/REL exceeded the average case-weighted threshold amount of $50,417 
by $24,361.
    The applicant conducted additional analysis to demonstrate that the 
technology meets the cost criterion. In these analyses, the applicant 
repeated the cost analysis above with one analysis of cases with a 
diagnosis of cUTI and the other analysis of cases with a diagnosis of 
cIAI. In each of these additional sensitivity analyses, the applicant 
determined that the final inflated average case-weighted standardized 
charge per case exceeded the final average case-weighed threshold 
amount, by $21,677 and $44,119, respectively. We are inviting public 
comments on whether the administration of IMI/REL meets the cost 
criterion.
    With regard to substantial clinical improvement, the applicant 
believes that the administration of IMI/REL represents a substantial 
clinical improvement over currently available therapies because of the 
efficacy and safety results of the completed Phase III trial RESTORE-
IMI 1. RESTORE-IMI 1 included 47 subjects who were randomized in a 
randomized, double-blind, active-controlled, parallel group, multi-
center Phase III trial of IMI/REL (provided together in a single vial 
as a fixed-dose combination product) + placebo compared with colistin 
(in the form of colistimethate sodium [CMS]) + IMI in patients with 
imipenem non-susceptible bacterial infections, including HABP/VABP, 
cIAI, and cUTI. The primary efficacy endpoint for RESTORE-IMI 1 was 
overall response based on the following: (a) All-cause mortality 
through Day 28 post-randomization in patients who had been diagnosed 
with HABP/VABP, (b) clinical response at Day 28 post-randomization for 
patients who had been diagnosed with cIAI, and (c) composite clinical 
and microbiological response at early follow-up (EFU) (Day 5 to 9 
following completion of therapy) for patients who had been diagnosed 
with cUTI. Key secondary efficacy endpoints include estimation of 
clinical response at Day 28 post-randomization and all-cause mortality 
through Day 28. A favorable clinical response for all infection sites 
refers to resolution of baseline clinical signs and symptoms associated 
with the baseline infection. The primary efficacy analysis population 
for this study is the microbiological modified intent-to treat (m-MITT) 
population (31 patients), defined as all randomized patients who 
received at least one dose of the study drug within a given stage/phase 
IV study therapy regimen, and who had been diagnosed with a qualifying 
baseline bacterial pathogen.
    With respect to efficacy, the applicant stated that the 
administration of IMI/REL demonstrates a substantial clinical 
improvement due to the following three study results: (1) Numerically 
comparable overall response of the use of IMI/REL compared to CMS + 
IMI, (2) numerically favorable clinical response at Day 28 for the use 
of IMI/REL compared to CMS + IMI, and (3), numerically lower all-cause 
mortality at Day 28. First, the applicant indicated that a favorable 
overall response (primary endpoint) was achieved in 71.4 percent of the 
patients who received treatment involving IMI/REL + placebo and 70.0 
percent of the patients who received treatment with CMS + IMI.\291\ 
Second, the applicant asserted that favorable clinical response 
(secondary endpoint) was achieved by a higher percentage of the 
patients who received treatment involving IMI/REL + placebo (71.4 
percent) than patients who received treatment with CMS + IMI (40.0 
percent) at Day 28, as well as at all other time points assessed.\292\ 
Third, the applicant states that all-cause mortality at Day 28 favored 
IMI/REL + placebo (9.5 percent) over CMS + IMI (30 percent), although 
the difference was not statistically significant at the 90 percent 
level.
---------------------------------------------------------------------------

    \291\ Motsch, J. et al., ``RESTORE-IMI 1: A Multicenter, 
Randomized, Double-Blind, Comparator-Controlled Trial Comparing the 
Efficacy and Safety of Imipenem/Relebactam vs Colistin Plus Imipenem 
in Patients With Imipenem-Non-susceptible Bacterial Infections.''
    \292\ Ibid.
---------------------------------------------------------------------------

    With respect to safety, the applicant indicated that the primary 
population used for all safety evaluations was the All-Subjects-as-
Treated (ASaT) population, which comprises all patients who received at 
least one dose of the study medication. The applicant stated that the 
incidence of AEs, including deaths, SAEs, drug-related AEs and SAEs, 
and discontinuations due to AEs, was lower in patients who received 
treatment involving the administration of IMI/REL + placebo than in 
patients who received treatment involving the CMS + IMI. Overall, the 
most commonly reported AEs (greater than or equal to 10 percent of the 
patients overall) across both treatment groups were pyrexia (12.8 
percent of the patients), increased AST (12.8 percent of the patients), 
increased ALT (10.6 percent), and nausea (10.6 percent of subjects). 
The incidences of increased AST, increased ALT, and nausea were lower 
in patients who received treatment involving IMI/REL + placebo than in 
patients who received treatment involving CMS + IMI. The applicant 
further stated that in accounting for nephrotoxicity associated with 
the use of CMS, a pre-specified key secondary objective of the study 
was to estimate the proportion of patients who experienced treatment-
emergent nephrotoxicity following receipt of treatment involving IMI/
REL + placebo or CMS + IMI and to compare the treatment groups. From 
this analysis, the applicant concluded that the incidence of treatment-
emergent nephrotoxicity was significantly lower in patients who 
received treatment involving IMI/REL + placebo (10.3 percent) than in 
patients who received treatment involving CMS + IMI (56.3 percent) 
(two-sided p-value of 0.002).
    We have the following concerns regarding whether IMI/REL meets the 
substantial clinical improvement criterion. First, we are concerned 
regarding the comparator chosen for the RESTORE-IMI 1 trial. We are not 
certain why the combination of CMS + IMI was chosen, and if other 
comparators would have been more appropriate. Second, 8 of the 21 cases 
in the m-MITT population treated with IMI/REL were cases of HABP/
VABP,\293\ and further 7 out of the 15 cases of positive clinical 
response in the m-MITT population to IMI/REL were cases of HABP/
VABP.\294\ Because HABP/VABP are not conditions for which the applicant 
is seeking indications for IMI/REL, it is possible that conclusions 
drawn from the RESTORE-IMI 1 study regarding safety and efficacy are 
not specific to those indications described

[[Page 19346]]

in the application. Third, the favorable clinical response after Day 28 
is measured at the 90 percent confidence level,\295\ rather than the 
more common 95 percent level, without explanation. Fourth, we note that 
the study is composed of an initial sample of only 47 patients.\296\ 
With such a small sample we are concerned about the external validity 
of the conclusions, specifically the generalizability of the results to 
the Medicare population, given the specific demographic makeup of that 
population. Fifth, we have another methodological concern regarding the 
different endpoints present in the study, along with the Day 28 
assessment. We note that HABP/VABP, cUTI, and cIAI are measured 
respectively by mortality, favorable clinical response (cure), and 
favorable clinical response (cure OR sustained eradication).\297\ We 
are uncertain why different endpoints were chosen for the different 
conditions. Additionally, we are uncertain if the Day 28 assessment 
cited in the application reflects microbiological or just clinical 
response. Sixth, the applicant defined the m-MITT and ASaT populations 
as those patients who received at least one dose of the study drug. We 
are not certain whether these analyses should also include those 
patients in the comparator arm who did not receive the study drug, as 
this could violate the applicant's definition of m-MITT. Seventh, CMS 
also notes that both the estimated difference in the favorable overall 
response at the primary endpoint and the estimated difference in all-
cause mortality are not statistically significant \298\ and, therefore, 
may not represent a substantial clinical improvement. Finally, in 
addition, with respect to safety, the applicant asserted that the 
administration of IMI/REL induces less nephrotoxicity compared to the 
use of CMS + IMI. However, nephrotoxicity is a known adverse effect of 
CMS, and other available antimicrobials approved to treat diagnoses of 
cUTIs and cIAIs induce less nephrotoxicity (and were not studied in the 
data provided to support this application). Therefore, it is not clear 
that IMI/REL induces less nephrotoxicity compared to other available 
treatments.
---------------------------------------------------------------------------

    \293\ 18-1315-D MRPAB18303 IDWeek SmMITT_final.
    \294\ Ibid.
    \295\ 18-1315-C MRPAB18304 IDWeek Nephrotoxicity_final.
    \296\ Ibid.
    \297\ 18-1315-D MRPAB18303 IDWeek SmMITT_final.
    \298\ Kaye, K.S., et al., ``Results for the Supplemental 
Microbiological Modified Intent-to-Treat (SmMITT) Population of the 
RESTORE-IMI 1 Trial of Imipenem/Cilastatin/Relebactam Versus 
Colistin Plus Imipenem/Cilastatin in Patients With Imipenem-
Nonsusceptible.''
---------------------------------------------------------------------------

    We are inviting public comments on whether IMI/REL meets the 
substantial clinical improvement criterion, including with respect to 
the concerns we have raised. We did not receive any written comments in 
response to the New Technology Town Hall meeting notice published in 
the Federal Register regarding the substantial clinical improvement 
criterion for IMI/REL or at the New Technology Town Hall meeting.
n. JAKAFITM (Ruxolitinib)
    Incyte Corporation submitted an application for new technology add-
on payments for JAKAFITM (ruxolitinib) for FY 2020. 
JAKAFITM is an oral kinase inhibitor that inhibits Janus-
associated kinases 1 and 2 (JAK1/JAK2). The JAK pathway, which includes 
JAK1 and JAK2, is involved in the regulation of immune cell maturation 
and function. According to the applicant, JAK inhibition represents a 
novel therapeutic approach for the treatment of acute graft-versus-host 
disease (GVHD) in patients who have had an inadequate response to 
corticosteroids.
    Allogeneic hematopoietic stem cell transplantation (allo-HSCT) is a 
treatment option for patients who have been diagnosed with hematologic 
cancers, some solid tumors, and some non-malignant hematologic 
disorders. According to the applicant, approximately 9,000 allo-HSCTs 
were performed in the U.S. in 2017. The most common cause of death in 
allo-HSCT recipients within the first 100 days is relapsed disease (29 
percent), infection (16 percent), and GVHD (9 percent).\299\ GVHD is a 
condition where donor immunocompetent cells attack the host tissue. 
GVHD can be acute (aGVHD), which generally occurs prior to day 100, or 
chronic (cGVHD). aGVHD results in systemic inflammation and tissue 
destruction affecting multiple organs. Systemic corticosteroids are 
used as first-line therapy for the treatment of a diagnosis of aGVHD, 
with response rates between 40 percent and 60 percent. However, the 
response is often not durable, and there is no consensus on optimal 
second-line treatment.\300\ The applicant envisions the use of 
JAKAFITM as second-line treatment (that is, first-line 
steroid treatment failures) for the treatment of a diagnosis of 
steroid-refractory aGVHD.
---------------------------------------------------------------------------

    \299\ D'Souza, A., Lee, S., Zhu, X., Pasquini, M., ``Current use 
and trends in hematopoietic cell transplantation in the United 
States,'' Biol Blood Marrow Transplant, 2017, vol. 23(9), pp. 1417-
1421.
    \300\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First 
and second-line systemic treatment of acute graft-versus-host 
disease: recommendations of the American Society of Blood and Marrow 
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8), 
pp. 1150-1163.
---------------------------------------------------------------------------

    The applicant reports that there are no FDA-approved treatments for 
patients who have been diagnosed with steroid-refractory aGVHD, and 
despite available treatment options, according to the applicant, 
patients do not always achieve a positive response, underscoring the 
need for new and innovative treatments for these patients. The 
applicant also states that patients who develop steroid-refractory 
aGVHD can progress to severe disease, with 1-year mortality rates of 70 
to 80 percent. A number of combination treatment approaches are being 
investigated as second-line therapy in patients who have been diagnosed 
with steroid-refractory aGVHD, including methotrexate, mycophenolate 
mofetil, extracorporeal photopheresis, IL-2R targeting agents 
(basiliximab, daclizumab, denileukin, and diftitox), alemtuzumab, horse 
antithymocyte globulin, etancercept, infliximab, and sirolimus. 
According to the applicant, the American Society for Blood and Marrow 
Transplantation (ASBMT) does not provide any recommendations for 
second-line therapy for patients who have been diagnosed with steroid-
refractory aGVHD, nor suggest avoidance of any specific agent.
    JAKAFITM received FDA approval in 2011 for the treatment 
of patients who have been diagnosed with intermediate or high-risk 
myelofibrosis (MF). In addition, JAKAFITM received FDA 
approval in December 2014 for the treatment of patients who have been 
diagnosed with polycythemia vera (PV) who have had an inadequate 
response to, or are intolerant of hydroxyurea. JAKAFITM is 
primarily prescribed in the outpatient setting for these indications. 
The applicant has submitted a supplemental new drug application (sNDA) 
(with Orphan Drug and Breakthrough Therapy designations) seeking FDA's 
approval for a new indication for JAKAFITM for the treatment 
of patients who have been diagnosed with steroid-refractory aGVHD who 
have had an inadequate response to treatment with corticosteroids. The 
applicant asserts that for this new indication, JAKAFITM is 
expected to be used in the inpatient setting, during either hospital 
admission for allo-HSCT, or upon need for hospital re-admission for 
treating patients who have been diagnosed with aGVHD who have had an 
inadequate response to treatment with corticosteroids. Although as of 
the time of the development of this FY 2020 IPPS/LTCH PPS proposed rule 
it has not yet received FDA approval, the applicant

[[Page 19347]]

indicated that it expects FDA approval for this new indication for the 
use of JAKAFITM prior to the July 1, 2019 deadline.
    There are currently no ICD-10-PCS procedure codes that uniquely 
identify the administration of JAKAFITM. We note that the 
applicant submitted a request for approval for a unique ICD-10-PCS 
procedure code to describe procedures involving the administration of 
JAKAFITM beginning in FY 2020.
    As stated above, if a technology meets all three of the substantial 
similarity criteria described above, it would be considered 
substantially similar to an existing technology and, therefore, 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 asserts that there are no products that utilize the same or 
similar mechanism of action (that is, JAK inhibition) to achieve the 
same therapeutic outcome for the treatment of acute steroid-resistant 
GVHD. The applicant further explained that JAKAFITM 
functions to inhibit the JAK pathway, and has been shown in pre-
clinical and clinical trials to reduce GVHD. The applicant explained 
that JAKs are intracellular, non-receptor tyrosine kinases that relay 
the signaling of inflammatory cytokines. The applicant stated that, 
based on their role in immune cell development and function, JAKs might 
affect all phases of aGVHD pathogenesis, including cell activation, 
expansion, and destruction. Specifically, JAKs regulate activities of 
immune cells involved in aGVHD etiology, including antigen-presenting 
cells, T-cells, and B-cells, and function downstream of many cytokines 
relevant to GVHD-mediated tissue damage. Inhibition of JAK1/JAK2 
signaling in aGVHD could be expected to block signal transduction from 
proinflammatory cytokines that activate antigen-presenting cells, 
expansion and differentiation of T-cells, suppression of regulatory T-
cells, and inflammation and tissue destruction mediated by infiltrating 
cytotoxic T-cells.\301\ The applicant stated that other agents that are 
being investigated as second-line treatments for patients who have been 
diagnosed with steroid-resistant aGVHD, such as methotrexate, 
mycophenolate mofetil, extracorporeal photopheresis, IL-2R targeting 
agents (basiliximab, daclizumab, denileukin, and diftitox), 
alemtuzumab, horse antithymocyte globulin, etancercept, infliximab, and 
sirolimus, use a different mechanism of action than that of 
JAKAFITM. The applicant believes that the mechanism of 
action of JAKAFITM differs from that of existing 
technologies used to achieve the same therapeutic outcome.
---------------------------------------------------------------------------

    \301\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First 
and second-line systemic treatment of acute graft-versus-host 
disease: recommendations of the American Society of Blood and Marrow 
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8), 
pp. 1150-1163.
---------------------------------------------------------------------------

    With regard to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant asserts that there are 
currently no FDA-approved medicines for the treatment of patients who 
have been diagnosed with steroid-refractory aGVHD who have had an 
inadequate response to corticosteroids and, therefore, 
JAKAFITM would not be assigned to the same MS-DRG as 
existing technologies.
    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 
stated that there are no existing treatment options for patients who 
have been diagnosed with steroid-refractory aGVHD who have had an 
inadequate response to corticosteroids and, therefore, 
JAKAFITM represents a new treatment option for a patient 
population without existing or alternative options. The applicant 
stated that, based on its knowledge, there are no other prospective 
studies evaluating the effects of treatment with JAK inhibitors for the 
treatment of aGVHD in this patient population, and there are no FDA-
approved agents for the treatment of patients who have been diagnosed 
with steroid-refractory aGVHD who have inadequately responded to 
treatment with corticosteroids.
    For the reasons summarized above, the applicant maintained that 
JAKAFITM is not substantially similar to any existing 
technology. We note, however, that there are a number of available 
second-line treatment options for a diagnosis of aGVHD that treat the 
same patient population. We also note that a number of these treatment 
options use a method of immunomodulation and suppress the body's immune 
response similar to the mechanics and goals of JAKAFITM and, 
therefore, we believe that JAFAKITM may have a similar 
mechanism of action as existing therapies. Finally, for patients 
receiving treatment involving any current second-line therapies for a 
diagnosis of steroid-refractory aGVHD, CMS would expect these patient 
cases to be generally assigned to the same MS-DRGs as a diagnosis for 
aGVHD, as would cases representing patients who may be eligible for 
treatment involving JAKAFITM. We are inviting public 
comments on whether JAKAFITM is substantially similar to any 
existing technologies, including with respect to the concerns we have 
raised, and whether the technology meets the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that the technology meets the cost 
criterion. To identify cases representing patients who may be eligible 
for treatment involving JAKAFITM, the applicant searched the 
FY 2017 MedPAR Limited Data Set (LDS) for cases reporting ICD-10-CM 
diagnosis codes for acute or unspecified GVHD in combination with 
either ICD-10-CM diagnosis codes for associated complications of bone 
marrow transplant or ICD-10-PCS procedure codes for transfusion of 
allogeneic bone marrow, as identified in the table below. The applicant 
used this methodology to capture patients who developed aGVHD during 
their initial stay for allo-HSCT treatment, as well as those patients 
who were discharged and needed to be readmitted for a diagnosis of 
aGVHD.
    The applicant submitted the following table displaying a complete 
list of the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes it 
used to identify cases representing patients who may be eligible for 
treatment with JAKAFITM.
BILLING CODE 4120-01-P

[[Page 19348]]

[GRAPHIC] [TIFF OMITTED] TP03MY19.017


[[Page 19349]]


[GRAPHIC] [TIFF OMITTED] TP03MY19.018


[[Page 19350]]


[GRAPHIC] [TIFF OMITTED] TP03MY19.019

BILLING CODE 4120-01-C
    The applicant identified a total of 210 cases mapping to MS-DRGs 
014 (Allogeneic Bone Marrow Transplant), 808 (Major Hematological and 
Immunological Diagnoses except Sickle Cell Crisis and Coagulation 
Disorders with MCC), 809 (Major Hematological and Immunological 
Diagnoses except Sickle Cell Crisis and Coagulation Disorders with CC), 
and 871 (Septicemia or Severe Sepsis without MV >96 hours with MCC). 
The applicant indicated that, because it is difficult to determine the 
realistic amount of drug charges to be replaced or avoided as a result 
of the use of JAKAFI\TM\, it provided two scenarios to demonstrate that 
JAKAFI\TM\ meets the cost criterion. In the first scenario, the 
applicant removed 100 percent of pharmacy charges to conservatively 
estimate the charges for drugs that potentially may be replaced or 
avoided by the use of JAKAFI\TM\. The applicant then standardized the 
charges and applied a 2-year inflation factor of 8.864 percent, which 
is the same inflation factor used by CMS to update the outlier 
threshold in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41722). (We 
note that this figure was revised in the FY 2019 IPPS/LTCH PPS final 
rule correction notice. The corrected final 2-year inflation factor is 
1.08986 (83 FR 49844).) The applicant then added charges for JAKAFI\TM\ 
to the inflated average case-weighted standardized charges per case. No 
other related charges were added to the cases.
    Under the assumption of 100 percent of historical drug charges 
removed, the applicant calculated the inflated average case-weighted 
standardized charge per case to be $261,512 and the average case-
weighted threshold amount to be $172,493. Based on this analysis, the 
applicant believed that JAKAFI\TM\ meets the cost criterion because the 
inflated average case-weighted standardized charge per case exceeds the 
average case-weighted threshold amount.
    As noted above, the applicant also submitted a second scenario to 
demonstrate that JAKAFI\TM\ meets the cost criterion. The applicant 
indicated that removing all charges for previous technologies as 
demonstrated in the first scenario is unlikely to reflect the actual 
case because many drugs are used in treating a diagnosis of aGVHD, 
especially during the initial bone marrow transplant. Therefore, the 
applicant also provided a sensitivity analysis where it did not remove 
any pharmacy charges or any other historical charges, which it 
indicated could be a more realistic assumption. Under this scenario, 
the final average case-weighted standardized charge per case is 
$377,494, which exceeds the average case-weighted threshold amount of 
$172,493. The applicant maintained that JAKAFI\TM\ also meets the cost 
criterion under this scenario.
    We are inviting public comments on whether JAKAFI\TM\ meets the 
cost criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that JAKAFI\TM\ represents a substantial clinical 
improvement because: (1) The technology offers a treatment option for a 
patient population previously ineligible for treatments because 
JAKAFI\TM\ (if approved) would be the first FDA-approved treatment 
option for patients who have been diagnosed with GVHD who have had an 
inadequate response to corticosteroids; and (2) use of the technology 
significantly improves clinical outcomes in patients with steroid-
refractory aGVHD, which the applicant asserts is supported by the 
results from REACH1, a prospective, open-label, single-cohort Phase II 
study of the use of JAKAFI\TM\, in combination with corticosteroids, 
for the treatment of Grade II to IV steroid-refractory aGVHD.
    The applicant stated that there are very few prospective studies 
evaluating second-line therapy for a diagnosis of steroid-refractory 
aGVHD, and interpretation of these studies is hampered by the 
heterogeneity of the patient population, small sample sizes, and lack 
of standardization in the study design (including timing of the 
response, different response criteria, and absence of validated 
endpoints). Agents that have been investigated over the last 2 decades 
in these studies include low-dose methotrexate, mycophenolate mofetil, 
extracorporeal photopheresis, IL-2R targeting (that is, basiliximab, 
daclizumab, denileukin, and diftitox), alemtuzumab, horse antithymocyte 
globulin, etanercept, infliximab, and sirolimus. The applicant stated 
that second-line treatments, especially those associated with 
suppression of T-cells, are associated with increased infection and 
viral reactivation (including cytomegalovirus (CMV), Epstein-Barr 
virus, human herpes virus 6, adenovirus, and polyoma). Numerous 
combination approaches (for example, antibodies directed against IL-2 
receptor, mammalian target of rapamycin inhibitors, or other 
immunosuppressive agents) also have been studied for the treatment of 
steroid-refractory aGVHD, but the applicant indicated that data do not 
support the recommendation or exclusion of any particular regimen. The 
applicant also asserted that such treatment combination approaches have 
been associated with significant toxicities, high failure rates, and an 
average 6-month survival rate of 49 percent.\302\ Therefore, the 
applicant maintains that therapeutic options are limited for patients 
who are refractory to corticosteroid treatment for a diagnosis of 
aGVHD.
---------------------------------------------------------------------------

    \302\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First 
and second-line systemic treatment of acute graft-versus-host 
disease: recommendations of the American Society of Blood and Marrow 
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8), 
pp. 1150-1163.
---------------------------------------------------------------------------

    The applicant asserted that the clinical benefit of the use of 
JAKAFI\TM\ in patients who have been diagnosed with steroid-refractory 
aGVHD is supported by the results from five clinical studies, including 
a mixture of prospective and retrospective studies.
    The first study is REACH1, a prospective, open-label, single-cohort 
Phase II study of the use of JAKAFI\TM\, in combination with 
corticosteroids, for the treatment of Grade II to IV steroid-refractory 
aGVHD. REACH1 included 71 patients who had been diagnosed with steroid-
refractory aGVHD. Included eligible patients were those that were 12

[[Page 19351]]

years old or older, had undergone at least one allogeneic hematopoietic 
stem cell transplantation from any donor source and donor type and were 
diagnosed with Grade II to IV steroid-refractory aGVHD, and presented 
evidence of myeloid engraftment. The patients' median age was 58 years 
old (ages 18 years old to 73 years old); 66 patients were white and 36 
patients were female. The majority of patients had peripheral blood 
stem cells as the graft source (57 patients or 80.3 percent). The 
starting dose of JAKAFI\TM\ was 5 mg twice daily (BID). The dose could 
be increased to 10 mg BID after 3 days, if hematologic parameters were 
stable and in the absence of any treatment-related toxicities. 
Methylprednisolone (or prednisone equivalent) was administered at a 
starting dose of 2 mg/kg/day on the first day of treatment and tapered 
as appropriate. Patients receiving calcineurin inhibitors or other 
medications for GVHD prophylaxis were permitted to continue at the 
investigator's discretion. The primary endpoint was overall response 
rate (ORR) at Day 28, which the applicant indicated has been shown to 
be predictive of non-relapse mortality (NRM). No description of the 
statistical methods used in the REACH1 study was provided by the 
applicant.
    The applicant stated that the ORR at Day 28 was achieved by 54.9 
percent of patients; nearly half (48.7 percent) of the responding 
patients achieved a complete response (CR). The best ORR was 73.2 
percent. Median time to first response for all responders was 7 days. 
Median duration of response was 345 days for both Day 28 responders 
(lower limit, 159 days) and for other responders (lower limit, 106 
days). Event-free probability estimates for Day 28 responders at 3 and 
6 months were 81.6 percent and 65.2 percent, respectively. Among all 
patients, median (95 percent CI) overall survival was 232.0 (93.0-not 
evaluable) days. Mean survival rates for the 39 responders at Day 28 
were 73.2 percent at 6 months, 69.9 percent at 9 months, and 66.2 
percent at 12 months with non-relapsed mortality of 21.2 percent at 6 
months, 24.5 percent at 9 months, and 28.2 percent at 12 months. Mean 
survival rates for the 13 other responders were 35.9 percent at 6 and 9 
months and were not evaluable at 12 months with non-relapsed mortality 
at 64.1 percent at 6 and 9 months and not evaluable at 12 months. Mean 
survival rates for non-responders were 15.8 percent at 6 months and 
10.5 percent at 9 months and 12 months with non-relapsed mortality at 
78.9 percent at 6 months and 84.2 percent at 9 and 12 months. Most 
patients (55.8 percent) had a greater than or equal to 50 percent 
reduction from baseline in corticosteroid dose.
    The applicant stated that the additional use of JAKAFITM 
to corticosteroid-based treatment did not result in unexpected 
toxicities or exacerbation of known toxicities related to high-dose 
corticosteroids or aGVHD. Cytopenias were among the most common 
treatment-emergent adverse events. The applicant indicated that 
JAKAFITM was well tolerated, and the adverse event profile 
was consistent with the observed safety profiles of the use of 
JAKAFITM and that of patients who had been diagnosed with 
steroid-refractory aGVHD. The most common treatment emergent adverse 
events in the REACH1 study were anemia (64.8 percent), hypokalemia 
(49.3 percent), peripheral edema (45.1 percent), decreased platelet 
count (45.1 percent), decreased neutrophil count (39.4 percent), 
muscular weakness (33.8 percent), dyspnea (32.4 percent), 
hypomagnesaemia (32.4 percent), hypocalcemia (31 percent), and nausea 
(31 percent). The most common treatment emergent infections were sepsis 
(12.7 percent) and bacteremia (9.9 percent).
    All patients who had a CMV event (n=14) had a positive CMV donor or 
recipient serostatus or both at baseline. No deaths were attributed to 
CMV events. The applicant asserted that the results of the prospective 
REACH1 study demonstrate the potential of the use of 
JAKAFITM to meaningfully improve the outcomes of allo-HSCT 
patients who develop steroid-refractory aGVHD, and further underscore 
the promise of JAK inhibition to advance the treatment of this 
potentially-devastating condition. Longer term follow-up analyses from 
REACH1 are expected to yield additional insights into the long-term 
efficacy and safety profile of the use of JAKAFITM in this 
patient population.
    In a second prospective, open-label study, 14 patients who had been 
diagnosed with acute or chronic GVHD that were refractory to 
corticosteroids and at least 2 other lines of treatment were treated 
with JAKAFITM at a dose of 5 mg twice a day and increased to 
10 mg twice a day. Of the 14 patients, 13 responded with respect to 
clinical GVHD symptoms and serum levels of pro-inflammatory cytokines. 
Three patients with histologically-proven acute skin or intestinal GVHD 
Grade I, achieved a CR. One non-responder discontinued use of 
JAKAFITM after 1 week because of lack of efficacy. In all 
other patients, corticosteroids could be reduced after a median 
treatment period of 1.5 weeks. CMV reactivation was observed in 4 out 
of the 14 patients, and they responded well to antiviral therapy. Until 
last follow-up, no patient experienced a relapse of GVHD.
    The applicant asserted that the efficacy and safety of the use of 
JAKAFITM for the treatment of steroid-refractory aGVHD is 
further supported by the results from a third study, a retrospective, 
multi-center study of 95 patients who received JAKAFITM as 
salvage therapy for corticosteroid-refractory GVHD. In the 54 patients 
who had been diagnosed with aGVHD, the median number of GVHD therapies 
received was 3. The (best) ORR was 81.5 percent. A CR and partial 
response (PR) was achieved in 46.3 percent and 35.2 percent of 
patients, respectively. Median time to response was 1.5 weeks (range 1 
to 11 weeks). Cytopenias and cytomegalovirus reactivation were seen in 
55.5 percent (Grade III or IV) and 33.3 percent of patients who had 
been diagnosed with aGVHD, respectively. Of those patients responding 
to treatment with JAKAFITM, with either CR or PR (n=44), the 
rate of GVHD-relapse was 6.8 percent (3/44). The 6-month-survival was 
79 percent (67.3 percent to 90.7 percent, 95 percent CI). The median 
follow-up time was 26.5 weeks (range 3 to 106 weeks). Underlying 
malignancy relapse occurred in 9.2 percent of patients who had been 
diagnosed with aGVHD.
    A fourth retrospective study evaluated data from the same 95 
patients in 19 stem cell transplant centers in Europe and the United 
States. For long-term results, CR was defined as the absence of any 
symptoms related to GVHD; PR was defined as the improvement of greater 
than or equal to 1 in stage severity in one organ, without 
deterioration in any other organ. A response had to last for at least 
or more than 3 weeks. Of the 54 patients who had been diagnosed with 
aGVHD, the 1-year overall survival (OS) rate was 62.4 percent (CI: 49.4 
percent to 75.4 percent). The estimated median OS (50 percent death) 
was 18 months for aGVHD patients. The median duration of 
JAKAFITM treatment was 5 months. At follow-up, 22/54 (41 
percent) of the patients had an ongoing response and were free of any 
immunosuppression. Cytopenias (any grade) and CMV-reactivation were 
observed during JAKAFITM-treatment (30/54, 55.6 percent and 
18/54, 33.3 percent, respectively).
    A fifth retrospective study evaluated 79 patients who received 
treatment

[[Page 19352]]

using JAKAFITM for refractory GVHD at 13 centers in Spain. 
Twenty-two patients had a diagnosis of aGVHD (Grades II to IV) and 
received a median of 2 previous GVHD therapies (range, 1 to 5 
therapies). The median daily dose of JAKAFITM was 20 mg. The 
overall response rate was 68.2 percent, which was obtained after a 
median of 2 weeks of treatment, and 18.2 percent (4/22) of the patients 
reached CR. Overall, steroid doses were tapered in 72 percent of the 
patients who had been diagnosed with aGVHD. Cytomegalovirus 
reactivation was reported in 54.5 percent of the patients who had been 
diagnosed with aGVHD. Overall, 26 patients (32.9 percent) discontinued 
treatment using JAKAFITM due to: Lack of response (14), 
cytopenias (3 patients had thrombocytopenia, 3 had anemia, and 3 had 
both); infections (1 patient); other causes (2 patients). Ten deaths 
occurred in patients who had been diagnosed with aGVHD.
    We note the following concerns with respect to whether 
JAKAFITM represents a substantial clinical improvement. 
First, while the applicant has submitted data from several clinical 
studies to support the efficacy of the use of JAKAFITM in 
treatment of patients who have been diagnosed with steroid-resistant 
aGVHD, including an overall response rate at Day 28 for 54.9 percent of 
the patients enrolled in one study, with nearly half of the responding 
patients achieving CR, the applicant has not provided any data directly 
comparing the use of JAKAFITM to any second-line treatments. 
As noted previously, a number of different agents can be used for 
second-line treatment as described by recommendations from the American 
Society of Blood and Marrow Transplantation (ASBMT).\303\ Numerous 
combination approaches have been investigated for second-line therapy 
for diagnoses of steroid-refractory aGVHD in allo-HSCT patients. These 
studied agents include methotrexate, mycophenolate mofetil, 
extracorporeal photopheresis, IL-2R targeting agents (basiliximab, 
daclizumab, denileukin, and diftitox), alemtuzumab, horse antithymocyte 
globulin, etancercept, infliximab, and sirolimus. Recommendations from 
professional societies for the treatment of diagnoses of aGVHD describe 
the lack of data demonstrating superior efficacy of any single agent as 
second-line therapy for patients who have been diagnosed with steroid-
resistant aGVHD and, therefore, suggest that choice of second-line 
treatment be guided by clinical considerations.\304\ Because the 
applicant has not provided any data directly comparing the use of 
JAKAFITM to any other second-line treatments (for example, 
current standard-of-care), it may make it difficult to directly assess 
whether the use of JAKAFITM provides a substantial clinical 
improvement compared to these existing therapies.
---------------------------------------------------------------------------

    \303\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First 
and second-line systemic treatment of acute graft-versus-host 
disease: recommendations of the American Society of Blood and Marrow 
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8), 
pp. 1150-1163.
    \304\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First 
and second-line systemic treatment of acute graft-versus-host 
disease: recommendations of the American Society of Blood and Marrow 
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8), 
pp. 1150-1163.
---------------------------------------------------------------------------

    Second, we have concerns regarding the methodologic approach of the 
studies submitted by the applicant in support of its assertions 
regarding substantial clinical improvement. While two of the clinical 
studies provided by the applicant are prospective in nature, the other 
three clinical studies provided in support of the application are 
retrospective studies and, therefore, provide a weaker basis of 
evidence for making conclusions of the causative effects of the drug 
compared to prospective studies. Additionally, no blinding or 
randomization occurred to minimize potential biases from the lack of a 
control group, and no Phase III study data were submitted by the 
applicant, to assist in our evaluation of substantial clinical 
improvement. Although we acknowledge that the patient population that 
would be eligible for treatment involving JAKAFITM under its 
proposed indication is likely relatively small because it is a subset 
of the patient population receiving allo-HSCTs, it may be difficult to 
evaluate the impact of the technology on longer term outcomes, such as 
overall survival and durability of response based on the studies 
submitted because the clinical studies are based on relatively small 
sample sizes.
    Third, given the variable amount of detail provided on the studies 
generally (for example, the number of patients from the United States, 
how many are Medicare eligible and the results for these Medicare-
eligible patients, what specific first-line treatments enrolled 
patients received and for what duration, how CRs and PRs were defined 
and assessed, statistical methods and assumptions), it is more 
difficult to fully assess the generalizability of the applicant's 
assertions to the Medicare population.
    Fourth, we note that several patients enrolled in each of the 
studies provided by the applicant had safety-related complications, 
including cytopenias and CMV reactivation. These complications are 
concerning because the target population is already immunocompromised 
and at risk of serious infections.
    We are inviting public comments on whether JAKAFITM 
meets the substantial clinical improvement criterion, including with 
respect to the concerns we have raised.
    We did not receive any written comments in response to the New 
Technology Town Hall Meeting notice published in the Federal Register 
regarding the substantial clinical improvement criterion for 
JAKAFITM or at the New Technology Town Hall meeting.
o. Supersaturated Oxygen (SSO2) Therapy (DownStream[supreg] 
System)
    TherOx, Inc. submitted an application for new technology add-on 
payments for Supersaturated Oxygen (SSO2) Therapy (the 
DownStream[supreg] System) for FY 2020. We note that the applicant 
previously submitted an application for new technology add-on payments 
for FY 2019, which was withdrawn prior to the issuance of the FY 2019 
IPPS/LTCH PPS final rule. The DownStream[supreg] System is an 
adjunctive therapy that creates and delivers superoxygenated arterial 
blood directly to reperfused areas of myocardial tissue which may be at 
risk after an acute myocardial infarction (AMI), or heart attack. 
SSO2 Therapy's proposed indication is for patients receiving 
treatment for an ST-segment elevation myocardial infarction (STEMI), a 
type of AMI where the anterior wall infarction impacts the left 
ventricle (LV) and which carries a substantial risk of death and 
disability. Elderly patients have an elevated risk of AMI, and the vast 
majority of AMI occur in the Medicare population.\305\ The applicant 
stated that the net effect of the SSO2 Therapy is to reduce 
the size of the infarction and, therefore, lower the risk of heart 
failure and mortality, as well as improve quality of life for STEMI 
patients.
---------------------------------------------------------------------------

    \305\ Wang, Y., Lichtman, J.H., Dharmarajan, K., Masoudi, F.A., 
Ross, J.S., Dodson, J.A., Chen, J., Spertus, J.A., Chaudhry, S.I., 
Nallamothu, B.K., Krumholz, H.M., 2014, ``National trends in stroke 
after acute myocardial infarction among Medicare patients in the 
United States: 1999 to 2010,'' American Heart Journal, vol. 169(1), 
pp. 78-85.e4.
---------------------------------------------------------------------------

    SSO2 Therapy consists of three main components: The 
DownStream[supreg] System; the DownStream cartridge; and the 
SSO2 delivery catheter. The DownStream[supreg] System and 
cartridge function together to create an oxygen-enriched saline 
solution called SSO2 solution from hospital-supplied oxygen 
and physiologic saline. A small amount of

[[Page 19353]]

the patient's blood is then mixed with the SSO2 solution, 
producing oxygen-enriched hyperoxemic blood, which is delivered to the 
left main coronary artery (LMCA) via the delivery catheter at a flow 
rate of 100 ml/min. The duration of the SSO2 Therapy is 60 
minutes and the infusion is performed in the catheterization 
laboratory. The oxygen partial pressure (pO2) of the 
infusion is elevated to ~1,000 mmHg, therefore providing oxygen locally 
to the myocardium at a hyperbaric level for 1 hour. After the 60-minute 
SSO2 infusion is complete, the cartridge is unhooked from 
the patient and discarded per standard practice. Coronary angiography 
is performed as a final step before removing the delivery catheter and 
transferring the patient to the intensive care unit (ICU).
    The applicant for the SSO2 Therapy received premarket 
approval from the FDA on April 4, 2019. The applicant stated that use 
of the SSO2 Therapy can be identified by the ICD-10-PCS 
procedure codes 5A0512C (Extracorporeal supersaturated oxygenation, 
intermittent) and 5A0522C (Extracorporeal supersaturated oxygenation, 
continuous).
    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. The applicant 
identified three treatment options currently available to restore 
coronary artery blood flow in AMI patients. These options are 
fibronolytic therapy (plasminogen activators) with or without 
glycoprotein IIb/IIIa inhibitors, percutaneous coronary intervention 
(PCI) with or without stent placement, and coronary artery bypass graft 
(CABG). The applicant noted that all of these therapies restore blood 
flow at the macrovascular level by targeting the coronary artery 
thrombosis that is the direct cause of the AMI. The applicant also 
noted that PCI with stenting is the preferred treatment for STEMI 
patients. The applicant asserted that SSO2 Therapy is not 
substantially similar to these existing treatment options and, 
therefore, meets the newness criterion. Below we summarize the 
applicant's assertions with respect to whether the SSO2 
Therapy meets each of the three substantial similarity criteria.
    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 SSO2 Therapy is a unique therapy 
designed to deliver localized hyperbaric oxygen equivalent to the 
coronary arteries immediately after administering the standard-of-care, 
PCI with stenting. The applicant describes SSO2 Therapy's 
mechanism of action as two-fold: (1) First, the increased oxygen levels 
act to re-open the microcirculatory system within the infarct zone, 
which has experienced ischemia during the occlusion period, and (2) 
second, once the microcirculatory system is re-opened, the blood flow 
containing the additional oxygen re-starts metabolic processes within 
the stunned myocardium. According to the applicant, the net result is 
to reduce the extent of necrosis as measured by infarct size in the 
myocardium post-AMI and thereby improve left ventricular function, 
leading to improved patient outcomes. The applicant maintained that 
this mechanism of action is not comparable to that of any existing 
treatment because no other therapy has demonstrated an infarct size 
reduction over and above the routine delivery of PCI. As mentioned 
above, the applicant asserted that currently available therapies 
restore blood flow at the macrovascular level by targeting the coronary 
artery thrombosis that is the direct cause of the AMI.
    With respect to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant reiterated that the 
standard procedure for treating patients with AMI is PCI with stent 
placement, and that these cases are typically assigned to MS-DRG 246 
(Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with 
MCC or 4+ Arteries/Stents), MS-DRG 247 (Percutaneous Cardiovascular 
Procedures with Drug-Eluting Stent without MCC), MS-DRG 248 
(Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent 
with MCC or 4+ Arteries/Stents), MS-DRG 249 (Percutaneous 
Cardiovascular Procedures with Non-Drug-Eluting Stent without MCC), MS-
DRG 250 (Percutaneous Cardiovascular Procedures without Coronary Artery 
Stent with MCC), or MS-DRG 251 (Percutaneous Cardiovascular Procedures 
without Coronary Artery Stent without MCC). The applicant maintained 
that because no other technologies exist that can deliver localized 
hyperbaric oxygen in the acute care setting, SSO2 Therapy 
has no analogous MS-DRG assignment. However, we note that potential 
cases that may be eligible for treatment involving SSO2 
Therapy may be assigned to the same MS-DRG(s) as other cases involving 
PCI with stent placement also used to treat patients who have been 
diagnosed with AMI.
    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 target patient population of SSO2 Therapy is 
patients who are receiving treatment after a diagnosis of AMI and 
specifically ST-segment elevation myocardial infarction (STEMI) where 
the anterior wall infarction impacts the left ventricle (LV). The 
applicant acknowledged that, because SSO2 Therapy is 
administered following completion of successful PCI, its target patient 
population includes a subset of patients with the same or similar type 
of disease process as patients treated with PCI with stent placement. 
However, the applicant also asserted that, while PCI with stenting 
achieves the goal of re-opening a blocked artery, SSO2 
Therapy delivers localized hyperbaric oxygen to reduce the extent of 
the myocardial necrosis that occurs as a consequence of experiencing 
AMI. Therefore, the applicant believed that SSO2 Therapy 
offers a treatment option for a different type of disease than 
currently available treatments.
    We are inviting public comments on whether the SSO2 
Therapy is substantially similar to existing technologies and whether 
it meets the newness criterion.
    With regard to the cost criterion, the applicant conducted the 
following analysis to demonstrate that SSO2 Therapy meets 
the cost criterion. The applicant searched the FY 2017 MedPAR file for 
claims reporting diagnoses of anterior STEMI by ICD-10-CM diagnosis 
codes I21.0 (ST elevation myocardial infarction of anterior wall), 
I21.01 (ST elevation (STEMI) myocardial infarction involving left main 
coronary artery), I21.02 (ST elevation (STEMI) myocardial infarction 
involving left anterior descending coronary artery), or I21.09 (ST 
elevation (STEMI) myocardial infarction involving other coronary artery 
of anterior wall) as a primary diagnosis, which the applicant believed 
would describe potential cases representing potential patients who may 
be eligible for treatment involving the SSO2 Therapy. The 
applicant identified 11,668 cases mapping to 4 MS-DRGs, with 
approximately 91 percent of all potential cases mapping to MS-DRG 246 
(Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with 
MCC or 4+ Arteries/Stents) and MS-DRG 247 (Percutaneous Cardiovascular 
Procedures with Drug-Eluting Stent without MCC). The remaining 9 
percent of potential cases

[[Page 19354]]

mapped to MS-DRG 248 (Percutaneous Cardiovascular Procedures with Non-
Drug-Eluting Stent with MCC or 4+ Arteries/Stents) and MS-DRG 249 
(Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent 
without MCC).
    The applicant determined that the average case-weighted 
unstandardized charge per case was $98,846. The applicant then 
standardized the charges. The applicant did not remove charges for the 
current treatment because, as discussed above, SSO2 Therapy 
would be used as an adjunctive treatment option following successful 
PCI with stent placement. The applicant then added charges for the 
technology, which accounts for the use of 1 cartridge per patient, to 
the average charges per case. The applicant did not apply an inflation 
factor to the charges for the technology. The applicant also added 
charges related to the technology, to account for the additional 
supplies used in the administration of SSO2 Therapy, as well 
as 70 minutes of procedure room time, including technician labor and 
additional blood tests. The applicant inflated the charges related to 
the technology. Based on the FY 2019 IPPS/LTCH PPS final rule 
correction notice data file thresholds, the average case-weighted 
threshold amount was $96,267. In the applicant's analysis, the inflated 
average case-weighted standardized charge per case was $144,364. 
Because the inflated average case-weighted standardized charge per case 
exceeds the average case-weighted threshold amount, the applicant 
maintained that the technology meets the cost criterion.
    We are inviting public comments on whether the SSO2 
Therapy meets the cost criterion.
    With regard to the substantial clinical improvement criterion, the 
applicant asserted that SSO2 Therapy represents a 
substantial clinical improvement over existing technologies because it 
improves clinical outcomes for STEMI patients as compared to the 
currently available standard-of-care treatment, PCI with stenting 
alone. Specifically, the applicant asserted that: (1) Infarct size 
reduction improves mortality outcomes; (2) infarct size reduction 
improves heart failure outcomes; (3) SSO2 Therapy 
significantly reduces infarct size; (4) SSO2 Therapy 
prevents left ventricular dilation; and (5) SSO2 Therapy 
reduces death and heart failure at 1 year. The applicant highlighted 
the importance of the SSO2 Therapy's mechanism of action, 
which treats hypoxemic damage at the microvascular or microcirculatory 
level. Specifically, the applicant noted that microvascular impairment 
in the myocardium is irreversible and leads to a greater extent of 
infarction. According to the applicant, the totality of the data on 
myocardial infarct size, ventricular remodeling, and clinical outcomes 
strongly supports the substantial clinical benefit of SSO2 
Therapy administration over the standard-of-care.
    To support the claims that infarct size reduction improves 
mortality and heart failure outcomes, the applicant cited an analysis 
of the Collaborative Organization for RheothRx Evaluation (CORE) trial 
and a pooled patient-level analysis.
     The CORE trial was a prospective, randomized, double-
blinded, placebo-controlled trial of Poloxamer 188, a novel therapy 
adjunctive to thrombolysis at the time the study was conducted.\306\ 
The applicant sought to relate left ventricular ejection fraction (EF), 
end-systolic volume index (ESVI) and infarct size (IS), as measured in 
a single, randomized trial, to 6-month mortality after myocardial 
infarction treated with thrombolysis. According to the applicant, 
subsets of clinical centers participating in CORE also participated in 
one or two radionuclide sub-studies: (1) Angiography for measurement of 
EF and absolute, count-based LV volumes; and (2) single-photon emission 
computed tomographic sestamibi measurements of IS. These sub-studies 
were performed in 1,194 and 1,181 patients, respectively, of the 2,948 
patients enrolled in the trial. Furthermore, ejection fraction, ESVI, 
and IS, as measured by central laboratories in these sub-studies, were 
tested for their association with 6-month mortality. According to the 
applicant, the results of the study showed that ejection fraction 
(n=1,137; p=0.0001), ESVI (n=945; p=0.055) and IS (n=1,164; p=0.03) 
were all associated with 6-month mortality, therefore, demonstrating 
the relationship between these endpoints and mortality.\307\
---------------------------------------------------------------------------

    \306\ Burns, R.J., Gibbons, R.J., Yi, Q., et al., ``The 
relationships of left ventricular ejection fraction, end-systolic 
volume index and infarct size to six-month mortality after hospital 
discharge following myocardial infarction treated by thrombolysis,'' 
J Am Coll Cardiol, 2002, vol. 39, pp. 30-6.
    \307\ Ibid.
---------------------------------------------------------------------------

     The pooled patient-level analysis was performed from 10 
randomized, controlled trials (with a total of 2,632 patients) that 
used primary PCI with stenting.\308\ The analysis assessed infarct size 
within 1 month after randomization by either cardiac magnetic resonance 
(CMR) imaging or technetium-99m sestamibi single-photon emission 
computed tomography (SPECT), with clinical follow-up for 6 months. 
Infarct size was assessed by CMR in 1,889 patients (71.8 percent of 
patients) and by SPECT in 743 patients (28.2 percent of patients) 
including both inferior wall and more severe anterior wall STEMI 
patients. According to the applicant, median infarct size (or percent 
of left ventricular myocardial mass) was 17.9 percent and median 
duration of clinical follow-up was 352 days. The Kaplan-Meier estimated 
1-year rates of all-cause mortality, re-infarction, and HF 
hospitalization were 2.2 percent, 2.5 percent, and 2.6 percent, 
respectively. The applicant noted that a strong graded response was 
present between infarct size (per 5 percent increase) and the 2 outcome 
measures of subsequent mortality (Cox-adjusted hazard ratio: 1.19 [95 
percent confidence interval: 1.18 to 1.20]; p<0.0001) and 
hospitalization for heart failure (adjusted hazard ratio: 1.20 [95 
percent confidence interval: 1.19 to 1.21]; p<0.0001), independent of 
other baseline factors.\309\ The applicant concluded from this study 
that infarct size, as measured by CMR or technetium-99m sestamibi SPECT 
within 1 month after primary PCI, is strongly associated with all-cause 
mortality and hospitalization for heart failure within 1 year.
---------------------------------------------------------------------------

    \308\ Stone, G.W., Selker, H.P., Thiele, H., et al., 
``Relationship between infarct size and outcomes following primary 
PCI,'' J Am Coll Cardiol, 2016, vol. 67(14), pp. 1674-83.
    \309\ Ibid.
---------------------------------------------------------------------------

    Next, to support the claim that SSO2 Therapy 
significantly reduces infarct size, the applicant cited the AMIHOT I 
and II studies.
     The AMIHOT I clinical trial was designed as a prospective, 
randomized evaluation of patients who had been diagnosed with AMI, 
including both anterior and inferior patients, and received treatment 
with either PCI with stenting alone or with SSO2 Therapy as 
an adjunct to successful PCI within 24 hours of symptom onset.\310\ The 
study included 269 randomized patients and 3 co-primary endpoints: 
Infarction size reduction, regional wall motion score improvement at 3 
months, and reduction in ST segment elevation. The study was designed 
to demonstrate superiority of the SSO2 Therapy group as 
compared to the control group for each of these endpoints, as well as 
to demonstrate non-inferiority of the SSO2 Therapy group 
with respect to 30-day Major Adverse Cardiac Event (MACE). The 
applicant stated that results for the control versus SSO2 
Therapy group

[[Page 19355]]

comparisons for the three co-primary effectiveness endpoints 
demonstrated a nominal improvement in the test group, although this 
nominal improvement did not achieve clinical and statistical 
significance in the entire population. The applicant further stated 
that a pre-specified analysis of the SSO2 Therapy patients 
who were revascularized within 6 hours of AMI symptom onset and who had 
anterior wall infarction showed a marked improvement in all 3 co-
primary endpoints as compared to the control group.\311\ Key safety 
data revealed no statistically significant differences in the composite 
primary endpoint of 1-month (30 days) MACE rates between the 
SSO2 Therapy and control groups. MACE includes the combined 
incidence of death, re-infarction, target vessel revascularization, and 
stroke. In total, 9/134 (6.7 percent) of the patients in the 
SSO2 Therapy group and 7/135 (5.2 percent) of the patients 
in the control group experienced 30-day MACE (p=0.62).\312\
---------------------------------------------------------------------------

    \310\ O'Neill, W.W., Martin, J.L., Dixon, S.R., et al., ``Acute 
Myocardial Infarction with Hyperoxemic Therapy (AMIHOT), J Am Coll 
Cardiol, 2007, vol. 50(5), pp. 397-405.
    \311\ Ibid.
    \312\ Ibid.
---------------------------------------------------------------------------

     The AMIHOT II trial randomized 301 patients who had been 
diagnosed with and receiving treatment for anterior AMI with either PCI 
plus the SSO2 Therapy or PCI alone.\313\ The AMIHOT II trial 
had a Bayesian statistical design that allows for the informed 
borrowing of data from the previously completed AMIHOT I trial. The 
primary efficacy endpoint of the study required proving superiority of 
the infarct size reduction, as assessed by Tc-99m Sestamibi SPECT 
imaging at 14 days post PCI/stenting, with the use of SSO2 
Therapy as compared to patients who were receiving treatment involving 
PCI with stenting alone. The primary safety endpoint for the AMIHOT II 
trial required a determination of non-inferiority in the 30-day MACE 
rate, comparing the SSO2 Therapy group with the control 
group, within a safety delta of 6.0 percent.\314\ Endpoint evaluation 
was performed using a Bayesian hierarchical model that evaluated the 
AMIHOT II result conditionally in consideration of the AMIHOT I 30-day 
MACE data. According to the applicant, the results of the AMIHOT II 
trial showed that the use of SSO2 therapy, together with PCI 
and stenting, demonstrated a relative reduction of 26 percent in the 
left ventricular infarct size and absolute reduction of 6.5 percent 
compared to PCI and stenting alone.\315\
---------------------------------------------------------------------------

    \313\ Stone, G.W., Martin, J.L., de Boer, M.J., et al., ``Effect 
of Supersaturated Oxygen Delivery on Infarct Size after Percutaneous 
Coronary Intervention in Acute Myocardial Infarction,'' Circ 
Cardiovasc Intervent, 2009, vol. 2, pp. 366-75.
    \314\ Ibid.
    \315\ Ibid.
---------------------------------------------------------------------------

    Next, to support the claim that SSO2 Therapy prevents 
left ventricular dilation, the applicant cited the Leiden study, which 
represents a single-center, sub-study of AMIHOT I patients treated at 
Leiden University in the Netherlands. The study describes outcomes of 
randomized selective treatment with intracoronary aqueous oxygen (AO), 
the therapy delivered by SSO2 Therapy, versus standard care 
in patients who had acute anterior wall myocardial infarction within 6 
hours of onset. Of the 50 patients in the sub-study, 24 received 
treatment using adjunctive AO and 26 were treated according to standard 
care after PCI, with no significant differences in baseline 
characteristics between groups. LV volumes and function were assessed 
by contrast echocardiography at baseline and 1 month. According to the 
applicant, the results demonstrated that treatment with aqueous oxygen 
prevents LV remodeling, showing a reduction in LV volumes (3 percent 
decrease in LV end-diastolic volume and 11 percent decrease in LV end-
systolic volume) at 1 month as compared to baseline in AO-treated 
patients, as compared to increasing LV volumes (14 percent increase in 
LV end diastolic volume and 18 percent increase in LV end-systolic 
volume) at 1 month in control patients.\316\ The results also show that 
treatment using AO preserves LV ejection fraction at 1 month, with AO-
treated patients experiencing a 10 percent increase in LV ejection 
fraction as compared to a 2 percent decrease in LV ejection fraction 
among patients in the control group.\317\
---------------------------------------------------------------------------

    \316\ Warda, H.M., Bax, J.J., Bosch, J.G., et al., ``Effect of 
intracoronary aqueous oxygen on left ventricular remodeling after 
anterior wall ST-elevation acute myocardial infarction,'' Am J 
Cardiol, 2005, vol. 96(1), pp. 22-4.
    \317\ Ibid.
---------------------------------------------------------------------------

    Finally, to support the claim that SSO2 Therapy reduces 
death and heart failure at 1 year, the applicant submitted the results 
from the IC-HOT clinical trial, which was designed to confirm the 
safety and efficacy of the use of the SSO2 Therapy in those 
individuals presenting with a diagnosis of anterior AMI who have 
undergone successful PCI with stenting of the proximal and/or mid left 
anterior descending artery within 6 hours of experiencing AMI symptoms. 
It is an IDE, nonrandomized, single arm study. The study primarily 
focused on safety, utilizing a composite endpoint of 30-day Net Adverse 
Clinical Events (NACE). A maximum observed event rate of 10.7 percent 
was established based on a contemporary PCI trial of comparable 
patients who had been diagnosed with anterior wall STEMI. The results 
of the IC-HOT trial exhibited a 7.1 percent observed NACE rate, meeting 
the study endpoint. Notably, no 30-day mortalities were observed, and 
the type and frequency of 30-day adverse events occurred at similar or 
lower rates than in contemporary STEMI studies of PCI-treated patients 
who had been diagnosed with anterior AMI.\318\ Furthermore, according 
to the applicant, the results of the IC-HOT study supported the 
conclusions of effectiveness established in AMIHOT II with a measured 
30-day median infarct size = 19.4 percent (as compared to the AMIHOT II 
SSO2 Therapy group infarct size = 20.0 percent).\319\ The 
applicant stated that notable measures include 4-day microvascular 
obstruction (MVO), which has been shown to be an independent predictor 
of outcomes, 4-day and 30-day left ventricular end diastolic and end 
systolic volumes, and 30-day infarct size.\320\ The applicant also 
stated that the IC-HOT study results exhibited a favorable MVO as 
compared to contemporary trial data, and decreasing left ventricular 
volumes at 30 days, compared to contemporary PCI populations that 
exhibit increasing left ventricular size.\321\ The applicant asserted 
that the IC-HOT clinical trial data continue to demonstrate the 
substantial clinical benefit of the use of SSO2 Therapy as 
compared to the standard-of-care, PCI with stenting alone.
---------------------------------------------------------------------------

    \318\ David, SW, Khan, Z.A., Patel, N.C., et al., ``Evaluation 
of intracoronary hyperoxemic oxygen therapy in acute anterior 
myocardial infarction: The IC-HOT study,'' Catheter Cardiovasc 
Interv, 2018, pp. 1-9.
    \319\ Ibid.
    \320\ Ibid.
    \321\ Ibid.
---------------------------------------------------------------------------

    The applicant also performed controlled studies in both porcine and 
canine AMI models to determine the safety, effectiveness, and mechanism 
of action of the SSO2 Therapy.322 323 According 
to the applicant, the key summary points from these animal studies are:
---------------------------------------------------------------------------

    \322\ Spears, J.R., Henney, C., Prcevski, P., et al., ``Aqueous 
Oxygen Hyperbaric Reperfusion in a Porcine Model of Myocardial 
Infarction,'' J Invasive Cardiol, 2002, vol. 14(4), pp. 160-6.
    \323\ Spears, J.R., Prcevski, P., Xu, R., et al., ``Aqueous 
Oxygen Attenuation of Reperfusion Microvascular Ischemia in a Canine 
Model of Myocardial Infarction,'' ASAIO J, 2003, vol. 49(6), pp. 
716-20.
---------------------------------------------------------------------------

     SSO2 Therapy administration post-AMI acutely 
improves heart function as measured by left ventricular ejection 
fraction (LVEF) and regional wall

[[Page 19356]]

motion as compared with non-treated control subjects.
     SSO2 Therapy administration post-AMI results in 
tissue salvage, as determined by post-sacrifice histological 
measurements of the infarct size. Control animals exhibit larger 
infarcts than the SSO2-treated animals.
     SSO2 Therapy has been shown to be non-toxic to 
the coronary arteries, myocardium, and end organs in randomized, 
controlled swine studies with or without induced acute myocardial 
infarction.
     SSO2 Therapy administration post-AMI has 
exhibited regional myocardial blood flow improvement in treated animals 
as compared to controls.
     A significant reduction in myeloperoxidase (MPO) levels in 
the SSO2-treated animals versus controls, which indicate 
improvement in underlying myocardial hypoxia.
     Transmission electron microscopy (TEM) photographs showing 
amelioration of endothelial cell edema and restoration of capillary 
patency in ischemic zone cross-sectional histological examination of 
the SSO2-treated animals, while non-treated controls exhibit 
significant edema and vessel constriction at the microvascular level.
    We have the following concerns regarding whether the technology 
meets the substantial clinical improvement criterion. We note that the 
standard-of-care for STEMI has evolved since the AMIHOT I and AMIHOT II 
studies were conducted, such that it is unclear whether use of 
SSO2 Therapy would demonstrate the same clinical improvement 
as compared to the current standard-of-care. We also note that the 
AMIHOT II study used SPECT infarct size data 14 days post-MI for 
efficacy and MACE events (including death, re-infarction, 
revascularization, and stroke) by 30 days post-MI for safety. We are 
concerned that there is no long-term data to demonstrate the validity 
of these statistics, and that infarct size has not been completely 
validated as a surrogate marker for the combination of PCI plus 
SSO2. With respect to the IC-HOT study, we are concerned 
that the lack of a control may limit the interpretation of the data. We 
also are concerned that the safety data (death, re-infarction, re-
vascularization, stent thrombosis, severe heart failure, and bleeding) 
for the IC-HOT study were limited to the 30 days post-MI, with no long-
term data being available.
    We are inviting public comments on whether the SSO2 
Therapy meets the substantial clinical improvement criterion, including 
with respect to whether the results of the AMIHOT I and AMIHOT II 
studies remain valid given the advancements in STEMI care since these 
trials were conducted, and the availability of long-term data to 
validate the efficacy and safety data of the AMIHOT II and IC-HOT 
studies.
    We did not receive any written comments in response to the New 
Technology Town Hall meeting notice published in the Federal Register 
regarding the substantial clinical improvement criterion for the 
SSO2 Therapy or at the New Technology Town Hall meeting.
p. T2Bacteria[supreg] Panel (T2 Bacteria Test Panel)
    T2 Biosystems, Inc. submitted an application for new technology 
add-on payments for the T2 Bacteria Test Panel (T2Bacteria[supreg] 
Panel) for FY 2020. According to the applicant, the T2Bacteria[supreg] 
Panel is indicated as an aid in the diagnosis of bacteremia, bacterial 
presence in the blood which is a precursor for sepsis. It is a 
multiplex diagnostic panel that detects five major bacterial pathogens 
(Enterococcus faecium, Escherichia coli, Klebsiella pneumoniae, 
Pseudomonas aeruginosa, and Staphylococcus aureus) associated with 
sepsis. According to the applicant, the T2Bacteria[supreg] Panel is 
capable of detecting bacterial pathogens directly in whole blood more 
rapidly and with greater sensitivity as compared to the current 
standard-of-care, blood culture. The applicant noted that the 
T2Bacteria[supreg] Panel's major detected species are five of the most 
common and virulent sepsis-causing organisms.324 325 The 
applicant asserted that, by enabling the rapid administration of 
species-specific antimicrobial therapies, the T2Bacteria[supreg] Panel 
helps to reduce patients' hospital lengths-of-stay and substantially 
improves clinical outcomes. Furthermore, the applicant asserted that 
the T2Bacteria[supreg] Panel helps to reduce the overuse of ineffective 
or unnecessary antimicrobial therapy, reducing patient side effects, 
lowering hospital costs, and potentially counteracting the growing 
resistance to antimicrobial therapy.
---------------------------------------------------------------------------

    \324\ Boucher, H., Talbot, G., Bradley, J., Edwards, J., 
Gilbert, D., Rice, L., Bartlett, J., ``Bad Bugs, No Drugs: No 
ESKAPE! An update from the infectious disease society of America,'' 
Clinical Infectious Diseases, 2009, vol. 48, pp. 1-12, doi:10.1086/
595011.
    \325\ Rice, L., ``Federal Funding for the Study of Antimicrobial 
Resistance in Nosocomial Pathogens: No ESKAPE,'' Journal of 
Infectious Diseases, 2008, vol. 197, pp. 1079-1081, doi:10.1086/
533452.
---------------------------------------------------------------------------

    The applicant stated that the T2Bacteria[supreg] Panel runs on the 
T2Dx Instrument, which is a bench-top diagnostic instrument that 
utilizes developments in magnetic resonance and nanotechnology to 
detect pathogens directly in whole blood, plasma, serum, saliva, sputum 
and urine at limits of detection as low as one colony forming unit per 
milliliter. The applicant explained that the T2Dx breaks down red blood 
cells, concentrates microbial cells and cellular debris, amplifies DNA 
using a thermostable polymerase and target-specific primers, and 
detects amplified product by amplicon-induced agglomeration of 
supermagnetic particles and T2MR measurement.\326\ To perform a 
diagnostic test, the patient's sample tube is snapped onto the 
disposable test cartridge, which is pre-loaded with all necessary 
reagents. The cartridge is then inserted into the T2Dx, which 
automatically processes the sample and then delivers a diagnostic test 
result. The applicant asserted that each test panel is comprised of a 
test cartridge and a reagent tray and that each are required to run the 
T2Bacteria[supreg] Test Panel.
---------------------------------------------------------------------------

    \326\ Clancy, C., & Nguyen, H., ``T2 magnetic resonance for the 
diagnosis of bloodstream infections: charting a path forward,'' 
Journal of Antimicrobial Chemotherapy, 2018, vol. 73(4), pp. iv2-
iv5, doi:10.1093/jac/dky050.
---------------------------------------------------------------------------

    As stated above, the current standard-of-care for identifying 
bacterial bloodstream infections that cause sepsis is a blood culture. 
The applicant explained that blood culture diagnostics have many 
limitations, beginning with a series of time and labor intensive 
analyses. According to the applicant, completing a blood culture 
requires typically 20 mLs or more of a patient's blood, which is 
obtained in two 10 mL draws and placed into two blood culture bottles 
containing nutrients formulated to grow bacteria. The applicant 
explained that before the blood culture indicates if a patient is 
infected, pathogens typically must reach a concentration of 1,000,000 
to 100,000,000 CFU/mL in the blood specimen. This growth process 
typically takes 1 to 6 or more days because the pathogen's initial 
concentration in the blood specimen is often less than 10 CFU/mL. The 
applicant stated that a typical blood culture provides a result in a 2 
to 4 day timeframe for species ID and yields 50 to 65 percent clinical 
sensitivity.327 328 According to the applicant, a recent 
retrospective analysis of 13 U.S. hospitals and over

[[Page 19357]]

150,000 cultures found a median blood culture time for species ID of 43 
hours.\329\
---------------------------------------------------------------------------

    \327\ Clancy, C., & Nguyen, M. H., ``Finding the ``Missing 50%'' 
of Invasive Candidiasis: How nonculture Diagnostics will improve 
understanding of disease spectrum and transform patient care,'' 
Clinical Infectious Diseases, 2013, vol. 56(9), pp. 1284-1292, 
doi:10.1093/cid/cit006.
    \328\ Cockerill, F., Wilson, J., Vetter, E., Goodman, K., 
Torgerson, C., Harmsen, W., Wilson, W., ``Optimal Testing Parameters 
for Blood Cultures,'' Clinical Infectious Diseases, 2004, vol. 38, 
pp. 1724-1730.
    \329\ Tabak, Y., Vankeepuram, L., Ye, G., Jeffers, K., Gupta, 
V., & Murray, P., ``Blood Culture Turanaround Time in US Acute Care 
Hospitals and Implications for Laboratory Process Optimization,'' 
Journal of Clinical Microbiology, August 2018, pp. 1-15.
---------------------------------------------------------------------------

    According to the applicant, blood cultures provide results at 
multiple stages. A negative test result requires a minimum of 5 days 
for blood cultures. A positive blood culture typically means that some 
pathogen is present, but additional steps must be performed to identify 
the specific pathogen and provide targeted therapy. The applicant 
submitted data stating that during the T2Bacteria[supreg] Panel's 
pivotal study, blood cultures took an average of 63.2 hours (off 
T2Bacteria[supreg] Panel) and 38.5 hours (on T2Bacteria[supreg] Panel) 
to obtain positive results and 96.0 hours (off T2Bacteria[supreg] 
Panel) and 71.7 hours (on T2Bacteria[supreg] Panel) to achieve species 
identification.\330\ The applicant stated that, given this length of 
time to species identification, the first therapy for a patient at risk 
of sepsis is often broad-spectrum antibiotics, which treats some, but 
not all bacteria types. In addition, the applicant indicated that the 
time to species identification in blood culture diagnostics causes 
delays in administration of species-specific targeted therapies, 
increasing hospital lengths-of-stay and risk of death.
---------------------------------------------------------------------------

    \330\ T2 Biosystems, Inc., ``T2Bacteria[supreg] Panel for use on 
the T2Dx[supreg] Instrument, 510(k) summary,'' Lexington, 2018.
---------------------------------------------------------------------------

    With respect to the newness criterion, the applicant filed a 
section 510(k) premarket notification with the FDA on September 8, 2017 
for the T2Bacteria[supreg] Panel. According to the applicant, the 
T2Bacteria[supreg] Panel received FDA 510(k) clearance on May 24, 2018, 
based on a determination of substantial equivalence to a legally 
marketed predicate device. The applicant noted that the 
T2Bacteria[supreg] Panel has a very broad application in the inpatient 
hospital setting and, as a result, potential cases available for use of 
the T2Bacteria[supreg] Panel may be identified by thousands of ICD-10-
CM diagnosis codes. We note that the applicant has submitted a request 
to the ICD-10 Coordination and Maintenance Committee for approval for a 
unique ICD-10-PCS procedure code, effective in FY 2020, to describe 
procedures which use the T2Bacteria[supreg] Panel. Currently, there are 
no ICD-10-PCS procedure codes to uniquely identify procedures involving 
the use of the T2Bacteria[supreg] Panel.
    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, the 
applicant asserted that the T2Bacteria[supreg] Panel: (1) Has a 
different mechanism of action when compared to the current standard-of-
care for the diagnosis of bacterial pathogens directly from whole 
blood; and (2) is designed to achieve a different therapeutic outcome 
when compared to the other diagnostic test panel that is based on the 
same technological diagnostic platform. Specifically, the applicant 
asserted that the standard-of-care blood culture is a laboratory test 
in which blood, taken from the patient, is inoculated into bottles 
containing culture media and incubated over a period of time to 
determine whether infection-causing micro-organisms (bacteria or fungi) 
are present in the patient's bloodstream. In contrast, the applicant 
stated that the T2Bacteria[supreg] Panel relies on developments in 
magnetic resonance and nanotechnology to determine the presence of 
bacterial pathogens in a patient's blood by exploiting the physics of 
magnetic resonance. Furthermore, the applicant indicated that the only 
other product on the U.S. market that uses the same or similar 
mechanism of action as the T2Bacteria[supreg] Panel is the T2Candida 
Panel, which detects five clinically relevant species of Candida, a 
fungal pathogen known to cause sepsis. However, the applicant noted 
that the T2Candida Panel achieves a different therapeutic outcome than 
the T2Bacteria[supreg] Panel, which is the diagnostic aid in the 
treatment of sepsis caused by fungal infections in the blood.
    With regard to the second criterion, whether the technology is 
assigned to the same or different MS-DRG, the applicant did not 
comment. However, we believe that cases involving the use of the 
technology would be assigned to the same MS-DRGs as cases involving the 
current standard-of-care laboratory blood cultures.
    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 T2Bacteria[supreg] Panel would be used as a diagnostic 
aid in the treatment of similar diseases and patient populations as the 
current standard-of-care laboratory blood cultures.
    We are concerned that the mechanism of action of the 
T2Bacteria[supreg] Test Panel may be similar to the mechanism of action 
used by the current standard-of-care laboratory blood cultures or other 
available diagnostic tests. While the applicant states that the 
technology has a different mechanism of action because its differs from 
the standard-of-care, blood cultures, we note that like other available 
diagnostic tests, the T2Bacteria[supreg] Test Panel uses DNA to 
identify bacterial species. Similarly, in order to obtain species 
identification from the current standard-of-care, blood cultures, a DNA 
test is also required. Therefore, we are concerned with the similarity 
of this mechanism of action. We are inviting public comments on whether 
the T2Bacteria[supreg] Test Panel is substantially similar to the 
standard-of-care laboratory blood cultures or other diagnostic tests 
and whether this technology meets the newness criterion.
    With regard to the cost criterion, the applicant provided the 
following analysis. To identify the MS-DRGs to which potential cases 
available for use of the T2Bacteria[supreg] Panel would most likely 
map, a selection of ICD-10-CM diagnosis codes associated with the 
clinical presence of the on-panel sepsis-causing bacteria for which the 
T2Bacteria[supreg] Test Panel tests was 
identified.331 332 333 334 335 The applicant asserted that 
the T2Bacteria[supreg] Test Panel can identify three Gram-negative 
blood

[[Page 19358]]

stream infections (Escherichia coli, Klebsiella pneumoniae, Pseudomonas 
aeruginosa) and two Gram-positive bloodstream infection species 
(Staphylococcus aureus, and Enterococcus faecium). A total of 67 ICD-
10-CM diagnosis codes were identified and segmented by two categories, 
infections (39 codes) and sepsis (28 codes). The applicant asserted 
that the former category represents potential cases available to be 
diagnosed by the T2Bacteria[supreg] Panel for patients who are at risk 
for sepsis and the latter represents potential cases available for use 
of the T2Bacteria[supreg] Panel for patients who have been diagnosed 
with a confirmed sepsis. The applicant stated that distinguishing 
between the two was necessary due to the varying costs associated with 
the treatment of patients at risk for sepsis versus confirmed cases of 
sepsis.
---------------------------------------------------------------------------

    \331\ Calderwood, S., ``Clinical manifestations, diagnosis and 
treatment of enterohemorrhagic Escherichia coli (EHEC) infection,'' 
September 2017. Available at: https://www.uptodate.com/contents/clinical-manifestations-diagnosis-and-treatment-of-enterohemorrhagic-escherichia-coli-ehec-infection.
    \332\ Yu, W.L., & Chuang, Y.C., ``Clinical features, diagnosis, 
and treatment of Klebsiella pneumoniae infection,'' May 18, 2017. 
Available at: https://www.uptodate.com/contents/clinical-features-
diagnosis-and-treatment-of-klebsiella-pneumoniae-
infection?search=Klebsiella%20pneumoniae&source=search_result&selecte
dTitle=1~150&usage_type=default&display_rank=1.
    \333\ Kanj, S., & Sexton, D., ``Epidemiology, microbiology, and 
pathogenesis of Pseudomonas aeruginosa infection,'' October 9, 2018. 
Available at: https://www.uptodate.com/contents/epidemiology-
microbiology-and-pathogenesis-of-pseudomonas-aeruginosa-
infection?search=Pseudomonas%20aeruginosa&source=search_result&select
edTitle=2~150&usage_type=default&display_rank=2.
    \334\ Holland, T., & Fowler, V., ``Clinical manifestations of 
Staphylococcus aureus infection in adults,'' September 22, 2017. 
Available at: https://www.uptodate.com/contents/clinical-
manifestations-of-staphylococcus-aureus-infection-in-
adults?search=Staphylococcus%20aureus&source=search_result&selectedTi
tle=3~150&usage_type=default&display_rank=3.
    \335\ Murray, B., ``Microbiology of enterococci,'' August 31, 
2017. Available at: https://www.uptodate.com/contents/microbiology-
of-
enterococci?search=Enterococcus%20faecium&source=search_result&select
edTitle=2~21&usage_type=default&display_rank=2.
---------------------------------------------------------------------------

    After the identification of the 39 infection and 28 sepsis 
diagnosis codes, both selections were refined by the applicant with the 
removal of cases identified by a total of 15 codes that represent 
pathogens not within the spectrum of blood infections that the 
T2Bacteria[supreg] Panel has been tested with and/or has been confirmed 
to detect. From the infection diagnosis codes, cases identified by two 
ICD-10-CM diagnosis codes: A021 (Salmonella sepsis); and A227 (Anthrax 
sepsis) were removed. From the sepsis diagnosis codes, cases identified 
by 13 diagnosis codes were removed: A021 (Salmonella sepsis); A227 
(Anthrax sepsis); A400 (Sepsis due to streptococcus, group A); A401 
(Sepsis due to streptococcus, group B); A403 (Sepsis due to 
streptococcus pneumonia); A408 (Other streptococcal sepsis); A409 
(Streptococcal sepsis, unspecified); A413 (Sepsis due to hemophilus 
influenza); A414 (Sepsis due to anaerobes); A4153 (Sepsis due to 
serratia); A427 (Actinomycotic sepsis); A5486 (Gonococcal sepsis); and 
B377 (Candidal sepsis). The remaining infection and sepsis diagnosis 
codes were then used to query the FY 2017 MedPAR database to identify 
inpatient discharges reporting these diagnosis codes under the primary 
and secondary position.
    According to the applicant, the resulting sets of MS-DRGs from both 
diagnosis code selection queries had visible commonalities when looking 
at only the MS-DRGs that contained potential cases which represented at 
least 1 percent of the discharge volume for the specific diagnoses. 
According to the applicant, due to the high volume of cases pulled and 
visible trends, provider-specific discharges at the MS-DRG level with 
fewer than 11 discharges were omitted from the analysis. In reconciling 
the list of MS-DRGs containing potential cases identified for the 
specific infection and sepsis codes, the applicant stated that MS-DRGs 
853 (Infectious & Parasitic Diseases with O.R. Procedure with MCC), 870 
(Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours), 
871 (Septicemia or Severe Sepsis without Mechanical Ventilation >96 
Hours with MCC) and 872 (Septicemia or Severe Sepsis without Mechanical 
Ventilation >96 Hours without MCC) contain at least 1 percent of the 
potential case volume under both scenarios and are the MS-DRGs to which 
these potential cases available for use of the T2Bacteria[supreg] Test 
Panel would most closely map.
    The applicant provided multiple cost analysis scenarios to 
demonstrate that the T2Bacteria[supreg] Test Panel meets the cost 
criterion. Eight scenarios were provided for the Sepsis and Infection 
diagnosis codes, separately, using the ICD-10-CM selections and based 
on the following methodologies: (1) Applicable discharges for the 
potential cases contained in 4 MS-DRGs (853, 870, 871 and 872); (2) 
applicable discharges for cases inclusive of all identified MS-DRGs; 
(3) applicable discharges with ICU usage for potential cases contained 
in 4 MS-DRGs (853, 870, 871 and 872); (4) applicable discharges with 
ICU usage for potential cases inclusive of all identified MS-DRGs; (5) 
applicable discharges for cases contained in 4 MS-DRGs (853, 870, 871 
and 872) with removal of 50 percent of pharmacy charges for prior 
technology; (6) applicable discharges for potential cases inclusive of 
all identified MS-DRGs with removal of 50 percent of pharmacy charges 
for prior technology; (7) applicable discharges with ICU usage for 
potential cases contained in 4 MS-DRGs (853, 870, 871 and 872) with 
removal of 75 percent of pharmacy charges for prior technology; and (8) 
applicable discharges with ICU usage for potential cases contained 
inclusive of all identified MS-DRGs with removal of 75 percent of 
pharmacy charges for prior technology.
    The applicant's order of operations used for each analysis is as 
follows: (1) Using the 15 sepsis or 37 infection diagnosis codes; (2) 
using the complete set of cases or those who had an ICU stay; (3) 
removing pharmacy charges at 0 percent, 50 percent, or 75 percent (for 
ICU patients only); and (4) standardizing the charges per cases using 
the Impact File published with the FY 2019 IPPS/LTCH PPS final rule 
correction notice data file. After removing the charges for the prior 
technology and standardizing charges, the applicant applied an 
inflation factor of 1.08986, which is the 2-year inflation factor from 
the FY 2019 IPPS/LTCH PPS final rule correction notice (83 FR 49844) to 
update the charges from FY 2017 to FY 2019. The applicant then added 
charges for the T2Bacteria[supreg] Panel. Under each scenario, the 
applicant stated that the inflated average case-weighted standardized 
charge per case exceeded the average case-weighted threshold amount. 
Below we provide a table depicting the applicant's results for all 16 
scenarios that the applicant indicated demonstrates that the technology 
meets the cost criterion.

------------------------------------------------------------------------
                                          Final inflated
                                           average  case-     Average
                                              weighted      case[dash]
                Scenario                   standardized      weighted
                                            charge  per      threshold
                                               case           amount
------------------------------------------------------------------------
Sepsis Discharges for Cases Contained in         $69,088         $62,699
 4 MS-DRGs (872, 871, 870 and 853)......
Sepsis Discharges for Cases Inclusive of          74,630          64,991
 All Identified MS-DRGs.................
Sepsis Discharges for Cases with ICU              94,385          69,194
 Usage Contained in 4 MS-DRGs (872, 871,
 870 and 853)...........................
Sepsis Discharges for Cases with ICU             103,285          73,349
 Usage Inclusive of All Identified MS-
 DRGs...................................
Sepsis Discharges for Cases Contained in          63,503          62,699
 4 MS-DRGs (872, 871, 870 and 853) with
 Removal of 50 Percent of Pharmacy
 Charges for Prior Technology...........
Sepsis Discharges for Cases Inclusive of          68,555          64,991
 All Identified MS-DRGs with Removal of
 50 Percent of Pharmacy Charges for
 Prior Technology.......................

[[Page 19359]]

 
Sepsis Discharges for Cases with ICU              82,415          69,194
 Usage Contained in 4 MS-DRGs (872, 871,
 870, and 853) with Removal of 75
 Percent of Pharmacy Charges for Prior
 Technology.............................
Sepsis Discharges for Cases with ICU              90,151          73,350
 usage Inclusive of All Identified MS-
 DRGs with Removal of 75 Percent of
 Pharmacy Charges for Prior Technology..
Infection Discharges for Cases Contained          69,349          60,696
 in 4 MS-DRGs (872, 871, 870 and 853)...
Infection Discharges for Cases Inclusive          61,299          52,595
 of All Identified MS-DRGs..............
Infection Discharges for Cases with ICU           95,952          67,024
 Usage Contained in 4 MS-DRGs (872, 871,
 870 and 853)...........................
Infection Discharges for Cases with ICU          102,171          68,682
 Usage Inclusive of All Identified MS-
 DRGs...................................
Infection Discharges for Cases Contained          63,744          60,696
 in 4 MS-DRGs (872, 871, 870 and 853)
 with Removal of 50 Percent of Pharmacy
 Charges for Prior Technology...........
Infection Discharges for Cases Inclusive          56,833          52,595
 of All Identified MS-DRGs with Removal
 of 50 Percent of Pharmacy Charges for
 Prior Technology.......................
Infection Discharges for Cases with ICU           83,760          67,024
 Usage Contained in 4 MS-DRGs (872, 871,
 870, and 853) with Removal of 75
 Percent of Pharmacy Charges for Prior
 Technology.............................
Infection Discharges for Cases with ICU           90,091          68,683
 Usage Inclusive of All Identified MS-
 DRGs with Removal of 75 Percent of
 Pharmacy Charges for Prior Technology..
------------------------------------------------------------------------

    The applicant noted that, in all 16 scenarios, the average case-
weighted standardized charge per case for potential cases available for 
aid by use of the T2Bacteria[supreg] Test Panel would exceed the 
average case-weighted threshold amounts in the FY 2019 IPPS/LTCH PPS 
final rule correction notice data file by between $803.87 and 
$33,488.82. Supplementary analyses were provided by the applicant, 
which included eight additional scenarios that combined the 15 sepsis 
and 37 infection diagnosis codes into one set of 52 diagnosis codes. 
The applicant again utilized an inflation factor of 1.08986 and 
followed the same methodology as the previously discussed cost 
analyses. The applicant again noted that the final inflated average 
case-weighted standardized charge per case exceeded the average case-
weighted threshold amounts in all scenarios, ranging between $1,083.67 
and $32,430.57.
    We are inviting public comments on whether the T2Bacteria[supreg] 
Panel meets the cost criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that the T2Bacteria[supreg] Panel represents a 
substantial clinical improvement over existing technologies. According 
to the applicant, the T2Bacteria[supreg] Panel is the only FDA-cleared 
diagnostic aid that has the ability to rapidly and accurately identify 
sepsis-causing bacteria species directly from whole blood within 3 to 5 
hours, instead of the 1 to 5 days required by current standard-of-care 
laboratory blood cultures or other diagnostic technology. The applicant 
also asserted that the use of the T2Bacteria[supreg] Panel provides 
more rapid beneficial resolution of the disease process due to enabling 
faster treatment. Several studies provided by the applicant suggest 
that effective detection prior to therapy can lead to a reduction in 
hospital lengths-of-stay and likelihood of death.336 337 
According to the applicant, in these studies for every hour reduction 
in time to effective therapy or species ID, the length-of-stay 
decreased by 2.7 hours.
---------------------------------------------------------------------------

    \336\ Huang, A., Newton, D., Kunapuli, A., Gandhi, T., Washer, 
L., Isip, J., Nagel, J., ``Impact of Rapid Organism Identification 
via Matrix-Assisted Laser Desorption/Ionization Time-of-Flight 
Combined with Antimicrobial Stewardship Team Intervention in Adult 
Patients with Bacteremia and Candidemia,'' Clinical Infectious 
Diseases, 2013, vol. 57(9), pp. 1237-1245.
    \337\ Perez, K., Olsen, R., Musick, W., Cernoch, P., Davis, J., 
Peterson, L., & Musser, J., ``Integrating Rapid Diagnostics and 
Antimicrobial Stewardship Improves Outcomes in Patients with 
Antibiotic-Resistant Gram-Negative Bacteremia,'' Journal of 
Infection, 2014, vol. 69(3), pp. 216-225.
---------------------------------------------------------------------------

    The applicant stated that the T2Bacteria[supreg] pivotal trial that 
led to the FDA clearance enrolled 11 hospitals in the United States and 
1,427 patients with a blood culture ordered as the standard-of-care, 
with species ID determined by MALDI-TOF or Vitek2.\338\ Furthermore, 
due to the low prevalence of panel specific organisms, an additional 
250 contrived specimens were evaluated. The T2Bacteria[supreg] Panel 
result was blinded to the managing staff and did not influence care. 
Blood samples were drawn for culture and T2Bacteria[supreg] Panel from 
the same line at the same time. The mean time to blood culture 
positivity was 51.0  43.0 hours (mean  SD) and 
the mean time to species ID was 83.7  47.6 hours (mean 
 SD). In contrast, the mean time to T2Bacteria[supreg] 
Panel result was 6.5  1.9 hours, where a full load of 7 
samples completed in 7.70  1.4 hours and a single sample 
completed in 3.6  0.02 hours. Therefore, the difference in 
mean time to result between blood culture and the T2Bacteria[supreg] 
Panel assay was 77.2 hours or 3.2 days (p<0.001). Compared to the 
matched draw blood culture and contrived samples, the overall 
sensitivity ranged from 81.3 percent to 100 percent and specificity 
ranged from 95.0 percent to 100 percent, respectively. Of the 190 
positive T2Bacteria[supreg] Panel results, 35 had matching blood 
culture results and 155 were potentially false positive. Of these 155, 
35 had a positive blood culture at another blood draw within 14 days; 
30 had positive results by amplification and gene sequencing; and 23 
had other positive non-blood specimens for the same organism. Sixty-
three of the 190 (33 percent) positive results were not associated with 
evidence of infection. Later testing by the applicant confirmed that 
reagent contamination caused the high false positive rates specifically 
for E. coli of 1.7 percent and P. aeruginosa (1.7 percent) in stored 
blood samples. Compared to blood culture results for species identified 
with the T2Bacteria[supreg] Panel, the assay detected 3.2-times more 
positives associated with infection.
---------------------------------------------------------------------------

    \338\ T2 Biosystems, Inc., ``T2Bacteria[supreg] Panel for use on 
the T2Dx[supreg] Instrument, 510(k) summary,'' Lexington, 2018.
---------------------------------------------------------------------------

    Nguyen, et al., a submitted publication manuscript based on the 
pivotal study data used by the FDA, found that the species 
identification of the T2Bacteria[supreg] Panel took an average mean 
time of 3.61  0.2 hours up to 7.70  1.38 hours 
(mean time dependent on the number of samples loaded, 1 to 7), which 
was shorter than that of the standard-of-care blood culture with a

[[Page 19360]]

mean time of 71.7  39.3 hours.\339\ In addition to faster 
species identification, the applicant asserted that the 
T2Bacteria[supreg] Panel identifies more infection-positive cases than 
blood cultures when verified by non-concurrent test results \340\ or 
when verified with proven, probably, or possible criteria (concurrent 
blood culture positive results, non-concurrent blood culture results 
with positive culture results from another site within 21 days, and no 
culture match, but the T2Bacteria[supreg] Panel bacteria was a 
plausible cause of disease, respectively). In this study, 66 percent of 
patients with concomitant blood culture results and T2Bacteria[supreg] 
Panel positive results were not on active antibiotics at the time of 
the blood draw, while 24 percent of patients with probable or possible 
blood stream infections that were positive by T2Bacteria[supreg] Panel 
alone were not on effective therapy.
---------------------------------------------------------------------------

    \339\ Nguyen, M.H., Clancy, C., Pasculle, A.W., Pappas, P., 
Alangaden, G., Pankey, G., Mylonakis, E. ``Clinical performance of 
the T2Bacteria panel for diagnosis bloodstream infections due to 
five common bacterial pathogens,'' Manuscript for submission.
    \340\ T2 Biosystems, Inc., ``T2Bacteria[supreg] Panel for use on 
the T2Dx[supreg] Instrument, 510(k) summary,'' Lexington, 2018.
---------------------------------------------------------------------------

    In another study submitted by the applicant, 137 blood cultures and 
T2Bacteria[supreg] Panel tests were obtained from participants in the 
emergency department.\341\ T2Bacteria[supreg] Panel results were 
verified with concordant blood culture results, or when discordant with 
blood cultures from another location drawn within 14 days of the 
matched draw, or with the whole blood Sanger sequencing method. No 
samples generated an invalid result for the T2Bacteria[supreg] assay. 
The T2Bacteria[supreg] Panel identified 15 positives for which blood 
cultures had concordant matches for 12. The three unmatched positives 
were verified via other means. As compared to blood cultures, the 
T2Bacteria[supreg] Panel had an overall positive percent agreement of 
100 percent (12/12) and a negative percent agreement of 98.4 percent 
(662/673). The negative percent agreement is shown to be due to blood 
culture results that are indeterminate, or false positive.
---------------------------------------------------------------------------

    \341\ Voigt, C., Silbert, S., Widen, R., Marturano, J., Lowery, 
T., Ashcraft, D., & Pankey, G., ``The T2Bacteria assay is a 
sensitive and rapid detector of bacteremia that can be initiated in 
the emergency department and has potential to favorably influence 
subsequent therapy,'' Journal of Emergency Medical Review, pp. 1-30.
---------------------------------------------------------------------------

    In the same study,\342\ the T2Bacteria[supreg] Panel results 
relative to standard-of-care blood culture identification were 
classified into four impact level categories: (1) Minimal impact 
results have negative blood culture results with no evidence of 
infection for which results would have little to no impact; (2) some 
impact results occur for patients who have an effective therapy at the 
time of results, but the number of antibiotics administered could have 
been reduced; (3) moderate impact results are for those on effective 
therapy at the time of results, but were switched to species-directed 
therapy within 12 hours of a standard-of-care blood culture 
identification; and (4) direct impact results relate to those who could 
have been placed on effective therapy earlier based on the results of 
the T2Bacteria[supreg] Panel.\343\ The study identified 7 ``minimal 
impact'' incidents, 8 ``some impact'' incidents, 4 ``moderate impact'' 
incidents, and 4 ``direct impact'' incidents, indicating that 16/23 
(69.6 percent) of positive test results could have potentially 
influenced patient care.
---------------------------------------------------------------------------

    \342\ Ibid.
    \343\ Voigt, C., Silbert, S., Widen, R., Marturano, J., Lowery, 
T., Ashcraft, D., & Pankey, G., ``The T2Bacteria assay is a 
sensitive and rapid detector of bacteremia that can be initiated in 
the emergency department and has potential to favorably influence 
subsequent therapy,'' Journal of Emergency Medical Review, pp. 1-30.
---------------------------------------------------------------------------

    In articles provided by the applicant which concerned separate 
studies, the T2Bacteria[supreg] Panel was found to have a shorter time 
to species identification than blood cultures.344 345 The 
study analysis by De Angelis, et al., 2018, an international, 
prospective observational study involving 129 patients (144 enrolled) 
18 years of age and older who had a blood culture and for whom a 
T2Bacteria[supreg] Panel was also obtained, showed that the 
T2Bacteria[supreg] Panel provided a mean time to species identification 
and negative result of 5.5  1.4 hours and 6.1  
1.5 hours, respectively as compared to 25.2  15.2 hours and 
120  0.0 hours resulting from the standard-of-care blood 
culture method, respectively.\346\ There were a total of 10 
concordantly identified micro-organisms, 2 identified by standard-of-
care blood culture only, and 20 detected by the T2Bacteria[supreg] 
Panel only. As compared to the results from the standard-of-care blood 
culture method, the results from the T2Bacteria[supreg] Panel had a 
sensitivity that ranged from 50 percent to 100 percent across the 5 
detection channels, with an aggregate of 83.3 percent and a specificity 
that ranged from 94.8 percent to 100 percent, with an aggregate of 97.6 
percent. For patients who had a matched blood culture positive (n=8) 
and who met the criterion of infection (n=6), a total of 36 percent (5/
14) of the patients were receiving inappropriate antimicrobial therapy 
at the time of the T2Bacteria[supreg] Panel result. The results of this 
study are again discussed in another article submitted by the 
applicant, which states that these results may have the potential to 
rapidly identify the five on-panel pathogens that may include cases 
missed by results of the standard-of-care blood culture.\347\
---------------------------------------------------------------------------

    \344\ De Angelis, G., Posteraro, B., Dr Carolis, E., 
Menchinelli, G., Franceschi, F., Tumbarello, M., Sanguinetti, M., 
``T2Bacteria magnetic resonance assay for the rapid detection of 
ESKAPEc pathogens directly in whole blood,'' Journal of 
Antimicrobial Chemotherapy, 2018, vol. 73, pp. iv20-iv26, 
doi:10.1093/jac/dky049.
    \345\ Nguyen, M. H., Clancy, C., Pasculle, A. W., Pappas, P., 
Alangaden, G., Pankey, G., Mylonakis, E., ``Clinical performance of 
the T2Bacteria panel for diagnosis bloodstream infections due to 
five common bacterial pathogens,'' Manuscript for submission.
    \346\ De Angelis, G., Posteraro, B., Dr Carolis, E., 
Menchinelli, G., Franceschi, F., Tumbarello, M., Sanguinetti, M., 
``T2Bacteria magnetic resonance assay for the rapid detection of 
ESKAPEc pathogens directly in whole blood,'' Journal of 
Antimicrobial Chemotherapy, 2018, vol. 73, pp. iv20-iv26, 
doi:10.1093/jac/dky049.
    \347\ Clancy, C., & Nguyen, H., ``T2 magnetic resonance for the 
diagnosis of bloodstream infections: charting a path forward,'' 
Journal of Antimicrobial Chemotherapy, 2018, vol. 73(4), pp. iv2-
iv5, doi:10.1093/jac/dky050.
---------------------------------------------------------------------------

    The applicant further asserted that the T2Bacteria[supreg] Panel 
provides a decreased rate of subsequent diagnostic or therapeutic 
interventions. The applicant discussed the results of a meta-analysis 
of 70 studies, in which the proportion of patients on an inappropriate 
empiric therapy was 46.5 percent.\348\ The applicant indicated that the 
results show that amongst patients with a blood culture draw, typical 
antibiotic administration rates range from 50 to 70 
percent.349 350 351 The applicant asserted that based on the 
results of the analysis by the Voigt, et al., manuscript, 35 percent 
(8/23) of the patients, receiving 3.6  1.1 (mean  SD) unique antibiotics per patient, could have potentially seen

[[Page 19361]]

a reduction in the number of administered antibiotics.\352\ The 
applicant further stated via a supplementary presentation to CMS that 
the use of the T2Bacteria[supreg] Panel allows for earlier species 
directed therapy than that allowed for by standard-of-care blood 
cultures. The applicant believed that the use of the T2Bacteria[supreg] 
Panel may allow the provider to move from broad potentially unnecessary 
empiric to species-targeted therapy. The applicant stated that using 
hospital antibiograms and being informed of the species by the 
T2Bacteria[supreg] Panel, the physician is able to use species-directed 
therapy and place up to 90 percent of patients on an effective therapy 
in a few hours instead of 2 to 3 days.
---------------------------------------------------------------------------

    \348\ Paul, M., Shani, V., Muchtar, E., Kariv, G., Robenshtok, 
E., & Leibovici, L., ``Systematic Review and Meta-Analysis of the 
Efficacy of Appropriate Empiric Antibiotic Therapy for Sepsis,'' 
Antimicrobial Agents and Chemotherapy, 2010, vol. 54(11), pp. 4851-
4863.
    \349\ Castellanos-Ortega, A., Suberviola, B., Garcia-Astudillo, 
L., Holanda, M., Ortiz, F., Llorca, J., & Delgado-Rodriguez, M., 
``Impact of the Surviving Sepsis Campaign Protocols on Hospital 
Length of Stay and Mortality in Septic Shock Patients: Results of a 
three-year follow-up quasi-experimental study,'' Crit Care Med, 
2010, vol. 38(4), pp. 1036-1043, doi:10.1097/CCM.0b0bl3e3181d455b6.
    \350\ Karlsson, S., Varpula, M., Pettila, V., & Parvlainen, I., 
``Incidence, Treatment, and Outcome of Severe Sepsis in ICU-treated 
Adults in Finland: The Finnsepsis study,'' Intensive Care Medicine, 
2007, vol. 33, pp. 435-443, doi:10.1007/s00134-006-0504-z.
    \351\ Suberviola, B., Marquez-Lopez, A., Castellanos-Ortega, A., 
Fernandez-Mazarrasa, C., Santibanez, M., & Martinez, L., 
``Microbiological Diagnosis of Speis: Polymerase chain reaction 
system versus blood cultures,'' American Journal of Critical Care, 
2016, vol. 25(1), pp. 68-75.
    \352\ Voigt, C., Silbert, S., Widen, R., Marturano, J., Lowery, 
T., Ashcraft, D., & Pankey, G., ``The T2Bacteria assay is a 
sensitive and rapid detector of bacteremia that can be initiated in 
the emergency department and has potential to favorably influence 
subsequent therapy,'' Journal of Emergency Medical Review, pp. 1-30.
---------------------------------------------------------------------------

    According to the applicant, the practice of antibiotic de-
escalation was recently evaluated across 23 studies and found to be 
safe and effective.\353\ Given the toxicity associated with 
antibiotics, where some antibiotics cause encephalopathies including 
seizures \354\ and in extreme cases show up to a 4.5 percent mortality 
rate due to the antibiotic itself,\355\ the applicant asserted that 
judicious use of antibiotics is necessary. The applicant further stated 
that rapid diagnostics such as that able to be accomplished by the use 
of the T2Bacteria[supreg] Panel assay, due to its negative predictive 
value (NPV) of 99.7 percent,\356\ will enable physicians to focus 
therapy and reduce the use of unnecessary drugs, where a targeted 
therapy is possible in 3.8 hours instead of 2 days, reducing toxicity 
and development of resistance.\357\
---------------------------------------------------------------------------

    \353\ Ohji, G., Doi, A., Yamamoto, S., & Iwata, K., ``Is De-
escalation of Antimicrobials Effective? A systematic review and 
meta-analysis,'' International Journal of Infectious Diseases, 2016, 
vol. 49, pp. 71-79, Retrieved from http://dx.doi.org/10.1016/j.ijid.2016.06.002.
    \354\ Bhattacharyya, S., Darby, R.R., Raibagkar, P., Gonzalez 
Castro, L.N., & Berkowitz, A., ``Antibiotic-associated 
Encephalopathy,'' American Academy of Neurology, 2016, pp. 963-971.
    \355\ Koch-Weser, J., Sidel, V., Federman, E., Kanarek, P., 
Finer, D., & Eaton, A., ``Adverse Effects of Sodium Colistimethate; 
Manifestations and specific reaction rates during 317 courses of 
therapy,'' Annals of Internal Medicine, 1970, vol. 72, pp. 857-868.
    \356\ Nguyen, M. H., Clancy, C., Pasculle, A.W., Pappas, P., 
Alangaden, G., Pankey, G., Mylonakis, E., ``Clinical performance of 
the T2Bacteria panel for diagnosis bloodstream infections due to 
five common bacterial pathogens,'' Manuscript for submission.
    \357\ Weisz, E., Newton, E., Estrada, S., & Saunders, M., 
``Early Experience with the T2Bacteria Research Use Only (RUO) Panel 
at a Community Hospital,'' Lee Memorial Hospital, Fort Meyers.
---------------------------------------------------------------------------

    The applicant stated that the use of the T2Bacteria[supreg] Panel 
will result in reduced mortality. The applicant indicated that the 
results of large retrospective analyses show that every hour delaying 
time to appropriate antibiotic therapy increased odds of death by 4 
percent or reduced survival by 7.6 percent.358 359 360 The 
applicant stated that the results of the T2Bacteria[supreg] Panel 
Pivotal trial show that out of 23 positive patients, 4 (17 percent) 
could have seen a reduction in time to effective therapy, with mean 
time of 28.0 hours. An additional 4 (17 percent) could have seen a 
reduction in time to species-directed therapy, with mean time reduction 
of 52.6 hours. The applicant stated that by using the 
T2Bacteria[supreg] Panel assay relative to standard-of-care blood 
cultures, they expect a potential reduction in the odds of death to be 
52.8 percent. According to the applicant, this factor of 2 difference 
is consistent with a two-time higher odds of death in patients given 
inappropriate empiric antibiotics relative to appropriate empiric 
antibiotics.\361\ The applicant indicated that this result suggests 
that employing the use of the T2Bacteria[supreg] Panel assay should 
reduce mortality in bacteremia patients who are not immediately on 
appropriate therapy.
---------------------------------------------------------------------------

    \358\ Paul, M., Shani, V., Muchtar, E., Kariv, G., Robenshtok, 
E., & Leibovici, L., ``Systematic Review and Meta-Analysis of the 
Efficacy of Appropriate Empiric Antibiotic Therapy for Sepsis,'' 
Antimicrobial Agents and Chemotherapy, 2010, vol. 54(11), pp. 4851-
4863.
    \359\ Kumar, A., Roberts, D., Wood, K., Light, B., Parrillo, J., 
Sharma, S., Cheang, M., ``Duration of Hypotension before Initiation 
of Effective Antimicrobial Therapy is the Critical Determinant of 
Survival in Human Septic Shock,'' Crit Care Med, 2006, vol. 34(6), 
pp. 1589-1596, doi:10.1097/01.CCM.0000217961.75225.E9.
    \360\ Seymour, C., Gesten, F., Prescott, H., Friedrich, M., 
Iwashyna, T., Phillips, G., Levy, M., ``Time to Treatment and 
Mortality during Mandated Emergency Care for Sepsis,'' The New 
England Journal of Medicine, 2017, vol. 376(23), pp. 2235-2244, 
doi:10.1056/NEJMoa1703058.
    \361\ Paul, M., Shani, V., Muchtar, E., Kariv, G., Robenshtok, 
E., & Leibovici, L., ``Systematic Review and Meta-Analysis of the 
Efficacy of Appropriate Empiric Antibiotic Therapy for Sepsis,'' 
Antimicrobial Agents and Chemotherapy, 2010, vol. 54(11), pp. 4851-
4863.
---------------------------------------------------------------------------

    In the form of supplementary information, the applicant stated that 
the use of the T2Bacteria[supreg] Panel covers 5 species, which account 
for 50 percent to 70 percent of all blood stream infections, depending 
on local epidemiology. According to the applicant, the remaining 30 
percent to 50 percent of patients would continue to need standard-of-
care blood cultures for species identification. Based on all of the 
above, the applicant believed that the T2Bacteria[supreg] Test Panel 
represents a substantial clinical improvement over existing 
technologies.
    We have the following concerns regarding whether the 
T2Bacteria[supreg] Panel meets the substantial clinical improvement 
criterion. First, we are not certain that the applicant has provided 
sufficient evidence to demonstrate that the early identification 
without antibiotic susceptibility provided by the use of the T2 
Bacteria[supreg] Panel is enough to prevent unnecessary empiric therapy 
because specific identification and antibiotic susceptibilities may 
still be required by blood cultures to adequately treat sepsis. For 
instance, if an on-panel bacteria were identified it remains possible 
that this species could be resistant to the standard-of-care treatment 
for such bacteria used in a hospital. In addition, we believe that not 
only is it possible for an identified species to be resistant to 
typical empiric therapy, therefore diminishing the utility of its early 
identification, it also is possible for off-panel organisms to be 
present and also not be affected by species-targeted empiric treatment. 
The applicant provided supplemental information in which it stated that 
consistent with its labeling, the use of the T2Bacteria[supreg] Test 
Panel would not replace blood cultures for specific organisms. Given 
this information, we are concerned that the use of the 
T2Bacteria[supreg] Panel may not be a substantial clinical improvement 
over standard-of-care blood cultures, the existing comparator.
    Second, the applicant provided research and analyses, which is 
suggestive that the use of the T2Bacteria[supreg] Test Panel may lead 
to decreased hospital lengths-of-stay, and decreased mortality. 
Specifically, these analyses and articles show that there is a 
possibility for a correlated relationship between the 
T2Bacteria[supreg] Panel's time to species ID and these identified 
outcomes. The applicant addressed this issue in a qualitative 
manuscript analysis involving identification of potential impacts of 
the T2Bacteria[supreg] Test Panel.\362\ We recognize that this 
qualitative analysis is informative, but we are concerned that the low 
number of cases (under 10) may limit generalizability of these results. 
Given this information, we are concerned that in lieu of direct 
testing, these suggestive

[[Page 19362]]

findings may not show a causative relationship.
---------------------------------------------------------------------------

    \362\ Voigt, C., Silbert, S., Widen, R., Marturano, J., Lowery, 
T., Ashcraft, D., & Pankey, G., ``The T2Bacteria assay is a 
sensitive and rapid detector of bacteremia that can be initiated in 
the emergency department and has potential to favorably influence 
subsequent therapy,'' Journal of Emergency Medical Review, pp. 1-30.
---------------------------------------------------------------------------

    Third, we are concerned that in all of the studies provided, the 
comparator for the T2Bacteria[supreg] Panel is a single blood culture 
draw. It is well established that blood culture sensitivity and 
specificity increase with repeat blood draws. According to research 
provided by the applicant, a single set of blood cultures should not be 
drawn, but rather surveillance blood cultures, involving multiple draws 
over time, should be practiced.\363\ Therefore, we believe that initial 
blood cultures followed by repeated blood draws would have been a 
better comparator. Furthermore, we believe an even stronger comparator 
for the T2Bacteria[supreg] Test Panel would be other DNA based tests, 
such as polymerase chain reaction (PCR), which also utilize DNA to 
identify bacterial infections.
---------------------------------------------------------------------------

    \363\ Wilson, M., Mitchell, M., Morris, A., Murray, P., Reimer, 
L., Reller, L. B., Welch, D., ``Prinicples and Procedures for Blood 
Cultures; Approved Guildeline,'' Clinical and Laboratory Standards 
Institute, 2007.
---------------------------------------------------------------------------

    Ultimately, we are concerned that the use of the T2Bacteria[supreg] 
Test Panel may not alter the clinical course of treatment. We believe 
that the variable sensitivity and specificity for the 
T2Bacteria[supreg] Panel may be of concern if these results do not 
compare favorably to other available DNA tests. While some of the false 
positives in the pivotal trial were explained by reagent contamination 
(43 of the 63 false positives),\364\ the high false positive rate seen 
in the applicant's literature, (for example, 13 of 32 positives (40.6 
percent),\365\ 58 of 146 positives (39.7 percent),\366\ and a potential 
20 of 63 (31.7 percent) from the pivotal trial) may result in 
unnecessary treatment of patients. Furthermore, use of a contrived arm 
in the pivotal trial and low overall incidence of these five specific 
sepsis-causing organisms may make it difficult to determine a 
substantial clinical improvement in the complex clinical setting. 
Lastly, it seems that blood cultures may still be necessary to identify 
species susceptibility because the T2Bacteria[supreg] Test Panel does 
not identify susceptibility and subsequent treatment based upon its 
results will still require empiric treatment. If these points are true, 
then the inferred decreased hospital lengths-of-stay, decreased 
mortality, and better clinical outcomes may not be achieved with the 
use of the T2Bacteria[supreg] Test Panel.
---------------------------------------------------------------------------

    \364\ T2 Biosystems, Inc., ``T2Bacteria[supreg] Panel for use on 
the T2Dx[supreg] Instrument, 510(k) summary,'' Lexington, 2018.
    \365\ De Angelis, G., Posteraro, B., Dr Carolis, E., 
Menchinelli, G., Franceschi, F., Tumbarello, M., Sanguinetti, M., 
``T2Bacteria magnetic resonance assay for the rapid detection of 
ESKAPEc pathogens directly in whole blood,'' Journal of 
Antimicrobial Chemotherapy, 2018, vol. 73, pp. iv20-iv26, 
doi:10.1093/jac/dky049.
    \366\ Nguyen, M. H., Clancy, C., Pasculle, A. W., Pappas, P., 
Alangaden, G., Pankey, G., Mylonakis, E., ``Clinical performance of 
the T2Bacteria panel for diagnosis bloodstream infections due to 
five common bacterial pathogens,'' Manuscript for submission.
---------------------------------------------------------------------------

    We are inviting public comments on whether the T2Bacteria[supreg] 
Test Panel technology meets the substantial clinical improvement 
criterion, including with respect to the specific concerns we have 
raised. We did not receive any written comments in response to the New 
Technology Town Hall meeting notice published in the Federal Register 
regarding the substantial clinical improvement criterion for the 
T2Bacteria[supreg] Test Panel or at the New Technology Town Hall 
meeting.
q. VENCLEXTA[supreg]
    AbbVie Pharmaceuticals, Inc. submitted an application for new 
technology add-on payments for VENCLEXTA[supreg] (venetoclax tablets) 
for FY 2020. According to the applicant, VENCLEXTA[supreg] is an oral 
anti-cancer drug previously FDA-approved for the treatment of patients 
who have been diagnosed with chronic lymphocytic leukemia (CLL) with 
17p deletion, as detected by an FDA-approved test, who have received at 
least one prior therapy. VENCLEXTA[supreg] received additional FDA 
approval on November 21, 2018, for the treatment of adult patients who 
have been diagnosed with CLL or small lymphocytic lymphoma (SLL), with 
or without 17p deletion, who have received at least one prior therapy, 
and in combination with azacitidine or decitabine or low-dose 
cytarabine for the treatment of newly-diagnosed acute myeloid leukemia 
(AML) in adults who are age 75 years old or older, or who have 
comorbidities that preclude use of intensive induction chemotherapy.
    AML is a type of cancer in which the bone marrow makes abnormal 
myeloblasts (a type of white blood cell), red blood cells, or 
platelets.\367\ The applicant stated that more than half of the 
patients who are diagnosed with AML annually (19,520) \368\ are of 
Medicare age.\369\ The leukemic cells proliferate in the marrow and 
interfere with production of normal blood cells, causing weakness, 
infection, bleeding, and other symptoms and complications. In 
approximately half of these patients, nonrandom chromosomal 
abnormalities are found by cytogenetic analysis, and these are used for 
classification, management, and prognostication. AML is generally 
rapidly lethal unless treated with intensive chemotherapy and/or 
targeted therapies together with supportive care.\370\
---------------------------------------------------------------------------

    \367\ National Cancer Institute, ``Adult Acute Myeloid Leukemia 
Treatment--Patient Version,'' https://www.cancer.gov/types/leukemia/patient/adult-aml-treatment-pdq, Accessed September 11, 2018.
    \368\ Siegel, R.L., Miller, K.D., Jemal, A., ``Cancer 
Statistics,'' CA: A Cancer Journal for Clinicians, 2018, vol, 68(1), 
pp. 7-30, doi:10.3322/caac.21442.
    \369\ National Cancer Institute. ``SEER Stat Fact Sheets: Acute 
Myeloid Leukemia,'' Bethesda, MD, http://seer.cancer.gov/statfacts/html/amyl.html, Accessed September 11, 2018.
    \370\ Wolters Kluwer Health, ``Overview of acute myeloid 
leukemia in adults,'' https://www.uptodate.com/contents/induction-therapy-for-acute-myeloid-leukemia-in-younger-adults, Accessed 
October 9, 2018.
---------------------------------------------------------------------------

    According to the applicant, in younger patients who have been 
diagnosed with AML, intensive combination chemotherapy is the primary 
treatment modality.\371\ Options for induction chemotherapy include 
standard or high-dose cytarabine in combination with an anthracycline. 
The most commonly used induction regimens for diagnoses of AML are the 
so-called ``7+3'' regimens, which combine a 7-day continuous 
intravenous infusion of cytarabine with a short infusion or bolus of an 
anthracycline given on days 1 through 3. The applicant indicated that 
the most commonly used anthracycline in this regimen is daunorubicin, 
but other anthracyclines or synthetic anthracycline analogs have been 
used. Depending on age and patient selection, up to 70 to 80 percent of 
younger adults achieve complete remission with the use of these 
regimens.372 373
---------------------------------------------------------------------------

    \371\ Wolters Kluwer Health, ``Induction therapy for acute 
myeloid leukemia in younger adults,'' https://www.uptodate.com/contents/induction-therapy-for-acute-myeloid-leukemia-in-younger-adults, Accessed September 11, 2018.
    \372\ Ohtake, S., Miyawaki, S., Fujita, H., et al., ``Randomized 
study of induction therapy comparing standard-dose idarubicin with 
high-dose daunorubicin in adult patients with previously untreated 
acute myeloid leukemia: the JALSG AML201 Study,'' Blood, 2010, vol. 
117(8), pp. 2358-65, doi:10.1182/blood-2010-03-273243.
    \373\ Fernandez, H.F., Sun, Z., Yao, X., et al., ``Anthracycline 
Dose Intensification in Acute Myeloid Leukemia,'' New England 
Journal of Medicine, 2009, vol. 361(13), pp. 1249-59, doi:10.1056/
nejmoa0904544.
---------------------------------------------------------------------------

    However, the applicant indicated that older adults over the age of 
55 years old \374\ are more frequently refractory to such cytotoxic-
intensive induction chemotherapy when compared to younger patients 
because of biological disease-related factors such as increased

[[Page 19363]]

frequency of adverse-risk cytogenetic and molecular features, secondary 
AML, and increased expression of multi-drug resistance phenotypes.\375\ 
Elderly patients also present with more comorbidities and compromised 
organ function than do younger patients, which means they have 
decreased tolerance to intensive therapies which can lead to 
unacceptably high treatment-related mortality.376 377 378 
The applicant explained that prognostic algorithms that can predict the 
probability of achieving a complete response (CR) and the risk for an 
early death for elderly patients with untreated AML have been 
developed, and can help a physician determine whether or not the 
patient is eligible for intensive chemotherapy.\379\ For these reasons, 
only 40 percent of Medicare-aged patients who have been diagnosed with 
AML receive chemotherapy for the treatment of the disease.\380\ The 
applicant stated that, in patients not considered fit for intensive 
treatment and who, therefore, were treated with lower intensity 
regimens of low-dose cytarabine and hydroxyurea, with or without, all-
trans retinoic acid for diagnoses of AML and high-risk myelodysplastic 
syndrome, only 25 percent of the patients on low-dose cytarabine 
survived for 12 months.\381\ According to the applicant, in an 
international Phase III study comparing the use of azacitidine with 
conventional care regimens in older patients who had been newly 
diagnosed with AML, only 18.6 percent of the patients receiving best 
supportive care survived for 12 months.\382\ Accordingly, the applicant 
believed that more effective, better-tolerated therapies for elderly 
patients who have been diagnosed with AML are needed.\383\
---------------------------------------------------------------------------

    \374\ Wolters Kluwer Health, ``Induction therapy for acute 
myeloid leukemia in younger adults,'' https://www.uptodate.com/contents/induction-therapy-for-acute-myeloid-leukemia-in-younger-adults, Accessed September 11, 2018.
    \375\ Krug, U., B[uuml]chner, T., Berdel, W.E., M[uuml]ller-
Tidow, C., ``The treatment of elderly patients with acute myeloid 
leukemia,'' Dtsch Arztebl Int, 2011, vol. 108, pp. 863-70.
    \376\ Pettit, K., Odenike, O., ``Defining and treating older 
adults with acute myeloid leukemia who are ineligible for intensive 
therapies,'' Front Oncol, 2015, vol. 5, pp. 280.
    \377\ Kantarjian, H., Ravandi, F., O'Brien, S., et al., 
``Intensive chemotherapy does not benefit most older patients (age 
70 years or older) with acute myeloid leukemia,'' Blood, 2010, vol. 
116, pp. 4422-9.
    \378\ Kantarjian, H., O'Brien, S., Cortes, J., et al., ``Results 
of intensive chemotherapy in 998 patients age 65 years or older with 
acute myeloid leukemia or high-risk myelodysplastic syndrome: 
predictive prognostic models for outcome,'' Cancer, 2006, vol. 106, 
pp. 1090-98.
    \379\ O'Donnell, Margaret R., et al. ``Acute Myeloid Leukemia, 
Version 3.2017, NCCN Clinical Practice Guidelines in Oncology.'' 
Journal of the National Comprehensive Cancer Network, vol. 15, no. 
7, 2017, pp. 926-957., doi:10.6004/jnccn.2017.0116.
    \380\ Medeiros, B.C., Satram-Hoang, S., Hurst, D., Hoang, K.Q., 
Momin, F., Reyes, C., ``Big data analysis of treatment patterns and 
outcomes among elderly acute myeloid leukemia patients in the United 
States,'' Annals of Hematology, 2015, vol. 94(7), pp. 1127-38, 
doi:10.1007/s00277-015-2351-x.
    \381\ Burnett, Alan K., et al., ``A Comparison of Low-Dose 
Cytarabine and Hydroxyurea with or without All-Trans Retinoic Acid 
for Acute Myeloid Leukemia and High-Risk Myelodysplastic Syndrome in 
Patients Not Considered Fit for Intensive Treatment,'' Cancer, vol. 
109, no. 6, 2007, pp. 1114-1124, doi:10.1002/cncr.22496.
    \382\ Dombret, H., et al., ``International Phase 3 Study of 
Azacitidine vs Conventional Care Regimens in Older Patients with 
Newly Diagnosed AML with >30% Blasts,'' Blood, vol. 126, no. 3, 
2015, pp. 291-299, doi:10.1182/blood-2015-01-621664.
    \383\ DiNardo, C.D., Pratz, K.W., Letai, A., et al., ``Safety 
and preliminary efficacy of venetoclax with decitabine or 
azacitidine in elderly patients with previously untreated acute 
myeloid leukemia: a non-randomized, open-label, phase Ib study,'' 
The Lancet Oncology, 2018, vol. 19(2), pp. 216-28, doi:10.1016/
s1470-2045(18)30010-x.
---------------------------------------------------------------------------

    We note that, the applicant has submitted a request for approval 
for a unique ICD-10-PCS code to identify procedures involving the 
administration of VENCLEXTA[supreg], effective for FY 2020.
    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, therefore, would not be 
considered ``new'' for purposes of new technology add-on payments. 
Current treatments include decitabine, azacitidine, low-dose 
cytarabine, MYLOTARGTM, and supportive care such as anti-
emetics, transfusions, and antibiotics/antifungals.384 385
---------------------------------------------------------------------------

    \384\ Ibid.
    \385\ Wolters Kluwer Health, ``Induction therapy for acute 
myeloid leukemia in younger adults,'' https://www.uptodate.com/contents/induction-therapy-for-acute-myeloid-leukemia-in-younger-adults, Accessed September 11, 2018.
---------------------------------------------------------------------------

    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 VENCLEXTA[supreg] does not use the same or 
similar mechanism of action when compared with an existing technology 
to achieve a therapeutic outcome for patients diagnosed with AML who 
are ineligible for intensive chemotherapy The applicant stated that 
VENCLEXTA[supreg] is the first and only FDA-approved, selective oral 
anti-apoptotic B-cell lymphoma 2 (BCL-2) inhibitor, and works by 
inhibiting the BCL-2 protein, which regulates cell death and is 
associated with chemotherapy-resistance and poor outcomes in patients 
who have been diagnosed with AML.\386\ The applicant further asserted 
that VENCLEXTA[supreg] is known to synergize with hypomethylating 
agents (azacitidine/decitabine) and low-dose cytarabine in the 
treatment of AML.\387\ In AML, malignant cells are dependent on BCL-2 
and other pro-survival proteins such as MCL-1 for their survival. A 
hypomethylator like azacitidine increases BCL-2 dependence and 
sensitivity to VENCLEXTA[supreg] through inhibition of MCL-1, therefore 
sensitizing the cell to VENCLEXTA[supreg]-induced 
apoptosis.388 389 The applicant indicated that because the 
combination of drugs in the recently-approved indication for the 
treatment of AML is new, and VENCLEXTA[supreg] works synergistically 
when administered as part of this treatment combination, this creates a 
unique mechanism of action for the treatment of AML.
---------------------------------------------------------------------------

    \386\ Pan, R., Hogdal, L.J., Benito, J.M., et al., ``Selective 
BCL-2 inhibition by ABT-199 causes on-target cell death in acute 
myeloid leukemia,'' Cancer Discov, 2014, vol. 4(3), pp. 362-75.
    \387\ Bogenberger, J.M., Delman, D., Hansen, N., et al., ``Ex 
vivo activity of BCL-2 family inhibitors ABT-199 and ABT-737 
combined with 5-azacitidine in myeloid malignancies,'' Leukemia & 
Lymphoma, 2014, vol. 56(1), pp. 226-229, doi:10.3109/
10428194.2014.910657.
    \388\ Konopleva, M., et al., ``Efficacy and Biological 
Correlates of Response in a Phase II Study of Venetoclax Monotherapy 
in Patients with Acute Myelogenous Leukemia,'' Cancer Discovery, 
vol. 6, no. 10, Dec. 2016, pp. 1106-1117, doi:10.1158/2159-8290.cd-
16-0313.
    \389\ Valentin, Rebecca, et al., ``The Rise of Apoptosis: 
Targeting Apoptosis in Hematologic Malignancies,'' Blood, 2018, vol. 
132, no. 12, pp. 1248-1264, doi:10.1182/blood-2018-02-791350.
---------------------------------------------------------------------------

    With respect to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant asserted that 
potential cases representing patients who have been diagnosed with CLL 
who may be eligible for treatment using VENCLEXTA[supreg] would be 
assigned to different MS-DRGs than cases representing patients who have 
been diagnosed with AML. According to the applicant, potential cases 
representing patients who have been diagnosed with CLL who may be 
eligible for treatment using VENCLEXTA[supreg] would be assigned to the 
following MS-DRGs: 808 (Major Hematological And Immunological Diagnoses 
Except Sickle Cell Crisis And Coagulation Disorders With MCC), 809 
(Major Hematological And Immunological Diagnoses Except Sickle Cell 
Crisis And Coagulation Disorders With CC), 823 (Lymphoma And Non-Acute 
Leukemia With Other Procedure With MCC), 824 (Lymphoma And Non-Acute 
Leukemia With Other Procedure With CC), 825 (Lymphoma And Non-Acute 
Leukemia With Other Procedure Without CC/MCC), 834 (Acute Leukemia 
Without Major O.R. Procedure With MCC), 835 (Acute Leukemia Without 
Major O.R. Procedure With CC), 836 (Acute Leukemia Without Major O.R. 
Procedure Without CC/MCC), and 839

[[Page 19364]]

(Chemotherapy With Acute Leukemia As SDX Without CC/MCC). We believe 
that potential cases representing patients who have been newly 
diagnosed with AML, as well as potential cases representing patients 
who have been diagnosed with CLL, could both be assigned to the 
following 3 MS-DRGs: 820 (Lymphoma and Leukemia With Major O.R. 
Procedure With MCC), 821 (Lymphoma and Leukemia With Major O.R. 
Procedure With CC), and 822 (Lymphoma and Leukemia With Major O.R. 
Procedure Without CC/MCC). We expect that cases involving treatment 
with VENCLEXTA[supreg] would most likely be assigned to the same MS-
DRGs to which cases involving comparable treatments are assigned.
    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 VENCLEXTA[supreg] does not involve the treatment of the 
same or similar type of disease or same or similar patient population 
because there are currently no curative treatment options available for 
elderly patients who have been newly diagnosed with AML who are 
ineligible for intensive chemotherapy.
    The applicant further asserted that the disease and patient 
population for which VENCLEXTA[supreg] provides treatment is unique. 
There are no other FDA-approved therapies specific to this patient 
population--newly diagnosed AML patients who are ineligible for 
intensive chemotherapy--and currently these patients receive only 
lower-intensity treatments without curative intent, but rather 
treatment is focused on alleviating symptoms, prolonging life, and/or 
improving quality of life.\390\ The applicant stated that where 
patients on intensive chemotherapy have benefited from improvements in 
overall survival over the past 50 years, ineligible patients have not; 
and more effective, better-tolerated therapies for elderly patients who 
have been diagnosed with AML are urgently needed.\391\ The applicant 
further stated that this unmet medical need is one reason why 
VENCLEXTA[supreg] received Breakthrough Therapy designation from the 
FDA for this patient population.\392\
---------------------------------------------------------------------------

    \390\ Wolters Kluwer Health, ``Acute myeloid leukemia: Treatment 
and outcomes in older adults,'' https://www.uptodate.com/contents/acute-myeloid-leukemia-treatment-and-outcomes-in-older-adults, 
Accessed September 11, 2018.
    \391\ DiNardo, C.D., Pratz, K.W., Letai, A., et al., ``Safety 
and preliminary efficacy of venetoclax with decitabine or 
azacitidine in elderly patients with previously untreated acute 
myeloid leukemia: a non-randomized, open-label, phase Ib study,'' 
The Lancet Oncology, 2018, vol. 19(2), pp. 216-28, doi:10.1016/
s1470-2045(18)30010-x.
    \392\ Hoffjman-LaRoche, Ltd., F., ``FDA grants breakthrough 
therapy designation for VENCLEXTA[supreg] in acute myeloid 
Leukaemia,'' https://www.roche.com/dam/jcr:0cf1ad70-02c8-44b4-94ac-ccdf1dbca95a/en/inv-update-2017-07-28-e.pdf, Accessed October 9, 
2018.
---------------------------------------------------------------------------

    With respect to whether the technology involves the treatment of a 
unique patient population, we note that as the applicant indicated, 
there are lower-intensity chemotherapeutic regimens available as 
standard-of-care therapies for patients who have been newly diagnosed 
with AML who are ineligible for intensive chemotherapy. We are inviting 
public comments on whether VENCLEXTA[supreg] is substantially similar 
to any existing technology and whether it meets the newness criterion, 
including with respect to the concerns we have raised.
    With regard to the cost criterion, the applicant conducted the 
following analysis. The applicant used the FY 2017 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 VENCLEXTA[supreg] would most likely be 
assigned. These potential cases representing patients who may be 
VENCLEXTA[supreg] candidates were identified if these cases reported a 
diagnosis of AML. The cohort was limited by excluding patients who were 
discharged as not classified with one of the relevant ICD-10-CM codes.
    From the resulting data, the applicant determined the most 
applicable MS-DRGs to use in order to determine the average length-of-
stay by identifying the codes with at least 1 percent of total 
discharge volume, which limited the selection to 16 codes. According to 
the applicant, in an effort to limit impact from MS-DRGs with probable 
low relevance and/or not usually representing solely AML inpatient 
stays, a number of high-volume MS-DRGs were not included in the 
calculation. These excluded codes included those representing high-dose 
chemotherapy inpatient stays, sepsis cases, pneumonia inpatient stays, 
and heart failure and circulation disorders. This left potential cases 
represented in MS-DRGs 808, 809, 834, 835, 836, and 839 to determine 
the average length-of-stay, which under this criterion resulted in 7.25 
days.
    The applicant noted that two limitations of this calculation method 
are: (1) That the average length-of-stay may have changed since FY 2017 
for the MS-DRGs selected; and (2) the approach of relevant case 
identification may not adequately capture patients who are ineligible 
for intensive chemotherapy.
    The applicant provided additional analyses with the 
VENCLEXTA[supreg] charges under six separate cost threshold scenarios. 
According to the applicant, the cost criterion was satisfied in each of 
these scenarios, with charges in excess of the average case-weighted 
threshold amount. Scenario 1 captures discharges classified with one or 
more of seven subtypes of patients who have been diagnosed with AML who 
have not achieved remission or who have been diagnosed with AML in 
relapse; a subgroup to capture patients who have not been responsive to 
existing treatments. Scenario 2 captures discharges classified with one 
or more of seven subtypes of patients who had been diagnosed with AML 
who never have achieved remission; a population that will have a high 
concentration of patients who have been newly diagnosed with AML. 
Lastly, scenario 3 is a combination of all discharges that classified 
patients who have been diagnosed with AML who have not relapsed.
    While the VENCLEXTA[supreg] Breakthrough Therapy designation is for 
use in elderly patients who have been newly diagnosed with AML, the 
applicant determined it was necessary to produce separate cost 
threshold calculations based on the three diagnosis code selections 
pending the final VENCLEXTA[supreg] label. Scenarios 1 through 3 have 
additional exclusions and inclusion codes that: (1) Add comorbidities 
to patients between 65 years old and 74 years old; (2) remove affects 
from related non-AML conditions; and (3) ensure that all discharges 
were administered drugs. Scenarios 4, 5, and 6 use the same base ICD-
10-CM inclusion codes as scenarios 1, 2, and 3, respectively, however, 
they do not use additional inclusion and exclusion codes, which makes 
the cost threshold results representative of a broader patient 
population. For each cost threshold scenario, the applicant also 
applied a deduction of 50 percent of pharmacy charges to account for 
the replacement of hospital expenditures when VENCLEXTA[supreg] is used 
as first-line therapy.
    The applicant produced cost threshold results for 6 scenarios, each 
with 4 MS-DRGs, for a total of 24 cost threshold calculations. All four 
MS-DRGs had identical volume percentages in each of the six scenarios. 
The average dollar amount by which the average case-weighted 
standardized charges per case exceeded the average case-weighted 
threshold amount is

[[Page 19365]]

$17,612.75 for scenario 1, $15,730.27 for scenario 2, $15,566.70 for 
scenario 3, $33,868.18 for scenario 4, $32,098.60 for scenario 5, and 
$30,860.67 for scenario 6. The applicant asserted that considering only 
the most applicable MS-DRGs, MS-DRG 834 and MS-DRG 835, the average 
case-weighted threshold amounts were exceeded by a range of $16,169.02 
at the lowest (scenario 2) and $50,185.99 at the highest (scenario 4) 
and, therefore, the applicant believes VENCLEXTA[supreg] meets the cost 
criterion.
    Based on all of the analyses above, the applicant maintained that 
VENCLEXTA[supreg] meets the cost criterion. We are inviting public 
comments on whether VENCLEXTA[supreg] meets the cost criterion.
    With regard to substantial clinical improvement, the applicant 
asserted that VENCLEXTA[supreg], in combination with either azacitidine 
or decitabine, and VENCLEXTA[supreg], in combination with low-dose 
cytarabine, both constitute a substantial clinical improvement over 
currently available treatments for patients who have been newly 
diagnosed with AML who are ineligible for intensive chemotherapy. The 
applicant submitted two main studies to support its assertion that the 
technology represents a substantial clinical improvement over existing 
technologies.
    The first study submitted was M14-358, a Phase Ib, open-label, 
multi-center, non-randomized study of the use of VENCLEXTA[supreg], in 
combination with azacitidine or decitabine, in the treatment of 
patients who have been newly diagnosed with AML who are not eligible 
for standard induction therapy. Eligible patients were 60 years old and 
older, had previously undiagnosed AML, had intermediate- or poor-risk 
cytogenetics, and were not eligible for standard induction therapy. 
Patients received VENCLEXTA[supreg] via a daily ramp-up to a final 400 
mg once-daily dose. During the ramp-up, patients received tumor lysis 
syndrome (TLS) prophylaxis and were hospitalized for monitoring. 
Azacitidine at 75 mg/m2 was administered either intravenously or 
subcutaneously on Days 1 through 7 of each 28-day cycle beginning on 
Cycle 1 Day 1. Decitabine at 20 mg/m2 was administered intravenously on 
Days 1 through 5 of each 28-day cycle beginning on Cycle 1 Day 1. 
Patients continued to receive treatment cycles until disease 
progression or unacceptable toxicity. Azacitidine dose reduction was 
implemented in the clinical trial for management of hematologic 
toxicity. Dose reductions for decitabine were not implemented in the 
clinical trial.
    The primary objective of the escalation stage of this trial was to 
evaluate the safety and pharmacokinetics of orally-administered 
VENCLEXTA[supreg], combined with decitabine or azacitidine, at standard 
doses and schedules in patients who had been newly diagnosed with AML 
who were 60 years old and older and who are not eligible for standard 
induction therapy due to comorbidities. Secondary objectives for the 
dose escalation included assessing the preliminary efficacy of the use 
of VENCLEXTA[supreg] administered orally, in combination with either 
decitabine or azacitidine, in this patient population. The primary 
objectives of the expansion stage were to confirm the safety and to 
assess efficacy including complete remission (CR) and complete 
remission with incomplete blood count recovery (CRi) and determine 
overall survival (OS) of the use of VENCLEXTA[supreg] combined with 
decitabine or azacitidine in the treatment of patients who had been 
newly diagnosed with AML. A secondary objective for the expansion was 
to evaluate duration of response (DOR). Complete remission was defined 
as absolute neutrophil count greater than 1,000/microliter, platelets 
greater than 100,000/microliter, red blood cell transfusion 
independence, and bone marrow with less than 5 percent blast, absence 
of circulating blasts and blasts with Auer rods, and absence of 
extramedullary disease. Complete remission with partial hematological 
recovery (CRh) was defined as less than 5 percent of blasts in the bone 
marrow, no evidence of disease, and partial recovery of peripheral 
blood counts (platelets greater than 50,000/microliter and ANC greater 
500/microliter).
    The study arm with VENCLEXTA[supreg], in combination with 
azacitadine, had 67 patients with a mean age of 76 years old (range 61 
years old to 90 years old). Eighty-seven percent of this group was 
white, 64 percent had an ECOG performance status of 0 to 1, and 34 
percent had poor cytogenetic risk detected. The study arm with 
VENCLEXTA[supreg], in combination with decitabine, had 13 patients with 
a mean age of 75 years old (range 68 years old to 86 years old). Seven-
seven percent of this group was white, 92 percent had an ECOG 
performance status of 0 to 1, and 62 percent had poor cytogenetic risk 
detected.
    For patients who received VENCLEXTA[supreg], in combination with 
azacitadine, 37.5 percent (95 percent CI 26, 50) achieved CR and 24 
percent (95 percent CI 14, 36) achieved CRh. Sixty-one percent of the 
patients achieved CR or CRh. The median time to first CR or CRh was 1 
month (range 0.7 months to 8.9 months), and median observed time in 
remission for those patients who achieved CR was 5.5 months (range 0.4 
months to 30 months) for this group. The median OS was 16.9 months, the 
12-month OS estimate was 57 percent, and median duration of response 
was 21.2 months. For patients who received VENCLEXTA[supreg], in 
combination with decitabine, 54 percent (95 percent CI, 25 months to 81 
months) achieved CR and 8 percent (95 percent CI, 0.2 months to 36 
months) achieved CRh. Sixty-two percent of the patients achieved CR or 
CRh. The median time to first CR or CRh was 1.9 months (range 0.8 
months to 4.2 months), and median observed time in remission for those 
who achieved CR was 4.7 months (range 1 month to 18 months) for this 
group. The median OS was 16.2 months, the 12-month OS estimate was 61 
percent, and median duration of response was 15 months. The study 
enrolled 35 additional patients (age range 65 years old to 74 years 
old) who did not have known comorbidities that precluded the use of 
intensive induction chemotherapy and were treated with 
VENCLEXTA[supreg], in combination with azacitidine (n=17) or decitabine 
(n=18). For the additional patients treated with VENCLEXTA[supreg], in 
combination with azacitidine, the CR rate was 35 percent (95 percent CI 
14, 62). The CRh rate was 41 percent (95 percent CI 18, 67). For the 
additional patients treated with VENCLEXTA[supreg], in combination with 
decitabine, the CR rate was 56 percent (95 percent CI 31, 79). The CRh 
rate was 22 percent (95 percent CI 6.4, 48).
    In terms of safety, for patients receiving azacitadine, the most 
common adverse reactions (greater than or equal to 30 percent) of any 
grade were nausea, diarrhea, constipation, neutropenia, 
thrombocytopenia, hemorrhage, peripheral edema, vomiting, fatigue, 
febrile neutropenia, rash, and anemia. Serious adverse reactions were 
reported in 75 percent of the patients. The most frequent serious 
adverse reactions (greater than or equal to 5 percent) were febrile 
neutropenia, pneumonia (excluding fungal), sepsis (excluding fungal), 
respiratory failure, and multiple organ dysfunction syndrome. The 
incidence of fatal adverse drug reactions was 1.5 percent within 30 
days of starting treatment. No reaction had an incidence of greater 
than or equal to 2 percent. Discontinuations due to adverse reactions 
occurred in 21 percent of the patients. The most frequent adverse 
reactions leading to drug

[[Page 19366]]

discontinuation (greater than or equal to 2 percent) were febrile 
neutropenia and pneumonia (excluding fungal). Dosage interruptions due 
to adverse reactions occurred in 61 percent of the patients. The most 
frequent adverse reactions leading to dose interruption (greater than 
or equal to 5 percent) were neutropenia, febrile neutropenia, and 
pneumonia (excluding fungal). Dosage reductions due to adverse 
reactions occurred in 12 percent of the patients. The most frequent 
adverse reaction leading to dose reduction (greater than or equal to 5 
percent) was neutropenia.
    For patients receiving decitabine, the most common adverse 
reactions (greater than or equal to 30 percent) of any grade were 
febrile neutropenia, constipation, fatigue, thrombocytopenia, abdominal 
pain, dizziness, hemorrhage, nausea, pneumonia (excluding fungal), 
sepsis (excluding fungal), cough, diarrhea, neutropenia, back pain, 
hypotension, myalgia, oropharyngeal pain, peripheral edema, pyrexia, 
and rash. Serious adverse reactions were reported in 85 percent of the 
patients. The most frequent serious adverse reactions (greater than or 
equal to 5 percent) were febrile neutropenia, sepsis (excluding 
fungal), pneumonia (excluding fungal), diarrhea, fatigue, cellulitis, 
and localized infection. One (8 percent) fatal adverse drug reaction of 
bacteremia occurred within 30 days of starting treatment. 
Discontinuations due to adverse reactions occurred in 38 percent of the 
patients. The most frequent adverse reaction leading to drug 
discontinuation (greater than or equal to 5 percent) was pneumonia 
(excluding fungal). Dosage interruptions due to adverse reactions 
occurred in 62 percent of the patients. The most frequent adverse 
reactions leading to dose interruption (greater than or equal to 5 
percent) were febrile neutropenia, neutropenia, and pneumonia 
(excluding fungal). Dosage reductions due to adverse reactions occurred 
in 15 percent of the patients. The most frequent adverse reaction 
leading to dose reduction (greater than or equal to 5 percent) was 
neutropenia.
    The second study submitted was M14-387, a non-randomized, open-
label Phase I/II study of the use of VENCLEXTA[supreg], in combination 
with low-dose cytarabine, in patients who had been newly diagnosed with 
AML who are ineligible for standard anthracycline-based induction 
therapy. The study enrolled patients who were 60 years old and older 
who had been diagnosed with AML and who were not eligible for standard 
induction therapy.
    Patients initiated use of VENCLEXTA[supreg] via daily ramp-up to a 
final 600 mg once-daily dose. During the ramp-up, patients received TLS 
prophylaxis and were hospitalized for monitoring. Cytarabine at a dose 
of 20 mg/m2 was administered subcutaneously once-daily on Days 1 
through 10 of each 28-day cycle beginning on Cycle 1 Day 1.
    This study consisted of three distinct portions. The first portion 
of the study was a Phase I, or dose-escalation portion, that evaluated 
the safety and pharmacokinetics (PK) profile of VENCLEXTA[supreg] 
administered with low-dose azacitidine with the objectives of defining 
the maximum-tolerated dose (MTD) and generating data to support a 
recommended Phase II dose (RPTD). A subsequent initial Phase II portion 
evaluated whether the RPTD had sufficient efficacy and acceptable 
toxicity to warrant further development of the combination therapy. 
Subsequently, a Phase II, Cohort C was enrolled to evaluate the ORR for 
patients who were allowed additional supportive medications (for 
example, strong CYP3A inhibitors), if medically indicated, because new 
PK data emerged from external studies demonstrating that these 
previously excluded concomitant medications may be tolerable with an 
appropriate VENCLEXTA[supreg] dose adjustment during co-administration.
    The primary objectives of the Phase I portion were to assess the 
safety profile, characterize the (PK), and determine the dose schedule, 
the MTD, and the RPTD of the use of VENCLEXTA[supreg], in combination 
with low-dose azacitidine or cytarabine in the treatment of patients 
who had been newly diagnosed with AML who were 60 years old and older 
and who were not eligible for standard induction therapy due to co-
morbidity or other factors. The primary objectives of the initial Phase 
II portion of the study were to evaluate the preliminary estimates of 
efficacy including the overall response rate (ORR) and to characterize 
the toxicities of the combination at the RPTD. The primary objective of 
Phase II, Cohort C was to evaluate the ORR for patients allowed 
additional supportive medications (strong cytochrome P450 [CYP]3A 
inhibitors), if medically indicated. The secondary objectives of the 
initial Phase II portion and Phase II, Cohort C were to evaluate 
leukemia response (rates of complete remission (CR)), complete 
remission with incomplete blood count recovery (Cri), partial remission 
(PR), and morphologically leukemia-free status (MLFS)), duration of 
response (DOR), and OS. Patients continued to receive treatment cycles 
until disease progression or unacceptable toxicity. Dose reduction for 
low-dose cytarabine was not implemented in the clinical trial.
    The study enrolled 61 patients with a median age of 76 years old 
(range 63 years old to 90 years old), 92 percent of whom were white, 66 
percent of whom had an ECOG performance status of 0 to 1, and 34 
percent of whom had poor cytogenetic risk detected. Twenty-one percent 
(95 percent CI 12, 34) achieved CR and 21 percent (95 percent CI 12, 
34) achieved CRh. Overall 43 percent of the patients achieved CR or 
CRh. The median OS was 10.1 months and median duration of response was 
8.1 months. The study enrolled 21 additional patients (age ranged 67 
years old to 74 years old) who did not have known comorbidities that 
precluded the use of intensive induction chemotherapy and were treated 
with VENCLEXTA[supreg], in combination with low-dose cytarabine. The CR 
rate was 33 percent (95 percent CI: 15, 57). The CRh rate was 24 
percent (95 percent CI: 8.2, 47).
    In terms of safety, the most common adverse reactions (greater than 
or equal to 30 percent) of any grade were nausea, thrombocytopenia, 
hemorrhage, febrile neutropenia, neutropenia, diarrhea, fatigue, 
constipation, and dyspnea. Serious adverse reactions were reported in 
95 percent of the patients. The most frequent serious adverse reactions 
(greater than or equal to 5 percent) were febrile neutropenia, sepsis 
(excluding fungal), hemorrhage, pneumonia (excluding fungal), and 
device-related infection. The incidence of fatal adverse drug reactions 
was 4.9 percent within 30 days of starting treatment with no reaction 
having an incidence of greater than or equal to 2 percent. 
Discontinuations due to adverse reactions occurred in 33 percent of the 
patients. The most frequent adverse reactions leading to drug 
discontinuation (greater than or equal to 2 percent) were hemorrhage 
and sepsis (excluding fungal). Dosage interruptions due to adverse 
reactions occurred in 52 percent of the patients. The most frequent 
adverse reactions leading to dose interruption (greater than or equal 
to 5 percent) were thrombocytopenia, neutropenia, and febrile 
neutropenia. Dosage reductions due to adverse reactions occurred in 8 
percent of the patients. The most frequent adverse reaction leading to 
dose reduction (greater than or equal to 2 percent) was 
thrombocytopenia. On the basis of these studies, the applicant asserted 
that median OS, 12-month OS, CR + CRi, and DOR for VENCLEXTA[supreg] 
are all substantially higher than the outcomes

[[Page 19367]]

achieved by standard-of-care as reported by studies. The applicant 
asserted that these improvements, especially the more than doubling of 
the remission rates as compared to other available low-intensity 
therapies (range reported as 0 to 28 percent), are substantial and 
clinically meaningful.
    In regard to the substantial clinical improvement criterion for 
VENCLEXTA[supreg], we reviewed the data the applicant provided on 
outcomes (for example, CR, CRh, CRi, DOR, and OS) using historical 
controls of other chemotherapeutic regimens used for this target 
patient population, and we note that the data is lacking information 
with regard to a direct comparator. The studies did not detail the 
demographics and outcomes for patients over the age of 75 versus 
younger patients. We note that the applicant did not provide any 
information on how many enrolled patients are from the United States. 
We further note that fatal adverse drug reactions occurred in both 
submitted studies in patients receiving treatment involving the use of 
VENCLEXTA[supreg], and dosage interruptions due to adverse events 
occurred in a significant proportion of the patients receiving the 
drug. We also are concerned about the lack of conclusive data on the 
efficacy of VENCLEXTA[supreg].
    We are inviting public comments on whether VENCLEXTA[supreg] meets 
the substantial clinical improvement criterion. We did not receive any 
written public comments in response to the New Technology Town Hall 
meeting notice published in the Federal Register regarding the 
substantial clinical improvement criterion for VENCLEXTA[supreg] or at 
the New Technology Town Hall meeting.
6. Request for Information on the New Technology Add-On Payment 
Substantial Clinical Improvement Criterion
    Under the Hospital Inpatient Prospective Payment System (IPPS), CMS 
has established policies to provide additional payment for new medical 
services and technologies. Similarly, under the Hospital Outpatient 
Prospective Payment System (OPPS), CMS has established policies to 
provide separate payment for innovative medical devices, drugs and 
biologicals. Sections 1886(d)(5)(K) and (L) of the Act require the 
Secretary to establish a mechanism to recognize the costs of new 
medical services and technologies under the IPPS, and section 
1833(t)(6) of the Act requires the Secretary to provide an additional 
payment amount, known as a transitional pass-through payment, for the 
additional costs of innovative medical devices, drugs, and biologicals 
under the OPPS. The substantial clinical improvement criterion that is 
used to evaluate a technology that is the subject of an application for 
new technology add-on payments under the IPPS or an application for the 
transitional pass-through payment for the additional costs of 
innovative devices under the OPPS (both categories of technologies are 
hereafter collectively referred to as ``new technology'') is the 
subject of the potential revisions discussed in this section to the new 
technology add-on payment policy's substantial clinical improvement 
criteria.
    Under the IPPS, the regulations at Sec.  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. Under this third criterion, Sec.  412.87(b)(1) of our 
existing regulations provides that a new technology is an appropriate 
candidate for an additional payment when it represents an advance that 
substantially improves, relative to technologies previously available, 
the diagnosis or treatment of Medicare beneficiaries (we refer readers 
to the September 7, 2001 final rule for a more detailed discussion of 
this criterion (66 FR 46902)). For more background on add-on payments 
for new medical services and technologies under the IPPS, we refer 
readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48552).
    In the CY 2001 OPPS interim final rule with comment period (65 FR 
67798), we implemented the transitional device pass-through payment 
requirements in section 1833(t)(6) of the Act under our regulation at 
42 CFR 419.66. Under Sec.  419.66(b), a medical device must meet the 
following requirements to be eligible for transitional pass-through 
payments: (1) If required by FDA, the device must have received FDA 
premarket approval or clearance (except for a device that has received 
an FDA investigational device exemption (IDE) and has been classified 
as a Category B device by the FDA), or another appropriate FDA 
exemption; and the pass-through payment application must be submitted 
within 3 years from the date of the initial FDA approval or clearance, 
if required, unless there is a documented, verifiable delay in U.S. 
market availability after FDA approval or clearance is granted, in 
which case CMS will consider the pass-through payment application if it 
is submitted within 3 years from the date of market availability; (2) 
the device is determined to be reasonable and necessary for the 
diagnosis or treatment of an illness or injury or to improve the 
functioning of a malformed body part, as required by section 
1862(a)(1)(A) of the Act; and (3) the device is an integral part of the 
service furnished, is used for one patient only, comes in contact with 
human tissue, and is surgically implanted or inserted (either 
permanently or temporarily), or applied in or on a wound or other skin 
lesion. In addition, according to Sec.  419.66(b)(4), a device is not 
eligible to be considered for device pass-through payment if it is any 
of the following: (1) Equipment, an instrument, apparatus, implement, 
or item of this type for which depreciation and financing expenses are 
recovered as depreciation assets as defined in Chapter 1 of the 
Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker).
    Finally, we use the following criteria, as set forth under Sec.  
419.66(c), to determine whether a new category of pass-through payment 
devices should be established. The devices to be included in the new 
category must:
     Not be appropriately described by an existing category or 
by any category previously in effect established for transitional pass-
through payments, and were not being paid for as an outpatient service 
as of December 31, 1996;
     Have an average cost that is not ``insignificant'' 
relative to the payment amount for the procedure or service with which 
the device is associated as determined under Sec.  419.66(d) by 
demonstrating: (1) The estimated average reasonable costs of the 
devices in the category exceeds 25 percent of the applicable APC 
payment amount for the service related to the category of devices; (2) 
the estimated average reasonable cost of the devices in the category 
exceeds the cost of the device-related portion of the APC payment 
amount for the related service by at least 25 percent; and (3) the 
difference between the estimated average reasonable cost of the devices 
in the category and the portion of the APC payment amount for the 
device exceeds 10 percent of the APC payment amount for the related 
service (with the exception of brachytherapy and temperature-monitored 
cryoblation, which are exempt from the cost

[[Page 19368]]

requirements as specified at Sec. Sec.  419.66(c)(3) and (e)); and
     Demonstrate a substantial clinical improvement, that is, 
substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment.
    For more background on transitional pass-through payments for 
devices under the OPPS, we refer readers to the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
    CMS posts on its website the application forms (OMB control #: 
0938-1347 for IPPS, and OMB control #: 0938-0857 for OPPS) that 
applicants must use to apply for IPPS new technology add-on payments 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html and for OPPS transitional pass-through 
payments for devices at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html). Each 
application describes the information specifically requested from each 
applicant, including what information is needed to support claims of 
substantial clinical improvement. For example, CMS requests that the 
applicant provide a summary of substantial clinical improvement 
claim(s), along with the data supporting each claim. For IPPS new 
technology add-on payments, in order to provide an opportunity for 
public input prior to publication of each proposed rule, CMS publishes 
a notice in the Federal Register to announce a town hall meeting at the 
CMS Headquarters Office in Baltimore, MD, which provides an opportunity 
for public discussion of the substantial clinical improvement criterion 
for each IPPS application. This meeting can be attended in-person or 
through a telephone line, and is also live-streamed on the CMS YouTube 
web page. CMS considers each IPPS applicant's presentation made at the 
town hall meeting, as well as written comments submitted on the 
applications that were received by the applicable deadline, in our 
evaluation of the new technology add-on payment applications in the 
IPPS/LTCH PPS proposed rule. For both IPPS and OPPS applicants, CMS 
summarizes each applicant's claim(s) of substantial clinical 
improvement as part of its discussion of the entire application in the 
relevant proposed rule, as well as any concerns regarding those claims. 
In the relevant final rule for the IPPS, CMS summarizes and responds to 
public comments received on the proposed rule and presents its decision 
whether to approve or disapprove the application for additional payment 
for the technology for the upcoming fiscal year. In the relevant final 
rule for the OPPS, CMS similarly responds to public comments and 
discusses its decision to approve or deny the application for separate 
transitional pass-through payment for the device for the upcoming 
calendar year.
    A stakeholder comment received in response to the most recent New 
Technology Town Hall meeting held in December 2018 expressed 
appreciation for CMS' statements in the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 20278 through 20279) related to the relationship between 
the data which satisfies FDA designations and the data which satisfies 
the substantial clinical improvement criterion under the IPPS 
regulations, and stated that the clarification would help future 
applicants understand which types of data can serve as the foundation 
for satisfying the substantial clinical improvement criterion. 
Commenters also stated that CMS' statements presented in the FY 2019 
IPPS/LTCH PPS proposed rule explaining that it accepts a wide range of 
data, including peer-reviewed articles, study results, letters from 
major associations, or other evidence that would support the conclusion 
of substantial clinical improvement were appreciated. However, feedback 
from applicants for new technology add-on payments and commenters in 
prior years have indicated that it would be helpful for CMS to provide 
greater guidance on what constitutes ``substantial clinical 
improvement.'' We understand that greater clarity regarding what would 
substantiate the requirements of this criterion would help the public, 
including innovators, better understand how CMS evaluates new 
technology applications for add-on payments and provide greater 
predictability about which applications will meet the criterion for 
substantial clinical improvement. We are considering potential 
revisions to the substantial clinical improvement criteria under the 
IPPS new technology add-on payment policy, and the OPPS transitional 
pass-through payment policy for devices, and are seeking public 
comments on the type of additional detail and guidance that the public 
and applicants for new technology add-on payments would find useful. 
This request for public comments is intended to be broad in scope and 
provide a foundation for potential rulemaking in future years.
    In addition to this broad request for public comments for potential 
rulemaking in future years, as discussed in greater detail in section 
II.H.7. of the preamble of this proposed rule, in order to respond to 
stakeholder feedback requesting greater understanding of CMS' approach 
to evaluating substantial clinical improvement, we are soliciting 
comments from the public on specific changes or clarifications to the 
IPPS and OPPS substantial clinical improvement criterion that CMS might 
consider making in the FY 2020 IPPS/LTCH PPS final rule to provide 
greater clarity and predictability.
    In the applications for both the IPPS new technology add-on 
payment, and for OPPS limited to the transitional pass-through payment 
for devices, CMS lists the following criteria that it uses to determine 
whether a new medical service or technology would represent a 
substantial clinical improvement:
    (1) The technology offers a treatment option for a patient 
population unresponsive to, or ineligible for, currently available 
treatments.
    (2) The technology offers the ability to diagnose a medical 
condition in a patient population where that medical condition is 
currently undetectable or offers the ability to diagnose a medical 
condition earlier in a patient population than allowed by currently 
available methods. There must also be evidence that use of the device 
to make a diagnosis affects the management of the patient.
    (3) Use of the technology significantly improves clinical outcomes 
for a patient population as compared to currently available treatments. 
Some examples of outcomes that are frequently evaluated in studies of 
technologies are the following:
     Reduced mortality rate with use of the device;
     Reduced rate of device-related complications;
     Decreased rate of subsequent diagnostic or therapeutic 
interventions (for example, due to reduced rate of recurrence of the 
disease process);
     Decreased number of future hospitalizations or physician 
visits;
     More rapid beneficial resolution of the disease process 
treatment because of the use of the device;
     Decreased pain, bleeding, or other quantifiable symptom; 
and
     Reduced recovery time.
    CMS considers the totality of the substantial clinical improvement 
claims and supporting data, as well as public

[[Page 19369]]

comments, when evaluating this aspect of each application.
    We are requesting feedback on whether new or changed regulatory 
provisions or new or changed guidance regarding additional aspects of 
the substantial clinical improvement evaluation process in the 
following areas would be helpful. Comments we receive in response to 
the following general questions will inform future rulemaking after the 
issuance of the final rule for FY 2020:
     What role should substantial clinical improvement play in 
our payment policies to ensure these policies do not discourage 
appropriate utilization of new medical services and technologies?
     How should CMS determine what existing technologies are 
appropriate comparators to new technologies? How should CMS evaluate a 
technology when its comparators have different measured clinical 
outcomes?
     Should CMS provide more specificity or greater clarity on 
the types of evidence or study designs that may be considered by the 
agency in evaluating substantial clinical improvement?
    For example, what data should be used to demonstrate whether the 
use of the technology substantially improves clinical outcomes for 
patients relative to existing technologies? To what extent, if any, 
should the data be focused on the Medicare population? What clinical 
outcomes data and patient reported measures data should be assessed to 
demonstrate substantial clinical improvement?
    What particular types of study designs, types of inclusion and 
exclusion criteria, or types of statistical methodologies, either 
generally or in comparison to existing technologies, could a new 
technology use to demonstrate that the technology meets the substantial 
clinical improvement criterion?
    Are there certain study designs that are technically or ethically 
challenging for specific medical technologies and, if so, should that 
be more explicitly reflected in the regulations?
    Should potential limitations related to cross-trial comparisons 
with any existing therapies be more explicitly reflected in the 
regulations?
    For non-inferiority studies, the goal of such studies is to show 
that the difference between the new and active control treatment is 
small--small enough to allow the known effectiveness of the active 
control, based on its performance in past studies and the assumed 
effectiveness of the active control in the current study, to support 
the conclusion that the new technology is also effective. Are there 
particular instances where non-inferiority studies should be considered 
sufficient for an evaluation for substantial clinical improvement 
because a non-inferiority study is the most appropriate study design 
for a given technology?
     Are there instances where it would be appropriate for CMS 
to infer substantial clinical improvement (for example, technical or 
financial challenges to study accrual)?
     Should CMS consider evidence regarding the off-label use 
of a new technology? If so, what is the appropriate use of that 
evidence when evaluating a new technology for an FDA approved or 
cleared indication? Are there other new technology add-on payment or 
device pass-through payment changes that CMS should consider regarding 
off-label use?
     We note that, while additional specificity and guidance on 
substantial clinical improvement may be helpful, this may also have the 
unintended consequence of limiting future flexibility in the evaluation 
of future applications, especially as new technologies are continually 
emerging. How should CMS balance these considerations in the evaluation 
of new technologies as it considers potential future steps? Towards 
this end, would it be helpful to the goal of both predictability and 
flexibility if the agency explained the types of information or 
evidence that are not required for a finding of substantial clinical 
improvement?
     Currently, our regulations at Sec.  412.87 require that we 
announce the results of the new technology add-on payment 
determinations in the Federal Register as part of our annual updates 
and changes to the IPPS. We also are seeking public comments on 
revising this requirement to allow the new technology add-on payment 
determinations, including but not limited to determinations of 
substantial clinical improvement, to be announced annually in the 
Federal Register separate from the annual updates and changes to the 
IPPS.
7. Potential Revisions to the New Technology Add-On Payment and 
Transitional Device Pass-Through Payment Substantial Clinical 
Improvement Criterion for Applications Received Beginning in FY 2020 
for IPPS and CY 2020 for OPPS
    In addition to future possible rulemaking and further guidance 
based on the responses to the general questions in the preceding 
section, we also are considering adopting, in the FY 2020 IPPS/LTCH PPS 
final rule, the following potential regulatory changes to the 
substantial clinical improvement criteria for applications received 
beginning in FY 2020 for IPPS (that is, for FY 2021 and subsequent new 
technology add-on payment) and beginning in CY 2020 for OPPS, after 
consideration of the public comments we receive in response to this 
proposed rule. We also are seeking public comments on whether any or 
all of these potential regulatory changes might be more appropriate as 
changes in guidance rather than or in addition to changes to our 
regulations.
     Adopting a policy in regulation or sub-regulatory guidance 
that explicitly specifies that the requirement for substantial clinical 
improvement can be met if the applicant demonstrates that new 
technology would be broadly adopted among applicable providers and 
patients. A broad adoption criterion would reflect the choices of 
patients and providers, and thus the marketplace, in determining 
whether a technology represents a substantial clinical improvement. 
This patient-centered approach would acknowledge that patients and 
providers can together determine the potential for substantial clinical 
improvement on an individual basis. As part of the policy being 
considered, we would add a provision at Sec.  412.87(b)(1) and Sec.  
419.66(c)(2) stating that ``substantially improves'' means, inter alia, 
broad adoption by applicable providers and patients. We are seeking 
public comments on whether, if such a provision is finalized, it should 
specify that a ``majority'' is the appropriate way to further define 
and specify ``broad adoption'', or if some other measure of ``broad'' 
(for example, more than the current standard-of-care, more than a 
particular percentage) is more appropriate. Furthermore, we are seeking 
public comments on whether to further specify that ``broad adoption'' 
is in the context of applicable providers and patients for the 
technology, and does not mean broadly adopted across the entire IPPS or 
OPPS. We are interested in whether commenters have particular 
suggestions regarding how, in implementing such a provision, CMS could 
provide other helpful regulatory clarification or sub-regulatory 
guidance regarding how ``broad adoption'' could be measured and 
demonstrated prospectively as a basis for substantial clinical 
improvement. If adopted, such a policy would establish, by regulation, 
predictability and clarity regarding the meaning and application of 
substantial clinical improvement by providing a specific and clear path 
to one way

[[Page 19370]]

substantial clinical improvement can be established.
     Adopting in regulations or through sub-regulatory guidance 
a definition that the term ``substantially improves'' means, inter 
alia, that the new technology has demonstrated positive clinical 
outcomes that are different from existing technologies. As part of the 
policy being considered, we would specify that the term ``improves'' 
can always be met by comparison to existing technology. Then, we would 
further specify that such improvement may always be demonstrated by 
reference and comparison to diagnosis or treatment achieved by existing 
technology. This would provide a standard for innovators that is 
predictable and based on comparison to outcomes from existing 
technologies, and would reflect that an evaluation of ``improvement'' 
involves a comparison relative to existing technology. If adopted, such 
a policy, would establish, by regulation or through sub-regulatory 
guidance, predictability and clarity regarding the meaning and 
application of substantial clinical improvement by clarifying how 
existing and new technologies are compared.
     Adopting a policy in regulation or through sub-regulatory 
guidance that specifies that ``substantially improves'' can be met 
through real-world data and evidence, including a non-exhaustive list 
of such data and evidence, but that such evidence is not a requirement. 
Real-world evidence reflects usage in everyday settings outside of a 
clinical trial, which is the majority of care delivered in the United 
States. For example, between 3 percent and 5 percent of patients with 
cancer are enrolled in a clinical trial.\393\
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    \393\ https://ascopubs.org/doi/full/10.1200/jop.0922001.
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    As part of the policy being considered, the regulation or sub-
regulatory guidance would list the kinds of data and evidence and 
particular findings that CMS would consider in determining whether the 
technology meets the substantial clinical improvement criterion and 
that such kinds of data can be sufficient to meet that standard. Then, 
we would provide a non-exhaustive list of such kinds of data and 
findings, including: a decreased mortality rate; a reduction in length 
of stay; a reduced recovery time; a reduced rate of at least one 
significant complication; a decreased rate of at least one subsequent 
diagnostic or therapeutic intervention; a reduction in at least one 
clinically significant adverse event; a decreased number of future 
hospitalizations or physician visits; a more rapid beneficial 
resolution of the disease process treatment; an improvement in one or 
more activities of daily living; or, an improved quality of life. 
Outcomes relating to quality of life, length of stay, and activities of 
daily living may reflect meaningful endpoints not often captured by 
clinical trials or other pivotal trials designed primarily for 
regulatory purposes. We are seeking public comments on whether we 
should adopt such a policy and list, and if so, what the list should 
contain. We also are seeking comments on whether, as a general matter, 
data exists on patients' experience with new medical devices outside of 
the clinician's office, on the effects of a treatment on patients' 
activities of daily living, or on any of the other areas listed above. 
These comments would at least inform our adoption of a policy in 
regulations or sub-regulatory guidance. If adopted, such a policy, 
would establish, by regulation or guidance, predictability and clarity 
regarding the meaning and application of substantial clinical 
improvement by providing a specific and clear path to one way 
substantial clinical improvement can be established.
     To address the impression that a peer-reviewed journal 
article is required for the agency to find that a new technology meets 
the requirement for substantial clinical improvement, explicitly 
adopting a policy in regulations or sub-regulatory guidance that the 
relevant information for purposes of a finding of substantial clinical 
improvement may not require a peer-reviewed journal article. We 
recognize the value of both academic and other traditional and non-
traditional emerging sources of information in determining substantial 
clinical improvement. We are seeking public comments on whether, in 
addition to making clear that a peer-reviewed journal article is not 
required, types of relevant information that could be helpful should be 
specified in such a regulation or guidance to include but not be 
limited to other particular formats or sources of information, such as 
consensus statements, white papers, patient surveys, editorials and 
letters to the editor, systematic reviews, meta-analyses, inferences 
from other literature or evidence, and case studies, reports or series, 
in addition to randomized clinical trials, study results, or letters 
from major associations, whether published or not. If adopted, such a 
policy, would establish, by regulation or guidance, predictability and 
clarity that the agency is open, in every case, to all types of 
information in considering whether a new technology meets the 
substantial clinical improvement criterion, consistent with our current 
practice of not requiring any particular type of information.
     Adopting a policy in regulations or sub-regulatory 
guidance that, if there is a demonstrated substantial clinical 
improvement based on the use of a new medical service or technology for 
any subset of beneficiaries, the substantial clinical improvement 
criterion may be met regardless of the size of that subset patient 
population. Substantial clinical improvement may be confounded by 
comorbidities, patient factors, or other concomitant therapies which 
are not readily controlled in research studies. This potential change 
recognizes that subset populations may have unique needs. As part of 
the policy being considered, we would include a statement in regulation 
or guidance that a technology may meet the ``substantial clinical 
improvement'' criterion by demonstrating a substantial improvement for 
any subset of beneficiaries regardless of size. This potential change 
would reflect that many medical technologies are designed for limited 
subset populations. Many personalized and precision medicine approaches 
aspire for ``n=1 therapy.''
    We are seeking public comments on whether, in adopting such a 
policy, we should also specify that the add-on payment would be limited 
to use in that subset of patient population. If not, why not? For 
example, if a new technology that treats cancer only demonstrates 
substantial clinical improvement for a select subset of patients with 
that diagnosis, should the additional inpatient payments for use of the 
new technology be limited to only when that new technology is used in 
the treatment of that select subset of Medicare beneficiaries, and, if 
so, how could that subset of patient population be defined in advance, 
and in what circumstances should there be an exception to any such 
limitation? If such a policy were adopted, how could it be constructed 
or written to not create new limitations or obstacles to innovation 
that are not present in our regulations today?
    We also are seeking public comments as to whether there are special 
approaches that CMS should adopt in regulations or through sub-
regulatory guidance for new technologies that treat low-prevalence 
medical conditions in which substantial clinical improvement may be 
more challenging to evaluate. Specifically, we are seeking comment on 
how to categorize and specify these conditions, including how to define 
``low-prevalence'', whether CMS should adopt any of the potential 
changes

[[Page 19371]]

under consideration in this section which are not adopted more broadly, 
or any special approaches suggested by commenters. The goal is to 
establish, by regulation or guidance, predictability and clarity that 
the substantial clinical improvement criterion can be met, either in 
all cases or for cases involving low-prevalence medical conditions, 
regardless of the size of the patient population which would benefit.
     Adopting a policy in regulations or sub-regulatory 
guidance that specifically addresses that the substantial clinical 
improvement criterion can be met without regard to the FDA pathway for 
the technology. As part of the policy being considered, we would 
clarify in regulation that the notion of ``improvement'' includes 
situations where there is an extant technology such as a predicate 
device for 510(k) purposes, and explicitly state that the agency will 
not require a device to be approved or cleared through a basis other 
than a 510(k) clearance in order for the device to be considered a 
substantial clinical improvement. If adopted, the policy described 
here, would establish, by regulation or guidance, predictability and 
clarity by clarifying that the substantial clinical improvement 
criterion can be met without regard to the FDA pathway for the 
technology, consistent with our current practice.
    We are soliciting comments on the potential revisions and 
regulatory or sub-regulatory changes described above, and also welcome 
suggestions on other information that would help us clarify and/or 
modify in the FY 2020 IPPS/LTCH PPS final rule or through sub-
regulatory guidance CMS' expectations regarding substantial clinical 
improvement for payments for new technologies.
8. Proposed Alternative Inpatient New Technology Add-On Payment Pathway 
for Transformative New Devices
    Under section 1886(d)(5)(K)(vi) of the Act, a medical service or 
technology will be considered a ``new medical service or technology'' 
if the service or technology meets criteria established by the 
Secretary after notice and an opportunity for public comment. For a 
more complete discussion of the establishment of the current criteria 
for the new technology add-on payment, we refer readers to the 
September 7, 2001 final rule (66 FR 46913), where we finalized the 
``substantial improvement'' criterion to limit new technology add-on 
payments under the IPPS to those technologies that afford clear 
improvements over the use of previously available technologies. 
Specifically, we stated that we would evaluate a request for new 
technology add-on payments against the following criteria to determine 
if the new medical service or technology would represent a substantial 
clinical improvement over existing technologies:
     The device offers a treatment option for a patient 
population unresponsive to, or ineligible for, currently available 
treatments.
     The device offers the ability to diagnose a medical 
condition in a patient population where that medical condition is 
currently undetectable or offers the ability to diagnose a medical 
condition earlier in a patient population than allowed by currently 
available methods. There must also be evidence that use of the device 
to make a diagnosis affects the management of the patient.
     Use of the device significantly improves clinical outcomes 
for a patient population as compared to currently available treatments. 
We also noted examples of outcomes that are frequently evaluated in 
studies of medical devices.
    In the September 7, 2001 final rule (66 FR 46913), we stated that 
we believed the special payments for new technology should be limited 
to those new technologies that have been demonstrated to represent a 
substantial improvement in caring for Medicare beneficiaries, such that 
there is a clear advantage to creating a payment incentive for 
physicians and hospitals to utilize the new technology. We also stated 
that where such an improvement is not demonstrated, we continued to 
believe the incentives of the DRG system would provide a useful balance 
to the introduction of new technologies. In that regard, we also 
pointed out that various new technologies introduced over the years 
have been demonstrated to have been less effective than initially 
thought, or in some cases even potentially harmful. We stated that we 
believe that it is in the best interest of Medicare beneficiaries to 
proceed very carefully with respect to the incentives created to 
quickly adopt new technology.
    Since 2001 when we first established the substantial clinical 
improvement criterion, the FDA programs for helping to expedite the 
development and review of transformative new technologies that are 
intended to treat serious conditions and address unmet medical needs 
(referred to as FDA's expedited programs) have continued to evolve in 
tandem with advances in medical innovations and technology. We note 
that at the time of the development of the September 7, 2001 final 
rule, devices were the predominant new technology entering the market 
and, therefore, the substantial clinical improvement criterion was 
developed with innovative new devices as a focus. At the time, the FDA 
had three expedited programs (Priority Review, Accelerated Approval, 
and Fast Track) for drugs and biologicals and no expedited programs for 
devices. Now, as described in FDA guidance (available on the website 
at: https://www.fda.gov/downloads/Drugs/Guidances/UCM358301.pdf and 
https://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM581664.pdf), there are 
four expedited FDA programs for drugs (the three expedited FDA programs 
named above and a fourth, Breakthrough Therapy, which was established 
in 2012) and one expedited FDA program for devices, the Breakthrough 
Devices Program. The 21st Century Cures Act (Cures Act) (Pub. L. 144-
255) established the Breakthrough Devices Program to expedite the 
development of, and provide for priority review of, medical devices and 
device-led combination products that provide for more effective 
treatment or diagnosis of life-threatening or irreversibly debilitating 
diseases or conditions and which meet one of the following four 
criteria: that represent breakthrough technologies; for which no 
approved or cleared alternatives exist; that offer significant 
advantages over existing approved or cleared alternatives, including 
the potential, compared to existing approved alternatives, to reduce or 
eliminate the need for hospitalization, improve patient quality of 
life, facilitate patients' ability to manage their own care (such as 
through self-directed personal assistance), or establish long-term 
clinical efficiencies; or the availability of which is in the best 
interest of patients.
    Some stakeholders over the years have requested that new 
technologies that receive marketing authorization and are part of an 
FDA expedited program be deemed as representing a substantial clinical 
improvement for purposes of the inpatient new technology add-on 
payments, even in the initial rulemaking on this issue. We understand 
this request would arguably create administrative efficiency because 
they currently view the two sets of criteria as the same, overlapping, 
similar, or otherwise duplicative or unnecessary. As discussed in the 
September 7, 2001 final rule in which we initially adopted the 
requirement that a new technology must represent a substantial clinical 
improvement, we proposed to consult a

[[Page 19372]]

Federal panel of experts in evaluating new technology under the 
``substantial improvement'' criterion. One commenter believed the panel 
would be unnecessary and that CMS should automatically deem drugs and 
biologicals approved by FDA that were included in its expedited 
programs (which the commenter referred to as ``fast track'' processes) 
as new technology (66 FR 46914). We stated in response that the panel 
would consider all relevant information (including FDA expedited 
program approval) in making its determinations. However, we stated that 
we did not envision an automatic approval process.
    Since 2001, we have continued to receive similar comments. More 
recently, in response to the FY 2019 New Technology Town Hall meeting 
notice (83 FR 50379) and the meeting, a commenter stated that the Food 
and Drug Administration Modernization Act of 1997 authorized a category 
of medical devices that are eligible for FDA Priority Review 
designation (83 FR 20278). The commenter explained that, to qualify, 
products must be designated by the FDA as offering the potential for 
significant improvements in the diagnosis or treatment of the most 
serious illnesses, including those that are life-threatening or 
irreversibly debilitating. The commenter indicated that the processes 
by which products meeting the statutory standard for priority review 
are considered by the FDA are specified in greater detail in FDA's 
Expedited Access Pathway Program, and in the 21st Century Cures Act. 
The commenter believed that the criteria for FDA Priority Review 
designation of devices are very similar to the substantial clinical 
improvement criteria and, therefore, devices used in the inpatient 
setting determined to be eligible for expedited review and approved by 
the FDA should automatically be considered as meeting the substantial 
clinical improvement criterion, without further consideration by CMS.
    The Administration is committed to addressing barriers to 
healthcare innovation and ensuring Medicare beneficiaries have access 
to critical and life-saving new cures and technologies that improve 
beneficiary health outcomes. As detailed in the President's FY 2020 
Budget, HHS is pursuing several policies that will instill greater 
transparency and consistency around how Medicare covers and pays for 
innovative technology.
    Therefore, given the FDA programs for helping to expedite the 
development and review of transformative new drugs and devices that 
meet expedited program criteria (that is, new drugs and devices that 
treat serious or life-threatening diseases or conditions for which 
there is an unmet medical need), we considered whether it would also be 
appropriate to similarly facilitate access to these transformative new 
technologies for Medicare beneficiaries taking into consideration that 
marketing authorization (that is, Premarket Approval (PMA); 510(k) 
clearance; the granting of a De Novo classification request; or 
approval of a New Drug Application (NDA)) for a product that is the 
subject of one of FDA's expedited programs could lead to situations 
where the evidence base for demonstrating substantial clinical 
improvement in accordance with CMS' current standard has not fully 
developed at the time of FDA marketing authorization (that is, PMA; 
510(k) clearance; the granting of a De Novo classification request; or 
approval of a NDA) (as applicable). We also considered whether FDA 
marketing authorization of a product that is part of an FDA expedited 
program is evidence that the product is sufficiently different from 
existing products for purposes of newness.
    After consideration of these issues, and consistent with the 
Administration's commitment to addressing barriers to healthcare 
innovation and ensuring Medicare beneficiaries have access to critical 
and life-saving new cures and technologies that improve beneficiary 
health outcomes, we concluded that it would be appropriate to develop 
an alternative pathway for transformative medical devices. In 
situations where a new medical device is part of the Breakthrough 
Devices Program and has received FDA marketing authorization (that is, 
the device has received PMA; 510(k) clearance; or the granting of a De 
Novo classification request), we are proposing an alternative inpatient 
new technology add-on payment pathway to facilitate access to this 
technology for Medicare beneficiaries.
    Specifically, we are proposing that, for applications received for 
new technology add-on payments for FY 2021 and subsequent fiscal years, 
if a medical device is part of the FDA's Breakthrough Devices Program 
and received FDA marketing authorization, it would be considered new 
and not substantially similar to an existing technology for purposes of 
the new technology add-on payment under the IPPS. In light of the 
criteria applied under the FDA's Breakthrough Device Program, and 
because the technology may not have a sufficient evidence base to 
demonstrate substantial clinical improvement at the time of FDA 
marketing authorization, we also are proposing that the medical device 
would not need to meet the requirement under Sec.  412.87(b)(1) that it 
represent an advance that substantially improves, relative to 
technologies previously available, the diagnosis or treatment of 
Medicare beneficiaries. We are proposing to add a new paragraph (c) 
under Sec.  412.87 to codify this proposed policy; existing paragraph 
(c) would be redesignated as paragraph (d) and amendments would be made 
to proposed redesignated paragraph (d) to reflect this proposed 
alternative pathway and to make clear that a new medical device may 
only be approved under Sec.  412.87(b) or proposed new Sec.  412.87(c). 
Under this proposed alternative pathway, a medical device that has 
received FDA marketing authorization (that is, has been approved or 
cleared by, or had a De Novo classification request granted by, the 
FDA) and that is part of the FDA's Breakthrough Devices Program would 
need to meet the cost criterion under Sec.  412.87(b)(3), as reflected 
in proposed new Sec.  412.87(c)(3), and would be considered new as 
reflected in proposed Sec.  412.87(c)(2).
    Given the lack of an evidence base to demonstrate substantial 
clinical improvement at the time of FDA marketing authorization, we are 
soliciting public comment on how CMS should weigh the benefits of this 
proposed alternative pathway to facilitate beneficiary access to 
transformative new medical devices, including the benefits of 
mitigating potential delayed access to innovation and adoption, against 
any potential risks, such as the risk of adverse events or negative 
outcomes that might come to light later.
    We further note that section 1886(d)(5)(K)(ii)(II) of the Act 
provides for the collection of data with respect to the costs of a new 
medical service or technology described in subclause (I) for a period 
of not less than 2 years and not more than 3 years beginning on the 
date on which an inpatient hospital code is issued with respect to the 
service or technology. We also are seeking public comments on whether 
the newness period under the proposed alternative new technology add-on 
payment pathway for transformative new medical devices should be 
limited to a period of time sufficient for the evidence base for the 
new transformative medical device to develop to the point where a 
substantial clinical improvement determination can be made (for 
example, 1 to 2 years after approval, depending on whether the 
transformative new medical device would be eligible for a third year of 
new

[[Page 19373]]

technology add-on payments). We note that, if we were to adopt such a 
policy in the future, the proposed amended regulation text would be 
revised accordingly. We further note that the newness period for a 
transformative new medical device cannot exceed 3 years, regardless of 
whether it is approved under the current eligibility criteria, the 
proposed alternative pathway, or potentially first under the proposed 
alternative pathway, and subsequently under the current eligibility 
criteria later in its newness period.
    As stated above, for the reasons discussed in section I.O. of 
Appendix A to this proposed rule, we are not proposing an alternative 
inpatient new technology add-on payment pathway for drugs at this time.
9. Proposed Change to the Calculation of the Inpatient New Technology 
Add-On Payment
    As noted earlier, section 1886(d)(5)(K)(ii)(I) of the Act specifies 
that a new medical service or technology may be considered for a 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. As discussed in the September 7, 
2001 final rule, in deciding which treatment is most appropriate for 
any particular patient, it is expected that physicians would balance 
the clinical needs of patients with the efficacy and costliness of 
particular treatments. In the May 4, 2001 proposed rule (66 FR 22695), 
we stated that we believed it is appropriate to limit the additional 
payment to 50 percent of the additional cost of the new technology to 
appropriately balance the incentives. We stated that this proposed 
limit would provide hospitals an incentive for continued cost-effective 
behavior in relation to the overall costs of the case. In addition, we 
stated that we believed hospitals would face an incentive to balance 
the desirability of using the new technology versus the old; otherwise, 
there would be a large and perhaps inappropriate incentive to use the 
new technology.
    As such, the current calculation of the new technology add-on 
payment is based on the cost to hospitals for the new medical service 
or technology. Specifically, under Sec.  412.88, if the costs of the 
discharge (determined by applying CCRs as described in Sec.  412.84(h)) 
exceed the full DRG payment (including payments for IME and DSH, but 
excluding outlier payments), Medicare will make an add-on payment equal 
to the lesser of: (1) 50 percent of the costs of the new medical 
service or technology; or (2) 50 percent of the amount by which the 
costs of the case exceed the standard DRG payment. 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.
    Since the 50-percent limit to the new technology add-on payment was 
first established, we have received feedback from stakeholders that our 
current policy does not adequately reflect the costs of new technology 
and does not sufficiently support healthcare innovations. For example, 
stakeholders have stated that a maximum add-on payment of 50 percent 
does not allow for accurate payment of a new technology with an 
unprecedented high cost, such as the CAR T-cell technologies 
KYMRIAH[supreg] and YESCARTA[supreg] (83 FR 41173).
    After consideration of the concerns raised by commenters and other 
stakeholders, and consistent with the Administration's commitment to 
addressing barriers to healthcare innovation and ensuring Medicare 
beneficiaries have access to critical and life-saving new cures and 
technologies that improve beneficiary health outcomes, we agree that 
there may be merit to the recommendations to increase the maximum add-
on amount, and that capping the add-on payment amount at 50 percent 
could in some cases no longer provide a sufficient incentive for the 
use of a new technology. Costs of new medical technologies have 
increased over the years to the point where 50 percent of the estimated 
cost may not be adequate, and we have received feedback that hospitals 
may potentially choose not to provide certain technologies for that 
reason alone.
    At the same time, we continue to believe that it is important to 
preserve the incentives inherent under an average-based prospective 
payment system through the use of a percentage of the estimated costs 
of a new technology or service. We stated in the September 7, 2001 
final rule (66 FR 46919) that we do not believe it is appropriate to 
pay an add-on amount equal to 100 percent of the costs of new 
technology because there is no similar methodology to reduce payments 
for cost-saving technology. For example, as new technologies permit the 
development of less-invasive surgical procedures, the total costs per 
case may begin to decline as patients recover and leave the hospital 
sooner. Finally, we stated our concern that, because these payments are 
linked to charges submitted by hospitals, there is the potential that 
hospitals may adapt their charge structure to maximize payments for 
DRGs that include eligible new technologies. The higher the marginal 
cost factor, the greater the incentive hospitals face in this regard.
    It is challenging to determine empirically a precise payment 
percentage between the current 50 percent and 100 percent payment that 
would be the most appropriate. We believe that 65 percent is an 
incremental increase that would reasonably balance the need to maintain 
the incentives inherent to the prospective payment system while also 
encouraging the development and use of new technologies.
    Therefore, we are proposing that, beginning with discharges on or 
after October 1, 2019, if the costs of a discharge involving a new 
technology (determined by applying CCRs as described in Sec.  
412.84(h)) exceed the full DRG payment (including payments for IME and 
DSH, but excluding outlier payments), Medicare will make an add-on 
payment equal to the lesser of: (1) 65 percent of the costs of the new 
medical service or technology; or (2) 65 percent of the amount by which 
the costs of the case exceed the standard DRG payment. Unless the 
discharge qualifies for an outlier payment, the additional Medicare 
payment would be limited to the full MS-DRG payment plus 65 percent of 
the estimated costs of the new technology or medical service. We also 
are proposing to revise paragraphs (a)(2) and (b) under Sec.  412.88 to 
reflect these proposed changes to the calculation of the new technology 
add-on payment amount beginning in FY 2020.

III. Proposed Changes to the Hospital Wage Index for Acute Care 
Hospitals

A. Background

1. Legislative Authority
    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

[[Page 19374]]

discussion of the proposed FY 2020 hospital wage index based on the 
statistical areas appears under section III.A.2. of the preamble of 
this proposed 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 proposed adjustment for 
FY 2020 is discussed in section II.B. of the Addendum to this proposed 
rule.
    As discussed in section III.I. of the preamble of this proposed 
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 proposed budget neutrality adjustment for FY 2020 is discussed in 
section II.A.4.b. of the Addendum to this proposed 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 proposing to 
apply to the FY 2020 wage index appears under sections III.E.3. and F. 
of the preamble of this proposed rule.
2. Core-Based Statistical Areas (CBSAs) for the Proposed FY 2020 
Hospital Wage Index
    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 Federal Register (75 FR 37246 through 37252). We 
refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 
through 49963) for a full discussion of our implementation of the OMB 
labor market area delineations beginning with the FY 2015 wage index.
    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 the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through 41363), we 
adopted the updates set forth in OMB Bulletin No. 17-01 effective 
October 1, 2018, beginning with the FY 2019 wage index. For a complete 
discussion of the adoption of the updates set forth in OMB Bulletin No. 
17-01, we refer readers to the FY 2019 IPPS/LTCH PPS final rule.
    For FY 2020, we are continuing to use the OMB delineations that 
were adopted beginning with FY 2015 (based on the revised delineations 
issued in OMB Bulletin No. 13-01) to calculate the area wage indexes, 
with updates as reflected in OMB Bulletin Nos. 15-01 and 17-01.
3. Codes for Constituent Counties in CBSAs
    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: 
https://www.census.gov/geo/reference/county-changes.html. We believe 
that it is important to use the latest counties or county equivalent 
entities in order to properly crosswalk hospitals from a county to a 
CBSA for purposes of the hospital wage index used under the IPPS.
    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

[[Page 19375]]

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. These updates have been 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 2020, we are continuing to use only the FIPS county codes 
for purposes of crosswalking counties to CBSAs. For FY 2020, Tables 2 
and 3 associated with this proposed 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.

B. Worksheet S-3 Wage Data for the Proposed FY 2020 Wage Index

    The proposed FY 2020 wage index values are based on the data 
collected from the Medicare cost reports submitted by hospitals for 
cost reporting periods beginning in FY 2016 (the FY 2019 wage indexes 
were based on data from cost reporting periods beginning during FY 
2015).
1. Included Categories of Costs
    The proposed FY 2020 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.
2. Excluded Categories of Costs
    Consistent with the wage index methodology for FY 2019, the 
proposed wage index for FY 2020 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 
related to GME (teaching physicians and residents) and certified 
registered nurse anesthetists (CRNAs), and other subprovider components 
that are not paid under the IPPS. The proposed FY 2020 wage index also 
excludes the salaries, hours, and wage-related costs of hospital-based 
rural health clinics (RHCs), and Federally qualified health centers 
(FQHCs) because Medicare pays for these costs outside of the IPPS (68 
FR 45395). In addition, salaries, hours, and wage-related costs of CAHs 
are excluded from the wage index for the reasons explained in the FY 
2004 IPPS final rule (68 FR 45397 through 45398). For FY 2020 and 
subsequent years, other wage-related costs are also excluded from the 
calculation of the wage index. As discussed in the FY 2019 IPPS/LTCH 
final rule (83 FR 41365 through 41369), other wage-related costs 
reported on Worksheet S-3, Part II, Line 18 and Worksheet S-3, Part IV, 
Line 25 and subscripts, as well as all other wage-related costs, such 
as contract labor costs, are excluded from the calculation of the wage 
index.
3. Use of Wage Index Data by Suppliers and Providers Other Than Acute 
Care Hospitals Under the IPPS
    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.

C. Verification of Worksheet S-3 Wage Data

    The wage data for the proposed FY 2020 wage index were obtained 
from Worksheet S-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, 2015, and before October 1, 2016. For 
wage index purposes, we refer to cost reports during this period as the 
``FY 2016 cost report,'' the ``FY 2016 wage data,'' or the ``FY 2016 
data.'' Instructions for completing the wage index sections of 
Worksheet S-3 are included in the Provider Reimbursement Manual (PRM), 
Part 2 (Pub. 15-2), Chapter 40, Sections 4005.2 through 4005.4. The 
data file used to construct the proposed FY 2020 wage index includes FY 
2016 data submitted to us as of February 7, 2019. 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 2020 wage index, we 
identified and excluded 81 providers with aberrant data that should not 
be included in the wage index, although if data elements for some of 
these providers are corrected, we intend to include data from those 
providers in the final FY 2020 wage index. 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 22, 2019. In addition, as a result of the April and May 
appeals processes, and posting of the April 30, 2019 PUF, we may make 
additional revisions to the FY 2020 wage data, as described further 
below. The revised data would be reflected in the FY 2020 IPPS/LTCH PPS 
final rule.
    Among the hospitals we identified and excluded with aberrant data 
that should not be included in the proposed FY 2020 wage index are 
eight hospitals that are part of a health care delivery system that is 
unique in several ways. The vast majority of the system's hospitals 
(38) are located in a single State, with one union representing most of 
their hospital employees in the ``northern'' region of the State, while 
another union represents most of their hospital employees in the 
``southern'' region of the State. The salaries negotiated do not 
reflect competitive local labor market salaries; rather, the salaries 
reflect negotiated salary rates for the ``northern'' and ``southern'' 
regions of the State respectively. For example, all medical assistants 
in the ``northern'' region start at $24.31 per hour, and medical 
assistants in the ``southern'' region start at $20.36 per hour. Thus, 
all salaries for similar positions and levels of experience in the 
northern region, for example, are the same regardless of prevailing 
labor market conditions in the area in which the hospital is located. 
In addition, this chain is part of a managed care organization and an 
integrated delivery system wherein the hospitals rely on the system's 
health care plans for funding. For the FY 2020 proposed wage index 
calculation, we have identified and excluded eight of the hospitals 
that are part of this health

[[Page 19376]]

care system. The average hourly wages of these eight hospitals differ 
most from their respective CBSA average hourly wages, and there is a 
large gap between the average hourly wage of each of the eight 
hospitals and the next closest average hourly wage in their respective 
CBSAs. We do not believe that the average hourly wages of these eight 
hospitals accurately reflect the economic conditions in their 
respective labor market areas during the FY 2016 cost reporting period. 
Therefore, we believe the inclusion of the wage data for these eight 
hospitals in the proposed wage index would not ensure that the FY 2020 
wage index represents the relative hospital wage level in the 
geographic area of the hospital as compared to the national average of 
wages. Rather, the inclusion of these data would distort the comparison 
of the average hourly wage of each of these hospitals' labor market 
areas to the national average hourly wage. We believe that under 
section 1886(d)(3)(E) of the Act, which requires the Secretary to 
establish an adjustment factor (the wage index) reflecting the relative 
hospital wage level in the geographic area of a hospital compared to 
the national average hospital wage level, we have the discretion to 
remove hospital data from the wage index that is not reflective of the 
relative hospital wage level in the hospitals' geographic area. In 
previous rulemaking (80 FR 49491), we explained that we remove 
hospitals from the wage index because their average hourly wages are 
either extraordinarily high or extraordinarily low compared to their 
labor market areas, even though their data were properly documented. 
For this reason, we have removed the data of other hospitals in the 
past; for example, data from government-owned hospitals and hospitals 
providing unique or niche services which affect their average hourly 
wages. We note that we are considering removing all of the hospitals in 
this health care system from the FY 2021 and subsequent wage index 
calculations, not because they are failing edits due to inaccuracy, but 
because of the uniqueness of this chain of hospitals, in particular, 
the fact that the salaries of their employees are not based on local 
labor market rates.
    In constructing the proposed FY 2020 wage index, we included the 
wage data for facilities that were IPPS hospitals in FY 2016, 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 believe 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 this proposed rule, we removed 4 
hospitals that converted to CAH status on or after January 26, 2018, 
the cut-off date for CAH exclusion from the FY 2019 wage index, and 
through and including January 24, 2019, the cut-off date for CAH 
exclusion from the FY 2020 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 3,221 hospitals.
    For the proposed FY 2020 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 2019 wage index (83 FR 41364 
through 41365); 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 proposed FY 2020 wage 
index associated with this proposed rule (available via the internet on 
the CMS website), includes separate wage data for the campuses of 17 
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:

------------------------------------------------------------------------
                                                             Full-time
                                                            equivalent
               CCN of multicampus hospital                     (FTE)
                                                            percentages
------------------------------------------------------------------------
050121..................................................            0.83
05B121..................................................            0.17
070033..................................................            0.92
07B033..................................................            0.08
100029..................................................            0.54
10B029..................................................            0.46
100167..................................................            0.39
10B167..................................................            0.61
140010..................................................            0.83
14B010..................................................            0.17
220074..................................................            0.86
22B074..................................................            0.14
330195..................................................            0.90
33B195..................................................            0.10
330234..................................................            0.73
33B234..................................................            0.27
340115..................................................            0.96
34B115..................................................            0.04
360020..................................................            0.99
36B020..................................................            0.01
370041..................................................            0.89
37B041..................................................            0.11
390006..................................................            0.94
39B006..................................................            0.06
390115..................................................            0.86
39B115..................................................            0.14
390142..................................................            0.83
39B142..................................................            0.17
460051..................................................            0.82
46B051..................................................            0.18
510022..................................................            0.95
51B022..................................................            0.05
670062..................................................            0.55
67B062..................................................            0.45
------------------------------------------------------------------------

    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 IPPS/LTCH PPS proposed and final rules 
and subsequent rules, 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.

D. Method for Computing the Proposed FY 2020 Unadjusted Wage Index

    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 41365), 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. Our proposals for FY 
2020 to address wage index disparities, particularly for rural 
hospitals, to the extent permitted under current law, are discussed in 
section III.N. of the preamble to this proposed rule. We continue to 
believe that broader statutory wage index reform is needed.

[[Page 19377]]

1. Proposed Methodology for FY 2020
    The method used to compute the proposed FY 2020 wage index without 
an occupational mix adjustment follows the same methodology that we 
used to compute the proposed wage indexes without an occupational mix 
adjustment since FY 2012 (76 FR 51591 through 51593), except as 
discussed below. Typically, we do not restate all of the steps of the 
methodology to compute the wage indexes in each proposed and final 
rulemaking; instead, we refer readers to the FY 2012 IPPS/LTCH PPS 
final rule. However, below in this FY 2020 IPPS/LTCH PPS proposed rule, 
we are (1) restating the steps of the methodology in order to update 
outdated references to certain cost report lines which were then 
reflected on Medicare CMS Form 2552-96 but are now reflected on 
Medicare CMS Form 2552-10; (2) proposing to change the calculation of 
the Overhead Rate in Step 4; (3) proposing to modify our methodology 
with regard to how dollar amounts, hours, and other numerical values in 
the wage index calculation are rounded; and (4) proposing a methodology 
for calculating the wage index for urban areas without wage data. We 
are otherwise not proposing to make any other policy changes in this 
section to the methodology set forth in the FY 2012 IPPS/LTCH PPS 
proposed rule (76 FR 51591 through 51593) for computing the proposed 
wage index without an occupational mix adjustment. Unless otherwise 
specified, all cost report line references below refer to CMS Form 
2552-10.
    Step 1.--We gathered data from each of the non-Federal, short-term, 
acute care hospitals for which data were reported on the Worksheet S-3, 
Parts II and III of the Medicare cost report for the hospital's cost 
reporting period relevant to the proposed wage index (in this case, for 
FY 2020, these would be data from cost reports for cost reporting 
periods beginning on or after October 1, 2015, and before October 1, 
2016). In addition, we include data from some hospitals that had cost 
reporting periods beginning before October 2015 and reported a cost 
reporting period covering all of FY 2016. These data are included 
because no other data from these hospitals would be available for the 
cost reporting period described above, and because particular labor 
market areas might be affected due to the omission of these hospitals. 
However, we generally describe these wage data as FY 2016 data. We note 
that, if a hospital had more than one cost reporting period beginning 
during FY 2016 (for example, a hospital had two short cost reporting 
periods beginning on or after October 1, 2015, and before October 1, 
2016), we include wage data from only one of the cost reporting 
periods, the longer, in the wage index calculation. If there was more 
than one cost reporting period and the periods were equal in length, we 
included the wage data from the later period in the wage index 
calculation.
    Step 2.--Salaries.--The method used to compute a hospital's average 
hourly wage excludes certain costs that are not paid under the IPPS. 
(We note that, beginning with FY 2008 (72 FR 47315), we included what 
were then Lines 22.01, 26.01, and 27.01 of Worksheet S-3, Part II of 
CMS Form 2552-96 for overhead services in the wage index. Currently, 
these lines are lines 28, 33, and 35 on CMS Form 2552-10. However, we 
note that the wages and hours on these lines are not incorporated into 
Line 101, Column 1 of Worksheet A, which, through the electronic cost 
reporting software, flows directly to Line 1 of Worksheet S-3, Part II. 
Therefore, the first step in the wage index calculation is to compute a 
``revised'' Line 1, by adding to the Line 1 on Worksheet S-3, Part II 
(for wages and hours respectively) the amounts on Lines 28, 33, and 
35.) In calculating a hospital's Net Salaries (we note that we 
previously used the term ``average'' salaries in the FY 2012 IPPS/LTCH 
PPS final rule (76 FR 51592), but we now use the term ``net'' salaries) 
plus wage-related costs, we first compute the following: Subtract from 
Line 1 (total salaries) the GME and CRNA costs reported on CMS Form 
2552-10, Lines 2, 4.01, 7, and 7.01, the Part B salaries reported on 
Lines 3, 5 and 6, home office salaries reported on Line 8, and exclude 
salaries reported on Lines 9 and 10 (that is, direct salaries 
attributable to SNF services, home health services, and other 
subprovider components not subject to the IPPS). We also subtract from 
Line 1 the salaries for which no hours were reported. Therefore, the 
formula for Net Salaries (from Worksheet S-3, Part II) is the 
following:

((Line 1 + Line 28 + Line 33 + Line 35) - (Line 2 + Line 3 + Line 4.01 
+ Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10))


    To determine Total Salaries plus Wage-Related Costs, we add to the 
Net Salaries the costs of contract labor for direct patient care, 
certain top management, pharmacy, laboratory, and nonteaching physician 
Part A services (Lines 11, 12 and 13), home office salaries and wage-
related costs reported by the hospital on Lines 14.01, 14.02, and 15, 
and nonexcluded area wage-related costs (Lines 17, 22, 25.50, 25.51, 
and 25.52). We note that contract labor and home office salaries for 
which no corresponding hours are reported are not included. In 
addition, wage-related costs for nonteaching physician Part A employees 
(Line 22) are excluded if no corresponding salaries are reported for 
those employees on Line 4.
    The formula for Total Salaries plus Wage-Related Costs (from 
Worksheet S-3, Part II) is the following: ((Line 1 + Line 28 + Line 33 
+ Line 35) - (Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + 
Line 7.01 + Line 8 + Line 9 + Line 10)) + (Line 11 + Line 12 + Line 13 
+ Line 14.01 + 14.02 + Line 15) + (Line 17 + Line 22 + 25.50 + 25.51 + 
25.52)
    Step 3.--Hours.--With the exception of wage-related costs, for 
which there are no associated hours, we compute total hours using the 
same methods as described for salaries in Step 2.
    The formula for Total Hours (from Worksheet S-3, Part II) is the 
following: ((Line 1 + Line 28 + Line 33 + Line 35) - (Line 2 + Line 3 + 
Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + 
Line 10)) + (Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line 
15).
    Step 4.--For each hospital reporting both total overhead salaries 
and total overhead hours greater than zero, we then allocate overhead 
costs to areas of the hospital excluded from the wage index 
calculation. First, we determine the ``excluded rate'', which is the 
ratio of excluded area hours to Revised Total Hours (from Worksheet S-
3, Part II) with the following formula: (Line 9 + Line 10)/(Line 1 + 
Line 28 + Line 33 + Line 35) - (Lines 2, 3, 4.01, 5, 6, 7, 7.01, and 8 
and Lines 26 through 43).
    We then compute the amounts of overhead salaries and hours to be 
allocated to excluded areas by multiplying the above ratio by the total 
overhead salaries and hours reported on Lines 26 through 43 of 
Worksheet S-3, Part II. Next, we compute the amounts of overhead wage-
related costs to be allocated to excluded areas using three steps:
    (1) We determine the ``overhead rate'' (from Worksheet S-3, Part 
II), which is the ratio of overhead hours (Lines 26 through 43 minus 
the sum of Lines 28, 33, and 35) to revised hours excluding the sum of 
lines 28, 33, and 35 (Line 1 minus the sum of Lines 2, 3, 4.01, 5, 6, 
7, 7.01, 8, 9, 10, 28, 33, and 35). We note that, for the FY 2008 and 
subsequent wage index calculations, we have been excluding the overhead 
contract labor (Lines 28, 33, and 35) from the determination of the 
ratio of overhead hours to revised hours because hospitals

[[Page 19378]]

typically do not provide fringe benefits (wage-related costs) to 
contract personnel. Therefore, it is not necessary for the wage index 
calculation to exclude overhead wage-related costs for contract 
personnel. Further, if a hospital does contribute to wage-related costs 
for contracted personnel, the instructions for Lines 28, 33, and 35 
require that associated wage-related costs be combined with wages on 
the respective contract labor lines.
    The formula for the Overhead Rate (from Worksheet S-3, Part II) has 
been the following: (Lines 26 through 43-Lines 28, 33 and 35)/((((Line 
1 + Lines 28, 33, 35) - (Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, 26 through 
43)) - (Lines 9, 10, 28, 33, and 35)) + (Lines 26 through 43 - Lines 
28, 33, and 35)).
    We note that, for the calculation for FY 2020 and subsequent fiscal 
years, we are reexamining this step above regarding removal of the sum 
of overhead contract labor hours on Lines 28, 33, and 35. In the 
denominator of this calculation of the overhead rate, we have been 
subtracting out the sum of the overhead contract labor hours from 
Revised Total Hours. However, this requires modification because 
Revised Total Hours do not include these overhead contract labor hours. 
We are proposing to modify this step of the calculation of the overhead 
rate as follows:
    The formula for the Overhead Rate (from Worksheet S-3, Part II) 
would be the following: (Lines 26 through 43-Lines 28, 33 and 35)/
((((Line 1 + Lines 28, 33, 35) - (Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, 
and 26 through 43)) - (Lines 9 and 10)) + (Lines 26 through 43 - Lines 
28, 33, and 35)).
    (2) We compute overhead wage-related costs by multiplying the 
overhead hours ratio by wage-related costs reported on Part II, Lines 
17, 22, 25.50, 25.51, and 25.52.
    (3) We multiply the computed overhead wage-related costs by the 
above excluded area hours ratio.
    Finally, we subtract the computed overhead salaries, wage-related 
costs, and hours associated with excluded areas from the total salaries 
(plus wage-related costs) and hours derived in Steps 2 and 3.
    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, 2015 through April 15, 2017, 
for private industry hospital workers from the BLS' Compensation and 
Working Conditions. We use the ECI because it reflects the price 
increase associated with total compensation (salaries plus fringes) 
rather than just the increase in salaries. In addition, the ECI 
includes managers as well as other hospital workers. This methodology 
to compute the monthly update factors uses actual quarterly ECI data 
and assures that the update factors match the actual quarterly and 
annual percent changes. We also note that, since April 2006 with the 
publication of March 2006 data, the BLS' ECI uses a different 
classification system, the North American Industrial Classification 
System (NAICS), instead of the Standard Industrial Codes (SICs), which 
no longer exist. We have consistently used the ECI as the data source 
for our wages and salaries and other price proxies in the IPPS market 
basket, and we are not proposing to make any changes to the usage for 
FY 2020. The factors used to adjust the hospital's data were based on 
the midpoint of the cost reporting period, as indicated below.
    Step 6.--Each hospital is assigned to its appropriate urban or 
rural labor market area before any reclassifications under section 
1886(d)(8)(B), section 1886(d)(8)(E), or section 1886(d)(10) of the 
Act. Within each urban or rural labor market area, we add the total 
adjusted salaries plus wage-related costs obtained in Step 5 for all 
hospitals in that area to determine the total adjusted salaries plus 
wage-related costs for the labor market area.
    Step 7.--We divide the total adjusted salaries plus wage-related 
costs obtained under Step 6 by the sum of the corresponding total hours 
(from Step 4) for all hospitals in each labor market area to determine 
an average hourly wage for the area.
    Step 8.--We add the total adjusted salaries plus wage-related costs 
obtained in Step 5 for all hospitals in the Nation and then divide the 
sum by the national sum of total hours from Step 4 to arrive at a 
national average hourly wage.
    Step 9.--For each urban or rural labor market area, we calculate 
the hospital wage index value, unadjusted for occupational mix, by 
dividing the area average hourly wage obtained in Step 7 by the 
national average hourly wage computed in Step 8.
    Step 10.--For each urban labor market area for which we do not have 
any hospital wage data (either because there are no IPPS hospitals in 
that labor market area, or there are IPPS hospitals in that area but 
their data are either too new to be reflected in the current year's 
wage index calculation, or their data are aberrant and are deleted from 
the wage index), we are proposing that, for FY 2020 and subsequent 
years' wage index calculations, such CBSA's wage index would be equal 
to total urban salaries plus wage-related costs (from Step 5) in the 
State, divided by the total urban hours (from Step 4) in the State, 
divided by the national average hourly wage from Step 8. We believe 
that, in the absence of wage data for an urban labor market area, it is 
reasonable to propose to use a statewide urban average, which is based 
on actual, acceptable wage data of hospitals in that State, rather than 
impute some other type of value using a different methodology.
    For calculation of the proposed FY 2020 wage index, we note there 
are 2 urban CBSAs for which we do not have IPPS hospital wage data. In 
Table 3 associated with this proposed rule (which is available via the 
internet on the CMS website) which contains the area wage indexes, we 
are including a footnote to indicate to which CBSAs this proposed 
policy would apply. We are proposing that these CBSAs' wage indexes 
would be equal to total urban salaries plus wage-related costs (from 
Step 5) in the respective State, divided by the total urban hours (from 
Step 4) in the respective State, divided by the national average hourly 
wage (from Step 8). Under this step, we also are proposing to apply our 
proposed policy with regard to how dollar amounts, hours, and other 
numerical values in the wage index calculations are rounded.
    We refer readers to section II. of the Appendix of this proposed 
rule for the policy regarding rural areas that do not have IPPS 
hospitals.
    Step 11.--Section 4410 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. The areas affected by this provision are 
identified in Table 2 which is listed in section VI. of the Addendum to 
this proposed rule and available via the internet on the CMS website.
    As we noted previously in this section, we are proposing to modify 
our methodology with regard to how dollar amounts, hours, and other 
numerical values in the unadjusted and adjusted wage index calculation 
are rounded, in order to help ensure consistency in the calculation. 
For example, we have received questions from stakeholders who use data 
printed in our proposed and final rules and online in our public use 
files (PUFs) to calculate the wage indexes, and it has come to our 
attention that, due in part to occasional inconsistencies in rounding 
of data,

[[Page 19379]]

CMS' calculations and stakeholders' calculations may not match. 
Therefore, to help ensure consistency in the calculation, we are 
proposing to modify how the wage data numbers are rounded, as follows. 
For data that we consider to be ``raw data,'' such as the cost report 
data on Worksheets S-3, Parts II and III, and the occupational mix 
survey data, we are proposing to use such data ``as is,'' and not round 
any of the individual line items or fields. However, for any dollar 
amounts within the wage index calculations, including any type of 
summed wage amount, average hourly wages, and the national average 
hourly wage (both the unadjusted and adjusted for occupational mix), we 
are proposing to round the dollar amounts to 2 decimals. For any hour 
amounts within the wage index calculations, we are proposing to round 
such hour amounts to the nearest whole number. For any numbers not 
expressed as dollars or hours within the wage index calculations, which 
could include ratios, percentages, or inflation factors, we are 
proposing to round such numbers to 5 decimals. However, we are 
proposing to continue rounding the actual unadjusted and adjusted wage 
indexes to 4 decimals, as we have done historically.
    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, 2015, through April 15, 
2017, for private industry hospital workers from the BLS' Compensation 
and Working Conditions. We have consistently used the ECI as the data 
source for our wages and salaries and other price proxies in the IPPS 
market basket, and we are not proposing any changes to the usage of the 
ECI for FY 2020. The factors used to adjust the hospital's data were 
based on the midpoint of the cost reporting period, as indicated in the 
following table.

                    Midpoint of Cost Reporting Period
------------------------------------------------------------------------
                                                              Adjustment
                     After                         Before       factor
------------------------------------------------------------------------
10/14/2015....................................   11/15/2015      1.03058
11/14/2015....................................   12/15/2015      1.02885
12/14/2015....................................   01/15/2016      1.02708
01/14/2016....................................   02/15/2016      1.02532
02/14/2016....................................   03/15/2016      1.02357
03/14/2016....................................   04/15/2016      1.02177
04/14/2016....................................   05/15/2016      1.01988
05/14/2016....................................   06/15/2016      1.01790
06/14/2016....................................   07/15/2016      1.01585
07/14/2016....................................   08/15/2016      1.01375
08/14/2016....................................   09/15/2016      1.01162
09/14/2016....................................   10/15/2016      1.00952
10/14/2016....................................   11/15/2016      1.00751
11/14/2016....................................   12/15/2016      1.00560
12/14/2016....................................   01/15/2017      1.00374
01/14/2017....................................   02/15/2017      1.00187
02/14/2017....................................   03/15/2017      1.00000
03/14/2017....................................   04/15/2017      0.99818
------------------------------------------------------------------------

    For example, the midpoint of a cost reporting period beginning 
January 1, 2016, and ending December 31, 2016, is June 30, 2016. An 
adjustment factor of 1.01585 was applied to the wages of a hospital 
with such a cost reporting period.
    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-related 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) and the national wage index, which is 
applied to the national labor-related share of the national 
standardized amount. Therefore, for FY 2020, there is no Puerto Rico-
specific overall average hourly wage or wage index.
    Based on the above methodology, the proposed unadjusted national 
average hourly wage is the following:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Proposed FY 2020 Unadjusted National Average Hourly Wage.....    $44.03
------------------------------------------------------------------------

2. Policies Regarding Rural Reclassification and Special Statuses for 
Multicampus Hospitals
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41369 through 
41374), we codified policies regarding rural reclassification and 
special statuses for multicampus hospitals in the regulations at Sec.  
412.92 for sole community hospitals (SCHs), Sec.  412.96 for rural 
referral centers (RRCs), Sec.  412.103 for rural reclassification, and 
Sec.  412.108 for Medicare-dependent, small rural hospitals (MDHs).
    We stated that these policies apply to hospitals that have 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 Sec.  413.65 as a main campus 
and a remote location of a hospital, also referred to as multicampus 
hospitals or hospitals with remote locations. As discussed in the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41369), 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 Sec.  412.92 for SCHs, Sec.  412.96 for RRCs, Sec.  
412.103 for rural reclassification, or Sec.  412.108 for MDHs, the 
hospital (that is, the main campus and its remote location(s)) will be 
granted the special treatment or rural reclassification afforded by the 
aforementioned regulations.
    We stated that, to qualify for rural reclassification or SCH, RRC, 
or MDH status, a hospital with remote locations must demonstrate that 
both the main campus and its remote location(s) satisfy the relevant 
qualifying criteria. If the regulations at Sec.  412.92, Sec.  412.96, 
Sec.  412.103, and Sec.  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, the combined data from 
the main campus and its remote location(s) are to be used.

[[Page 19380]]

    For other qualifying criteria set forth in the regulations at 
Sec. Sec.  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.
    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41369 through 41374) for a detailed discussion of our policies for 
multicampus hospitals.

E. Proposed Occupational Mix Adjustment to the FY 2020 Wage Index

    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.
1. Use of 2016 Medicare Wage Index Occupational Mix Survey for the FY 
2019, FY 2020, and FY 2021 Wage Indexes
    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 (the 
2016 survey) was required for FY 2019, FY 2020, and FY 2021.
    The FY 2020 occupational mix adjustment is based on the 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 2020 
desk review process, the MACs revised or verified data elements in 
hospitals' occupational mix surveys that resulted in certain edit 
failures.
2. Calculation of the Occupational Mix Adjustment for FY 2020
    For FY 2020, we are proposing 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 2020 wage index. 
As we explained in section III.D. of the preamble of this proposed 
rule, we are proposing to modify our methodology with regard to how 
dollar amounts, hours, and other numerical values in the unadjusted and 
adjusted wage index calculation are rounded, in order to ensure 
consistency in the calculation. For data that we consider to be ``raw 
data,'' such as the cost report data on Worksheets S-3, Parts II and 
III, and the occupational mix survey data, we are proposing to use 
these data ``as is'', and not round any of the individual line items or 
fields. However, for any dollar amounts within the wage index 
calculations, including any type of summed wage amount, average hourly 
wages, and the national average hourly wage (both the unadjusted and 
adjusted for occupational mix), we are proposing to round such dollar 
amounts to 2 decimals. We are proposing to round any hour amounts 
within the wage index calculations to the nearest whole number. We are 
proposing to round any numbers not expressed as dollars or hours in the 
wage index calculations, which could include ratios, percentages, or 
inflation factors, to 5 decimals. However, we are proposing to continue 
rounding the actual unadjusted and adjusted wage indexes to 4 decimals, 
as we have done historically.
    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 proposed rule (which is 
available via the internet on the CMS website), which contains the 
proposed FY 2020 occupational mix adjusted wage index, includes 
separate wage data for the campuses of multicampus hospitals. We refer 
readers to section III.C. of the preamble of this proposed 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 2020 wage index. For the proposed FY 2020 wage index, we are 
using the Worksheet S-3, Parts II and III wage data of 3,221 hospitals, 
and we are using the occupational mix surveys of 3,119 hospitals for 
which we also have Worksheet S-3 wage data, which represented a 
``response'' rate of 97 percent (3,119/3,221). For the proposed FY 2020 
wage index, we are applying 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 proposed FY 2020 occupational mix 
adjusted national average hourly wage is the following:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Proposed FY 2020 Occupational Mix Adjusted National Average      $43.99
 Hourly Wage.................................................
------------------------------------------------------------------------

F. Analysis and Implementation of the Proposed Occupational Mix 
Adjustment and the Proposed FY 2020 Occupational Mix Adjusted Wage 
Index

    As discussed in section III.E. of the preamble of this proposed 
rule, for FY 2020, we are proposing to apply the occupational mix 
adjustment to 100 percent of the FY 2020 wage index. We calculated the 
proposed 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).
    The proposed FY 2020 national average hourly wages for each 
occupational mix nursing subcategory as calculated in Step 2 of the 
occupational mix calculation are as follows. (We note that the average 
hourly wage figures are rounded to two decimal places as we are 
proposing in section III.D. of the preamble of this proposed rule.)

[[Page 19381]]



------------------------------------------------------------------------
                                                                 Average
             Occupational mix nursing subcategory                hourly
                                                                  wage
------------------------------------------------------------------------
National RN...................................................    $41.54
National LPN and Surgical Technician..........................     24.67
National Nurse Aide, Orderly, and Attendant...................     16.95
National Medical Assistant....................................     18.14
National Nurse Category.......................................     34.91
------------------------------------------------------------------------

    The proposed national average hourly wage for the entire nurse 
category is computed in Step 5 of the occupational mix calculation. 
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 percent, 
and the national percentage of hospital employees in the all other 
occupations category is 58 percent. At the CBSA level, the percentage 
of hospital employees in the nurse category ranged from a low of 27 
percent in one CBSA to a high of 82 percent in another CBSA.
    We compared the FY 2020 proposed occupational mix adjusted wage 
indexes for each CBSA to the proposed unadjusted wage indexes for each 
CBSA. Applying the proposed occupational mix adjustment to the wage 
data resulted in the following:

    Comparison of the FY 2020 Proposed Occupational Mix Adjusted Wage
         Indexes to the Proposed Unadjusted Wage Indexes by CBSA
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of Urban Areas Wage Index           233 (56.8 percent).
 Increasing.
Number of Rural Areas Wage Index           23 (48.9 percent).
 Increasing.
Number of Urban Areas Wage Index           113 (27.6 percent).
 Increasing by Greater Than or Equal to 1
 Percent But Less Than 5 Percent.
Number of Urban Areas Wage Index           7 (1.7 percent).
 Increasing by 5 percent or More.
Number of Rural Areas Wage Index           10 (21.3 percent).
 Increasing by Greater Than or Equal to 1
 Percent But Less Than 5 percent.
Number of Rural Areas Wage Index           0 (0 percent).
 Increasing by 5 Percent or More.
Number of Urban Areas Wage Index           175 (42.7 percent).
 Decreasing.
Number of Rural Areas Wage Index           24 (51.1 percent).
 Decreasing.
Number of Urban Areas Wage Index           80 (19.5 percent).
 Decreasing by Greater Than or Equal to 1
 Percent But Less Than 5 percent.
Number of Urban Areas Wage Index           1 (0.2 percent).
 Decreasing by 5 Percent or More.
Number of Rural Areas Wage Index           7 (14.9 percent).
 Decreasing by Greater Than or Equal to 1
 Percent But Less than 5 Percent.
Number of Rural Areas Wage Index           0 (0 percent).
 Decreasing by 5 Percent or More.
Largest Proposed Positive Impact for an    6.39 percent.
 Urban Area.
Largest Proposed Positive Impact for a     3.82 percent.
 Rural Area.
Largest Proposed Negative Impact for an    5.90 percent.
 Urban Area.
Largest Proposed Negative Impact for a     1.66 percent.
 Rural Area.
Urban Areas Unchanged by Application of    2.
 the Proposed Occupational Mix Adjustment.
Rural Areas Unchanged by Application of    0.
 the Proposed Occupational Mix Adjustment.
------------------------------------------------------------------------

    These results indicate that a larger percentage of urban areas 
(56.8 percent) would benefit from the occupational mix adjustment than 
would rural areas (48.9 percent).

G. Proposed Application of the Rural Floor, Summary of Expired Imputed 
Floor Policy, and Proposed Application of the State Frontier Floor

1. Proposed Rural Floor
    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 proposed FY 2020 wage index associated with this proposed rule 
(which is available via the internet on the CMS website) and our 
proposal, as discussed in section III.N. of the preamble of this 
proposed rule, to calculate the rural floor without the wage data of 
hospitals that have reclassified as rural under Sec.  412.103, we 
estimated that 166 hospitals would receive an increase in their FY 2020 
proposed wage index due to the application of the rural floor.
2. Summary of Expired Imputed Floor Policy
    As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41376 
through 41380), the imputed floor under both the original methodology 
and the alternative methodology expired on September 30, 2018. As such, 
the wage index and impact tables associated with this FY 2020 IPPS/LTCH 
PPS proposed 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 2020. For a complete discussion, we refer readers to the FY 2019 
IPPS/LTCH PPS final rule (83 FR 41376 through 41380). As discussed in 
section III.N. of the preamble of this proposed rule, we are seeking 
public comments on proposals to help address wage index disparities 
under the IPPS. We also are seeking public comments on how the 
expiration of the imputed floor has impacted hospitals in FY 2019.
3. Proposed State Frontier Floor for FY 2020
    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 this FY 2020 IPPS/
LTCH PPS proposed rule, we are not proposing any changes to the 
frontier floor policy for FY 2020. In this proposed rule, 45 hospitals 
would receive the frontier floor value of 1.0000 for their FY 2020 wage 
index. These hospitals are located in Montana, Nevada, North Dakota, 
South Dakota, and Wyoming.
    The areas affected by the proposed rural and frontier floor 
policies for the proposed FY 2020 wage index are identified in Table 2 
associated with this proposed rule, which is available via the internet 
on the CMS website.

[[Page 19382]]

H. Proposed FY 2020 Wage Index Tables

    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). As 
discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41380), 
beginning with FY 2019, we added Table 4 which is titled and includes a 
``List of Counties Eligible for the Out-Migration Adjustment under 
Section 1886(d)(13) of the Act'' for the relevant fiscal year. We refer 
readers to section VI. of the Addendum to this proposed rule for a 
discussion of the proposed wage index tables for FY 2020.

I. Revisions to the Wage Index Based on Hospital Redesignations and 
Reclassifications

1. General Policies and Effects of Reclassification and Redesignation
    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 Federal Register (81 FR 23428 through 23438) that 
included provisions amending our regulations to allow hospitals 
nationwide to have simultaneous Sec.  412.103 and MGCRB 
reclassifications. For reclassifications effective beginning FY 2018, a 
hospital may acquire rural status under Sec.  412.103 and subsequently 
apply for a reclassification under the MGCRB using distance and average 
hourly wage criteria designated for rural hospitals. In addition, we 
provided that a hospital that has an active MGCRB reclassification and 
is then approved for redesignation under Sec.  412.103 will not lose 
its MGCRB reclassification; such a hospital receives a reclassified 
urban wage index during the years of its active MGCRB reclassification 
and is still considered rural under section 1886(d) of the Act and for 
other purposes.
    We discussed that when there is both a Sec.  412.103 redesignation 
and an MGCRB reclassification, the MGCRB reclassification controls for 
wage index calculation and payment purposes. We exclude hospitals with 
Sec.  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 Sec.  412.103 and the MGCRB processes on wage index calculations.
2. MGCRB Reclassification and Redesignation Issues for FY 2020
a. FY 2020 Reclassification Application Requirements and Approvals
    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 proposed rule was constructed, the MGCRB had 
completed its review of FY 2020 reclassification requests. Based on 
such reviews, there are 357 hospitals approved for wage index 
reclassifications by the MGCRB starting in FY 2020. Because MGCRB wage 
index reclassifications are effective for 3 years, for FY 2020, 
hospitals reclassified beginning in FY 2018 or FY 2019 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 332 hospitals approved for wage index reclassifications in 
FY 2018 that will continue for FY 2020, and 274 hospitals approved for 
wage index reclassifications in FY 2019 that will continue for FY 2020. 
Of all the hospitals approved for reclassification for FY 2018, FY 
2019, and FY 2020, based upon the review at the time of this proposed 
rule, 963 hospitals are in a MGCRB reclassification status for FY 2020 
(with 32 of these hospitals reclassified back to their geographic 
location).
    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 Federal Register concerning 
changes to the inpatient hospital prospective payment system and 
proposed payment rates for the fiscal year for which the application 
has been filed. For information about withdrawing, terminating, or 
canceling a previous withdrawal or termination of a 3-year 
reclassification for wage index purposes, we refer readers to Sec.  
412.273, as well as the FY 2002 IPPS final rule (66 FR 39887 through 
39888) and the FY 2003 IPPS final rule (67 FR 50065 through 50066). 
Additional discussion on withdrawals and terminations, and 
clarifications regarding reinstating reclassifications and ``fallback'' 
reclassifications were included in the FY 2008 IPPS final rule (72 FR 
47333) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148 through 
38150).

[[Page 19383]]

    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 2020 will be incorporated 
into the wage index values published in the FY 2020 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 2021 reclassifications (OMB control number 
0938-0573) are due to the MGCRB by September 3, 2019 (the first working 
day of September 2019). 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 
2019, via the internet on the CMS website at: https://www.cms.gov/Regulations-and-Guidance/Review-Boards/MGCRB/index.html, or by calling 
the MGCRB at (410) 786-1174.
b. Proposed Elimination of Copy Requirement to CMS
    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.
    Beginning with applications from hospitals to reclassify for FY 
2020, the MGCRB 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 issues all of its notices and decisions 
via email and these documents are accessible electronically through OH 
CDMS. Registration instructions and the system user manual are 
available at: https://www.cms.gov/Regulations-and-Guidance/Review-Boards/MGCRB/Electronic-Filing.html.
    Filing a reclassification application using OH CDMS entails 
completing required fields electronically and uploading supporting 
documentation. We believe that the requirement for hospitals to submit 
a copy of the application to CMS would now require hospitals to compile 
their application information in a different format than what is 
required by the MGCRB, which would result in additional burden for 
hospitals. Furthermore, we believe that CMS can forgo the copy of 
applications provided by hospitals because the MGCRB's electronic 
module will facilitate CMS' verification of reclassification statuses 
during the wage index development process. Therefore, we are proposing 
to reduce burden for hospitals by eliminating the requirement to copy 
CMS. Specifically, we are proposing to revise Sec.  412.256(a)(1) to 
delete the requirement that an electronic copy of the application be 
sent to CMS, so that this section would specify that an application 
must be submitted to the MGCRB according to the method prescribed by 
the MGCRB.
c. Proposed Revision To Clarify Criteria for a Hospital Seeking 
Reclassification to Another Rural Area or Urban Area
    Section 412.230(a)(4) of our regulations currently specifies that 
the rounding of numbers to meet certain mileage or qualifying 
percentage standards is not permitted when an individual hospital seeks 
wage index reclassification through the MGCRB. In this section, the 
regulation specifically cites paragraphs (b)(1), (b)(2), (d)(1)(iii), 
and (d)(1)(iv)(A) and (B). The qualifying percentage standards included 
in these paragraphs have been periodically updated, and additional 
paragraphs have been added in Sec.  412.230 to reflect these changes. 
Specifically, paragraphs (d)(1)(iv)(C), (D), and (E) have been added to 
Sec.  412.230 to reflect changes in the percentage standards 
implemented in FY 2002, FY 2010, and FY 2011, respectively. Although we 
have continued to apply the policy set forth at Sec.  412.230(a)(4) to 
the updated percentage standards set forth in paragraphs (d)(1)(iv)(C), 
(D), and (E) in Sec.  412.230, conforming changes to Sec.  
412.230(a)(4) were not made to reflect these new paragraphs. This 
oversight has caused some confusion. Therefore, we are proposing to 
revise Sec.  412.230(a)(4) to clarify that the policy prohibiting the 
rounding of qualifying percentage standards applies to paragraphs 
(d)(1)(iv)(C), (D), and (E) in Sec.  412.230. Specifically, we are 
proposing to remove specific references to paragraphs (d)(1)(iv)(A) and 
(B) and instead cite paragraph (d)(1)(iv) as a more general reference 
to the specific standards.
3. Redesignations Under Section 1886(d)(8)(B) of the Act
a. Lugar Status Determinations
    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 
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 [email protected]. In the FY 
2018 IPPS/LTCH PPS final rule (82 FR 38147 through 38148), we finalized 
a policy revision to require a Lugar hospital that qualifies for and 
accepts the out-migration adjustment, or that no longer wishes to 
accept the out-migration adjustment and instead elects to return to its 
deemed urban status, to notify CMS within 45 days from the date of 
public display of the proposed rule at the Office of the Federal 
Register. These revised notification timeframes were effective 
beginning October 1, 2017. In addition, in the FY 2018 IPPS/LTCH PPS 
final rule (82 FR 38148), we clarified that both requests to waive and 
to reinstate ``Lugar'' status may be sent to

[[Page 19384]]

[email protected]. To ensure proper accounting, we request 
hospitals to include their CCN, and either ``waive Lugar'' or 
``reinstate Lugar'', in the subject line of these requests.
b. Clarification Regarding Accepting the Out-Migration Adjustment When 
the Outmigration Adjustment Changes After Reclassification
    Section 1886(d)(8)(B) of the Act provides that for purposes a 
reclassification under this subsection, the Secretary shall treat a 
hospital located in a rural county adjacent to one or more urban areas 
as being located in the urban metropolitan statistical area to which 
the greatest number of workers in the county commute if certain 
criteria are met. Rural hospitals in these counties are commonly known 
as ``Lugar'' hospitals. This statutory provision specifies that Lugar 
status is mandatory (not optional) if the statutory criteria are met. 
However, as discussed in the FY 2012 IPPS/LTCH PPS proposed and final 
rules (76 FR 25885 through 25886 and 51599), Lugar hospitals located in 
counties that qualify for the out-migration adjustment are required to 
waive their Lugar urban status in its entirety in order to receive the 
out-migration adjustment. We stated our belief that this represents one 
permissible reading of the statute, given that section 1886(d)(13)(G) 
of the Act states that a hospital in a county that has an out-migration 
adjustment and that has not waived that adjustment under section 
1886(d)(13)(F) of the Act is not eligible for reclassification under 
section 1886(d)(8) or (10) of the Act. Therefore, a hospital may opt to 
receive either its county's out-migration adjustment or the wage index 
determined by its Lugar reclassification.
    We have become aware of a potential issue with the current election 
process that requires further clarification. As discussed in the 
following section, the out-migration adjustment is calculated to 
provide a positive adjustment to 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. When a county is determined to 
qualify for an out-migration adjustment, the final adjustment value is 
determined in accordance with section 1886(d)(13)(D) of the Act and is 
fixed by statute for a 3-year period under section 1886(d)(13)(F) of 
the Act. CMS performs an annual analysis to evaluate all counties 
without current out-migration adjustment values assigned, including 
counties where the out-migration adjustment value will be expiring 
after a 3-year period. Initial out-migration adjustment values are 
published in Table 4 associated with the IPPS proposed and final rules 
(which are available via the internet on the CMS website). Due to 
various factors, including hospitals withdrawing or terminating MGCRB 
reclassifications, obtaining Sec.  412.103 rural reclassifications, or 
corrections to hospital wage data, the amount of newly proposed (1st 
year) out-migration adjustment values may fluctuate between the 
proposed rule and the final rule (and subsequent correction notices). 
These fluctuations are typically minimal. However, in certain 
circumstances, after processing varying forms of reclassification, wage 
index values may change so that a county would no longer qualify for an 
out-migration adjustment. In particular, when changes in wage index 
reclassification status alter the State rural floor so that multiple 
CBSAs would be assigned the same wage index value, an out-migration 
adjustment may no longer be indicated for a county as there would be 
little, if any, differential in nearby wage index values. This can lead 
to a situation where a hospital has opted to receive a non-existent 
out-migration adjustment. We believe this situation is not compatible 
with longstanding CMS policy preventing a hospital from waiving its 
deemed urban Lugar status outside the prescribed out-migration 
adjustment election process described above. Section 1886(d)(13)(G) of 
the Act specifies that a hospital in a county that has a wage index 
increase under section 1886(d)(13)(F) of the Act (the out-migration 
adjustment) and that has not waived such increase under section 
1886(d)(13)(F) of the Act is not eligible for reclassification under 
section 1886(d)(8) or (10) of the Act during that period. If there is 
no out-migration adjustment available to provide a wage index increase, 
the fact pattern for which CMS established the process for a hospital 
to opt to receive a county out-migration adjustment in lieu of its 
``Lugar'' reclassification no longer applies, and the hospital must be 
assigned its deemed urban status. Therefore, we are clarifying that, in 
circumstances where an eligible hospital elects to receive the out-
migration adjustment within 45 days of the public display date of the 
proposed rule at the Office of the Federal Register in lieu of its 
Lugar wage index reclassification, and the county in which the hospital 
is located would no longer qualify for an out-migration adjustment when 
the final rule (or a subsequent correction notice) wage index 
calculations are completed, the hospital's request to accept the out-
migration adjustment would be denied, and the hospital would be 
automatically assigned to its deemed urban status under section 
1886(d)(8)(B) of the Act. Final rule wage index values would be 
recalculated to reflect this reclassification, and in some instances, 
after taking into account this reclassification, the out-migration 
adjustment for the county in question could be restored in the final 
rule. However, as the hospital is assigned a Lugar reclassification 
under section 1886(d)(8)(B) of the Act, it would be ineligible to 
receive the county out-migration adjustment under section 
1886(d)(13)(G) of the Act. Because the out-migration adjustment, once 
finalized, is locked for a 3-year period under section 1886(d)(13)(F) 
of the Act, the hospital would be eligible to accept its out-migration 
adjustment in either the second or third year.
c. Proposed Change to Lugar County Assignments
    Section 1886(d)(8)(B) of the Act establishes a wage index 
reclassification process by which the Secretary is required to treat a 
hospital located in a rural county adjacent to one or more urban areas 
as being located in the urban metropolitan statistical area (MSA), or 
core based statistical area (CBSA), to which the greatest number of 
workers in the county commute if certain criteria are met. Rural 
hospitals in these counties are known as ``Lugar'' hospitals and the 
counties themselves are often referred to as ``Lugar'' counties. These 
Lugar counties are not located in any urban area, but are adjacent to 
two or more urban CBSAs. In determining whether a county qualifies as a 
Lugar county, sections 1886(d)(8)(B)(i) and (ii) of the Act require us 
to use the standards for designating MSAs published in the Federal 
Register by OMB based on the most recent available decennial population 
data. Based on OMB definitions (75 FR 37246 through 37252), a CBSA is 
composed of ``central'' counties and ``outlying'' counties. While 
``central'' counties meet certain population density requirements and 
other urban characteristics, a county qualifies as an ``outlying'' 
county of a CBSA if it meets one of the following commuting 
requirements: (a) At least 25 percent of the workers living in the 
county work in the central county or counties of the CBSA; or (b) at 
least 25 percent of the employment in the county is accounted for by 
workers who reside in the central county or counties

[[Page 19385]]

of the CBSA. Given the OMB standards above, when a county is located 
between two or more urban centers, these ``central'' county commuting 
patterns may be split between two or more CBSAs, and the 25-percent 
thresholds to qualify as an outlying county for any single CBSA may not 
be met. In such situations, the county would be considered rural 
according to CMS, based on the OMB definitions above, as it would not 
be part of an urban CBSA. Section 1886(d)(8)(B) of the Act addresses 
this issue where a county would have qualified as an outlying urban 
county if all its central county commuting data to adjacent urban CBSAs 
were combined. Specifically, section 1886(d)(8)(B)(i) of the Act 
requires CMS to consider a rural county to be part of an adjacent CBSA 
if the rural county would otherwise be considered part of an urban area 
under the OMB standards for designating MSAs if the commuting rates 
used in determining outlying counties were determined on the basis of 
the aggregate number of resident workers who commute to (and, if 
applicable under the standards, from) the central county or counties of 
all contiguous MSAs. Section 1886(d)(8)(B)(i) further requires CMS to 
assign these Lugar counties to the CBSA to which the greatest number of 
workers in the county commute. Since the implementation of section 
1886(d)(8)(B) of the Act for discharges occurring after October 1, 
1988, CMS' policy has been that, once a county qualifies as Lugar, the 
proper methodology for determining the CBSA to which the greatest 
number of workers in the county commute should be based on the same OMB 
dataset used to determine whether a county qualifies as an ``outlying'' 
county of a CBSA. These data are a summary of commuting patterns 
between the non-central county being evaluated and the ``central'' 
county or counties of an urban metropolitan area (without taking into 
account outlying counties). Section 1886(d)(8)(B) of the Act clearly 
instructs CMS to use the OMB criteria for determining ``outlying'' 
counties when determining the list of qualifying Lugar counties. These 
criteria are limited to assessing commuting patterns to and from 
central counties. Further, we do not believe the statute requires that 
CMS perform an additional and separate community analysis, taking into 
account outlying counties, to determine to which CBSA a Lugar county 
should be assigned. When CMS updated the OMB labor market delineations 
based on 2010 decennial census in FY 2015, we were made aware that a 
hospital in Henderson County, TX (a Lugar county) disagreed with CMS' 
interpretation of the statute. In particular, the hospital stated that 
section 1886(d)(8)(B)(i) of the Act requires that CMS assign a 
qualified Lugar county to ``the urban metropolitan statistical area to 
which the greatest number of workers in the county commute,'' and that 
this instruction does not distinguish between an urban CBSA's central 
counties and outlying counties. The hospital claimed that the 
assignment of a Lugar county to a CBSA should not be based solely on 
commuting data and commuting patterns to and from the central county or 
counties of a CBSA, but should consider outlying counties as well.
    After consideration of this matter, we continue to believe that 
CMS' methodology is a reasonable interpretation of the statute. 
However, upon further consideration and analysis, we have determined 
that the Henderson, TX hospital's interpretation of section 
1886(d)(8)(B) of the Act is a reasonable alternative. After reanalyzing 
the commuting data used when developing the FY 2015 IPPS/LTCH PPS final 
rule (the American Community Survey commuting data for 2006-2010), we 
identified 10 instances where a rural county would have been assigned 
to a different CBSA if we had considered outlying counties in our 
analysis of the urban metropolitan statistical area to which the 
greatest number of workers in the county commute, as shown in the table 
below.
BILLING CODE 4120-01-P

[[Page 19386]]

[GRAPHIC] [TIFF OMITTED] TP03MY19.020

BILLING CODE 4120-01-C
    Of these 10 counties, currently only 3 counties (Talladega, AL, 
Pearl River, MS, and Henderson, TX) contain IPPS hospitals (4 hospitals 
in total). When including ``outlying'' counties in the commuting 
analysis, the analysis suggests that generally (but not always) the 
revised CBSA assignment would be to a larger CBSA, which would be 
expected as larger CBSAs generally include a greater number of 
``outlying'' counties. After further consideration of this issue, we 
believe that inclusion of outlying counties in the commuting analysis 
for purposes of assigning counties that qualify as Lugar counties (the 
second step of the Lugar analysis),

[[Page 19387]]

although not unambiguously required by statute, is a reasonable, and 
arguably more natural, reading of the language in section 
1886(d)(8)(B)(i) of the Act. Accordingly, we are proposing to modify 
the assigned CBSA for the 10 Lugar counties specified in the table 
above for FY 2020. We also plan to fully reevaluate this proposed 
policy and underlying methodologies, if finalized, when CMS updates 
Lugar county assignments, which typically occurs after OMB labor market 
delineations are updated in response to the next decennial census.

J. Proposed Out-Migration Adjustment Based on Commuting Patterns of 
Hospital Employees

    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, 2018, 
and 2019 IPPS/LTCH PPS final rules (80 FR 49501, 81 FR 56930, 82 FR 
38150, and 83 FR 41384, respectively), the same policies, procedures, 
and computation that were used for the FY 2012 out-migration adjustment 
were applicable for FYs 2016 through 2019, and we are proposing to use 
them again for FY 2020. We have applied the same policies, procedures, 
and computations since FY 2012, and we believe they continue to be 
appropriate for FY 2020. 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 2020, 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 2020, we 
are not proposing 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).)
    Table 2 associated with this proposed rule (which is available via 
the internet on the CMS website) includes the proposed out-migration 
adjustments for the FY 2020 wage index. In addition, as discussed in 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20367), we have added a 
Table 4, ``List of Counties Eligible for the Out-Migration Adjustment 
under Section 1886(d)(13) of the Act.'' For this proposed rule, Table 4 
consists of the following: A list of counties that would be eligible 
for the out-migration adjustment for FY 2020 identified by FIPS county 
code, the proposed FY 2020 out-migration adjustment, and the number of 
years the adjustment would be in effect. We believe this table makes 
this information more transparent and provides the public with easier 
access to this information. We note that we intend to make the 
information available annually via Table 4 associated with the IPPS/
LTCH PPS proposed and final rules, and are including it among the 
tables associated with this FY 2020 IPPS/LTCH PPS proposed rule that 
are available via the internet on the CMS website.

K. Reclassification From Urban to Rural Under Section 1886(d)(8)(E) of 
the Act, Implemented at 42 CFR 412.103

1. Application for Rural Status and Lock-In Date
    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 manner 
determined by the Secretary) from a subsection (d) hospital that 
satisfies certain criteria, the Secretary shall treat the hospital as 
being located in the rural area (as defined in paragraph (2)(D)) of the 
State in which the hospital is located. We refer readers to the 
regulations at 42 CFR 412.103 for the general criteria and application 
requirements for a subsection (d) hospital to reclassify from urban to 
rural status in accordance with section 1886(d)(8)(E) of the Act. The 
FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes 
our policies regarding the effect of wage data from reclassified or 
redesignated hospitals.
    Hospitals must meet the criteria to be reclassified from urban to 
rural status under Sec.  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 Sec.  412.103(b) by

[[Page 19388]]

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 Sec. Sec.  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 Sec.  412.103.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41384 through 
41386), we changed the lock-in date to provide for additional time in 
the ratesetting process and to match the lock-in date with another 
existing deadline, the usual public comment deadline for the IPPS 
proposed rule. We revised Sec.  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 Sec. Sec.  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 Sec.  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 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 Sec.  412.103. As we 
discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931) and the 
FY 2019 IPPS/LTCH PPS final rule (83 FR 41385 through 41386), this 
lock-in date also does not change the current regulation that allows 
hospitals that qualify under Sec.  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 Sec.  412.103(d). The hospital's IPPS 
claims will be paid reflecting its rural status beginning on the filing 
date (the effective date) of the reclassification, regardless of when 
the hospital applies.
2. Proposed Change to the Regulations To Allow for Electronic 
Submission of Applications for Reclassification From Urban to Rural 
Status
    The application requirements at Sec.  412.103(b)(3) for 
reclassification from urban to rural status currently state that an 
application must be mailed to the CMS Regional Office by the requesting 
hospital and may not be submitted by facsimile or other electronic 
means. We believe that this policy is outdated and overly restrictive. 
In the interest of burden reduction and to promote ease of application, 
in this proposed rule, we are proposing to eliminate the restriction on 
submitting an application by facsimile or other electronic means so 
that hospitals may also submit applications to the CMS Regional Office 
electronically. Accordingly, we are proposing to revise Sec.  
412.103(b)(3) to allow a requesting hospital to submit an application 
to the CMS Regional Office by mail or by facsimile or other electronic 
means.
3. Proposed Changes to Cancellation Requirements for Rural 
Reclassifications
    Under current regulations at Sec.  412.103(g)(1), hospitals, other 
than those hospitals that are rural referral centers (RRCs), may cancel 
a rural reclassification by submitting a written request to the CMS 
Regional Office not less than 120 days before the end of its current 
cost reporting period, effective beginning with the next full cost 
reporting period. Under the current regulations at Sec.  412.103(g)(2), 
a hospital that was classified as an RRC under Sec.  412.96 based on 
rural reclassification under Sec.  412.103 may cancel its rural 
reclassification by submitting a written request to the CMS Regional 
Office not less than 120 days prior to the end of the Federal fiscal 
year and after being paid as rural for at least one 12-month cost 
reporting period. The RRC's cancellation of a Sec.  412.103 rural 
reclassification is not effective until it has been paid as rural for 
at least one 12-month cost reporting period, and not until the 
beginning of the Federal fiscal year following both the request for 
cancellation and the 12-month cost reporting period.
    In this proposed rule, we are proposing to revise the rural 
reclassification cancellation requirements at Sec.  412.103(g) for 
hospitals classified as RRCs. Currently, Sec.  412.103(g)(2) requires 
that, for a hospital that has been classified as an RRC based on rural 
reclassification under Sec.  412.103, cancellation of a Sec.  412.103 
rural reclassification is not effective until the hospital that is 
classified as an RRC has been paid as rural for at least one 12-month 
cost reporting period, and not until the beginning of the Federal 
fiscal year following both the request for cancellation and the 12-
month cost reporting period. We stated in the FY 2008 IPPS final rule 
(72 FR 47371 through 47373) that the goal of creating this minimum time 
period was to disincentivize hospitals from receiving a rural 
redesignation, obtaining RRC status to take advantage of special MGCRB 
reclassification rules, and then terminating their rural status. 
However, as suggested by a commenter in response to the April 22, 2016 
interim final rule with comment period (81 FR 56926), this disincentive 
is no longer necessary now that hospitals can have simultaneous MGCRB 
and Sec.  412.103 reclassifications. Accordingly, in this proposed 
rule, we are proposing to revise Sec.  412.103(g)(2)(iii) to specify 
that the provisions set forth at Sec.  412.103(g)(2)(i) and (ii) are 
effective for all written requests submitted by hospitals on or after 
October 1, 2007 and before October 1, 2019 to cancel rural 
reclassifications. Therefore, the reclassification cancellation 
requirements specific to RRCs at Sec.  412.103(g)(2) would no longer 
apply for cancellation requests submitted on or after October 1, 2019. 
In addition, as further discussed below, we are proposing to revise 
Sec.  412.103(g) to include uniform reclassification cancellation 
requirements that would be applied to all hospitals effective for 
cancellation requests submitted on or after October 1, 2019.
    As further discussed below, we are proposing to revise the 
regulations at Sec.  412.103(g) to set forth uniform requirements 
applicable to all hospitals for cancelling rural reclassifications. 
Currently, for non-RRCs, the cancellation of rural status is effective 
beginning with the hospital's next cost reporting period. A hospital 
that has a Sec.  412.103 rural reclassification and that does not have 
an additional MGCRB or ``Lugar'' reclassification is assigned the rural 
wage index value for its State. Because wage index values are 
determined and assigned to hospitals on a Federal fiscal year basis, 
when such an aforementioned hospital cancels its rural 
reclassification, the wage index value must be manually updated by the 
MAC to its appropriate urban wage index value. Because the end dates of 
cost reporting periods vary among hospitals, this process can be 
cumbersome and some cancellation requests may not be processed in time 
to be accurately reflected in the IPPS final rule appendix tables. 
Because there is no apparent advantage to continuing to link the rural 
reclassification cancellation date to a hospital's cost reporting 
period, we believe that, in the interests of reducing overall 
complexity and administrative burden, the cancellation of rural 
reclassification should be effective for all hospitals

[[Page 19389]]

beginning with the next Federal fiscal year (that is, the Federal 
fiscal year following the cancellation request). In addition, similar 
to the current requirements at Sec.  412.103(g)(2), we believe it would 
be appropriate to require hospitals to request cancellation not less 
than 120 days prior to the end of a Federal fiscal year. We believe 
this proposed 120-day timeframe would provide hospitals adequate time 
to assess and review reclassification options, and provide CMS adequate 
time to incorporate the cancellation in the wage index development 
process. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41384 through 41386), we finalized a lock-in date for a new rural 
reclassification to be approved in order for a hospital to be treated 
as rural in the wage index and budget neutrality calculations under 
Sec. Sec.  412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates 
for the next Federal fiscal year. We considered using this deadline, 
which is 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, as the deadline to submit cancellation requests effective for the 
next Federal fiscal year as well. While we see certain advantages with 
aligning various wage index deadlines to the same date, based on the 
public display date of the proposed rule, we believe the proposed 
deadline of not less than 120 days prior to the end of the Federal 
fiscal year would give hospitals adequate time to assess and review 
reclassification options, and CMS adequate time to incorporate the 
cancellation in the wage index and budget neutrality calculations under 
Sec. Sec.  412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates 
for the next Federal fiscal year. In addition, this proposed 120-day 
deadline is already familiar to many hospitals because it is similar to 
the current deadline under Sec.  412.103(g)(2), and therefore, we 
believe implementation of the proposed deadline may pose less of a 
burden overall for many hospitals. For these reasons, we are proposing 
to add paragraph (g)(3) to Sec.  412.103 to specify that, for all 
written requests submitted by hospitals on or after October 1, 2019 to 
cancel rural reclassifications, a hospital may cancel its rural 
reclassification by submitting a written request to the CMS Regional 
Office not less than 120 days prior to the end of a Federal fiscal 
year, and the hospital's cancellation of the classification would be 
effective beginning with the next Federal fiscal year. In addition, we 
are proposing to add paragraph (g)(1)(iii) to Sec.  412.103 to specify 
that the provisions of paragraphs (g)(1)(i) and (ii) of Sec.  412.103 
are effective only for written requests submitted by hospitals before 
October 1, 2019 to cancel rural reclassification.
    In addition, we are proposing to codify into regulations a 
longstanding CMS policy regarding canceling a Sec.  412.103 
reclassification when a hospital opts to accept and receives its county 
out-migration adjustment in lieu of its ``Lugar'' reclassification. As 
discussed in section III.I.3. of the preamble of this proposed rule, a 
hospital may opt to receive either its ``Lugar'' county 
reclassification established under section 1886(d)(8)(B) of the Act, or 
the county out-migration adjustment determined under section 
1886(d)(13) of the Act. Such requests may be submitted to CMS by email 
to [email protected] within 45 days of the public display date of 
the proposed rule for the next Federal fiscal year. We established this 
process because section 1886(d)(13)(G) of the Act prohibits a hospital 
from having both an out-migration wage index adjustment and 
reclassification under section 1886(d)(8) or (10) of the Act. Because 
Sec.  412.103 reclassifications were established under section 
1886(d)(8)(E) of the Act, a hospital cannot simultaneously have an out-
migration adjustment and be reclassified as rural under Sec.  412.103. 
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51600), we addressed a 
commenter's concern regarding timing issues for some hospitals that 
wish to receive their county out-migration adjustment, but would not 
have adequate time to also cancel their rural reclassification. In that 
rule, we stated that ``we will allow the act of waiving Lugar status 
for the out-migration adjustment to simultaneously waive the hospital's 
deemed urban status and cancel the hospital's acquired rural status, 
thus treating the hospital as a rural provider effective on October 
1.'' While this policy modification was initially discussed in the FY 
2012 IPPS/LTCH PPS final rule in the context of hospitals wishing to 
obtain or maintain sole community hospital (SCH) or Medicare-dependent 
hospital (MDH) status, its application has not been limited to current 
or potential SCHs or MDHs. We continue to believe this policy of 
automatically canceling rural reclassifications when a hospital waives 
its Lugar reclassification to receive its out-migration adjustment 
reduces overall burden on hospitals by not requiring them to file a 
separate rural reclassification cancellation request. We also believe 
this policy reduces overall complexity for CMS, avoiding the need to 
track and process multiple cancellation requests. Accordingly, we 
believe this policy should be codified in the regulations at Sec.  
412.103.
    Therefore, we are proposing to add paragraph (g)(4) to Sec.  
412.103 to specify that a rural reclassification will be considered 
cancelled effective for the next Federal fiscal year when a hospital 
opts (by submitting a request to CMS within 45 days of the date of 
public display of the proposed rule for the next Federal fiscal year at 
the Office of the Federal Register in accordance with the procedure 
described in section III.I.3. of the preamble of this proposed rule) to 
accept and receives its county out-migration wage index adjustment 
determined under section 1886(d)(13) of the Act in lieu of its 
geographic reclassification described under section 1886(d)(8)(B) of 
the Act. If the hospital wishes to once again obtain a Sec.  412.103 
rural reclassification, it would have to reapply through the CMS 
Regional Office in accordance with Sec.  412.103, and the hospital 
would once again be ineligible to receive its out-migration adjustment. 
We note that, in a case where a hospital reclassified as rural under 
Sec.  412.103 wishes to receive its out-migration adjustment but does 
not qualify for a ``Lugar'' reclassification, the hospital would need 
to formally cancel its Sec.  412.103 rural reclassification by written 
request to the CMS Regional Office within the timeframe specified at 
Sec.  412.103. Finally, in order to address the scenario described in 
section III.I.3.b. of the preamble of this proposed rule, we note that, 
in proposed Sec.  412.103(g)(4), we are providing that the hospital 
must not only opt to accept, but also receive, its county out-migration 
wage index adjustment to trigger cancellation of rural reclassification 
under that provision. In such cases where an out-migration adjustment 
is no longer applicable based on the wage index in the final rule, a 
hospital's rural reclassification remains in effect (unless otherwise 
cancelled by written request to the CMS Regional Office within the 
timeframe specified at Sec.  412.103).

L. Process for Requests for Wage Index Data Corrections

1. Process for Hospitals To Request Wage Index Data Corrections
    The preliminary, unaudited Worksheet S-3 wage data files and the 
preliminary CY 2016 occupational mix data files for the proposed FY 
2020 wage index were made available on June 5, 2018 through the 
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-
Fee-for-Service-

[[Page 19390]]

Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2020-Wage-Index-
Home-Page.html.
    On January 31, 2019, we posted a public use file (PUF) at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatient 
PPS/Wage-Index-Files-Items/FY2020-Wage-Index-Home-Page.html containing 
FY 2020 wage index data available as of January 30, 2019. This PUF 
contains a tab with the Worksheet S-3 wage data (which includes 
Worksheet S-3, Parts II and III wage data from cost reporting periods 
beginning on or after October 1, 2015 through September 30, 2016; that 
is, FY 2016 wage data), a tab with the occupational mix data (which 
includes data from the CY 2016 occupational mix survey, Form CMS-
10079), a tab containing the Worksheet S-3 wage data of hospitals 
deleted from the January 31, 2019 wage data PUF, and a tab containing 
the CY 2016 occupational mix data of the hospitals deleted from the 
January 31, 2019 occupational mix PUF. In a memorandum dated January 
18, 2019, we instructed all MACs to inform the IPPS hospitals that they 
service of the availability of the January 31, 2019 wage index data 
PUFs, and the process and timeframe for requesting revisions in 
accordance with the FY 2020 Wage Index Timetable.
    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: http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/index.html.
    In a memorandum dated April 20, 2018, we instructed all MACs to 
inform the IPPS hospitals that they service of the availability of the 
preliminary wage index data files and the CY 2016 occupational mix 
survey data files posted on May 18, 2018, and the process and timeframe 
for requesting revisions.
    In a memorandum dated June 6, 2018, we corrected and reposted the 
preliminary wage file on our website because we realized that the PUF 
originally posted on May 18 2018 did not include new line items that 
were first included in cost reports for cost reporting periods 
beginning on or after October 1, 2015 (and will be used for the first 
time in the FY 2020 wage index). Specifically, the lines are: Worksheet 
S-3, Part II, lines 14.01 and 14.02, and 25.50, 25.51, 25.52, and 
25.53; and Worksheet S-3, Part IV, lines 8.01, 8.02, 8.03. In the same 
memorandum, we instructed all MACs to inform the IPPS hospitals that 
they service of the availability of the corrected and reposted 
preliminary wage index data files and the CY 2016 occupational mix 
survey data files posted on June 6, 2018, and the process and timeframe 
for requesting revisions.
    If a hospital wished to request a change to its data as shown in 
the June 6, 2018 preliminary wage and occupational mix data files, the 
hospital had to submit corrections along with complete, detailed 
supporting documentation to its MAC by September 4, 2018. 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 16, 2018 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 6, 2018 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 2019. CMS published the wage 
index PUFs that included hospitals' revised wage index data on January 
31, 2019. Hospitals had until February 15, 2019, to submit requests to 
the MACs to correct errors in the January 31, 2019 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 January 31, 
2019 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 22, 2019. 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 4, 
2019. Data that were incorrect in the preliminary or January 31, 2019 
wage index data PUFs, but for which no correction request was received 
by the February 15, 2019 deadline, are not considered for correction at 
this stage. In addition, April 4, 2019 was the deadline for hospitals 
to dispute data corrections made by CMS of which the hospital is 
notified after the January 31, 2019 PUF and at least 14 calendar days 
prior to April 4, 2019 (that is, March 21, 2018), that do not arise 
from a hospital's request for revisions. We note that, as with previous 
years, for the proposed FY 2020 wage index, in accordance with the FY 
2020 wage index timeline posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatient 
PPS/Wage-Index-Files-Items/FY2020-Wage-Index-Home-Page.html, the April 
appeals have to be sent via mail and email. We refer readers to the 
wage index timeline for complete details.
    Hospitals are given the opportunity to examine Table 2 associated 
with this proposed rule, which is listed in section VI. of the Addendum 
to this proposed rule and available via the internet on the CMS website 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS-FY2020-IPPS-Proposed-Rule-Home-Page.html. Table 2 
contains each hospital's proposed adjusted average hourly wage used to 
construct the wage index values for the past 3 years, including the FY 
2016 data used to construct the proposed FY 2020 wage index. We note 
that the proposed hospital average hourly wages shown in Table 2 only 
reflect changes made to a hospital's data that were transmitted to CMS 
by early February 2019.
    We plan to post the final wage index data PUFs in late April 2019 
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatient PPS/Wage-Index-Files-
Items/FY2020-Wage-Index-Home-Page.html. The April 2019 PUFs are made 
available solely for the limited purpose of identifying any potential 
errors made by CMS or the MAC in the entry of the final wage index data 
that resulted from the correction process previously described (the 
process for disputing revisions submitted to CMS by the MACs by March 
21, 2019, and the process for disputing data corrections made by CMS 
that did not arise from a hospital's request for wage data revisions as 
discussed earlier).
    After the release of the April 2019 wage index data PUFs, changes 
to the wage and occupational mix data can only be made in those very 
limited situations involving an error by the

[[Page 19391]]

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 21, 2018.
     Requests for correction of errors that were not, but could 
have been, identified during the hospital's review of the January 31, 
2019 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 2019 final wage index data PUFs, a 
hospital believes that its wage or occupational mix data are incorrect 
due to a MAC or CMS error in the entry or tabulation of the final data, 
the hospital is given the opportunity to notify both its MAC and CMS 
regarding why the hospital believes an error exists and provide all 
supporting information, including relevant dates (for example, when it 
first became aware of the error). The hospital is required to send its 
request to CMS and to the MAC no later than May 30, 2019. May 30, 2019 
is also the deadline for hospitals to dispute data corrections made by 
CMS of which the hospital is notified on or after 13 calendar days 
prior to April 4, 2019 (that is, March 22, 2019), and at least 14 
calendar days prior to May 30, 2019 (that is, May 16, 2019), that do 
not arise from a hospital's request for revisions. (Data corrections 
made by CMS of which a hospital is notified on or after 13 calendar 
days prior to May 30, 2019 (that is, May 17, 2019) may be appealed to 
the Provider Reimbursement Review Board (PRRB)). Similar to the April 
appeals, beginning with the FY 2015 wage index, in accordance with the 
FY 2020 wage index timeline posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2020-Wage-Index-Home-Page.html, the May appeals must be sent via mail and email to CMS and 
the MACs. We refer readers to the wage index timeline for complete 
details.
    Verified corrections to the wage index data received timely (that 
is, by May 30, 2019) by CMS and the MACs will be incorporated into the 
final FY 2020 wage index, which will be effective October 1, 2019.
    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 2020 payment rates. 
Accordingly, 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 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 have access to the final wage index data 
PUFs by late April 2019, they have 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 2020 wage index by August 
2019, and the implementation of the FY 2020 wage index on October 1, 
2019. 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, 
2019, 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, 2019 for the FY 2020 
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, 2019 deadline for the 
FY 2020 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, 2019 deadline for the FY 2020 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.

[[Page 19392]]

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.
2. Process for Data Corrections by CMS After the January 31 Public Use 
File (PUF)
    The process set forth with the wage index timeline discussed in 
section III.L.1. of the preamble of this proposed 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 January 31 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.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41364), 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). Furthermore, 
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) and as first 
implemented with the FY 2019 wage index (83 FR 41389), hospitals are 
able 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 
January 31 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) promote additional transparency to instances where CMS 
makes data corrections after the January 31 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 2020 Wage Index Development Time Table, as well 
as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156).

M. Proposed Labor-Related Share for the Proposed FY 2020 Wage Index

    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 that 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-

[[Page 19393]]

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 additional payments that would be made as a result of 
hospitals with a wage index less than or equal to 1.0000 being paid 
using a labor-related share lower than the labor-related share of 
hospitals with a wage index greater than 1.0000. In the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41389 and 41390), for FY 2019, we continued 
to use a labor-related share of 68.3 percent for discharges occurring 
on or after October 1, 2018.
    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 this 
proposed rule, for FY 2020, we are not proposing 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 2020, we are proposing to continue 
to use a labor-related share of 68.3 percent for discharges occurring 
on or after October 1, 2019.
    As discussed in section IV.B. of the preamble of this proposed 
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 2020, we are 
not proposing a Puerto Rico-specific labor-related share percentage or 
a nonlabor-related share percentage.
    Tables 1A and 1B, which are published in section VI. of the 
Addendum to this FY 2020 IPPS/LTCH PPS proposed rule and available via 
the internet on the CMS website, reflect the proposed national labor-
related share, which is also applicable to Puerto Rico hospitals. For 
FY 2020, for all IPPS hospitals (including Puerto Rico hospitals) whose 
wage indexes are less than or equal to 1.0000, we are proposing to 
apply 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 2020, 
we are proposing to apply the wage index to a proposed labor-related 
share of 68.3 percent of the national standardized amount.

N. Proposals To Address Wage Index Disparities Between High and Low 
Wage Index Hospitals

    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20372), we 
invited the public to submit further comments, suggestions, and 
recommendations for regulatory and policy changes to the Medicare wage 
index. Many of the responses received from this request for information 
(RFI) reflect a common concern that the current wage index system 
perpetuates and exacerbates the disparities between high and low wage 
index hospitals. Many respondents also expressed concern that the 
calculation of the rural floor has allowed a limited number of States 
to manipulate the wage index system to achieve higher wages for many 
urban hospitals in those states at the expense of hospitals in other 
states, which also contributes to wage index disparities.
    To help mitigate these wage index disparities, including those 
resulting from the inclusion of hospitals with rural reclassifications 
under 42 CFR 412.103 in the calculation of the rural floor, we are 
proposing to reduce the disparity between high and low wage index 
hospitals by increasing the wage index values for certain hospitals 
with low wage index values and decreasing the wage index values for 
certain hospitals with high wage index values to maintain budget 
neutrality, and changing the calculation of the rural floor, as further 
discussed below. We also are proposing a transition for hospitals 
experiencing significant decreases in their wage index values as a 
result of our proposed wage index policies. We discuss these proposed 
changes to the wage index in more detail below.
1. Prior Rulemaking Public Comments
    As described in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20372 through 20377), there have been numerous studies, analyses, and 
reports on ways to revise the Medicare wage index. In public comments 
received on prior rulemakings for FYs 2009, 2010, and 2011, many 
commenters argued that the current labor market definitions and wage 
data sources used by CMS, in many instances, are not reflective of the 
true cost of labor for any given hospital or are inappropriate to use 
for this purpose because of, for example, the resulting payment 
disparities, or both. For our responses to public comments received on 
the FY 2009 IPPS/LTCH PPS proposed rule, we refer readers to the FY 
2009 IPPS/LTCH PPS final rule (73 FR 48563 through 48567); for 
responses to public comments on the FY 2010 IPPS/LTCH PPS proposed 
rule, we refer readers to the FY 2010 IPPS/LTCH PPS final rule (74 FR 
43824 through 43826); and for responses to public comments on the FY 
2011 IPPS/LTCH PPS proposed rule, we refer readers to the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50157 through 50160). The public comments on 
these proposed rules are available at www.regulations.gov under file 
numbers CMS-1390-P, CMS-1406-P, and CMS-1498-P, respectively.
    In the FY 2019 IPPS/LTCH proposed rule, we invited the public to 
submit further comments, suggestions, and recommendations for 
regulatory and policy changes to the Medicare wage index. We requested 
the public to submit appropriate supporting data and specific 
recommendations in their comments. We also welcomed analysis

[[Page 19394]]

regarding CMS' authority for our consideration. We received many 
comments, many of which addressed wage index disparities between high 
and low wage index hospitals. The following is a summary of the 
comments we received on the wage index disparity issue. We note that we 
also received comments regarding other aspects of the wage index 
system, including current labor market areas, MGCRB reclassifications, 
use of alternative data, and the use of the hospital wage index by 
nonhospital providers. We will continue to consider those comments for 
potential future rulemaking.
2. Public Comments on Wage Index Disparities in Response to the Request 
for Information in the FY 2019 IPPS/LTCH PPS Proposed Rule
    One of the concerns regarding the wage index system expressed by 
hospitals in low wage index areas is the disparity in wage index values 
between high and low wage index areas. The following comment, received 
in response to the request for information in the FY 2019 IPPS/LTCH PPS 
proposed rule, is a typical comment in this regard:
    ``The most significant issue with the current system can be traced 
to the data sources used to calculate the wage index. Relying 
exclusively on hospital cost reports as the source to calculate the 
wage index allows hospitals in States with significantly higher wage 
indexes to maintain and improve their favorable position in the current 
system by setting higher than market value wages for their employees. 
The higher wage hospitals can, by virtue of higher Medicare payments, 
afford to pay wages that allow them to continue as a high wage index 
State. Low wage index States . . . cannot afford to pay wages that 
would allow their hospitals to climb back toward the median wage index. 
Over time this condition of circularity has increased the gap between 
the wage indexes of the high and low wage States to a much larger 
degree than what the wage index was initially designed to address, the 
difference in labor markets across the country for comparable 
services.''
    For discussion purposes, we will refer to this situation as the 
``downward spiral,'' as this term has been used by some stakeholders to 
describe this issue. Some respondents stated that the disparity between 
the higher and lower wage index areas continues to grow and suggested 
that the problem is, in large part, due to providers in low wage index 
areas having difficulty keeping pace with competitive labor costs and 
having to reduce expenses in other areas to make up for it. Some 
respondents indicated that the downward spiral faced by hospitals in 
low wage index areas was the most important wage index issue facing the 
system and it needed to be addressed quickly.
    Some respondents recommended that CMS create a wage index floor for 
low wage hospitals, and that, in order to maintain budget neutrality, 
CMS reduce the wage index values for high wage hospitals through the 
creation of wage index ceiling.
    Some respondents also indicated that the current wage index 
methodology encourages misuse and opportunist gaming, especially in the 
area of urban to rural reclassifications and the rural floor. According 
to these respondents, under current policies, providers in some urban 
areas are able to reclassify to a rural area and substantially raise 
the rural floor for an entire State. Several respondents suggested that 
this is inconsistent with the intent of the rural floor policy, which 
is to protect vulnerable urban hospitals, and that the policy was not 
intended to allow urban hospitals to artificially inflate the rural 
floor through urban to rural reclassification. These respondents 
indicated that, because the rural floor policy is budget neutral 
nationally, all providers throughout the country that do not benefit 
from the rural floor policy have their payments lowered due to this 
misuse and opportunistic gaming. These respondents stressed that this 
further contributes to financial distress of hospitals in low wage 
index areas.
    Some respondents stated that CMS has the regulatory authority to 
determine how it calculates the rural floor. They stated that the 
calculation should mirror the spirit and intent of law by only 
considering the geographically rural providers in a State when 
calculating a rural floor. According to these respondents, CMS should 
consider changing the existing calculation to include only the 
geographically rural providers when calculating the rural floor for a 
State in order to ensure that existing regulatory policy around the 
rural floor calculation meets the intent of law and does not harm 
vulnerable providers the law intended to protect.
    Other commenters were not critical in their comments regarding wage 
index disparities. The following is a typical comment arguing that the 
reflection of such disparities in the wage index is appropriate:
    ``CMS has requested comments on wage index disparities, but we urge 
the agency to continue to recognize that as long as there are 
`disparities' in the cost of labor and cost of living between different 
parts of the country, there will and should always be wage index 
`disparities'. The area wage index is intended to recognize differences 
in resource use across types and location of hospitals. In a quest to 
smooth out so-called `disparities', we urge CMS to continue to 
adequately account for these resource differences in its payment 
systems.''
    Some commenters indicated that further analysis and study are 
needed. The following comment is a typical comment expressing this 
view:
    ``The area wage index is intended to recognize differences in 
resource use across types and location of hospitals. If these resource 
differences are not adequately accounted for by Medicare payment 
adjustments, hospitals are either inappropriately rewarded or put under 
fiscal pressure. Taking this into account, hospitals have repeatedly 
expressed concern that the wage index is greatly flawed in many 
respects, including its accuracy, volatility, circularity, and 
substantial reclassifications and exceptions. Members of Congress and 
Medicare officials also have voiced concerns with the present system. 
While a consensus solution to the wage index's shortcomings has not yet 
been developed, further analysis of alternatives is needed to identify 
approaches that promote payment adjustments that are accurate, fair, 
and effective.''
    As noted earlier, we also received comments regarding other aspects 
of the wage index system. We will continue to consider those responses 
for potential future rulemaking. We encourage interested members of the 
public to review all the comments on the wage index received in 
response to the request for information in their entirety, which are 
available at www.regulations.gov under file number CMS-1694-P.
3. Proposals To Address Wage Index Disparities
a. Providing an Opportunity for Low Wage Index Hospitals To Increase 
Employee Compensation
    As CMS and other entities have stated in the past, comprehensive 
wage index reform would require both statutory and regulatory changes, 
and could require new data sources. Notwithstanding the challenges 
associated with comprehensive wage index reform, we agree with 
respondents to the request for information who indicated that some 
current wage index policies create barriers to hospitals with low wage 
index values from being able to increase employee compensation due to 
the lag

[[Page 19395]]

between when hospitals increase the compensation and when those 
increases are reflected in the calculation of the wage index. (We note 
that this lag results from the fact that the wage index calculations 
rely on historical data.) We also agree that addressing this systemic 
issue does not need to wait for comprehensive wage index reform given 
the growing disparities between low and high wage index hospitals, 
including rural hospitals that may be in financial distress and facing 
potential closure. Therefore, in response to these concerns, we are 
proposing a policy that would provide certain low wage index hospitals 
with an opportunity to increase employee compensation without the usual 
lag in those increases being reflected in the calculation of the wage 
index.
    In general terms, as discussed further below, we are proposing to 
increase the wage index values for hospitals with a wage index value in 
the lowest quartile of the wage index values across all hospitals. 
Quartiles are a common way to divide a distribution, and therefore we 
believe it is appropriate to divide the wage indexes into quartiles for 
this purpose. For example, the interquartile range is a common measure 
of variability based on dividing data into quartiles. Furthermore, 
quartiles are used to divide distributions for other purposes under the 
Medicare program. For example, when determining Medicare Advantage 
benchmarks, excluding quality bonuses, counties are organized into 
quartiles based on their Medicare fee-for-service (FFS) spending. Also, 
Congress chose the worst performing quartile of hospitals for the 
Hospital-Acquired Condition Reduction Program penalty. (We refer 
readers to section IV.J. of the preamble of this proposed rule for a 
discussion of the Hospital-Acquired Condition Reduction Program.) 
Having determined that quartiles are a reasonable method of dividing 
the distribution of hospitals' wage index values, we believe that 
identifying hospitals in the lowest quartile as low wage index 
hospitals, hospitals in the second and third ``middle'' quartiles as 
hospitals with wages index values that are neither low nor high, and 
hospitals in the highest quartile as hospitals with high wage index 
values, is then a reasonable method of determining low wage index and 
high wage index hospitals for purposes of our proposals (discussed 
below) addressing wage index disparities. While we acknowledge that 
there is no set standard for identifying hospitals as having low or 
high wage index values, we believe our proposed quartile approach is 
reasonable for this purpose, given that, as discussed above, quartiles 
are a common way to divide distributions, and this proposed approach is 
consistent with approaches used in other areas of the Medicare program.
    Based on the data for this proposed rule, for FY 2020, the 25th 
percentile wage index value across all hospitals is 0.8482. If this 
policy is adopted in the final rule, this number would be updated in 
the final rule based on the final wage index values.
    Under our proposed methodology, we are proposing to increase the 
wage index for hospitals with a wage index value below the 25th 
percentile wage index. The proposed increase in the wage index for 
these hospitals would be equal to half the difference between the 
otherwise applicable final wage index value for a year for that 
hospital and the 25th percentile wage index value for that year across 
all hospitals. For example, assume the otherwise applicable final FY 
2020 wage index value for a geographically rural hospital in Alabama is 
0.6663, and the 25th percentile wage index value for FY 2020 is 0.8482. 
Half the difference between the otherwise applicable wage index value 
and the 25th percentile wage index value is 0.0910 (that is, (0.8482 - 
0.6663)/2). Under our proposal, the FY 2020 wage index value for such a 
hospital would be 0.7573 (that is, 0.6663 + 0.0910).
    Some respondents to the request for information indicated that CMS 
should establish a wage index floor for hospitals with low wage index 
values. However, we believe that it is important to preserve the rank 
order of the wage index values under the current policy and, therefore, 
are proposing to increase the wage index for the low-wage index 
hospitals described above by half the difference between the otherwise 
applicable final wage index value and the 25th percentile wage index 
value. We believe the rank order generally reflects meaningful 
distinctions between the employee compensation costs faced by hospitals 
in different geographic areas. Although wage index value differences 
between areas may be artificially magnified by the current wage index 
policies, we do not believe those differences are nonexistent. For 
example, if we were to instead create a floor to address the lag issue 
discussed above, it does not seem likely that hospitals in Puerto Rico 
and Alabama would have the same wage index value after hospitals in 
both areas have had the opportunity increase their employee 
compensation costs. We believe a distinction between their wage index 
values would remain because hospitals in these areas face different 
employee compensation costs in their respective labor market areas.
    We are proposing that this policy would be effective for at least 4 
years, beginning in FY 2020, in order to allow employee compensation 
increases implemented by these hospitals sufficient time to be 
reflected in the wage index calculation. For the FY 2020 wage index, we 
are proposing to use data from the FY 2016 cost reports. Four years is 
the minimum time before increases in employee compensation included in 
the Medicare cost report could be reflected in the wage index data, and 
additional time may be necessary. We intend to revisit the issue of the 
duration of the policy in future rulemaking as we gain experience under 
the policy if adopted.
b. Budget Neutrality for Providing an Opportunity for Low Wage Index 
Hospitals To Increase Employee Compensation
    As noted earlier, in response to the request for information on 
wage index disparities in the FY 2019 IPPS/LTCH PPS proposed rule, some 
respondents recommended that CMS create a wage index floor for low wage 
index hospitals, and that, in order to maintain budget neutrality, CMS 
reduce the wage index values for high wage index hospitals through the 
creation of wage index ceiling.
    While we do not believe it would be appropriate to create a wage 
index floor or a wage index ceiling as suggested in the comment 
summarized above, we believe the suggestion that we provide a mechanism 
to increase the wage index of low wage index hospitals (as we have 
proposed in section III.N.3.a. of the preamble of this proposed rule) 
while maintaining budget neutrality for that increase through an 
adjustment to the wage index of high wage index hospitals has two key 
merits. First, by compressing the wage index for hospitals on the high 
and low ends, that is, those hospitals with a low wage index and those 
hospitals with a high wage index, such a methodology increases the 
impact on existing wage index disparities more than by simply 
addressing one end. Second, such a methodology ensures those hospitals 
in the middle, that is, those hospitals whose wage index is not 
considered high or low, do not have their wage index values affected by 
this proposed policy. Thus, given the growing disparities between low 
wage index hospitals and high wage index hospitals, consistent with the 
comment summarized above, we believe it would

[[Page 19396]]

be appropriate to maintain budget neutrality for the low wage index 
policy proposed in section III.N.3.a. of the preamble of this proposed 
rule by adjusting the wage index for high wage index hospitals.
    As discussed earlier, we believe it is important to preserve the 
rank order of wage index values because the rank order generally 
reflects meaningful distinctions between the employee compensation 
costs faced by hospitals in different geographic areas. Although wage 
index value differences between areas (including areas with high wage 
index hospitals) may be artificially magnified by the current wage 
index policies, we do not believe those differences are nonexistent, 
and therefore, we do not believe it would be appropriate to set a wage 
index ceiling or floor. Accordingly, in order to offset the estimated 
increase in IPPS payments to hospitals with wage index values below the 
25th percentile under our proposal in section III.N.3.a. of the 
preamble of this proposed rule, we are proposing to decrease the wage 
index values for hospitals with high wage index values, but preserve 
the rank order among those values, as further discussed below.
    As discussed in section III.N.3.a. of the preamble of this proposed 
rule, we believe it is reasonable to divide all hospitals into 
quartiles based on their wage index value whereby we identify hospitals 
in the lowest quartile as low wage index hospitals, hospitals in the 
second and third ``middle'' quartiles as hospitals with wage index 
values that are neither high nor low, and hospitals in the highest 
quartile as hospitals with high wage index values. We believe our 
proposed quartile approach is reasonable for this purpose, given that, 
as discussed above, quartiles are a common way to divide distributions, 
and this proposed approach is consistent with approaches used in other 
areas of the Medicare program. Therefore, we are proposing to identify 
high wage index hospitals as hospitals in the highest quartile, and in 
the budget neutrality discussion that follows, we refer to hospitals 
with wage index values above the 75th percentile wage index value 
across all hospitals for a fiscal year as ``high wage index 
hospitals.''
    To ensure our proposal in section III.N.3.a. of the preamble of 
this proposed rule is budget neutral, we are proposing to reduce the 
wage index values for high wage index hospitals using a methodology 
analogous to the methodology used to increase the wage index values for 
low wage index hospitals described in section III.N.3.a. of the 
preamble of this proposed rule; that is, we are proposing to decrease 
the wage index values for high wage index hospitals by a uniform factor 
of the distance between the hospital's otherwise applicable wage index 
and the 75th percentile wage index value for a fiscal year across all 
hospitals. As described below, the proposed budget neutrality 
adjustment factor is 3.4 percent for FY 2020.
    In calculating the proposed budget neutrality adjustment factor for 
our proposal in section III.N.3.a. of the preamble of this proposed 
rule, we would first examine the distance between the wage index values 
for high wage index hospitals and the 75th percentile wage index value 
across all hospitals for a fiscal year. Based on the data for this 
proposed rule, the 75th percentile wage index value is 1.0351. 
Therefore, for example, if high wage index Hospital A had an otherwise 
applicable wage index value of 1.7351, the distance between that 
hospital's wage index value and the 75th percentile is 0.7000 (that is, 
1.7351 - 1.0351). If high wage index Hospital B had an otherwise 
applicable wage index value of 1.2351, the distance between that 
hospital's wage index value and the 75th percentile is 0.2000 (that is, 
1.2351 - 1.0351).
    We would next estimate the uniform multiplicative budget neutrality 
factor needed to reduce those distances for all high wage index 
hospitals so that the estimated decreased aggregate payments to high 
wage index hospitals offset the estimated increased aggregate payments 
to low wage index hospitals under our proposed policy in section 
III.N.3.a. of the preamble of this proposed rule. Based on the data for 
this proposed rule, we estimate this factor is 3.4 percent for FY 2020.
    Therefore, in the examples we provided earlier, the distance 
between Hospital A's wage index value and the 75th percentile would be 
reduced by 0.0238 (that is, the prior distance of 0.7000 * 0.034), and 
therefore the wage index for Hospital A after application of the 
proposed budget neutrality adjustment would be 1.7113 (that is, 1.7351 
- 0.0238). The distance between Hospital B's wage index value and the 
75th percentile would be reduced by 0.0068 (that is, the prior distance 
of 0.2000 * 0.034), and therefore the wage index for Hospital B after 
application of the proposed budget neutrality adjustment would be 
1.2283 (that is, 1.2351-0.0068).
    We believe we have authority to implement our lowest quartile wage 
index proposal in section III.N.3.a. of the preamble of this proposed 
rule and our budget neutrality proposal in this section III.N.3.b. of 
the preamble of this proposed rule under section 1886(d)(3)(E) of the 
Act (which gives the Secretary broad authority to adjust 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, and requires those adjustments to be budget 
neutral), and under our exceptions and adjustments authority under 
section 1886(d)(5)(I) of the Act.
c. Preventing Inappropriate Payment Increases Due to Rural 
Reclassifications Under the Provisions of 42 CFR 412.103
    We also agree with respondents to the request for information who 
indicated that another contributing systemic factor to wage index 
disparities is the rural floor. As discussed in section III.G.1. of the 
preamble of this proposed rule, 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. Section 3141 of Public 
Law 111-148 also requires that a national budget neutrality adjustment 
be applied in implementing the rural floor.
    The rural floor policy was addressed by the Office of the Inspector 
General (OIG) in its recent November 2018 report, ``Significant 
Vulnerabilities Exist in the Hospital Wage Index System for Medicare 
Payment'' (A-01-17-00500), which is available on the OIG website at: 
https://oig.hhs.gov/oas/reports/region1/11700500.pdf. The OIG stated 
(we note that the footnote references included here were in the 
original document but are not carried here):
    ``The stated legislative intent of the rural floor was to correct 
the `anomaly' of `some urban hospitals being paid less than the average 
rural hospital in their States.' \9\ However, MedPAC, an independent 
congressional advisory board, has since stated that it is `not aware of 
any empirical support for this policy,\10\ and that the policy is built 
on the false assumption that hospital wage rates in all urban labor 
markets in a State are always higher than the average hospital wage 
rate in rural areas of that State.\11\ ''
    As one simplified example for purposes of illustrating the rural 
floor policy, assume that the rural wage index for a State is 1.1000. 
Therefore, under current policy, the rural floor for that State would 
be 1.1000. Any urban hospital with a wage index value below

[[Page 19397]]

1.1000 in that State would have its wage index value raised to 1.1000. 
The additional Medicare payments to those urban hospitals in that State 
increase the national budget neutrality adjustment for the rural floor 
provision.
    For a real world example of the impact of the rural floor policy, 
we point to FY 2018, in which 366 urban hospitals benefitted from the 
rural floor. The increase in the wage indexes of urban hospitals 
receiving the rural floor was offset by a nationwide decrease in all 
hospitals' wage indexes of approximately 0.67 percent. In 
Massachusetts, that meant that 36 urban hospitals received a wage index 
based on hospital wages in Nantucket, an island that is home to the 
only rural hospital contributing to the State's rural floor wage index. 
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38557), we estimated 
that those 36 hospitals would receive an additional $44 million in 
inpatient payments for the year. These increased payments were offset 
by decreased payments to hospitals nationwide, and those decreases were 
not based on actual local wage rates but on the current rural floor 
calculation.
    As acknowledged by the OIG, CMS has long recognized the disparate 
impacts and unintended outcomes of the rural floor. We have stated that 
the rural floor creates a benefit for a minority of States that is then 
funded by a majority of States, including States that are 
overwhelmingly rural in character (73 FR 23528 and 23622). We also have 
stated that ``as a result of hospital actions not envisioned by 
Congress, the rural floor is resulting in significant disparities in 
wage index and, in some cases, resulting in situations where all 
hospitals in a State receive a wage index higher than that of the 
single highest wage index urban hospital in the State'' (76 FR 42170 
and 42212).
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41748), we indicated 
that wage index disparities associated with the rural floor 
significantly increased in FY 2019 with the urban to rural 
reclassification of an urban hospital in Massachusetts. We also note 
that Massachusetts is not the only State where urban hospitals 
reclassified as rural under Sec.  412.103 have a significant impact on 
the State's rural floor. This also occurs, for example, in Arizona and 
Connecticut. The rural floor policy was meant to address anomalies of 
some urban hospitals being paid less than the average rural hospital in 
their States, not to raise the payments of many hospitals in a State to 
the high wage level of a geographically urban hospital.
    We note that, for FY 2020, the urban Massachusetts hospital 
reclassified as rural under Sec.  412.103 has an approved MGCRB 
reclassification back to its geographic location, and, therefore, its 
MGCRB reclassification is used for wage index calculation and payment 
purposes in this proposed rule (that is, this hospital would not be 
considered rural for wage index purposes). However, under our current 
wage index policy, the hospital would be able to influence the 
Massachusetts rural floor by withdrawing or terminating its MGCRB 
reclassification in accordance with the regulation at Sec.  412.273 for 
FY 2020 or subsequent years.
    Returning to our simplified example, for purposes of illustrating 
the impact of an urban to rural reclassification on the calculation of 
the rural floor under current policy, again assume that the rural wage 
index for a State is 1.1000. Therefore, under current policy, the rural 
floor for that State would be 1.1000. Any urban hospital with a wage 
index value below 1.1000 in that State would have its wage index value 
raised to 1.1000. However, now assume that one urban hospital in that 
State subsequently reclassifies from urban to rural and raises the 
rural wage index from 1.1000 to 1.2000. Now, solely because of a 
geographically urban hospital, the rural floor in that State would go 
from 1.1000 to 1.2000 under current policy.
    As noted by OIG in the November 2018 report referenced above, the 
stated legislative intent of the rural floor was to correct the 
``anomaly'' of ``some urban hospitals being paid less than the average 
rural hospital in their States.'' (Report 105-149 of the Committee on 
the Budget, House of Representatives, to Accompany H.R. 2015, June 24, 
1997, section 10205, page 1305.) We believe that urban to rural 
reclassifications have stretched the rural floor provision beyond a 
policy designed to address such anomalies. Rather than raising the 
payment of some urban hospitals to the level of the average rural 
hospital in their State, urban hospitals may have their payments raised 
to the relatively high level of one or more geographically urban 
hospitals reclassified as rural. The current state of affairs with 
respect to urban to rural reclassifications goes beyond the general 
criticisms of the rural floor policy by MedPAC, CMS, OIG, and many 
stakeholders. We believe an adjustment is necessary to address the 
unanticipated effects of urban to rural reclassifications on the rural 
floor and the resulting wage index disparities, including the 
inappropriate wage index disparities caused by the manipulation of the 
rural floor policy by some hospitals.
    Therefore, given the circumstances described above, the comments 
received on the request for information, and that urban to rural 
reclassifications have stretched the rural floor provision beyond a 
policy designed to address anomalies of some urban hospitals being paid 
less than the average rural hospital in their States, we are proposing 
to remove urban to rural reclassifications from the calculation of the 
rural floor. In other words, under our proposal, beginning in FY 2020, 
the rural floor would be calculated without including the wage data of 
urban hospitals that have reclassified as rural under section 
1886(d)(8)(E) of the Act (as implemented at Sec.  412.103). We believe 
our proposed calculation methodology is permissible under section 
1886(d)(8)(E) of the Act and the rural floor statute (section 4410 of 
Pub. L. 105-33). Section 1886(d)(8)(E) of the Act does not specify 
where the wage data of reclassified hospitals must be included. 
Therefore, we believe we have discretion to exclude the wage data of 
such hospitals from the calculation of the rural floor. Furthermore, 
the rural floor statute does not specify how the rural floor wage index 
is to be calculated or what data are to be included in the calculation. 
Therefore, we also believe we have discretion under the rural floor 
statute to exclude the wage data of hospitals reclassified under 
section 1886(d)(8)(E) of the Act from the calculation of the rural 
floor. We believe this proposed policy is necessary and appropriate to 
address the unanticipated effects of rural reclassifications on the 
rural floor and the resulting wage index disparities, including the 
effects of the manipulation of the rural floor by certain hospitals. As 
discussed above, the inclusion of reclassified hospitals in the rural 
floor calculation has had the unforeseen effect of exacerbating the 
wage index disparities between low and high wage index hospitals. 
Therefore, under our proposal, in the case of Massachusetts, for 
example, the geographically rural hospital in Nantucket would still be 
included in the calculation of the rural floor for Massachusetts, but a 
geographically urban hospital reclassified under Sec.  412.103 would 
not.
    Returning to our simplified example for purposes of illustrating 
the impact of the proposed policy, again assume that the rural wage 
index for a State is 1.1000 without any hospital in the State having 
reclassified from urban to rural. Therefore, the rural floor for that 
State would be 1.1000. Any urban hospital

[[Page 19398]]

with a wage index value below 1.1000 in that State would have its wage 
index value raised to 1.1000. However, again assume that one urban 
hospital in that State subsequently reclassifies from urban to rural 
and raises the rural wage index from 1.1000 to 1.2000. Under our 
proposed policy, the rural floor in that State would not go from 1.1000 
to 1.2000, but would remain at 1.1000 because urban to rural 
reclassifications would no longer impact the rural floor.
    As we discuss earlier, the purpose of our proposal to calculate the 
rural floor without including the wage data of urban hospitals 
reclassified as rural under section 1886(d)(8)(E) of the Act (as 
implemented at Sec.  412.103) is to address wage index disparities that 
result when urban hospitals may have their payments raised to the 
relatively high level of one or more geographically urban hospitals 
reclassified as rural. In particular, we believe that no urban hospital 
not reclassified as rural should have its payments raised to the 
relatively high level of one or more geographically urban hospitals 
reclassified as rural, and we believe it would be inappropriate to 
prevent this for one class of urban hospitals not reclassified as rural 
(that is, under the rural floor provision) but allow this for another. 
As such, for consistent treatment of urban hospitals not reclassified 
as rural, we also are proposing to apply the provisions of section 
1886(d)(8)(C)(iii) of the Act without including the wage data of urban 
hospitals that have reclassified as rural under section 1886(d)(8)(E) 
of the Act (as implemented at Sec.  412.103). Because section 
1886(d)(8)(C)(iii) of the Act provides that reclassifications under 
section 1886(d)(8)(B) of the Act and section 1886(d)(10) of the Act may 
not reduce any county's wage index below the wage index for rural areas 
in the State, we are making this proposal to help ensure no urban 
hospitals not reclassified as rural, including those hospitals with no 
reclassification as well as those hospitals reclassified under section 
1886(d)(8)(B) of the Act or section 1886(d)(10) of the Act, have their 
payments raised to the relatively high level of one or more 
geographically urban hospitals reclassified as rural. Specifically, for 
purposes of applying the provisions of section 1886(d)(8)(C)(iii) of 
the Act, we are proposing to remove urban to rural reclassifications 
from the calculation of ``the wage index for rural areas in the State 
in which the county is located'' referred to in section 
1886(d)(8)(C)(iii) of the Act.
d. Proposed Transition for Hospitals Negatively Impacted
    We recognize that, absent further adjustments, the combined effect 
of the proposed changes to the FY 2020 wage index could lead to 
significant decreases in the wage index values for some hospitals 
depending on the data for the final rule. In the past, we have proposed 
and finalized budget neutral transition policies to help mitigate any 
significant negative impacts on hospitals of certain wage index 
proposals, and we believe it would be appropriate to propose a 
transition policy here for the same purpose. For example, in the FY 
2015 IPPS/LTCH PPS final rule (79 FR 49957 through 49963), we finalized 
a budget neutral transition to address certain wage index changes that 
occurred under the new OMB CBSA delineations.
    Therefore, for FY 2020, we are proposing a transition wage index to 
help mitigate any significant decreases in the wage index values of 
hospitals compared to their final wage indexes for FY 2019. 
Specifically, for FY 2020, we are proposing to place a 5-percent cap on 
any decrease in a hospital's wage index from the hospital's final wage 
index in FY 2019. In other words, we are proposing that a hospital's 
final wage index for FY 2020 would not be less than 95 percent of its 
final wage index for FY 2019. This proposed transition would allow the 
effects of our proposed policies to be phased in over 2 years with no 
estimated reduction in the wage index of more than 5 percent in FY 2020 
(that is, no cap would be applied the second year). We believe 5 
percent is a reasonable level for the cap because it would effectively 
mitigate any significant decreases in the wage index for FY 2020. 
However, we are seeking public comments on alternative levels for the 
cap and accompanying rationale. Under the proposed transition policy, 
we would compute the proposed FY 2020 wage index for each hospital as 
follows.
    Step 1.--Compute the proposed FY 2020 ``uncapped'' wage index that 
would result from the implementation of proposed changes to the FY 2020 
wage index.
    Step 2.--Compute a proposed FY 2020 ``capped'' wage index which 
would equal 95 percent of that provider's FY 2019 final wage index.
    Step 3.--The proposed FY 2020 wage index is the greater of the 
``uncapped'' wage index computed in Step 1 or the ``capped'' wage index 
computed in Step 2.
e. Transition Budget Neutrality
    We are proposing to apply a budget neutrality adjustment to the 
standardized amount so that our proposed transition (described in 
section III.N.3.c. of the preamble of this proposed rule) for hospitals 
that could be negatively impacted is implemented in a budget neutral 
manner under our authority in section 1886(d)(5)(I) of the Act. We note 
that implementing the proposed transition wage index in a budget 
neutral manner is consistent with past practice (for example, 79 FR 
50372) where CMS has used its exceptions and adjustments authority 
under section 1886(d)(5)(I)(i) of the Act to budget neutralize 
transition wage index policies when such policies allow for the 
application of a transitional wage index only when it benefits the 
hospital. We believed, and continue to believe, that it would be 
appropriate to ensure that such policies do not increase estimated 
aggregate Medicare payments beyond the payments that would be made had 
we never proposed these transition policies (79 FR 50732). Therefore, 
for FY 2020, we are proposing to use our exceptions and adjustments 
authority under section 1886(d)(5)(I)(i) of the Act to apply a budget 
neutrality adjustment to the standardized amount so that our proposed 
transition (described in section III.N.3.d. of the preamble of this 
proposed rule) for hospitals negatively impacted is implemented in a 
budget neutral manner.
    Specifically, we are proposing to apply a budget neutrality 
adjustment to ensure that estimated aggregate payments under our 
proposed transition (described in section III.N.3.d. of the preamble of 
this proposed rule) for hospitals negatively impacted by our proposed 
wage index policies would equal what estimated aggregate payments would 
have been without the proposed transition for hospitals negatively 
impacted. To determine the associated budget neutrality factor, we 
compared estimated aggregate IPPS payments with and without the 
proposed transition. To achieve budget neutrality for the proposed 
transition policy, we are proposing to apply a budget neutrality 
adjustment factor of 0.998349 to the FY 2020 standardized amount, as 
further discussed in section I.A.4.f. of the Addendum to this proposed 
rule. If this policy is adopted in the final rule, this number would be 
updated based on the final rule data.
    We note that our proposal, discussed in section III.N.3.c. of the 
preamble of this proposed rule, to prevent inappropriate payment 
increases due rural reclassifications under Sec.  412.103 would also be 
budget neutral, but this budget neutrality would occur through the 
proposed budget neutrality

[[Page 19399]]

adjustments for geographic reclassifications and the rural floor that 
are discussed in the Addendum to this proposed rule.

IV. Other Decisions and Proposed Changes to the IPPS for Operating 
System

A. Proposed Changes to MS-DRGs Subject to Postacute Care Transfer 
Policy and MS-DRG Special Payments Policies (Sec.  412.4)

1. Background
    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 Sec.  412.4(c) defines postacute care 
transfers. Our policy set forth in Sec.  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 (Sec.  412.4(f)(1)). Transfer cases also are 
eligible for outlier payments. In general, the outlier threshold for 
transfer cases, as described in Sec.  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 Sec.  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, Sec.  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 (Sec.  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 days, and the average charges of 1-day discharge cases in the 
MS-DRG must be at least 50 percent of the average charges for all cases 
within the MS-DRG. MS-DRGs that are part of an MS-DRG severity level 
group will qualify under the MS-DRG special payment methodology policy 
if any one of the MS-DRGs that share that same base MS-DRG qualifies 
(Sec.  412.4(f)(6)).
    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 
provided 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 is subject to payment as a transfer 
case. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41394), we made 
conforming amendments to Sec.  412.4(c) of the regulation to include 
discharges to hospice care occurring on or after October 1, 2018 as 
qualified discharges. We specified 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) are subject to the 
postacute care transfer policy in accordance with this statutory 
amendment. Consistent with our policy for other qualified discharges, 
CMS claims processing software has been 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.
2. Proposed Changes for FY 2020
    As discussed in section II.F. of the preamble of this FY 2020 IPPS/
LTCH PPS proposed rule, based on our analysis of FY 2018 MedPAR claims 
data, we are proposing to make changes to a number of MS-DRGs, 
effective for FY 2020. Specifically, we are proposing to:
     Reassign procedure codes from MS-DRGs 216 through 218 
(Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac 
Catheterization with MCC, CC and without CC/MCC, respectively), MS-DRGs 
219 through 221 (Cardiac Valve and Other Major Cardiothoracic 
Procedures without Cardiac Catheterization with MCC, CC and without CC/
MCC, respectively), and MS-DRGs 273 and 274 (Percutaneous Intracardiac 
Procedures with and without MCC, respectively) and create new MS-DRGs 
319 and 320 (Other Endovascular Cardiac Valve Procedures with and 
without MCC, respectively); and
     Delete MS-DRGs 691 and 692 (Urinary Stones with ESW 
Lithotripsy with CC/MCC and without CC/MCC,

[[Page 19400]]

respectively) and revise the titles for MS-DRGs 693 and 694 to 
``Urinary Stones with MCC'' and ``Urinary Stones without MCC'', 
respectively.
    In light of the proposed changes to these MS-DRGs for FY 2020, 
according to the regulations under Sec.  412.4(d), we evaluated these 
MS-DRGs using the general postacute care transfer policy criteria and 
data from the FY 2018 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 Sec.  
412.4(f)(6). 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. MS-DRGs 216, 217, 
218, 219, 220, and 221 are currently subject to the postacute care 
transfer policy. 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. MS-DRGs 
273 and 274 are also currently subject to the postacute care transfer 
policy and MS-DRGs 693 and 694 are currently not subject to the 
postacute care transfer policy. As a result of our review, these MS-
DRGs, as proposed to be revised, would not qualify to be included on 
the list of MS-DRGs that are subject to the postacute care transfer 
policy. Proposed new MS-DRGs 319 and 320 also would not qualify to be 
included on the list of MS-DRGs that are subject to the postacute care 
transfer policy. Therefore, we are proposing to remove MS-DRGs 273 and 
274 from the list of MS-DRGs that are subject to the postacute care 
transfer policy. We note that MS-DRGs that are subject to the postacute 
care transfer policy for FY 2019 and are not revised will continue to 
be subject to the policy in FY 2020.
    Using the December 2018 update of the FY 2018 MedPAR file, we 
developed the chart below, which sets forth the most recent analysis of 
the postacute care transfer policy criteria completed for this proposed 
rule with respect to each of these proposed new or revised MS-DRGs. For 
the FY 2020 final rule, we intend to update this analysis using the 
most recent available data at that time.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Percent of
                                                                                                short-stay
                                                              Postacute care                  postacute care
  Proposed new  or                                               transfers      Short-stay     transfers to     Current postacute    Proposed postacute
  revised  MS-DRGS         MS-DRG title         Total cases        (55th      postacute care     all cases    care transfer policy  care transfer policy
                                                                percentile:      transfers         (55th             status                status
                                                                  1,400)                        percentile:
                                                                                                 8.5132%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
216.................  Cardiac Valve & Other            5,733           4,196           1,643         28.6586  Yes.................  Yes.
                       Major Cardiothoracic
                       Procedure with
                       Cardiac
                       Catheterization with
                       MCC.
217.................  Cardiac Valve & Other            2,317           1,551             424         18.2995  Yes.................  Yes.
                       Major Cardiothoracic
                       Procedure with
                       Cardiac
                       Catheterization with
                       CC.
218.................  Cardiac Valve & Other              599           * 328              67         11.1853  Yes.................  ** Yes.
                       Major Cardiothoracic
                       Procedure with
                       Cardiac
                       Catheterization
                       without CC/MCC.
219.................  Cardiac Valve & Other           13,177           9,216           3,450          26.182  Yes.................  Yes.
                       Major Cardiothoracic
                       Procedure without
                       Cardiac
                       Catheterization with
                       MCC.
220.................  Cardiac Valve & Other           16,201          10,247           2,914         17.9865  Yes.................  Yes.
                       Major Cardiothoracic
                       Procedure without
                       Cardiac
                       Catheterization with
                       CC.
221.................  Cardiac Valve & Other            6,070           3,205             239        * 3.9374  Yes.................  ** Yes.
                       Major Cardiothoracic
                       Procedure without
                       Cardiac
                       Catheterization
                       without CC/MCC.
273.................  Percutaneous                     5,958           2,152             280        * 4.6996  Yes.................  No.
                       Intracardiac
                       Procedures with MCC.
274.................  Percutaneous                         0             * 0               0             * 0  Yes.................  No.
                       Intracardiac
                       Procedures without
                       MCC.
319.................  Other Endovascular               1,651           * 842             191         11.5687  New.................  No.
                       Cardiac Valve
                       Procedures with MCC.
320.................  Other Endovascular                 707           * 229              30        * 4.2433  New.................  No.
                       Cardiac Valve
                       Procedures without
                       MCC.
693.................  Urinary Stones with              1,300           * 541              81        * 6.2308  No..................  No.
                       MCC.
694.................  Urinary Stones without           8,025           1,739             185        * 2.3053  No..................  No.
                       MCC.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Indicates a current postacute care transfer policy criterion that the MS-DRG did not meet.
** As described in the policy at 42 CFR 412.4(d)(3)(ii)(D), MS-DRGs that share the same base MS-DRG will all qualify under the postacute care transfer
  policy if any one of the MS-DRGs that share that same base MS-DRG qualifies.

    During our annual review of proposed new or revised MS-DRGs and 
analysis of the December 2018 update of the FY 2018 MedPAR file, we 
reviewed the list of proposed revised or new MS-DRGs that qualify to be 
included on the list of MS-DRGs subject to the postacute care transfer 
policy for FY 2020 to determine if any of these MS-DRGs would also be 
subject to the special payment methodology policy for FY 2020. Based on 
our analysis of proposed changes to MS-DRGs included in this proposed 
rule, we determined that proposed revised MS-DRGs 216, 217, 218, 219, 
220, and 221 would continue to meet the criteria for the MS-DRG special 
payment methodology. Because we are proposing to remove MS-DRGs 273 and 
274 from the list of MS-DRGs subject to the postacute care transfer 
policy, we also are proposing to remove these MS-DRGs from the list of 
MS-DRGs subject to the MS-DRG special payment methodology, effective FY 
2020.
    For the FY 2020 final rule, we intend to update this analysis using 
the most recent available data at that time.

[[Page 19401]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       50 Percent of
                                                      Geometric mean      Average         average
 Proposed  revised  MS-          MS-DRG title           length  of    charges  of 1-    charges for       Current  special          Proposed  special
           DRG                                             stay             day          all cases     payment  policy status    payment  policy status
                                                                        discharges     within MS-DRG
--------------------------------------------------------------------------------------------------------------------------------------------------------
216.....................  Cardiac Valve & Other              14.1126               0     $186,087.76  Yes.....................  Yes.
                           Major Cardiothoracic
                           Procedure with Cardiac
                           Catheterization with MCC.
217.....................  Cardiac Valve & Other               8.9229      147,964.00      128,141.91  Yes.....................  Yes.
                           Major Cardiothoracic
                           Procedure with Cardiac
                           Catheterization with CC.
218.....................  Cardiac Valve & Other              6.46878      203,555.50      101,286.68  Yes.....................  Yes.
                           Major Cardiothoracic
                           Procedure with Cardiac
                           Catheterization without
                           CC/MCC.
219.....................  Cardiac Valve & Other              9.48987      185,157.20      152,482.54  Yes.....................  Yes.
                           Major Cardiothoracic
                           Procedure without Cardiac
                           Catheterization with MCC.
220.....................  Cardiac Valve & Other               6.3373      115,955.36      101,812.54  Yes.....................  Yes.
                           Major Cardiothoracic
                           Procedure without Cardiac
                           Catheterization with CC.
221.....................  Cardiac Valve & Other              4.66413      127,074.88       82,400.23  Yes.....................  Yes.
                           Major Cardiothoracic
                           Procedure without Cardiac
                           Catheterization without
                           CC/MCC.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The proposed postacute care transfer and special payment policy 
status of these MS-DRGs is reflected in Table 5 associated with this 
proposed rule, which is listed in section VI. of the Addendum to this 
proposed rule and available via the internet on the CMS website.

B. Proposed Changes in the Inpatient Hospital Update for FY 2020 (Sec.  
412.64(d))

1. Proposed FY 2020 Inpatient Hospital Update
    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 2020, we are setting the applicable percentage 
increase by applying the adjustments listed in this section in the same 
sequence as we did for FY 2019. (We note that section 
1886(b)(3)(B)(xii) of the Act required an additional reduction each 
year only for FYs 2010 through 2019.) 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 
for FY 2020 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; and
    (c) An adjustment based on changes in economy-wide productivity 
(the multifactor productivity (MFP) adjustment).
    Section 1886(b)(3)(B)(xi) of the Act, as added by section 3401(a) 
of the Affordable Care Act, states that application of the MFP 
adjustment may result in the applicable percentage increase being less 
than zero.
    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 2014-
based IPPS operating market basket, effective with FY 2018.
    We are proposing to base the proposed FY 2020 market basket update 
used to determine the applicable percentage increase for the IPPS on 
IHS Global Inc.'s (IGI's) fourth quarter 2018 forecast of the 2014-
based IPPS market basket rate-of-increase with historical data through 
third quarter 2018, which is estimated to be 3.2 percent. We also are 
proposing that if more recent data subsequently become 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 2020 market basket update and the MFP adjustment in the final rule.
    For FY 2020, 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, 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 http://www.bls.gov/mfp for the BLS historical published MFP data.
    MFP is derived by subtracting the contribution of labor and capital 
input growth from output growth. The projections of the components of 
MFP are currently produced by IGI, a nationally recognized economic

[[Page 19402]]

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: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. As 
discussed in the FY 2016 IPPS/LTCH PPS final rule, if IGI makes changes 
to the MFP methodology, we will announce them on our website rather 
than in the annual rulemaking.
    For FY 2020, we are proposing an MFP adjustment of 0.5 percentage 
point. Similar to the market basket update, for this proposed rule, we 
used IGI's fourth quarter 2018 forecast of the MFP adjustment to 
compute the proposed FY 2020 MFP adjustment. As noted previously, we 
are proposing that if more recent data subsequently become available, 
we would use such data, if appropriate, to determine the FY 2020 market 
basket update and the MFP adjustment for the final rule.
    Based on these data, for this proposed rule, we have determined 
four proposed applicable percentage increases to the standardized 
amount for FY 2020, as specified in the following table:

                          Proposed FY 2020 Applicable Percentage Increases for the IPPS
----------------------------------------------------------------------------------------------------------------
                                                     Hospital        Hospital      Hospital did    Hospital did
                                                     submitted       submitted      NOT submit      NOT submit
                                                   quality data    quality data    quality data    quality data
                     FY 2020                         and is a      and is NOT a      and is a      and is NOT a
                                                  meaningful EHR  meaningful EHR  meaningful EHR  meaningful EHR
                                                       user            user            user            user
----------------------------------------------------------------------------------------------------------------
Proposed Market Basket                                       3.2             3.2             3.2             3.2
 Rate[dash]of[dash]Increase.....................
Proposed Adjustment for Failure to Submit                      0               0            -0.8            -0.8
 Quality Data under Section 1886(b)(3)(B)(viii)
 of the Act.....................................
Proposed Adjustment for Failure to be a                        0            -2.4               0            -2.4
 Meaningful EHR User under Section
 1886(b)(3)(B)(ix) of the Act...................
Proposed MFP Adjustment under Section                       -0.5            -0.5            -0.5            -0.5
 1886(b)(3)(B)(xi) of the Act...................
Proposed Applicable Percentage Increase Applied              2.7             0.3             1.9            -0.5
 to Standardized Amount.........................
----------------------------------------------------------------------------------------------------------------

    We are proposing to revise the existing regulations at 42 CFR 
412.64(d) to reflect the current law for the update for FY 2020 and 
subsequent fiscal years. Specifically, in accordance with section 
1886(b)(3)(B) of the Act, we are proposing to add paragraph (viii) to 
Sec.  412.64(d)(1) to set forth the applicable percentage increase to 
the operating standardized amount for FY 2020 and subsequent fiscal 
years as the percentage increase in the market basket index, subject to 
the reductions specified under Sec.  412.64(d)(2) for a hospital that 
does not submit quality data and Sec.  412.64(d)(3) for a hospital that 
is not a meaningful EHR user, less an MFP adjustment. (As noted above, 
section 1886(b)(3)(B)(xii) of the Act required an additional reduction 
each year only for FYs 2010 through 2019.)
    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. (Under current law, the MDH 
program is effective for discharges on or before September 30, 2022, as 
discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41429 through 
41430).)
    For FY 2020, we are proposing the following updates to the 
hospital-specific rates applicable to SCHs and MDHs: A proposed update 
of 2.7 percent for a hospital that submits quality data and is a 
meaningful EHR user; a proposed update of 1.9 percent for a hospital 
that fails to submit quality data and is a meaningful EHR user; a 
proposed update of 0.3 percent for a hospital that submits quality data 
and is not a meaningful EHR user; and a proposed update of -0.5 percent 
for a hospital that fails to submit quality data and is not a 
meaningful EHR user. As noted previously, for this FY 2020 IPPS/LTCH 
PPS proposed rule, we are using IGI's fourth quarter 2018 forecast of 
the 2014-based IPPS market basket update with historical data through 
third quarter 2018. Similarly, we are using IGI's fourth quarter 2018 
forecast of the MFP adjustment. We are proposing that if more recent 
data subsequently become 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.
2. Proposed FY 2020 Puerto Rico Hospital Update
    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 proposed rule. 
Accordingly, in this FY 2020 IPPS/LTCH PPS proposed rule, for FY 2020, 
we are proposing an applicable percentage increase of 2.7 percent to 
the

[[Page 19403]]

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 2020.

C. Rural Referral Centers (RRCs) Proposed Annual Updates to Case-Mix 
Index and Discharge Criteria (Sec.  412.96)

    Under the authority of section 1886(d)(5)(C)(i) of the Act, the 
regulations at Sec.  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 hospitals that lost that 
status due to triennial review or MGCRB reclassification. However, we 
did not reinstate the status of hospitals that lost RRC status because 
they were now urban for all purposes because of the OMB designation of 
their geographic area as urban. Subsequently, in the August 1, 2000 
IPPS final rule (65 FR 47089), we indicated that we were revisiting 
that decision. Specifically, we stated that we would permit hospitals 
that previously qualified as an RRC and lost their status due to OMB 
redesignation of the county in which they are located from rural to 
urban, to be reinstated as an RRC. Otherwise, a hospital seeking RRC 
status must satisfy all of the other applicable criteria. We use the 
definitions of ``urban'' and ``rural'' specified in Subpart D of 42 CFR 
part 412. One of the criteria under which a hospital may qualify as an 
RRC is to have 275 or more beds available for use (Sec.  
412.96(b)(1)(ii)). A rural hospital that does not meet the bed size 
requirement can qualify as an RRC if the hospital meets two mandatory 
prerequisites (a minimum case-mix index (CMI) and a minimum number of 
discharges), and at least one of three optional criteria (relating to 
specialty composition of medical staff, source of inpatients, or 
referral volume). (We refer readers to Sec.  412.96(c)(1) through 
(c)(5) and the September 30, 1988 Federal Register (53 FR 38513) for 
additional discussion.) With respect to the two mandatory 
prerequisites, a hospital may be classified as an RRC if--
     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.
1. Case-Mix Index (CMI)
    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 Sec.  412.96(c)(1)(ii). The proposed national 
median CMI value for FY 2020 is based on the CMI values of all urban 
hospitals nationwide, and the proposed regional median CMI values for 
FY 2020 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 Sec.  413.75). These proposed values are 
based on discharges occurring during FY 2018 (October 1, 2017 through 
September 30, 2018), and include bills posted to CMS' records through 
December 2018.
    In this FY 2020 IPPS/LTCH PPS proposed rule, we are proposing 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, 2019, they must have a CMI 
value for FY 2018 that is at least--
     1.68555 (national--all urban); or
     The median CMI value (not transfer-adjusted) for urban 
hospitals (excluding hospitals with approved teaching programs as 
identified in Sec.  413.75) calculated by CMS for the census region in 
which the hospital is located.
    The proposed median CMI values by region are set forth in the table 
below. We intend to update the proposed CMI values in the FY 2020 final 
rule to reflect the updated FY 2018 MedPAR file, which will contain 
data from additional bills received through March 2019.

------------------------------------------------------------------------
                                                               Proposed
                           Region                              case-mix
                                                             index value
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)....................       1.4231
2. Middle Atlantic (PA, NJ, NY)............................        1.492
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).....        1.576
4. East North Central (IL, IN, MI, OH, WI).................       1.5921
5. East South Central (AL, KY, MS, TN).....................       1.5579
6. West North Central (IA, KS, MN, MO, NE, ND, SD).........      1.67025
7. West South Central (AR, LA, OK, TX).....................       1.7172
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)...............       1.7769
9. Pacific (AK, CA, HI, OR, WA)............................       1.6699
------------------------------------------------------------------------

    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.
2. Discharges
    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

[[Page 19404]]

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. For FY 2020, we are proposing to update the regional 
standards based on discharges for urban hospitals' cost reporting 
periods that began during FY 2017 (that is, October 1, 2016 through 
September 30, 2017), which are the latest cost report data available at 
the time this proposed rule was developed. Therefore, we are proposing 
that, in addition to meeting other criteria, a hospital, if it is to 
qualify for initial RRC status for cost reporting periods beginning on 
or after October 1, 2019, must have, as the number of discharges for 
its cost reporting period that began during FY 2017, at least--
     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. The 
proposed numbers of discharges are set forth in the table below. We 
intend to update these numbers in the FY 2020 final rule based on the 
latest available cost report data.

------------------------------------------------------------------------
                                                              Number of
                           Region                             discharges
------------------------------------------------------------------------
1. New England (CT, ME, MA, NH, RI, VT)....................        8,542
2. Middle Atlantic (PA, NJ, NY)............................       10,154
3. South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV).....       10,653
4. East North Central (IL, IN, MI, OH, WI).................        8,379
5. East South Central (AL, KY, MS, TN).....................        7,627
6. West North Central (IA, KS, MN, MO, NE, ND, SD).........        7,850
7. West South Central (AR, LA, OK, TX).....................        5,468
8. Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)...............        8,618
9. Pacific (AK, CA, HI, OR, WA)............................        8,618
------------------------------------------------------------------------

    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 proposed rule, 5,000 discharges is the minimum 
criterion for all hospitals, except for osteopathic hospitals for which 
the minimum criterion is 3,000 discharges.

D. Proposed Payment Adjustment for Low-Volume Hospitals (Sec.  412.101)

1. Background
    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 final rule (83 FR 41398 
through 41399), 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.) 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 Federal Register on 
April 26, 2018 (83 FR 18301 through 18308).)
2. Temporary Changes to the Low-Volume Hospital Definition and Payment 
Adjustment Methodology for FYs 2019 Through 2022
    As discussed earlier, section 50204 of the Bipartisan Budget Act of 
2018 further 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. Specifically, the qualifying 
criteria for low-volume hospitals under section 1886(d)(12)(C)(i) of 
the Act were amended to specify that, for FYs 2019 through 2022, a 
subsection (d) hospital qualifies as a low-volume hospital if it is 
more than 15 road miles from another subsection (d) hospital and has 
less than 3,800 total discharges during the fiscal year. Section 
1886(d)(12)(D) of the Act was also amended to provide that, for 
discharges occurring in FYs 2019 through 2022, the Secretary shall 
determine the applicable percentage increase using a continuous, linear 
sliding scale ranging from an additional 25 percent payment adjustment 
for low-volume hospitals with 500 or fewer discharges to a zero percent 
additional payment for low-volume hospitals with more than 3,800 
discharges in the fiscal year. Consistent with the requirements of 
section 1886(d)(12)(C)(ii) of the Act, the term ``discharge'' for 
purposes of these provisions refers to total discharges, regardless of 
payer (that is, Medicare and non-Medicare discharges).
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399), to implement 
this requirement, we specified 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 Sec.  412.101(c)(2)(ii) in the FY 
2011 IPPS/LTCH PPS final rule (75 FR 50240 through 50241). Consistent 
with the statute, we provided that qualifying hospitals with 500 or 
fewer total discharges will 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 is calculated by subtracting from 25 percent the proportion 
of payments associated with the discharges in excess of 500. As such, 
for qualifying hospitals with fewer than 3,800 total discharges but 
more than 500 total discharges, the low-volume hospital payment 
adjustment for FYs 2019 through 2022 is calculated using the following 
formula:

Low-Volume Hospital Payment Adjustment = 0.25-[0.25/3300] x (number of 
total discharges-500) = (95/330)-(number of total discharges/13,200).

    For this purpose, we specified that the ``number of total 
discharges'' is 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. The low-volume hospital 
payment adjustment for FYs 2019 through 2022 is set forth in the 
regulations at 42 CFR 412.101(c)(3).

[[Page 19405]]

3. Process for Requesting and Obtaining the Low-Volume Hospital Payment 
Adjustment
    In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275 
and 50414) and subsequent rulemaking (for example, the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41399 through 41401), 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 Sec.  
412.101 to its MAC. This request must contain sufficient documentation 
to establish that the hospital meets the applicable mileage and 
discharge criteria. The MAC will determine if the hospital qualifies as 
a low-volume hospital by reviewing the data the hospital submits with 
its request for low-volume hospital status in addition to other 
available data. Under this approach, a hospital will know in advance 
whether or not it will receive a payment adjustment under the low-
volume hospital policy. The MAC and CMS may review available data such 
as the number of discharges, in addition to the data the hospital 
submits with its request for low-volume hospital status, in order to 
determine whether or not the hospital meets the qualifying criteria. 
(For additional information on our existing process for requesting the 
low-volume hospital payment adjustment, we refer readers to the FY 2019 
IPPS/LTCH PPS final rule (83 FR 41399 through 41401).)
    As explained earlier, 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 Sec.  412.101(b)(2)(i) and Sec.  
412.101(b)(2)(iii), 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. As 
discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399 and 
41400), 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 final 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 Sec.  412.101(b)(2)(i) or Sec.  
412.101(b)(2)(iii) for the fiscal year. Specifically, to meet the 
mileage criterion to qualify for the low-volume hospital payment 
adjustment for FY 2020, as was the case for FY 2019, a hospital must be 
located more than 15 road miles from the nearest subsection (d) 
hospital. (We define in Sec.  412.101(a) the term ``road miles'' to 
mean ``miles'' as defined in Sec.  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.
    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.
    Consistent with this previously established process, for FY 2020, 
we are proposing 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 2020, we are proposing that a hospital's 
written request must be received by its MAC no later than September 1, 
2019 in order for the low-volume hospital payment adjustment to be 
applied to payments for its discharges beginning on or after October 1, 
2019. If a hospital's written request for low-volume hospital status 
for FY 2020 is received after September 1, 2019, 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 2020 
discharges, effective prospectively within 30 days of the date of the 
MAC's low-volume hospital status determination. We note that this 
proposal is consistent with the process for requesting and obtaining 
the low-volume hospital payment adjustment for FY 2019 (83 FR 41399 
through 41400).
    Under this process, a hospital receiving the low-volume hospital 
payment adjustment for FY 2019 may continue to receive a low-volume 
hospital payment adjustment for FY 2020 without reapplying if it 
continues to meet the applicable mileage and discharge criteria (which, 
as discussed previously, are the same qualifying criteria that apply 
for FY 2019). In this case, a hospital's request can include a 
verification statement that it continues to meet the mileage criterion 
applicable for FY 2020. (Determination of meeting the discharge 
criterion is discussed earlier in this section.) We note 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). Consistent with historical policy, a hospital 
must submit its request, including this written verification, for each 
fiscal year for which it seeks to receive the low-volume hospital 
payment adjustment, and in accordance with the timeline described 
earlier.

[[Page 19406]]

4. Proposed Conforming Changes To Codify Certain Changes to the Low-
Volume Hospital Payment Adjustment for FYs 2011 Through 2017 Provided 
by Section 429 of the Consolidated Appropriations Act, 2018
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38188 through 
38189), for the reasons discussed in that rule, we adopted a parallel 
adjustment in the regulations at Sec.  412.101(e) which specifies that, 
for discharges occurring in FY 2018 and subsequent years, only the 
distance between Indian Health Service (IHS) and Tribal hospitals 
(collectively referred to here as ``IHS hospitals'') will be considered 
when assessing whether an IHS hospital meets the mileage criterion 
under Sec.  412.101(b)(2), and similarly, only the distance between 
non-IHS hospitals would be considered when assessing whether a non-IHS 
hospital meets the mileage criterion under Sec.  412.101(b)(2). Section 
429 of the Consolidated Appropriations Act, 2018, which was enacted on 
March 23, 2018, subsequently amended section 1886(d)(12)(C) of the Act 
by adding a new clause (iii) specifying that, for purposes of 
determining whether an IHS or a non-IHS hospital meets the mileage 
criterion under section 1886(d)(12)(C)(i) of the Act with respect to FY 
2011 or a succeeding year, the Secretary shall apply the policy 
described in the regulations at Sec.  412.101(e) (as in effect on the 
date of enactment). In other words, under this statutory change, the 
special treatment with respect to the proximities between IHS and non-
IHS hospitals as set forth in Sec.  412.101(e) for discharges occurring 
in FY 2018 and subsequent fiscal years is also applicable for purposes 
of applying the mileage criterion for the low-volume hospital payment 
adjustment for FYs 2011 through 2017. We refer readers to the notice 
that appeared in the Federal Register on August 23, 2018 (83 FR 42596 
through 42600) for further detail on the process for requesting the 
low-volume hospital payment adjustment for any applicable fiscal years 
between FY 2011 and FY 2017 under the provisions of section 429 of the 
Consolidated Appropriations Act, 2018, including the details on the 
limitations under the reopening rules at 42 CFR 405.1885.
    In this proposed rule, we are proposing to make conforming changes 
to the regulatory text at Sec.  412.101(e) to reflect the changes to 
the low-volume hospital payment adjustment policy in accordance with 
the amendments made by section 429 of the Consolidated Appropriations 
Act, 2018. Specifically, we are proposing to revise Sec.  412.101(e) to 
specify that, subject to the reopening rules at 42 CFR 405.1885, a 
qualifying hospital may request the application of the policy set forth 
in proposed amended Sec.  412.101(e)(1) for FYs 2011 through 2017. As 
noted previously, the process for requesting the low-volume hospital 
payment adjustment for any applicable fiscal years between FY 2011 and 
2017 under the provisions of section 429 of the Consolidated 
Appropriations Act, 2018, as well as further discussion on the 
limitations under the reopening rules at 42 CFR 405.1885, are described 
in the August 23, 2018 Federal Register notice (83 FR 42596 through 
425600). We note that proposed amended Sec.  412.101(e) would apply to 
discharges occurring in FY 2011 through FY 2017, consistent with the 
provisions of section 429 of the Consolidated Appropriations Act, 2018. 
To the extent that these proposed revisions could be viewed as 
retroactive rulemaking, they would be authorized under section 
1871(e)(1)(A)(i) of the Act as the Secretary has determined that these 
changes are necessary to comply with the statute as amended by the 
Consolidated Appropriations Act, 2018.

E. Indirect Medical Education (IME) Payment Adjustment Factor (Sec.  
412.105)

    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 Sec.  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 
2020, the formula multiplier is 1.35. We estimate that application of 
this formula multiplier for the FY 2020 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.

F. Proposed Payment Adjustment for Medicare Disproportionate Share 
Hospitals (DSHs) for FY 2020 (Sec.  412.106)

1. General Discussion
    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 Sec.  412.106(a)(1)(i), the number of beds 
for

[[Page 19407]]

the Medicare DSH payment adjustment is determined in accordance with 
bed counting rules for the IME adjustment under Sec.  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 otherwise receive DSH 
payments made under section 1886(d)(5)(F) of the Act receives two 
separately calculated payments. Specifically, section 1886(r)(1) of the 
Act provides that the Secretary shall pay to such subsection (d) 
hospital (including a Pickle hospital) 25 percent of the amount the 
hospital would have received under section 1886(d)(5)(F) of the Act for 
DSH payments, which represents the empirically justified amount for 
such payment, as determined by the MedPAC in its March 2007 Report to 
Congress. We refer to this payment as the ``empirically justified 
Medicare DSH payment.''
    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.
2. Eligibility for Empirically Justified Medicare DSH Payments and 
Uncompensated Care Payments
    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

[[Page 19408]]

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 this proposed rule, we are discussing our 
specific policies for FY 2020 with respect to the following hospitals:
     Subsection (d) Puerto Rico hospitals that are eligible for 
DSH payments also are eligible to receive empirically justified 
Medicare DSH payments and uncompensated care payments under the new 
payment methodology (78 FR 50623 and 79 FR 50006).
     Maryland hospitals are not eligible to receive empirically 
justified Medicare DSH payments and uncompensated care payments under 
the payment methodology of section 1886(r) of the Act because they are 
not paid under the IPPS. As discussed in the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41402 through 41403), CMS and the State have entered 
into an agreement to govern payments to Maryland hospitals under a new 
payment model, the Maryland Total Cost of Care (TCOC) Model, which 
began on January 1, 2019. Under the Maryland TCOC Model, Maryland 
hospitals will not be paid under the IPPS in FY 2020, and will be 
ineligible to receive empirically justified Medicare DSH payments and 
uncompensated care payments under section 1886(r) of the Act.
     Sole community hospitals (SCHs) that are paid under their 
hospital-specific rate are not eligible for Medicare DSH payments. SCHs 
that are paid under the IPPS Federal rate receive interim payments 
based on what we estimate and project their DSH status to be prior to 
the beginning of the Federal fiscal year (based on the best available 
data at that time) subject to settlement through the cost report, and 
if they receive interim empirically justified Medicare DSH payments in 
a fiscal year, they also will receive interim uncompensated care 
payments for that fiscal year on a per discharge basis, subject as well 
to settlement through the cost report. Final eligibility determinations 
will be made at the end of the cost reporting period at settlement, and 
both interim empirically justified Medicare DSH payments and 
uncompensated care payments will be adjusted accordingly (78 FR 50624 
and 79 FR 50007).
     Medicare-dependent, small rural hospitals (MDHs) are paid 
based on the IPPS Federal rate or, if higher, the IPPS Federal rate 
plus 75 percent of the amount by which the Federal rate is exceeded by 
the updated hospital-specific rate from certain specified base years 
(76 FR 51684). The IPPS Federal rate that is used in the MDH payment 
methodology is the same IPPS Federal rate that is used in the SCH 
payment methodology. Section 50205 of the Bipartisan Budget Act of 2018 
(Pub. L. 115-123), enacted on February 9, 2018, extended the MDH 
program for discharges on or after October 1, 2017, through September 
30, 2022. Because MDHs are paid based on the IPPS Federal rate, they 
continue to be eligible to receive empirically justified Medicare DSH 
payments and uncompensated care payments if their DPP is at least 15 
percent, and we apply the same process to determine MDHs' eligibility 
for empirically justified Medicare DSH and uncompensated care payments 
as we do for all other IPPS hospitals. Due to the extension of the MDH 
program, MDHs will continue to be paid based on the IPPS Federal rate 
or, if higher, the IPPS Federal rate plus 75 percent of the amount by 
which the Federal rate is exceeded by the updated hospital-specific 
rate from certain specified base years. Accordingly, we will continue 
to 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). 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 
addition, as we do for all IPPS hospitals, we will calculate a 
numerator for Factor 3 for all MDHs, regardless of whether they are 
projected to be eligible for Medicare DSH payments during the fiscal 
year, but the denominator for Factor 3 will be based on the 
uncompensated care data from the hospitals that we have projected to be 
eligible for Medicare DSH payments during the fiscal year.
     IPPS hospitals that elect to participate in the Bundled 
Payments for Care Improvement Advanced Initiative (BPCI Advanced) model 
starting October 1, 2018, will continue to be paid under the IPPS and, 
therefore, are eligible to receive empirically justified Medicare DSH 
payments and uncompensated care payments. For further information 
regarding the BPCI Advanced model, we refer readers to the CMS website 
at: https://innovation.cms.gov/initiatives/bpci-advanced/.
     IPPS hospitals that are participating in the Comprehensive 
Care for Joint Replacement Model (80 FR 73300) continue to be paid 
under the IPPS and, therefore, are eligible to receive empirically 
justified Medicare DSH payments and uncompensated care payments.
     Hospitals participating in the Rural Community Hospital 
Demonstration Program are not eligible to receive empirically justified 
Medicare DSH payments and uncompensated care payments under section 
1886(r) of the Act because they are not paid under the IPPS (78 FR 
50625 and 79 FR 50008). The Rural Community Hospital Demonstration 
Program was originally authorized for a 5-year period by section 410A 
of the Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) (Pub. L. 108-173), and extended for another 5-year period 
by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 114-
255). The period of performance for this 5-year extension period ended 
December 31, 2016. Section 15003 of the 21st Century Cures Act (Pub. L. 
114-255), enacted December 13, 2016, again amended section 410A of 
Public Law 108-173 to require a 10-year extension period (in place of 
the 5-year extension required by the Affordable Care Act), therefore 
requiring an additional 5-year participation period for the 
demonstration program. Section 15003 of Public Law 114-255 also 
required a solicitation for applications for additional hospitals to 
participate in the demonstration program. At the time of issuance of 
this proposed rule, there are 29 hospitals participating in the 
demonstration program. Under the payment methodology that applies 
during the second 5 years of the extension period under the 
demonstration program, participating hospitals do not receive 
empirically justified Medicare DSH payments, and they are also excluded 
from receiving interim and final uncompensated care payments.

[[Page 19409]]

3. Empirically Justified Medicare DSH Payments
    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: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
4. Uncompensated Care Payments
    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 2019, and our 
proposed policies for FY 2020.
a. Proposed Calculation of Factor 1 for FY 2020
    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 2019, in this FY 2020 IPPS/LTCH PPS proposed rule, 
in order to determine Factor 1 in the uncompensated care payment 
formula for FY 2020, we are proposing 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 2020. 
Therefore, in order to determine the two elements of proposed Factor 1 
for FY 2020 (Medicare DSH payments prior to the application of section 
1886(r)(1) of the Act, and empirically justified Medicare DSH payments 
after application of section 1886(r)(1) of the Act), for this proposed 
rule, we used the most recently available projections of Medicare DSH 
payments for the fiscal year, as calculated by CMS' Office of the 
Actuary using the most recently filed Medicare hospital cost reports 
with Medicare DSH payment information and the most recent Medicare DSH 
patient percentages and Medicare DSH payment adjustments provided in 
the IPPS Impact File. The determination of the amount of DSH payments 
is partially based on the Office of the Actuary's Part A benefits 
projection model. One of the results of this model is inpatient 
hospital spending. Projections of DSH payments require projections for 
expected increases in utilization and case-mix. The assumptions that 
were used in making these projections and the resulting estimates of 
DSH payments for FY 2017 through FY 2020 are discussed in the table 
titled ``Factors Applied for FY 2017 through FY 2020 to Estimate 
Medicare DSH Expenditures Using FY 2016 Baseline.''
    For purposes of calculating Factor 1 and modeling the impact of 
this FY 2020 IPPS/LTCH PPS proposed rule, we used the Office of the 
Actuary's December 2018 Medicare DSH estimates, which were based on 
data from the September 2018 update of the Medicare Hospital Cost 
Report Information System (HCRIS) and the FY 2019 IPPS/LTCH PPS final 
rule IPPS Impact File, published in conjunction with the publication of 
the FY 2019 IPPS/LTCH PPS final rule. 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 2018 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

[[Page 19410]]

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 2018 
Medicare DSH estimates. The 29 hospitals that are 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 this proposed rule, using the data sources discussed above, the 
Office of the Actuary's December 2018 estimate for Medicare DSH 
payments for FY 2020, without regard to the application of section 
1886(r)(1) of the Act, is approximately $16.857 billion. Therefore, 
also based on the December 2018 estimate, the estimate of empirically 
justified Medicare DSH payments for FY 2020, with the application of 
section 1886(r)(1) of the Act, is approximately $4.214 billion (or 25 
percent of the total amount of estimated Medicare DSH payments for FY 
2020). Under Sec.  412.l06(g)(1)(i) of the regulations, Factor 1 is the 
difference between these two estimates of the Office of the Actuary. 
Therefore, in this proposed rule, we are proposing that Factor 1 for FY 
2020 would be $12,643,011,209.74, which is equal to 75 percent of the 
total amount of estimated Medicare DSH payments for FY 2020 
($16,857,348,279.65 minus $4,214,337,069.91).
    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: https://www.whitehouse.gov/omb/budget. We recognize that our 
reliance on the economic assumptions and actuarial analysis used to 
develop the President's Budget in estimating Factor 1 has an impact on 
stakeholders who wish to replicate the Factor 1 calculation, such as 
modelling the relevant Medicare Part A portion of the budget, but we 
believe commenters are able to meaningfully comment on our proposed 
estimate of Factor 1 without replicating the President's Budget.
    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: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrust 
Funds/index.html?redirect=/reportstrustfunds/ under ``Downloads.'' We 
note that the annual reports of the Medicare Boards of Trustees to 
Congress represent the Federal Government's official evaluation of the 
financial status of the Medicare Program. The actuarial projections 
contained in these reports are based on numerous assumptions regarding 
future trends in program enrollment, utilization and costs of health 
care services covered by Medicare, as well as other factors affecting 
program expenditures. In addition, although the methods used to 
estimate future costs based on these assumptions are complex, they are 
subject to periodic review by independent experts to ensure their 
validity and reasonableness.
    We also refer readers to the Actuarial Report on the Financial 
Outlook for Medicaid for a discussion of general issues regarding 
Medicaid projections.
    In this proposed rule, we include information regarding the data 
sources, methods, and assumptions employed by the actuaries in 
determining the OACT's estimate of Factor 1. In summary, we indicate 
the historical HCRIS data update OACT used to identify Medicare DSH 
payments, we explain that the most recent Medicare DSH payment 
adjustments provided in the IPPS Impact File were used, and we provide 
the components of all the update factors that were applied to the 
historical data to estimate the Medicare DSH payments for the upcoming 
fiscal year, along with the associated rationale and assumptions. This 
discussion also includes a description of the ``Other'' and 
``Discharges'' assumptions, and also provides additional information 
regarding how we address the Medicaid and CHIP expansion.
    The Office of the Actuary's estimates for FY 2020 for this proposed 
rule began with a baseline of $13.981 billion in Medicare DSH 
expenditures for FY 2016. The following table shows the factors applied 
to update this baseline through the current estimate for FY 2020:

                        Factors Applied for FY 2017 Through FY 2020 To Estimate Medicare DSH Expenditures Using FY 2016 Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          Estimated  DSH
                           FY                                 Update        Discharges       Case-mix          Other           Total       payment  (in
                                                                                                                                            billions) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017....................................................          1.0015          0.9986           1.004          1.0751          1.0795          15.093
2018....................................................        1.018088          0.9819           1.018          1.0345          1.0528          15.889
2019....................................................          1.0185          0.9791           1.005         1.02206          1.0243          16.275
2020....................................................           1.032          1.0055           1.005          0.9932          1.0358          16.857
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Rounded.

    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 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 figures for FY 
2019 and FY 2020 are assumptions 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 2017 and FY 2018 are based on actual data 
adjusted by a completion factor. The FY 2019 and FY 2020 increases are 
estimates 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 include the difference between the total inpatient

[[Page 19411]]

hospital discharges and the IPPS discharges, and various adjustments to 
the payment rates that have been included over the years but are not 
reflected in the other columns (such as the change in rates for the 2-
midnight stay policy). In addition, the ``Other'' column includes a 
factor for the Medicaid expansion due to the Affordable Care Act. The 
factor for Medicaid expansion was developed using public information 
and statements for each State regarding its intent to implement the 
expansion. Based on this information, it is assumed that 50 percent of 
all individuals who were potentially newly eligible Medicaid enrollees 
in 2016 resided in States that had elected to expand Medicaid 
eligibility and, for 2017 and thereafter, that 55 percent of such 
individuals would reside in expansion States. In the future, these 
assumptions may change based on actual participation by States. For a 
discussion of general issues regarding Medicaid projections, we refer 
readers to the 2017 Actuarial Report on the Financial Outlook for 
Medicaid, which is available on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/MedicaidReport2017.pdf. We note that, in 
developing their estimates of the effect of Medicaid expansion on 
Medicare DSH expenditures, our actuaries have assumed that the new 
Medicaid enrollees are healthier than the average Medicaid recipient 
and, therefore, use fewer hospital services. Specifically, based on 
data from the President's Budget, the OACT assumed per capita spending 
for Medicaid beneficiaries who enrolled due to the expansion to be 50 
percent of the average per capita expenditures for a pre-expansion 
Medicaid beneficiary due to the better health of these beneficiaries. 
This assumption is consistent with recent internal estimates of 
Medicaid per capita spending pre-expansion and post-expansion.
    The table below shows the factors that are included in the 
``Update'' column of the above table:

----------------------------------------------------------------------------------------------------------------
                                                    Affordable
                                  Market  basket     Care Act       Multifactor    Documentation   Total update
               FY                    percentage       payment      productivity     and coding      percentage
                                                    reductions      adjustment
----------------------------------------------------------------------------------------------------------------
2017............................             2.7           -0.75            -0.3            -1.5            0.15
2018............................             2.7           -0.75            -0.6          0.4588          1.8088
2019............................             2.9           -0.75            -0.8             0.5           1.885
2020............................             3.2               0            -0.5             0.5             3.2
----------------------------------------------------------------------------------------------------------------
Note: All numbers are based on the FY 2020 President's Budget projections, except for the FY 2020 percentages,
  which are based on the most recent forecast. We refer readers to section IV.B. of the preamble of this
  proposed rule for a complete discussion of the proposed changes in the inpatient hospital update for FY 2020.

b. Calculation of Proposed Factor 2 for FY 2020
(1) Background
    Section 1886(r)(2)(B) of the Act establishes Factor 2 in the 
calculation of the uncompensated care payment. Section 
1886(r)(2)(B)(ii) of the Act provides 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. In FY 
2020 and subsequent fiscal years, there is no longer a reduction. We 
note that, unlike section 1886(r)(2)(B)(i) of the Act, which governed 
the calculation of Factor 2 for FYs 2014, 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 years of age.
    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. We are proposing to use the 
same methodology as was used in FY 2018 and FY 2019 to determine Factor 
2 for FY 2020.
    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 been used 
to study numerous topics related to the health care sector, including, 
but not limited to, changes in the amount and cost of health services 
purchased and the payers or programs that provide or purchase these 
services; the economic causal factors at work in the health sector; the 
impact of policy changes, including major health reform; and 
comparisons to other countries' health spending. Of relevance to the 
determination of Factor 2 is that the comprehensive and integrated 
structure of the NHEA creates an ideal tool for evaluating changes to 
the health care system, such as the mix of the insured and uninsured 
because this mix is

[[Page 19412]]

integral to the well-established NHEA methodology. Below we describe 
some aspects of the methodology used to develop the NHEA that were 
particularly relevant in estimating the percent change in the rate of 
uninsurance for FY 2018 and FY 2019 that we believe continue to be 
relevant in developing the estimate for FY 2020. A full description of 
the methodology used to develop the NHEA is available on the CMS 
website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/DSM-15.pdf.
    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 2017, 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 2017. The NHEA data are publicly available 
on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealth ExpendData/
index.html.
    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: http://www.census.gov/programs-surveys/cps.html.) The enhanced CPS, available 
from SHADAC (available at: http://datacenter.shadac.org) accounts for 
changes in the CPS methodology over time. OACT further adjusts the 
enhanced CPS for an estimated undercount of Medicaid enrollees (a 
population that is often not fully captured in surveys that include 
Medicaid enrollees due to a perceived stigma associated with being 
enrolled in the Medicaid program or confusion about the source of their 
health insurance).
    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). 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: https://www.cdc.gov/nchs/nhis/index.htm.
    The next metrics needed to compute Factor 2 are projections of the 
rate of uninsurance in both calendar years 2019 and 2020. On an annual 
basis, OACT projects enrollment and spending trends for the coming 10-
year period. Those projections (currently for years 2018 through 2027) 
use the latest NHEA historical data, which presently run through 2017. 
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: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.pdf.
    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 upcoming fiscal year. 
Timeliness and continuity are important considerations because of our 
need to be able to update this estimate annually. Accuracy is also a 
very important consideration and, all things being equal, we would 
choose the most accurate data source that sufficiently meets our other 
criteria.
(2) Proposed Factor 2 for FY 2020
    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 2019 and 2020 is 9.4 percent 
and 9.3 percent, respectively.\394\ As required by section 
1886(r)(2)(B)(ii) of the Act, the Chief Actuary of CMS has certified 
these estimates.
---------------------------------------------------------------------------

    \394\ Certification of Rates of Uninsured. March 28, 2019. 
Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInPatientPPS/dsh.html.

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

[[Page 19413]]

    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, we are proposing to continue to apply the weighted average 
approach used in past fiscal years in order to estimate the rate of 
uninsurance for FY 2020. 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 2020 using a 
weighted average of the OACT's projections for CY 2019 and CY 2020 is 
as follows:
     Percent of individuals without insurance for CY 2013: 14 
percent.
     Percent of individuals without insurance for CY 2019: 9.4 
percent.
     Percent of individuals without insurance for CY 2020: 9.4 
percent.
     Percent of individuals without insurance for FY 2020 (0.25 
times 0.094) + (0.75 times 0.094): 9.4 percent 1 - [bond]((0.094 - 
0.14)/0.14)[bond] = 1 - 0.3286 = 0.6714 (67.14 percent).
    For FY 2020 and subsequent fiscal years, section 1886(r)(2)(B)(ii) 
of the Act no longer includes any reduction to the above calculation. 
Therefore, we are proposing that Factor 2 for FY 2020 will be 67.14 
percent.
    The proposed FY 2020 uncompensated care amount is 
$12,643,011,209.74 x 0.6714 = $8,488,517,726.22.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Proposed FY 2020 Uncompensated Care Amount........    $8,488,517,726.22
------------------------------------------------------------------------

    We are inviting public comments on our proposed methodology for 
calculating Factor 2 for FY 2020.
c. Calculation of Proposed Factor 3 for FY 2020
(1) General Background
    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

[[Page 19414]]

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 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. 
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 data on Worksheet S-10 would improve over time as the data 
are actually used to make payments (81 FR 25090). In addition, a 2007 
MedPAC analysis of data from the Government Accountability Office (GAO) 
and the American Hospital Association (AHA) had suggested that Medicaid 
days and low-income Medicare days are not an accurate proxy for 
uncompensated care costs (80 FR 49525).
    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. Our analyses on 
balance 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: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R1681OTN.pdf). In this transmittal, as part of the process for ensuring 
complete submission of Worksheet S-10 by all eligible DSH hospitals, we 
instructed MACs to accept amended Worksheets S-10 for FY 2014 cost 
reports submitted by hospitals (or initial submissions of Worksheet S-
10 if none had been submitted previously) and to upload them to the 
Health Care Provider Cost Report Information System (HCRIS) in a timely 
manner. The transmittal stated that, for revisions to be considered, 
hospitals were required to submit their amended FY 2014 cost report 
containing the revised Worksheet S-10 (or a completed Worksheet S-10 if 
no data were included on the previously submitted cost report) to the 
MAC no later than September 30, 2016. For the FY 2018 IPPS/LTCH PPS 
proposed rule (82 FR 19949 through 19950), we examined hospitals' FY 
2014 cost reports to see if the Worksheet S-10 data on those cost 
reports had changed as a result of the opportunity for hospitals to 
submit revised Worksheet S-10 data for FY 2014. Specifically, we 
compared hospitals' FY 2014 Worksheet S-10 data as they existed in the 
first quarter of CY 2016 with data from the fourth quarter of CY 2016. 
We found that the FY 2014 Worksheet S-10 data had changed over that 
time period for approximately one quarter of hospitals that receive 
uncompensated care payments. The fact that the Worksheet S-10 data 
changed for such a significant number of hospitals following a review 
of the cost report data they originally submitted and that the revised 
Worksheet S-10 information is available to be used in determining 
uncompensated care costs contributed to our belief that we could no 
longer conclude that alternative data are available that are a better 
proxy than the Worksheet S-10 data for the costs of subsection (d) 
hospitals for treating individuals who are uninsured.
    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 
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

[[Page 19415]]

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 trims for potentially 
aberrant data (82 FR 38207, 38217, and 38218). 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.
    For FY 2019, as discussed in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41413), we 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 
acknowledged the concerns that had been raised regarding the 
instructions for Worksheet S-10. In particular, commenters had 
expressed concerns that the lack of clear and concise line-level 
instructions prevented accurate and consistent data from being reported 
on Worksheet S-10. We noted 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: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R10P240.pdf. In Transmittal 10, we clarified 
that hospitals may include discounts given to uninsured patients who 
meet the hospital's charity care criteria in effect for that cost 
reporting period. This clarification applied to cost reporting periods 
beginning prior to October 1, 2016, as well as cost reporting periods 
beginning on or after October 1, 2016. As a result, nothing prohibits a 
hospital from considering a patient's insurance status as a criterion 
in its charity care policy. A hospital determines its own financial 
criteria as part of its charity care policy. The instructions for the 
Worksheet S-10 set forth that hospitals may include discounts given to 
uninsured patients, including patients with coverage from an entity 
that does not have a contractual relationship with the provider, who 
meet the hospital's charity care criteria in effect for that cost 
reporting period. In addition, we revised the instructions for the 
Worksheet S-10 for cost reporting periods beginning on or after October 
1, 2016, to provide that charity care charges must be determined in 
accordance with the hospital's charity care criteria/policy and written 
off in the cost reporting period, regardless of the date of service.
    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: 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R11p240.pdf. We further clarified that full or partial 
discounts given to uninsured patients who meet the hospital's charity 
care policy or financial assistance policy/uninsured discount policy 
(hereinafter referred to as Financial Assistance Policy or FAP) may be 
included on Line 20, Column 1 of Worksheet S-10. These clarifications 
apply to cost reporting periods beginning on or after October 1, 2013. 
We also modified the application of the CCR. We specified that the CCR 
will not be applied to the deductible and coinsurance amounts for 
insured patients approved for charity care and non-reimbursed Medicare 
bad debt. The CCR will be applied to the charges for uninsured patients 
approved for charity care or an uninsured discount, non-Medicare bad 
debt, and charges for noncovered days exceeding a length of stay limit 
imposed on patients covered by Medicaid or other indigent care 
programs.
    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: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R1981OTN.pdf). In this transmittal, we instructed MACs to 
accept amended Worksheets S-10 for FY 2014 and FY 2015 cost reports 
submitted by hospitals (or initial submissions of Worksheet S-10 if 
none had been submitted previously) and to upload them to the Health 
Care Provider Cost Report Information System (HCRIS) in a timely 
manner. The transmittal included the deadlines by which hospitals 
needed to submit their amended FY 2014 and FY 2015 cost reports 
containing the revised Worksheet S-10 (or a completed Worksheet S-10 if 
no data were included on the previously submitted cost report) to the 
MAC, as well as the dates by which MACs must have accepted these data 
and uploaded the revised cost report to the HCRIS, in order for the 
data to be considered for purposes of the FY 2019 rulemaking.
(2) Background on the Methodology Used To Calculate Factor 3 for FY 
2019
    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 Affordable 
Care Act. Consistent with that process, we also determined the time 
period from which to calculate the numerator and denominator of the 
Factor 3 quotient in a way that would be consistent with making interim 
and

[[Page 19416]]

final payments. Specifically, we must have Factor 3 values available 
for hospitals that we estimate will qualify for Medicare DSH payments 
and for those hospitals that we do not estimate will qualify for 
Medicare DSH payments but that may ultimately qualify for Medicare DSH 
payments at the time of cost report settlement.
    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 
regulation at Sec.  412.106(g)(1)(iii)(C).
    As we stated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41414), 
with the additional steps we had 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 continued 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, led 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 
final rule (83 FR 41428), we finalized our proposal 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 indicated that 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 2013, FY 2014, and FY 2015, we used 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 for the FY 2019 final rule, 
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 was the June 30, 2018 update of HCRIS, due to the unique 
circumstances related to 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 (83 FR 41421).
    Accordingly, for FY 2019, in addition to the Worksheet S-10 data 
for FY 2014 and FY 2015, we used 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 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. In 
addition, we continued 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 annualize SSI days because 
we do not obtain these data from hospital cost reports in HCRIS. 
Rather, we obtained these data from the latest available SSI ratios 
posted on the Medicare DSH homepage (https://www.cms.gov/Medicare/
Medicare-fee-for-service-payment/AcuteInpatientPPS/dsh.html), which 
were aggregated at the hospital level and did not include the 
information needed to determine if the data should be annualized. To 
address the effects of averaging Factor 3s calculated for 3 separate 
fiscal years, we continued to apply a scaling factor to the Factor 3 
values of all DSH eligible hospitals such that total uncompensated care 
payments are consistent with the estimated amount available to make 
uncompensated care payments for the applicable fiscal year. With 
respect to the incorporation of data from Worksheet S-10, we indicated 
that we believe that the definition of uncompensated care adopted in FY 
2018 is still appropriate because it incorporates the most commonly 
used factors within uncompensated care as reported by stakeholders, 
including charity care costs and non-Medicare bad debt costs, and 
correlates to Line 30 of Worksheet S-10. Therefore, for purposes of 
calculating Factor 3 and uncompensated care costs in FY 2019, we again 
defined ``uncompensated care'' 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).
    We noted that we were discontinuing 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 was needed. This policy was developed in 
response to commenters' concerns regarding the unique circumstances of

[[Page 19417]]

hospitals that file 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 and final rules, 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 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 used data from the cost report 
that is equivalent to 12 months or, if no such cost report existed, the 
cost report that was closest to 12 months, and annualized 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 would 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.
    In FY 2019, we also continued to apply statistical trims to 
anomalous hospital CCRs using a similar methodology to the one 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 (Sec.  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, Sec.  
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''). The geometric means for purposes 
of the Worksheet S-10 trim of CCRs and for purposes of Sec.  
412.84(h)(3)(ii) are separately calculated annually by CMS and 
published in the applicable sections of the proposed and final IPPS 
rules each year. We refer readers to the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41415) for a detailed description of the CCR trim 
methodology for purposes of the Worksheet S-10 trim of CCRs, which 
included calculating 3 standard deviations above the national geometric 
mean CCR for each of the applicable cost report years (FY 2014 and FY 
2015) that were part of the Factor 3 methodology for FY 2019.
    Similar in concept to the policy that we adopted for FY 2018, for 
FY 2019, we stated that we continued 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. 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 also indicated that we did not intend to make the MACs' review 
protocols public (83 FR 41416). Similarly, 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. In the FY 2019 
IPPS/LTCH PPS proposed rule (83 FR 20399), we noted that our 
calculation of Factor 3 for the final rule would be contingent on the 
results of the ongoing MAC reviews of hospitals' Worksheet S-10 data, 
and in the event those reviews necessitate supplemental data edits, we 
would incorporate such edits in the final rule for the purpose of 
correcting aberrant data. After the completion of the MAC reviews, we 
did not incorporate any additional edits to the Worksheet S-10 data 
that we did not propose in the FY 2019 IPPS/LTCH PPS proposed rule. We 
refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41416) for 
a detailed discussion of our policies for trimming aberrant data. In 
brief summary, in cases where a hospital's uncompensated care costs for 
FY 2014 or FY 2015 were an extremely high ratio of its total operating 
costs, and the hospital could not justify the amount it reported, we 
determined the ratio of uncompensated care costs to the hospital's 
total operating costs from another available cost report, and applied 
that ratio to the total operating expenses for the potentially aberrant 
fiscal year to determine an adjusted amount of uncompensated care 
costs. For example, if the FY 2015 cost report was determined to 
include potentially aberrant data, data from the FY 2016 cost report 
would be used for the ratio calculation. In this case, the hospital's 
uncompensated care costs for FY 2015 would be trimmed by multiplying 
its FY 2015 total operating costs by the ratio of uncompensated care 
costs to total operating costs from the hospital's FY 2016 cost report 
to calculate an estimate of the hospital's uncompensated care costs for 
FY 2015 for purposes of determining Factor 3 for FY 2019.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41416), for Indian 
Health Service and Tribal hospitals, subsection (d) Puerto Rico 
hospitals, and all-inclusive rate providers, we continued 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

[[Page 19418]]

these hospitals' uncompensated care payments due to their unique 
funding structure. With respect to Puerto Rico hospitals, we indicated 
that we continue to agree with concerns raised by commenters that the 
uncompensated care data reported by these hospitals need to be further 
examined before the data are used to determine Factor 3 (82 FR 38209). 
Finally, we acknowledged that the CCRs for all-inclusive rate providers 
are potentially erroneous and still in need of further examination 
before they can be used in the determination of uncompensated care 
amounts for purposes of Factor 3 (82 FR 38212). For the reasons 
described earlier related to the impact of the Medicaid expansion 
beginning in FY 2014, we stated that we also continue to believe that 
it is inappropriate to calculate a Factor 3 using FY 2014 and FY 2015 
low-income insured days. Because we did not believe it was appropriate 
to use the FY 2014 or FY 2015 uncompensated care data for these 
hospitals and we also did not believe it was appropriate to use the FY 
2014 or FY 2015 low-income insured days, we stated that the best proxy 
for the costs of Indian Health Service and Tribal hospitals, subsection 
(d) Puerto Rico hospitals, and all-inclusive rate providers for 
treating the uninsured continues to be the low-income insured days data 
for FY 2013. Accordingly, for these hospitals, we determined Factor 3 
only on the basis of low-income insured days for FY 2013. We stated our 
belief that this approach was appropriate as the FY 2013 data reflect 
the most recent available information regarding these hospitals' low-
income insured days before any expansion of Medicaid. In addition, 
because we continued to use 1 year of insured low-income patient days 
as a proxy for uncompensated care and residents of Puerto Rico are not 
eligible for SSI benefits, we continued to use a proxy for SSI days for 
Puerto Rico hospitals consisting of 14 percent of the hospital's 
Medicaid days, as finalized in the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56953 through 56956).
    Therefore, for FY 2019, we computed 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 amended the regulations at Sec.  412.106(g)(1)(iii)(C) by 
adding a new paragraph (5) to reflect the above methodology for 
computing Factor 3 for FY 2019.
    In the FY 2019 IPPS/LTCH PPS final 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 
would consider the hospital not to have data available for the fiscal 
year, and would remove that fiscal year from the calculation and divide 
by the number of years with data. A hospital would be considered to 
have both Medicaid days and SSI days data available if it reported zero 
days for either component of the Factor 3 calculation in Step 1. 
However, if a hospital was missing data due to not filing a cost report 
in one of the applicable fiscal years, we would divide by the remaining 
number of fiscal years.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41417), we noted 
that we did not make any proposals with respect to the development of 
Factor 3 for FY 2020 and subsequent fiscal years. However, 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, and therefore, the use of low-income 
insured days would be phased out by FY 2020 if the same methodology 
were to be proposed and finalized for that year. We also indicated that 
it was possible that when we examine the FY 2016 Worksheet S-10 data, 
we might determine that the use of multiple years of Worksheet S-10 
data is no longer necessary in calculating Factor 3 for FY 2020. We 
stated that, 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 the FY 2019 IPPS/LTCH PPS final rule, along with 
additional review work that might take place following the issuance of 
the FY 2019 final rule, we might consider using 1 year of Worksheet S-
10 data as the basis for calculating Factor 3 for FY 2020.
    For new hospitals that did not have data for any of the three cost 
reporting periods used in the Factor 3 calculation for FY 2019, we 
continued 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 the uncompensated care costs reported on 
Worksheet S-10 of the FY 2015 cost reports for all DSH eligible 
hospitals (that is, the most recent year of the 3-year time period used 
in the development of Factor 3 for FY 2019). 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.
(3) Proposed Methodology for Calculating Factor 3 for FY 2020
(a) Proposal to Use of Audited FY 2015 Data
    Since the publication of the FY 2019 IPPS/LTCH PPS final rule, we 
have continued to monitor the reporting of Worksheet S-10 data in order 
to determine the most appropriate data to use in the calculation of 
Factor 3 for FY 2020. As stated in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41424), due to the overwhelming feedback from commenters 
emphasizing the importance of audits in ensuring the accuracy and 
consistency of data reported on the Worksheet S-10, we expected audits 
of the Worksheet S-10 to begin in the Fall of 2018. The audit protocol 
instructions were still under development at the time of the FY 2019 
IPPS/LTCH PPS final rule; yet, we noted the audit protocols would be 
provided to the MACs in advance of the audit. Once the audit protocol 
instructions were complete, we began auditing the Worksheet S-10 data 
for selected hospitals in the Fall of 2018 so that the audited 
uncompensated care data from these hospitals would be available in time 
for use in this FY 2020 proposed rule. We chose to audit 1 year of data 
(that is, FY 2015) in order to maximize the available audit resources 
and not spread those audit resources over multiple years, potentially 
diluting their effectiveness. We chose to focus the audit on the FY 
2015 cost reports primarily because this was the most

[[Page 19419]]

recent year of data that we had broadly allowed to be resubmitted by 
hospitals, and many hospitals had already made considerable efforts to 
amend their FY 2015 reports for the FY 2019 rulemaking. We also 
considered that we had previously used the FY 2015 data as part of the 
calculation of the FY 2019 uncompensated care payments; therefore, the 
data had previously been subject to public comment and scrutiny.
    Given that we have conducted audits of the FY 2015 Worksheet S-10 
data and have previously used the FY 2015 data to determine 
uncompensated care payments, and the fact that the FY 2015 data are the 
most recent data that we have allowed to be resubmitted to date, we 
believe that, on balance, the FY 2015 Worksheet S-10 data are the best 
available data to use for calculating Factor 3 for FY 2020. However, as 
discussed in more detail later in the next section, an alternative we 
also considered is the use of FY 2017 data. We are seeking public 
comments on this alternative and, based on the public comments we 
receive, could adopt it in the FY 2020 final rule.
    We recognize that, in FY 2019, we used 3 years of data in the 
calculation of Factor 3 in order to smooth over anomalies between cost 
reporting periods and to mitigate undue fluctuations in the amount of 
uncompensated care payments from year to year. However, we believe 
that, for FY 2020, mixing audited and unaudited data for individual 
hospitals by averaging multiple years of data could potentially lead to 
a less smooth result, which is counter to our original goal in using 3 
years of data. To the extent that the audited FY 2015 data for a 
hospital are relatively different from its unaudited FY 2014 data and/
or its unaudited FY 2016 data, we potentially would be diluting the 
effect of our considerable auditing efforts and introducing unnecessary 
variability into the calculation if we continued to use 3 years of data 
to calculate Factor 3. For example, approximately 10 percent of audited 
hospitals have more than a $20 million difference between their audited 
FY 2015 data and their unaudited FY 2016 data.
    Accordingly, we are proposing to use a single year of Worksheet S-
10 data from FY 2015 cost reports to calculate Factor 3 in the FY 2020 
methodology. We note that the proposed uncompensated care payments to 
hospitals whose FY 2015 Worksheet S-10 data were audited represent 
approximately half of the proposed total uncompensated care payments 
for FY 2020. For purposes of this FY 2020 proposed rule, we have used 
the most recent available HCRIS extract available, which is the HCRIS 
data updated through February 15, 2019. We expect to use the March 2019 
update of HCRIS for the final rule.
(b) Alternative Considered To Use FY 2017 Data
    Although we are proposing to use Worksheet S-10 data from the FY 
2015 cost reports, we acknowledge that some hospitals have raised 
concerns regarding some of the adjustments made to the FY 2015 cost 
reports following the audits of these reports (for example, adjustments 
made to Line 22 of Worksheet S-10). These hospitals contend that there 
are issues regarding the instructions in effect for FY 2015, especially 
compared to the reporting instructions that were effective for cost 
reporting periods beginning on or after October 1, 2016, and some of 
these adjustments would not have been made if CMS had chosen as an 
alternative to audit the FY 2017 reports.
    Accordingly, we are seeking public comments on whether the changes 
in the reporting instructions between the FY 2015 cost reports and the 
FY 2017 cost reports have resulted in a better common understanding 
among hospitals of how to report uncompensated care costs and improved 
relative consistency and accuracy across hospitals in reporting these 
costs. We also are seeking public comments on whether, due to the 
changes in the reporting instructions, we should use a single year of 
uncompensated care cost data from the FY 2017 reports, instead of the 
FY 2015 reports, to calculate Factor 3 for FY 2020. We note that we are 
not proposing to use FY 2016 reports because the reporting instructions 
for that year were similar to the reporting instructions for the FY 
2015 reports. If, based on the public comments received, we were to 
adopt a final policy in which we use Worksheet S-10 data from the FY 
2017 cost reports to determine Factor 3 for FY 2020, we would also 
expect to use the March 2019 update of HCRIS for the final rule.
    Under the alternative considered on which we are seeking public 
comment, the FY 2017 Worksheet S-10 data would be used instead of the 
FY 2015 Worksheet S-10 data, but, in general, the proposed Factor 3 
methodology would be unchanged. The limited circumstances where the 
methodology would need to differ from the proposed methodology using FY 
2015 data, if we were to adopt the alternative of using FY 2017 data in 
the final rule based on the public comments received, are outlined in 
section IV.F.4.c.(3)(d) of the preamble of this proposed rule 
(Methodological Considerations for Calculating Factor 3). If an aspect 
of the proposed methodology described below does not specifically 
indicate that we would modify it under the alternative considered, that 
aspect of the methodology would be unchanged, regardless of whether we 
use FY 2015 data or FY 2017 data. We note that we are providing all of 
the same public information regarding the alternative considered, 
including the Factor 3 values for each hospital and the impact 
information, that we are providing for our proposal to use FY 2015 
data.
(c) Proposed Definition of ``Uncompensated Care''
    We continue to believe that the definition of ``uncompensated 
care'' first adopted in FY 2018 when we started to incorporate data 
from Worksheet S-10 into the determination of Factor 3 and used again 
in FY 2019 is appropriate, as it incorporates the most commonly used 
factors within uncompensated care as reported by stakeholders, namely, 
charity care costs and bad debt costs, and correlates to Line 30 of 
Worksheet S-10. Therefore, we are proposing that, for purposes of 
determining uncompensated care costs and calculating Factor 3 for FY 
2020, ``uncompensated care'' would continue to be defined 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).
(d) Methodological Considerations for Calculating Factor 3
    For FY 2020, we are proposing to continue the merger policies that 
were finalized in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020). 
In addition, we are proposing to continue the policy that was finalized 
in the FY 2018 IPPS/LTCH PPS final rule of annualizing uncompensated 
care cost data reported on the Worksheet S-10 if a hospital's cost 
report does not equal 12 months of data.
    We are proposing to modify the new hospital policy first adopted in 
the FY 2014 IPPS/LTCH PPS final rule (78 FR 50643) and continued 
through the FY 2019 IPPS/LTCH PPS final rule (83 FR 41417), for new 
hospitals that do not have data for the cost reporting period(s) used 
in the proposed Factor 3 calculation. For FY 2020, new hospitals that 
are eligible for Medicare DSH would receive interim empirically 
justified DSH payments. Generally, new hospitals do not yet have 
available data to project their eligibility for DSH

[[Page 19420]]

payments because there is a lag until the SSI ratio and the Medicaid 
ratio become available. However, we note that there are some new 
hospitals (that is, hospitals with CCNs established after October 1, 
2015) that have a preliminary projection of being eligible for DSH 
payments based on their most recent available DSH percentages. Because 
these hospitals do not have a FY 2015 cost report to use in the Factor 
3 calculation and the projection of eligibility for DSH payments is 
still preliminary, we are proposing that the MAC would make a final 
determination concerning whether the hospital is eligible to receive 
Medicare DSH payments at cost report settlement based on its FY 2020 
cost report. If the hospital is ultimately determined to be eligible 
for Medicare DSH payments for FY 2020, the hospital would 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 2020 cost report, and the denominator is the sum of 
the uncompensated care costs reported on Worksheet S-10 of the FY 2015 
cost reports for all DSH-eligible hospitals. This denominator would be 
the same denominator that is determined prospectively for purposes of 
determining Factor 3 for all DSH-eligible hospitals, excluding Puerto 
Rico hospitals and Indian Health Service and Tribal hospitals. The new 
hospital would not receive interim uncompensated care payments before 
cost report settlement because we would have no FY 2015 uncompensated 
care data on which to determine what those interim payments should be. 
We note that, given the time period of the data we are proposing to use 
to calculate Factor 3, any hospitals with a CCN established on or after 
October 1, 2015, would be considered new and subject to this policy. 
However, under the alternative policy considered of using FY 2017 data, 
we would modify the new hospital policy, such that any hospital with a 
CCN established on or after October 1, 2017, would be considered new 
and subject to this policy with conforming changes to provide for the 
use of FY 2017 uncompensated care data.
    We have received questions regarding the new hospital policy for 
new Puerto Rico hospitals. In FY 2018 and FY 2019, Factor 3 for all 
Puerto Rico hospitals, including new Puerto Rico hospitals, was based 
on the low-income insured proxy data. Under this approach, the MAC will 
calculate a Factor 3 for new Puerto Rico hospitals at cost report 
settlement for the applicable fiscal year using the Medicaid days from 
the hospital's cost report and the SSI day proxy (that is, 14 percent 
of the hospital's Medicaid days) divided by the low-income insured 
proxy data denominator that was established for that fiscal year. For 
FY 2020, we are proposing that Puerto Rico hospitals that do not have a 
FY 2013 report would be considered new hospitals and would be subject 
to the proposed new hospital policy, as discussed above. Specifically, 
the numerator would be the uncompensated care costs reported on 
Worksheet S-10 of the hospital's FY 2020 cost report and the 
denominator would be the same denominator that is determined 
prospectively for purposes of determining Factor 3 for all DSH-eligible 
hospitals. We believe this notice of proposed rulemaking provides 
sufficient time for all new hospitals to take the steps necessary to 
ensure that their uncompensated care costs for FY 2020 are accurately 
reported on their FY 2020 Worksheet S-10. In addition, we expect MACs 
to review FY 2020 reports from new hospitals, as necessary, which will 
address past commenters' concerns regarding the need for further review 
of Puerto Rico hospitals' uncompensated care data before the data are 
used to determine Factor 3. Therefore, we believe the uncompensated 
care costs reported on their FY 2020 Worksheet S-10 are the best 
available and appropriate data to use to calculate Factor 3 for new 
Puerto Rico hospitals. This proposed would also allow our new hospital 
policy to be more uniform, given that Worksheet S-10 would be the 
source of the uncompensated care cost data across all new hospitals.
    For Indian Health Service and Tribal hospitals and subsection (d) 
Puerto Rico hospitals that have a FY 2013 cost report, we are proposing 
to adapt the policy first adopted for the FY 2018 rulemaking regarding 
FY 2013 low-income insured days 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 respect to Puerto Rico hospitals that would not 
be subject to the proposed new hospital policy, we continue to agree 
with concerns raised by commenters that the uncompensated care data 
reported by these hospitals need to be further examined before the data 
are used to determine Factor 3 (82 FR 38209). Accordingly, for these 
hospitals, we are proposing to determine Factor 3 based on Medicaid 
days from FY 2013 and the most recent update of SSI days. The aggregate 
amount of uncompensated care that is used in the Factor 3 denominator 
for these hospitals would continue to be based on the low-income 
patient proxy; that is, the aggregate amount of uncompensated care 
determined for all DSH eligible hospitals using the low-income insured 
days proxy. We believe this approach is appropriate because the FY 2013 
data reflect the most recent available information regarding these 
hospitals' Medicaid days before any expansion of Medicaid. At the time 
of development of this proposed rule, for modeling purposes, we 
computed Factor 3 for these hospitals using FY 2013 Medicaid days and 
the most recent available FY 2017 SSI days. In addition, because we are 
continuing to use 1 year of insured low-income patient days as a proxy 
for uncompensated care for Puerto Rico hospitals and residents of 
Puerto Rico are not eligible for SSI benefits, we are proposing to 
continue to use a proxy for SSI days for Puerto Rico hospitals, 
consisting of 14 percent of a hospital's Medicaid days, as finalized in 
the FY 2017 IPPS/LTCH PPS final rule (81 FR 56953 through 56956).
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41417), we noted 
that further examination of the CCRs for all-inclusive rate providers 
was necessary before we considered incorporating Worksheet S-10 into 
the Factor 3 calculation for these hospitals. We have examined the CCRs 
from the FY 2015 cost reports and believe the risk that all-inclusive 
rate providers will have aberrant CCRs and, consequently, aberrant 
uncompensated care data, is mitigated by the proposal to apply trim 
methodologies for potentially aberrant uncompensated care costs for all 
hospitals. Therefore, we believe it is no longer necessary to propose 
specific Factor 3 policies for all-inclusive rate providers.
    Because we are proposing to use 1 year of cost report data, as 
opposed to averaging 3 cost report years, it is also no longer 
necessary to propose to apply a scaling factor to the Factor 3 of all 
DSH eligible hospitals similar to the scaling factor that was finalized 
in FY 2018 IPPS/LTCH PPS final rule (82 FR 38214) and also applied in 
the FY 2019 IPPS/LTCH PPS final rule. The primary purpose of the 
scaling factor was to account for the averaging effect of the use of 3 
years of data on the Factor 3 calculation.
    However, we are proposing to continue certain other policies 
finalized

[[Page 19421]]

in the FY 2019 IPPS/LTCH PPS final rule, specifically: (1) For 
providers with multiple cost reports, beginning in the same fiscal 
year, using the longest cost report and annualizing 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, using the cost report that spans 
both fiscal years for the latter fiscal year; and (3) applying 
statistical trim methodologies to potentially aberrant CCRs and 
potentially aberrant uncompensated care costs reported on the Worksheet 
S-10. Thus, if a hospital's uncompensated care costs for FY 2015 are an 
extremely high ratio of its total operating costs, and the hospital 
cannot justify the amount it reported, we are proposing to determine 
the ratio of uncompensated care costs to the hospital's total operating 
costs from another available cost report, and apply that ratio to the 
total operating expenses for the potentially aberrant fiscal year to 
determine an adjusted amount of uncompensated care costs. For example, 
if the FY 2015 cost report is determined to include potentially 
aberrant data, data from the FY 2016 cost report would be used for the 
ratio calculation. In this case, similar to the trim methodology used 
for FY 2019, the hospital's uncompensated care costs for FY 2015 would 
be trimmed by multiplying its FY 2015 total operating costs by the 
ratio of uncompensated care costs to total operating costs from the 
hospital's FY 2016 cost report to calculate an estimate of the 
hospital's uncompensated care costs for FY 2015 for purposes of 
determining Factor 3 for FY 2020.
    In support of the alternative policy considered of using 
uncompensated care data from FY 2017 and to improve the quality of the 
Worksheet S-10 data generally, we are currently in a process of 
outreach to hospitals related to potentially aberrant data reported in 
their FY 2017 cost reports. For example, a significant positive or 
negative difference in the percent of total uncompensated care costs to 
total operating costs when comparing the hospital's FY 2015 cost report 
to its FY 2017 cost report may indicate potentially aberrant data. 
While hospitals may see uncompensated care cost fluctuations from year 
to year, if a hospital experiences a significant change compared to 
other comparable hospitals, this could be an indication of potentially 
aberrant data. A hospital with such changes would have the opportunity 
to justify its reporting fluctuation to the MAC and, if necessary, to 
amend its FY 2017 cost report. If a hospital's FY 2017 cost report 
remains unchanged without an acceptable response or explanation from 
the provider, under the alternative policy considered, we would trim 
the data in the provider's FY 2017 cost report using data from the 
provider's FY 2015 cost report in order to determine Factor 3 for 
purposes of the final rule.
    While we expect all providers will have FY 2017 cost reports in 
HCRIS by the time that any data would be taken from HCRIS for the final 
rule, if such data are not reflected in HCRIS for an unforeseen reason 
unrelated to any inappropriate action or improper reporting on the part 
of the hospital, we would substitute the Worksheet S-10 data from the 
FY 2015 cost report for the data from the FY 2017 cost report.
    Similar to the process used in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38217 through 38218) and the FY 2019 IPPS/LTCH PPS (83 FR 41415 
and 41416) for trimming CCRs, in this FY 2020 IPPS/LTCH PPS proposed 
rule, we are proposing the following steps:
    Step 1: Remove Maryland hospitals. In addition, we would remove 
all-inclusive rate providers because their CCRs are not comparable to 
the CCRs calculated for other IPPS hospitals.
    Step 2: For FY 2015 cost reports, 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 
fiscal year is not necessary, 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 proposed rule, this 
trim would remove 8 hospitals that have a CCR above the calculated 
ceiling of 0.925 for FY 2015 cost reports.) (Under the alternative 
policy considered, the trim would remove 13 hospitals that have a CCR 
above the calculated ceiling of 0.942 for FY 2017 cost reports.)
    Step 3: Using the CCRs for the remaining hospitals in Step 2, 
determine the urban and rural statewide average CCRs 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 FY 2015 
greater than 3 standard deviations above the national geometric mean 
for that fiscal year (that is, the CCR ``ceiling''). For this proposed 
rule, the statewide average CCR would therefore be applied to 8 
hospitals, of which 4 hospitals have FY 2015 Worksheet S-10 data. 
(Under the alternative policy considered, the statewide average CCR 
would be applied to 13 hospitals, of which 5 hospitals have FY 2017 
Worksheet S-10 data.)
    For providers that did not report a CCR on Worksheet S-10, Line 1, 
we would assign them the statewide average CCR in step 4.
    After applying the applicable trims to a hospital's CCR as 
appropriate, we are proposing that we would calculate a hospital's 
uncompensated care costs for the applicable fiscal year as being equal 
to Line 30, which is the sum of Line 23, Column 3, and Line 29 
determined using the hospital's CCR or the statewide average CCR (urban 
or rural), if applicable.
    Therefore, for FY 2020, we are proposing to compute Factor 3 for 
each hospital by--
    Step 1: Selecting the provider's longest cost report from its 
Federal fiscal year (FFY) 2015 cost reports. (Alternatively, in the 
rare case when the provider has no FFY 2015 cost report because the 
cost report for the previous Federal fiscal year spanned the FFY 2015 
time period, the previous Federal fiscal year cost report would be used 
in this step.)
    Step 2: Annualizing the uncompensated care costs (UCC) from 
Worksheet S-10 Line 30, if the cost report is more than or less than 12 
months. (If applicable, use the statewide average CCR (urban or rural) 
to calculate uncompensated care costs.)
    Step 3: Combining annualized uncompensated care costs for hospitals 
that merged.
    Step 4: Calculating Factor 3 for Indian Health Service and Tribal 
hospitals and Puerto Rico hospitals using the low-income insured days 
proxy based on FY 2013 cost report data and the most recent available 
SSI ratio (or, for Puerto Rico hospitals, 14 percent of the

[[Page 19422]]

hospital's FY 2013 Medicaid days). The denominator is calculated using 
the low-income insured days proxy data from all DSH eligible hospitals.
    Step 5: Calculating Factor 3 for the remaining DSH eligible 
hospitals using annualized uncompensated care costs (Worksheet S-10 
Line 30) based on FY 2015 cost report data (from Step 3). The hospitals 
for which Factor 3 was calculated in Step 4 are excluded from this 
calculation.
    We also are proposing to amend the regulations at Sec.  
412.106(g)(1)(iii)(C) by adding a new paragraph (6) to reflect the 
above proposed methodology for computing Factor 3 for FY 2020.
    We note that, if a hospital does not have Worksheet S-10 data for 
FY 2015 and the hospital is not a new hospital (that is, its CCN was 
established before October 1, 2015) nor has the rare case of no FY 2015 
cost report, we are proposing to apply the steps above with 
uncompensated care costs of zero for the hospital. In addition, if, in 
the course of the Worksheet S-10 reviews by MACs, a hospital is unable 
to provide sufficient documentation or is unwilling to justify its cost 
report, which subsequently results in the hospital's Worksheet S-10 
being adjusted to zero, we also are proposing to use the above steps to 
calculate Factor 3. We recognize that, under this proposal, these 
hospitals would be treated as having reported no uncompensated care 
costs on the Worksheet S-10 for FY 2015, which would result in their 
not receiving uncompensated care payments for FY 2020. However, we 
believe this proposal is equitable to other hospitals because all 
short-term acute care hospitals are required to report Worksheet S-10 
and must maintain sufficient documentation to support the information 
reported. In addition, hospitals have been on notice since the 
beginning of FY 2014 that Worksheet S-10 could eventually become the 
data source for CMS to calculate uncompensated care payments. 
Furthermore, we have previously given hospitals the opportunity to 
amend their Worksheet S-10 for FY 2015 cost reports (or to submit a 
Worksheet S-10 for FY 2015 if none had been submitted previously).
    As we have done for every proposed and final rule beginning in FY 
2014, in conjunction with both the FY 2020 IPPS/LTCH PPS proposed rule 
and final rule, we will publish on the CMS website a table listing 
Factor 3 computed using both the proposed methodology and the potential 
alternative methodology for all hospitals that we estimate would 
receive empirically justified Medicare DSH payments in FY 2020 (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 note that, at the time 
of development of this proposed rule, the FY 2017 SSI ratios were 
available. Accordingly, for purposes of this proposed rule, we have 
computed Factor 3 for Indian Health Service and Tribal hospitals and 
Puerto Rico hospitals using the most recent available data regarding 
SSI days from the FY 2017 SSI ratios. We also will publish in the 
supplemental data file a list of the mergers that we are aware of and 
the computed uncompensated care payment for each merged hospital.
    Hospitals have 60 days from the date of public display of this FY 
2020 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 that 
are specific to the information included in the table and supplemental 
data file can be submitted to the CMS inbox at 
[email protected]. We will address these comments as 
appropriate in the table and the supplemental data file that we publish 
on the CMS website in conjunction with the publication of the FY 2020 
IPPS/LTCH PPS final rule. After the publication of the FY 2020 IPPS/
LTCH PPS final rule, hospitals will have until August 31, 2019, to 
review and submit comments on the accuracy of the table and 
supplemental data file published in conjunction with the final rule. 
Comments may be submitted to the CMS inbox at 
[email protected] through August 31, 2019, and any changes to 
Factor 3 will be posted on the CMS website prior to October 1, 2019.
    We are inviting public comments on our proposed methodology for 
calculating Factor 3 for FY 2020, including, but not limited to, our 
proposed use of the FY 2015 Worksheet S-10 data and the alternative 
policy considered of using the FY 2017 Worksheet S-10 data instead of 
the FY 2015 Worksheet S-10 data.
5. Request for Public Comments on Ways To Reduce Provider Reimbursement 
Review Board (PRRB) Appeals Related to a Hospital's Medicaid Fraction 
Used in the Disproportionate Share Hospital (DSH) Payment Adjustment 
Calculation
    As part of our ongoing efforts to reduce regulatory burden on 
providers, we are examining the backlog of appeals cases at the 
Provider Reimbursement Review Board (PRRB). A large number of appeals 
before the PRRB relate to the calculation of a hospital's 
disproportionate patient percentage (DPP) used in the calculation of 
the DSH payment adjustment. (We refer readers to section IV.F. 1. of 
the preamble of this proposed rule for a discussion of the calculation 
of a hospitals DPP.) Many of these appeals before the PRRB focus on the 
calculation of a hospital's Medicaid fraction, which is one of the two 
fractions comprising the DPP, particularly the data used to determine 
an individual's Medicaid eligibility in the calculation. Specifically, 
it is possible that updated data on Medicaid eligibility are available 
following cost report submission. As a result, many hospitals annually 
appeal their cost reports to the PRRB in an effort to try and use 
updated State Medicaid eligibility data to calculate the Medicaid 
fraction. We believe it is in both CMS' and the providers' interest to 
seek a solution to issues related to the Medicaid fraction that appear 
to have led to a large volume and backlog of PRRB appeals. Therefore, 
we believe it is appropriate to explore options that may prevent the 
need for such appeals. We note that the Provider Reimbursement Review 
Board Rules, Version 2.0, August 29, 2018, contain revisions in Rules 
46 and 47 pertaining to ``Withdrawal of an Appeal or Issue Within an 
Appeal'' and ``Reinstatement'', respectively. These changes may lower 
the number of tracked PRRB appeals. In exploring possible solutions, we 
are concerned about balancing the competing interests of administrative 
finality, ease of implementation for both CMS and providers, and the 
use of the most appropriate data.
    We believe one such solution might be to develop regulations 
governing the timing of the data for determining Medicaid eligibility, 
somewhat similar to our existing policy on entitlement to SSI benefits 
which is determined at a specific time. For more information on this 
policy, we refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 
50276). Under this possible solution, a provider would submit a cost 
report

[[Page 19423]]

with Medicaid days based on the best available Medicaid eligibility 
data at the time of filing and could request a ``reopening'' when the 
cost report is settled without filing an appeal. CMS would issue 
directives to the MACs requiring them to reopen those cost reports for 
this issue at a specific time and set a realistic period during which 
the provider could submit updated data. This would be an expansion of 
the preamble instructions finalized in the CY 2016 OPPS/ASC final rule 
with comment period issued on November 13, 2015 (80 FR 70563 and 70564) 
which requires the MACs to accept one amended cost report submitted 
within 12 months after the due date of the cost report solely for the 
purpose of revising Medicaid days. (We note that an amendment of the 
cost report is initiated by the provider prior to final settlement of 
the cost report, while a reopening of the cost report occurs after 
final settlement and can be requested by the provider or initiated by 
the MAC.) Under this possible expansion, we would require MACs to 
reopen cost reports for the purpose of revising the Medicaid fraction 
near the end of the 3-year reopening window and use the Medicaid data 
at that time to settle the cost report. We believe the 3 years of the 
reopening period could provide adequate time to update the Medicaid 
data used to determine an individual's Medicaid eligibility for 
purposes of calculating a hospital's Medicaid fraction. However, we are 
generally interested in public comments on using reopenings as a 
mechanism to use updated Medicaid eligibility data and reduce the 
filing of PRRB appeals--in particular, the optimal time for review of 
data to occur taking into account the hospital's desire to receive 
accurate payment and CMS' and the MACs' desire to settle cost reports 
in a timely manner (for example, whether it makes sense to review data 
2 years after cost report submission, near the end of the 3 years 
mentioned in the reopening regulations, or at some other time).
    We also are considering allowing hospitals, for a one-time option, 
to resubmit a cost report with updated Medicaid eligibility 
information, somewhat similar to our existing DSH policy allowing 
hospitals a one-time option to have their SSI ratios calculated based 
on their cost reporting period rather than the Federal fiscal year 
under 42 CFR 412.106(a)(3). Under this option, we would undertake 
rulemaking to determine the timeframe for exercising the option (which 
may be a maximum allowable time after the close of a cost reporting 
period or a specific window during which the request could be made). We 
are interested in feedback and comments concerning the viability of 
these options, as well as any alternative approaches, that could help 
reduce the number of DSH-related appeals and inform our future 
rulemaking efforts.

G. Hospital Readmissions Reduction Program: Proposed Updates and 
Changes (Sec. Sec.  412.150 Through 412.154)

1. Statutory Basis for the Hospital Readmissions Reduction Program
    Section 1886(q) of the Act, as amended by section 15002 of the 21st 
Century Cures Act, establishes the Hospital Readmissions Reduction 
Program. Under the Hospital Readmissions Reduction 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 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 the 
FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49531) and 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.
2. Regulatory Background
    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);
     FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through 
38240); and
     FY 2019 IPPS/LTCH PPS final rule (83 FR 41431 through 
41439).
    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 (ERR), which is used, in 
part, to calculate the payment adjustment factor; (3) beginning in FY 
2019, the calculation of the proportion of ``dually eligible'' Medicare 
beneficiaries which is used to stratify hospitals into peer groups and 
establish the peer group median ERRs; (4) the calculation of the 
payment adjustment factor, specifically addressing the base operating 
DRG payment amount, aggregate payments for excess readmissions 
(including calculating the peer group median ERRs), aggregate payments 
for all discharges, and the neutrality modifier; (5) the opportunity 
for hospitals to review and submit corrections using a process similar 
to what is currently used for posting results on Hospital Compare; (6) 
the adoption of an extraordinary circumstances exception policy to 
address hospitals that experience a disaster or other extraordinary 
circumstance; (7) the clarification that the public reporting of ERRs 
will be posted on an annual basis to the Hospital Compare website as 
soon as is feasible following the review and corrections period; and 
(8) the specification that the definition of ``applicable hospital'' 
does not include hospitals and hospital units excluded from the IPPS, 
such as LTCHs, cancer hospitals, children's hospitals, IRFs, IPFs, 
CAHs, and hospitals in United States territories and Puerto Rico.
    We also have codified certain requirements of the Hospital 
Readmissions Reduction Program at 42 CFR 412.152 through 412.154, which 
we are proposing to update in this proposed rule to reflect both 
proposed and previously finalized policies.
    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 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. To that end, we are committed to monitoring the 
efficacy of the program to ensure that the Hospital Readmissions 
Reduction Program improves the lives of patients and reduces cost.

[[Page 19424]]

3. Summary of Proposed Policies for the Hospital Readmissions Reduction 
Program
    In this proposed rule, we are proposing the following policies: (1) 
A measure removal policy that aligns with the removal factor policies 
previously adopted in other quality reporting and quality payment 
programs; (2) an update to the program's definition of ``dual-
eligible'' beginning with the FY 2021 program year, to allow for a 1-
month lookback period in data sourced from the State Medicare 
Modernization Act (MMA) files to determine dual-eligible status for 
beneficiaries who die in the month of discharge; (3) a subregulatory 
process to address any potential future nonsubstantive changes to the 
payment adjustment factor components; and (4) an update to the 
regulations at 42 CFR 412.152 and 412.154 to reflect proposed policies 
and to codify additional previously finalized policies.
    We discuss these proposals in greater detail below.
4. Current Measures and Proposed Measure Policies for FY 2020 and 
Subsequent Years
a. Current Measures
    The Hospital Readmissions Reduction Program currently includes six 
applicable conditions/procedures: Acute myocardial infarction (AMI); 
heart failure (HF); pneumonia; elective primary total hip arthroplasty/
total knee arthroplasty (THA/TKA); chronic obstructive pulmonary 
disease (COPD); and coronary artery bypass graft (CABG) surgery. We 
refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41431 
through 41439) for more information about how the Hospital Readmissions 
Reduction Program supports CMS' goal of bringing quality measurement, 
transparency, and improvement together with value-based purchasing to 
the hospital inpatient care setting through the Meaningful Measures 
Initiative. We continue to believe the measures we have adopted 
adequately meet the goals of the Hospital Readmissions Reduction 
Program. Therefore, we are not proposing to remove or adopt any 
additional measures at this time.
b. Proposed Measure Removal Factors Policy
    While we are not proposing to remove any measures from the Hospital 
Readmissions Reduction Program in this proposed rule, we are proposing 
to adopt a measure removal factors policy as part of our efforts to 
ensure that the Hospital Readmissions Reduction Program measure set 
continues to promote improved health outcomes for beneficiaries while 
minimizing the overall burden and costs associated with the program. 
The adoption of measure removal factors would align the Hospital 
Readmissions Reduction Program with our other quality reporting and 
quality payment programs and help ensure consistency in our measure 
evaluation methodology across programs.
    In the FY 2019 IPPS/LTCH PPS final rule, we updated a number of CMS 
programs' considerations for removing measures from the respective 
programs. Specifically, we finalized eight measure removal factors for 
the Hospital IQR Program (83 FR 41540 through 41544), the Hospital VBP 
Program (83 FR 41441 through 41446), the PCHQR Program (83 FR 41609 
through 41611), and the LTCH QRP (83 FR 41625 through 41627).
    We believe these removal factors are also appropriate for the 
Hospital Readmissions Reduction Program, and we believe that alignment 
between CMS quality programs is important to provide stakeholders with 
a clear, consistent, and transparent process. Therefore, to align with 
our other quality reporting and quality payment programs, we are 
proposing to adopt the following removal factors for the Hospital 
Readmissions Reduction Program:
     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);
     Factor 2. Measure does not align with current clinical 
guidelines or practice;
     Factor 3. Measure can be replaced by a more broadly 
applicable measure (across settings or populations) or a measure that 
is more proximal in time to desired patient outcomes for the particular 
topic;
     Factor 4. Measure performance or improvement does not 
result in better patient outcomes;
     Factor 5. Measure can be replaced by a measure that is 
more strongly associated with desired patient outcomes for the 
particular topic;
     Factor 6. Measure collection or public reporting leads to 
negative unintended consequences other than patient harm; \395\
---------------------------------------------------------------------------

    \395\ When there is reason to believe that the continued 
collection of a measure as it is currently specified raises 
potential patient safety concerns, CMS will take immediate action to 
remove a measure from the program and not wait for the annual 
rulemaking cycle. In such situations, we would promptly retire such 
measures followed by subsequent confirmation of the retirement in 
the next IPPS rulemaking. When we do so, we will notify hospitals 
and the public through the usual hospital and QIO communication 
channels used for the Hospital Readmissions Reduction Program, which 
include memo and email notification and QualityNet website articles 
and postings.
---------------------------------------------------------------------------

     Factor 7. Measure is not feasible to implement as 
specified; and
     Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.\396\
---------------------------------------------------------------------------

    \396\ We refer readers to the Hospital IQR Program's measure 
removal factors discussions in the FY 2016 IPPS/LTCH PPS final rule 
(80 FR 49641 through 49643) and the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41540 through 41544) for additional details on the removal 
factors and the rationale supporting them.
---------------------------------------------------------------------------

    We note that these factors are considerations taken into account 
when deciding whether or not to remove measures, not firm requirements, 
and that we will propose to remove measures based on these factors on a 
case-by-case basis. 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 benefits of a 
measure can outweigh its drawbacks. 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.
5. Proposed Updated Definition of ``Dual-Eligible'' Beginning in FY 
2021
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226 through 
38229), as part of implementing the 21st Century Cures Act, we 
finalized the definition of dual-eligible as follows: ``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 Medicare 
Modernization Act (MMA) files for the month the beneficiary was 
discharged from the hospital.'' In the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41437 through 41438), we finalized our proposal to codify this 
definition at 42 CFR 412.152 along with other definitions pertinent to 
dual-eligibility calculations for assigning hospitals into peer groups.
    In this proposed rule, we are proposing to update our previously 
finalized definition of ``dual-eligible'' to specify that, for the 
payment adjustment factors beginning with the FY 2021 program year, 
``dual-eligible'' is a patient beneficiary who has been identified as 
having full benefit status in both the Medicare and Medicaid programs 
in data sourced from the State MMA files for the month the beneficiary 
was discharged from the hospital, except for those patient 
beneficiaries

[[Page 19425]]

who die in the month of discharge, who will be identified using the 
previous month's data sourced from the State MMA files.\397\
---------------------------------------------------------------------------

    \397\ In addition, it has come to our attention that the 
determination of dual eligibility is made from data sourced from the 
State MMA files, not the original State MMA files. The program also 
considers this to be a nonsubstantive change as the data are 
obtained from the specified source.
---------------------------------------------------------------------------

    The updated definition is necessary to account for 
misidentification of the dual-eligible status of patient beneficiaries 
who die in the month of discharge, which can occur under the current 
definition. We were not aware at the time we finalized our current 
definition of ``dual-eligible'' that there are times when the data 
sourced from the State MMA files may underreport the number of 
beneficiaries with dual-eligibility status for the month in which the 
beneficiaries dies, and, therefore, these data are not fully accurate 
reflections of dual-eligible status for the month in which a 
beneficiary dies. We have identified two situations that lead to the 
underreporting of dual-eligible patients: (1) The dual-eligible status 
is not recorded in the month of death; and (2) the dual-eligible status 
changes from dual in the months prior to death to non-dual in the month 
of death. While the number of misidentified patient beneficiaries is 
very small and did not have a substantive impact, we believe that using 
the most accurate information available is the most appropriate policy 
for the program and consistent with our initial rationale for using the 
State MMA files as the source to identify dual-eligibles. When we 
adopted the current definition of ``dual-eligible'' in the FY 2018 
IPPS/LTCH PPS final rule (82 FR 38226), we stated, and many commenters 
agreed, that the State MMA file is considered the most current and most 
accurate source of data for identifying dual-eligible beneficiaries 
because the data are also used for operational purposes related to the 
administration of Medicare Part D benefits.
    Our intent was and remains to use the most accurate data available 
to determine ``dual-eligible'' status in the hospital grouping portion 
of the payment adjustment. Through our analysis, we believe using a 1-
month lookback period within the data sourced from the State MMA files 
to determine dual-eligible status for beneficiaries who die in the 
month of discharge will improve the accuracy of the number of 
beneficiaries identified as having dual-eligible status. We note that 
we are proposing to update this definition for FY 2021 instead of FY 
2020 because of the time associated with updates to the data systems is 
inconsistent with our ability to finalize this proposal in time for FY 
2020 and the lack of a subregulatory policy, which would allow us to 
make nonsubstantive changes outside of the rulemaking schedule.
    We are proposing to revise the definition of ``dual-eligible'' 
codified at 42 CFR 412.152 to incorporate this update.
6. Proposed Adoption of a Subregulatory Process for Changes to Payment 
Adjustment Factor Components
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41434), we 
reiterated our policy regarding the maintenance of technical 
specifications for quality measures. In adopting our policy for the 
maintenance of technical specifications in the FY 2015 IPPS/LTCH PPS 
final rule (79 FR 50039), we stated that it is important to have in 
place a subregulatory process to incorporate nonsubstantive updates 
required by the National Quality Forum into the measure specifications 
we have adopted for the Hospital Readmissions Reduction Program, so 
that these measures remain up to date. We also stated that we would 
continue to use notice-and-comment rulemaking for any substantive 
changes to measure specification. We continue to believe this process 
is the most expeditious manner possible to ensure that quality measures 
remain fully up to date while preserving the public's ability to 
comment on updates that so fundamentally change a measure that it is no 
longer the same measure that we originally adopted. When we adopted 
this policy, we received commenter support for our policy of handling 
substantive and nonsubstantive changes to measures. The policy allows 
CMS two mechanisms to address measure updates: (1) The use of future 
proposed rules and public comment periods for substantive changes; and 
(2) subregulatory processes for nonsubstantive changes which also 
preserve CMS' autonomy and flexibility, in order to rapidly implement 
nonsubstantive updates to measures (79 FR 50039).
    We now believe it is important for the Hospital Readmissions 
Reduction Program to adopt an analogous subregulatory process for 
changes to the payment adjustment factor components to provide similar 
flexibility to rapidly implement nonsubstantive updates to implement 
data sourcing and other minor changes when payment adjustment factor 
components are impacted. We are proposing to adopt a policy under which 
we would use a subregulatory process to make nonsubstantive changes to 
the payment adjustment factor components used for the Hospital 
Readmissions Reduction Program. We previously adopted our payment 
adjustment factor components policies through the notice-and-comment 
rulemaking process. The Hospital Readmissions Reduction Program relies 
on these payment adjustment factor components, including, but not 
limited to, dual proportion, peer group assignment, peer group median 
ERR, neutrality modifier, and ratio of DRG payments to total payments, 
to determine hospital payments in each fiscal year. Each year, we 
provide details on most of that information in the Hospital Specific 
Report (HSR) User Guide located on QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772412669. However, there are times when data sourcing and other technical 
aspects of the payment adjustment factor components change and require 
updating, even when those changes do not alter the intent of our 
previously finalized policies. Because the updates to data sourcing and 
technical aspects of the components are not always linked to the timing 
of regulatory actions, we believe this proposed policy is prudent to 
allow for the use of the most up-to-date, accurate information. We 
reiterate that we would continue to consider all changes to the 
framework of the components themselves as substantive changes that we 
would propose through the notice-and-comment rulemaking process.
    Most recently, as discussed earlier, we identified an issue with 
data accuracy for determining dual-eligible status from data sourced 
from the State MMA files for beneficiaries who die in the same month as 
discharge. In this proposed rule, we are proposing to amend the 
definition of ``dual-eligible'' to account for this data issue. 
However, we would like to clarify that the proposal is not altering the 
intent of our previously finalized policy. Instead, the proposed 
updated definition of ``dual-eligible'' allows for the use of the month 
preceding discharge for identifying dual-eligibles who died during the 
discharge month after learning that the current files misidentified the 
dual-eligibility status of certain patient beneficiaries who die in the 
month of discharge. Although we have identified this issue, and do not 
believe that it is a substantive change to our policy for determining 
dual-eligibles, we believe

[[Page 19426]]

that we should utilize the notice-and-comment rulemaking process to 
address this clarification because we do not currently have a 
subregulatory policy in place to address this type of data issue. 
However, we believe that a subregulatory process for addressing 
nonsubstantive data issues like the dual-eligible update could be used 
for similar situations in the future. We would publish these 
nonsubstantive data changes in the HSR User Guide annually. We note 
that we would continue to use notice-and-comment rulemaking for 
substantive changes.
    With respect to what constitutes substantive changes versus 
nonsubstantive changes, we expect to make this determination on a case-
by-case basis. In other quality reporting and quality payment programs 
(77 FR 53504), we stated that substantive changes are those that are so 
significant that the measures could no longer be considered the same 
measure. For this proposed policy, we would utilize the same principle; 
we would deem a change to be substantive and to require notice-and-
comment rulemaking when the impact of the change to the payment 
adjustment factor component was so significant that it could no longer 
be considered to be the same as the previously finalized component. 
Examples of nonsubstantive changes would include, but not be limited 
to, updated naming or locations of data files and/or other minor 
discrepancies that do not change the intent of the policy. Examples of 
substantive changes to data might include use of different 
methodologies to use data than finalized for the payment adjustment 
factor component or the use of a different component in the methodology 
for payment calculations.
7. Proposed Applicable Period for FY 2022
    We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51671) and the FY 2013 IPPS/LTCH PPS final rule (77 FR 53675) for 
discussion of our previously finalized policy for defining applicable 
periods. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41434 through 
41435), we finalized the following ``applicable periods'' to calculate 
the readmission payment adjustment factor for FY 2019, FY 2020, and FY 
2021, respectively:
     The 3-year time period of July 1, 2014 through June 30, 
2017 for FY 2019;
     The 3-year time period of July 1, 2015 through June 30, 
2018 for FY 2020; and
     The 3-year time period of July 1, 2016 through June 30, 
2019 for FY 2021.
    These are the 3-year periods from which data are being collected in 
order to calculate ERRs and payment adjustment factors for the fiscal 
year; this 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 Hospital Readmissions Reduction Program.
    We are proposing, for FY 2022, consistent with the definition 
specified at Sec.  412.152, that the ``applicable period'' for the 
Hospital Readmissions Reduction Program would be the 3-year period from 
July 1, 2017 through June 30, 2020. The applicable period for dual-
eligibles for FY 2022 would similarly be the 3-year period from July 1, 
2017 through June 30, 2020.
8. Identification of Aggregate Payments for Each Condition/Procedure 
and All Discharges for FY 2020
    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 
Federal fiscal year within the applicable period, as our data source.
    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 2020 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 identify Medicare fee-for-service (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 (Medicare Advantage) are not 
included in this calculation). This policy is consistent with the 
methodology to calculate ERRs based solely on admissions and 
readmissions for Medicare FFS patients. Therefore, consistent with our 
established methodology, for FY 2020, we are proposing to continue to 
exclude admissions for patients enrolled in Medicare Advantage, as 
identified in the Medicare Enrollment Database.
    In this proposed rule, for FY 2020, we are proposing 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, 2015, and not later than June 30, 2018. 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 note that, for the purpose of 
modeling the proposed FY 2020 readmissions payment adjustment factors 
for this proposed rule, we are using the proportion of dual-eligibles, 
excess readmission ratios, and aggregate payments for each condition/
procedure and all discharges for applicable hospitals from the FY 2019 
Hospital Readmissions Reduction Program applicable period. For the FY 
2020 program year, applicable hospitals will have the opportunity to 
review and correct calculations based on the proposed FY 2020 
applicable period of July 1, 2015 to June 30, 2018, 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 this proposed rule, for FY 2020, we are proposing to use MedPAR 
data from July 1, 2015 through June 30, 2018 for the FY 2020 Hospital 
Readmissions Reduction Program calculations. Specifically--
     The March 2016 update of the FY 2015 MedPAR file to 
identify claims within FY 2015 with discharges dates that are on or 
after July 1, 2015;
     The March 2017 update of the FY 2016 MedPAR file to 
identify claims within FY 2016;
     The March 2018 update of the FY 2017 MedPAR file to 
identify claims within FY 2017; and
     The March 2019 update of the FY 2018 MedPAR file to 
identify claims

[[Page 19427]]

within FY 2018 with discharge dates that are on or before June 30, 
2018.
9. Calculation of Payment Adjustment Factors for FY 2020
    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 or 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 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:
[GRAPHIC] [TIFF OMITTED] TP03MY19.021

where dx is AMI, HF, pneumonia, COPD, THA/TKA or CABG and payments 
refers to the base operating DRG payments. The payment reduction (1-P) 
resulting from use of the median ERR for the peer group is scaled by a 
neutrality modifier to achieve budget neutrality. We refer readers to 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226 through 38237) for a 
detailed discussion of the payment adjustment methodology. We are not 
proposing any changes to this payment adjustment calculation 
methodology for FY 2020.
10. Calculation of Payment Adjustment for FY 2020
    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 Sec.  
412.154(c)(1) of the regulations and the floor adjustment factor is 
codified at Sec.  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 Sec.  412.154(c)(2), for FY 2020, 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 2020, 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).
    For additional information on the FY 2020 payment calculation, we 
refer readers to the QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename= QnetPublic%2FPage%2FQnetTier3&cid= 
1228776124112.
11. Confidential Reporting of Stratified Data for Hospital Quality 
Measures
    Beginning as early as the spring of 2020, CMS plans to include in 
confidential hospital-specific reports (HSR) data stratified by patient 
dual eligible status for the six readmissions measures included in the 
Hospital Readmissions Reduction Program. These data will include two 
disparity methodologies designed to illuminate potential disparities 
within individual hospitals and across hospitals nationally and will 
supplement the measure data currently publicly reported on the Hospital 
Compare website. The first methodology, the Within-Hospital Disparity 
Method highlights differences in outcomes for dual eligible versus non-
dual eligible patients within an individual hospital, while the second 
methodology, the Dual Eligible Outcome Method, allows for a comparison 
of performance in care for dual-eligible patients across hospitals (82 
FR 38405 through 38407; 83 FR 41598). These two disparity methods are 
separate from the stratified methodology used by the Hospital 
Readmissions Reduction Program, and we emphasize that the two disparity 
methods would not be used in payment adjustment factors calculations 
under the Hospital Readmissions Reduction Program. We believe that 
providing the results of both disparity methods alongside a hospital's 
measure data as a point of reference allows for a more meaningful 
comparison and comprehensive assessment of the quality of care for 
patients with social risk factors and the identification of providers 
where disparities in health care may exist. We also believe the two 
disparity methods provide additional perspectives on health care equity 
(83 FR 41598).
    We believe hospitals can use their results from the disparity 
methods to identify and develop strategies to reduce disparities in the 
quality of care for patients through targeted improvement efforts (83 
FR 41598). The two disparity methods and the stratified methodology 
used by the Hospital Readmissions Reduction Program are part of CMS' 
broader effort to account for social risk factors in quality 
measurement and quality payment programs. We refer readers to section 
VIII.A.9. of the preamble of this proposed rule for more information on 
confidential reporting of stratified data for hospital quality 
measures. We further refer readers to the FY 2017 IPPS/LTCH PPS final 
rule (81 FR 57167 through 57168), the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38324 through 38326; 82 FR 38403 through 38409), and the FY 2019 
IPPS/LTCH PPS final rule (83 FR 41597 through 41601) for detailed 
discussions on disparity reporting.

[[Page 19428]]

    We note that the two disparity methods do not place any additional 
collection or reporting burden on hospitals because dual-eligibility 
data are readily available in claims data. In addition, we reiterate 
that these confidential hospital-specific reports data do not impact 
the calculation of hospital payment adjustment factors under the 
Hospital Readmissions Reduction Program.
12. Proposed Revisions of Regulatory Text
    We are proposing to revise 42 CFR 412.152 to reflect proposed 
policies and to codify previously finalized policies. Specifically, we 
are proposing to revise the definition of ``aggregate payments for 
excess readmissions'', as discussed earlier, to specify that it means 
the sum of the product for each applicable condition, among others, of 
``the excess readmission ratio for the hospital for the applicable 
period minus the peer group median excess readmission ratio'' (instead 
of minus 1) (proposed paragraph (3) of the definition) and to include 
the neutrality modifier--a multiplicative factor that equates total 
Medicare savings under the current stratified methodology to the 
previous non-stratified methodology (proposed paragraph (4) of the 
definition).
    We are proposing to revise the definition of ``applicable 
condition'' to include other conditions and procedures as determined 
appropriate by the Secretary. In expanding the applicable conditions, 
the Secretary will seek endorsement of the entity with a contract under 
section 1890(a) of the Act, but may apply such measures without such an 
endorsement in the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the entity with a contract under section 
1890(a) of the Act as long as due consideration is given to measures 
that have been endorsed or adopted by a consensus organization 
identified by the Secretary.
    We are proposing to revise the definition of ``base operating DRG 
payment amount'', with respect to a sole community hospital that 
receives payments under Sec.  412.92(d) or a Medicare-dependent, small 
rural hospital that receives payments under Sec.  412.108(c), to remove 
the applicability date of FY 2013, and to specify that this amount also 
includes the difference between the hospital-specific payment rate and 
the Federal payment rate determined under the subpart. This proposal is 
intended to align the regulatory text with section 1886(q)(2)(b)(i) of 
the Act, because the regulatory text was not updated following the 
expiration of the FY 2013 changes.
    We are proposing to revise the definition of ``dual-eligible'' to 
specify that, for payment adjustment factors beginning in FY 2021, 
dual-eligible is a patient beneficiary who has been identified as 
having full benefit status in both the Medicare and Medicaid programs 
in data sourced from the State MMA files for the month the beneficiary 
was discharged from the hospital except for those patient beneficiaries 
who die in the month of discharge, which will be identified using the 
previous month's data as sourced from the State MMA files, as discussed 
earlier.
    We are proposing to revise Sec.  412.154(e) to specify that the 
limitations on administrative or judicial review would include the 
neutrality modifier and the proportion of dual-eligibles as discussed 
earlier (proposed new paragraphs (e)(4) and (5); existing paragraph 
(e)(4) would be redesignated as paragraph (e)(6)).

H. Hospital Value-Based Purchasing (VBP) Program: Proposed Policy 
Changes

1. Background
a. Statutory Background and Overview of Past Program Years
    Section 1886(o) of the 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); 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38240 through 38269); and 
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41440 through 41472).
    We also have codified certain requirements for the Hospital VBP 
Program at 42 CFR 412.160 through 412.167.
b. FY 2020 Program Year Payment Details
    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)(v) of the Act, the applicable percent 
for the FY 2020 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 2020 is approximately $1.9 billion, based on 
the December 2018 update of the FY 2018 MedPAR file. We intend to 
update this estimate for the FY 2020 IPPS/LTCH PPS final rule using the 
March 2019 update of the FY 2018 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 2020, on a per-claim 
basis. We are publishing proxy value-based incentive payment adjustment 
factors in Table 16 associated with this proposed rule (which is 
available via the internet on the CMS website). The proxy factors are 
based on the TPSs from the FY 2019 program year. These FY 2019 
performance scores are the most recently available performance scores 
hospitals have been given the opportunity to review and correct. The 
slope of the linear exchange function used to calculate the proxy 
value-based incentive payment adjustment factors in

[[Page 19429]]

Table 16 is 2.8391388973. This slope, along with the estimated amount 
available for value-based incentive payments, is also published in 
Table 16.
    We intend to update this table as Table 16A in the final rule 
(which will be available on the CMS website) to reflect changes based 
on the March 2019 update to the FY 2018 MedPAR file. We also intend to 
update the slope of the linear exchange function used to calculate 
those updated proxy value-based incentive payment adjustment factors. 
The updated proxy value-based incentive payment adjustment factors for 
FY 2020 will continue to be based on historic FY 2019 program year TPSs 
because hospitals will not have been given the opportunity to review 
and correct their actual TPSs for the FY 2020 program year until after 
the FY 2020 IPPS/LTCH PPS final rule is published.
    After hospitals have been given an opportunity to review and 
correct their actual TPSs for FY 2020, 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 2020 program 
year. We expect Table 16B will be posted on the CMS website in the fall 
of 2019.
2. Retention and Removal of Quality Measures
a. Retention of Previously Adopted Hospital VBP Program Measures and 
Relationship Between the Hospital IQR and Hospital VBP Program Measure 
Sets
    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 final rule (83 FR 41440 through 41441), we 
finalized a revision to 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 Hospital Compare for at least one year 
prior to its inclusion in a Hospital VBP Program performance period), 
the Hospital VBP Program statute does not require that the measure 
continue to remain in the Hospital IQR Program. We are not proposing 
any changes to these policies in this proposed rule.
b. Measure Removal Factors for the Hospital VBP Program
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41441 through 
41446), in alignment with the Hospital IQR Program, we finalized the 
following measure removal factors for the Hospital VBP Program:
     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; \398\
---------------------------------------------------------------------------

    \398\ We previously adopted the two criteria for determining the 
``topped-out'' status of Hospital VBP Program measures in the FY 
2015 IPPS/LTCH PPS final rule (79 FR 50055).
---------------------------------------------------------------------------

     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;
     Factor 7. It is not feasible to implement the measure 
specifications; and
     Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.
    We noted that these removal factors will 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. In addition, 
to further align with policies adopted in the Hospital IQR Program (74 
FR 43864), in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41446), we 
finalized a policy that if we believe continued use of a measure 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 and then confirm the removal of 
the measure from the Hospital VBP Program measure set in rulemaking. We 
are not proposing any changes to these policies in this proposed rule.
c. Summary of Previously Adopted Measures for the FY 2022 and FY 2023 
Program Years
    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41454 through 41456) and below for tables showing summaries of 
previously adopted measures for the FY 2022 and FY 2023 program years. 
We note that we are not proposing to add new measures to or remove 
measures from the Hospital VBP Program in this proposed rule.

   Summary of Previously Adopted Measures for the FY 2022 Program Year
------------------------------------------------------------------------
       Measure short name          Domain/measure name        NQF No.
------------------------------------------------------------------------
                 Person and Community Engagement Domain
------------------------------------------------------------------------
HCAHPS.........................  Hospital Consumer           0166 (0228)
                                  Assessment of
                                  Healthcare Providers
                                  and Systems (HCAHPS)
                                  (including Care
                                  Transition Measure).
------------------------------------------------------------------------
                              Safety Domain
------------------------------------------------------------------------
CAUTI..........................  National Healthcare                0138
                                  Safety Network (NHSN)
                                  Catheter-Associated
                                  Urinary Tract
                                  Infection (CAUTI)
                                  Outcome Measure.
CLABSI.........................  National Healthcare                0139
                                  Safety Network (NHSN)
                                  Central Line-
                                  Associated Bloodstream
                                  Infection (CLABSI)
                                  Outcome Measure.

[[Page 19430]]

 
Colon and Abdominal              American College of                0753
 Hysterectomy SSI.                Surgeons--Centers for
                                  Disease Control and
                                  Prevention Harmonized
                                  Procedure Specific
                                  Surgical Site
                                  Infection (SSI)
                                  Outcome Measure.
MRSA Bacteremia................  National Healthcare                1716
                                  Safety Network (NHSN)
                                  Facility-wide
                                  Inpatient Hospital-
                                  onset Methicillin-
                                  resistant
                                  Staphylococcus aureus
                                  (MRSA) Bacteremia
                                  Outcome Measure.
CDI............................  National Healthcare                1717
                                  Safety Network (NHSN)
                                  Facility-wide
                                  Inpatient Hospital-
                                  onset Clostridium
                                  difficile Infection
                                  (CDI) Outcome Measure.
------------------------------------------------------------------------
                        Clinical Outcomes Domain
------------------------------------------------------------------------
MORT-30-AMI....................  Hospital 30-Day, All-              0230
                                  Cause, Risk-
                                  Standardized Mortality
                                  Rate Following Acute
                                  Myocardial Infarction
                                  (AMI) Hospitalization.
MORT-30-HF.....................  Hospital 30-Day, All-              0229
                                  Cause, Risk-
                                  Standardized Mortality
                                  Rate Following Heart
                                  Failure (HF)
                                  Hospitalization.
MORT-30-PN (updated cohort)....  Hospital 30-Day, All-              0468
                                  Cause, Risk-
                                  Standardized Mortality
                                  Rate Following
                                  Pneumonia
                                  Hospitalization.
MORT-30-COPD...................  Hospital 30-Day, All-              1893
                                  Cause, Risk-
                                  Standardized Mortality
                                  Rate Following Chronic
                                  Obstructive Pulmonary
                                  Disease (COPD)
                                  Hospitalization.
MORT-30-CABG...................  Hospital 30-Day, All-              2558
                                  Cause, Risk-
                                  Standardized Mortality
                                  Rate Following
                                  Coronary Artery Bypass
                                  Graft (CABG) Surgery.
COMP-HIP-KNEE *................  Hospital-Level Risk-               1550
                                  Standardized
                                  Complication Rate
                                  Following Elective
                                  Primary Total Hip
                                  Arthroplasty (THA) and/
                                  or Total Knee
                                  Arthroplasty (TKA).
------------------------------------------------------------------------
                  Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB...........................  Medicare Spending Per              2158
                                  Beneficiary (MSPB)--
                                  Hospital.
------------------------------------------------------------------------
* We note that we are updating the short name of the Hospital-Level Risk-
  Standardized Complication Rate Following Elective Primary Total Hip
  Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) measure (NQF
  #1550) from THA/TKA to COMP-HIP-KNEE in order to maintain consistency
  with the updated Measure ID and short name used in tables on the
  Hospital Compare website and hospital reports for the Hospital VBP
  Program. This updated name is used throughout section IV.H. of the
  preamble of this proposed rule.


                       Summary of Previously Adopted Measures for the FY 2023 Program Year
----------------------------------------------------------------------------------------------------------------
                    Measure short name                               Domain/measure name              NQF No.
----------------------------------------------------------------------------------------------------------------
                                     Person and Community Engagement Domain
----------------------------------------------------------------------------------------------------------------
HCAHPS....................................................  Hospital Consumer Assessment of          0166 (0228)
                                                             Healthcare Providers and Systems
                                                             (HCAHPS) (including Care Transition
                                                             Measure).
----------------------------------------------------------------------------------------------------------------
                                                  Safety Domain
----------------------------------------------------------------------------------------------------------------
CAUTI.....................................................  National Healthcare Safety Network              0138
                                                             (NHSN) Catheter-Associated Urinary
                                                             Tract Infection (CAUTI) Outcome
                                                             Measure.
CLABSI....................................................  National Healthcare Safety Network              0139
                                                             (NHSN) Central Line-Associated
                                                             Bloodstream Infection (CLABSI)
                                                             Outcome Measure.
Colon and Abdominal Hysterectomy SSI......................  American College of Surgeons--                  0753
                                                             Centers for Disease Control and
                                                             Prevention Harmonized Procedure
                                                             Specific Surgical Site Infection
                                                             (SSI) Outcome Measure.
MRSA Bacteremia...........................................  National Healthcare Safety Network              1716
                                                             (NHSN) Facility-wide Inpatient
                                                             Hospital-onset Methicillin-
                                                             resistant Staphylococcus aureus
                                                             (MRSA) Bacteremia Outcome Measure.
CDI.......................................................  National Healthcare Safety Network              1717
                                                             (NHSN) Facility-wide Inpatient
                                                             Hospital-onset Clostridium
                                                             difficile Infection (CDI) Outcome
                                                             Measure.
CMS PSI 90 *..............................................  CMS Patient Safety and Adverse                  0531
                                                             Events Composite *.
----------------------------------------------------------------------------------------------------------------
                                            Clinical Outcomes Domain
----------------------------------------------------------------------------------------------------------------
MORT-30-AMI...............................................  Hospital 30-Day, All-Cause, Risk-               0230
                                                             Standardized Mortality Rate
                                                             Following Acute Myocardial
                                                             Infarction (AMI) Hospitalization.
MORT-30-HF................................................  Hospital 30-Day, All-Cause, Risk-               0229
                                                             Standardized Mortality Rate
                                                             Following Heart Failure (HF)
                                                             Hospitalization.
MORT-30-PN (updated cohort)...............................  Hospital 30-Day, All-Cause, Risk-               0468
                                                             Standardized Mortality Rate
                                                             Following Pneumonia Hospitalization.
MORT-30-COPD..............................................  Hospital 30-Day, All-Cause, Risk-               1893
                                                             Standardized Mortality Rate
                                                             Following Chronic Obstructive
                                                             Pulmonary Disease (COPD)
                                                             Hospitalization.
MORT-30-CABG..............................................  Hospital 30-Day, All-Cause, Risk-               2558
                                                             Standardized Mortality Rate
                                                             Following Coronary Artery Bypass
                                                             Graft (CABG) Surgery.
COMP-HIP-KNEE.............................................  Hospital-Level Risk-Standardized                1550
                                                             Complication Rate Following
                                                             Elective Primary Total Hip
                                                             Arthroplasty (THA) and/or Total
                                                             Knee Arthroplasty (TKA).
----------------------------------------------------------------------------------------------------------------

[[Page 19431]]

 
                                      Efficiency and Cost Reduction Domain
----------------------------------------------------------------------------------------------------------------
MSPB......................................................  Medicare Spending Per Beneficiary               2158
                                                             (MSPB)--Hospital.
----------------------------------------------------------------------------------------------------------------
* We note that we have updated the name of the Patient Safety and Adverse Events Composite (PSI 90) to the CMS
  Patient Safety and Adverse Events Composite (CMS PSI 90) when it is used in CMS programs due to transition of
  the measure from AHRQ to CMS.

3. Previously Adopted Baseline and Performance Periods
a. Background
    Section 1886(o)(4) of the Act requires the Secretary to establish a 
performance period for the Hospital VBP Program that begins and ends 
prior to the beginning of such fiscal year. We refer readers to the FY 
2017 IPPS/LTCH PPS final rule (81 FR 56998 through 57003) for baseline 
and performance periods that we have adopted for the FY 2019, FY 2020, 
FY 2021, and FY 2022 program years. In the same final rule, we 
finalized a schedule for all future baseline and performance periods 
for previously adopted measures. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38256 through 38261) and the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41466 through 41469) for additional baseline 
and performance periods that we have adopted for the FY 2022, FY 2023, 
and subsequent program years.
b. Person and Community Engagement Domain
    Since the FY 2015 program year, we have adopted a 12-month baseline 
period and a 12-month performance period for measures in the Person and 
Community Engagement domain (previously referred to as the Patient- and 
Caregiver-Centered Experience of Care/Care Coordination domain) (77 FR 
53598; 78 FR 50692; 79 FR 50072; 80 FR 49561). In the FY 2017 IPPS/LTCH 
PPS final rule (81 FR 56998), we finalized our proposal to adopt a 12-
month performance period for the Person and Community Engagement domain 
that runs on the calendar year 2 years prior to the applicable program 
year and a 12-month baseline period that runs on the calendar year 4 
years prior to the applicable program year, for the FY 2019 program 
year and subsequent years.
    We are not proposing any changes to these policies in this proposed 
rule.
c. Clinical Outcomes Domain
    For the FY 2020 and FY 2021 program years, we adopted a 36-month 
baseline period and a 36-month performance period for measures in the 
Clinical Outcomes domain (previously referred to as the Clinical Care 
domain) (79 FR 50073; 80 FR 49563 through 49564). In the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57001), we also adopted a 22-month 
performance period and a 36-month baseline period specifically for the 
MORT-30-PN (updated cohort) measure for the FY 2021 program year.
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57000), we adopted a 
36-month performance period and a 36-month baseline period for the FY 
2022 program year for each of the previously finalized measures in the 
Clinical Outcomes domain--that is, the MORT-30-AMI, MORT-30-HF, MORT-
30-COPD, COMP-HIP-KNEE, and MORT-30-CABG measures. In the same final 
rule, we adopted a 34-month performance period and a 36-month baseline 
period for the MORT-30-PN (updated cohort) measure for the FY 2022 
program year.
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38259), we adopted a 
36-month performance period and a 36-month baseline period for the 
MORT-30-AMI, MORT-30-HF, MORT-30-COPD, MORT-30-CABG, MORT-30-PN 
(updated cohort), and COMP-HIP-KNEE measures for the FY 2023 program 
year and subsequent years. Specifically, for the mortality measures 
(MORT-30-AMI, MORT-30-HF, MORT-30-COPD, MORT-30-CABG, and MORT-30-PN 
(updated cohort)), the performance period runs for 36 months from July 
1, five years prior to the applicable fiscal program year, to June 30, 
two years prior to the applicable fiscal program year, and the baseline 
period runs for 36 months from July 1, ten years prior to the 
applicable fiscal program year, to June 30, seven years prior to the 
applicable fiscal program year. For the COMP-HIP-KNEE measure, the 
performance period runs for 36 months from April 1, five years prior to 
the applicable fiscal program year, to March 31, two years prior to the 
applicable fiscal program year, and the baseline period runs for 36 
months from April 1, ten years prior to the applicable fiscal program 
year, to March 31, seven years prior to the applicable fiscal program 
year.
    We are not proposing any changes to the length of these performance 
or baseline periods in this proposed rule.
d. Safety Domain
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57000), we finalized 
our proposal to adopt a performance period for all measures in the 
Safety domain--with the exception of the CMS Patient Safety and Adverse 
Events Composite (CMS PSI 90) measure--that runs on the calendar year 2 
years prior to the applicable program year and a baseline period that 
runs on the calendar year 4 years prior to the applicable program year 
for the FY 2019 program year and subsequent program years.
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38258), for the FY 
2023 program year, we adopted a 21-month baseline period (October 1, 
2015 to June 30, 2017) and a 24-month performance period (July 1, 2019 
to June 30, 2021) for the CMS PSI 90 measure. In the FY 2018 IPPS/LTCH 
PPS final rule (82 FR 38258 through 38259), we adopted a 24-month 
performance period and a 24-month baseline period for the CMS PSI 90 
measure for the FY 2024 program year and subsequent years. 
Specifically, the performance period runs from July 1, four years prior 
to the applicable fiscal program year, to June 30, two years prior to 
the applicable fiscal program year, and the baseline period runs from 
July 1, eight years prior to the applicable fiscal program year, to 
June 30, six years prior to the applicable fiscal program year.
    We are not proposing any changes to these policies in this proposed 
rule.
e. Efficiency and Cost Reduction Domain
    Since the FY 2016 program year, we have adopted a 12-month baseline 
period and a 12-month performance period for the MSPB measure in the 
Efficiency and Cost Reduction domain (78 FR 50692; 79 FR 50072; 80 FR 
49562). In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56998), we 
finalized our proposal to adopt a 12-month performance period for the 
MSPB measure that runs on the calendar year 2 years prior to the 
applicable program year and a 12-month baseline period

[[Page 19432]]

that runs on the calendar year 4 years prior to the applicable program 
year for the FY 2019 program year and subsequent years.
    We are not proposing any changes to these policies in this proposed 
rule.
f. Summary of Previously Adopted Baseline and Performance Periods for 
the FY 2022 Through FY 2025 Program Years
    The tables below summarize the baseline and performance periods 
that we have previously adopted.

[[Page 19433]]

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[[Page 19434]]


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[[Page 19435]]


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4. Performance Standards for the Hospital VBP Program
a. Background
    Section 1886(o)(3)(A) of the Act requires the Secretary to 
establish performance standards for the measures selected under the 
Hospital VBP Program for a performance period for the applicable fiscal 
year. The performance standards must include levels of achievement and 
improvement, as required by section 1886(o)(3)(B) of the Act, and must 
be established no later than 60 days before the beginning of the 
performance period for the fiscal year involved, as required by section 
1886(o)(3)(C) of the Act. We refer readers to the Hospital Inpatient 
VBP Program final rule (76 FR 26511 through 26513) for further 
discussion of achievement and improvement standards under the Hospital 
VBP Program.
    In addition, when establishing the performance standards, section 
1886(o)(3)(D) of the Act requires the Secretary to consider appropriate 
factors, such as: (1) Practical experience with the measures, including 
whether a significant proportion of hospitals failed to meet the 
performance standard during previous performance periods; (2) 
historical performance standards; (3) improvement rates; and (4) the 
opportunity for continued improvement.
    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 50077 through 50081, respectively) for a more detailed discussion 
of the general scoring methodology used in the Hospital VBP Program. We 
refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41469 
through 41470) for previously established performance standards for the 
FY 2021 program year.
    We note that the performance standards for the following measures 
are calculated with lower values representing better performance:
     CDC NHSN HAI measures (CLABSI, CAUTI, CDI, MRSA 
Bacteremia, and Colon and Abdominal Hysterectomy SSI);
     CMS PSI 90 measure;
     COMP-HIP-KNEE measure; and
     MSPB measure.
    This distinction is made in contrast to other measures--HCAHPS and 
the mortality measures, which use survival rates rather than mortality 
rates--for which higher values indicate better performance. As 
discussed further in the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50684), the performance standards for the Colon and Abdominal 
Hysterectomy SSI measure are computed separately for each procedure 
stratum, and we first award achievement and improvement points to each 
stratum separately, and then compute a weighted average of the points 
awarded to each stratum by predicted infections.
b. Previously Established and Estimated Performance Standards for the 
FY 2022 Program Year
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57009), we 
established performance standards for the FY 2022

[[Page 19436]]

program year for the Clinical Outcomes domain measures (MORT-30-AMI, 
MORT-30-HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30-CABG, 
and COMP-HIP-KNEE) and the Efficiency and Cost Reduction domain measure 
(MSPB). We note that the performance standards for the MSPB measure are 
based on performance period data. Therefore, we are unable to provide 
numerical equivalents for the standards at this time.
    In accordance with our methodology for calculating performance 
standards discussed more fully in the Hospital Inpatient VBP Program 
final rule (76 FR 26511 through 26513) and codified at 42 CFR 412.160, 
we are estimating additional performance standards for the FY 2022 
program year. We note that the numerical values for the performance 
standards for the Safety and Person and Community Engagement domains 
for the FY 2022 program year in the tables below are estimates based on 
the most recently available data, and we intend to update the numerical 
values in the FY 2020 IPPS/LTCH PPS final rule.
    The previously established and estimated performance standards for 
the measures in the FY 2022 program year are set out in the tables 
below.
[GRAPHIC] [TIFF OMITTED] TP03MY19.025


[[Page 19437]]


    The eight dimensions of the HCAHPS measure are calculated to 
generate the HCAHPS Base Score. For each of the eight dimensions, 
Achievement Points (0-10 points) and Improvement Points (0-9 points) 
are calculated, the larger of which is then summed across the eight 
dimensions to create the HCAHPS Base Score (0-80 points). Each of the 
eight dimensions is of equal weight; therefore, the HCAHPS Base Score 
ranges from 0 to 80 points. HCAHPS Consistency Points are then 
calculated, which range from 0 to 20 points. The Consistency Points 
take into consideration the scores of all eight Person and Community 
Engagement dimensions. The final element of the scoring formula is the 
summation of the HCAHPS Base Score and the HCAHPS Consistency Points, 
which results in the Person and Community Engagement Domain score that 
ranges from 0 to 100 points.

   Estimated Performance Standards for the FY 2022 Program Year: Person and Community Engagement Domain 
----------------------------------------------------------------------------------------------------------------
                                                                                    Achievement
                                                                       Floor         threshold       Benchmark
                     HCAHPS survey dimension                         (minimum)         (50th       (mean of top
                                                                                    percentile)       decile)
----------------------------------------------------------------------------------------------------------------
Communication with Nurses.......................................           10.93           79.06           87.42
Communication with Doctors......................................           13.98           79.69           87.97
Responsiveness of Hospital Staff................................           16.92           65.97           81.33
Communication about Medicines...................................            8.50           63.60           74.56
Hospital Cleanliness & Quietness................................            4.39           65.47           79.49
Discharge Information...........................................           65.62           87.17           91.96
Care Transition.................................................            5.11           51.88           63.18
Overall Rating of Hospital......................................           18.86           71.48           85.32
----------------------------------------------------------------------------------------------------------------
 The estimated performance standards displayed in this table were calculated using one quarter (Q4)
  CY 2017 data and three quarters (Q1, Q2, and Q3) CY 2018 data. We will update this table's performance
  standards using four quarters of CY 2018 data in the FY 2020 IPPS/LTCH PPS final rule.

c. Previously Established Performance Standards for Certain Measures 
for the FY 2023 Program Year
    We have adopted certain measures for the Safety domain, Clinical 
Outcomes domain, and Efficiency and Cost Reduction domain for future 
program years in order to ensure that we can adopt baseline and 
performance periods of sufficient length for performance scoring 
purposes. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38264 through 
38265), we established performance standards for the FY 2023 program 
year for the Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-
HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30-CABG, and COMP-
HIP-KNEE) and for the Efficiency and Cost Reduction domain measure 
(MSPB). In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41471 through 
41472), we established, for the FY 2023 program year, the performance 
standards for the Safety domain measure, CMS PSI 90. We note that the 
performance standards for the MSPB measure are based on performance 
period data. Therefore, we are unable to provide numerical equivalents 
for the standards at this time. The previously established performance 
standards for these measures are set out in the table below.

  Previously Established Performance Standards for the FY 2023 Program
                                  Year
------------------------------------------------------------------------
                                      Achievement
       Measure short name              threshold           Benchmark
------------------------------------------------------------------------
                              Safety Domain
------------------------------------------------------------------------
CMS PSI 90 *....................  0.972658..........  0.760882.
------------------------------------------------------------------------
                        Clinical Outcomes Domain
------------------------------------------------------------------------
MORT-30-AMI.....................  0.866548..........  0.885499.
MORT-30-HF......................  0.881939..........  0.906798.
MORT-30-PN (updated cohort).....  0.840138..........  0.871741.
MORT-30-COPD....................  0.919769..........  0.936349.
MORT-30-CABG....................  0.968747..........  0.979620.
COMP-HIP-KNEE *.................  0.027428..........  0.019779.
------------------------------------------------------------------------
                  Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB *..........................  Median Medicare     Mean of the lowest
                                   Spending per        decile Medicare
                                   Beneficiary ratio   Spending per
                                   across all          Beneficiary
                                   hospitals during    ratios across all
                                   the performance     hospitals during
                                   period.             the performance
                                                       period
------------------------------------------------------------------------
* Lower values represent better performance.


[[Page 19438]]

d. Previously Established and Newly Established Performance Standards 
for Certain Measures for the FY 2024 Program Year
    We have adopted certain measures for the Safety domain, Clinical 
Outcomes domain, and Efficiency and Cost Reduction domain for future 
program years in order to ensure that we can adopt baseline and 
performance periods of sufficient length for performance scoring 
purposes. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41472), we 
established performance standards for the FY 2024 program year for the 
Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-HF, MORT-30-PN 
(updated cohort), MORT-30-COPD, MORT-30-CABG, and COMP-HIP-KNEE) and 
the Efficiency and Cost Reduction domain measure (MSPB). We note that 
the performance standards for the MSPB measure are based on performance 
period data. Therefore, we are unable to provide numerical equivalents 
for the standards at this time.
    In accordance with our methodology for calculating performance 
standards discussed more fully in the Hospital Inpatient VBP Program 
final rule (76 FR 26511 through 26513) and codified at 42 CFR 412.160, 
we are establishing performance standards for the CMS PSI 90 measure 
for the FY 2024 program year. The previously established and newly 
established performance standards for these measures are set out in the 
table below.

 Previously Established and Newly Established Performance Standards for
                        the FY 2024 Program Year
------------------------------------------------------------------------
                                      Achievement
       Measure short name              threshold           Benchmark
------------------------------------------------------------------------
                              Safety Domain
------------------------------------------------------------------------
CMS PSI 90 *....................  0.968841..........  0.754176
------------------------------------------------------------------------
                        Clinical Outcomes Domain
------------------------------------------------------------------------
MORT-30-AMI #...................  0.869247..........  0.887868
MORT-30-HF #....................  0.882308..........  0.907733
MORT-30-PN (updated cohort) #...  0.840281..........  0.872976
MORT-30-COPD #..................  0.916491..........  0.934002
MORT-30-CABG #..................  0.969499..........  0.980319
COMP-HIP-KNEE *#................  0.025396..........  0.018159
------------------------------------------------------------------------
                  Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB *#.........................  Median Medicare     Mean of the lowest
                                   Spending per        decile Medicare
                                   Beneficiary ratio   Spending per
                                   across all          Beneficiary
                                   hospitals during    ratios across all
                                   the performance     hospitals during
                                   period.             the performance
                                                       period
------------------------------------------------------------------------
* Lower values represent better performance.
# Previously established performance standards.

e. Newly Established Performance Standards for Certain Measures for the 
FY 2025 Program Year
    As discussed above, we have adopted certain measures for the 
Clinical Outcomes domain (MORT-30-AMI, MORT-30-HF, MORT-30-PN (updated 
cohort), MORT-30-COPD, MORT-30-CABG, and COMP-HIP-KNEE) and the 
Efficiency and Cost Reduction domain (MSPB) for future program years in 
order to ensure that we can adopt baseline and performance periods of 
sufficient length for performance scoring purposes. In accordance with 
our methodology for calculating performance standards discussed more 
fully in the Hospital Inpatient VBP Program final rule (76 FR 26511 
through 26513), and our performance standards definitions codified at 
42 CFR 412.160, we are establishing the following performance standards 
for the FY 2025 program year for the Clinical Outcomes domain and the 
Efficiency and Cost Reduction domain. We note that the performance 
standards for the MSPB measure are based on performance period data. 
Therefore, we are unable to provide numerical equivalents for the 
standards at this time. The newly established performance standards for 
these measures are set out in the table below.

  Newly Established Performance Standards for the FY 2025 Program Year
------------------------------------------------------------------------
                                      Achievement
       Measure short name              threshold           Benchmark
------------------------------------------------------------------------
                        Clinical Outcomes Domain
------------------------------------------------------------------------
MORT-30-AMI.....................  0.872624..........  0.889994.
MORT-30-HF......................  0.883990..........  0.910344.
MORT-30-PN (updated cohort).....  0.841475..........  0.874425.
MORT-30-COPD....................  0.915127..........  0.932236.
MORT-30-CABG....................  0.970100..........  0.979775.
COMP-HIP-KNEE **................  0.025332..........  0.017946.
------------------------------------------------------------------------

[[Page 19439]]

 
                  Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB *#.........................  Median Medicare     Mean of the lowest
                                   Spending per        decile Medicare
                                   Beneficiary ratio   Spending per
                                   across all          Beneficiary
                                   hospitals during    ratios across all
                                   the performance     hospitals during
                                   period.             the performance
                                                       period.
------------------------------------------------------------------------
* Lower values represent better performance.

5. Scoring Methodology and Data Requirements
a. Domain Weighting for the FY 2022 Program Year and Subsequent Years 
for Hospitals That Receive a Score on All Domains
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38266), we finalized 
our proposal to retain the equal weight of 25 percent for each of the 
four domains in the Hospital VBP Program for the FY 2020 program year 
and subsequent years for hospitals that receive a score in all domains. 
In FY 2019 IPPS/LTCH PPS rulemaking (83 FR 20416 through 20420; 41459 
through 41464), we proposed, but did not adopt, any changes to the 
Hospital VBP Program domains and weighting. We are not proposing any 
changes to these domain weights in this proposed rule.
b. Domain Weighting for the FY 2022 Program Year and Subsequent Years 
for Hospitals Receiving Scores on Fewer Than Four Domains
    In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50084 through 
50085), for the FY 2017 program year and subsequent years, we adopted a 
policy that hospitals must receive domain scores on at least three of 
four quality domains in order to receive a TPS, and hospitals with 
sufficient data on only three domains will have their TPSs 
proportionately reweighted. We are not proposing any changes to these 
domain weights in this proposed rule.
c. Minimum Numbers of Measures for Hospital VBP Program Domains
    Based on our previously finalized policies (82 FR 38266), for a 
hospital to receive domain scores for the FY 2021 program year and 
subsequent years:
     A hospital must report a minimum number of 100 completed 
HCAHPS surveys for a hospital to receive a Person and Community 
Engagement domain score.
     A hospital must receive a minimum of two measure scores 
within the Clinical Outcomes domain to receive a Clinical Outcomes 
domain score.
     A hospital must receive a minimum of two measure scores 
within the Safety domain to receive a Safety domain score.
     A hospital must receive a minimum of one measure score 
within the Efficiency and Cost Reduction domain to receive an 
Efficiency and Cost Reduction domain score.
    We are not proposing any changes to these policies in this proposed 
rule.
d. Minimum Numbers of Cases for Hospital VBP Program Measures
(1) Background
    Section 1886(o)(1)(C)(ii)(IV) of the Act requires the Secretary to 
exclude for the fiscal year hospitals that do not report a minimum 
number (as determined by the Secretary) of cases for the measures that 
apply to the hospital for the performance period for the fiscal year. 
For additional discussion of the previously finalized minimum numbers 
of cases for measures under the Hospital VBP Program, we refer readers 
to the Hospital Inpatient VBP Program final rule (76 FR 26527 through 
26531); the CY 2012 OPPS/ASC final rule (76 FR 74532 through 74534); 
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53608 through 53610); the 
FY 2015 IPPS/LTCH PPS final rule (79 FR 50085 through 50086); the FY 
2016 IPPS/LTCH PPS final rule (80 FR 49570); the FY 2017 IPPS/LTCH PPS 
final rule (81 FR 57011); the FY 2018 IPPS/LTCH PPS final rule (82 FR 
38266 through 38267); and the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41465 through 41466). We are not proposing any changes to these 
policies in this proposed rule.
(2) Summary of Previously Adopted Minimum Numbers of Cases
    The previously adopted minimum numbers of cases for these measures 
are set forth in the table below.

   Previously Adopted Minimum Case Number Requirements for the FY 2022
                    Program Year and Subsequent Years
------------------------------------------------------------------------
        Measure short name                 Minimum number of cases
------------------------------------------------------------------------
                 Person and Community Engagement Domain
------------------------------------------------------------------------
HCAHPS............................  Hospitals must report a minimum
                                     number of 100 completed HCAHPS
                                     surveys.
------------------------------------------------------------------------
                        Clinical Outcomes Domain
------------------------------------------------------------------------
MORT-30-AMI.......................  Hospitals must report a minimum
                                     number of 25 cases.
MORT-30-HF........................  Hospitals must report a minimum
                                     number of 25 cases.
MORT-30-PN (updated cohort).......  Hospitals must report a minimum
                                     number of 25 cases.
MORT-30-COPD......................  Hospitals must report a minimum
                                     number of 25 cases.
MORT-30-CABG......................  Hospitals must report a minimum
                                     number of 25 cases.
COMP-HIP-KNEE.....................  Hospitals must report a minimum
                                     number of 25 cases.
------------------------------------------------------------------------
                              Safety Domain
------------------------------------------------------------------------
CAUTI.............................  Hospitals have a minimum of 1.000
                                     predicted infections as calculated
                                     by the CDC.
CLABSI............................  Hospitals have a minimum of 1.000
                                     predicted infections as calculated
                                     by the CDC.

[[Page 19440]]

 
Colon and Abdominal Hysterectomy    Hospitals have a minimum of 1.000
 SSI.                                predicted infections as calculated
                                     by the CDC.
MRSA Bacteremia...................  Hospitals have a minimum of 1.000
                                     predicted infections as calculated
                                     by the CDC.
CDI...............................  Hospitals have a minimum of 1.000
                                     predicted infections as calculated
                                     by the CDC.
CMS PSI 90........................  Hospitals must report a minimum of
                                     three eligible cases on any one
                                     underlying indicator.
------------------------------------------------------------------------
                  Efficiency and Cost Reduction Domain
------------------------------------------------------------------------
MSPB..............................  Hospitals must report a minimum
                                     number of 25 cases.
------------------------------------------------------------------------

e. Proposed Administrative Policies for NHSN Healthcare-Associated 
Infection (HAI) Measure Data
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41553), beginning 
with the CY 2020 reporting period, the Hospital IQR Program finalized 
removal of the five CDC NHSN HAI measures that are used in both the 
Hospital VBP and HAC Reduction Programs (CAUTI, CLABSI, Colon and 
Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI). Since these 
measures were adopted in the Hospital VBP Program, the Hospital VBP 
Program has used the same data to calculate the CDC NHSN HAI measures 
that is used by the Hospital IQR Program. In the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41475 through 41478), the HAC Reduction Program 
adopted data collection policies for the CDC NHSN HAI measures, 
beginning on January 1, 2020 with CY 2020 submissions, which will use 
the same process as the Hospital IQR Program for hospitals to report, 
review, and correct CDC NHSN HAI measure data. Furthermore, the HAC 
Reduction Program also adopted processes to validate the CDC NHSN HAI 
measures used in the HAC Reduction Program beginning with Q3 2020 
discharges (83 FR 41478 through 41483). These processes are intended to 
reflect, to the greatest extent possible, the processes previously 
established for the Hospital IQR Program in order to aid continued 
hospital reporting through clear and consistent requirements. In 
section IV.I.7. of the preamble of this proposed rule, the HAC 
Reduction Program is proposing additional refinements to its validation 
process for the CDC NHSN HAI measures in the HAC Reduction Program and 
providing clarifications regarding validation processes.
    To streamline and simplify processes across hospital programs, we 
are proposing that the Hospital VBP Program will use the same data to 
calculate the CDC NHSN HAI measures that the HAC Reduction Program uses 
for purposes of calculating the measures under that program, beginning 
on January 1, 2020 for CY 2020 data collection, which would apply to 
the Hospital VBP Program starting with data for the FY 2022 program 
year performance period. This proposed start date aligns with the 
effective date of the removal of the measures from the Hospital IQR 
Program and the date when data on those measures will begin to be 
reported for the HAC Reduction Program, allowing for a seamless 
transition. We note that the data used by the HAC Reduction Program 
will be the same data previously used by the Hospital IQR Program, and 
therefore, we do not anticipate any changes in the use of such data for 
the Hospital VBP Program.
    We also are proposing that the Hospital VBP Program will use the 
same processes adopted by the HAC Reduction Program for hospitals to 
review and correct data for the CDC NHSN HAI measures and will rely on 
HAC Reduction Program validation to ensure the accuracy of CDC NHSN HAI 
measure data used in the Hospital VBP Program. We note that the 
processes for hospitals to submit, review, and correct their data for 
these measures are the same processes previously used by the Hospital 
IQR Program. We believe that using the HAC Reduction Program review and 
correction process will satisfy the requirement in section 
1886(o)(10)(A)(ii) of the Act to allow hospitals to review and submit 
corrections for Hospital VBP Program information that will be made 
public with respect to each hospital. In addition, as noted earlier, 
the HAC Reduction Program's validation processes are intended to 
reflect, to the greatest extent possible, the processes previously 
established for the Hospital IQR Program. We refer readers to the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41478 through 41483) for a 
discussion of those processes in the HAC Reduction Program.\399\ We 
believe relying on the HAC Reduction Program's validation process would 
be sufficient for purposes of ensuring the accuracy of CDC NHSN HAI 
measure data under the Hospital VBP Program. We believe that these 
policies will ensure that the use of the same data for the Hospital VBP 
Program will result in accurate measure scores under the Hospital VBP 
Program.
---------------------------------------------------------------------------

    \399\ The FY 2019 IPPS/LTCH PPS final rule (83 FR 41478 through 
41483) includes additional information regarding provider selection, 
targeting criteria, calculation of the confidence, education review 
process, and application of validation penalty for the HAC Reduction 
Program's validation processes compared to the Hospital IQR 
Program's processes. We also refer readers to section IV.I.7. of the 
preamble of this proposed rule for proposed changes to the 
validation selection methodology and proposed clarifications to the 
validation filtering methodology for the HAC Reduction Program.
---------------------------------------------------------------------------

    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41475 through 41484) for additional details on the HAC Reduction 
Program's data collection, review and correction, validation, and data 
accuracy policies for the CDC NHSN HAI measures. We also refer readers 
to sections IV.I.6. and IV.I.7. of the preamble of this proposed rule 
for additional information about HAC Reduction Program data collection, 
review and correction, and proposed refinements to validation policies 
for the CDC NHSN HAI measures.

I. Hospital-Acquired Condition (HAC) Reduction Program

1. Background
    We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50707 through 50708) for a general overview of the HAC Reduction 
Program. For a detailed discussion of the statutory basis of the HAC 
Reduction Program, we refer readers to the FY 2014 IPPS/LTCH PPS final 
rule (78 FR 50708 through 50709). For a further description of our 
previously finalized policies for the HAC Reduction Program, we refer 
readers to the FY 2014 IPPS/LTCH PPS

[[Page 19441]]

final rule (78 FR 50707 through 50729), the FY 2015 IPPS/LTCH PPS final 
rule (79 FR 50087 through 50104), the FY 2016 IPPS/LTCH PPS final rule 
(80 FR 49570 through 49581), the FY 2017 IPPS/LTCH PPS final rule (81 
FR 57011 through 57026), the FY 2018 IPPS/LTCH PPS final rule (82 FR 
38269 through 38278), and the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41472 through 41492). These policies describe the general framework for 
implementation of the HAC Reduction Program, including: (1) The 
relevant definitions applicable to the program; (2) the payment 
adjustment under the program; (3) the measure selection process and 
conditions for the program, including a risk adjustment- and scoring 
methodology; (4) performance scoring; (5) data collection; (6) 
validation; (7) the process for making hospital-specific performance 
information available to the public, including the opportunity for a 
hospital to review the information and submit corrections; and (8) 
limitation of administrative and judicial review. We remind readers 
that data collection and validation (items (5) and (6)) policies were 
newly finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41472 
through 41492).
    We also have codified certain requirements of the HAC Reduction 
Program at 42 CFR 412.170 through 412.172. In section IV.I.12. of the 
preamble of this proposed rule, we are proposing to update 42 CFR 
412.172(f) to reflect policies finalized in the FY 2019 IPPS/LTCH PPS 
final rule.
2. Implementation of the HAC Reduction Program for FY 2020
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41472 through 
41492), we reviewed the HAC Reduction Program in the context of our 
Meaningful Measures Initiative. The HAC Reduction Program addresses the 
priority areas of making care safer by reducing harm caused in the 
delivery of care. The measures in the Program generally represent 
``never events'' \400\ and often, if not always, assess the incidence 
of preventable conditions. In the FY 2019 IPPS/LTCH PPS final rule (83 
FR 41547 through 41553), for the Hospital IQR Program, as part of the 
Meaningful Measures Initiative, we deduplicated the CMS Patient Safety 
and Adverse Events Composite (CMS PSI 90) beginning with the Hospital 
IQR Program's FY 2020 payment determination, and the Centers for 
Disease Control and Prevention (CDC) National Healthcare Safety Network 
(NHSN) Healthcare-Associated Infection (HAI) measures (CDC NHSN HAI 
measures) from the Hospital IQR Program beginning in CY 2020/FY 2022 
payment determination. However, we retained these measures in the HAC 
Reduction Program because we believe these measures will continue to 
encourage hospitals to address the serious harm caused by these adverse 
events while still using the most parsimonious measure set available. 
To that end, however, we were required to adopt numerous HAC Reduction 
Program-specific CDC NHSN HAI measure policies, including data 
collection, validation requirements, and scoring associated with data 
completeness, timeliness, and accuracy, to transition the 
administrative processes on which the HAC Reduction Program had 
historically relied on the Hospital IQR Program to support. In the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41475 through 41484), for the HAC 
Reduction Program, we formally adopted analogous processes to 
independently manage these administrative processes to receive CDC NHSN 
data beginning in CY 2020 and with validation beginning with Q3 CY 2020 
infectious events.
---------------------------------------------------------------------------

    \400\ The term ``Never Event'' was first introduced in 2001 by 
Ken Kizer, MD, former CEO of the National Quality Forum (NQF), in 
reference to particularly shocking medical errors (such as wrong-
site surgery) that should never occur. Over time, the list has been 
expanded to signify adverse events that are unambiguous (clearly 
identifiable and measurable), serious (resulting in death or 
significant disability), and usually preventable. The NQF initially 
defined 27 such events in 2002. The list has been revised since 
then, most recently in 2011, and now consists of 29 events grouped 
into 7 categories: Surgical, product or device, patient protection, 
care management, environmental, radiologic, and criminal.'' Never 
Events are available at: https://psnet.ahrq.gov/primers/primer/3/neverevents.
---------------------------------------------------------------------------

    In this proposed rule, we are proposing to clarify policies that we 
finalized for the HAC Reduction Program in the FY 2019 IPPS/LTCH PPS 
final rule, so that they are implemented as intended. We are 
specifically proposing to: (1) Adopt a measure removal policy that 
aligns with the removal factor policies previously adopted in other 
quality reporting and quality payment programs; (2) clarify 
administrative policies for validation of the CDC NHSN HAI measures; 
(3) adopt the data collection periods for the FY 2022 program year; and 
(4) update regulations for the HAC Reduction Program at 42 CFR 
412.172(f) to reflect policies finalized in the FY 2019 IPPS/LTCH PPS 
final rule.
3. Current Measures for FY 2020 and Subsequent Years
    The HAC Reduction Program has adopted six measures. In the FY 2014 
IPPS/LTCH PPS final rule (78 FR 50717), we finalized the use of five 
CDC NHSN HAI measures: (1) CAUTI; (2) CDI; (3) CLABSI; (4) Colon and 
Abdominal Hysterectomy SSI; and (5) MRSA Bacteremia. In the FY 2017 
IPPS/LTCH PPS final rule (81 FR 57014), we finalized the use of the CMS 
Patient Safety and Adverse Events Composite (CMS PSI 90) measure. These 
previously finalized measures, with their full measure names, are shown 
in the table below.\401\
---------------------------------------------------------------------------

    \401\ In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41485 
through 41489), we finalized the equal weighting of measures to 
coincide with the removal of Domains for scoring purposes, so these 
measures are no longer grouped by Domain.

                                   HAC Reduction Program Measures for FY 2019
----------------------------------------------------------------------------------------------------------------
                Short name                                      Measure name                           NQF #
----------------------------------------------------------------------------------------------------------------
CMS PSI 90...............................  CMS Patient Safety Indicator (PSI) 90................            0531
CAUTI....................................  CDC NHSN Catheter-associated Urinary Tract Infection             0138
                                            (CAUTI) Outcome Measure.
CDI......................................  CDC NHSN Facility-wide Inpatient Hospital-onset                  1717
                                            Clostridium difficile Infection (CDI) Outcome
                                            Measure.
CLABSI...................................  CDC NHSN Central Line-Associated Bloodstream                     0139
                                            Infection (CLABSI) Outcome Measure.
Colon and Abdominal Hysterectomy SSI.....  American College of Surgeons--Centers for Disease                0753
                                            Control and Prevention (ACS-CDC) Harmonized
                                            Procedure Specific Surgical Site Infection (SSI)
                                            Outcome Measure.
MRSA Bacteremia..........................  CDC NHSN Facility-wide Inpatient Hospital-onset                  1716
                                            Methicillin-resistant Staphylococcus aureus (MRSA)
                                            Bacteremia Outcome Measure.
----------------------------------------------------------------------------------------------------------------


[[Page 19442]]

    In this proposed rule, we are not proposing to add or remove any 
measures.
4. Measures Specification and Technical Specifications
    As we stated in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50100 
through 50101) and reiterated in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41475), we will use a subregulatory process to make 
nonsubstantive updates to measures used for the HAC Reduction Program 
and use notice-and-comment rulemaking to adopt substantive updates to 
measures. We are not making any substantive changes to the measures 
this year. Technical specifications for the CMS PSI 90 measure can be 
found on the QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetBasic&cid=1228695355425. Technical specifications for the CDC NHSN HAI measures can be 
found at CDC's NHSN website at: http://www.cdc.gov/nhsn/acute-care-hospital/index.html. Both websites provide measure updates and other 
information necessary to guide hospitals participating in the 
collection of HAC Reduction Program data.
5. Proposed Measure Removal Factors
    While we are not proposing to remove any measures in this proposed 
rule, we are proposing to adopt a removal factor policy as part of our 
ongoing efforts to ensure that the HAC Reduction Program measure set 
continues to promote improved health outcomes for beneficiaries while 
minimizing the overall burden and costs associated with the program. In 
addition, the adoption of measure removal factors would align the HAC 
Reduction Program with our other quality reporting and quality payment 
programs and help ensure consistency in our measure evaluation 
methodology across programs.
    In the FY 2019 IPPS/LTCH PPS final rule, we updated considerations 
for removing measures from several CMS quality reporting and quality 
payment programs. Specifically, we finalized eight measure removal 
factors for the Hospital IQR Program (83 FR 41540 through 41544), the 
Hospital VBP Program (83 FR 41441 through 41446), the PCHQR Program (83 
FR 41609 through 41611), and the LTCH QRP (83 FR 41625 through 41627).
    We believe these removal factors are also appropriate for the HAC 
Reduction Program, and we believe that alignment among CMS quality 
programs is important to provide stakeholders with a clear, consistent, 
and transparent process. Therefore, to align with our other quality 
reporting and quality payment programs, we are proposing to adopt the 
following removal factors for the HAC Reduction Program:
     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);
     Factor 2. Measure does not align with current clinical 
guidelines or practice;
     Factor 3. Measure can be replaced by a more broadly 
applicable measure (across settings or populations) or a measure that 
is more proximal in time to desired patient outcomes for the particular 
topic;
     Factor 4. Measure performance or improvement does not 
result in better patient outcomes;
     Factor 5. Measure can be replaced by a measure that is 
more strongly associated with desired patient outcomes for the 
particular topic;
     Factor 6. Measure collection or public reporting leads to 
negative unintended consequences other than patient harm; \402\
---------------------------------------------------------------------------

    \402\ When there is reason to believe that the continued 
collection of a measure as it is currently specified raises 
potential patient safety concerns, CMS will take immediate action to 
remove a measure from the program and not wait for the annual 
rulemaking cycle. In such situations, we would promptly retire such 
measures followed by subsequent confirmation of the retirement in 
the next IPPS rulemaking. When we do so, we will notify hospitals 
and the public through the usual hospital and QIO communication 
channels used for the HAC Reduction Program, which include memo and 
email notification and QualityNet website articles and postings.
---------------------------------------------------------------------------

     Factor 7. Measure is not feasible to implement as 
specified; and
     Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.\403\
---------------------------------------------------------------------------

    \403\ We refer readers to the Hospital IQR Program's removal 
factors discussions in the FY 2016 IPPS/LTCH PPS final rule (80 FR 
49641 through 49643) and the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41540 through 41544) for additional details on the removal factors 
and the rationale supporting them.
---------------------------------------------------------------------------

    We note that these removal factors are considerations taken into 
account when deciding whether or not to remove measures, not firm 
requirements, and that we will propose to remove measures based on 
these factors on a case-by-case basis. 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 benefits 
of a measure can outweigh its drawbacks. 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.
6. Administrative Policies for the HAC Reduction Program for FY 2020 
and Subsequent Years
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41475 through 
41485), we discussed our previously finalized administrative polices 
for the HAC Reduction Program and adopted several HAC Reduction 
Program-specific policies for CDC NHSN HAI data collection and 
validation.
a. Data Collection Beginning CY 2020
    As finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41475 
through 41477), the HAC Reduction Program will assume responsibility 
for receiving CDC NHSN HAI data from the CDC beginning with CY 2020 
(January 1, 2020) submissions. All reporting requirements, including, 
but not limited to, quarterly frequency, CDC collection system and 
deadlines, will remain constant from the current Hospital IQR Program 
requirements to aid continued hospital reporting through clear and 
consistent requirements. We refer readers to the Hospital IQR Program's 
prior years' rules for reference of these requirements \404\ and to 
QualityNet for the current reporting requirements and deadlines.
---------------------------------------------------------------------------

    \404\ FY 2011 IPPS/LTCH PPS final rule (75 FR 50223 through 
50224); FY 2012 IPPS/LTCH PPS final rule (76 FR 51644 through 
51645); FY 2013 IPPS/LTCH PPS final rule (77 FR 53539); FY 2014 
IPPS/LTCH PPS final rule (78 FR 50821 through 50822); FY 2015 IPPS/
LTCH PPS final rule (79 FR 50259 through 50262); FY 2016 IPPS/LTCH 
PPS final rule (80 FR 49710); FY 2017 IPPS/LTCH PPS final rule (81 
FR 57173); FY 2018 IPPS/LTCH PPS final rule (82 FR 38398); FY 2019 
IPPS/LTCH PPS final rule (83 FR 41607).
---------------------------------------------------------------------------

    Hospitals will continue to submit data through the CDC NHSN portal 
by selecting ``NHSN Reporting'' after signing in at: https://sams.cdc.gov. The HAC Reduction Program will receive the CDC NHSN data 
directly from the CDC instead of through the Hospital IQR Program as an 
intermediary. We note that some hospitals may not have locations that 
meet the CDC NHSN criteria for CLABSI or CAUTI reporting, and that some 
hospitals may perform so few procedures requiring surveillance under 
the Colon and Abdominal Hysterectomy SSI measure that the data may not 
be meaningful for public reporting or sufficiently reliable to be 
utilized for a program year. If a hospital does not have adequate 
locations or procedures, it should submit the Measure Exception Form to 
the HAC

[[Page 19443]]

Reduction Program beginning on January 1, 2020. The IPPS Quality 
Reporting Programs Measure Exception Form is located using the link 
located on the QualityNet website under the Hospitals Inpatient > 
Hospital Inpatient Quality Reporting Program tab at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228760487021. As has been the case under the Hospital IQR Program, hospitals 
seeking an exception would submit this form at least annually to be 
considered.
    We reiterate that no additional collection mechanisms are required 
for the CMS PSI 90 measure because it is a claims-based measure 
calculated using data submitted to CMS by hospitals for Medicare 
payment, and therefore imposes no additional administrative or 
reporting requirements on participating hospitals.
    In this proposed rule, we are not proposing any updates to our 
previously finalized data collection processes.
b. Review and Correction of Claims Data and Chart-Abstracted CDC NHSN 
HAI Data Used in the HAC Reduction Program for FY 2020 and Subsequent 
Years
    For the review and correction of claims data, hospitals are 
encouraged to ensure that their claims are accurate prior to the 
snapshot date, which is taken after the 90-day period following the 
last date of discharge used in the applicable period. In the FY 2014 
IPPS/LTCH PPS final rule (78 FR 50726 through 50727) and FY 2019 IPPS/
LTCH PPS final rule (83 FR 41477 through 41478), we detailed the 
process for the review and correction of claims-based data, and we 
refer readers to those rules for more information on the process for 
the review and correction of claims-based data.
    For the review and correction of chart-abstracted CDC NHSN HAI 
measures, we reiterate that hospitals can submit, review, and correct 
any of the chart-abstracted information for the full 4\1/2\ months 
after the end of the reporting quarter. We refer readers to the FY 2014 
IPPS/LTCH PPS final rule (78 FR 50726), the FY 2018 IPPS/LTCH PPS final 
rule (82 FR 38270 through 38271), and the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41477 through 41478) for more information.
    In this proposed rule, we are not proposing any change to our 
current administrative policies regarding the review and correction of 
claims data or chart-abstracted CDC NHSN HAI data.
7. Proposed Change to Validation Targeting Methodology and 
Clarifications Regarding Validation Processes
a. Summary of Existing Validation Processes
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41478 through 
41484), we adopted processes to validate the CDC NHSN HAI measure data 
used in the HAC Reduction Program because the Hospital IQR Program 
finalized its proposals to remove CDC NHSN HAI measures from its 
program. We finalized the HAC Reduction Program's processes to reflect, 
to the greatest extent possible, the processes previously established 
under the Hospital IQR Program. We refer readers to the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41478 through 41484), for detailed 
information on the following HAC Reduction Program validation 
processes:

 Measures Subject to Validation
 Educational Review Process
 Calculation of Confidence Intervals
 Application of Validation Scoring and Penalty
 Validation Period
 Data Accuracy and Completeness Acknowledgement

    We also refer readers to the QualityNet website for more 
information regarding measure abstraction: https://www.qualitynet.org/dcs/ContentServer?cid=%201228776288808&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page.
    We would also like to remind stakeholders of the finalized 
validation periods for the HAC Reduction Program.
[GRAPHIC] [TIFF OMITTED] TP03MY19.026


[[Page 19444]]


    In this proposed rule, we are proposing to change the number of 
hospitals selected under the validation targeting methodology and are 
providing two clarifications to this validation process.
---------------------------------------------------------------------------

    \405\ The CMS Clinical Data Abstraction Center (CDAC) performs 
the validation.
---------------------------------------------------------------------------

b. Proposed Change to the Previously Finalized Validation Selection 
Methodology
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41480), we finalized 
our policy to select 200 additional hospitals for targeted validation 
and five targeting criteria.
    While we are retaining the same targeting criteria that we 
finalized last year, we are proposing to change the number of hospitals 
targeted from exactly 200 hospitals to ``up to 200 hospitals.'' We 
believe this change is necessary to provide flexibility in the 
selection process for the HAC Reduction Program so that we can 
implement a targeting process for validation of chart-abstracted 
measures in both the Hospital IQR Program and HAC Reduction Program in 
a manner that does not unnecessarily subject hospitals to selection 
just to meet the 200 number. This proposed policy would allow us to 
only select hospitals that meet the targeting criteria and allow us to 
remove hospitals that do not have the requisite number of CDC NHSN HAI 
events from the targeted validation pool. We note that this will not 
affect the statistical reliability of the validation sample because 
statistical methodologies are only applied to data within hospitals for 
validation.
c. Clarifications to the Validation Selection Methodology
    As discussed in section IV.I.7.a. of the preamble of this proposed 
rule, in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41478 through 
41484), we finalized several proposals to implement validation of the 
CDC NHSN HAI measures in the HAC Reduction Program, in as similar a 
manner to the validation process used by the Hospital IQR Program as 
prudent. In this proposed rule, in addition to proposing to change the 
number of targeted hospitals from ``200'' to ``up to 200'', we also are 
clarifying our selection process for both the random and targeted 
sample of subsection (d) hospitals subject to HAC Reduction Program 
validation.
    During the comment period for the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 41479), some commenters expressed concern that hospitals 
could now be selected for validation under both the Hospital IQR 
Program and the HAC Reduction Program during the same reporting period, 
thereby increasing the burden to selected hospitals. As we stated last 
year, one of the goals of our deduplication efforts has been and 
continues to be a reduction in provider burden. To that end and to 
allay stakeholder concerns, we are clarifying the provider selection 
process and reassuring providers that we will work to reduce validation 
burden to the greatest extent possible.
    We are clarifying that the HAC Reduction Program, in conjunction 
with the Hospital IQR Program, will use an aggregated random sample 
selection methodology through which the validation team would select 
one pool of 400 subsection (d) hospitals for validation of chart-
abstracted measures in both the Hospital IQR Program and HAC Reduction 
Program. The pool of 400 hospitals will be selected randomly and 
validated for both the CDC NHSN HAI measures for the HAC Reduction 
Program and the Hospital IQR Program's chart-abstracted measures. The 
HAC Reduction Program will include all subsection (d) hospitals, 
whereas the Hospital IQR Program will remove any subsection (d) 
hospital without an active notice of participation in the Hospital IQR 
Program (83 FR 41479).
    This approach will ensure that the Programs' validation samples are 
selected at random and would avoid any perception associated with the 
selection of one program's sample before the other program's sample. We 
will begin using this selection process with Q3 CY 2020 infectious 
events, which is when the HAC Reduction Program is scheduled to begin 
its validation process. We refer readers to section VIII.A.11. of the 
preamble of this proposed rule for more information on the Hospital IQR 
Program's validation policies.
    After the random selection process, an additional targeted \406\ 
aggregated sample of up to 200 hospitals will be selected for the HAC 
Reduction and Hospital IQR Programs' validation processes using 
existing targeting criteria.
---------------------------------------------------------------------------

    \406\ We refer readers to the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41480), where we detailed the criteria for selecting 
additional hospitals for targeted validation.
---------------------------------------------------------------------------

    We also note that any nonsubstantive updates to the specifications 
for validation of chart-abstracted measures will be provided on the 
QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?cid=%201228776288808&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page. Further, any substantive changes, such as the measures 
validated, changes to passing confidence intervals, and the number of 
providers selected, will be proposed through notice-and-comment 
rulemaking.
    We believe this clarification of our approach to the random 
selection of one pool of 400 hospitals and our proposal to select up to 
200 targeted hospitals will avoid increasing provider burden because 
the total number of hospitals selected for validation is not 
increasing, nor are the measures that were subject to validation for 
the selected hospitals prior to deduplication.
    Moreover, we do not anticipate any increased burden to hospitals 
because we are not increasing the number of cases selected for 
validation. For HAC Reduction Program validation, we will continue to 
select up to 40 cases annually from each hospital selected for 
validation (four CAUTI, four CLABSI, and two Colon and Abdominal 
Hysterectomy SSI per quarter; or four CDI, four MRSA, and two Colon and 
Abdominal Hysterectomy SSI per quarter). As we stated in the FY 2019 
IPPS/LTCH PPS rulemaking, we intend this process to be as efficient as 
possible and we believe this clarification and our proposal help meet 
that expectation.
d. Proposed Clarification to Validation Filtering Methodology
    As we discussed for the Hospital IQR Program in the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53542), CMS has the option to target the 
sample selection to cases, referred to as candidate events, that are 
more likely to be true CDC NHSN HAIs events, or those that meet CDC 
NHSN HAI criteria. To better target true events for CDC NHSN HAI 
validation, we are proposing to clarify our approach for selecting 
CLABSI and CAUTI cases for chart-abstracted validation when CDC NHSN 
HAI validation that is currently performed under the Hospital IQR 
Program migrates to the HAC Reduction Program, beginning with the 
reporting of Q3 CY 2020 infections events. To date, our experience has 
shown us that many candidate cases selected for validation have all 
their positive cultures collected during the first or second day 
following admission and, as such, would be considered community onset 
events for CLABSI and CAUTI.\407\ Therefore, we

[[Page 19445]]

are proposing to clarify that we will eliminate these candidate CLABSI 
and CAUTI cases from the CDC NHSN HAI selection process prior to random 
case selection via a filtering method. The filtering method would 
eliminate any cases from the validation pool for which all positive 
blood or urine cultures were collected during the first or second day 
following admission. We estimate that, by implementing this proposed 
filtering method, the number of true events validated for CLABSI and 
CAUTI will increase without increasing the sample size, which will help 
us better understand the overreporting and underreporting of such 
events. This proposed approach is also in support of the 
recommendations provided by a recent HHS Office of Inspector General 
(OIG) report, which recommended that we make better use of analytics to 
ensure the integrity of hospital-reported quality data and the 
resulting payment adjustments by identifying potential gaming or other 
inaccurate reporting of quality data.\408\
---------------------------------------------------------------------------

    \407\ We refer readers to CDC guidance on this issue and the 
``CLABSI Tool Display'' on the CDC website and on QualityNet, 
located at: http://www.cdc.gov/nhsn/PDFs/pscManual/2PSC_IdentifyingHAIs_NHSNcurrent.pdf and https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1140537256076.
    \408\ April 2017 OIG report titled ``CMS Validated Hospital 
Inpatient Quality Reporting Program Data, But Should Use Additional 
Tools to Identify Gaming.'' Available at: https://www.oig.hhs.gov/oei/reports/oei-01-15-00320.asp.
---------------------------------------------------------------------------

    A key rationale for this proposed approach is that we have found 
that the yield rate for CLABSI and CAUTI, which is defined as the ratio 
of the number of true CDC NHSN HAI events to the total sample size of 
candidate events, is low (13 percent for CLABSI and 9 percent for 
CAUTI, based on the FY 2017 validation sample). After applying the 
proposed filtering method to the FY 2017 sample, we estimated that the 
yield rate increased from 13 percent to 24 percent for CLABSI and from 
9 percent to 17 percent for CAUTI. This increase will help CMS better 
understand the number of overreporting and underreporting of such 
events. A higher yield rate improves the power of the validation 
methodology, meaning that CMS could potentially select fewer cases for 
validation while still increasing the predictive power of the 
validation methodology. A potential reduction in the amount of cases 
selected for validation would decrease burden for hospitals.
    In addition, because hospitals may now have fewer than four events 
each of CLABSI and CAUTI that meet validation filtering requirements, 
we expect a reduction in burden from some hospitals being required to 
submit three or fewer medical records as part of the validation 
process. We anticipate this filtering method to allow for both a richer 
data sample and reduced provider burden.
    We also note that the agreement rates between hospital-reported 
MRSA and CDI events compared to events identified as infections by a 
trained CMS abstractor using a standardized protocol (77 FR 53548) have 
been lower than the agreement rates for CLABSI and CAUTI. Unlike the 
true event rate issue for CLABSI and CAUTI, we have determined that the 
lower overall agreement rates for MRSA and CDI is due to the 
overreporting of such events. This overreporting appears to be caused 
by missing or incomplete laboratory record information submitted by 
hospitals on the validation templates. As a result, we will provide 
additional training to hospitals regarding template completion and 
medical record submission with the hope of increasing hospital 
validation performance on MRSA and CDI measures.
    Colon and Abdominal Hysterectomy SSI has a similarly low yield 
rate, and we have begun testing a filtering option to apply to Colon 
and Abdominal Hysterectomy SSI cases to increase the yield rate for 
that measure as well. We anticipate providing further guidance for 
Colon and Abdominal Hysterectomy SSI in future rulemaking cycles. In 
this proposed rule, we are not proposing any changes to the validation 
of Colon and Abdominal Hysterectomy SSI events.
8. HAC Reduction Program Scoring Methodology
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41485 through 
41489), we finalized our proposal to remove domains from the HAC 
Reduction Program and simply assign equal weight to each measure for 
which a hospital has a measure score. As a result of this policy, we 
calculate each hospital's Total HAC Score as the equally weighted 
average of the hospital's measure scores. The table below displays the 
weights applied to each measure under this approach. All other aspects 
of the HAC Reduction Program scoring methodology remained the same, 
including the calculation of measure scores as Winsorized z-scores (FY 
2017 IPPS/LTCH PPS final rule 81 FR 57022 through 57025), the 
determination of the 75th percentile Total HAC Score (83 FR 41480), and 
the determination of the worst-performing quartile (83 FR 41481 through 
41482). In this proposed rule, we are not proposing any changes to this 
methodology.

 Weight Applied to Each Measure by Number of Measures With Measure Score
  for Hospitals With and Without a CMS PSI 90 Score Under Equal Measure
                            Weights Approach
------------------------------------------------------------------------
                                            Weight applied to:
Number of CDC NHSN HAI measures ----------------------------------------
       with measure score                           Each CDC NHSN HAI
                                   CMS PSI 90            measure
------------------------------------------------------------------------
0..............................           100.0  N/A.
1..............................            50.0  50.0.
2..............................            33.3  33.3.
3..............................            25.0  25.0.
4..............................            20.0  20.0.
5..............................            16.7  16.7.
Any number.....................             N/A  100.0 (equally divided
                                                  among each CDC NHSN
                                                  HAI measure with
                                                  measure score).
------------------------------------------------------------------------

9. Scoring Calculations Review and Correction Period
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41484), we renamed 
the annual 30-day review and correction period to the ``Scoring 
Calculations Review and Correction Period.'' The purpose of the annual 
30-day review and corrections period is to allow hospitals to review 
the calculation of their HAC Reduction Program scores.
    The HAC Reduction Program will continue to provide hospitals with 
annual confidential hospital-specific reports and discharge level 
information used in the calculation of their Total HAC Scores via the 
QualityNet Secure

[[Page 19446]]

Portal. Hospitals must register at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1138115992011 for a QualityNet Secure Portal account in order to access their 
annual hospital-specific reports.
    As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50725 
through 50728), hospitals have a period of 30 days after the 
information is posted to the QualityNet Secure Portal to review their 
HAC Reduction Program scores, submit questions about the calculation of 
their results, and request corrections for their HAC Reduction Program 
scores prior to public reporting. Hospitals may use the 30-day Scoring 
Calculations Review and Correction Period to request corrections to the 
following information prior to public reporting:
     CMS PSI 90 measure score;
     CMS PSI 90 measure result and Winsorized measure result;
     CLABSI measure score;
     CAUTI measure score;
     Colon and Abdominal Hysterectomy SSI measure score;
     MRSA Bacteremia measure score;
     CDI measure score; and
     Total HAC Score.
    As we clarified in the FY 2018 IPPS/LTCH PPS final rule (82 FR 
38270 through 38271), this 30-day period is not an opportunity for 
hospitals to submit additional corrections related to the underlying 
claims data for the CMS PSI 90, or to add new claims to the data 
extract used to calculate the results. Hospitals have an opportunity to 
review and correct claims and CDC NHSN HAI data used in the HAC 
Reduction Program as detailed in the FY 2014 IPPS/LTCH PPS final rule 
(78 FR 50726 through 50727), the FY 2018 IPPS/LTCH PPS final rule (82 
FR 38270 through 38271), and the FY 2019 IPPS/LTCH PPS final rule (83 
FR 41477 through 41478).
    In this proposed rule, we are not proposing any changes our 
policies regarding the scoring calculations review and correction 
period.
10. Proposed Applicable Period for FY 2022 Program Year
    In the FY 2018 IPPS/LTCH PPS final rule, we finalized the 
applicable period for the CMS Patient Safety and Adverse Events 
Composite (CMS PSI 90) as the 24-month period from July 1, 2016 through 
June 30, 2018. For the CDC NHSN HAI measures (CLABSI, CAUTI, Colon and 
Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI), we finalized the 
use of data from CYs 2017 and 2018, that is, January 1, 2017 through 
December 31, 2018, for the FY 2020 program.
    Consistent with the definition specified at Sec.  412.170, we are 
proposing to adopt the applicable period for the FY 2022 HAC Reduction 
Program for the CMS PSI 90 as the 24-month period from July 1, 2018 
through June 30, 2020, and the applicable period for CDC NHSN HAI 
measures as the 24-month period from January 1, 2019 through December 
31, 2020.
11. Limitation on Administrative and Judicial Review
    Section 1886(p)(7) of the Act, as codified at 42 CFR 412.172(g), 
provides that there will be no administrative or judicial review under 
section 1869 of the Act, under section 1878 of the Act, or otherwise 
for any of the following:
     The criteria describing an applicable hospital in 
paragraph 1886(p)(2)(A) of the Act;
     The specification of hospital acquired conditions under 
paragraph 1886(p)(3) of the Act;
     The specification of the applicable period under paragraph 
1886(p)(4) of the Act;
     The provision of reports to applicable hospitals under 
paragraph 1886(p)(5) of the Act; and
     The information made available to the public under 
paragraph 1886(p)(6) of the Act.
    For additional information, we refer readers to FY 2014 IPPS/LTCH 
PPS final rule (78 FR 50729) and FY 2015 IPPS/LTCH PPS final rule (79 
FR 50100).
12. Proposed Regulatory Updates (42 CFR 412.172)
    We are proposing to update 42 CFR 412.172(f)(2) and (4) to reflect 
current policies and align across our quality programs. We are 
proposing these updates to remove references to domains, which were 
removed from the scoring methodology beginning with the FY 2020 
calculation. We refer readers to the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41485 through 41489) for a discussion of the removal of domains 
from the HAC Reduction Program and more information about the equal 
weighting scoring methodology.

J. Payments for Indirect and Direct Graduate Medical Education Costs 
(Sec. Sec.  412.105 and 413.75 Through 413.83)

1. Background
    Section 1886(h) of the Act, as added by section 9202 of the 
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L. 
99-272), establishes a methodology for determining Medicare payments to 
hospitals for the direct costs of approved graduate medical education 
(GME) programs. Section 1886(h)(2) of the Act sets forth a methodology 
for the determination of a hospital-specific base-period per resident 
amount (PRA) that is calculated by dividing a hospital's allowable 
direct costs of GME in a base period by its number of full-time 
equivalent (FTE) residents in the base period. The base period is, for 
most hospitals, the hospital's cost reporting period beginning in FY 
1984 (that is, October 1, 1983 through September 30, 1984). The base 
year PRA is updated annually for inflation. In general, Medicare direct 
GME payments are calculated by multiplying the hospital's updated PRA 
by the weighted number of FTE residents working in all areas of the 
hospital complex (and at nonprovider sites, when applicable), and the 
hospital's Medicare share of total inpatient days. The provisions of 
section 1886(h) of the Act are implemented in regulations at 42 CFR 
413.75 through 413.83.
    Section 1886(d)(5)(B) of the Act provides for a payment adjustment 
known as the indirect medical education (IME) adjustment under the IPPS 
for hospitals that have residents in an approved GME program, in order 
to account for the higher indirect patient care costs of teaching 
hospitals relative to nonteaching hospitals. The regulation regarding 
the calculation of this additional payment is located at 42 CFR 
412.105. The hospital's IME adjustment applied to the MS-DRG payments 
is calculated based on the ratio of the hospital's number of FTE 
residents training in either the inpatient or outpatient departments of 
the IPPS hospital to the number of inpatient hospital beds.
    The calculation of both direct GME and IME payments is affected by 
the number of FTE residents that a hospital is allowed to count. 
Generally, the greater the number of FTE residents a hospital counts, 
the greater the amount of Medicare direct GME and IME payments the 
hospital will receive. Congress, through the Balanced Budget Act of 
1997 (Pub. L. 105-33), established a limit (that is, a cap) on the 
number of allopathic and osteopathic residents that a hospital may 
include in its FTE resident count for direct GME and IME payment 
purposes. Under section 1886(h)(4)(F) of the Act, for cost reporting 
periods beginning on or after October 1, 1997, a hospital's unweighted 
FTE count of residents for purposes of direct GME may not exceed the 
hospital's unweighted FTE count for direct GME in its most recent cost 
reporting period ending on or before

[[Page 19447]]

December 31, 1996. Under section 1886(d)(5)(B)(v) of the Act, a similar 
limit based on the FTE count for IME during that cost reporting period 
is applied effective for discharges occurring on or after October 1, 
1997. Dental and podiatric residents are not included in this 
statutorily mandated cap.
    Section 5504 of the Affordable Care Act (Pub. L. 111-148) made a 
number of statutory changes relating to the determination of a 
hospital's FTE resident count for direct GME and IME payment purposes 
and the manner in which FTE resident limits are calculated and applied 
to hospitals under certain circumstances. Regulations implementing 
these changes are discussed in the November 24, 2010 final rule (75 FR 
72133) and the FY 2013 IPPS/LTCH PPS final rule (77 FR 53416).
2. Proposed Policy Changes Related to Critical Access Hospitals (CAHs) 
as Nonproviders for Direct GME and IME Payment Purposes
    Under the regulation governing direct GME payments to nonprovider 
sites at 42 CFR 413.78(g) (and the corresponding IME regulation at 42 
CFR 412.105(f)(1)(ii)(E)), a hospital can include residents training in 
a nonprovider setting in its FTE count if the hospital incurs the 
residents' salaries and fringe benefits while the residents are 
training at that site, in addition to other requirements. Under current 
policy, critical access hospitals (CAHs) that train residents in 
approved residency training programs are paid 101 percent of the 
reasonable costs for any costs they incur associated with training 
residents in approved programs, consistent with the CAH payment 
regulations at 42 CFR 413.70. We have heard concerns related to CMS' 
current policy that CAHs are not considered nonprovider sites for 
purposes of direct GME and IME payments, including the concern that 
CMS' current policy is creating barriers to training residents in rural 
areas, thereby also hindering efforts to increase the practice of 
physicians in rural areas. We previously heard concerns that not 
considering CAHs to be nonprovider sites would reduce training in rural 
and underserved areas and affect primary care and community-based 
residency training programs, such as family medicine, which train in 
those areas (78 FR 50737). Stakeholders also raised concerns that not 
considering CAHs to be nonprovider sites would hinder collaborative 
efforts between hospitals and CAHs to recruit and retain physicians in 
rural areas (78 FR 50737) and that some CAHs may be too small to 
support residency training programs or may not be in a financial 
position to incur the costs associated with residency training programs 
(78 FR 50738). In light of these concerns, we have reexamined the 
statutory language associated with this policy, issues raised in prior 
rulemaking related to this policy, and the intent of the changes made 
by section 5504 of the Affordable Care Act. As a result, we are 
proposing to modify our policy, such that a hospital could include 
residents training in a CAH in its FTE count as long as the nonprovider 
setting requirements at 42 CFR 413.78(g) are met. Below we discuss our 
proposal for this policy change.
    We adopted our current GME payment policy regarding nonprovider 
settings and CAHs in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50734 
through 50739). Prior to this time, we allowed a CAH the option to 
either function as a nonhospital site or to incur costs for training 
residents in an approved program and be paid 101 percent of the 
reasonable costs for any costs associated with training residents in an 
approved program. In part, our policy was driven by how we have 
regarded nonhospital settings and the unique nature of CAHs. Although 
we generally had used the term ``nonhospital'' to describe the training 
sites in which time spent by residents training outside of the hospital 
setting may be counted for both direct GME and IME payment purposes, we 
acknowledged in the FY 2014 IPPS/LTCH PPS final rule that we sometimes 
used the terms ``nonhospital'' and ``nonprovider'' interchangeably (78 
FR 50735). We considered that a CAH is a unique facility that, by 
definition, is not always a hospital and noted that, because a CAH is 
generally not considered a ``hospital'' under section 1861(e) of the 
Act, a CAH could be treated as a nonhospital site for GME purposes (78 
FR 50735).
    Section 5504(a) of the Affordable Care Act amended sections 
1886(d)(5)(B)(iv)(II) and 1886(h)(4)(E) of the Act, on a prospective 
basis, to further address the setting in which time spent by residents 
training outside of the hospital setting may be counted for both direct 
GME and IME payment purposes. In particular, the statute was amended to 
reference a ``nonprovider.'' As a result of this legislative change and 
because a CAH is defined as a ``provider of services'' under section 
1861(u) of the Act, we finalized our current policy, effective for 
portions of cost reporting periods occurring on or after October 1, 
2013.
    Section 5504 of the Affordable Care Act made several changes to the 
requirements a hospital must meet in order to include residents 
training in a nonprovider setting in its FTE count. As we noted in 
prior rulemaking, these changes include the requirement that a hospital 
need only incur residents' salaries and fringe benefits in order to 
count the residents as opposed to incurring ``all or substantially 
all'' of the costs of the training at the nonprovider site and the 
ability for more than one hospital to count FTE residents training at a 
single nonprovider site (75 FR 72136 through 72139). We believe these 
changes were intended to promote the training of residents at sites 
outside of the IPPS hospital setting, many of which provide access to 
care for patients in rural and underserved areas. Furthermore, we 
reassessed and agree with prior comments we have received stating that 
the intent of section 5504 was to reduce the administrative burden 
associated with counting residency training time in settings engaged in 
patient care outside of the IPPS hospital setting (78 FR 50736). 
Therefore, we believe that, to the extent possible, in accordance with 
current statutory language, it is important to support residency 
training in rural and underserved areas, including residency training 
at CAHs.
    While a CAH is considered a ``provider of services'' under section 
1861(u) of the Act, we acknowledge that the term ``nonprovider'' is not 
explicitly defined in the statute. Furthermore, section 1861(e) of the 
Act, which states in part that the term ``hospital'' does not include, 
unless the context otherwise requires, a critical access hospital (as 
defined in section 1861(mm)(1) of the Act), underscores the sometimes 
ambiguous status of CAHs. We believe that the lack of both an explicit 
statutory definition of ``nonprovider'' and a definitive determination 
as to whether a CAH is considered a hospital along with the fact that a 
CAH is a facility primarily engaged in patient care (we refer readers 
to section 1886(h)(5)(K) of the Act which states that the term 
``nonprovider setting that is primarily engaged in furnishing patient 
care'' means a nonprovider setting in which the primary activity is the 
care and treatment of patients, as defined by the Secretary), provides 
flexibility within the current statutory language to consider a CAH as 
a ``nonprovider'' setting for direct GME and IME payment purposes.
    Therefore, in order to support the training of residents in rural 
and underserved areas, we are proposing that, effective with portions 
of cost

[[Page 19448]]

reporting periods beginning October 1, 2019, a hospital may include FTE 
residents training at a CAH in its FTE count as long as it meets the 
nonprovider setting requirements currently included at 42 CFR 
412.105(f)(1)(ii)(E) and 413.78(g). We are not proposing to change our 
policy with respect to CAHs incurring the costs of training residents. 
That is, a CAH may continue to incur the costs of training residents in 
an approved residency training program(s) and receive payment based on 
101 percent of the reasonable costs for these training costs. If this 
proposal is finalized, CMS will work closely with HRSA and the Federal 
Office of Rural Health Policy to communicate the increased regulatory 
flexibility to CAHs as well as existing residency programs and the 
options it affords for increasing rural residency training. We are 
seeking public comments on this proposed policy change.
3. Notice of Closure of Teaching Hospital and Opportunity To Apply for 
Available Slots
a. Background
    Section 5506 of the Affordable Care Act (Pub. L. 111-148), as 
amended by the Health Care and Education Reconciliation Act of 2010 
(Pub. L. 111-152) (collectively, the ``Affordable Care Act''), 
authorizes the Secretary to redistribute residency slots after a 
hospital that trained residents in an approved medical residency 
program closes. Specifically, section 5506 of the Affordable Care Act 
amended the Act by adding subsection (vi) to section 1886(h)(4)(H) of 
the Act and modifying language at section 1886(d)(5)(B)(v) of the Act, 
to instruct the Secretary to establish a process to increase the FTE 
resident caps for other hospitals based upon the FTE resident caps in 
teaching hospitals that closed ``on or after a date that is 2 years 
before the date of enactment'' (that is, March 23, 2008). In the CY 
2011 Outpatient Prospective Payment System (OPPS) final rule with 
comment period (75 FR 72212), we established regulations at 42 CFR 
413.79(o) and an application process for qualifying hospitals to apply 
to CMS to receive direct GME and IME FTE resident cap slots from the 
hospital that closed. We made certain modifications to those 
regulations in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53434), and 
we made changes to the section 5506 application process in the FY 2015 
IPPS/LTCH PPS final rule (79 FR 50122 through 50134). The procedures we 
established apply both to teaching hospitals that closed on or after 
March 23, 2008, and on or before August 3, 2010, and to teaching 
hospitals that close after August 3, 2010.
b. Notice of Closure of Good Samaritan Hospital Located in Dayton, OH 
and the Application Process--Round 14
    CMS has learned of the closure of Good Samaritan Hospital, located 
in Dayton, OH (CCN 360052). Accordingly, this notice serves to notify 
the public of the closure of this teaching hospital and initiate 
another round of the section 5506 application and selection process. 
This round will be the 14th round (``Round 14'') of the application and 
selection process. The table below contains the identifying information 
and IME and direct GME FTE resident caps for the closed teaching 
hospital, which is part of the Round 14 application process under 
section 5506 of the Affordable Care Act.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                       Direct GME FTE
                                                                                 CBSA                         IME FTE resident cap      resident cap
               CCN                     Provider name        City and state       code     Terminating date      (including +/-MMA     (including +/-MMA
                                                                                                                 sec.  422 \1\)        sec.  422  \1\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
360052...........................  Good Samaritan        Dayton, OH..........    19380  July 23, 2018.......  55.60 + 7.00 sec.     58.89 + 3.14 sec.
                                    Hospital.                                                                  422 increase =        422 increase =
                                                                                                               62.60.\2\             62.03.\3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Section 422 of the MMA, Public Law 108-173, redistributed unused IME and direct GME residency slots effective July 1, 2005.
\2\ Good Samaritan Hospital's 1996 IME FTE resident cap is 55.60. Under section 422 of the MMA, the hospital received an increase of 7.00 to its IME FTE
  resident cap: 55.60 + 7.00 = 62.60.
\3\ Good Samaritan Hospital's 1996 direct GME FTE resident cap is 58.89. Under section 422 of the MMA, the hospital received an increase of 3.14 to its
  direct GME FTE resident cap: 58.89 + 3.14 = 62.03.

c. Application Process for Available Resident Slots
    The application period for hospitals to apply for slots under 
section 5506 of the Affordable Care Act is 90 days following notice to 
the public of a hospital closure (77 FR 53436). Therefore, hospitals 
that wish to apply for and receive slots from the FTE resident caps of 
closed Good Samaritan Hospital, located in Dayton, OH, must submit 
applications (Section 5506 Application Form posted on Direct Graduate 
Medical Education (DGME) website as noted at the end of this section) 
directly to the CMS Central Office no later than July 22, 2019. The 
mailing address for the CMS Central Office is included on the 
application form. Applications must be received by the CMS Central 
Office by the July 22, 2019 deadline date. It is not sufficient for 
applications to be postmarked by this date.
    After an applying hospital sends a hard copy of a section 5506 slot 
application to the CMS Central Office mailing address, the hospital is 
encouraged to notify the CMS Central Office of the mailed application 
by sending an email to: [email protected]. In the email, 
the hospital should state: ``On behalf of [insert hospital name and 
Medicare CCN#], I, [insert your name], am sending this email to notify 
CMS that I have mailed to CMS a hard copy of a section 5506 application 
under Round 14 due to the closure of Good Samaritan Hospital. If you 
have any questions, please contact me at [insert phone number] or 
[insert your email address].'' An applying hospital should not attach 
an electronic copy of the application to the email. The email will only 
serve to notify the CMS Central Office to expect a hard copy 
application that is being mailed to the CMS Central Office.
    We have not established a deadline by when CMS will issue the final 
determinations to hospitals that receive slots under section 5506 of 
the Affordable Care Act. However, we review all applications received 
by the deadline and notify applicants of our determinations as soon as 
possible.
    We refer readers to the CMS Direct Graduate Medical Education 
(DGME) website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME.html to download a copy of the 
section 5506 application form (Section 5506 Application Form) that 
hospitals must use to apply for slots under section 5506 of the 
Affordable Care Act. Hospitals should also access this same

[[Page 19449]]

website for a list of additional section 5506 guidelines for the policy 
and procedures for applying for slots, and the redistribution of the 
slots under sections 1886(h)(4)(H)(vi) and 1886(d)(5)(B)(v) of the Act.

K. Rural Community Hospital Demonstration Program

1. Introduction
    The Rural Community Hospital Demonstration was originally 
authorized for a 5-year period by section 410A of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
(Pub. L. 108-173), and extended for another 5-year period by sections 
3123 and 10313 of the Affordable Care Act (Pub. L. 111-148). 
Subsequently, section 15003 of the 21st Century Cures Act (Pub. L. 114-
255), enacted December 13, 2016, amended section 410A of Public Law 
108-173 to require a 10-year extension period (in place of the 5-year 
extension required by the Affordable Care Act, as further discussed 
below). Section 15003 also required that, no later than 120 days after 
enactment of Public Law 114-255, the Secretary had to issue a 
solicitation for applications to select additional hospitals to 
participate in the demonstration program for the second 5 years of the 
10-year extension period, so long as the maximum number of 30 hospitals 
stipulated by Public Law 114-148 was not exceeded. In this proposed 
rule, we are providing a description of the provisions of section 15003 
of Public Law 114-255, our final policies for implementation, and the 
finalized budget neutrality methodology for the extension period 
authorized by section 15003 of Public Law 114-255. We are including a 
discussion of the budget neutrality methodology used in previous final 
rules for periods prior to the extension period, as well as for this 
upcoming fiscal year. In addition, we will provide an update on the 
reconciliation of actual and estimated costs of the demonstration for 
FYs 2014 and 2015.
2. Background
    Section 410A(a) of Public Law 108-173 required the Secretary to 
establish a demonstration program to test the feasibility and 
advisability of establishing rural community hospitals to furnish 
covered inpatient hospital services to Medicare beneficiaries. The 
demonstration pays rural community hospitals under a reasonable cost-
based methodology for Medicare payment purposes for covered inpatient 
hospital services furnished to Medicare beneficiaries. A rural 
community hospital, as defined in section 410A(f)(1), is a hospital 
that--
     Is located in a rural area (as defined in section 
1886(d)(2)(D) of the Act) or is treated as being located in a rural 
area under section 1886(d)(8)(E) of the Act;
     Has fewer than 51 beds (excluding beds in a distinct part 
psychiatric or rehabilitation unit) as reported in its most recent cost 
report;
     Provides 24-hour emergency care services; and
     Is not designated or eligible for designation as a CAH 
under section 1820 of the Act.
    Section 410A of Public Law 108-173 required a 5-year period of 
performance. Subsequently, sections 3123 and 10313 of Public Law 111-
148 required the Secretary to conduct the demonstration program for an 
additional 5-year period, to begin on the date immediately following 
the last day of the initial 5-year period. Public Law 111-148 required 
the Secretary to provide for the continued participation of rural 
community hospitals in the demonstration program during the 5-year 
extension period, in the case of a rural community hospital 
participating in the demonstration program as of the last day of the 
initial 5-year period, unless the hospital made an election to 
discontinue participation. In addition, Public Law 111-148 limited the 
number of hospitals participating to no more than 30. We refer readers 
to previous final rules for a summary of the selection and 
participation of these hospitals. Starting from December 2014 and 
extending through December 2016, the 21 hospitals that were still 
participating in the demonstration ended their scheduled periods of 
performance on a rolling basis, respectively, according to the end 
dates of the hospitals' cost report periods.
3. Provisions of the 21st Century Cures Act (Pub. L. 114-255) and 
Finalized Policies for Implementation
a. Statutory Provisions
    As stated earlier, section 15003 of Public Law 114-255 further 
amended section 410A of Public Law 108-173 to require the Secretary to 
conduct the Rural Community Hospital Demonstration for a 10-year 
extension period (in place of the 5-year extension period required by 
Pub. L. 111-148), beginning on the date immediately following the last 
day of the initial 5-year period under section 410A(a)(5) of Public Law 
108-173. Thus, the Secretary is required to conduct the demonstration 
for an additional 5-year period. Specifically, section 15003 of Public 
Law 114-255 amended section 410A(g)(4) of Public Law 108-173 to require 
that, for hospitals participating in the demonstration as of the last 
day of the initial 5-year period, the Secretary shall provide for 
continued participation of such rural community hospitals in the 
demonstration during the 10-year extension period, unless the hospital 
makes an election, in such form and manner as the Secretary may 
specify, to discontinue participation. Furthermore, section 15003 of 
Public Law 114-255 added subsection (g)(5) to section 410A of Public 
Law 108-173 to require that, during the second 5 years of the 10-year 
extension period, the Secretary shall apply the provisions of section 
410A(g)(4) of Public Law 108-173 to rural community hospitals that are 
not described in subsection (g)(4) but that were participating in the 
demonstration as of December 30, 2014, in a similar manner as such 
provisions apply to hospitals described in subsection (g)(4).
    In addition, section 15003 of Public Law 114-255 amended section 
410A of Public Law 108-173 to add paragraph (g)(6)(A) which requires 
that the Secretary issue a solicitation for applications no later than 
120 days after enactment of paragraph (g)(6) to select additional rural 
community hospitals located in any State to participate in the 
demonstration program for the second 5 years of the 10-year extension 
period, without exceeding the maximum number of hospitals (that is, 30) 
permitted under section 410A(g)(3) of Pub. L. 108-173 (as amended by 
Public Law 111-148). Section 410A(g)(6)(B) provides that, in 
determining which hospitals submitting an application pursuant to this 
solicitation are to be selected for participation in the demonstration, 
the Secretary must give priority to rural community hospitals located 
in one of the 20 States with the lowest population densities, as 
determined using the 2015 Statistical Abstract of the United States. 
The Secretary may also consider closures of hospitals located in rural 
areas in the State in which an applicant hospital is located during the 
5-year period immediately preceding the date of enactment of Public Law 
114-255 (December 13, 2016), as well as the population density of the 
State in which the rural community hospital is located.
(b) Terms of Participation for the Extension Period Authorized by 
Public Law 114-255
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38280), we finalized 
our policy with regard to the effective date for the application of the 
reasonable cost-based payment methodology under

[[Page 19450]]

the demonstration for those previously participating hospitals choosing 
to participate in the second 5-year extension period. According to our 
finalized policy, each previously participating hospital began the 
second 5 years of the 10-year extension period and payment for services 
provided under the cost-based payment methodology under section 410A of 
Public Law 108-173 (as amended by section 15003 of Pub. L. 114-255) on 
the date immediately after the period of performance ended under the 
first 5-year extension period.
    Seventeen of the 21 hospitals that completed their periods of 
participation under the extension period authorized by Public Law 111-
148 elected to continue in the second 5-year extension period for the 
full second 5-year extension period. (Of the four hospitals that did 
not elect to continue participating, three hospitals converted to CAH 
status during the time period of the second 5-year extension period.) 
Therefore, the 5-year period of performance for each of these hospitals 
started on dates beginning May 1, 2015 and extending through January 1, 
2017. On November 20, 2017, we announced that, as a result of the 
solicitation issued earlier in the year responding to the requirement 
in Public Law 114-255, 13 additional hospitals were selected to 
participate in the demonstration in addition to these 17 hospitals 
continuing participation from the first 5-year extension period. 
(Hereafter, these two groups are referred to as ``newly participating'' 
and ``previously participating'' hospitals, respectively.) In addition, 
we announced that each of these newly participating hospitals would 
begin its 5-year period of participation effective with the start of 
the first cost reporting period on or after October 1, 2017. One of the 
hospitals selected from the solicitation in 2017 withdrew from the 
demonstration program, prior to beginning participation in the 
demonstration on July 1, 2018. Therefore, 29 hospitals participated in 
the demonstration in FYs 2018 and 2019, and are scheduled to 
participate in FY 2020.
4. Budget Neutrality
a. Statutory Budget Neutrality Requirement
    Section 410A(c)(2) of Public Law 108-173 requires that, in 
conducting the demonstration program under this section, the Secretary 
shall ensure that the aggregate payments made by the Secretary do not 
exceed the amount which the Secretary would have paid if the 
demonstration program under this section was not implemented. This 
requirement is commonly referred to as ``budget neutrality.'' 
Generally, when we implement a demonstration program on a budget 
neutral basis, the demonstration program is budget neutral on its own 
terms; in other words, the aggregate payments to the participating 
hospitals do not exceed the amount that would be paid to those same 
hospitals in the absence of the demonstration program. Typically, this 
form of budget neutrality is viable when, by changing payments or 
aligning incentives to improve overall efficiency, or both, a 
demonstration program may reduce the use of some services or eliminate 
the need for others, resulting in reduced expenditures for the 
demonstration program's participants. These reduced expenditures offset 
increased payments elsewhere under the demonstration program, thus 
ensuring that the demonstration program as a whole is budget neutral or 
yields savings. However, the small scale of this demonstration program, 
in conjunction with the payment methodology, made it extremely unlikely 
that this demonstration program could be held to budget neutrality 
under the methodology normally used to calculate it--that is, cost-
based payments to participating small rural hospitals were likely to 
increase Medicare outlays without producing any offsetting reduction in 
Medicare expenditures elsewhere. In addition, a rural community 
hospital's participation in this demonstration program would be 
unlikely to yield benefits to the participants if budget neutrality 
were to be implemented by reducing other payments for these same 
hospitals. Therefore, in the 12 IPPS final rules spanning the period 
from FY 2005 through FY 2016, we adjusted the national inpatient PPS 
rates by an amount sufficient to account for the added costs of this 
demonstration program, thus applying budget neutrality across the 
payment system as a whole rather than merely across the participants in 
the demonstration program. (A different methodology was applied for FY 
2017.) As we discussed in the FYs 2005 through 2017 IPPS/LTCH PPS final 
rules (69 FR 49183; 70 FR 47462; 71 FR 48100; 72 FR 47392; 73 FR 48670; 
74 FR 43922, 75 FR 50343, 76 FR 51698, 77 FR 53449, 78 FR 50740, 77 FR 
50145; 80 FR 49585; and 81 FR 57034, respectively), we believe that the 
language of the statutory budget neutrality requirements permits the 
agency to implement the budget neutrality provision in this manner.
b. Methodology Used in Previous Final Rules for Periods Prior to the 
Extension Period Authorized by the 21st Century Cures Act (Pub. L. 114-
255)
    We have generally incorporated two components into the budget 
neutrality offset amounts identified in the final IPPS rules in 
previous years. First, we have estimated the costs of the demonstration 
for the upcoming fiscal year, generally determined from historical, 
``as submitted'' cost reports for the hospitals participating in that 
year. Update factors representing nationwide trends in cost and volume 
increases have been incorporated into these estimates, as specified in 
the methodology described in the final rule for each fiscal year. 
Second, as finalized cost reports became available, we determined the 
amount by which the actual costs of the demonstration for an earlier, 
given year, differed from the estimated costs for the demonstration set 
forth in the final IPPS rule for the corresponding fiscal year, and 
incorporated that amount into the budget neutrality offset amount for 
the upcoming fiscal year. If the actual costs for the demonstration for 
the earlier fiscal year exceeded the estimated costs of the 
demonstration identified in the final rule for that year, this 
difference was added to the estimated costs of the demonstration for 
the upcoming fiscal year when determining the budget neutrality 
adjustment for the upcoming fiscal year. Conversely, if the estimated 
costs of the demonstration set forth in the final rule for a prior 
fiscal year exceeded the actual costs of the demonstration for that 
year, this difference was subtracted from the estimated cost of the 
demonstration for the upcoming fiscal year when determining the budget 
neutrality adjustment for the upcoming fiscal year. (We note that we 
have calculated this difference for FYs 2005 through 2013 between the 
actual costs of the demonstration as determined from finalized cost 
reports once available, and estimated costs of the demonstration as 
identified in the applicable IPPS final rules for these years.)
c. Budget Neutrality Methodology for the Extension Period Authorized by 
the 21st Century Cures Act (Pub. L. 114-255)
(1) General Approach
    We finalized our budget neutrality methodology for periods of 
participation under the second 5 years of the 10-year extension period 
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38285 through 38287). 
Similar to previous

[[Page 19451]]

years, we stated in this rule, as well as in the FY 2019 IPPS/LTCH PPS 
proposed and final rules (83 FR 20444 and 41503, respectively) that we 
would incorporate an estimate of the costs of the demonstration, 
generally determined from historical, ``as submitted'' cost reports for 
the participating hospitals and appropriate update factors, into a 
budget neutrality offset amount to be applied to the national IPPS 
rates for the upcoming fiscal year. In addition, we stated that we 
would continue to apply our general policy from previous years of 
including, as a second component to the budget neutrality offset 
amount, the amount by which the actual costs of the demonstration for 
an earlier, given year (as determined from finalized cost reports when 
available) differed from the estimated costs for the demonstration set 
forth in the final IPPS rule for the corresponding fiscal year.
    In the FY 2018 IPPS/LTCH PPS final rule and FY 2019 IPPS/LTCH PPS 
proposed and final rules, we described several distinct components to 
the budget neutrality offset amount for the specific fiscal years of 
the extension period authorized by Public Law 114-255.
     We will include a component to our overall methodology 
similar to previous years, according to which an estimate of the costs 
of the demonstration for both previously and newly participating 
hospitals for the upcoming fiscal year is incorporated into a budget 
neutrality offset amount to be applied to the national IPPS rates for 
the upcoming fiscal year. In the FY 2019 IPPS final rule (83 FR 41506), 
we included such an estimate of the costs of the demonstration for each 
of FYs 2018 and 2019 into the budget neutrality offset amount for FY 
2019. In this proposed rule, we are including an estimate of the costs 
of the demonstration for FY 2020.
     Similar to previous years, we will continue to implement 
the policy of determining the difference between the actual costs of 
the demonstration as determined from finalized cost reports for a given 
fiscal year and the estimated costs indicated in the corresponding 
year's final rule, and including that difference as a positive or 
negative adjustment in the upcoming year's final rule. (For each 
previously participating hospital that has decided to participate in 
the second 5 years of the 10-year extension period, the cost-based 
payment methodology under the demonstration began on the date 
immediately following the end date of its period of performance for the 
first 5-year extension period. In addition, for previously 
participating hospitals that converted to CAH status during the time 
period of the second 5-year extension period, the demonstration payment 
methodology was applied to the date following the end date of its 
period of performance for the first extension period to the date of 
conversion). Therefore, for cost reporting periods starting in FYs 
2015, 2016, and 2017, we will use available finalized cost reports that 
detail the actual costs of the demonstration for each of these fiscal 
years and incorporate these amounts into the budget neutrality 
calculation.
    In this proposed rule, we are identifying the amount of the 
difference between actual and estimated costs based on finalized cost 
reports for FY 2014; and, in addition, we are proposing that if 
finalized cost reports are available we will include the amount for FY 
2015 in the budget neutrality offset adjustment to be applied to the 
national IPPS rates for FY 2020. In future IPPS rules, we will continue 
this reconciliation, calculating the difference between actual and 
estimated costs for the remaining years of the first extension period 
and, as described above, the additional years of the demonstration 
under the second extension period, applying this difference to the 
budget neutrality offset adjustments identified in future years' final 
rules.
(2) Methodology for Estimating Demonstration Costs for FY 2020
    We are using a methodology similar to previous years, according to 
which an estimate of the costs of the demonstration for the upcoming 
fiscal year is incorporated into a budget neutrality offset amount to 
be applied to the national IPPS rates for the upcoming fiscal year, 
that is, FY 2020. The methodology for calculating the amount for FY 
2020 will proceed according to the following steps:
    Step 1: For each of the 29 participating hospitals, we will 
identify the reasonable cost amount calculated under the reasonable 
cost-based methodology for covered inpatient hospital services, 
including swing beds, as indicated on the ``as submitted'' cost report 
for the most recent cost reporting period available. (For each of these 
hospitals, these ``as submitted'' cost reports are those with cost 
report period end dates in CY 2017. We note that, for 3 of these 
hospitals, the 5-year participation authorized by Pub. L. 114-255 will 
end prior to the end of FY 2020. Therefore, consistent with previous 
practice, we will prorate the cost amounts for these hospitals by the 
fraction of total months in the demonstration period of participation 
that fall within FY 2020 out of the total of 12 months in the fiscal 
year. For example, for a hospital whose period of performance ends June 
30, 2020, this prorating factor is .75. We will sum these hospital-
specific amounts to arrive at a total general amount representing the 
costs for covered inpatient hospital services, including swing beds, 
across the 29 participating hospitals.
    Then, we will multiply this amount by the FYs 2018, 2019 and 2020 
IPPS market basket percentage increases, which are formulated by the 
CMS Office of the Actuary. The result for each participating hospital 
will be the general estimated reasonable cost amount for covered 
inpatient hospital services for FY 2020.
    Consistent with our methods in previous years for formulating this 
estimate, we will apply the IPPS market basket percentage increases for 
FYs 2018 through 2020 to the applicable estimated reasonable cost 
amounts (described above) in order to model the estimated FY 2020 
reasonable cost amount under the demonstration. We believe that the 
IPPS market basket percentage increases appropriately indicate the 
trend of increase in inpatient hospital operating costs under the 
reasonable cost methodology for the years involved.
    Step 2: For each of the participating hospitals, we identify the 
estimated amount that would otherwise be paid in FY 2020 under 
applicable Medicare payment methodologies for covered inpatient 
hospital services, including swing beds (as indicated on the same set 
of ``as submitted'' cost reports as in Step 1), if the demonstration 
were not implemented. (Also, similar to step 1, we are prorating the 
amounts for hospitals whose period of participation ends during FY 2020 
by the fraction of total months in the demonstration period of 
participation for the hospital that falls within FY 2020 out of the 
total of 12 months in the fiscal year). We will sum these hospital-
specific amounts, and, in turn, multiply this sum by the FYs 2018, 2019 
and 2020 IPPS applicable percentage increases. This methodology differs 
from Step 1, in which we apply the market basket percentage increases 
to the hospitals' applicable estimated reasonable cost amount for 
covered inpatient hospital services. We believe that the IPPS 
applicable percentage increases are appropriate factors to update the 
estimated amounts that generally would otherwise be paid without the 
demonstration. This is because IPPS payments constitute the majority of 
payments that would otherwise be made without the demonstration and the

[[Page 19452]]

applicable percentage increase is the factor used under the IPPS to 
update the inpatient hospital payment rates.
    Step 3: We will subtract the amount derived in Step 2 from the 
amount derived in Step 1. According to our methodology, the resulting 
amount indicates the total difference for the 29 hospitals (for covered 
inpatient hospital services, including swing beds), which will be the 
general estimated amount of the costs of the demonstration for FY 2020.
    For this proposed rule, the resulting amount is $61,970,567, which 
we are proposing to include in the budget neutrality offset adjustment 
for FY 2020. This estimated amount is based on the specific assumptions 
regarding the data sources used, that is, recently available ``as 
submitted'' cost reports and historical update factors for cost and 
payment. If updated data become available prior to the FY 2020 IPPS/
LTCH PPS final rule, we will use them as appropriate to estimate the 
costs for the demonstration program for FY 2020 in accordance with our 
methodology for determining the budget neutrality estimate. Therefore, 
the estimated budget neutrality offset amount may change in the final 
rule, depending on the availability of updated data.
(3) Reconciling Actual and Estimated Costs of the Demonstration for 
Previous Years (2014 and 2015)
    As described earlier, we have calculated the difference for FYs 
2005 through 2013 between the actual costs of the demonstration, as 
determined from finalized cost reports once available, and estimated 
costs of the demonstration as identified in the applicable IPPS final 
rules for these years. In this proposed rule, we are identifying the 
difference between the total cost of the demonstration as indicated on 
finalized FY 2014 cost reports and the estimates for the costs of the 
demonstration for that year's final rule, and we are proposing to 
adjust the current year's budget neutrality amount by the amount 
identified. If any information relevant to the determination of these 
amounts (for example, a cost report reopening) would necessitate a 
revision of these amounts, we will make the appropriate change and 
include the determination in the FY 2020 IPPS/LTCH PPS final rule. 
Furthermore, if the needed costs reports are available in time for the 
FY 2020 IPPS/LTCH PPS final rule, we also will identify the difference 
between the total cost of the demonstration based on finalized FY 2015 
cost reports and the estimates for the costs of the demonstration for 
that year, and incorporate that amount into the budget neutrality 
offset amount for FY 2020.
    Currently, finalized cost reports are available for the 22 
hospitals that completed a cost reporting period beginning in FY 2014 
according to the demonstration's reasonable cost-based payment 
methodology. The actual costs of the demonstration for FY 2014 (that 
is, the amount from finalized cost reports for the 22 hospitals that 
were paid under the demonstration reasonable cost-based payment 
methodology for cost reporting periods with start dates during FY 
2014), fell short of the estimated amount that was finalized in the FY 
2014 IPPS/LTCH final rule for FY 2014 by $14,932,060.
    We note that the amounts identified for the actual cost of the 
demonstration, determined from finalized cost reports, is less than the 
amount that was identified in the final rule for the respective year. 
Therefore, in keeping with previous policy finalized in situations when 
the costs of the demonstration fell short of the amount estimated in 
the corresponding year's final rule, we will be including this 
component as a negative adjustment to the budget neutrality offset 
amount for the current fiscal year.
(4) Total Proposed Budget Neutrality Offset Amount for FY 2020
    Therefore, for this FY 2020 IPPS/LTCH PPS proposed rule, we are 
proposing to incorporate the following components into the calculation 
of the total budget neutrality offset for FY 2020:
     The amount determined under section IV.K.4.c.(2) of the 
preamble of this proposed rule, representing the difference applicable 
to FY 2020 between the sum of the estimated reasonable cost amounts 
that would be paid under the demonstration to the 29 participating 
hospitals for covered inpatient hospital services and the sum of the 
estimated amounts that would generally be paid if the demonstration had 
not been implemented. This estimated amount is $61,970,567.
     The amount determined under section IV.K.4.c.(3) of the 
preamble of this proposed rule according to which the actual costs of 
the demonstration for FY 2014 for the 22 hospitals that completed a 
cost reporting period beginning in FY 2014 differ from the estimated 
amount that was incorporated into the budget neutrality offset amount 
for FY 2014 in the FY 2014 IPPS/LTCH PPS final rule. Analysis of this 
set of cost reports shows that the actual costs of the demonstration 
fell short of the estimated amount finalized in the FY 2014 IPPS/LTCH 
PPS final rule by $14,932,060. In keeping with previously finalized 
policy, we are proposing to apply this difference, according to which 
the actual costs of the demonstration for FY 2014 fell short of the 
estimated amount determined in the final rule for that fiscal year by 
reducing the budget neutrality offset amount for FY 2020 by this 
amount.
    Therefore, for FY 2020, the proposed total budget neutrality offset 
amount that we will be applying is the estimated amount for FY 2020 
(that is, $61,970,567) minus the amount by which the actual costs of 
the demonstration fell short of the estimated amount for FY 2014 (that 
is, $14,932,060). This total is $47,038,507. If updated data become 
available prior to the FY 2020 IPPS/LTCH PPS final rule, we would use 
them to the extent appropriate to determine the budget neutrality 
offset amount for FY 2020. Therefore, the amount of the budget 
neutrality offset amount may change in the FY 2020 IPPS/LTCH PPS final 
rule. Furthermore, if the needed costs reports are available in time 
for the FY 2020 IPPS/LTCH PPS final rule, we also will identify the 
difference between the total cost of the demonstration based on 
finalized FY 2015 cost reports and the estimates for the costs of the 
demonstration for that year, and incorporate that amount into the final 
budget neutrality offset amount for FY 2020.

V. Proposed Changes to the IPPS for Capital-Related Costs

A. Overview

    Section 1886(g) of the Act requires the Secretary to pay for the 
capital-related costs of inpatient acute hospital services in 
accordance with a prospective payment system established by the 
Secretary. Under the statute, the Secretary has broad authority in 
establishing and implementing the IPPS for acute care hospital 
inpatient capital-related costs. We initially implemented the IPPS for 
capital-related costs in the FY 1992 IPPS final rule (56 FR 43358). In 
that final rule, we established a 10-year transition period to change 
the payment methodology for Medicare hospital inpatient capital-related 
costs from a reasonable cost-based payment methodology to a prospective 
payment methodology (based fully on the Federal rate).
    FY 2001 was the last year of the 10-year transition period that was 
established to phase in the IPPS for hospital inpatient capital-related 
costs. For cost reporting periods beginning in FY 2002, capital IPPS 
payments are based solely on the Federal rate for

[[Page 19453]]

almost all acute care hospitals (other than hospitals receiving certain 
exception payments and certain new hospitals). (We refer readers to the 
FY 2002 IPPS final rule (66 FR 39910 through 39914) for additional 
information on the methodology used to determine capital IPPS payments 
to hospitals both during and after the transition period.)
    The basic methodology for determining capital prospective payments 
using the Federal rate is set forth in the regulations at 42 CFR 
412.312. For the purpose of calculating capital payments for each 
discharge, the standard Federal rate is adjusted as follows:
    (Standard Federal Rate) x (DRG Weight) x (Geographic Adjustment 
Factor (GAF)) x (COLA for hospitals located in Alaska and Hawaii) x (1 
+ Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if 
applicable).
    In addition, under Sec.  412.312(c), hospitals also may receive 
outlier payments under the capital IPPS for extraordinarily high-cost 
cases that qualify under the thresholds established for each fiscal 
year.

B. Additional Provisions

1. Exception Payments
    The regulations at 42 CFR 412.348 provide for certain exception 
payments under the capital IPPS. The regular exception payments 
provided under Sec. Sec.  412.348(b) through (e) were available only 
during the 10-year transition period. For a certain period after the 
transition period, eligible hospitals may have received additional 
payments under the special exceptions provisions at Sec.  412.348(g). 
However, FY 2012 was the final year hospitals could receive special 
exceptions payments. For additional details regarding these exceptions 
policies, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 
FR 51725).
    Under Sec.  412.348(f), a hospital may request an additional 
payment if the hospital incurs unanticipated capital expenditures in 
excess of $5 million due to extraordinary circumstances beyond the 
hospital's control. Additional information on the exception payment for 
extraordinary circumstances in Sec.  412.348(f) can be found in the FY 
2005 IPPS final rule (69 FR 49185 and 49186).
2. New Hospitals
    Under the capital IPPS, the regulations at 42 CFR 412.300(b) define 
a new hospital as a hospital that has operated (under previous or 
current ownership) for less than 2 years and lists examples of 
hospitals that are not considered new hospitals. In accordance with 
Sec.  412.304(c)(2), under the capital IPPS, a new hospital is paid 85 
percent of its allowable Medicare inpatient hospital capital-related 
costs through its first 2 years of operation, unless the new hospital 
elects to receive full prospective payment based on 100 percent of the 
Federal rate. We refer readers to the FY 2012 IPPS/LTCH PPS final rule 
(76 FR 51725) for additional information on payments to new hospitals 
under the capital IPPS.
3. Payments for Hospitals Located in Puerto Rico
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57061), we revised 
the regulations at 42 CFR 412.374 relating to the calculation of 
capital IPPS payments to hospitals located in Puerto Rico beginning in 
FY 2017 to parallel the change in the statutory calculation of 
operating IPPS payments to hospitals located in Puerto Rico, for 
discharges occurring on or after January 1, 2016, made by section 601 
of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113). Section 
601 of Public Law 114-113 increased the applicable Federal percentage 
of the operating IPPS payment for hospitals located in Puerto Rico from 
75 percent to 100 percent and decreased the applicable Puerto Rico 
percentage of the operating IPPS payments for hospitals located in 
Puerto Rico from 25 percent to zero percent, applicable to discharges 
occurring on or after January 1, 2016. As such, under revised Sec.  
412.374, for discharges occurring on or after October 1, 2016, capital 
IPPS payments to hospitals located in Puerto Rico are based on 100 
percent of the capital Federal rate.

C. Proposed Annual Update for FY 2020

    The proposed annual update to the national capital Federal rate, as 
provided for in 42 CFR 412.308(c), for FY 2020 is discussed in section 
III. of the Addendum to this FY 2020 IPPS/LTCH PPS proposed rule.
    In section II.D. of the preamble of this FY 2020 IPPS/LTCH PPS 
proposed rule, we present a discussion of the MS-DRG documentation and 
coding adjustment, including previously finalized policies and 
historical adjustments, as well as the adjustment to the standardized 
amount under section 1886(d) of the Act that we are proposing for FY 
2020, in accordance with the amendments made to section 7(b)(1)(B) of 
Public Law 110-90 by section 414 of the MACRA. Because these provisions 
require us to make an adjustment only to the operating IPPS 
standardized amount, we are not proposing to make a similar adjustment 
to the national capital Federal rate (or to the hospital-specific 
rates).

VI. Proposed Changes for Hospitals Excluded From the IPPS

A. Proposed Rate-of-Increase in Payments to Excluded Hospitals for FY 
2020

    Certain hospitals excluded from a prospective payment system, 
including children's hospitals, 11 cancer 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) receive payment for 
inpatient hospital services they furnish on the basis of reasonable 
costs, subject to a rate-of-increase ceiling. A per discharge limit 
(the target amount, as defined in Sec.  413.40(a) of the regulations) 
is set for each hospital based on the hospital's own cost experience in 
its base year, and updated annually by a rate-of-increase percentage. 
For each cost reporting period, the updated target amount is multiplied 
by total Medicare discharges during that period and applied as an 
aggregate upper limit (the ceiling as defined in Sec.  413.40(a)) of 
Medicare reimbursement for total inpatient operating costs for a 
hospital's cost reporting period. In accordance with Sec.  403.752(a) 
of the regulations, religious nonmedical health care institutions 
(RNHCIs) also are subject to the rate-of-increase limits established 
under Sec.  413.40 of the regulations discussed previously. 
Furthermore, in accordance with Sec.  412.526(c)(3) of the regulations, 
extended neoplastic disease care hospitals also are subject to the 
rate-of-increase limits established under Sec.  413.40 of the 
regulations discussed previously.
    As explained in the FY 2006 IPPS final rule (70 FR 47396 through 
47398), beginning with FY 2006, we have used the percentage increase in 
the IPPS operating market basket to update the target amounts for 
children's hospitals, cancer hospitals, and RNHCIs. Consistent with the 
regulations at Sec. Sec.  412.23(g), 413.40(a)(2)(ii)(A), and 
413.40(c)(3)(viii), we also have used the percentage increase in the 
IPPS operating market basket to update target amounts for short-term 
acute care hospitals located in the U.S. Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa. In the FYs 2014 and 2015 
IPPS/LTCH PPS final rules (78 FR 50747 through 50748 and 79 FR 50156 
through 50157, respectively), we adopted a policy of

[[Page 19454]]

using the percentage increase in the FY 2010-based IPPS operating 
market basket to update the target amounts for FY 2014 and subsequent 
fiscal years for children's hospitals, cancer hospitals, RNHCIs, and 
short-term acute care hospitals located in the U.S. Virgin Islands, 
Guam, the Northern Mariana Islands, and American Samoa. However, in the 
FY 2018 IPPS/LTCH PPS final rule, we rebased and revised the IPPS 
operating basket to a 2014 base year, effective for FY 2018 and 
subsequent years (82 FR 38158 through 38175), and finalized the use of 
the percentage increase in the 2014-based IPPS operating market basket 
to update the target amounts for children's hospitals, the 11 cancer 
hospitals, RNHCIs, and short-term acute care hospitals located in the 
U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American 
Samoa for FY 2018 and subsequent years. Accordingly, for FY 2020, the 
rate-of-increase percentage to be applied to the target amount for 
these hospitals would be the FY 2020 percentage increase in the 2014-
based IPPS operating market basket.
    For this FY 2020 IPPS/LTCH PPS proposed rule, based on IGI's 2018 
fourth quarter forecast, we estimated that the 2014-based IPPS 
operating market basket update for FY 2020 would be 3.2 percent (that 
is, the estimate of the market basket rate-of-increase). Based on this 
estimate, the FY 2020 rate-of-increase percentage that would be applied 
to the FY 2019 target amounts in order to calculate the FY 2020 target 
amounts for children's hospitals, cancer hospitals, RNCHIs, and short-
term acute care hospitals located in the U.S. Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa would be 3.2 percent, in 
accordance with the applicable regulations at 42 CFR 413.40. However, 
we are proposing that if more recent data become available for the 
final rule, we would use them to calculate the final IPPS operating 
market basket update for FY 2020.
    In addition, payment for inpatient operating costs for hospitals 
classified under section 1886(d)(1)(B)(vi) of the Act (which we refer 
to as ``extended neoplastic disease care hospitals'') for cost 
reporting periods beginning on or after January 1, 2015, is to be made 
as described in 42 CFR 412.526(c)(3), and payment for capital costs for 
these hospitals is to be made as described in 42 CFR 412.526(c)(4). 
(For additional information on these payment regulations, we refer 
readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38321 through 
38322).) Section 412.526(c)(3) provides that the hospital's Medicare 
allowable net inpatient operating costs for that period are paid on a 
reasonable cost basis, subject to that hospital's ceiling, as 
determined under Sec.  412.526(c)(1), for that period. Under section 
412.526(c)(1), for each cost reporting period, the ceiling was 
determined by multiplying the updated target amount, as defined in 
Sec.  412.526(c)(2), for that period by the number of Medicare 
discharges paid during that period. Section 412.526(c)(2)(i) describes 
the method for determining the target amount for cost reporting periods 
beginning during FY 2015. Section 412.526(c)(2)(ii) specifies that, for 
cost reporting periods beginning during fiscal years after FY 2015, the 
target amount will equal the hospital's target amount for the previous 
cost reporting period updated by the applicable annual rate-of-increase 
percentage specified in Sec.  413.40(c)(3) for the subject cost 
reporting period (79 FR 50197).
    For FY 2020, in accordance with Sec.  412.22(i) and Sec.  
412.526(c)(2)(ii) of the regulations, for cost reporting periods 
beginning during FY 2020, the proposed update to the target amount for 
long-term care neoplastic disease hospitals (that is, hospitals 
described under Sec.  412.22(i)) is the applicable annual rate-of-
increase percentage specified in Sec.  413.40(c)(3) for FY 2020, which 
would be equal to the percentage increase in the hospital market basket 
index, which is estimated to be the percentage increase in the 2014-
based IPPS operating market basket (that is, the estimate of the market 
basket rate-of-increase). Accordingly, the proposed update to an 
extended neoplastic disease care hospital's target amount for FY 2020 
is 3.2 percent, which is based on IGI's 2018 fourth quarter forecast. 
Furthermore, we are proposing that if more recent data become available 
for the final rule, we would use that updated data to calculate the 
IPPS operating market basket update for FY 2020.

B. Request for Public Comments on Methodologies and Requirements for 
TEFRA Adjustments to the Rate-of-Increase Ceiling

1. General Background
    Section 1886(b) of the Act, as amended by the Tax Equity and Fiscal 
Responsibility Act (TEFRA) of 1982, establishes a ceiling on the 
allowable rate of increase in hospital inpatient operating costs per 
discharge applicable to cost reporting periods beginning on or after 
October 1, 1982. However, effective with cost reporting periods 
beginning on or after October 1, 1983, most hospitals are paid under 
the prospective payment system (PPS) as described in section 1886(d) of 
the Act, 42 CFR part 412, and Chapter 28 of the Provider Reimbursement 
Manual (PRM) (CMS Pub. 15-1). Currently, hospitals that are paid under 
TEFRA include cancer hospitals (11 qualified by statute under section 
1886(d)(1)(B)(v) of the Act), children's hospitals, and hospitals 
outside the 50 States, the District of Columbia, and Puerto Rico (that 
is, short-term acute care hospitals located in the U.S. Virgin Islands, 
Guam, American Samoa, and the Northern Mariana Islands). Under certain 
circumstances, CMS may provide for an adjustment to the rate-of-
increase ceiling or may assign a new base period.
    Medicare payment for inpatient hospital services under the TEFRA 
system is made on a reasonable cost basis, as noted above, subject to a 
limit or ceiling. The ceiling is determined from a hospital's target 
amount per discharge updated from its base year. Specifically, a 
hospital's TEFRA target amount per discharge is determined from its 
total Medicare inpatient operating costs per Medicare discharge in its 
base year. This target amount per discharge is updated each year for 
inflation based on the IPPS operating market basket increase. 
Multiplying the TEFRA target amount per discharge by the Medicare 
discharges in a particular cost reporting period produces the maximum 
amount (the ceiling) Medicare will pay the hospital for inpatient 
hospital services. In other words, under the TEFRA system, Medicare 
payment is the lesser of the reasonable costs incurred or the ceiling 
amount. If a hospital's inpatient operating costs exceed the ceiling in 
a cost reporting period, section 1886(b)(4)(A)(i) of the Act and 
implementing regulations at Sec.  413.40 allow hospitals paid under the 
TEFRA system to request adjustments to increase their Medicare payment 
limits (that is, their ceiling) or to request a new base year (a 
permanent revised TEFRA target amount per discharge for determining the 
ceiling) to account for certain factors such as a significant change in 
services or patient population.
2. TEFRA Adjustment Requests
    Under the regulations at 42 CFR 413.40(g), if a hospital's 
inpatient operating costs exceed the ceiling in a cost reporting 
period, hospitals may request an increase to their Medicare payment 
limits (that is, their ceiling) to account for cost distortions between 
the base year and current year. Section 3004.1 of the PRM states that 
distortions

[[Page 19455]]

in inpatient operating costs resulting in noncomparability of the cost 
reporting periods are generally the result of extraordinary 
circumstances, an increase in the average length of stay of Medicare 
patients, or changes in the volume or intensity of direct patient care 
services. Section 3004 of the PRM provides extensive examples of 
noncomparability of cost reporting periods due to direct patient care 
changes with calculations for increases of average length of stay, 
changes in the intensity of care, as well as for additions/deletions of 
services. These examples were developed many years ago to assist 
providers in filing an adjustment request and to provide guidance to 
MACs when reviewing and evaluating a provider's adjustment request. The 
examples emphasize that the methodologies used to determine the amount 
of the adjustment are based on comparisons between the base year costs 
and current year costs. To receive an adjustment to its ceiling, the 
provider must demonstrate that the increased Medicare costs are 
reasonable, related to direct patient care services, attributable to 
the circumstances specified, separately identified by the hospital, 
verified by the contractor, and tie to costs quantified in its cost 
report. In some cases, an adjustment may be adopted permanently and 
reflected in the hospital's ceiling in subsequent cost reporting 
periods.
    The delivery of direct patient care services, as well as the cost 
report form and instructions, have evolved since the guidance and 
examples currently in section 3004 of the PRM (Pub. 15-1) were 
originally developed. In this proposed rule, we are soliciting public 
comments, suggestions, and recommendations regarding the methodologies 
and examples provided in section 3004 of the PRM to determine an 
appropriate adjustment amount, considering the current environment 
facing providers paid by Medicare under the TEFRA system.
    As noted above, under 42 CFR 413.40(i), hospitals can request a 
permanent change to their ceiling by requesting a new base year for 
determining their target amount per discharge. In accordance with 42 
CFR 413.40(i)(1)(i)(B), this process is meant to account for 
substantial and permanent changes in furnishing patient care services 
since the base period, and, as such, the requirements are stringent. 
Historically, CMS has rarely authorized assignment of a new base year 
period because the adjustment mechanism discussed above is meant to 
address most situations where there is distortion in costs between the 
base year and the current period and providers seldom meet the criteria 
for a new base period. We are requesting public comments, suggestions, 
and recommendations on the possible criteria and circumstances needed 
to warrant a new base period, and, importantly, the documentation that 
would be required to qualify, particularly relative to and 
differentiating it from an adjustment.
    As stated earlier, we are inviting comments, suggestions, and 
recommendations for regulatory and other policy changes to the TEFRA 
adjustment process. We also are interested in feedback on whether or 
not there should be standardization in the supporting documentation 
(such as electronic workbooks) as part of TEFRA adjustment requests 
and, if so, we invite commenters to provide specific examples.

C. Critical Access Hospitals (CAHs)

1. Background
    Section 1820 of the Act provides for the establishment of Medicare 
Rural Hospital Flexibility Programs (MRHFPs), under which individual 
States may designate certain facilities as critical access hospitals 
(CAHs). Facilities that are so designated and meet the CAH conditions 
of participation under 42 CFR part 485, subpart F, will be certified as 
CAHs by CMS. Regulations governing payments to CAHs for services to 
Medicare beneficiaries are located in 42 CFR part 413.
2. Proposed Change Related to CAH Payment for Ambulance Services
a. Background
    Section 1834(l) of the Act sets forth the payment rules for 
ambulance services. Generally, payment to ambulance providers and 
suppliers for ambulance services are made under the Ambulance Fee 
Schedule. Section 205 of BIPA (Pub. L. 106-554) amended section 1834(l) 
of the Act by adding a paragraph (8), which, effective for services 
furnished on or after December 21, 2000, provided that the Secretary 
would pay the reasonable costs incurred in furnishing ambulance 
services if such services are furnished by a CAH (as defined in section 
1861(mm)(1) of the Act), or by an entity that is owned and operated by 
a CAH, but only if the CAH or entity is the only provider or supplier 
of ambulance services that is located within a 35-mile drive of the 
CAH. Regulations implementing section 1834(l)(8) of the Act are set 
forth at 42 CFR 413.70(b)(5). For purposes of this discussion, the term 
``provider'' of ambulance services means all Medicare-participating 
providers that submit claims under Medicare for ambulance services (for 
example, hospitals, CAHs, skilled nursing facilities (SNFs), and home 
health agencies (HHAs)), and the term ``supplier'' of ambulance 
services means an entity that provides ambulance services and that is 
independent of any Medicare-participating or non-Medicare-participating 
provider. The terms ``supplier'' and ``provider of services'' are 
defined in sections 1861(d) and (u) of the Act, respectively, and the 
term ``provider or supplier of ambulance services'' appears in section 
1834(l)(8) of the Act.
    Section 3128(a) of the Affordable Care Act (Pub. L. 111-148) 
amended section 1834(l)(8) of the Act by specifying that payment for 
the reasonable costs incurred by a CAH or by an entity that is owned 
and operated by a CAH in furnishing ambulance services would be at 
``101 percent'' of the reasonable costs incurred in furnishing such 
services. As such, section 3128(a) of the Affordable Care Act increased 
payment for ambulance services furnished by CAHs or entities owned and 
operated by CAHs to 101 percent of the reasonable costs, subject to the 
requirements outlined in section 1834(l)(8) of the Act, effective for 
cost reporting periods beginning on or after January 1, 2004. We 
amended Sec.  413.70(b)(5)(i) in the FY 2011 IPPS/LTCH PPS final rule 
(75 FR 50361) to conform to the statute, as amended.
    More recently, in the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51729), to ensure consistency between the regulations and statute, we 
revised Sec.  413.70(b)(5)(i) by adding a new paragraph (C) to state 
that, effective for cost reporting periods beginning on or after 
October 1, 2011, payment for ambulance services furnished by a CAH or 
by a CAH-owned and operated entity is 101 percent of the reasonable 
costs of the CAH or the entity in furnishing those services, but only 
if the CAH or the entity is the only provider or supplier of ambulance 
services located within a 35-mile drive of the CAH. If there is no 
provider or supplier of ambulance services located within a 35-mile 
drive of the CAH and there is an entity that is owned and operated by a 
CAH that is more than a 35-mile drive from the CAH, payment for 
ambulance services furnished by that entity is 101 percent of the 
reasonable costs of the entity in furnishing those services, but only 
if the entity is the closest provider or supplier of ambulance services 
to the CAH. Therefore, a CAH is paid 101 percent of the reasonable 
costs for its ambulance services only if there is no other provider or 
supplier of ambulance

[[Page 19456]]

services within a 35-mile drive of the CAH. If there is another 
provider or supplier of ambulance services located within a 35-mile 
drive of the CAH, the CAH is paid for its ambulance services using the 
Ambulance Fee Schedule.
b. Proposed Change
    As indicated above and in accordance with statutory language at 
section 1834(l)(8) of the Act, Sec.  413.70(b)(5)(i)(C) currently 
states in relevant part that payment for ambulance services furnished 
by a CAH or an entity that is owned and operated by a CAH is 101 
percent of the reasonable costs of the CAH or the entity in furnishing 
those services, but only if the CAH or the entity is the only provider 
or supplier of ambulance services located within a 35-mile drive of the 
CAH. It has been brought to our attention that there may be instances 
where a provider or supplier of ambulance services that is not owned or 
operated by the CAH is located within a 35-mile drive of the CAH, but 
that provider or supplier of ambulance services is not legally 
authorized to furnish ambulance services to transport individuals 
either to or from the CAH. For example, consider the scenario where an 
ambulance supplier is located within a 35-mile drive of a CAH, but in a 
different State, and the ambulance supplier is not legally authorized 
(for example, the supplier of ambulance services does not have the 
appropriate State licensure) to furnish ambulance services in the State 
in which the CAH is located. Under this scenario, Sec.  
413.70(b)(5)(i)(C) requires that the CAH be paid for its ambulance 
services using the Ambulance Fee Schedule, even though the out-of-state 
ambulance supplier cannot actually furnish ambulance services to 
transport individuals either to or from the CAH. We believe this 
outcome is not consistent with the intent of the Medicare Rural 
Hospital Flexibility Program, which is to provide access to care to 
individuals living in remote and rural areas. A CAH may provide crucial 
health care services to individuals living in a remote and rural area; 
however, if transport services to that CAH are limited due to lack of 
ambulance services, health care services available to individuals 
living in the CAH's service area may also be limited. A lack of 
ambulance services within the CAH's service area could limit access to 
care for individuals living in these remote and rural areas, 
particularly in emergency situations and when individuals have no other 
mode of transportation due to hazardous traveling conditions. In 
general, payment for ambulance services based on 101 percent of the 
reasonable costs is higher than payment made under the Ambulance Fee 
Schedule. This higher payment is intended to provide CAHs with 
sufficient payment to sustain their own ambulance services when no 
other ambulance services are available in their service area. If a CAH 
does not receive reasonable cost-based payments for its ambulance 
services because there is another provider or supplier of ambulance 
services within a 35-mile drive of the CAH, even if that provider or 
supplier is not legally authorized to transport individuals either to 
or from the CAH, the CAH may be unable to support the costs of 
providing ambulance services in its service area.
    Therefore, we are proposing to address this ``gap'' in the current 
regulation at Sec.  413.70(b)(5)(i)(C) by revising our interpretation 
of the requirement in section 1834(l)(8)(B) of the Act that the CAH or 
the entity owned and operated by the CAH be the only provider or 
supplier of ambulance services that is located within a 35-mile drive 
of such a CAH, to exclude consideration of ambulance providers or 
suppliers that are not legally authorized to furnish ambulance services 
to transport individuals either to or from the CAH. Specifically, we 
would interpret section 1834(l)(8)(B) of the Act to mean that the CAH 
or the CAH-owned and operated entity must be the only provider or 
supplier of ambulance services within a 35-mile drive of the CAH that 
is legally authorized to furnish ambulance services to individuals 
transported to or from the CAH. We believe this is a reasonable reading 
of the statutory language because it retains the requirement that the 
CAH or the CAH-owned and operated entity be the only provider or 
supplier of ambulance services within a 35-mile drive of the CAH that 
is available to transport individuals either to or from the CAH. We are 
proposing to revise Sec.  413.70(b)(5)(i) of the regulations to reflect 
this revised interpretation by adding a new paragraph (D) to state 
that, effective for cost reporting periods beginning on or after 
October 1, 2019, payment for ambulance services furnished by a CAH or 
by an entity that is owned and operated by a CAH is 101 percent of the 
reasonable costs of the CAH or the entity in furnishing those services, 
but only if the CAH or the entity is the only provider or supplier of 
ambulance services located within a 35-mile drive of the CAH, excluding 
ambulance providers or suppliers that are not legally authorized to 
furnish ambulance services to transport individuals either to or from 
the CAH. Consistent with the existing policy under Sec.  
413.70(b)(5)(i)(C), if there is no provider or supplier of ambulance 
services located within a 35-mile drive of the CAH and there is an 
entity that is owned and operated by a CAH that is more than a 35-mile 
drive from the CAH, payment for ambulance services furnished by that 
entity is 101 percent of the reasonable costs of the entity in 
furnishing those services, but only if the entity is the closest 
provider or supplier of ambulance services to the CAH. We also are 
proposing a conforming change to Sec.  413.70(b)(5)(i)(C) to make that 
existing provision effective only through September 30, 2019.
    As stated earlier in this discussion, if a CAH does not receive 
reasonable cost-based payments for its ambulance services, which in 
general provide higher payment compared to the Ambulance Fee Schedule, 
the CAH may be unable to support the costs of providing ambulance 
services in its service area. As such, we believe that our proposed 
change to allow for payment based on 101 percent of the reasonable 
costs of the CAH or the CAH-owned and operated entity in furnishing 
ambulance services, in a situation where there is another provider or 
supplier of ambulance services located within a 35-mile drive of the 
CAH that is not legally authorized to transport individuals either to 
or from the CAH, would improve access to care in remote and rural 
areas, particularly in situations where an individual is experiencing 
an emergency and can only receive the necessary services through 
ambulance transport to or from the CAH or in situations where no other 
mode of transportation is advisable. Furthermore, we believe our 
proposal is consistent with the original purpose of section 1834(l)(8) 
of the Act, which was to help ensure that areas served by CAHs would 
have adequate access to ambulance services.
3. Frontier Community Health Integration Project (FCHIP) Demonstration
    As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41516 
through 41517), section 123 of the Medicare Improvements for Patients 
and Providers Act of 2008 (Pub. L. 110-275), as amended by section 3126 
of the Affordable Care Act, authorizes a demonstration project to allow 
eligible entities to develop and test new models for the delivery of 
health care services in eligible counties in order to improve access to 
and better integrate the delivery of acute care, extended care and 
other health care services to

[[Page 19457]]

Medicare beneficiaries. The demonstration is titled ``Demonstration 
Project on Community Health Integration Models in Certain Rural 
Counties,'' and is commonly known as the Frontier Community Health 
Integration Project (FCHIP) demonstration.
    The authorizing statute states the eligibility criteria for 
entities to be able to participate in the demonstration. An eligible 
entity, as defined in section 123(d)(1)(B) of Public Law 110-275, as 
amended, is an MRHFP grantee under section 1820(g) of the Act (that is, 
a CAH); and is located in a State in which at least 65 percent of the 
counties in the State are counties that have 6 or less residents per 
square mile.
    The authorizing statute stipulates several other requirements for 
the demonstration. Section 123(d)(2)(B) of Public Law 110-275, as 
amended, limits participation in the demonstration to eligible entities 
in not more than 4 States. Section 123(f)(1) of Public Law 110-275 
requires the demonstration project to be conducted for a 3-year period. 
In addition, section 123(g)(1)(B) of Public Law 110-275 requires that 
the demonstration be budget neutral. Specifically, this provision 
states that, in conducting the demonstration project, the Secretary 
shall ensure that the aggregate payments made by the Secretary do not 
exceed the amount which the Secretary estimates would have been paid if 
the demonstration project under the section were not implemented. 
Furthermore, section 123(i) of Public Law 110-275 states that the 
Secretary may waive such requirements of titles XVIII and XIX of the 
Act as may be necessary and appropriate for the purpose of carrying out 
the demonstration project, thus allowing the waiver of Medicare payment 
rules encompassed in the demonstration.
    In January 2014, CMS released a request for applications (RFA) for 
the FCHIP demonstration. Using 2013 data from the U.S. Census Bureau, 
CMS identified Alaska, Montana, Nevada, North Dakota, and Wyoming as 
meeting the statutory eligibility requirement for participation in the 
demonstration. The RFA solicited CAHs in these five States to 
participate in the demonstration, stating that participation would be 
limited to CAHs in four of the States. To apply, CAHs were required to 
meet the eligibility requirements in the authorizing legislation, and, 
in addition, to describe a proposal to enhance health-related services 
that would complement those currently provided by the CAH and better 
serve the community's needs. In addition, in the RFA, CMS interpreted 
the eligible entity definition in the statute as meaning a CAH that 
receives funding through the MHRFP. The RFA identified four 
interventions, under which specific waivers of Medicare payment rules 
would allow for enhanced payment for telehealth, skilled nursing 
facility/nursing facility beds, ambulance services, and home health 
services, respectively. These waivers were formulated with the goal of 
increasing access to care with no net increase in costs.
    Ten CAHs were selected for participation in the demonstration, 
which started on August 1, 2016. These CAHs are located in Montana, 
Nevada, and North Dakota, and they are participating in three of the 
four interventions identified in the FY 2017 IPPS/LTCH PPS final rule 
(81 FR 57064 through 57065), the FY 2018 IPPS/LTCH PPS final rule (82 
FR 38294 through 38296), and the FY 2019 IPPS/LTCH PPS final rule (83 
FR 41516 through 41517). Eight CAHs are participating in the telehealth 
intervention, three CAHs are participating in the skilled nursing 
facility/nursing facility bed intervention, and two CAHs are 
participating in the ambulance services intervention. Each CAH is 
allowed to participate in more than one of the interventions. None of 
the selected CAHs are participants in the home health intervention, 
which was the fourth intervention included in the RFA.
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57064 through 
57065), the FY 2018 IPPS/LTCH PPS final rule (82 FR 38294 through 
38296), and the FY 2019 IPPS/LTCH PPS final rule (83 FR 41516 through 
41517), we finalized a policy to address the budget neutrality 
requirement for the demonstration. As explained in the FY 2019 IPPS/
LTCH PPS final rule, we based our selection of CAHs for participation 
with the goal of maintaining the budget neutrality of the demonstration 
on its own terms (that is, the demonstration will produce savings from 
reduced transfers and admissions to other health care providers, thus 
offsetting any increase in payments resulting from the demonstration). 
However, because of the small size of this demonstration and 
uncertainty associated with projected Medicare utilization and costs, 
we adopted a contingency plan to ensure that the budget neutrality 
requirement in section 123 of Public Law 110-275 is met. If analysis of 
claims data for Medicare beneficiaries receiving services at each of 
the participating CAHs, as well as from other data sources, including 
cost reports for these CAHs, shows that increases in Medicare payments 
under the demonstration during the 3-year period are not sufficiently 
offset by reductions elsewhere, we will recoup the additional 
expenditures attributable to the demonstration through a reduction in 
payments to all CAHs nationwide. Because of the small scale of the 
demonstration, we indicated that we did not believe it would be 
feasible to implement budget neutrality by reducing payments to only 
the participating CAHs. Therefore, in the event that this demonstration 
is found to result in aggregate payments in excess of the amount that 
would have been paid if this demonstration were not implemented, we 
will comply with the budget neutrality requirement by reducing payments 
to all CAHs, not just those participating in the demonstration. We 
stated that we believe it is appropriate to make any payment reductions 
across all CAHs because the FCHIP demonstration is specifically 
designed to test innovations that affect delivery of services by the 
CAH provider category. We explained our belief that the language of the 
statutory budget neutrality requirement at section 123(g)(1)(B) of 
Public Law 110-275 permits the agency to implement the budget 
neutrality provision in this manner. The statutory language merely 
refers to ensuring that aggregate payments made by the Secretary do not 
exceed the amount which the Secretary estimates would have been paid if 
the demonstration project was not implemented, and does not identify 
the range across which aggregate payments must be held equal.
    Based on actuarial analysis using cost report settlements for FYs 
2013 and 2014, the demonstration is projected to satisfy the budget 
neutrality requirement and likely yield a total net savings. As we 
estimated for the FY 2019 IPPS/LTCH PPS final rule, for this FY 2020 
IPPS/LTCH PPS proposed rule, we estimate that the total impact of the 
payment recoupment will be no greater than 0.03 percent of CAHs' total 
Medicare payments within one fiscal year (that is, Medicare Part A and 
Part B). The final budget neutrality estimates for the FCHIP 
demonstration will be based on the demonstration period, which is 
August 1, 2016 through July 31, 2019.
    The demonstration is projected to impact payments to participating 
CAHs under both Medicare Part A and Part B. As stated in the FY 2019 
IPPS/LTCH PPS final rule, in the event the demonstration is found not 
to have been budget neutral, any excess costs will be recouped over a 
period of 3 cost reporting years, beginning in CY 2020.

[[Page 19458]]

The 3-year period for recoupment will allow for a reasonable timeframe 
for the payment reduction and to minimize any impact on CAHs' 
operations. Based on the currently available data and because any 
reduction to CAH payments in order to recoup excess costs under the 
demonstration will not begin until CY 2020, this policy will likely 
have no impact for any national payment system for FY 2020.

VII. Proposed Changes to the Long-Term Care Hospital Prospective 
Payment System (LTCH PPS) for FY 2020

A. Background of the LTCH PPS

1. Legislative and Regulatory Authority
    Section 123 of the Medicare, Medicaid, and SCHIP (State Children's 
Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA) 
(Pub. L. 106-113), as amended by section 307(b) of the Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554), provides for payment for both the operating 
and capital-related costs of hospital inpatient stays in long-term care 
hospitals (LTCHs) under Medicare Part A based on prospectively set 
rates. The Medicare prospective payment system (PPS) for LTCHs applies 
to hospitals that are described in section 1886(d)(1)(B)(iv) of the 
Act, effective for cost reporting periods beginning on or after October 
1, 2002.
    Section 1886(d)(1)(B)(iv)(I) of the Act originally defined an LTCH 
as a hospital which has an average inpatient length of stay (as 
determined by the Secretary) of greater than 25 days. Section 
1886(d)(1)(B)(iv)(II) of the Act (``subclause II'' LTCHs) also provided 
an alternative definition of LTCHs. However, section 15008 of the 21st 
Century Cures Act (Pub. L. 114-255) amended section 1886 of the Act to 
exclude former ``subclause II'' LTCHs from being paid under the LTCH 
PPS and created a new category of IPPS-excluded hospitals, which we 
refer to as ``extended neoplastic disease care hospitals''), to be paid 
as hospitals that were formally classified as ``subclause (II)'' LTCHs 
(82 FR 38298).
    Section 123 of the BBRA requires the PPS for LTCHs to be a ``per 
discharge'' system with a diagnosis-related group (DRG) based patient 
classification system that reflects the differences in patient 
resources and costs in LTCHs.
    Section 307(b)(1) of the BIPA, among other things, mandates that 
the Secretary shall examine, and may provide for, adjustments to 
payments under the LTCH PPS, including adjustments to DRG weights, area 
wage adjustments, geographic reclassification, outliers, updates, and a 
disproportionate share adjustment.
    In the August 30, 2002 Federal Register, we issued a final rule 
that implemented the LTCH PPS authorized under the BBRA and BIPA (67 FR 
55954). For the initial implementation of the LTCH PPS (FYs 2003 
through FY 2007), the system used information from LTCH patient records 
to classify patients into distinct long-term care diagnosis-related 
groups (LTC-DRGs) based on clinical characteristics and expected 
resource needs. Beginning in FY 2008, we adopted the Medicare severity 
long-term care diagnosis-related groups (MS-LTC-DRGs) as the patient 
classification system used under the LTCH PPS. Payments are calculated 
for each MS-LTC-DRG and provisions are made for appropriate payment 
adjustments. Payment rates under the LTCH PPS are updated annually and 
published in the Federal Register.
    The LTCH PPS replaced the reasonable cost-based payment system 
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) 
(Pub. L. 97-248) for payments for inpatient services provided by an 
LTCH with a cost reporting period beginning on or after October 1, 
2002. (The regulations implementing the TEFRA reasonable cost-based 
payment provisions are located at 42 CFR part 413.) With the 
implementation of the PPS for acute care hospitals authorized by the 
Social Security Amendments of 1983 (Pub. L. 98-21), which added section 
1886(d) to the Act, certain hospitals, including LTCHs, were excluded 
from the PPS for acute care hospitals and were paid their reasonable 
costs for inpatient services subject to a per discharge limitation or 
target amount under the TEFRA system. For each cost reporting period, a 
hospital-specific ceiling on payments was determined by multiplying the 
hospital's updated target amount by the number of total current year 
Medicare discharges. (Generally, in this section of the preamble of 
this proposed rule, when we refer to discharges, we describe Medicare 
discharges.) The August 30, 2002 final rule further details the payment 
policy under the TEFRA system (67 FR 55954).
    In the August 30, 2002 final rule, we provided for a 5-year 
transition period from payments under the TEFRA system to payments 
under the LTCH PPS. During this 5-year transition period, an LTCH's 
total payment under the PPS was based on an increasing percentage of 
the Federal rate with a corresponding decrease in the percentage of the 
LTCH PPS payment that is based on reasonable cost concepts, unless an 
LTCH made a one-time election to be paid based on 100 percent of the 
Federal rate. Beginning with LTCHs' cost reporting periods beginning on 
or after October 1, 2006, total LTCH PPS payments are based on 100 
percent of the Federal rate.
    In addition, in the August 30, 2002 final rule, we presented an in-
depth discussion of the LTCH PPS, including the patient classification 
system, relative weights, payment rates, additional payments, and the 
budget neutrality requirements mandated by section 123 of the BBRA. The 
same final rule that established regulations for the LTCH PPS under 42 
CFR part 412, subpart O, also contained LTCH provisions related to 
covered inpatient services, limitation on charges to beneficiaries, 
medical review requirements, furnishing of inpatient hospital services 
directly or under arrangement, and reporting and recordkeeping 
requirements. We refer readers to the August 30, 2002 final rule for a 
comprehensive discussion of the research and data that supported the 
establishment of the LTCH PPS (67 FR 55954).
    In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 
49623), we implemented the provisions of the Pathway for Sustainable 
Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which mandated 
the application of the ``site neutral'' payment rate under the LTCH PPS 
for discharges that do not meet the statutory criteria for exclusion 
beginning in FY 2016. For cost reporting periods beginning on or after 
October 1, 2015, discharges that do not meet certain statutory criteria 
for exclusion are paid based on the site neutral payment rate. 
Discharges that do meet the statutory criteria continue to receive 
payment based on the LTCH PPS standard Federal payment rate. For more 
information on the statutory requirements of the Pathway for SGR Reform 
Act of 2013, we refer readers to the FY 2016 IPPS/LTCH PPS final rule 
(80 FR 49601 through 49623) and the FY 2017 IPPS/LTCH PPS final rule 
(81 FR 57068 through 57075).
    In the FY 2018 IPPS/LTCH PPS final rule, we implemented several 
provisions of the 21st Century Cures Act (``the Cures Act'') (Pub. L. 
114-255) that affected the LTCH PPS. For more information on these 
provisions, we refer readers to 82 FR 38299.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41529), we made 
conforming changes to our regulations to implement the provisions of 
section 51005 of the Bipartisan Budget Act of

[[Page 19459]]

2018, Public Law 115-123, which extends the transitional blended 
payment rate for site neutral payment rate cases for an additional 2 
years. We refer readers to section VII.C. of the preamble of the FY 
2019 IPPS/LTCH PPS final rule for a discussion of our final policy. In 
addition, in the FY 2019 IPPS/LTCH PPS final rule, we removed the 25-
percent threshold policy under 42 CFR 412.538.
    In this FY 2020 IPPS/LTCH PPS proposed rule, we are proposing 
revisions to our regulations to implement the provisions of the Pathway 
for SGR Reform Act of 2013 (Pub. L. 113-67) that relate to the payment 
adjustment for discharges from LTCHs that do not maintain the requisite 
discharge payment percentage and the process by which such LTCHs may 
have the payment adjustment discontinued.
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
    Under the regulations at Sec.  412.23(e)(1), to qualify to be paid 
under the LTCH PPS, a hospital must have a provider agreement with 
Medicare. Furthermore, Sec.  412.23(e)(2)(i), which implements section 
1886(d)(1)(B)(iv) of the Act, requires that a hospital have an average 
Medicare inpatient length of stay of greater than 25 days to be paid 
under the LTCH PPS. In accordance with section 1206(a)(3) of the 
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67), as amended by 
section 15007 of Public Law 114-255, we amended our regulations to 
specify that Medicare Advantage plans' and site neutral payment rate 
discharges are excluded from the calculation of the average length of 
stay for all LTCHs, for discharges occurring in cost reporting period 
beginning on or after October 1, 2015.
b. Hospitals Excluded From the LTCH PPS
    The following hospitals are paid under special payment provisions, 
as described in Sec.  412.22(c) and, therefore, are not subject to the 
LTCH PPS rules:
     Veterans Administration hospitals.
     Hospitals that are reimbursed under State cost control 
systems approved under 42 CFR part 403.
     Hospitals that are reimbursed in accordance with 
demonstration projects authorized under section 402(a) of the Social 
Security Amendments of 1967 (Pub. L. 90-248) (42 U.S.C. 1395b-1), 
section 222(a) of the Social Security Amendments of 1972 (Pub. L. 92-
603) (42 U.S.C. 1395b-1 (note)) (Statewide all-payer systems, subject 
to the rate-of-increase test at section 1814(b) of the Act), or section 
3201 of the Patient Protection and Affordable Care Act (Pub. L. 111-148 
(42 U.S.C. 1315a).
     Nonparticipating hospitals furnishing emergency services 
to Medicare beneficiaries.
3. Limitation on Charges to Beneficiaries
    In the August 30, 2002 final rule, we presented an in-depth 
discussion of beneficiary liability under the LTCH PPS (67 FR 55974 
through 55975). This discussion was further clarified in the RY 2005 
LTCH PPS final rule (69 FR 25676). In keeping with those discussions, 
if the Medicare payment to the LTCH is the full LTC-DRG payment amount, 
consistent with other established hospital prospective payment systems, 
Sec.  412.507 currently provides that an LTCH may not bill a Medicare 
beneficiary for more than the deductible and coinsurance amounts as 
specified under Sec. Sec.  409.82, 409.83, and 409.87, and for items 
and services specified under Sec.  489.30(a). However, under the LTCH 
PPS, Medicare will only pay for services furnished during the days for 
which the beneficiary has coverage until the short-stay outlier (SSO) 
threshold is exceeded. If the Medicare payment was for a SSO case (in 
accordance with Sec.  412.529), and that payment was less than the full 
LTC-DRG payment amount because the beneficiary had insufficient 
coverage as a result of the remaining Medicare days, the LTCH also is 
currently permitted to charge the beneficiary for services delivered on 
those uncovered days (in accordance with Sec.  412.507). In the FY 2016 
IPPS/LTCH PPS final rule (80 FR 49623), we amended our regulations to 
expressly limit the charges that may be imposed upon beneficiaries 
whose LTCHs' discharges are paid at the site neutral payment rate under 
the LTCH PPS. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57102), we 
amended the regulations under Sec.  412.507 to clarify our existing 
policy that blended payments made to an LTCH during its transitional 
period (that is, an LTCH's payment for discharges occurring in cost 
reporting periods beginning in FY 2016 or FY 2017) are considered to be 
site neutral payment rate payments.

B. Proposed Medicare Severity Long-Term Care Diagnosis-Related Group 
(MS-LTC-DRG) Classifications and Relative Weights for FY 2020

1. Background
    Section 123 of the BBRA required that the Secretary implement a PPS 
for LTCHs to replace the cost-based payment system under TEFRA. Section 
307(b)(1) of the BIPA modified the requirements of section 123 of the 
BBRA by requiring that the Secretary examine the feasibility and the 
impact of basing payment under the LTCH PPS on the use of existing (or 
refined) hospital DRGs that have been modified to account for different 
resource use of LTCH patients.
    When the LTCH PPS was implemented for cost reporting periods 
beginning on or after October 1, 2002, we adopted the same DRG patient 
classification system utilized at that time under the IPPS. As a 
component of the LTCH PPS, we refer to this patient classification 
system as the ``long-term care diagnosis-related groups (LTC-DRGs).'' 
Although the patient classification system used under both the LTCH PPS 
and the IPPS are the same, the relative weights are different. The 
established relative weight methodology and data used under the LTCH 
PPS result in relative weights under the LTCH PPS that reflect the 
differences in patient resource use of LTCH patients, consistent with 
section 123(a)(1) of the BBRA (Pub. L. 106-113).
    As part of our efforts to better recognize severity of illness 
among patients, in the FY 2008 IPPS final rule with comment period (72 
FR 47130), the MS-DRGs and the Medicare severity long-term care 
diagnosis-related groups (MS-LTC-DRGs) were adopted under the IPPS and 
the LTCH PPS, respectively, effective beginning October 1, 2007 (FY 
2008). For a full description of the development, implementation, and 
rationale for the use of the MS-DRGs and MS-LTC-DRGs, we refer readers 
to the FY 2008 IPPS final rule with comment period (72 FR 47141 through 
47175 and 47277 through 47299). (We note that, in that same final rule, 
we revised the regulations at Sec.  412.503 to specify that for LTCH 
discharges occurring on or after October 1, 2007, when applying the 
provisions of 42 CFR part 412, subpart O applicable to LTCHs for policy 
descriptions and payment calculations, all references to LTC-DRGs would 
be considered a reference to MS-LTC-DRGs. For the remainder of this 
section, we present the discussion in terms of the current MS-LTC-DRG 
patient classification system unless specifically referring to the 
previous LTC-DRG patient classification system that was in effect 
before October 1, 2007.)
    The MS-DRGs adopted in FY 2008 represent an increase in the number 
of DRGs by 207 (that is, from 538 to 745) (72 FR 47171). The MS-DRG 
classifications are updated annually. There are currently 761 MS-DRG

[[Page 19460]]

groupings. For FY 2020, there would be 761 MS-DRG groupings based on 
the proposed changes, as discussed in section II.F. of the preamble of 
this FY 2020 IPPS/LTCH PPS proposed rule. Consistent with section 123 
of the BBRA, as amended by section 307(b)(1) of the BIPA, and Sec.  
412.515 of the regulations, we use information derived from LTCH PPS 
patient records to classify LTCH discharges into distinct MS-LTC-DRGs 
based on clinical characteristics and estimated resource needs. We then 
assign an appropriate weight to the MS-LTC-DRGs to account for the 
difference in resource use by patients exhibiting the case complexity 
and multiple medical problems characteristic of LTCHs.
    In this section of the proposed rule, we provide a general summary 
of our existing methodology for determining the proposed FY 2020 MS-
LTC-DRG relative weights under the LTCH PPS.
    In this FY 2020 IPPS/LTCH PPS proposed rule, in general, for FY 
2020, we are proposing to continue to use our existing methodology to 
determine the proposed MS-LTC-DRG relative weights (as discussed in 
greater detail in section VII.B.3. of the preamble of this proposed 
rule). As we established when we implemented the dual rate LTCH PPS 
payment structure codified under Sec.  412.522, which began in FY 2016, 
we are proposing that the annual recalibration of the MS-LTC-DRG 
relative weights are determined: (1) Using only data from available 
LTCH PPS claims that would have qualified for payment under the new 
LTCH PPS standard Federal payment rate if that rate had been in effect 
at the time of discharge when claims data from time periods before the 
dual rate LTCH PPS payment structure applies are used to calculate the 
relative weights; and (2) using only data from available LTCH PPS 
claims that qualify for payment under the new LTCH PPS standard Federal 
payment rate when claims data from time periods after the dual rate 
LTCH PPS payment structure applies are used to calculate the relative 
weights (80 FR 49624). That is, under our current methodology, our MS-
LTC-DRG relative weight calculations do not use data from cases paid at 
the site neutral payment rate under Sec.  412.522(c)(1) or data from 
cases that would have been paid at the site neutral payment rate if the 
dual rate LTCH PPS payment structure had been in effect at the time of 
that discharge. For the remainder of this discussion, we use the phrase 
``applicable LTCH cases'' or ``applicable LTCH data'' when referring to 
the resulting claims data set used to calculate the relative weights 
(as described later in greater detail in section VII.B.3.c. of the 
preamble of this proposed rule). In addition, in this FY 2020 IPPS/LTCH 
PPS proposed rule, for FY 2020, we are proposing to continue to exclude 
the data from all-inclusive rate providers and LTCHs paid in accordance 
with demonstration projects, as well as any Medicare Advantage claims 
from the MS-LTC-DRG relative weight calculations for the reasons 
discussed in section VII.B.3.c. of the preamble of this proposed rule.
    Furthermore, for FY 2020, in using data from applicable LTCH cases 
to establish MS-LTC-DRG relative weights, we are proposing to continue 
to establish low-volume MS-LTC-DRGs (that is, MS-LTC-DRGs with less 
than 25 cases) using our quintile methodology in determining the MS-
LTC-DRG relative weights because LTCHs do not typically treat the full 
range of diagnoses as do acute care hospitals. Therefore, for purposes 
of determining the relative weights for the large number of low-volume 
MS-LTC-DRGs, we grouped all of the low-volume MS-LTC-DRGs into five 
quintiles based on average charges per discharge. Then, under our 
existing methodology, we account for adjustments made to LTCH PPS 
standard Federal payments for short-stay outlier (SSO) cases (that is, 
cases where the covered length of stay at the LTCH is less than or 
equal to five-sixths of the geometric average length of stay for the 
MS-LTC-DRG), and we make adjustments to account for nonmonotonically 
increasing weights, when necessary. The methodology is premised on more 
severe cases under the MS-LTC-DRG system requiring greater expenditure 
of medical care resources and higher average charges such that, in the 
severity levels within a base MS-LTC-DRG, the relative weights should 
increase monotonically with severity from the lowest to highest 
severity level. (We discuss each of these components of our MS-LTC-DRG 
relative weight methodology in greater detail in section VII.B.3.g. of 
the preamble of this proposed rule.)
2. Patient Classifications Into MS-LTC-DRGs
a. Background
    The MS-DRGs (used under the IPPS) and the MS-LTC-DRGs (used under 
the LTCH PPS) are based on the CMS DRG structure. As noted previously 
in this section, we refer to the DRGs under the LTCH PPS as MS-LTC-DRGs 
although they are structurally identical to the MS-DRGs used under the 
IPPS.
    The MS-DRGs are organized into 25 major diagnostic categories 
(MDCs), most of which are based on a particular organ system of the 
body; the remainder involve multiple organ systems (such as MDC 22, 
Burns). Within most MDCs, cases are then divided into surgical DRGs and 
medical DRGs. Surgical DRGs are assigned based on a surgical hierarchy 
that orders operating room (O.R.) procedures or groups of O.R. 
procedures by resource intensity. The GROUPER software program does not 
recognize all ICD-10-PCS procedure codes as procedures affecting DRG 
assignment. That is, procedures that are not surgical (for example, 
EKGs), or minor surgical procedures (for example, a biopsy of skin and 
subcutaneous tissue (procedure code 0JBH3ZX)) do not affect the MS-LTC-
DRG assignment based on their presence on the claim.
    Generally, under the LTCH PPS, a Medicare payment is made at a 
predetermined specific rate for each discharge that varies based on the 
MS-LTC-DRG to which a beneficiary's discharge is assigned. Cases are 
classified into MS-LTC-DRGs for payment based on the following six data 
elements:
     Principal diagnosis;
     Additional or secondary diagnoses;
     Surgical procedures;
     Age;
     Sex; and
     Discharge status of the patient.
    Currently, for claims submitted using version ASC X12 5010 format, 
up to 25 diagnosis codes and 25 procedure codes are considered for an 
MS-DRG assignment. This includes one principal diagnosis and up to 24 
secondary diagnoses for severity of illness determinations. (For 
additional information on the processing of up to 25 diagnosis codes 
and 25 procedure codes on hospital inpatient claims, we refer readers 
to section II.G.11.c. of the preamble of the FY 2011 IPPS/LTCH PPS 
final rule (75 FR 50127).)
    Under the HIPAA transactions and code sets regulations at 45 CFR 
parts 160 and 162, covered entities must comply with the adopted 
transaction standards and operating rules specified in Subparts I 
through S of Part 162. Among other requirements, on or after January 1, 
2012, covered entities were required to use the ASC X12 Standards for 
Electronic Data Interchange Technical Report Type 3--Health Care Claim: 
Institutional (837), May 2006, ASC X12N/005010X223, and Type 1 Errata 
to Health Care Claim: Institutional (837) ASC X12 Standards for 
Electronic Data Interchange Technical Report Type 3, October 2007, ASC 
X12N/005010X233A1 for the health care claims or equivalent

[[Page 19461]]

encounter information transaction (45 CFR 162.1102(c)).
    HIPAA requires covered entities to use the applicable medical data 
code set requirements when conducting HIPAA transactions (45 CFR 
162.1000). Currently, upon the discharge of the patient, the LTCH must 
assign appropriate diagnosis and procedure codes from the most current 
version of 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, 
both of which were required to be implemented October 1, 2015 (45 CFR 
162.1002(c)(2) and (3)). For additional information on the 
implementation of the ICD-10 coding system, we refer readers to section 
II.F.1. of the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 
56790) and section II.F.1. of the preamble of this final rule. 
Additional coding instructions and examples are published in the AHA's 
Coding Clinic for ICD-10-CM/PCS.
    To create the MS-DRGs (and by extension, the MS-LTC-DRGs), base 
DRGs were subdivided according to the presence of specific secondary 
diagnoses designated as complications or comorbidities (CCs) into one, 
two, or three levels of severity, depending on the impact of the CCs on 
resources used for those cases. Specifically, there are sets of MS-DRGs 
that are split into 2 or 3 subgroups based on the presence or absence 
of a CC or a major complication or comorbidity (MCC). We refer readers 
to section II.D. of the FY 2008 IPPS final rule with comment period for 
a detailed discussion about the creation of MS-DRGs based on severity 
of illness levels (72 FR 47141 through 47175).
    MACs enter the clinical and demographic information submitted by 
LTCHs into their claims processing systems and subject this information 
to a series of automated screening processes called the Medicare Code 
Editor (MCE). These screens are designed to identify cases that require 
further review before assignment into a MS-LTC-DRG can be made. During 
this process, certain cases are selected for further explanation (74 FR 
43949).
    After screening through the MCE, each claim is classified into the 
appropriate MS-LTC-DRG by the Medicare LTCH GROUPER software on the 
basis of diagnosis and procedure codes and other demographic 
information (age, sex, and discharge status). The GROUPER software used 
under the LTCH PPS is the same GROUPER software program used under the 
IPPS. Following the MS-LTC-DRG assignment, the MAC determines the 
prospective payment amount by using the Medicare PRICER program, which 
accounts for hospital-specific adjustments. Under the LTCH PPS, we 
provide an opportunity for LTCHs to review the MS-LTC-DRG assignments 
made by the MAC and to submit additional information within a specified 
timeframe as provided in Sec.  412.513(c).
    The GROUPER software is used both to classify past cases to measure 
relative hospital resource consumption to establish the MS-LTC-DRG 
relative weights and to classify current cases for purposes of 
determining payment. The records for all Medicare hospital inpatient 
discharges are maintained in the MedPAR file. The data in this file are 
used to evaluate possible MS-DRG and MS-LTC-DRG classification changes 
and to recalibrate the MS-DRG and MS-LTC-DRG relative weights during 
our annual update under both the IPPS (Sec.  412.60(e)) and the LTCH 
PPS (Sec.  412.517), respectively.
b. Proposed Changes to the MS-LTC-DRGs for FY 2020
    As specified by our regulations at Sec.  412.517(a), which require 
that the MS-LTC-DRG classifications and relative weights be updated 
annually, and consistent with our historical practice of using the same 
patient classification system under the LTCH PPS as is used under the 
IPPS, in this FY 2020 IPPS/LTCH PPS proposed rule, we are proposing to 
update the MS-LTC-DRG classifications effective October 1, 2019, 
through September 30, 2020 (FY 2020), consistent with the proposed 
changes to specific MS-DRG classifications presented in section II.F. 
of the preamble of this proposed rule. Accordingly, the proposed MS-
LTC-DRGs for FY 2020 presented in this proposed rule are the same as 
the proposed MS-DRGs that are being used under the IPPS for FY 2020. In 
addition, because the MS-LTC-DRGs for FY 2020 are the same as the 
proposed MS-DRGs for FY 2020, the other proposed changes that affect 
MS-DRG (and by extension MS-LTC-DRG) assignments under proposed GROUPER 
Version 37 as discussed in section II.F. of the preamble of this 
proposed rule, including the proposed changes to the MCE software and 
the ICD-10-CM/PCS coding system, also would be applicable under the 
LTCH PPS for FY 2020.
3. Development of the Proposed FY 2020 MS-LTC-DRG Relative Weights
a. General Overview of the Development of the MS-LTC-DRG Relative 
Weights
    One of the primary goals for the implementation of the LTCH PPS is 
to pay each LTCH an appropriate amount for the efficient delivery of 
medical care to Medicare patients. The system must be able to account 
adequately for each LTCH's case-mix in order to ensure both fair 
distribution of Medicare payments and access to adequate care for those 
Medicare patients whose care is more costly (67 FR 55984). To 
accomplish these goals, we have annually adjusted the LTCH PPS standard 
Federal prospective payment rate by the applicable relative weight in 
determining payment to LTCHs for each case. In order to make these 
annual adjustments under the dual rate LTCH PPS payment structure, 
beginning with FY 2016, we recalibrate the MS-LTC-DRG relative 
weighting factors annually using data from applicable LTCH cases (80 FR 
49614 through 49617). Under this policy, the resulting MS-LTC-DRG 
relative weights would continue to be used to adjust the LTCH PPS 
standard Federal payment rate when calculating the payment for LTCH PPS 
standard Federal payment rate cases.
    The established methodology to develop the MS-LTC-DRG relative 
weights is generally consistent with the methodology established when 
the LTCH PPS was implemented in the August 30, 2002 LTCH PPS final rule 
(67 FR 55989 through 55991). However, there have been some 
modifications of our historical procedures for assigning relative 
weights in cases of zero volume and/or nonmonotonicity resulting from 
the adoption of the MS-LTC-DRGs, along with the change made in 
conjunction with the implementation of the dual rate LTCH PPS payment 
structure beginning in FY 2016 to use LTCH claims data from only LTCH 
PPS standard Federal payment rate cases (or LTCH PPS cases that would 
have qualified for payment under the LTCH PPS standard Federal payment 
rate if the dual rate LTCH PPS payment structure had been in effect at 
the time of the discharge). (For details on the modifications to our 
historical procedures for assigning relative weights in cases of zero 
volume and/or nonmonotonicity, we refer readers to the FY 2008 IPPS 
final rule with comment period (72 FR 47289 through 47295) and the FY 
2009 IPPS final rule (73 FR 48542 through 48550).) For details on the 
change in our historical methodology to use LTCH claims data only from 
LTCH PPS standard Federal

[[Page 19462]]

payment rate cases (or cases that would have qualified for such payment 
had the LTCH PPS dual payment rate structure been in effect at the 
time) to determine the MS-LTC-DRG relative weights, we refer readers to 
the FY 2016 IPPS/LTCH PPS final rule (80 FR 49614 through 49617). Under 
the LTCH PPS, relative weights for each MS-LTC-DRG are a primary 
element used to account for the variations in cost per discharge and 
resource utilization among the payment groups (Sec.  412.515). To 
ensure that Medicare patients classified to each MS-LTC-DRG have access 
to an appropriate level of services and to encourage efficiency, we 
calculate a relative weight for each MS-LTC-DRG that represents the 
resources needed by an average inpatient LTCH case in that MS-LTC-DRG. 
For example, cases in an MS-LTC-DRG with a relative weight of 2 would, 
on average, cost twice as much to treat as cases in an MS-LTC-DRG with 
a relative weight of 1.
b. Development of the Proposed MS-LTC-DRG Relative Weights for FY 2020
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41521 through 
41529), we presented our policies for the development of the MS-LTC-DRG 
relative weights for FY 2019.
    In this FY 2020 IPPS/LTCH PPS proposed rule, we are proposing to 
continue to use our current methodology to determine the proposed MS-
LTC-DRG relative weights for FY 2020, including the continued 
application of established policies related to: The hospital-specific 
relative value methodology, the treatment of severity levels in the 
proposed MS-LTC-DRGs, proposed low-volume and no-volume MS-LTC-DRGs, 
proposed adjustments for nonmonotonicity, the steps for calculating the 
proposed MS-LTC-DRG relative weights with a proposed budget neutrality 
factor, and only using data from applicable LTCH cases (which includes 
our policy of only using cases that would meet the criteria for 
exclusion from the site neutral payment rate (or, for discharges 
occurring prior to the implementation of the dual rate LTCH PPS payment 
structure, would have met the criteria for exclusion had those criteria 
been in effect at the time of the discharge)).
    In this section, we present our proposed application of our 
existing methodology for determining the proposed MS-LTC-DRG relative 
weights for FY 2020, and we discuss the effects of our proposals 
concerning the data used to determine the proposed FY 2020 MS-LTC-DRG 
relative weights on the various components of our existing methodology 
in the discussion that follows.
    As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41522), 
we now generally provide the low-volume quintiles and no-volume 
crosswalk data previously published in Tables 13A and 13B for each 
annual proposed and final rule as one of our supplemental IPPS/LTCH PPS 
related data files that are made available for public use via the 
internet on the CMS website for the respective rule and fiscal year 
(that is, FY 2019 and subsequent fiscal years) at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html to streamline the information made 
available to the public that is used in the annual development of IPPS 
Table 11 and to make it easier for the public to navigate and find the 
relevant data and information used for the development of proposed and 
final payment rates or factors for the applicable payment year while 
continuing to furnish the same information the tables provided in 
previous fiscal years. We refer readers to the CMS website for the low-
volume quintiles and no-volume crosswalk data previously furnished via 
Tables 13A and 13B.
c. Data
    For this FY 2020 IPPS/LTCH PPS proposed rule, consistent with our 
proposals regarding the calculation of the proposed MS-LTC-DRG relative 
weights for FY 2020, we obtained total charges from FY 2018 Medicare 
LTCH claims data from the December 2018 update of the FY 2018 MedPAR 
file, which are the best available data at this time, and we are 
proposing to use Version 37 of the GROUPER to classify LTCH cases. 
Consistent with our historical practice, we are proposing that if more 
recent data become available, we would use those data and the finalized 
Version 37 of the GROUPER in establishing the FY 2020 MS-LTC-DRG 
relative weights in the final rule. To calculate the proposed FY 2020 
MS-LTC-DRG relative weights under the dual rate LTCH PPS payment 
structure, we are proposing to continue to use applicable LTCH data, 
which includes our policy of only using cases that meet the criteria 
for exclusion from the site neutral payment rate (or would have met the 
criteria had they been in effect at the time of the discharge) (80 FR 
49624). Specifically, we began by first evaluating the LTCH claims data 
in the December 2018 update of the FY 2018 MedPAR file to determine 
which LTCH cases would meet the criteria for exclusion from the site 
neutral payment rate under Sec.  412.522(b) had the dual rate LTCH PPS 
payment structure applied to those cases at the time of discharge. We 
identified the FY 2018 LTCH cases that were not assigned to MS-LTC-DRGs 
876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945 
and 946, which identify LTCH cases that do not have a principal 
diagnosis relating to a psychiatric diagnosis or to rehabilitation; and 
that either--
     The admission to the LTCH was ``immediately preceded'' by 
discharge from a subsection (d) hospital and the immediately preceding 
stay in that subsection (d) hospital included at least 3 days in an 
ICU, as we define under the ICU criterion; or
     The admission to the LTCH was ``immediately preceded'' by 
discharge from a subsection (d) hospital and the claim for the LTCH 
discharge includes the applicable procedure code that indicates at 
least 96 hours of ventilator services were provided during the LTCH 
stay, as we define under the ventilator criterion. Claims data from the 
FY 2017 MedPAR file that reported ICD-10-PCS procedure code 5A1955Z 
were used to identify cases involving at least 96 hours of ventilator 
services in accordance with the ventilator criterion. We note that, for 
purposes of developing the proposed FY 2020 MS-LTC-DRG relative weights 
using our current methodology, we are not making any proposals for 
exceptions regarding the identification of cases that would have been 
excluded from the site neutral payment rate under the statutory 
provisions that provided for temporary exception from the site neutral 
payment rate under the LTCH PPS for certain severe wound care 
discharges from certain LTCHs or for certain spinal cord specialty 
hospitals provided by sections 15009 and 15010 of Public Law 114-255, 
respectively, had our implementation of that law and the dual rate LTCH 
PPS payment structure been in effect at the time of the discharge. At 
this time, it is uncertain how many LTCHs and how many cases in the 
claims data we are using for this proposed rule meet the criteria to be 
excluded from the site neutral payment rate under those exceptions (or 
would have met the criteria for exclusion had the dual rate LTCH PPS 
payment structure been in effect at the time of the discharge). 
Therefore, for the remainder of this section, when we refer to LTCH 
claims only from cases that meet the criteria for exclusion from the 
site neutral payment rate (or would have met the criteria had the 
applicable statutes been in effect at the time of the discharge), such 
data do not include any discharges that would have been paid

[[Page 19463]]

based on the LTCH PPS standard Federal payment rate under the 
provisions of sections 15009 and 15010 of Public Law 114-255, had the 
exception been in effect at the time of the discharge.
    Furthermore, consistent with our historical methodology, we are 
excluding any claims in the resulting data set that were submitted by 
LTCHs that were all-inclusive rate providers and LTCHs that are paid in 
accordance with demonstration projects authorized under section 402(a) 
of Public Law 90-248 or section 222(a) of Public Law 92-603. In 
addition, consistent with our historical practice and our policies, we 
are excluding any Medicare Advantage (Part C) claims in the resulting 
data. Such claims were identified based on the presence of a GHO Paid 
indicator value of ``1'' in the MedPAR files. The claims that remained 
after these three trims (that is, the applicable LTCH data) were then 
used to calculate the proposed MS-LTC-DRG relative weights for FY 2020.
    In summary, in general, we identified the claims data used in the 
development of the proposed FY 2020 MS-LTC-DRG relative weights in this 
proposed rule, as we are proposing, by trimming claims data that were 
paid the site neutral payment rate (or would have been paid the site 
neutral payment rate had the dual payment rate structure been in 
effect, except for discharges which would have been excluded from the 
site neutral payment under the temporary exception for certain severe 
wound care discharges from certain LTCHs and under the temporary 
exception for certain spinal cord specialty hospitals), as well as the 
claims data of 8 all-inclusive rate providers reported in the December 
2018 update of the FY 2018 MedPAR file and any Medicare Advantage 
claims data. (We note that, there were no data from any LTCHs that are 
paid in accordance with a demonstration project reported in the 
December 2018 update of the FY 2018 MedPAR file. However, had there 
been we would trim the claims data from those LTCHs as well, in 
accordance with our established policy.) We are proposing to use the 
remaining data (that is, the applicable LTCH data) to calculate the 
proposed relative weights for FY 2020.
d. Hospital-Specific Relative Value (HSRV) Methodology
    By nature, LTCHs often specialize in certain areas, such as 
ventilator-dependent patients. Some case types (MS-LTC-DRGs) may be 
treated, to a large extent, in hospitals that have, from a perspective 
of charges, relatively high (or low) charges. This nonrandom 
distribution of cases with relatively high (or low) charges in specific 
MS-LTC-DRGs has the potential to inappropriately distort the measure of 
average charges. To account for the fact that cases may not be randomly 
distributed across LTCHs, consistent with the methodology we have used 
since the implementation of the LTCH PPS, in this FY 2020 IPPS/LTCH PPS 
proposed rule, we are proposing to continue to use a hospital-specific 
relative value (HSRV) methodology to calculate the proposed MS-LTC-DRG 
relative weights for FY 2020. We believe that this method removes this 
hospital-specific source of bias in measuring LTCH average charges (67 
FR 55985). Specifically, under this methodology, we are proposing to 
reduce the impact of the variation in charges across providers on any 
particular MS-LTC-DRG relative weight by converting each LTCH's charge 
for an applicable LTCH case to a relative value based on that LTCH's 
average charge for such cases.
    Under the HSRV methodology, we standardize charges for each LTCH by 
converting its charges for each applicable LTCH case to hospital-
specific relative charge values and then adjusting those values for the 
LTCH's case-mix. The adjustment for case-mix is needed to rescale the 
hospital-specific relative charge values (which, by definition, average 
1.0 for each LTCH). The average relative weight for an LTCH is its 
case-mix; therefore, it is reasonable to scale each LTCH's average 
relative charge value by its case-mix. In this way, each LTCH's 
relative charge value is adjusted by its case-mix to an average that 
reflects the complexity of the applicable LTCH cases it treats relative 
to the complexity of the applicable LTCH cases treated by all other 
LTCHs (the average LTCH PPS case-mix of all applicable LTCH cases 
across all LTCHs).
    In accordance with our established methodology, for FY 2020, we are 
proposing to continue to standardize charges for each applicable LTCH 
case by first dividing the adjusted charge for the case (adjusted for 
SSOs under Sec.  412.529 as described in section VII.B.3.g. (Step 3) of 
the preamble of this proposed rule) by the average adjusted charge for 
all applicable LTCH cases at the LTCH in which the case was treated. 
SSO cases are cases with a length of stay that is less than or equal to 
five-sixths the average length of stay of the MS-LTC-DRG (Sec.  412.529 
and Sec.  412.503). The average adjusted charge reflects the average 
intensity of the health care services delivered by a particular LTCH 
and the average cost level of that LTCH. The resulting ratio is 
multiplied by that LTCH's case-mix index to determine the standardized 
charge for the case.
    Multiplying the resulting ratio by the LTCH's case-mix index 
accounts for the fact that the same relative charges are given greater 
weight at an LTCH with higher average costs than they would at an LTCH 
with low average costs, which is needed to adjust each LTCH's relative 
charge value to reflect its case-mix relative to the average case-mix 
for all LTCHs. By standardizing charges in this manner, we count 
charges for a Medicare patient at an LTCH with high average charges as 
less resource intensive than they would be at an LTCH with low average 
charges. For example, a $10,000 charge for a case at an LTCH with an 
average adjusted charge of $17,500 reflects a higher level of relative 
resource use than a $10,000 charge for a case at an LTCH with the same 
case-mix, but an average adjusted charge of $35,000. We believe that 
the adjusted charge of an individual case more accurately reflects 
actual resource use for an individual LTCH because the variation in 
charges due to systematic differences in the markup of charges among 
LTCHs is taken into account.
e. Treatment of Severity Levels in Developing the Proposed MS-LTC-DRG 
Relative Weights
    For purposes of determining the MS-LTC-DRG relative weights, under 
our historical methodology, there are three different categories of MS-
DRGs based on volume of cases within specific MS-LTC-DRGs: (1) MS-LTC-
DRGs with at least 25 applicable LTCH cases in the data used to 
calculate the relative weight, which are each assigned a unique 
relative weight; (2) low-volume MS-LTC-DRGs (that is, MS-LTC-DRGs that 
contain between 1 and 24 applicable LTCH cases that are grouped into 
quintiles (as described later in this section of the proposed rule) and 
assigned the relative weight of the quintile); and (3) no-volume MS-
LTC-DRGs that are cross-walked to other MS-LTC-DRGs based on the 
clinical similarities and assigned the relative weight of the cross-
walked MS-LTC-DRG (as described in greater detail below). For FY 2020, 
we are proposing to continue to use applicable LTCH cases to establish 
the same volume-based categories to calculate the proposed FY 2020 MS-
LTC-DRG relative weights.
    In determining the proposed FY 2020 MS-LTC-DRG relative weights, 
when necessary, as is our longstanding practice, we are proposing to 
make adjustments to account for nonmonotonicity, as discussed in

[[Page 19464]]

greater detail later in Step 6 of section VII.B.3.g. of the preamble of 
this proposed rule. We refer readers to the discussion in the FY 2010 
IPPS/RY 2010 LTCH PPS final rule for our rationale for including an 
adjustment for nonmonotonicity (74 FR 43953 through 43954).
f. Proposed Low-Volume MS-LTC-DRGs
    In order to account for proposed MS-LTC-DRGs with low-volume (that 
is, with fewer than 25 applicable LTCH cases), consistent with our 
existing methodology, we are proposing to continue to employ the 
quintile methodology for proposed low-volume MS-LTC-DRGs, such that we 
group the proposed ``low-volume MS-LTC-DRGs'' (that is, proposed MS-
LTC-DRGs that contain between 1 and 24 applicable LTCH cases into one 
of five categories (quintiles) based on average charges (67 FR 55984 
through 55995; 72 FR 47283 through 47288; and 81 FR 25148).) In cases 
where the initial assignment of a low-volume proposed MS-LTC-DRG to a 
quintile results in nonmonotonicity within a base-DRG, we are proposing 
to make adjustments to the resulting low-volume proposed MS-LTC-DRGs to 
preserve monotonicity, as discussed in detail in section VII.B.3.g. 
(Step 6) of the preamble of this proposed rule.
    In this proposed rule, based on the best available data (that is, 
the December 2018 update of the FY 2018 MedPAR files), we identified 
259 proposed MS-LTC-DRGs that contained between 1 and 24 applicable 
LTCH cases. This list of proposed MS-LTC-DRGs was then divided into 1 
of the 5 low-volume quintiles, each containing at least proposed 51 MS-
LTC-DRGs (259/5 = 51 with a remainder of 4). We assigned the proposed 
low-volume MS-LTC-DRGs to specific proposed low-volume quintiles by 
sorting the proposed low-volume MS-LTC-DRGs in ascending order by 
average charge in accordance with our established methodology. Based on 
the data available for this proposed rule, the number of proposed MS-
LTC-DRGs with less than 25 applicable LTCH cases was not evenly 
divisible by 5 and, therefore, we are proposing to employ our 
historical methodology for determining which of the proposed low-volume 
quintiles would contain the additional proposed low-volume MS-LTC-DRG. 
Specifically for this proposed rule, after organizing the proposed MS-
LTC-DRGs by ascending order by average charge, we assigned the first 52 
(1st through 52nd) of proposed low-volume MS-LTC-DRGs (with the lowest 
average charge) into Quintile 1. Because the average charge of the 52nd 
proposed low-volume MS-LTC-DRG in the sorted list was closer to the 
average charge of the 51st proposed low-volume MS-LTC-DRG (assigned to 
Quintile 1) than to the average charge of the 53rd proposed low-volume 
MS-LTC-DRG (assigned to Quintile 2), we assigned it to Quintile 1 (such 
that Quintile 1 contains 52 proposed low-volume MS-LTC-DRGs before any 
adjustments for nonmonotonicity, as discussed below). The 51 proposed 
MS-LTC-DRGs with the highest average charge were assigned into Quintile 
5. This resulted in 4 of the 5 proposed low-volume quintiles containing 
52 proposed MS-LTC-DRGs (Quintiles 1 through 4) and 1 proposed low-
volume quintile containing 51 proposed MS-LTC-DRGs (Quintile 5). As 
discussed earlier, for this proposed rule, we are providing the list of 
the composition of the proposed low-volume quintiles for proposed low-
volume MS-LTC-DRGs for FY 2020 in a supplemental data file for public 
use posted via the internet on the CMS website for this proposed rule 
at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/Acute InpatientPPS/index.html in order to streamline the information 
made available to the public that is used in the annual development of 
Table 11.
    In order to determine the proposed FY 2020 relative weights for the 
proposed low-volume MS-LTC-DRGs, consistent with our historical 
practice, we are proposing to use the five low-volume quintiles 
described previously. We determined a proposed relative weight and 
(geometric) average length of stay for each of the five proposed low-
volume quintiles using the methodology described in section VII.B.3.g. 
of the preamble of this proposed rule. We are proposing to assign the 
same proposed relative weight and average length of stay to each of the 
proposed low-volume MS-LTC-DRGs that make up an individual low-volume 
quintile. We note that, as this system is dynamic, it is possible that 
the number and specific type of MS-LTC-DRGs with a low-volume of 
applicable LTCH cases will vary in the future. Furthermore, we note 
that we continue to monitor the volume (that is, the number of 
applicable LTCH cases) in the low-volume quintiles to ensure that our 
quintile assignments used in determining the MS-LTC-DRG relative 
weights result in appropriate payment for LTCH cases grouped to 
proposed low-volume MS-LTC-DRGs and do not result in an unintended 
financial incentive for LTCHs to inappropriately admit these types of 
cases.
g. Steps for Determining the Proposed FY 2020 MS-LTC-DRG Relative 
Weights
    In this proposed rule, we are proposing to continue to use our 
current methodology to determine the proposed FY 2020 MS-LTC-DRG 
relative weights.
    In summary, to determine the proposed FY 2020 MS-LTC-DRG relative 
weights, we are proposing to group applicable LTCH cases to the 
appropriate proposed MS-LTC-DRG, while taking into account the proposed 
low-volume quintiles (as described above) and cross-walked proposed no-
volume MS-LTC-DRGs (as described later in this section). After 
establishing the appropriate proposed MS-LTC-DRG (or proposed low-
volume quintile), we are proposing to calculate the proposed FY 2020 
relative weights by first removing cases with a length of stay of 7 
days or less and statistical outliers (Steps 1 and 2 below). Next, we 
are proposing to adjust the number of applicable LTCH cases in each 
proposed MS-LTC-DRG (or proposed low-volume quintile) for the effect of 
SSO cases (Step 3 below). After removing applicable LTCH cases with a 
length of stay of 7 days or less (Step 1 below) and statistical 
outliers (Step 2 below), which are the SSO-adjusted applicable LTCH 
cases and corresponding charges (Step 3 below), we are proposing to we 
calculate proposed ``relative adjusted weights'' for each proposed MS-
LTC-DRG (or proposed low-volume quintile) using the HSRV method.
    Step 1--Remove cases with a length of stay of 7 days or less.
    The first step in our proposed calculation of the proposed FY 2020 
MS-LTC-DRG relative weights is to remove cases with a length of stay of 
7 days or less. The MS-LTC-DRG relative weights reflect the average of 
resources used on representative cases of a specific type. Generally, 
cases with a length of stay of 7 days or less do not belong in an LTCH 
because these stays do not fully receive or benefit from treatment that 
is typical in an LTCH stay, and full resources are often not used in 
the earlier stages of admission to an LTCH. If we were to include stays 
of 7 days or less in the computation of the FY 2020 MS-LTC-DRG relative 
weights, the value of many relative weights would decrease and, 
therefore, payments would decrease to a level that may no longer be 
appropriate. We do not believe that it would be appropriate to 
compromise the integrity of the payment determination for those LTCH 
cases that actually benefit from and receive a full course of treatment 
at an LTCH by including data from these very

[[Page 19465]]

short stays. Therefore, consistent with our existing relative weight 
methodology, in determining the proposed FY 2020 MS-LTC-DRG relative 
weights, we are proposing to remove LTCH cases with a length of stay of 
7 days or less from applicable LTCH cases. (For additional information 
on what is removed in this step of the relative weight methodology, we 
refer readers to 67 FR 55989 and 74 FR 43959.)
    Step 2--Remove statistical outliers.
    The next step in our proposed calculation of the proposed FY 2020 
MS-LTC-DRG relative weights is to remove statistical outlier cases from 
the LTCH cases with a length of stay of at least 8 days. Consistent 
with our existing relative weight methodology, we are proposing to 
continue to define statistical outliers as cases that are outside of 
3.0 standard deviations from the mean of the log distribution of both 
charges per case and the charges per day for each MS-LTC-DRG. These 
statistical outliers are removed prior to calculating the proposed 
relative weights because we believe that they may represent aberrations 
in the data that distort the measure of average resource use. Including 
those LTCH cases in the calculation of the proposed relative weights 
could result in an inaccurate relative weight that does not truly 
reflect relative resource use among those MS-LTC-DRGs. (For additional 
information on what is removed in this step of the proposed relative 
weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.) 
After removing cases with a length of stay of 7 days or less and 
statistical outliers, we were left with applicable LTCH cases that have 
a length of stay greater than or equal to 8 days. In this proposed 
rule, we refer to these cases as ``trimmed applicable LTCH cases.''
    Step 3--Adjust charges for the effects of SSOs.
    As the next step in the proposed calculation of the proposed FY 
2020 MS-LTC-DRG relative weights, consistent with our historical 
approach, we are proposing to adjust each LTCH's charges per discharge 
for those remaining cases (that is, trimmed applicable LTCH cases) for 
the effects of SSOs (as defined in Sec.  412.529(a) in conjunction with 
Sec.  412.503). Specifically, we are proposing to make this adjustment 
by counting an SSO case as a fraction of a discharge based on the ratio 
of the length of stay of the case to the average length of stay for the 
MS-LTC-DRG for non-SSO cases. This has the effect of proportionately 
reducing the impact of the lower charges for the SSO cases in 
calculating the average charge for the MS-LTC-DRG. This process 
produces the same result as if the actual charges per discharge of an 
SSO case were adjusted to what they would have been had the patient's 
length of stay been equal to the average length of stay of the MS-LTC-
DRG.
    Counting SSO cases as full LTCH cases with no adjustment in 
determining the proposed FY 2020 MS-LTC-DRG relative weights would 
lower the proposed FY 2020 MS-LTC-DRG relative weight for affected MS-
LTC-DRGs because the relatively lower charges of the SSO cases would 
bring down the average charge for all cases within a MS-LTC-DRG. This 
would result in an ``underpayment'' for non-SSO cases and an 
``overpayment'' for SSO cases. Therefore, we are proposing to continue 
to adjust for SSO cases under Sec.  412.529 in this manner because it 
would result in more appropriate payments for all LTCH PPS standard 
Federal payment rate cases. (For additional information on this step of 
the relative weight methodology, we refer readers to 67 FR 55989 and 74 
FR 43959.)
    Step 4--Calculate the proposed FY 2020 MS-LTC-DRG relative weights 
on an iterative basis.
    Consistent with our historical relative weight methodology, we are 
proposing to calculate the proposed FY 2020 MS-LTC-DRG relative weights 
using the HSRV methodology, which is an iterative process. First, for 
each SSO-adjusted trimmed applicable LTCH case, we calculated a 
hospital-specific relative charge value by dividing the charge per 
discharge after adjusting for SSOs of the LTCH case (from Step 3) by 
the average charge per SSO-adjusted discharge for the LTCH in which the 
case occurred. The resulting ratio is then multiplied by the LTCH's 
case-mix index to produce an adjusted hospital-specific relative charge 
value for the case. We used an initial case-mix index value of 1.0 for 
each LTCH.
    For each proposed MS-LTC-DRG, we calculated the proposed FY 2020 
relative weight by dividing the SSO-adjusted average of the hospital-
specific relative charge values for applicable LTCH cases for the 
proposed MS-LTC-DRG (that is, the sum of the hospital-specific relative 
charge value from above divided by the sum of equivalent cases from 
Step 3 for each proposed MS-LTC-DRG) by the overall SSO-adjusted 
average hospital-specific relative charge value across all applicable 
LTCH cases for all LTCHs (that is, the sum of the hospital-specific 
relative charge value from above divided by the sum of equivalent 
applicable LTCH cases from Step 3 for each proposed MS-LTC-DRG). Using 
these recalculated MS-LTC-DRG relative weights, each LTCH's average 
relative weight for all of its SSO-adjusted trimmed applicable LTCH 
cases (that is, its case-mix) was calculated by dividing the sum of all 
the LTCH's MS-LTC-DRG relative weights by its total number of SSO-
adjusted trimmed applicable LTCH cases. The LTCHs' hospital-specific 
relative charge values (from previous) are then multiplied by the 
hospital-specific case-mix indexes. The hospital-specific case-mix 
adjusted relative charge values are then used to calculate a new set of 
proposed MS-LTC-DRG relative weights across all LTCHs. This iterative 
process continued until there was convergence between the relative 
weights produced at adjacent steps, for example, when the maximum 
difference was less than 0.0001.
    Step 5--Determine a proposed FY 2020 relative weight for MS-LTC-
DRGs with no applicable LTCH cases.
    Using the trimmed applicable LTCH cases, consistent with our 
historical methodology, we identified the proposed MS-LTC-DRGs for 
which there were no claims in the December 2018 update of the FY 2018 
MedPAR file and, therefore, for which no charge data was available for 
these proposed MS-LTC-DRGs. Because patients with a number of the 
diagnoses under these proposed MS-LTC-DRGs may be treated at LTCHs, 
consistent with our historical methodology, we generally assign a 
proposed relative weight to each of the proposed no-volume MS-LTC-DRGs 
based on clinical similarity and relative costliness (with the 
exception of ``transplant'' proposed MS-LTC-DRGs, ``error'' proposed 
MS-LTC-DRGs, and proposed MS-LTC-DRGs that indicate a principal 
diagnosis related to a psychiatric diagnosis or rehabilitation 
(referred to as the ``psychiatric or rehabilitation'' MS-LTC-DRGs), as 
discussed later in this section of this proposed rule). (For additional 
information on this step of the relative weight methodology, we refer 
readers to 67 FR 55991 and 74 FR 43959 through 43960.)
    We are proposing to cross-walk each no-volume proposed MS-LTC-DRG 
to another proposed MS-LTC-DRG for which we calculated a proposed 
relative weight (determined in accordance with the methodology 
described above). Then, the ``no-volume'' proposed MS-LTC-DRG was 
assigned the same proposed relative weight (and average length of stay) 
of the proposed MS-LTC-DRG to which it was cross-walked

[[Page 19466]]

(as described in greater detail in this section of this proposed rule).
    Of the 761 proposed MS-LTC-DRGs for FY 2020, we identified 320 MS-
LTC-DRGs for which there were no trimmed applicable LTCH cases (the 
number identified includes the 8 ``transplant'' MS-LTC-DRGs, the 2 
``error'' MS-LTC-DRGs, and the 15 ``psychiatric or rehabilitation'' MS-
LTC-DRGs, which are discussed below). We are proposing to assign 
proposed relative weights to each of the 320 no-volume proposed MS-LTC-
DRGs that contained trimmed applicable LTCH cases based on clinical 
similarity and relative costliness to 1 of the remaining 441 (761-320 = 
441) proposed MS-LTC-DRGs for which we calculated proposed relative 
weights based on the trimmed applicable LTCH cases in the FY 2018 
MedPAR file data using the steps described previously. (For the 
remainder of this discussion, we refer to the ``cross-walked'' proposed 
MS-LTC-DRGs as the proposed MS-LTC-DRGs to which we cross-walked 1 of 
the 320 ``no-volume'' proposed MS-LTC-DRGs.) Then, we are generally 
proposing to assign the 320 no-volume proposed MS-LTC-DRGs the proposed 
relative weight of the cross-walked proposed MS-LTC-DRG. (As explained 
below in Step 6, when necessary, we made adjustments to account for 
nonmonotonicity.)
    We cross-walked the no-volume proposed MS-LTC-DRG to a proposed MS-
LTC-DRG for which we calculated proposed relative weights based on the 
December 2018 update of the FY 2018 MedPAR file, and to which it is 
similar clinically in intensity of use of resources and relative 
costliness as determined by criteria such as care provided during the 
period of time surrounding surgery, surgical approach (if applicable), 
length of time of surgical procedure, postoperative care, and length of 
stay. (For more details on our process for evaluating relative 
costliness, we refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS final 
rule (73 FR 48543).) We believe in the rare event that there would be a 
few LTCH cases grouped to one of the no-volume proposed MS-LTC-DRGs in 
FY 2020, the proposed relative weights assigned based on the cross-
walked proposed MS-LTC-DRGs would result in an appropriate LTCH PPS 
payment because the crosswalks, which are based on clinical similarity 
and relative costliness, would be expected to generally require 
equivalent relative resource use.
    We then assigned the proposed relative weight of the cross-walked 
proposed MS-LTC-DRG as the proposed relative weight for the no-volume 
proposed MS-LTC-DRG such that both of these proposed MS-LTC-DRGs (that 
is, the no-volume proposed MS-LTC-DRG and the cross-walked proposed MS-
LTC-DRG) have the same proposed relative weight (and average length of 
stay) for FY 2020. We note that, if the cross-walked proposed MS-LTC-
DRG had 25 applicable LTCH cases or more, its proposed relative weight 
(calculated using the methodology described in Steps 1 through 4 above) 
is assigned to the no-volume proposed MS-LTC-DRG as well. Similarly, if 
the proposed MS-LTC-DRG to which the no-volume proposed MS-LTC-DRG was 
cross-walked had 24 or less cases and, therefore, was designated to 1 
of the proposed low-volume quintiles for purposes of determining the 
proposed relative weights, we assigned the proposed relative weight of 
the applicable proposed low-volume quintile to the no-volume proposed 
MS-LTC-DRG such that both of these proposed MS-LTC-DRGs (that is, the 
no-volume proposed MS-LTC-DRG and the cross-walked proposed MS-LTC-DRG) 
have the same proposed relative weight for FY 2020. (As we noted 
previously, in the infrequent case where nonmonotonicity involving a 
no-volume proposed MS-LTC-DRG resulted, additional adjustments as 
described in Step 6 are required in order to maintain monotonically 
increasing proposed relative weights.)
    As discussed earlier, for this proposed rule, we are providing the 
list of the no-volume proposed MS-LTC-DRGs and the proposed MS-LTC-DRGs 
to which each was cross-walked (that is, the cross-walked proposed MS-
LTC-DRGs) for FY 2020 in a supplemental data file for public use posted 
via the internet on the CMS website for this proposed rule at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html in order to streamline the information 
made available to the public that is used in the annual development of 
Table 11.
    To illustrate this methodology for determining the proposed 
relative weights for the proposed FY 2020 MS-LTC-DRGs with no 
applicable LTCH cases, we are providing the following example, which 
refers to the no-volume proposed MS-LTC-DRGs crosswalk information for 
FY 2020 (which, as previously stated, we are providing in a 
supplemental data file posted via the internet on the CMS website for 
this proposed rule).
    Example: There were no trimmed applicable LTCH cases in the FY 2018 
MedPAR file that we are using for this proposed rule for proposed MS-
LTC-DRG 061 (Acute Ischemic Stroke with Use of Thrombolytic Agent with 
MCC). We determined that proposed MS-LTC-DRG 070 (Nonspecific 
Cerebrovascular Disorders with MCC) is similar clinically and based on 
resource use to proposed MS-LTC-DRG 061. Therefore, we assigned the 
same proposed relative weight (and average length of stay) of proposed 
MS-LTC-DRG 70 of 0.8909 for FY 2020 to proposed MS-LTC-DRG 061 (we 
refer readers to Table 11, which is listed in section VI. of the 
Addendum to this proposed rule and is available via the internet on the 
CMS website).
    Again, we note that, as this system is dynamic, it is entirely 
possible that the number of proposed MS-LTC-DRGs with no volume will 
vary in the future. Consistent with our historical practice, we are 
proposing to use the most recent available claims data to identify the 
trimmed applicable LTCH cases from which we determine the relative 
weights in the final rule.
    For FY 2020, consistent with our historical relative weight 
methodology, we are proposing to establish a proposed relative weight 
of 0.0000 for the following transplant proposed MS-LTC-DRGs: Heart 
Transplant or Implant of Heart Assist System with MCC (MS-LTC-DRG 001); 
Heart Transplant or Implant of Heart Assist System without MCC (MS-LTC-
DRG 002); Liver Transplant with MCC or Intestinal Transplant (MS-LTC-
DRG 005); Liver Transplant without MCC (MS-LTC-DRG 006); Lung 
Transplant (MS-LTC-DRG 007); Simultaneous Pancreas/Kidney Transplant 
(MS-LTC-DRG 008); Pancreas Transplant (MS-LTC-DRG 010); and Kidney 
Transplant (MS-LTC-DRG 652). This is because Medicare only covers these 
procedures if they are performed at a hospital that has been certified 
for the specific procedures by Medicare and presently no LTCH has been 
so certified. At the present time, we include these eight proposed 
transplant MS-LTC-DRGs in the GROUPER program for administrative 
purposes only. Because we use the same GROUPER program for LTCHs as is 
used under the IPPS, removing these MS-LTC-DRGs would be 
administratively burdensome. (For additional information regarding our 
treatment of transplant MS-LTC-DRGs, we refer readers to the RY 2010 
LTCH PPS final rule (74 FR 43964).) In addition, consistent with our 
historical policy, we are proposing to establish a relative weight of 
0.0000 for the 2 ``error'' MS-LTC-DRGs (that is, MS-LTC-DRG 998 
(Principal Diagnosis Invalid as Discharge Diagnosis) and MS-LTC-DRG 999 
(Ungroupable)) because applicable LTCH cases grouped to these MS-LTC-
DRGs cannot be properly assigned to an

[[Page 19467]]

MS-LTC-DRG according to the grouping logic.
    Section 51005 of the Bipartisan Budget Act of 2018 (Pub. L. 115-
123) extended the transitional blended payment rate for site neutral 
payment rate cases for an additional 2 years (that is, discharges 
occurring in cost reporting periods beginning in FYs 2018 and 2019 
continued to be paid under the blended payment rate). Therefore, in the 
FY 2019 IPPS/LTCH PPS final rule (83 FR 41529), consistent with our 
practice in FYs 2016 through 2018, we established a relative weight for 
FY 2019 equal to the respective FY 2015 relative weight of the MS-LTC-
DRGs for the following ``psychiatric or rehabilitation'' MS-LTC-DRGs: 
MS-LTC-DRG 876 (O.R. Procedure with Principal Diagnoses of Mental 
Illness); MS-LTC-DRG 880 (Acute Adjustment Reaction & Psychosocial 
Dysfunction); MS-LTC-DRG 881 (Depressive Neuroses); MS-LTC-DRG 882 
(Neuroses Except Depressive); MS-LTC-DRG 883 (Disorders of Personality 
& Impulse Control); MS-LTC-DRG 884 (Organic Disturbances & Mental 
Retardation); MS-LTC-DRG 885 (Psychoses); MS-LTC-DRG 886 (Behavioral & 
Developmental Disorders); MS-LTC-DRG 887 (Other Mental Disorder 
Diagnoses); MS-LTC-DRG 894 (Alcohol/Drug Abuse or Dependence, Left 
Ama); MS-LTC-DRG 895 (Alcohol/Drug Abuse or Dependence, with 
Rehabilitation Therapy); MS-LTC-DRG 896 (Alcohol/Drug Abuse or 
Dependence, without Rehabilitation Therapy with MCC); MS-LTC-DRG 897 
(Alcohol/Drug Abuse or Dependence, without Rehabilitation Therapy 
without MCC); MS-LTC-DRG 945 (Rehabilitation with CC/MCC); and MS-LTC-
DRG 946 (Rehabilitation without CC/MCC). As we discussed when we 
implemented the dual rate LTCH PPS payment structure, LTCH discharges 
that are grouped to these 15 ``psychiatric and rehabilitation'' MS-LTC-
DRGs do not meet the criteria for exclusion from the site neutral 
payment rate. As such, under the criterion for a principal diagnosis 
relating to a psychiatric diagnosis or to rehabilitation, there are no 
applicable LTCH cases to use in calculating a relative weight for the 
``psychiatric and rehabilitation'' MS-LTC-DRGs. In other words, any 
LTCH PPS discharges grouped to any of the 15 ``psychiatric and 
rehabilitation'' MS-LTC-DRGs would always be paid at the site neutral 
payment rate, and, therefore, those MS-LTC-DRGs would never include any 
LTCH cases that meet the criteria for exclusion from the site neutral 
payment rate. However, section 1886(m)(6)(B) of the Act establishes a 
transitional payment method for cases that would be paid at the site 
neutral payment rate for LTCH discharges occurring in cost reporting 
periods beginning during FY 2016 or FY 2017, which was extended to 
include FYs 2018 and 2019 under Public Law 115-123. (We refer readers 
to section VII.C. of the preamble of the FY 2019 IPPS/LTCH PPS final 
rule for a detailed discussion of the extension of the transitional 
blended payment method provisions under Public Law 115-123 and our 
policies for FY 2019). Under the transitional blended payment method 
for site neutral payment rate cases, for LTCH discharges occurring in 
cost reporting periods beginning on or after October 1, 2018, and on or 
before September 30, 2019, site neutral payment rate cases are paid a 
blended payment rate, calculated as 50 percent of the applicable site 
neutral payment rate amount for the discharge and 50 percent of the 
applicable LTCH PPS standard Federal payment rate. Because this 
transitional blended payment method for site neutral payment rate cases 
is applicable for LTCH discharges occurring in cost reporting periods 
beginning on or after October 1, 2018, and on or before September 30, 
2019, some LTCHs' site neutral payment rate cases that are discharged 
during FY 2020 will be paid a blended payment rate.
    Because the LTCH PPS standard Federal payment rate is based on the 
relative weight of the MS-LTC-DRG, in order to determine the 
transitional blended payment for site neutral payment rate cases 
grouped to one of the ``psychiatric or rehabilitation'' MS-LTC-DRGs in 
FY 2020, consistent with past practice, we are proposing to assign a 
relative weight to these MS-LTC-DRGs for FY 2020 that is the same as 
the FY 2019 relative weight (which is also the same as the FYs 2016 
through 2019 relative weight). We believed that using the respective FY 
2015 relative weight for each of the ``psychiatric or rehabilitation'' 
MS-LTC-DRGs results in appropriate payments for LTCH cases that are 
paid at the site neutral payment rate under the transition policy 
provided by the statute because there are no clinically similar MS-LTC-
DRGs for which we were able to determine relative weights based on 
applicable LTCH cases in the December 2018 update of the FY 2018 MedPAR 
file data using the steps described above. Furthermore, we believed 
that it would be administratively burdensome and introduce unnecessary 
complexity to the MS-LTC-DRG relative weight calculation to use the 
LTCH discharges in the MedPAR file data to calculate a relative weight 
for those 15 ``psychiatric and rehabilitation'' MS-LTC-DRGs to be used 
for the sole purposes of determining half of the transitional blended 
payment for site neutral payment rate cases during the transition 
period (80 FR 49631 through 49632) or payment for discharges from 
spinal cord specialty hospitals under Sec.  412.522(b)(4).
    In summary, for FY 2020, we are proposing to establish a relative 
weight (and average length of stay thresholds) equal to the respective 
FY 2015 relative weight of the MS-LTC-DRGs for the 15 ``psychiatric or 
rehabilitation'' MS-LTC-DRGs listed previously (that is, MS-LTC-DRGs 
876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945, 
and 946). Table 11, which is listed in section VI. of the Addendum to 
this proposed rule and is available via the internet on the CMS 
website, reflects this policy.
    Step 6--Adjust the proposed FY 20120MS-LTC-DRG relative weights to 
account for nonmonotonically increasing relative weights.
    The MS-DRGs contain base DRGs that have been subdivided into one, 
two, or three severity of illness levels. Where there are three 
severity levels, the most severe level has at least one secondary 
diagnosis code that is referred to as an MCC (that is, major 
complication or comorbidity). The next lower severity level contains 
cases with at least one secondary diagnosis code that is a CC (that is, 
complication or comorbidity). Those cases without an MCC or a CC are 
referred to as ``without CC/MCC.'' When data do not support the 
creation of three severity levels, the base MS-DRG is subdivided into 
either two levels or the base MS-DRG is not subdivided. The two-level 
subdivisions may consist of the MS-DRG with CC/MCC and the MS-DRG 
without CC/MCC. Alternatively, the other type of two-level subdivision 
may consist of the MS-DRG with MCC and the MS-DRG without MCC.
    In those base MS-LTC-DRGs that are split into either two or three 
severity levels, cases classified into the ``without CC/MCC'' MS-LTC-
DRG are expected to have a lower resource use (and lower costs) than 
the ``with CC/MCC'' MS-LTC-DRG (in the case of a two-level split) or 
both the ``with CC'' and the ``with MCC'' MS-LTC-DRGs (in the case of a 
three-level split). That is, theoretically, cases that are more severe 
typically require greater expenditure of medical care resources and 
would result in higher average charges. Therefore, in the three 
severity levels, relative

[[Page 19468]]

weights should increase by severity, from lowest to highest. If the 
relative weights decrease as severity increases (that is, if within a 
base MS-LTC-DRG, an MS-LTC-DRG with CC has a higher relative weight 
than one with MCC, or the MS-LTC-DRG ``without CC/MCC'' has a higher 
relative weight than either of the others), they are nonmonotonic. We 
continue to believe that utilizing nonmonotonic relative weights to 
adjust Medicare payments would result in inappropriate payments because 
the payment for the cases in the higher severity level in a base MS-
LTC-DRG (which are generally expected to have higher resource use and 
costs) would be lower than the payment for cases in a lower severity 
level within the same base MS-LTC-DRG (which are generally expected to 
have lower resource use and costs). Therefore, in determining the 
proposed FY 2020 MS-LTC-DRG relative weights, consistent with our 
historical methodology, we are proposing to continue to combine MS-LTC-
DRG severity levels within a base MS-LTC-DRG for the purpose of 
computing a relative weight when necessary to ensure that monotonicity 
is maintained. For a comprehensive description of our existing 
methodology to adjust for nonmonotonicity, we refer readers to the FY 
2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43964 through 43966). Any 
adjustments for nonmonotonicity that were made in determining the 
proposed FY 2020 MS-LTC-DRG relative weights in this proposed rule by 
applying this methodology are denoted in Table 11, which is listed in 
section VI. of the Addendum to this proposed rule and is available via 
the internet on the CMS website.
    Step 7-- Calculate the proposed FY 2020 MS-LTC-DRG reclassification 
and recalibration budget neutrality factor.
    In accordance with the regulations at Sec.  412.517(b) (in 
conjunction with Sec.  412.503), the annual update to the MS-LTC-DRG 
classifications and relative weights is done in a budget neutral manner 
such that estimated aggregate LTCH PPS payments would be unaffected, 
that is, would be neither greater than nor less than the estimated 
aggregate LTCH PPS payments that would have been made without the MS-
LTC-DRG classification and relative weight changes. (For a detailed 
discussion on the establishment of the budget neutrality requirement 
for the annual update of the MS-LTC-DRG classifications and relative 
weights, we refer readers to the RY 2008 LTCH PPS final rule (72 FR 
26881 and 26882).)
    The MS-LTC-DRG classifications and relative weights are updated 
annually based on the most recent available LTCH claims data to reflect 
changes in relative LTCH resource use (Sec.  412.517(a) in conjunction 
with Sec.  412.503). To achieve the budget neutrality requirement at 
Sec.  412.517(b), under our established methodology, for each annual 
update, the MS-LTC-DRG relative weights are uniformly adjusted to 
ensure that estimated aggregate payments under the LTCH PPS would not 
be affected (that is, decreased or increased). Consistent with that 
provision, we are proposing to update the MS-LTC-DRG classifications 
and relative weights for FY 2020 based on the most recent available 
LTCH data for applicable LTCH cases, and continue to apply a budget 
neutrality adjustment in determining the proposed FY 2020 MS-LTC-DRG 
relative weights.
    In this FY 2020 IPPS/LTCH PPS proposed rule, to ensure budget 
neutrality in the update to the MS-LTC-DRG classifications and relative 
weights under Sec.  412.517(b), we are proposing to continue to use our 
established two-step budget neutrality methodology.
    To calculate the proposed normalization factor for FY 2020, we are 
proposing to group applicable LTCH cases using the proposed FY 2020 
Version 37 GROUPER, and the recalibrated proposed FY 2020 MS-LTC-DRG 
relative weights to calculate the average case-mix index (CMI); we 
grouped the same applicable LTCH cases using the FY 2019 GROUPER 
Version 36 and MS-LTC-DRG relative weights and calculated the average 
CMI; and computed the ratio by dividing the average CMI for FY 2019 by 
the average CMI for proposed FY 2020. That ratio is the proposed 
normalization factor. Because the calculation of the proposed 
normalization factor involves the proposed relative weights for the 
proposed MS-LTC-DRGs that contained applicable LTCH cases to calculate 
the average CMIs, any low-volume proposed MS-LTC-DRGs are included in 
the calculation (and the proposed MS-LTC-DRGs with no applicable LTCH 
cases are not included in the calculation).
    To calculate the proposed budget neutrality adjustment factor, we 
simulated estimated total FY 2020 LTCH PPS standard Federal payment 
rate payments for applicable LTCH cases using the proposed FY 2020 
normalized relative weights and proposed GROUPER Version 37; simulated 
estimated total FY 2020 LTCH PPS standard Federal payment rate payments 
for applicable LTCH cases using the FY 2019 MS-LTC-DRG relative weights 
and the FY 2019 GROUPER Version 36; and calculated the ratio of these 
estimated total payments by dividing the simulated estimated total LTCH 
PPS standard Federal payment rate payments using the FY 2019 MS-LTC-DRG 
relative weights and the GROUPER Version 36 by the simulated estimated 
total LTCH PPS standard Federal payment rate payments using the 
proposed FY 2020 MS-LTC-DRG relative weights and the proposed GROUPER 
Version 37. The resulting ratio is the proposed budget neutrality 
adjustment factor. The calculation of the proposed budget neutrality 
factor involves the proposed relative weights for the LTCH cases used 
in the payment simulation, which includes any cases grouped to low-
volume proposed MS-LTC-DRGs or to proposed MS-LTC-DRGs with no 
applicable LTCH cases, and generally does not include payments for 
cases grouped to a proposed MS-LTC-DRG with no applicable LTCH cases. 
(Occasionally, a few LTCH cases (that is, those with a covered length 
of stay of 7 days or less), which are removed from the proposed 
relative weight calculation in step (2) that are grouped to a proposed 
MS-LTC-DRG with no applicable LTCH cases are included in the payment 
simulations used to calculate the proposed budget neutrality factor. 
However, the number and payment amount of such cases have a negligible 
impact on the proposed budget neutrality factor calculation).
    In this proposed rule, to ensure budget neutrality in the update to 
the MS-LTC-DRG classifications and relative weights under Sec.  
412.517(b), we are proposing to continue to use our established two-
step budget neutrality methodology. Therefore, in this proposed rule, 
in the first step of our proposed MS-LTC-DRG budget neutrality 
methodology, for FY 2020, we are proposing to calculate and apply a 
proposed normalization factor to the recalibrated proposed relative 
weights (the result of Steps 1 through 6 discussed previously) to 
ensure that estimated payments are not affected by changes in the 
composition of case types or the proposed changes to the classification 
system. That is, the proposed normalization adjustment is intended to 
ensure that the recalibration of the proposed MS-LTC-DRG relative 
weights (that is, the process itself) neither increases nor decreases 
the average case-mix index.
    To calculate the proposed normalization factor for FY 2020 (the 
first step of our proposed budget neutrality methodology), we used the 
following three steps: (1.a.) Used the most recent available applicable 
LTCH cases from the most recent available data (that is, LTCH 
discharges from the

[[Page 19469]]

FY 2018 MedPAR file) and grouped them using the proposed FY 2020 
GROUPER (that is, proposed Version 37 for FY 2020) and the recalibrated 
proposed FY 2020 MS-LTC-DRG relative weights (determined in Steps 1 
through 6 above) to calculate the average case-mix index; (1.b.) 
grouped the same applicable LTCH cases (as are used in Step 1.a.) using 
the FY 2019 GROUPER (Version 36) and FY 2019 MS-LTC-DRG relative 
weights and calculated the average case-mix index; and (1.c.) computed 
the ratio of these average case-mix indexes by dividing the average CMI 
for FY 2020 (determined in Step 1.a.) by the average case-mix index for 
FY 2019 (determined in Step 1.b.). As a result, in determining the 
proposed MS-LTC-DRG relative weights for FY 2020, each recalibrated 
proposed MS-LTC-DRG relative weight is multiplied by the proposed 
normalization factor of 1.271 (determined in Step 1.c.) in the first 
step of the proposed budget neutrality methodology, which produced 
``normalized relative weights.''
    In the second step of our proposed MS-LTC-DRG budget neutrality 
methodology, we calculated a second proposed budget neutrality factor 
consisting of the ratio of estimated aggregate FY 2020 LTCH PPS 
standard Federal payment rate payments for applicable LTCH cases (the 
sum of all calculations under Step 1.a. mentioned previously) after 
reclassification and recalibration to estimated aggregate payments for 
FY 2020 LTCH PPS standard Federal payment rate payments for applicable 
LTCH cases before reclassification and recalibration (that is, the sum 
of all calculations under Step 1.b. mentioned previously).
    That is, for this proposed rule, for FY 2020, under the second step 
of the proposed budget neutrality methodology, we are proposing to 
determine the proposed budget neutrality adjustment factor using the 
following three steps: (2.a.) Simulated estimated total FY 2020 LTCH 
PPS standard Federal payment rate payments for applicable LTCH cases 
using the proposed normalized relative weights for FY 2020 and proposed 
GROUPER Version 37 (as described above); (2.b.) simulated estimated 
total FY 2020 LTCH PPS standard Federal payment rate payments for 
applicable LTCH cases using the FY 2019 GROUPER (Version 36) and the FY 
2019 MS-LTC-DRG relative weights in Table 11 of the FY 2019 IPPS/LTCH 
PPS final rule available on the internet, as described in section VI. 
of the Addendum of that final rule; and (2.c.) calculated the ratio of 
these estimated total payments by dividing the value determined in Step 
2.b. by the value determined in Step 2.a. In determining the proposed 
FY 2020 MS-LTC-DRG relative weights, each normalized proposed relative 
weight is then multiplied by a budget neutrality factor of 0.9971599 
(the value determined in Step 2.c.) in the second step of the proposed 
budget neutrality methodology to achieve the budget neutrality 
requirement at Sec.  412.517(b).
    Accordingly, in determining the proposed FY 2020 MS-LTC-DRG 
relative weights in this proposed rule, consistent with our existing 
methodology, we are proposing to apply a normalization factor of 1.271 
and a budget neutrality factor of 0.9971599. Table 11, which is listed 
in section VI. of the Addendum to this proposed rule and is available 
via the internet on the CMS website, lists the proposed MS-LTC-DRGs and 
their respective proposed relative weights, geometric mean length of 
stay, and five-sixths of the geometric mean length of stay (used to 
identify SSO cases under Sec.  412.529(a)) for FY 2020.

C. Proposed Payment Adjustment for LTCH Discharges That Do Not Meet the 
Applicable Discharge Payment Percentage

    Section 1886(m)(6)(C) of the Act, as added by section 1206 of the 
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67), imposes several 
requirements related to an LTCH's discharge payment percentage. As 
defined by section 1886(m)(6)(C)(iv) of the Act, the term ``LTCH 
discharge payment percentage'' is a ratio, expressed as a percentage, 
of Medicare fee-for-service (FFS) discharges not paid the site neutral 
payment rate to total number of Medicare FFS discharges occurring 
during the cost reporting period. In other words, an LTCH's discharge 
payment percentage is the ratio of an LTCH's Medicare discharges that 
meet the criteria for exclusion from the site neutral payment rate (as 
described under Sec.  412.522(a)), that is, discharges paid the LTCH 
PPS standard Federal payment rate, to an LTCH's total number of 
Medicare FFS discharges paid under the LTCH PPS during the cost 
reporting period. Section 1886(m)(6)(C)(ii)(I) of the Act, requires 
that, for cost reporting periods beginning on or after October 1, 2019, 
any LTCH with a discharge payment percentage for the cost reporting 
period that is not at least 50 percent be informed of such a fact; and 
section 1886(m)(6)(C)(ii)(II) of the Act requires that all of the 
LTCH's discharges in each successive cost reporting period be paid the 
payment amount that would apply under subsection (d) for the discharge 
if the hospital were a subsection (d) hospital, subject to the LTCH's 
compliance with the process for reinstatement provided for by section 
1886(m)(6)(C)(iii) of the Act.
    Section 1886(m)(6)(C)(i) of the Act requires that we provide notice 
to each LTCH of the LTCH's discharge payment percentage for LTCH cost 
reporting periods beginning during or after FY 2016. We implemented 
this requirement in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49613), 
and we have established subregulatory policies and timeframes by which 
we calculate and inform LTCHs of their discharge payment percentage. We 
note that, because the discharge payment percentage for a cost 
reporting period cannot be calculated until after the cost reporting 
period has ended, in order to ensure claims for the entire period are 
reflected, an LTCH is typically informed of the results of the 
calculation of the discharge payment percentage between 5 and 6 months 
after the end of the cost reporting period.
    To implement the provisions of section 1886(m)(6)(C)(ii)(I) of the 
Act, as established by the amendments made by Public Law 113-67, we are 
proposing to continue to use our existing policy to calculate the 
discharge payment percentage and to inform LTCHs when their discharge 
payment percentage for the cost reporting period is not at least 50 
percent. To implement the provisions of section 1886(m)(6)(C)(ii)(II) 
of the Act, as established by the amendments made by Public Law 113-67, 
we are proposing to establish the policy that an LTCH would become 
subject to a payment adjustment for all of its cost reporting periods 
beginning on or after October 1, 2019, and is notified that its 
calculated discharge payment percentage did not equal at least 50 
percent. For example, if an LTCH has a calendar year cost reporting 
period, its first cost reporting period beginning on or after October 
1, 2019 would be its January 1, 2020 through December 31, 2020 cost 
reporting period (that is, its FY 2020 cost reporting period). Because 
a cost reporting period must have ended and claims from the reporting 
period must be processed prior to the calculation of the discharge 
payment percentage, a hospital's discharge payment percentage for its 
FY 2020 cost reporting period cannot be calculated for approximately 6 
months; that is, not completed until sometime during its FY 2021 cost 
reporting period. If the discharge payment percentage for its FY 2020 
cost reporting period is not at least 50

[[Page 19470]]

percent (when calculated during its FY 2021 cost reporting period), 
under our proposal, the LTCH would become subject to a payment 
adjustment, applied to all discharges, for its FY 2022 cost reporting 
period (the first cost reporting period after its discharge payment 
percentage for a cost reporting period had been calculated to not have 
been at least 50 percent). We are proposing to codify the proposed 
implementation of these regulations establishing the policy to adjust 
payment to an LTCH for all discharges when the LTCH does not meet the 
discharge payment percentage after it is notified for cost reporting 
periods beginning on or after October 1, 2019, under proposed new Sec.  
412.522(d)(3).
    As noted above, section 1886(m)(6)(C)(iii) of the Act, as 
established by the amendments made by Public Law 113-67, provides for 
the establishment of a reinstatement process whereby an LTCH can have 
the payment adjustment discontinued. To implement and maintain a 
reinstatement process as required by the statute, we are proposing to 
discontinue the payment adjustment for an LTCH's discharges as a result 
of its discharge payment percentage not equaling at least 50 percent 
beginning with the discharges occurring in the cost reporting period 
after the LTCH's discharge payment percentage is calculated to be at 
least 50 percent. For example, the LTCH with a calendar year cost 
reporting period that did not have a discharge payment percentage of at 
least 50 percent during its FY 2020 cost reporting period would be 
subject to the payment adjustment for its FY 2022 cost reporting 
period, as described above. However, if the discharge payment 
percentage for its FY 2021 cost reporting period equaled at least 50 
percent, the calculation (and notification thereof) of such percentage 
would be made during FY 2022, and the payment adjustment would be 
discontinued beginning with discharges occurring at the start of its FY 
2023 cost reporting period. We note that this proposed policy is based 
on cost reporting periods, is cyclical in nature, and, as such, an LTCH 
that has been reinstated would be subject to the payment adjustment 
again (in a future cost reporting period) if its discharge payment 
percentage is again calculated not to meet the required threshold. We 
are proposing to codify the proposed policy reinstatement process for 
LTCHs under the discharge payment percentage requirements in proposed 
new Sec.  412.522(d)(5).
    While we believe the proposed policy reinstatement process would 
satisfy the statutory requirement without further modification, because 
there could be unusual circumstances that result in a discharge payment 
percentage for a cost reporting period that may not be fully reflective 
of an LTCH's typical mix of site neutral and LTCH PPS standard Federal 
payment rate discharges (for example, patients require a shorter period 
of ventilation than was expected on admission), we also are proposing a 
special probationary reinstatement process, which is consistent with 
public comments we received during the FY 2016 rulemaking when the 
dual-rate payment system was implemented. While the public comments 
from the FY 2016 rulemaking cycle did not request that the special 
reinstatement process be probationary, we are concerned that, while 
there are unusual circumstances that may result in the discharge 
payment percentage for a cost reporting period not being fully 
reflective of an LTCH's typical mix of site neutral and LTCH PPS 
standard Federal payment rate discharges, if the special reinstatement 
process were not probationary, hospitals may be able to manipulate 
discharges or delay billing in such a way as to artificially inflate 
their discharge payment percentage for purposes of qualifying for the 
special reinstatement process. To alleviate these concerns, we are 
proposing that the special reinstatement process be probationary. Under 
this proposed special probationary reinstatement process, a 
probationary-cure period would allow an LTCH the opportunity to have 
the payment adjustment delayed during the applicable cost reporting 
period if, for the period of at least 5 consecutive months of the 6-
month period immediately preceding the beginning of the cost reporting 
period during which the adjustment would apply (we note this time 
period is consistent with our current policy for the average length-of-
stay determination), the discharge payment percentage is calculated to 
be at least 50 percent. Under such circumstances, the LTCH would not 
ultimately be subject to the payment adjustment for the cost reporting 
period during which the adjustment would apply--provided that the 
discharge payment percentage for that cost reporting period is at least 
50 percent. If the discharge payment percentage for that cost reporting 
period is not at least 50 percent, the adjustment will be applied to 
the cost reporting period at settlement. For example, an LTCH with a 
calendar year cost reporting period that does not have a discharge 
payment percentage of at least 50 percent during its FY 2020 cost 
reporting period would be informed of this during its FY 2021 cost 
reporting period. The payment adjustment would then apply during its FY 
2022 cost reporting period. However, if in the 6-month period 
immediately preceding the cost reporting period for which the payment 
adjustment would apply (July 1, 2021 through December 31, 2021), the 
LTCH achieved at least 5 consecutive months with a discharge payment 
percentage that is calculated to be at least 50 percent, application of 
the payment adjustment would be delayed during the FY 2022 cost 
reporting period (that is, the payment adjustment would not be applied 
to any discharges that occur during the FY 2022 cost reporting period). 
However, if the discharge payment percentage that is ultimately 
calculated for that LTCH's FY 2022 cost reporting period (the period 
for which the payment adjustment would have applied if the LTCH had not 
met the requirements during the probationary-cure period) is not at 
least 50 percent, the payment adjustment delay would be lifted, and the 
penalty would be applied to payments made for all of the discharges 
that occurred during the FY 2022 cost reporting period at settlement.
    We are proposing to codify the policy for a special probationary 
reinstatement process under proposed new Sec.  412.522(d)(6). We note 
that we expect to issue subregulatory guidance to describe the specific 
procedures for implementing this proposed probationary-cure period, if 
the policy is finalized. However, we are inviting public comments on 
suggestions regarding the specific process to be used, including 
whether the process should mirror the existing process used by LTCHs 
for the greater than 25-day average length-of-stay requirements.
    Section 1886(m)(6)(C)(ii) of the Act specifies that, subject to the 
process for reinstatement, when the requisite discharge patient 
percentage threshold is not met, all of the LTCH's discharges in each 
successive cost reporting period will be paid the payment amount that 
would apply under subsection (d) for the discharge if the hospital were 
a subsection (d) hospital. We note that ``subsection (d)'' as it is 
referred to under section 1886(d) of the Act refers to IPPS hospitals. 
For purposes of implementing the payment adjustment provisions of 
section 1886(m)(6)(C)(ii) of the Act, as established by the amendments 
of Public Law 113-67, we are proposing to establish the policy at 
proposed new Sec.  412.522(d)(4) that, for cost reporting periods 
beginning on or after October 1, 2019, under this payment adjustment, 
the LTCH would receive payment for all discharges in the

[[Page 19471]]

cost reporting periods beginning after the LTCH is informed that its 
calculated discharge payment percent is not at least 50 percent at the 
amount comparable to the IPPS amount determined under Sec. Sec.  
412.529(d)(4)(i)(A) and (ii), with an additional payment for high-cost 
outlier cases that would be based on the IPPS fixed-loss amount in 
effect at the time of the LTCH discharge. We note that the amount 
comparable to the IPPS amount determined under Sec. Sec.  
412.529(d)(4)(i)(A) and (ii) is the basis of the IPPS comparable per 
diem amount (for which the per diem is calculated in accordance with 
the provisions of Sec. Sec.  412.529(d)(4)(i)(B) and (C)) that are also 
used to calculate payments under the SSO policy at Sec.  412.529(c)(4) 
and site neutral payment rate payments at Sec.  412.522(c).

D. Proposed Changes to the LTCH PPS Payment Rates and Other Proposed 
Changes to the LTCH PPS for FY 2020

1. Overview of Development of the LTCH PPS Standard Federal Payment 
Rates
    The basic methodology for determining LTCH PPS standard Federal 
payment rates is currently set forth at 42 CFR 412.515 through 412.533 
and 412.535. In this section, we discuss the factors that we are 
proposing to use to update the LTCH PPS standard Federal payment rate 
for FY 2020, that is, effective for LTCH discharges occurring on or 
after October 1, 2019 through September 30, 2020. Under the dual rate 
LTCH PPS payment structure required by statute, beginning with 
discharges in cost reporting periods beginning in FY 2016, only LTCH 
discharges that meet the criteria for exclusion from the site neutral 
payment rate are paid based on the LTCH PPS standard Federal payment 
rate specified at Sec.  412.523. (For additional details on our 
finalized policies related to the dual rate LTCH PPS payment structure 
required by statute, we refer readers to the FY 2016 IPPS/LTCH PPS 
final rule (80 FR 49601 through 49623).)
    Prior to the implementation of the dual payment rate system in FY 
2016, all LTCH discharges were paid similarly to those now exempt from 
the site neutral payment rate. That legacy payment rate was called the 
standard Federal rate. For details on the development of the initial 
standard Federal rate for FY 2003, we refer readers to the August 30, 
2002 LTCH PPS final rule (67 FR 56027 through 56037). For subsequent 
updates to the standard Federal rate (FYs 2003 through 2015)/LTCH PPS 
standard Federal payment rate (FY 2016 through present) as implemented 
under Sec.  412.523(c)(3), we refer readers to the following final 
rules: RY 2004 LTCH PPS final rule (68 FR 34134 through 34140); RY 2005 
LTCH PPS final rule (69 FR 25682 through 25684); RY 2006 LTCH PPS final 
rule (70 FR 24179 through 24180); RY 2007 LTCH PPS final rule (71 FR 
27819 through 27827); RY 2008 LTCH PPS final rule (72 FR 26870 through 
27029); RY 2009 LTCH PPS final rule (73 FR 26800 through 26804); FY 
2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 44021 through 44030); FY 
2011 IPPS/LTCH PPS final rule (75 FR 50443 through 50444); FY 2012 
IPPS/LTCH PPS final rule (76 FR 51769 through 51773); FY 2013 IPPS/LTCH 
PPS final rule (77 FR 53479 through 53481); FY 2014 IPPS/LTCH PPS final 
rule (78 FR 50760 through 50765); FY 2015 IPPS/LTCH PPS final rule (79 
FR 50176 through 50180); FY 2016 IPPS/LTCH PPS final rule (80 FR 49634 
through 49637); FY 2017 IPPS/LTCH PPS final rule (81 FR 57296 through 
57310); the FY 2018 IPPS/LTCH PPS final rule (82 FR 58536 through 
58547); and the FY 2019 IPPS/LTCH PPS final rule (83 FR 41530 through 
41537).
    In this FY 2020 IPPS/LTCH PPS proposed rule, we present our 
proposals related to the annual update to the LTCH PPS standard Federal 
payment rate for FY 2020.
    The proposed update to the LTCH PPS standard Federal payment rate 
for FY 2020 is presented in section V.A. of the Addendum to this 
proposed rule. The components of the proposed annual update to the LTCH 
PPS standard Federal payment rate for FY 2020 are discussed below, 
including the statutory reduction to the annual update for LTCHs that 
fail to submit quality reporting data for FY 2020 as required by the 
statute (as discussed in section VII.D.2.c. of the preamble of this 
proposed rule). We also are proposing to make an adjustment to the LTCH 
PPS standard Federal payment rate to account for the estimated effect 
of the changes to the area wage level for FY 2020 on estimated 
aggregate LTCH PPS payments, in accordance with Sec.  412.523(d)(4) (as 
discussed in section V.B. of the Addendum to this proposed rule).
    In addition, as discussed in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41532 through 41537), we eliminated the 25-percent threshold 
policy in a budget neutral manner. The budget neutrality requirements 
are codified in the regulations at Sec.  412.523(d)(6). Under these 
regulations, a temporary, one-time factor is applied to the standard 
Federal payment rate in FY 2019 and FY 2020, and a permanent, one-time 
factor in FY 2021. These factors as established in the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41536) are:
     For FY 2019, a temporary, one-time factor of 0.990884;
     For FY 2020, a temporary, one-time factor of 0.990741; and
     For FY 2021 and subsequent years, a permanent, one-time 
factor of 0.991249.
    Therefore, in determining the proposed FY 2020 LTCH PPS standard 
Federal payment rate, we are proposing to:
    (1) Remove the temporary, one-time factor of 0.990884 for the 
estimated cost of the elimination of the 25-percent threshold policy in 
FY 2019 by applying a factor of (1/0.990884); and
    (2) Apply a temporary, one-time factor of 0.990741 for the 
estimated cost of the elimination of the 25-percent threshold policy in 
FY 2020.
    Equivalently, in determining the proposed FY 2020 LTCH PPS standard 
Federal payment rate, we are proposing to apply a temporary, one-time 
factor of 0.999856 (1/0.990884 x 0.990741) to the FY 2019 LTCH PPS 
standard Federal payment rate. The proposed FY 2020 LTCH PPS standard 
Federal payment rate shown in Table 1E in section VI. of the Addendum 
to this proposed rule reflects this adjustment.
2. Proposed FY 2020 LTCH PPS Standard Federal Payment Rate Annual 
Market Basket Update
a. Overview
    Historically, the Medicare program has used a market basket to 
account for input price increases in the services furnished by 
providers. The market basket used for the LTCH PPS includes both 
operating and capital related costs of LTCHs because the LTCH PPS uses 
a single payment rate for both operating and capital-related costs. We 
adopted the 2013-based LTCH market basket for use under the LTCH PPS 
beginning in FY 2017 (81 FR 57100 through 57102). For additional 
details on the historical development of the market basket used under 
the LTCH PPS, we refer readers to the FY 2013 IPPS/LTCH PPS final rule 
(77 FR 53467 through 53476), and for a complete discussion of the LTCH 
market basket and a description of the methodologies used to determine 
the operating and capital-related portions of the 2013-based LTCH 
market basket, we refer readers to section VII.D. of the preamble of 
the FY 2017 IPPS/LTCH PPS proposed and final rules (81 FR 25153 through 
25167 and 81 FR 57086 through 57099, respectively).
    Section 3401(c) of the Affordable Care Act provides for certain 
adjustments to

[[Page 19472]]

any annual update to the LTCH PPS standard Federal payment rate and 
refers to the timeframes associated with such adjustments as a ``rate 
year.'' We note that, because the annual update to the LTCH PPS 
policies, rates, and factors now occurs on October 1, we adopted the 
term ``fiscal year'' (FY) rather than ``rate year'' (RY) under the LTCH 
PPS beginning October 1, 2010, to conform with the standard definition 
of the Federal fiscal year (October 1 through September 30) used by 
other PPSs, such as the IPPS (75 FR 50396 through 50397). Although the 
language of sections 3004(a), 3401(c), 10319, and 1105(b) of the 
Affordable Care Act refers to years 2010 and thereafter under the LTCH 
PPS as ``rate year,'' consistent with our change in the terminology 
used under the LTCH PPS from ``rate year'' to ``fiscal year,'' for 
purposes of clarity, when discussing the annual update for the LTCH PPS 
standard Federal payment rate, including the provisions of the 
Affordable Care Act, we use ``fiscal year'' rather than ``rate year'' 
for 2011 and subsequent years.
b. Proposed Annual Update to the LTCH PPS Standard Federal Payment Rate 
for FY 2020
    CMS has used an estimated market basket increase to update the LTCH 
PPS. As noted above, we adopted the 2013-based LTCH market basket for 
use under the LTCH PPS beginning in FY 2017. The 2013-based LTCH market 
basket is based solely on the Medicare cost report data submitted by 
LTCHs and, therefore, specifically reflects the cost structures of only 
LTCHs. (For additional details on the development of the 2013-based 
LTCH market basket, we refer readers to the FY 2017 IPPS/LTCH PPS final 
rule (81 FR 57085 through 57099).) We continue to believe that the 
2013-based LTCH market basket appropriately reflects the cost structure 
of LTCHs for the reasons discussed when we adopted its use in the FY 
2017 IPPS/LTCH PPS final rule (81 FR 57100). Therefore, in this 
proposed rule, we are proposing to use the 2013-based LTCH market 
basket to update the LTCH PPS standard Federal payment rate for FY 
2020.
    Section 1886(m)(3)(A) of the Act provides that, beginning in FY 
2010, any annual update to the LTCH PPS standard Federal payment rate 
is reduced by the adjustments specified in clauses (i) and (ii) of 
subparagraph (A). Clause (i) of section 1886(m)(3)(A) of the Act 
provides for a reduction, for FY 2012 and each subsequent rate year, by 
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) 
of the Act (that is, ``the multifactor productivity (MFP) 
adjustment''). Clause (ii) of section 1886(m)(3)(A) of the Act provided 
for a reduction, for each of FYs 2010 through 2019, by the ``other 
adjustment'' described in section 1886(m)(4)(F) of the Act; therefore, 
it is not applicable for FY 2020.
    Section 1886(m)(3)(B) of the Act provides that the application of 
paragraph (3) of section 1886(m) of the Act may result in the annual 
update being less than zero for a rate year, and may result in payment 
rates for a rate year being less than such payment rates for the 
preceding rate year.
c. Proposed Adjustment to the LTCH PPS Standard Federal Payment Rate 
Under the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
    In accordance with section 1886(m)(5) of the Act, the Secretary 
established the Long-Term Care Hospital Quality Reporting Program (LTCH 
QRP). The reduction in the annual update to the LTCH PPS standard 
Federal payment rate for failure to report quality data under the LTCH 
QRP for FY 2014 and subsequent fiscal years is codified under 42 CFR 
412.523(c)(4). The LTCH QRP, as required for FY 2014 and subsequent 
fiscal years by section 1886(m)(5)(A)(i) of the Act, applies a 2.0 
percentage point reduction to any update under Sec.  412.523(c)(3) for 
an LTCH that does not submit quality reporting data to the Secretary in 
accordance with section 1886(m)(5)(C) of the Act with respect to such a 
year (that is, in the form and manner and at the time specified by the 
Secretary under the LTCH QRP) (Sec.  412.523(c)(4)(i)). Section 
1886(m)(5)(A)(ii) of the Act provides that the application of the 2.0 
percentage points reduction may result in an annual update that is less 
than 0.0 for a year, and may result in LTCH PPS payment rates for a 
year being less than such LTCH PPS payment rates for the preceding 
year. Furthermore, section 1886(m)(5)(B) of the Act specifies that the 
2.0 percentage points reduction is applied in a noncumulative manner, 
such that any reduction made under section 1886(m)(5)(A) of the Act 
shall apply only with respect to the year involved, and shall not be 
taken into account in computing the LTCH PPS payment amount for a 
subsequent year. These requirements are codified in the regulations at 
Sec.  412.523(c)(4). (For additional information on the history of the 
LTCH QRP, including the statutory authority and the selected measures, 
we refer readers to section VIII.C. of the preamble of this proposed 
rule.)
d. Proposed Annual Market Basket Update Under the LTCH PPS for FY 2020
    Consistent with our historical practice and our proposal, we 
estimate the market basket increase and the MFP adjustment based on 
IGI's forecast using the most recent available data. Based on IGI's 
fourth quarter 2018 forecast, the FY 2020 full market basket estimate 
for the LTCH PPS using the 2013-based LTCH market basket is 3.2 
percent. The current estimate of the MFP adjustment for FY 2020 based 
on IGI's fourth quarter 2018 forecast is 0.5 percent.
    For FY 2020, section 1886(m)(3)(A)(i) of the Act requires that any 
annual update to the LTCH PPS standard Federal payment rate be reduced 
by the productivity adjustment (``the MFP adjustment'') described in 
section 1886(b)(3)(B)(xi)(II) of the Act. Consistent with the statute, 
we are proposing to reduce the full estimated FY 2020 market basket 
increase by the proposed FY 2020 MFP adjustment. To determine the 
proposed market basket increase for LTCHs for FY 2020, as reduced by 
the proposed MFP adjustment, consistent with our established 
methodology, we are subtracting the proposed FY 2020 MFP adjustment 
from the estimated FY 2020 market basket increase. (We note that 
sections 1886(m)(3)(A)(ii) and 1886(m)(4)(F) of the Act required an 
additional reduction each year only for FYs 2010 through 2019.) (For 
additional details on our established methodology for adjusting the 
market basket increase by the MFP adjustment, we refer readers to the 
FY 2012 IPPS/LTCH PPS final rule (76 FR 51771).)
    For FY 2020, section 1886(m)(5) of the Act requires that, for LTCHs 
that do not submit quality reporting data as required under the LTCH 
QRP, any annual update to an LTCH PPS standard Federal payment rate, 
after application of the adjustments required by section 1886(m)(3) of 
the Act, shall be further reduced by 2.0 percentage points. Therefore, 
for LTCHs that fail to submit quality reporting data under the LTCH 
QRP, the proposed 3.2 percent update to the LTCH PPS standard Federal 
payment rate for FY 2020 will be reduced by the proposed 0.5 percentage 
point MFP adjustment as required under section 1886(m)(3)(A)(i) of the 
Act and the additional 2.0 percentage points reduction required by 
section 1886(m)(5) of the Act.
    In this FY 2020 IPPS/LTCH PPS proposed rule, in accordance with the 
statute, we are proposing to reduce the proposed FY 2020 full market 
basket estimate of 3.2 percent (based on IGI's

[[Page 19473]]

fourth quarter 2018 forecast of the 2013-based LTCH market basket) by 
the proposed FY 2020 MFP adjustment of 0.5 percentage point (based on 
IGI's fourth quarter 2018 forecast). Therefore, under the authority of 
section 123 of the BBRA as amended by section 307(b) of the BIPA, we 
are proposing to establish an annual market basket update to the LTCH 
PPS standard Federal payment rate for FY 2020 of 2.7 percent (that is, 
the most recent estimate of the proposed LTCH PPS market basket 
increase of 3.2 percent, less the proposed MFP adjustment of 0.5 
percentage point). Accordingly, we are proposing to revise Sec.  
412.523(c)(3) by adding a new paragraph (xvi), which would specify that 
the LTCH PPS standard Federal payment rate for FY 2020 is the LTCH PPS 
standard Federal payment rate for the previous LTCH PPS payment year 
updated by 2.7 percent, and as further adjusted, as appropriate, as 
described in Sec.  412.523(d) (including the application of the 
proposed adjustment factor for the cost of the elimination of the 25-
percent threshold policy under Sec.  412.523(d)(6) discussed above). 
For LTCHs that fail to submit quality reporting data under the LTCH 
QRP, under proposed Sec.  412.523(c)(3)(xvi) in conjunction with Sec.  
412.523(c)(4), we are proposing to further reduce the proposed annual 
update to the LTCH PPS standard Federal payment rate by 2.0 percentage 
points, in accordance with section 1886(m)(5) of the Act. Accordingly, 
we are proposing to establish an annual update to the LTCH PPS standard 
Federal payment rate of 0.7 percent (that is, 2.7 percent minus 2.0 
percentage points) for FY 2020 for LTCHs that fail to submit quality 
reporting data as required under the LTCH QRP. Consistent with our 
historical practice, we are proposing to use a more recent estimate of 
the market basket and the MFP adjustment in the final rule to establish 
an annual update to the LTCH PPS standard Federal payment rate for FY 
2020 under proposed Sec.  412.523(c)(3)(xvi). (We note that, consistent 
with historical practice, we also are proposing to adjust the proposed 
FY 2020 LTCH PPS standard Federal payment rate by an area wage level 
budget neutrality factor in accordance with Sec.  412.523(d)(4) (as 
discussed in section V.B.5. of the Addendum to this proposed rule).)

VIII. Quality Data Reporting Requirements for Specific Providers and 
Suppliers

    In section VIII. of the preamble of this proposed rule, we are 
proposing changes to the following Medicare quality reporting systems:
     In section VIII.A., the Hospital IQR Program;
     In section VIII.B., the PCHQR Program; and
     In section VIII.C., the LTCH QRP.
    In addition, in section VIII.D. of the preamble of this proposed 
rule, we are proposing changes to the Medicare and Medicaid Promoting 
Interoperability Programs (previously known as the Medicare and 
Medicaid EHR Incentive Programs) for eligible hospitals and critical 
access hospitals (CAHs).

A. Hospital Inpatient Quality Reporting (IQR) Program

1. Background
a. History of the Hospital IQR Program
    The Hospital IQR 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 burden 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 IQR 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 seek to promote higher quality and more efficient health care 
for Medicare beneficiaries. This effort is supported by the adoption of 
widely-agreed upon quality and cost measures. We have worked with 
relevant stakeholders to define measures in almost every care setting 
and currently measure some aspect of care for almost all Medicare 
beneficiaries. These measures assess clinical processes, patient safety 
and adverse events, patient experiences with care, care coordination, 
and clinical outcomes, as well as cost of care. We have implemented 
quality measure reporting programs for multiple settings of care. To 
measure the quality of hospital inpatient services, we implemented the 
Hospital IQR Program, previously referred to as the Reporting Hospital 
Quality Data for Annual Payment Update (RHQDAPU) Program. We refer 
readers to the FY 2010 IPPS/LTCH PPS final rule (74 FR 43860 through 
43861) and the FY 2011 IPPS/LTCH PPS final rule (75 FR 50180 through 
50181) for detailed discussions of the history of the Hospital IQR 
Program, including the statutory history, and to the FY 2015 IPPS/LTCH 
PPS final rule (79 FR 50217 through 50249), the FY 2016 IPPS/LTCH PPS 
final rule (80 FR 49660 through 49692), the FY 2017 IPPS/LTCH PPS final 
rule (81 FR 57148 through 57150), the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38326 through 38328 and 82 FR 38348), and the FY 2019 IPPS/LTCH 
PPS final rule (83 FR 41538 through 41609) for the measures we have 
previously adopted for the Hospital IQR Program measure set for the FY 
2022 payment determination and subsequent years.
b. Maintenance of Technical Specifications for Quality Measures
    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41538) in which we summarized how the Hospital IQR Program maintains 
the technical measure specifications for quality measures and the 
subregulatory process for incorporation of nonsubstantive updates to 
the measure specifications to ensure that measures remain up-to-date. 
We are not proposing any changes to these policies in this proposed 
rule.
c. Public Display of Quality Measures
    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41538 through 41539) in which we stated the Hospital IQR Program's 
policy for public display of quality measures. We are not proposing any 
changes to these policies in this proposed rule.
2. Retention of Previously Adopted Hospital IQR Program Measures for 
Subsequent Payment Determinations
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53512 through 53513) for our finalized measure retention policy. 
Pursuant to this policy, when we adopt measures for the Hospital IQR 
Program beginning with a particular payment determination, we 
automatically readopt these measures for all subsequent payment 
determinations unless we propose to remove, suspend, or replace the 
measures. We are not proposing any changes to this policy in this 
proposed rule.
3. Removal Factors for Hospital IQR Program Measures
    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41540 through 41544) for a summary of the Hospital IQR Program's 
removal factors. We are not proposing any changes to

[[Page 19474]]

our policies regarding measure removal in this proposed rule.
4. Considerations in Expanding and Updating Quality Measures
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53510 through 53512) for a discussion of the previous considerations we 
have used to expand and update quality measures under the Hospital IQR 
Program. We also refer readers to the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41147 through 41148), in which we describe the Meaningful 
Measures Initiative,\409\ our objectives under this new framework for 
quality measurement, and the quality topics that we have identified as 
high impact measurement areas that are relevant and meaningful to both 
patients and providers. Furthermore, in selecting measures for the 
Hospital IQR Program, we are mindful that measures adopted for the 
Hospital VBP Program must first have been adopted under the Hospital 
IQR Program and publicly reported on the Hospital Compare website for 
at least 1 year. We view the value-based purchasing programs, including 
the Hospital VBP Program, as the next step in promoting higher quality 
care for Medicare beneficiaries by transforming Medicare from a passive 
payer of claims into an active purchaser of quality health care for its 
beneficiaries. We are not proposing any changes to these policies in 
this proposed rule.
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    \409\ Meaningful Measures web page: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
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5. Proposed New Measures for the Hospital IQR Program Measure Set
    In this proposed rule, we are proposing to: (1) Adopt two new 
quality measures beginning with the FY 2023 payment determination; and 
(2) expand the voluntary reporting status of the Hybrid Hospital-Wide 
Readmission Measure with Claims and Electronic Health Record Data 
(Hybrid HWR measure), and then require mandatory reporting of this 
measure beginning with the FY 2026 payment determination, as discussed 
in detail below.
a. Proposed Adoption of Two Opioid-Related eCQMs
    In this proposed rule, we are proposing to add the following two 
opioid-related electronic clinical quality measures (eCQMs) to the 
Hospital IQR Program eCQM measure set, beginning with the CY 2021 
reporting period/FY 2023 payment determination: (1) Safe Use of 
Opioids--Concurrent Prescribing eCQM (NQF #3316e); and (2) Hospital 
Harm--Opioid-Related Adverse Events eCQM.
    We believe these opioid-related measures are valuable patient 
safety measures and are responsive to stakeholder feedback expressing 
support for eCQMs that focus on higher priority measurement areas and 
patient outcomes. While both measures are designed to reduce adverse 
events or harms associated with opioid use, the main focus of each 
measure's intent is different.
    The Safe Use of Opioids--Concurrent Prescribing eCQM focuses on 
concurrent prescriptions of opioids and benzodiazepines at discharge, 
an area of high-risk prescribing. Implementation of the measure has the 
potential to reduce preventable mortality and costs of adverse events 
associated with prescription opioid use and could contribute to efforts 
to combat the current opioid epidemic, which is a high-priority focus 
area for measurement.
    The Hospital Harm--Opioid-Related Adverse Events eCQM is designed 
to reduce adverse events associated with the administration of opioids 
in the hospital setting by assessing the administration of naloxone as 
an indicator of harm. Implementation of the measure can lead to safer 
patient care by incentivizing hospitals to track and improve their 
monitoring of patients who receive opioids during hospitalization.
    Adopting these two opioid-related eCQMs would further diversify the 
eCQM measure set by addressing two additional Meaningful Measures 
quality priorities that are not currently addressed by the eCQM measure 
set: ``Promoting Effective Prevention and Treatment of Chronic 
Disease'' and ``Making Care Safer by Reducing Harm Caused in the 
Delivery of Care'' through the Meaningful Measures Areas of 
``Prevention and Treatment of Opioid and Substance Use Disorders'' and 
``Preventable Healthcare Harm,'' respectively.
    Additional details on each of the opioid-related eCQMs are 
presented below. We also refer readers to two related proposals in this 
proposed rule: (1) Section VIII.A.10.d.(1) through (4) of the preamble 
of this proposed rule for a discussion of proposed reporting and 
submission requirements for eCQMs through the CY 2022 reporting period/
FY 2024 payment determination, including our proposal to require 
hospitals to report on the Safe Use of Opioids--Concurrent Prescribing 
eCQM as one of the four required eCQMs effective beginning with the CY 
2022 reporting period/FY 2024 payment determination; and (2) section 
VIII.D.6.a. and b. of the preamble of this proposed rule for similar 
proposals to adopt these two opioid-related eCQMs in the Medicare and 
Medicaid Promoting Interoperability Programs (previously known as the 
Medicare and Medicaid EHR Incentive Programs).
(1) Safe Use of Opioids--Concurrent Prescribing eCQM (NQF #3316e)
(a) Background
    Fatalities from unintentional opioid overdose have become an 
epidemic in the last 20 years, representing a major public health 
concern in the United States.\410\ According to the Centers for Disease 
Control and Prevention (CDC), opioid overdose resulted in more than 
42,000 deaths in 2016, and 40 percent of those deaths involved 
prescription opioids.\411\ In addition, a recent retrospective study of 
claims data found that concurrent benzodiazepine and opioid use 
increased by 80 percent between 2001 and 2013 in a large sample of 
privately insured patients, and significantly contributed to the 
overall population risk of opioid overdose in the United States.\412\
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    \410\ Rudd, R., Aleshire, N., Zibbell, J. & Gladden, R.M. 
(2016). Increases in Drug and Opioid Overdose Deaths--United States, 
2000-2014. Morbidity and Mortality Weekly Report, 64(50): 1378-82. 
Available at: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm6450a3.htm.
    \411\ Centers for Disease Control and Prevention. Drug Overdose 
Epidemic: Behind the Numbers. Available at: https://www.cdc.gov/drugoverdose/data/index.html.
    \412\ Sun, E., Dixit, A., Humphreys, K., Darnall, B., Baker, L. 
& Mackey, S. (2017). Association Between Concurrent Use of 
Prescription Opioids and Benzodiazepines and Overdose: Retrospective 
Analysis. BMJ, 356: j760.
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    Concurrent prescriptions of opioids or opioids and benzodiazepines 
place patients at a greater risk of unintentional overdose due to the 
increased risk of respiratory depression.\413\ According to the 
National Institute on Drug Abuse, concurrent use of benzodiazepines 
with opioids was present in more than 30 percent of fatal overdoses, 
but many people continue to be prescribed both drugs 
simultaneously.414 415 Rates of fatal overdose are 10 times 
higher in

[[Page 19475]]

patients who are co-dispensed opioid analgesics and benzodiazepines 
versus opioids alone.\416\ Studies of multiple claims and prescription 
databases show that 5 to 15 percent of patients receive concurrent 
opioid prescriptions, and 5 to 20 percent of patients receive 
concurrent opioid and benzodiazepine prescriptions across various 
settings.417 418 419 On average, the number of opioid 
overdose deaths involving benzodiazepines increased 14 percent each 
year from 2006 to 2011, whereas the number of opioid analgesic overdose 
deaths not involving benzodiazepines did not change significantly.\420\ 
One study showed that reducing concurrent use of opioids and 
benzodiazepines could reduce the risk of opioid overdose-related 
emergency department (ED) and inpatient visits by 15 percent, and could 
have prevented an estimated 2,630 deaths related to opioid painkiller 
overdoses in 2015.\421\ In the FY 2018 IPPS/LTCH PPS rulemaking (82 FR 
20059 through 20060; 82 FR 38377 through 38378), we sought public 
comment on the potential future adoption of this measure.
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    \413\ Dowell, D., Haegerich, T. & Chou, R. (2016). CDC Guideline 
for Prescribing Opioids for Chronic Pain--United States, 2016. 
Morbidity and Mortality Weekly Report: Recommendations and Reports, 
65. Available at: http://www.cdc.gov/media/dpk/2016/dpk-opioid-prescription-guidelines.html.
    \414\ National Institute on Drug Abuse. Benzodiazepines and 
Opioids. Available at: https://www.drugabuse.gov/drugs-abuse/opioids/benzodiazepines-opioids.
    \415\ Sun, E., Dixit, A., Humphreys, K., Darnall, B., Baker, L. 
& Mackey, S. (2017). Association Between Concurrent Use of 
Prescription Opioids and Benzodiazepines and Overdose: Retrospective 
Analysis. BMJ, 356: j760.
    \416\ Dasgupta, N., Jonsson Funk, M., Proescholdbell, S., 
Hirsch, A., Ribisl, K.M. & Marshall, S. (2015). Cohort Study of the 
Impact of High-Dose Opioid Analgesics on Overdose Mortality. Pain 
Medicine. Available at: http://onlinelibrary.wiley.com/doi/10.1111/pme.12907/abstract.
    \417\ Liu, Y., Logan, J., Paulozzi, L., Zhang, K., Jones, C. 
(2013). Potential Misuse and Inappropriate Prescription Practices 
Involving Opioid Analgesics. American Journal of Managed Care, 
19(8): 648-65.
    \418\ Mack, K., Zhang, K., Paulozzi, L. & Jones, C. (2015). 
Prescription Practices Involving Opioid Analgesics Among Americans 
with Medicaid, 2010. Journal of Health Care for the Poor and 
Underserved, 26(1): 182-98.
    \419\ Park, T., Saitz, R., Ganoczy, D., Ilgen, M.A. & Bohnert, 
A.S.B. (2015). Benzodiazepine Prescribing Patterns and Deaths from 
Drug Overdose Among U.S. Veterans Receiving Opioid Analgesics: Case-
Cohort Study. BMJ, 350: h2698.
    \420\ Jones, C.M. & McAninch, J.K. (2015). Emergency Department 
Visits and Overdose Deaths from Combined Use of Opioids and 
Benzodiazepines. American Journal of Preventive Medicine, 49(4): 
493-501.
    \421\ Sun, E., Dixit, A., Humphreys, K., Darnall, B., Baker, L. 
& Mackey, S. (2017). Association Between Concurrent Use of 
Prescription Opioids and Benzodiazepines and Overdose: Retrospective 
Analysis. BMJ, 356: j760.
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(b) Overview of Measure
    We believe that a measure that calculates the proportion of 
patients who were concurrently prescribed two or more opioids or 
opioids and benzodiazepines has the potential to reduce preventable 
mortality and the costs of adverse events associated with opioid use. 
Therefore, we are proposing to adopt the Safe Use of Opioids--
Concurrent Prescribing eCQM (NQF #3316e) beginning with the CY 2021 
reporting period/FY 2023 payment determination. The Safe Use of 
Opioids--Concurrent Prescribing eCQM seeks to reduce preventable 
mortality and the costs of adverse events associated with opioid use by 
encouraging providers to identify patients who have concurrent 
prescriptions for opioids or opioids and benzodiazepines, and 
discouraging providers from prescribing these drugs concurrently 
whenever possible. The goal of the measure is to provide a patient-
centric measure to help systems identify and monitor patients at risk, 
and ultimately to reduce the risk of harm to patients across the 
continuum of care. This measure also seeks to combat the opioid crisis, 
which has been declared a public health emergency,\422\ and is 
recognized as a priority focus area for measurement by CMS and HHS. 
Specifically, by collecting and reporting concurrent prescribing rates 
with minimal lag time, this measure advances one of the key strategies 
prioritized by HHS in its five-point Opioid Strategy, which is to 
improve our understanding of the crisis through more timely, specific 
public health data collection and reporting.\423\ In addition, under 
CMS' Meaningful Measures framework, the Safe Use of Opioids--Concurrent 
Prescribing eCQM addresses the quality priority of ``Promoting 
Effective Prevention and Treatment of Chronic Disease'' through the 
Meaningful Measures Area of ``Prevention and Treatment of Opioid and 
Substance Use Disorders.'' \424\
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    \422\ Office of the Assistant Secretary for Preparedness and 
Response (ASPR). Public Health Emergency Declarations. Available at: 
https://www.phe.gov/emergency/news/healthactions/phe/pages/default.aspx.
    \423\ In April 2017, HHS identified the opioid crisis as a top 
priority and prioritized five specific strategies to combat the 
epidemic, including ``Better Data'' on the epidemic to improve our 
understanding of the crisis. HHS aims to strengthen public health 
data collection and reporting to improve the timeliness and 
specificity of data and to inform a real-time public health response 
as the epidemic evolves. In its Strategy to Combat Opioid Abuse, 
Misuse, and Overdose, HHS sets forth a number of activities that can 
be taken by the Secretary and HHS agencies to advance its ``Better 
Data'' strategy, including the collection of data on opioid 
prescriptions, new drug patterns, and related harms, with minimal 
lag time. More information on HHS' Opioid Strategy is available at: 
https://www.hhs.gov/opioids/about-the-epidemic/hhs-response/index.html.
    \424\ The Safe Use of Opioids--Concurrent Prescribing measure 
also addresses the quality priority of ``Promoting Effective 
Communication and Coordination of Care'' through the Meaningful 
Measure area of ``Medication Management.'' More information on CMS' 
Meaningful Measures Initiative is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
---------------------------------------------------------------------------

    The measure's concept is based on the 2016 CDC Guideline for 
Prescribing Opioids for Chronic Pain, which recommends that clinicians 
should avoid prescribing opioids and benzodiazepines concurrently 
whenever possible.\425\ It is also in line with many state-issued and 
professional society guidelines on concurrent prescribing, which 
recommend that providers should avoid prescribing multiple opioids and 
opioids and benzodiazepines concurrently because it puts patients at 
high risk for respiratory depression, overdose, and death.\426\
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    \425\ Dowell, D., Haegerich, T. & Chou, R. (2016). CDC Guideline 
for Prescribing Opioids for Chronic Pain--United States, 2016. 
Morbidity and Mortality Weekly Report: Recommendations and Reports, 
65. Available at: https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm.
    \426\ See, for example, American Academy of Emergency Medicine, 
Emergency Department Opioid Prescribing Guidelines for the Treatment 
of Non-Cancer Related Pain (available at: https://www.deepdyve.com/lp/elsevier/american-academy-of-emergency-medicine-PlQtPNi8J4) 
(recommending that clinicians should avoid prescribing opioid 
analgesics to patients currently taking sedative hypnotic 
medications or concurrent opioid analgesics); Washington State 
Agency Medical Directors' Group, Interagency Guideline on 
Prescribing Opioids for Pain (available at: http://agencymeddirectors.wa.gov/Files/2015AMDGOpioidGuideline.pdf) 
(recommending that clinicians should avoid combining opioids with 
benzodiazepines, sedative-hypnotics or barbiturates when prescribing 
opioid for chronic noncancer pain).
---------------------------------------------------------------------------

    In addition, stakeholders involved during development, including 
the project TEP and public commenters, stated that the measure was 
useful not only because it could promote adherence to recommended 
clinical guidelines, but also because capturing data on hospital-level 
prescribing practices could assist in identifying strategies to address 
the issue of concurrent prescriptions of opioids and benzodiazepines. 
Stakeholders also stated that the measure could reduce opioid-related 
mortality resulting from concurrent opioid prescriptions or opioid-
benzodiazepine prescriptions, with minimal implementation costs.\427\ 
Measure testing demonstrated that almost all of the data elements 
required to calculate and report the measure are collected as part of 
required clinical workflow protocols in structured fields within the 
EHR. The NQF Patient Safety Standing Committee did not raise any 
concerns on the feasibility of the measure during endorsement review.
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    \427\ Gao, A., Bandyopadhyay, J., Barrett, K., Morales, N. & Tu, 
D. (2017). Beta Testing Report on the Safe Use of Opioids--
Concurrent Prescribing Electronic Clinical Quality Measure. Hospital 
Inpatient and Outpatient Process and Structural Measure Development 
and Maintenance Project (HHSM-500-2013-13011I, Task Order HHSM-500-
T0003).

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[[Page 19476]]

    The Safe Use of Opioids--Concurrent Prescribing measure (MUC16-167) 
was included in the publicly available ``List of Measures Under 
Consideration for December 1, 2016.'' \428\ The measure was reviewed by 
the NQF MAP in December 2016 and January 2017, which recommended that 
the measure be refined and resubmitted prior to rulemaking due to the 
importance of the opioid epidemic.\429\ The MAP noted that there are 
instances where concurrent prescribing may be clinically appropriate, 
and that the measure could potentially cause unintentional consequences 
associated with withdrawal of medications. For more information on the 
concerns and considerations raised by the MAP related to this measure, 
we refer readers to the January 2017 NQF MAP Coordinating Committee 
Meeting Transcript.\430\ In response to the MAP's recommendation, and 
as suggested by the project's TEP and expert work group, we explored 
single-condition exclusions, specifically for patients with sickle cell 
disease and those undergoing substance use therapy, and found that 
these instances comprised a very small portion of eligible cases 
captured by the numerator during testing.
---------------------------------------------------------------------------

    \428\ List of Measures Under Consideration for December 1, 2016. 
Available at: http://www.qualityforum.org/ProjectMaterials.aspx? 
projectID=75367.
    \429\ 2016-2017 Spreadsheet of Final Recommendations to HHS and 
CMS. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75367.
    \430\ Measure Applications Partnership, January 2017 NQF MAP 
Coordinating Committee Meeting Transcript. Available at: http://www.quality forum.org/ProjectMaterials.aspx?projectID=75367.
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    After reviewing these testing results, expert opinions from 
clinicians recommended continuing to include patients for whom 
concurrent prescribing may be clinically necessary because experts 
stated that these populations are at highest risk of adverse drug 
events due to concurrent prescriptions and should continue to be 
monitored by clinicians throughout the continuum of care. In addition, 
there are currently no guidelines supporting exclusion of patients who 
may require concurrent prescriptions from the measure, other than 
cancer and palliative care; a broader set of evidence-based exclusions 
may increase the face validity of the measure, but there are currently 
no strong evidence-based indicators to support other exclusions beyond 
what is currently included in the measure that would continue to 
maintain the strength of the measure's evidence base.
    To strengthen the measure's feasibility and usability, the measure 
was refined to address other feedback from the MAP such as: (1) 
Including only encounters for inpatient, ED, and hospital observation 
stays (rather than including encounters spanning inpatient and hospital 
outpatient settings); and (2) including only medications prescribed at 
discharge (rather than those spanning the duration of the encounter). 
An update on the measure was presented to the MAP on November 8, 
2018.\431\
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    \431\ November 8, 2018 meeting agenda and presentation slides 
available at: http://www.qualityforum.org/ProjectMaterials.aspx 
?projectID=75369.
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    The NQF Patient Safety Standing Committee also recommended 
endorsement of the proposed measure in 2018, acknowledging that there 
is strong evidence for an association between increased use of multiple 
opioids, or opioids and benzodiazepines together, as well as increased 
risk of unintentional and fatal overdoses.\432\ The committee agreed 
that this measure will likely reduce concurrent prescribing of opioid-
opioid and opioid-benzodiazepine medications at discharge in inpatient 
and ED settings.\433\ This measure was endorsed by the NQF in May 
2018.\434\
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    \432\ National Quality Forum. (2018). Patient Safety Fall 2017 
Final Report. Available at: http://www.qualityforum.org/Publications/2018/07/Patient_Safety_Fall_2017_Final_Report.aspx.
    \433\ Ibid.
    \434\ Ibid.
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    Concurrent opioid or opioid-benzodiazepine prescription use 
contributes significantly to the overall population's risk of opioid 
overdose. Currently, however, no measure exists to assess nationwide 
rates of the concurrent prescribing of opioids and benzodiazepines at 
the hospital-level.\435\ Adopting the Safe Use of Opioids--Concurrent 
Prescribing eCQM would thus enhance the information available to 
providers in this area of high-risk prescribing. In addition, we 
believe the measure is a valuable patient safety measure that has the 
potential to reduce preventable mortality and other adverse events 
associated with prescription opioid use, with minimal implementation 
costs.
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    \435\ The Veterans Health Administration (VHA), as part of its 
Opioid Safety Initiative, implemented a measure of concurrent opioid 
and benzodiazepine prescribing that is similar to the Safe Use of 
Opioids--Concurrent Prescribing measure. The Opioid Safety 
Initiative was associated with a decrease in patients receiving 
benzodiazepine concurrently with an opioid--specifically, a recent 
study showed a 20.67 percent decrease overall and a 0.86 percent 
decrease in patients per month (781 patients per month)--among all 
adult VHA patients who filled outpatient opioid prescriptions from 
October 2012 to September 2014. See Lin, L.A., Bohnert, A.S., Kerns, 
R.D., Clay, M.A., Ganoczy, D. & Ilgen, M.A. (2017). Impact of the 
Opioid Safety Initiative on Opioid-Related Prescribing in Veterans. 
Pain, 158(5): 833-39.
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    The measure is intended to facilitate safer patient care not only 
by promoting adherence to recommended clinical guidelines on concurrent 
prescribing practices, but also by incentivizing hospitals to develop 
strategies to identify and monitor patients on concurrent opioids and 
opioid-benzodiazepine prescriptions who might be at higher risk of 
adverse drug events. For instance, the measure could encourage hospital 
prescribers to use data from prescription drug-monitoring programs when 
assessing whether to prescribe concurrent substances. The measure could 
also encourage more effective communication among providers to 
coordinate care across hospital and ambulatory care settings. The 
measure could also help establish a national benchmark of opioid 
prescribing in hospital inpatient settings.
(c) Data Sources
    The proposed measure is an eCQM that uses data collected through 
EHRs to determine hospital performance. Between July 2016 and July 
2017, the Safe Use of Opioids--Concurrent Prescribing measure was 
tested at three health systems (eight hospitals in total) with two 
different EHR systems for reliability, validity, and feasibility based 
on the endorsement criteria outlined by NQF.\436\ The testing showed 
that the measure is feasible, valid, and reliable. The measure is 
feasible as 96 percent of the data elements required to calculate the 
performance rate are: (1) Collected during routine care; (2) 
extractable from structured fields in the electronic health systems of 
test sites; and (3) likely to be accurate. The measure is valid as all 
data elements needed to calculate the measure had levels of agreement 
of 84 to 99 percent between electronically extracted and manually 
abstracted data elements. The measure also has a reliability 
coefficient of 0.99 across the three health systems' sites with two 
different EHR systems. This finding indicates that differences in 
hospital performance reflect true differences in quality, rather than 
measurement error or noise. For encounters where the patient had at 
least one active opioid or benzodiazepine prescription at discharge, 
measure testing also showed concurrent prescribing rates of 18.2 
percent in the inpatient setting and 6.1 percent in ED settings. This 
aligned

[[Page 19477]]

with the rates found in the literature. We note that NQF reviewed these 
data as part of their measure endorsement process and endorsed the 
measure in 2018.\437\
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    \436\ National Quality Forum. What NQF Endorsement Means. 
Available at: http://www.qualityforum.org/Measuring_Performance/ABCs/What_NQF_Endorsement_Means.aspx.
    \437\ National Quality Forum. (2018). Patient Safety, Fall 2017 
Final Report. Available at: http://www.qualityforum.org/Publications/2018/07/Patient_Safety_Fall_2017_Final_Report.aspx.
---------------------------------------------------------------------------

(d) Measure Calculation
    The Safe Use of Opioids--Concurrent Prescribing eCQM is a process 
measure that calculates the proportion of patients age 18 years and 
older prescribed two or more opioids or an opioid and benzodiazepine 
concurrently at discharge from a hospital-based encounter (inpatient or 
emergency department [ED], including observation stays). An improvement 
in quality of care is indicated by a decrease in the measure score. We 
recognize that there may be some clinically appropriate situations for 
concurrent prescriptions of two unique opioids or an opioid and 
benzodiazepine. Thus, we do not expect the measure rate to be zero; 
rather, the goal of the measure is to help systems identify and monitor 
patients at risk, and ultimately, to reduce the risk of harm to 
patients across the continuum of care.
    The measure's cohort includes all patients aged 18 years and older 
who were prescribed a new or continued opioid or a benzodiazepine at 
discharge from a hospital-based encounter (inpatient stay less than or 
equal to 120 days or ED encounters, including observation stays) that 
ended during the measurement period. To reduce hospital burden, the 
definition of ``hospital-based encounter'' is aligned with that of 
other eCQMs in the Hospital IQR Program.
    Patients are included in the numerator if their discharge 
medications include two or more active opioids or an active opioid and 
benzodiazepine resulting in concurrent therapy at discharge from the 
hospital-based encounter.
    Patients are included in the denominator if they were discharged 
from a hospital-based encounter during the measurement period (which 
includes inpatient stays less than or equal to 120 days or ED visits, 
including observation stays) and their medications at discharge 
included a new or continued Schedule II or III opioid, or a new or 
continued Schedule IV benzodiazepine prescription. Patients are 
excluded from the denominator if they have an active diagnosis of 
cancer or order for palliative care (including comfort measures, 
terminal care, dying care, and hospice care) during the encounter. 
These exclusions align with the populations excluded from the 2016 CDC 
Guideline for Prescribing Opioids for Chronic Pain.
    We note risk adjustment is not applicable to the Safe Use of 
Opioids--Concurrent Prescribing eCQM because it is a process measure. 
The measure addresses any difference in risk levels for patients via 
the current denominator exclusions as supported by the available 
evidence, that is, the measure excludes patients with cancer or 
patients receiving palliative care.
    For more information about the Safe Use of Opioids--Concurrent 
Prescribing eCQM, we refer readers to the measure specifications.\438\
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    \438\ Ibid.
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    We also refer readers to section VIII.A.10.d.(1) through (4) of the 
preamble of this proposed rule where we discuss our proposed eCQM 
reporting and submission requirements through the CY 2022 reporting 
period/FY 2024 payment determination, including proposing that all 
participating hospitals report the Safe Use of Opioids--Concurrent 
Prescribing eCQM (NQF #3316e) as one of the four required eCQMs 
beginning with the CY 2022 reporting period/FY 2024 payment 
determination. In addition, we refer readers to section VIII.D.6.a. and 
b. of the preamble of this proposed rule for a similar proposal to 
adopt the Safe Use of Opioids--Concurrent Prescribing eCQM (NQF #3316e) 
for the Promoting Interoperability Program beginning with the reporting 
period in CY 2021.
(2) Hospital Harm--Opioid-Related Adverse Events eCQM
(a) Background
    Opioids are among the most frequently implicated medications in 
adverse drug events among hospitalized patients. The most serious 
opioid-related adverse events include those with respiratory 
depression, which can lead to brain damage and death. Opioid-related 
adverse events have both negative impact on patients and financial 
implications. Patients who experience adverse events due to opioid 
administration have been noted to have 55 percent longer lengths of 
stay, 47 percent higher costs, 36 percent higher risk of 30-day 
readmission, and 3.4 times higher payments than patients without these 
adverse events.\439\ While noting that data are limited, The Joint 
Commission suggested that opioid-induced respiratory arrest may 
contribute substantially to the 350,000 to 750,000 in-hospital cardiac 
arrests annually.\440\
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    \439\ Kessler, E.R., Shah, M., Gruschkkus, S.K., et al. (2013). 
Cost and quality implications of opioid-based postsurgical pain 
control using administrative claims data from a large health system: 
opioid-related adverse events and their impact on clinical and 
economic outcomes. Pharmacotherapy, 33(4): 383-91.
    \440\ Overdyk, F.J. (2009). Postoperative Respiratory Depression 
and Opioids. Initiatives in Safe Patient Care.
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    Most opioid-related adverse events are preventable. Of the opioid-
related adverse drug events reported to The Joint Commission's Sentinel 
Event database, 47 percent were due to a wrong medication dose, 29 
percent due to improper monitoring, and 11 percent due to other causes 
(for example, medication interactions and/or drug reactions).\441\ In 
addition, in a review of cases from a malpractice claims database in 
which there was opioid-induced respiratory depression among post-
operative surgical patients, 97 percent of these adverse events were 
judged preventable with better monitoring and response.\442\ While 
hospital quality interventions such as proper dosing, adequate 
monitoring, and attention to potential drug interactions that can lead 
to overdose are key to prevention of opioid-related adverse events, the 
use of these practices can vary substantially across hospitals.
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    \441\ The Joint Commission. (2012.) Safe Use of Opioids in 
Hospitals. The Joint Commission Sentinel Event Alert, 49:1-5.
    \442\ Lee, L.A., Caplan, R.A., Stephens, L.S., et al. (2015). 
Postoperative opioid-induced respiratory depression: a closed claims 
analysis. Anesthesiology, 122(3): 659-65.
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    Administration of opioids also varies widely by hospital, ranging 
from 5 percent in the lowest-use hospital to 72 percent in the highest-
use hospital.\443\ Notably, hospitals that use opioids most frequently 
have increased adjusted risk of severe opioid-related adverse 
events.\444\ We have developed the Hospital Harm--Opioid-Related 
Adverse Events eCQM to assess the rates of adverse events as well as 
the variation in rates among hospitals. In the FY 2019 IPPS/LTCH PPS 
rulemaking (83 FR 20493 through 20494; 83 FR 41588 through 41592), we 
solicited public comment on the potential future adoption of this 
measure.
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    \443\ Herzig, S.J., Rothberg, M.B., Cheung, M., et al. (2014). 
Opioid utilization and opioid-related adverse events in nonsurgical 
patients in US hospitals. Journal of Hospital Medicine, 9(2): 73-81.
    \444\ Ibid.
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(b) Overview of Measure
    The Hospital Harm--Opioid-Related Adverse Events eCQM is an outcome 
measure focusing specifically on opioid-related adverse events during 
an

[[Page 19478]]

admission to an acute care hospital by assessing the administration of 
naloxone. Naloxone is a lifesaving emergent therapy with clear and 
unambiguous applications in the setting of opioid 
overdose.445 446 447 448 Naloxone administration has also 
been used in a number of studies as an indicator of opioid-related 
adverse events to indicate a harm to a patient during inpatient 
admission to a hospital.449 450 The intent of this measure 
is for hospitals to track and improve their monitoring and response to 
patients administered opioids during hospitalization, and to avoid 
harm, such as respiratory depression, which can lead to brain damage 
and death. This measure focuses specifically on in-hospital opioid-
related adverse events, rather than opioid overdose events that happen 
in the community and may bring a patient into the emergency department.
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    \445\ Surgeon General's Advisory on Naloxone and Opioid 
Overdose. Available at: https://www.surgeongeneral.gov/priorities/opioid-overdose-prevention/naloxone-advisory.html.
    \446\ Agency for Healthcare Research and Quality (AHRQ). (2017). 
Management of Suspected Opioid Overdose with Naloxone by Emergency 
Medical Services Personnel. Comparative Effectiveness Review No. 
193. Available at: https://effectivehealthcare.ahrq.gov/topics/emt-naloxon/systematic-review.
    \447\ Substance Abuse and Mental Health Services Administration 
(SAMHSA). (2018). Opioid Overdose Prevention Toolkit: Information 
for Prescribers. Available at: https://store.samhsa.gov/system/files/information-for-prescribers.pdf.
    \448\ Harm Reduction Coalition. (2012). Guide To Developing and 
Managing Overdose Prevention and Take-Home Naloxone Projects. 
Available at: https://harmreduction.org/issues/overdose-prevention/tools-best-practices/manuals-best-practice/od-manual/.
    \449\ Eckstrand, J.A., Habib, A.S., Williamson, A., et al. 
(2009). Computerized surveillance of opioid-related adverse drug 
events in perioperative care: A cross-sectional study. Patient 
Safety Surgery, 3:18.
    \450\ Nwulu, U., Nirantharakumar, K., Odesanya, R., et al. 
(2013). Improvement in the detections of adverse drug events by the 
use of electronic health and prescription records: An evaluation of 
two trigger tools. European Journal of Clinical Pharmacology, 69(2): 
255-59.
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    As we state below, this measure would be added to the eCQM measure 
set from which hospitals could choose to report. For hospitals that 
select this measure, the measure would provide them with measurement of 
opioid-related adverse event rates and incentivize improved clinical 
workflows and monitoring when administering opioids.
    The goal of this measure is to incentivize hospitals to closely 
monitor patients who receive opioids during their hospitalization to 
prevent respiratory depression. The measure requires evidence of 
hospital opioid administration prior to the naloxone administration 
during the first 24 hours after hospital arrival to ensure that the 
harm was hospital acquired and not due to an overdose that happened 
outside of the hospital. In addition, the aim of this measure is not to 
identify preventability of an individual harm instance or whether each 
instance of harm was an error, but rather to assess the overall rate of 
harm within a hospital by incorporating a definition of harm that is 
likely to be reduced as a result of hospital best practice.
    The Hospital Harm--Opioid-Related Adverse Events measure (MUC17-
210) was included in the publicly available ``List of Measures Under 
Consideration for December 1, 2017.'' \451\ The measure was reviewed by 
the NQF MAP Hospital Workgroup in December 2017, and received the 
recommendation to refine and resubmit prior to rulemaking, as 
referenced in the ``2017-2018 Spreadsheet of Final Recommendations to 
HHS and CMS.'' \452\ The MAP acknowledged the significant health risks 
associated with opioid-related adverse events but recommended adjusting 
the numerator to consider the impact on chronic opioid users.\453\ 
Patients on chronic opioids remain at risk of preventable over- or mis-
administration of opioids in the hospital and ideally would remain in 
the measure cohort. This decision was supported by the TEP during 
measure development. In addition, although chronic opioid users may 
require higher doses of opioids to achieve adequate pain control, 
providers have the ability to apply appropriate monitoring to prevent 
severe adverse events requiring naloxone administration.
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    \451\ List of Measures Under Consideration for December 1, 2017. 
Available at: http://www.qualityforum.org/ProjectMaterials.aspx 
?projectID=75369.
    \452\ 2017-2018 Spreadsheet of Final Recommendations to HHS and 
CMS. Available at: http://www.qualityforum.org/ProjectMaterials.aspx 
?projectID=75369.
    \453\ National Quality Forum, Measure Applications Partnership, 
MAP 2018 Considerations for Implementing Measures in Federal 
Programs: Hospitals. Available at: http://www.qualityforum.org/Publications/2018/02/MAP_2018_Considerations_for_Implementing_Measures_Final_Report_-_Hospitals.aspx.
---------------------------------------------------------------------------

    In response to the MAP's concerns that the measure needed to be 
tested in more facilities to demonstrate reliability and validity, we 
have completed testing the Measure Authoring Tool (MAT) \454\ output 
for this measure in multiple hospitals that use a variety of EHR 
systems,\455\ and the measure was shown to be feasible to implement, 
reliable, and valid. For more information on the concerns and 
considerations raised by the MAP related to this measure, we refer 
readers to the December 2017 NQF MAP Hospital Workgroup Meeting 
Transcript.\456\ In response to the MAP's recommendation, the measure 
was refined and presented to the MAP on November 8, 2018 for any 
additional feedback; however, there was no additional MAP feedback at 
that time.
---------------------------------------------------------------------------

    \454\ The Measure Authoring Tool (MAT) is a web-based tool used 
to develop the electronic measure specifications, which expresses 
complicated measure logic in several formats including a human-
readable document. For additional information, we refer readers to: 
https://www.emeasuretool.cms.gov/.
    \455\ National Quality Forum, Measure Applications Partnership, 
MAP 2018 Considerations for Implementing Measures in Federal 
Programs: Hospitals. Available at: http://www.qualityforum.org/Publications/2018/02/MAP_2018_Considerations_for_Implementing_Measures_Final_Report_-_Hospitals.aspx.
    \456\ Measure Applications Partnership, December 2017 NQF MAP 
Hospital Workgroup Meeting Transcript. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
---------------------------------------------------------------------------

    This measure was submitted for endorsement by NQF's Patient Safety 
Standing Committee for the Spring 2019 cycle, with a complete review of 
measure validity and reliability scheduled for June 2019. However, we 
also note that section 1866(b)(3)(B)(viii)(IX)(bb) of the Act provides 
an exception under which, in the case of a specified area or medical 
topic determined appropriate by the Secretary for which a feasible and 
practical measure has not been endorsed by the entity with a contract 
under section 1890(a) of the Act, the Secretary may specify a measure 
that is not so endorsed as long as due consideration is given to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary.
    We believe this measure will provide hospitals with reliable and 
timely measurement of their opioid-related adverse event rates, which 
are a high-priority measurement area. We believe implementation of this 
measure can lead to safer patient care by incentivizing hospitals to 
implement or refine clinical workflows that facilitate evidence-based 
use and monitoring when administering opioids. We also believe 
implementation of this measure may result in fewer patients 
experiencing adverse events associated with the administration of 
opioids, such as respiratory depression, which can lead to brain damage 
and death. This measure addresses the quality priority of ``Making Care 
Safer by Reducing Harm Caused in the Delivery of Care'' through the 
Meaningful Measures Area of ``Preventable Harm.'' \457\ We also note

[[Page 19479]]

that adoption of this measure would introduce the first outcomes 
measure to the eCQM measure set under the Hospital IQR Program, which 
currently is comprised entirely of process measures.
---------------------------------------------------------------------------

    \457\ More information on CMS' Meaningful Measures Initiative is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
---------------------------------------------------------------------------

(c) Data Sources
    The data source for this measure is entirely EHR data. The measure 
is designed to be calculated by the hospitals' EHRs, as well as by CMS 
using the patient level data submitted by hospitals to CMS. As with all 
quality measures we develop, testing was performed to confirm the 
feasibility of the measure, data elements, and validity of the 
numerator, using clinical adjudicators who validated the EHR data 
compared with medical chart-abstracted data. Based on testing, results 
showed that rates of missing data elements required for measure 
calculation were very low (range 0 percent to 0.8 percent). Testing 
also showed that the positive predictive value (PPV),\458\ which 
describes the probability that a patient with a positive result 
(numerator case) identified by the EHR data was also a positive result 
verified by review of the patient's medical record done by a clinical 
adjudicator, was high at all hospital testing sites (94 percent to 98 
percent). For more information on the measure testing and data, we 
refer readers to the measure's methodology report on the CMS measure 
methodology page at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. Testing was completed using output from the MAT in 
five hospitals, using two different EHR systems.
---------------------------------------------------------------------------

    \458\ ``Predictive Value.'' Farlex Partner Medical Dictionary. 
Available at: https://medical-dictionary.thefreedictionary.com/predictive+value.
---------------------------------------------------------------------------

(d) Measure Calculation
    The Hospital Harm--Opioid-Related Adverse Events eCQM is an outcome 
measure that assesses, by hospital, the proportion of patients who had 
an opioid-related adverse event during an admission to an acute care 
hospital by assessing the administration of naloxone. The measure 
includes inpatient admissions that were initiated in the emergency 
department or in observational status followed by a hospital admission. 
The measure denominator includes all patients 18 years or older 
discharged from an inpatient hospital admission during the measurement 
period.
    The numerator is the number of patients who received naloxone 
outside of the operating room either: (1) After 24 hours from hospital 
arrival; or (2) during the first 24 hours after hospital arrival with 
evidence of hospital opioid administration prior to the naloxone 
administration. We do not include naloxone use in the operating room 
where it could be part of the sedation plan as administered by an 
anesthesiologist or nurse anesthetist. Uses of naloxone for procedures 
outside of the operating room (such as bone marrow biopsy) are counted 
in the numerator as its use would indicate the patient was over 
sedated. These criteria exist to ensure patients are not considered to 
have experienced harm if they receive naloxone in the first 24 hours 
due to an opioid overdose that occurred in the community prior to 
hospital arrival. We do not require the administration of an opioid 
prior to naloxone after 24 hours from hospital arrival because an event 
occurring 24 hours after admission is most likely due to hospitals' 
administration of opioids. By limiting the requirement of documented 
opioid administration to the first 24 hours of the encounter, we are 
reducing the complexity of the measure logic, and therefore, the burden 
of implementation for hospitals. The measure numerator identifies a 
harm using the administration of naloxone, and purposely does not 
include any medications that combine naloxone with other agents.
    The measure is intended to capture a type of rare event, such that 
a full year of data would most reliably capture the quality of care 
that is associated with low rates. While reliability of this measure 
was established using 1 year of data, we note that under the eCQM 
reporting and submission requirements we are proposing in section 
VIII.A.10.d.(1) through (4) of the preamble of this proposed rule, 
initial reporting of this measure, if finalized, would only require 
hospitals to submit one self-selected calendar quarter of data; 
hospitals may submit more than one quarter of data for this measure 
should they so desire. We are considering a 1-year measurement period 
for the future public reporting of this measure.
(e) Outcome
    This eCQM assesses the proportion of encounters where naloxone is 
administered as a proxy for administration of excessive amounts of 
opioid medications, not including naloxone given while in the operating 
room. In the first 24 hours of the hospitalization, an opioid must have 
been administered prior to receiving naloxone to be considered part of 
the outcome.
    We note this measure is not risk adjusted for chronic opioid use, 
as most instances of opioid-related adverse events should be 
preventable for all patients regardless of prior exposure to opioids or 
chronic opioid use. In addition, there are several risk factors that 
affect sensitivity to opioids that physicians should consider when 
dosing opioids. Risk adjustment would only be needed if certain 
hospitals have patients with distinctly different risk profiles that 
cannot be mitigated by providing high-quality care. Similarly, the 
current measure specification does not include stratification of 
patients for chronic opioid use for three reasons: (1) This is a 
challenging data element to capture consistently in the EHR; (2) 
chronic opioid use should be taken into consideration by clinicians in 
determining dosing in the hospital and theoretically should not be 
considered a different risk level for patients; and (3) stratification 
can reduce the effective sample size of a measure and make the measure 
less useable. During measure development, TEP members gave feedback on 
whether the measure required risk adjustment. The majority of TEP 
members voted against risk adjustment of this measure with the 
rationale that it would be difficult to capture chronic opioid use 
within the EHR and that the increased risk of harm associated with 
these patients can be mitigated by hospital monitoring. For more 
information on the Hospital Harm--Opioid-Related Adverse Events eCQM, 
we refer readers to the measure specifications available on the CMS 
Measure Methodology website, at: https://www.cms.gov/medicare/quality-
initiatives-patient-assessment-instruments/hospitalqualityinits/
measure-methodology.html.
    We also refer readers to section VIII.A.10.d.(1) through (4) of the 
preamble of this proposed rule where we discuss our proposed eCQM 
reporting and submission requirements through the CY 2022 reporting 
period/FY 2024 payment determination. In addition, we refer readers to 
section VIII.D.6.a. and b. of the preamble of this proposed rule for a 
similar proposal to adopt the Hospital Harm--Opioid-Related Adverse 
Events eCQM for the Promoting Interoperability Program beginning with 
the reporting period in CY 2021.
    We acknowledge that some stakeholders have expressed concern that 
some providers could withhold the use of naloxone for patients who are 
in respiratory depression, believing that

[[Page 19480]]

may help those providers avoid poor performance on the proposed 
Hospital Harm--Opioid-Related Adverse Events eCQM (83 FR 41591). 
Therefore, we are soliciting public comment on the potential for this 
measure to disincentivize the appropriate use of naloxone in the 
hospital setting or withholding opioids when they are medically 
necessary in patients requiring palliative care or who are at end of 
life out of an overabundance of caution.
b. Proposed Adoption of Hybrid Hospital-Wide Readmission Measure With 
Claims and Electronic Health Record Data (NQF #2879)
    In this proposed rule, we are proposing to adopt the Hybrid 
Hospital-Wide Readmission Measure with Claims and Electronic Health 
Record Data (NQF #2879) (Hybrid HWR measure) into the Hospital IQR 
Program in a stepwise fashion. First, we would accept data submissions 
for the Hybrid HWR measure during two voluntary reporting periods. In 
those periods, we would collect data on the Hybrid HWR measure in 
accordance with, and to the extent permitted by, the HIPAA Privacy and 
Security Rules (45 CFR parts 160 and 164, Subparts A, C, and E), and 
other applicable law. The first voluntary reporting period would run 
from July 1, 2021 through June 30, 2022, and the second would run from 
July 1, 2022 through June 30, 2023. These voluntary reporting periods 
would last for four quarters, which is an expansion upon the 2018 
Voluntary Reporting Period for the Hybrid HWR measure, which only 
collected two quarters of data. Immediately thereafter, we are 
proposing to require reporting of the Hybrid HWR measure for the 
reporting period which runs from July 1, 2023 through June 30, 2024, 
impacting the FY 2026 payment determination, and for subsequent years. 
This proposal to adopt the Hybrid HWR measure with a stepwise 
implementation timeline is being made in conjunction with our proposal 
to remove the Claims-Based Hospital-Wide All-Cause Unplanned 
Readmission Measure (NQF #1789) (HWR claims-only measure) (discussed in 
section VIII.A.6. of the preamble of this proposed rule, below). These 
proposals are discussed in detail below.
(1) Background
    Hospital readmission rates are affected by complex and critical 
aspects of care such as communication between providers or between 
providers and patients; prevention of, and response to, complications; 
patient safety; and coordinated transitions to the outpatient 
environment (82 FR 38350 through 38355). Some readmissions are 
unavoidable, for example, those that result from inevitable progression 
of disease or worsening of chronic conditions. However, readmissions 
may also result from poor quality of care or inadequate transitional 
care (77 FR 53521). From a patient perspective, an unplanned 
readmission for any cause is an adverse event. For the July 1, 2016 
through June 30, 2017 measurement period (the most recent data 
available), the readmission rate from the hospital-wide population 
ranged from 10.6 percent to 20.3 percent, showing a performance gap 
across hospitals with wide variation and an opportunity to improve 
quality.\459\
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    \459\ Centers for Medicare & Medicaid Services. (2018). 2018 
All-Cause Hospital-Wide Measure Updates and Specifications Report: 
Hospital-Wide Readmission. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
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    Consistent with our goal of increasing the use of EHR data in 
quality measurement and in response to stakeholder feedback encouraging 
the use of clinical data in outcome measures, we developed the Hybrid 
HWR measure (NQF #2879). The Hybrid HWR measure is designed to capture 
all unplanned readmissions that arise from acute clinical events 
requiring urgent rehospitalization within 30 days of discharge. Planned 
readmissions, which are generally not a signal of quality of care, are 
not considered readmissions in the measure outcome and all unplanned 
readmissions are considered an outcome, regardless of cause. The Hybrid 
HWR measure provides a facility-wide picture of this aspect of care 
quality in hospitals and was designed to promote hospital quality 
improvement. The Hybrid HWR measure aligns with the Meaningful Measures 
Initiative quality priority of ``Promoting Effective Communication and 
Coordination of Care.''
    The Hybrid HWR measure was first included in a publicly available 
document entitled ``List of Measures Under Consideration for December 
1, 2014.'' \460\ Upon review, the MAP supported further development of 
the Hybrid HWR measure, which was an expression of their conditional 
support pending endorsement for the National Quality Forum (NQF).\461\ 
Thereafter, the Hybrid HWR measure was endorsed by the NQF on December 
9, 2016.\462\ The Hybrid HWR measure was first discussed in the FY 2016 
IPPS/LTCH PPS final rule (80 FR 49698 through 49704).
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    \460\ List of Measures Under Consideration for December 1, 2014. 
Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \461\ Measure Applications Partnership, 2015 Considerations for 
Implementing Measures in Federal Programs: Hospitals. Available at: 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
    \462\ National Quality Forum. (2017). All-Cause Admissions and 
Readmissions 2015-2017 Technical Report. Available at: https://www.qualityforum.org/Publications/2017/04/All-Cause_Admissions_and_Readmissions_2015-2017_Technical_Report.aspx.
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    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38350 through 
38355), we finalized a 6-month, limited, voluntary reporting period for 
the EHR-derived data elements used in the Hybrid HWR measure 
(hereinafter referred to as the 2018 Voluntary Reporting Period). 
Specifically, for the 2018 Voluntary Reporting Period, we invited 
participating hospitals and their health IT vendors to report data on 
discharges over a 6-month period in the first two quarters of CY 2018 
(January 1, 2018 through June 30, 2018). We finalized that a hospital's 
annual payment determination would not be affected by the 2018 
Voluntary Reporting Period. Hospitals that participated in the 2018 
Voluntary Reporting Period will receive confidential hospital-specific 
reports in early summer of 2019 that detail submission results from the 
reporting period, as well as the Hybrid HWR measure results assessed 
from merged files created by our merging of the EHR data elements 
submitted by each participating hospital with claims data from the same 
set of index admissions.
    Hospitals that volunteered to submit data increased their 
familiarity with submitting data for hybrid quality measures from their 
EHR systems. Participating hospitals received information and 
instruction on the use of the electronic specifications for this 
measure, had an opportunity to test extraction and submission of data 
to CMS, and received submission feedback reports from CMS, available 
via the QualityNet Secure Portal, with details on the success of their 
submissions. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38354), we 
stated that we were considering proposing the Hybrid HWR measure (NQF 
#2879) as a required measure as early as the FY 2023 payment 
determination. We also stated that any requirement for mandatory 
reporting on this measure would be proposed through future rulemaking.
    During the 2018 Voluntary Reporting Period, approximately 80 
hospitals submitted data for the Hybrid HWR measure. We are currently 
merging the EHR data with the claims data and will provide hospitals 
with confidential hospital-specific reports which will

[[Page 19481]]

reflect submission results from the reporting period. The assessment 
will be based on the merged files containing both submitted EHR data 
elements as well as claims data from the same set of index admissions.
    We note that the Hybrid HWR measure cohort and outcome are 
identical to those in the HWR claims-only measure, which was adopted 
into the Hospital IQR Program beginning with the FY 2015 payment 
determination (77 FR 53521 through 53528). Therefore, we intend for the 
Hybrid HWR measure to replace the previously finalized HWR claims-only 
measure, as further discussed in section VIII.A.6. of the preamble of 
this proposed rule, where we are proposing to remove the HWR claims-
only measure beginning with the July 1, 2023 through June 30, 2024 
reporting period, for the FY 2026 payment determination, the same year 
the Hybrid HWR measure would be required if this proposal is finalized.
(2) Measure Overview
    Both the previously finalized HWR claims-only measure and proposed 
Hybrid HWR measure capture the hospital-level, risk-standardized 
readmission rate (RSRR) of unplanned, all-cause readmissions within 30 
days of hospital discharge for any eligible condition. The measure 
reports a single summary RSRR, derived from the volume-weighted results 
of five different models, one for each of the following specialty 
cohorts based on groups of discharge condition categories or procedure 
categories: (1) Surgery/gynecology; (2) general medicine; (3) 
cardiorespiratory; (4) cardiovascular; and (5) neurology. The measure 
also indicates the hospital-level standardized readmission ratios (SRR) 
for each of these five specialty cohorts. The outcome is defined as 
unplanned readmission for any cause within 30 days of the discharge 
date for the index admission (the admission included in the measure 
cohort). A specified set of readmissions are planned and do not count 
in the readmission outcome. The target population is Medicare fee-for-
service (FFS) beneficiaries who are 65 years or older and hospitalized 
in non-federal hospitals.
(3) Data Sources
    The Hybrid HWR measure uses a combination of administrative data 
and a set of core clinical data elements extracted from hospital EHRs 
for each hospitalized Medicare FFS beneficiary over the age of 65 
years, which is why it is referred to as a ``hybrid'' measure. The 
measure also requires a set of linking variables which are present in 
both the EHR and claims data, so each patient's core clinical data 
elements can be matched to the claim for the relevant admission 
(examples of linking variables are patient unique identifier and 
patient date of birth).
    The administrative data consist of Medicare Part A and Part B 
claims data and Medicare beneficiary enrollment data, and are used to 
identify index admissions included in the measure cohort, to create a 
risk-adjustment model, and to assess the 30-day unplanned readmission 
outcome. The claims data are merged with EHR-based core clinical data 
elements, which are routinely collected on hospitalized adults, and are 
used in this hybrid measure for risk-adjustment of patients' severity 
of illness. The specific set of core clinical data elements that are 
used in the Hybrid HWR measure are listed below.

------------------------------------------------------------------------
                                                           Additional
         Data elements           Units of measurement    accepted units
                                                         of measurement
------------------------------------------------------------------------
Heart Rate....................  Beats per minute......
Systolic Blood Pressure.......  Millimeter of mercury
                                 (mmHg).
Respiratory Rate..............  Breath per minute.....
Temperature...................  Degrees Fahrenheit (F)  Degrees Celsius
                                                         (C).
Oxygen Saturation.............  Percent (%)...........
Weight........................  Kilogram (KG).........  Pounds (LB).
Hematocrit....................  Percent (%)...........
White Blood Cell Count........  10[supcaret]9 per       Thousands of
                                 liter (X10E+09/L).      cells per
                                                         microliter (K/
                                                         MCL).
Potassium.....................  Millimole per liter     MEQ/L.
                                 (MMOL/L).
Sodium........................  Millimole per liter     MEQ/L.
                                 (MMOL)/L.
Bicarbonate...................  Millimole per liter     MEQ/L.
                                 (MMOL)/L.
Creatinine....................  Milligrams per
                                 deciliter (MG/DL).
Glucose.......................  Milligrams per
                                 deciliter (MG/DL).
------------------------------------------------------------------------

    As we stated in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49703), 
the core clinical data elements use existing value sets where possible. 
Because core clinical data elements are data that are routinely 
collected on hospitalized adults, they are widely available in hospital 
EHR systems. We have confirmed through testing that extraction of core 
clinical data elements from hospital EHRs is feasible and can be 
utilized as part of specific quality outcome measures.\463\ The core 
clinical data elements utilize EHR data, therefore, we developed and 
tested a MAT output and identified value sets for extraction of the 
core clinical data elements, which are available at the eCQI Resource 
Center.\464\
---------------------------------------------------------------------------

    \463\ For more detail about core clinical data elements used in 
the Hybrid HWR measure, we refer readers to our discussion in the FY 
2016 IPPS/LTCH PPS final rule (80 FR 49698 through 49704) and to the 
QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228763452133.
    \464\ Electronic Clinical Quality Improvement (eCQI) Resource 
Center. Hybrid Hospital-Wide Readmission. Available at: https://ecqi.healthit.gov/ecqm/measures/cms529v0.
---------------------------------------------------------------------------

    We tested the electronic specifications in four separate health 
systems that used three different EHR systems. During development and 
testing of the Hybrid HWR measure, we demonstrated that the core 
clinical data elements were feasibly extracted from hospital EHRs for 
nearly all adult patients admitted. We also demonstrated that the use 
of the core clinical data elements to risk-adjust the Hybrid HWR 
measure improves the discrimination of the measure, or the ability to 
distinguish patients with a low risk of readmission from those at high 
risk of readmission, as assessed by the c-statistic.\465\ In addition, 
inclusion of patients' clinical information from EHRs is responsive to 
stakeholders who prefer to use clinical information that is available 
to the clinical care team at the time treatment is rendered to account

[[Page 19482]]

for patients' severity of illness rather than relying solely on data 
from claims (80 FR 49702). The Hybrid HWR measure is now fully 
developed, tested, and NQF-endorsed (NQF #2879).
---------------------------------------------------------------------------

    \465\ Hybrid 30-day Risk-standardized Acute Myocardial 
Infarction Mortality Measure with Electronic Health Record Extracted 
Risk Factors (Version 1.1); Hybrid Hospital-Wide Readmission Measure 
with Electronic Health Record Extracted Risk Factors (Version 1.1); 
164 2013 Core Clinical Data Elements Technical Report (Version 1.1); 
all available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    We note the Hybrid HWR measure was initially developed using claims 
coded in ICD-9. However, we have identified and tested ICD-10 
specifications for all information used in the measure derived from 
Medicare claims for both the HWR claims-only measure, which is 
currently in use under the Hospital IQR Program, and for the proposed 
Hybrid HWR measure. The ICD-10 specifications are identical for both 
the Hybrid and claims-only HWR measures. Only the Hybrid HWR measure's 
use of the core clinical data elements in the risk-adjustment model 
differs between the two measures. Those data elements are not affected 
by ICD-10 implementation. We update the measure specifications annually 
for both measures to incorporate new and revised ICD-10 codes effective 
October 1 of each year after clinical review.
    We also clinically and empirically review updates to the Agency for 
Healthcare Research and Quality (AHRQ) Clinical Classifications 
Software (CCS) map that incorporate new codes and shifts in CCS 
categories of existing codes.\466\ These updates may impact assignment 
to HWR sub-cohorts or modify the planned readmission algorithm. For 
additional details regarding the measure specifications that 
accommodate ICD-10-coded claims, we refer readers to the 2018 All-Cause 
Hospital-Wide Measure Updates and Specifications Report, which is 
posted on the QualityNet website.\467\ We will update and publicly 
release the MAT output annually to include any updates to the 
electronic quality measure standards and all included value sets for 
the measure-specific data elements. We note that the data sources are 
the same as those used for the 2018 Voluntary Reporting Period.
---------------------------------------------------------------------------

    \466\ https://www.hcup-us.ahrq.gov/toolssoftware/ccs10/ccs10.jsp. Version 2019.1 of CCS for ICD-10-CM and CCS for ICD-10 
for PCS.
    \467\ Centers for Medicare & Medicaid Services. (2018). 2018 All 
Cause Hospital Wide Measure Updates and Specifications Report. 
Available at: https://www.qualitynet.org/dcs/ContentServer?cid=1228774371008&pagename=QnetPublic%2FPage%2FQnetTier4&c=Page.
---------------------------------------------------------------------------

(4) Measure Calculation
    The methods used to calculate the Hybrid HWR measure align with the 
methods used to calculate the currently adopted HWR claims-only 
measure. Index admissions are assigned to one of five mutually 
exclusive specialty cohort groups consisting of related conditions or 
procedures. An index admission is the hospitalization to which the 
readmission outcome is attributed and includes admissions for patients:
     Enrolled in Medicare FFS Part A for the 12 months prior to 
the date of admission and during the index admission;
     Aged 65 or over;
     Discharged alive from a non-federal short-term acute care 
hospital; and
     Not transferred to another acute care facility.
    This measure excludes index admissions for patients:
     Admitted to Prospective Payment System (PPS)-exempt cancer 
hospitals;
     Without at least 30 days of post-discharge enrollment in 
Medicare FFS;
     Discharged against medical advice;
     Admitted for primary psychiatric diagnoses;
     Admitted for rehabilitation; or
     Admitted for medical treatment of cancer.
    The five specialty cohort groups are: (1) Surgery/gynecology; (2) 
general medicine; (3) cardiorespiratory; (4) cardiovascular; and (5) 
neurology. For each specialty cohort group, the standardized 
readmission ratio (SRR) is calculated as the ratio of the number of 
``predicted'' readmissions to the number of ``expected'' readmissions 
at a given hospital. For each hospital, the numerator of the ratio is 
the number of readmissions predicted within 30 days based on the 
hospital's performance with its observed case mix and service mix. The 
denominator for each hospital is the number of readmissions expected 
based on the nation's performance with each particular hospital's case 
mix and service mix. This approach is analogous to a ratio of 
``observed'' to ``expected'' used in other types of statistical 
analyses. The specialty cohort SRRs are then pooled for each hospital 
using a volume-weighted geometric mean to create a hospital-wide 
composite SRR. The composite SRR is multiplied by the national observed 
readmission rate to produce the Risk-Standardized Readmission Rate 
(RSRR). For additional details regarding the measure specifications to 
calculate the RSRR, we refer readers to the 2018 All-Cause Hospital-
Wide Measure Updates and Specifications Report, which is posted on the 
QualityNet website.\468\
---------------------------------------------------------------------------

    \468\ Centers for Medicare & Medicaid Services. (2018). 2018 All 
Cause Hospital Wide Measure Updates and Specifications Report. 
Available at: https://www.qualitynet.org/dcs/ContentServer?cid=1228774371008&pagename=QnetPublic%2FPage%2FQnetTier4&c=Page.
---------------------------------------------------------------------------

    We also note an important distinguishing factor about hybrid 
measures: Hybrid measure results must be calculated by CMS to determine 
hospitals' risk-adjusted rates relative to national rates using data 
from all reporting hospitals. With a hybrid measure, hospitals submit 
data extracted from the EHR, and CMS performs the measure calculations 
and disseminates results.
(5) Outcome
    As stated above, the proposed Hybrid HWR measure outcome is aligned 
with the currently adopted HWR claims-only measure. The Hybrid HWR 
measure outcome assesses unplanned readmissions for any cause within 30 
days of discharge from the index admission. It does not consider 
planned readmissions as part of the readmission outcome and identifies 
them by using the CMS Planned Readmission Algorithm, which is a set of 
criteria for classifying readmissions as planned using Medicare claims. 
The algorithm for the Hybrid HWR measure \469\ is the same algorithm 
used in the HWR claims-only measure (77 FR 53521).\470\ The algorithm 
and outcomes are also the same as those used for the 2018 Voluntary 
Reporting Period, although the algorithm is updated annually to reflect 
changes in the ICD-10 coding system and the CCS map. The algorithm 
identifies admissions that are typically planned and may occur within 
30 days of discharge from the hospital.\471\ The most recent version (v 
4.0) was described in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50211 
through 50216) for the HWR claims-only measure, and the code 
specifications are updated annually. A complete description of the CMS 
Planned Readmission Algorithm, which includes lists of planned 
procedures and acute diagnoses, can be found in the 2018 All-Cause 
Hospital-Wide Measure Updates and Specifications Report.\472\
---------------------------------------------------------------------------

    \469\ Centers for Medicare & Medicaid Services. Hybrid Hospital-
Wide Readmission Measure with Electronic Health Record Extracted 
Risk Factors (Version 1.1). Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
    \470\ Centers for Medicare & Medicaid Services. Measure 
Methodology. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
    \471\ Ibid.
    \472\ Centers for Medicare & Medicaid Services. (2018). 2018 All 
Cause Hospital Wide Measure Updates and Specifications Report. 
Available at: https://www.qualitynet.org/dcs/ContentServer?cid=1228774371008&pagename=QnetPublic%2FPage%2FQnetTier4&c=Page.
---------------------------------------------------------------------------

(6) Risk Adjustment
    The proposed Hybrid HWR measure adjusts both for case-mix 
differences

[[Page 19483]]

(how severely ill patients are when they are admitted) as well as 
differences in hospitals' service-mix (the types of conditions that 
cause patients' admissions). The case-mix variables include patients' 
ages and comorbidities as well as laboratory test results and vital 
signs. As listed in detail above, the Hybrid HWR measure specifically 
uses 13 core clinical data elements from EHRs--seven laboratory test 
results (hematocrit, white blood cell count, sodium, potassium, 
bicarbonate, creatinine, glucose) and six vital signs (heart rate, 
respiratory rate, temperature, systolic blood pressure, oxygen 
saturation, weight). The use of the core clinical data elements to 
risk-adjust the Hybrid HWR measure improves the discrimination of the 
measure, and inclusion of patients' clinical information from EHRs is 
responsive to stakeholders who prefer to use clinical information that 
is available to the clinical care team at the time treatment is 
rendered to account for patients' severity of illness rather than 
relying solely on data from claims (80 FR 49702).
    The service-mix variables include principal discharge diagnoses 
grouped into AHRQ Clinical Classification Software. Patient 
comorbidities are based on the index admission, the admission included 
in the measure cohort, and a full year of prior history. The risk-
adjustment variables included in the development and testing of the 
proposed Hybrid HWR measure are derived from both claims and clinical 
EHR data. As identified in the measure specifications, the variables 
are: (1) 13 core clinical data elements derived from hospital EHRs; 
\473\ (2) the Clinical Classification Software (CCS) categories \474\ 
for the principal discharge diagnosis associated with each index 
admission derived from ICD-10 codes in administrative claims data; and 
(3) comorbid conditions of each patient identified from inpatient 
claims in the 12 months prior to and including the index admission 
derived from ICD-10 codes and grouped into the CMS condition categories 
(CC).\475\ The condition categories used in the risk-adjustment model 
and the ICD-10 codes grouped into each condition category can be found 
in the Annual Updates and Specification Report on the QualityNet 
website.
---------------------------------------------------------------------------

    \473\ Electronic Clinical Quality Improvement (eCQI) Resource 
Center. Hybrid Hospital-Wide Readmission. Available at: https://ecqi.healthit.gov/ecqm/measures/cms529v0.
    \474\ Centers for Medicare & Medicaid Services. (2018). 2018 
All-Cause Hospital-Wide Measure Updates and Specifications Report: 
Hospital-Wide Readmission. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
    \475\ Centers for Medicare & Medicaid Services. (2018). 2018 
All-Cause Hospital-Wide Measure Updates and Specifications Report: 
Hospital-Wide Readmission. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    All 13 core clinical data elements were shown to be statistically 
significant predictors of readmission in one or more risk-adjustment 
models of the five specialty cohort groups used to calculate the 
proposed Hybrid HWR measure.\476\ The testing results demonstrate that 
the core clinical data elements enhanced the discrimination (assessed 
using the c-statistic) when used in combination with administrative 
claims data.\477\ For additional details regarding the risk-adjustment 
model, we refer readers to the Hybrid Hospital-Wide Readmission Measure 
with Electronic Health Record Extracted Risk Factors (Version 
1.1).\478\ We note that the risk adjustment methods are the same as 
those used for the 2018 Voluntary Reporting Period.
---------------------------------------------------------------------------

    \476\ Centers for Medicare & Medicaid Services. Hybrid Hospital-
Wide Readmission Measure with Electronic Health Record Extracted 
Risk Factors (Version 1.1). Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
    \477\ Centers for Medicare & Medicaid Services. Hybrid Hospital-
Wide Readmission Measure with Electronic Health Record Extracted 
Risk Factors (Version 1.1). Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
    \478\ Ibid.
---------------------------------------------------------------------------

(7) Data Submission
    As with the 2018 Voluntary Reporting Period (82 FR 38350 through 
38355), we are proposing that hospitals would use Quality Reporting 
Data Architecture (QRDA) Category I files for each Medicare FFS 
beneficiary who is 65 years and older. Submission of data to CMS using 
QRDA I files is the current EHR data and measure reporting standard 
adopted for eCQMs implemented in the Hospital IQR Program. This same 
standard would be used for reporting the core clinical data elements to 
the CMS data receiving system via the QualityNet Secure Portal.
    To successfully submit the Hybrid HWR measure, hospitals would need 
to submit the core clinical data elements included in the Hybrid HWR 
measure, as described in the measure specifications, for all Medicare 
FFS beneficiaries 65 and older discharged from an acute care 
hospitalization in the 1-year measurement period (July 1 to June 30 of 
each year). We note this is the same measurement period as the HWR 
claims-only measure (77 FR 53521 through 53528). Voluntary submission 
would run from July 1, 2021 through June 30, 2022, and from July 1, 
2022 through June 30, 2023. Required submission would begin with the 
reporting period which runs July 1, 2023 through June 30, 2024, 
impacting the FY 2026 payment determination.
    Hospitals would also be required to successfully submit the 
following six linking variables that are necessary in order to merge 
the core clinical data elements with the CMS claims data to calculate 
the measure:
     CMS Certification Number;
     Health Insurance Claims Number or Medicare Beneficiary 
Identifier;
     Date of birth;
     Sex;
     Admission date, and
     Discharge date.
    In order for us to be able to calculate the Hybrid HWR measure 
results, each hospital would need to report vital signs for 90 percent 
or more of the hospital discharges for Medicare FFS patients, 65 years 
or older in the measurement period (as determined from the claims 
submitted to CMS for admissions that ended during the same reporting 
period). Vital signs are measured on nearly every adult patient 
admitted to an acute care hospital and should be present for nearly 100 
percent of discharges (identified in Medicare FFS claims submitted 
during the same period). In addition, calculating the measure with more 
than 10 percent of hospital discharges missing these data elements 
could cause poor reliability of the measure score and instability of 
hospitals' results from measurement period to measurement period.
    Hospitals would also be required to submit the laboratory test 
results for 90 percent or more of discharges for non-surgical 
patients,\479\ meaning those not included in the surgical specialty 
cohort of the HWR measure. For many patients admitted following 
elective surgery, there are no laboratory values available in the 
appropriate time window. Therefore, laboratory test results are not 
used in the risk adjustment of the surgical cohort.
---------------------------------------------------------------------------

    \479\ Centers for Medicare & Medicaid Services. (2018). 2018 
All-Cause Hospital-Wide Measure Updates and Specifications Report: 
Hospital-Wide Readmission. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    The six variables required for linking EHR and claims data should 
be submitted for 100 percent of discharges in the measurement period. 
Because these linking variables are required for

[[Page 19484]]

billing,\480\ they should be available on all Medicare FFS patients and 
are ideally suited to support merging claims and EHR data. However, 
hospitals would meet Hospital IQR Program requirements if they submit 
linking variables on 95 percent or more of discharges with a Medicare 
FFS claim for the same hospitalization during the measurement period. 
Beginning with the reporting period which runs from July 1, 2023 
through June 30, 2024, a hospital that does not submit any EHR data for 
the Hybrid HWR measure, or that submits data for less than the 
specified percentage of applicable patients, would be considered as not 
having met this Hospital IQR Program requirement and would receive a 
one-fourth reduction of its Annual Payment Update (APU) for the 
applicable fiscal year.
---------------------------------------------------------------------------

    \480\ CMS, Medicare Claims Processing Manual (100-04). Available 
at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs.html.
---------------------------------------------------------------------------

    Under our stepwise approach, for the voluntary reporting periods 
which run from July 1, 2021 through June 30, 2022, and July 1, 2022 
through June 30, 2023, if a hospital submits data for this proposed 
measure, it should do so according to the requirements described above 
in order for CMS to calculate the measure. However, a hospital's annual 
payment determination would not be affected during this timeframe. The 
benefits to hospitals that submit the data in the initial 2-year 
voluntary reporting period include the opportunity to provide feedback 
on the measure specifications, to confirm mapping and extraction of 
data elements, to hone and improve quality assurance practices, and to 
troubleshoot any problems populating QRDA templates for successful 
submission to CMS. As described above, hospitals would receive detailed 
patient discharge information which would help them perfect these 
processes before hospitals' payment determinations would be impacted 
beginning with the FY 2026 payment determination. We refer readers to 
section VIII.A.10.e. of the preamble of this proposed rule for more 
information about the form and manner of hybrid measure data 
submission.
(8) Confidential Feedback Reports
    Hospitals that submit data for this measure during the voluntary 
reporting periods, which run from July 1, 2021 through June 30, 2022, 
and July 1, 2022 through June 30, 2023, would receive confidential 
hospital-specific reports that detail submission results from the 
applicable reporting period, as well as the Hybrid HWR measure results 
assessed from merged files created by our merging of the EHR data 
elements submitted by each participating hospital with claims data from 
the same set of index admissions. Participating hospitals would receive 
information and instructions on the use of the electronic 
specifications for this measure, have an opportunity to test extraction 
and submission of data to CMS, and receive feedback reports from CMS, 
available via the QualityNet Secure Portal, with details on the success 
of their submissions.
    We are proposing to take an incremental approach to implementing 
this proposed measure in an effort to be responsive to provider and 
vendor feedback (82 FR 38355), which requested sufficient time to 
undertake the data mapping, validation, adjustments to clinician 
workflow (specifically, changes to documentation practices to ensure 
accurate and complete mapping of the required data elements), and 
training needed to effectively implement EHR-based quality reporting to 
CMS. We believe that two additional years of voluntary reporting of the 
Hybrid HWR measure, in addition to the 2018 Voluntary Reporting Period, 
would allow hospitals more time to update and validate their systems, 
to ensure data mapping is accurate and complete, and to implement 
workflow changes and clinician training as necessary to better prepare 
for submitting data when the Hybrid HWR measure becomes required 
beginning with the reporting period which runs from July 1, 2023 
through June 30, 2024 (impacting the FY 2026 payment determination) if 
our proposal is finalized. We believe those hospitals that can 
implement the Hybrid HWR measure more quickly can have the opportunity 
to submit their data to CMS and refine their data collection and 
submission processes. Starting with voluntary and confidential 
reporting for the Hybrid HWR measure would enable hospitals and their 
vendors to gain further experience collecting and reporting the core 
clinical data elements and linking variables so they would be ready for 
public reporting of the Hybrid HWR measure data on the Hospital Compare 
website starting with the FY 2026 payment determination.
    Under our proposal, the first year of voluntary data collection for 
confidential reporting would be for the July 1, 2021 through June 30, 
2022 reporting period. The 12-month measurement period that runs from 
July 1 through June 30 would be consistent with the calculation of the 
HWR claims-only measure. To support hospital reporting, we intend to 
publish the electronic specifications for this reporting period in the 
2021 Annual Update \481\ in the spring of 2020, providing hospitals and 
vendors with the electronic specifications approximately 15 months 
before the beginning of the reporting period on July 1, 2021. We intend 
to deliver the first set of confidential hospital-specific feedback 
reports in the spring of 2023, after we merge the EHR data with the 
associated claims data for the same reporting period, which is 
historically pulled from CMS' claims data system at the end of 
September following the end of the reporting period. During the first 
year of voluntary data collection, which runs from July 1, 2021 through 
June 30, 2022, we would not publicly report Hybrid HWR measure data, 
nor would incomplete or non-submission of the EHR data impact 
hospitals' APU determinations for the FY 2024 payment determination.
---------------------------------------------------------------------------

    \481\ Electronic Clinical Quality Improvement (eCQI) Resource 
Center. 2018 Measure Specifications. Available at: https://ecqi.healthit.gov/ecqm/measures/cms529v0. Note that the measure 
specifications may be further refined in the 2021 Annual Update.
---------------------------------------------------------------------------

    The second year of voluntary data collection for confidential 
reporting would be for the July 1, 2022 through June 30, 2023 reporting 
period. Similar to the first year of voluntary reporting, hospitals 
would use the electronic specifications for this reporting period as 
published in the 2022 Annual Update planned for the spring of 2021. We 
plan to deliver confidential hospital-specific feedback reports in the 
spring of 2024, after we merge the EHR data with the associated claims 
data. As with the first year of voluntary data collection, there would 
not be any associated public reporting, nor impact on hospitals' APU 
determinations for the FY 2025 payment determination. As discussed 
above, hospitals' payment determinations could be affected beginning 
with the FY 2026 payment determination.
(9) Public Reporting
    Under our stepwise approach, data collected specifically during the 
voluntary reporting periods, which run from July 1, 2021 through June 
30, 2022, and July 1, 2022 through June 30, 2023, would not be publicly 
reported, as mentioned above. However, we are proposing that after the 
end of the proposed voluntary reporting periods, we would begin public 
reporting of the Hybrid HWR measure results, beginning with data 
collected from the July 1, 2023 through June 30, 2024 reporting period, 
impacting the FY 2026 payment determination. This would be the first

[[Page 19485]]

set of Hybrid HWR measure data to be publicly reported on the Hospital 
Compare website, which we anticipate would be included in the July 2025 
refresh of Hospital Compare. The EHR data would be merged with the 
associated claims data, and then Hybrid HWR measure results would be 
shared with hospitals in the confidential hospital-specific feedback 
reports planned for the spring of 2025, providing hospitals a 30-day 
review period prior to public reporting. Thereafter, in subsequent 
reporting years, we would follow a similar operational timeline for EHR 
data submissions, availability of hospital-specific reports, and public 
reporting on the Hospital Compare website.
    We note that this proposal is being made in conjunction with our 
proposal to remove the Claims-Based Hospital-Wide All-Cause Unplanned 
Readmission Measure (NQF #1789) beginning with the FY 2026 payment 
determination as discussed below. We also refer readers to section 
VIII.D.6.c. of preamble of this proposed rule, which includes a request 
for feedback on whether to consider adopting the Hybrid HWR measure for 
the Promoting Interoperability Program.
6. Proposed Removal of Claims-Based Hospital-Wide All-Cause Unplanned 
Readmission Measure (NQF #1789) (HWR Claims-Only Measure)
    In this proposed rule, we are proposing to remove the Claims-Based 
Hospital-Wide All-Cause Unplanned Readmission Measure (NQF #1789) in 
conjunction with our proposal to replace the measure by making the 
Hybrid HWR measure mandatory beginning with the reporting period which 
runs from July 1, 2023 through June 30, 2024, impacting the FY 2026 
payment determination. This is discussed in detail below.
    The HWR claims-only measure was adopted in the FY 2013 IPPS/LTCH 
PPS final rule (77 FR 53521 through 53528) for the FY 2015 payment 
determination and subsequent years, to allow us to provide a broader 
assessment of the quality of care at hospitals, especially for 
hospitals with too few disease specific readmissions to count 
separately.
    In this proposed rule, we are proposing to remove the HWR claims-
only measure, beginning with the July 1, 2023 through June 30, 2024 
reporting period, for the FY 2026 payment determination. As discussed 
in section VIII.A.5.b. of the preamble of this proposed rule above, the 
Hybrid HWR measure is an enhanced version of HWR claims-only measure, 
in that it provides substantive improvement to the current claims-based 
measure, which is why we are proposing to replace it. The Hybrid HWR 
measure includes clinical variables in the risk adjustment, which 
improves face validity of the measure. Furthermore, we have heard from 
stakeholders that they strongly favor electronic measures over claims-
based versions due to the incorporation of clinical data (80 FR 49694).
    We are proposing to remove the HWR claims-only measure under 
removal Factor 3, ``the availability of a more broadly applicable 
measure (across settings, populations, or the availability of a measure 
that is more proximal in time to desired patient outcomes for the 
particular topic).'' We took into particular consideration the aspect 
of removal Factor 3 which emphasizes when there is a different measure 
that is more proximal in time to desired patient outcomes. Aspects of 
the Hybrid HWR measure are more proximal in time to desired patient 
outcomes for this measure because the measurement of the core clinical 
data elements for each patient in the measure cohort is taken from the 
beginning of the applicable inpatient stay, in comparison to the claims 
data used for risk adjustment, which accounts for 1-year preceding 
admission. In other words, the patient data used for risk adjustment of 
the Hybrid HWR measure are data that come from the very start of the 
inpatient stay that is evaluated for a readmission. In addition, as 
noted above and discussed in detail in section VIII.A.5.b. of the 
preamble of this proposed rule, the Hybrid HWR measure includes 
clinical variables in the risk adjustment, which improves face validity 
of the measure, and is responsive to provider stakeholder feedback 
strongly in favor of electronic measures over claims-based versions due 
to the incorporation of clinical data. For these reasons, we are 
proposing to remove the HWR claims-only measure and replace it with the 
Hybrid HWR measure.
    We refer readers to sections VIII.A.5.b. and VIII.A.10.e. of the 
preamble of this proposed rule for more detail on our proposals to 
adopt the Hybrid HWR measure with a stepwise implementation timeline 
starting with 2 years of voluntary confidential reporting, followed by 
mandatory data submission and public reporting of the Hybrid HWR 
measure results beginning with data collected from the July 1, 2023 
through June 30, 2024 reporting period, impacting the FY 2026 payment 
determination. To ensure continuity of public reporting on Hospital-
Wide All-Cause Unplanned Readmission measure data, we are proposing to 
align the removal of the HWR claims-only measure such that its removal 
aligns with the end of the 2-year confidential reporting period and 
beginning of the mandatory data submission and public reporting of the 
Hybrid HWR measure. In short, the Hybrid HWR measure is intended to 
replace the HWR claims-only measure. Our proposal to remove the HWR 
claims-only measure is contingent upon our proposals for the Hybrid HWR 
measure being finalized.
7. Summary of Previously Finalized and Proposed Hospital IQR Program 
Measures
a. Summary of Previously Finalized Hospital IQR Program Measures for 
the FY 2022 Payment Determination
    The table below summarizes the previously finalized Hospital IQR 
Program measure set for the FY 2022 payment determination:

                                 Measures for the FY 2022 Payment Determination
----------------------------------------------------------------------------------------------------------------
                   Short name                                      Measure name                       NQF No.
----------------------------------------------------------------------------------------------------------------
                                   National Healthcare Safety Network Measures
----------------------------------------------------------------------------------------------------------------
HCP.............................................  Influenza Vaccination Coverage Among                      0431
                                                   Healthcare Personnel.
----------------------------------------------------------------------------------------------------------------
                                      Claims-Based Patient Safety Measures
----------------------------------------------------------------------------------------------------------------
COMP-HIP-KNEE *\++\.............................  Hospital-Level Risk-Standardized Complication             1550
                                                   Rate (RSCR) Following Elective Primary Total
                                                   Hip Arthroplasty (THA) and/or Total Knee
                                                   Arthroplasty (TKA).
CMS PSI 04......................................  CMS Death Rate among Surgical Inpatients with            (\+\)
                                                   Serious Treatable Complications.
----------------------------------------------------------------------------------------------------------------

[[Page 19486]]

 
                                         Claims-Based Mortality Measures
----------------------------------------------------------------------------------------------------------------
MORT-30-STK.....................................  Hospital 30-Day, All-Cause,                                N/A
                                                   Risk[dash]Standardized Mortality Rate
                                                   Following Acute Ischemic Stroke.
----------------------------------------------------------------------------------------------------------------
                                   Claims-Based Coordination of Care Measures
----------------------------------------------------------------------------------------------------------------
READM-30-HWR....................................  Hospital-Wide All-Cause Unplanned Readmission             1789
                                                   Measure (HWR).
AMI Excess Days.................................  Excess Days in Acute Care after                           2881
                                                   Hospitalization for Acute Myocardial
                                                   Infarction.
HF Excess Days..................................  Excess Days in Acute Care after                           2880
                                                   Hospitalization for Heart Failure.
PN Excess Days..................................  Excess Days in Acute Care after                           2882
                                                   Hospitalization for Pneumonia.
----------------------------------------------------------------------------------------------------------------
                                          Claims-Based Payment Measures
----------------------------------------------------------------------------------------------------------------
AMI Payment.....................................  Hospital-Level, Risk-Standardized Payment                 2431
                                                   Associated with a 30-Day Episode-of-Care for
                                                   Acute Myocardial Infarction (AMI).
HF Payment......................................  Hospital-Level, Risk-Standardized Payment                 2436
                                                   Associated with a 30-Day Episode-of-Care For
                                                   Heart Failure (HF).
PN Payment......................................  Hospital-Level, Risk-Standardized Payment                 2579
                                                   Associated with a 30-day Episode-of-Care For
                                                   Pneumonia.
THA/TKA Payment.................................  Hospital[hyphen]Level,                                     N/A
                                                   Risk[hyphen]Standardized Payment Associated
                                                   with an Episode-of-Care for Primary Elective
                                                   Total Hip Arthroplasty and/or Total Knee
                                                   Arthroplasty.
----------------------------------------------------------------------------------------------------------------
                               Chart-Abstracted Clinical Process of Care Measures
----------------------------------------------------------------------------------------------------------------
PC-01...........................................  Elective Delivery.............................            0469
Sepsis..........................................  Severe Sepsis and Septic Shock: Management                0500
                                                   Bundle (Composite Measure).
----------------------------------------------------------------------------------------------------------------
       EHR-based Clinical Process of Care Measures (that is, Electronic Clinical Quality Measures (eCQMs))
----------------------------------------------------------------------------------------------------------------
ED-2............................................  Admit Decision Time to ED Departure Time for              0497
                                                   Admitted Patients.
PC-05...........................................  Exclusive Breast Milk Feeding.................            0480
STK-02..........................................  Discharged on Antithrombotic Therapy..........            0435
STK-03..........................................  Anticoagulation Therapy for Atrial                        0436
                                                   Fibrillation/Flutter.
STK-05..........................................  Antithrombotic Therapy by the End of Hospital             0438
                                                   Day Two.
STK-06..........................................  Discharged on Statin Medication...............            0439
VTE-1...........................................  Venous Thromboembolism Prophylaxis............            0371
VTE-2...........................................  Intensive Care Unit Venous Thromboembolism                0372
                                                   Prophylaxis.
----------------------------------------------------------------------------------------------------------------
                                   Patient Experience of Care Survey Measures
----------------------------------------------------------------------------------------------------------------
HCAHPS **.......................................  Hospital Consumer Assessment of Healthcare         0166 (0228)
                                                   Providers and Systems Survey (including Care
                                                   Transition Measure).
----------------------------------------------------------------------------------------------------------------
* Finalized for removal from the Hospital IQR Program beginning with the FY 2023 payment determination, as
  discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41558 through 41559).
** In the CY 2019 OPPS/ASC PPS final rule with comment period (83 FR 59140 through 59149), we finalized removal
  of the Communication About Pain questions from the HCAHPS Survey effective with October 2019 discharges, for
  the FY 2021 payment determination and subsequent years.
\+\ Measure is no longer endorsed by the NQF, but was endorsed at time of adoption. Section
  1886(b)(3)(B)(viii)(IX)(bb) of the Act authorizes the Secretary to specify a measure that is not endorsed by
  the NQF as long as due consideration is given to measures that have been endorsed or adopted by a consensus
  organization identified by the Secretary. We attempted to find available measures for each of these clinical
  topics that have been endorsed or adopted by a consensus organization and found no other feasible and
  practical measures on the topics for the inpatient setting.
\++\ We have updated the short name for the Hospital-Level Risk-Standardized Complication Rate Following
  Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) measure (NQF #1550) measure
  from Hip/Knee Complications to COMP-HIP-KNEE in order to maintain consistency with the updated Measure ID and
  hospital reports for the Hospital Compare website.

b. Summary of Previously Finalized and Newly Proposed Hospital IQR 
Program Measures for the FY 2023 Payment Determination
    The table below summarizes the previously finalized and newly 
proposed Hospital IQR Program measure set for the FY 2023 payment 
determination:

                                 Measures for the FY 2023 Payment Determination
----------------------------------------------------------------------------------------------------------------
                   Short name                                      Measure name                       NQF No.
----------------------------------------------------------------------------------------------------------------
                                   National Healthcare Safety Network Measures
----------------------------------------------------------------------------------------------------------------
HCP.............................................  Influenza Vaccination Coverage Among                      0431
                                                   Healthcare Personnel.
----------------------------------------------------------------------------------------------------------------
                                      Claims-Based Patient Safety Measures
----------------------------------------------------------------------------------------------------------------
CMS PSI 04......................................  CMS Death Rate among Surgical Inpatients with              (+)
                                                   Serious Treatable Complications.
----------------------------------------------------------------------------------------------------------------
                                         Claims-Based Mortality Measures
----------------------------------------------------------------------------------------------------------------
MORT-30-STK.....................................  Hospital 30-Day, All-Cause,                                N/A
                                                   Risk[dash]Standardized Mortality Rate
                                                   Following Acute Ischemic Stroke.
----------------------------------------------------------------------------------------------------------------
                                   Claims-Based Coordination of Care Measures
----------------------------------------------------------------------------------------------------------------
READM-30-HWR *..................................  Hospital-Wide All-Cause Unplanned Readmission             1789
                                                   Measure (HWR).

[[Page 19487]]

 
AMI Excess Days.................................  Excess Days in Acute Care after                           2881
                                                   Hospitalization for Acute Myocardial
                                                   Infarction.
HF Excess Days..................................  Excess Days in Acute Care after                           2880
                                                   Hospitalization for Heart Failure.
PN Excess Days..................................  Excess Days in Acute Care after                           2882
                                                   Hospitalization for Pneumonia.
----------------------------------------------------------------------------------------------------------------
                                          Claims-Based Payment Measures
----------------------------------------------------------------------------------------------------------------
AMI Payment.....................................  Hospital-Level, Risk-Standardized Payment                 2431
                                                   Associated with a 30-Day Episode-of-Care for
                                                   Acute Myocardial Infarction (AMI).
HF Payment......................................  Hospital-Level, Risk-Standardized Payment                 2436
                                                   Associated with a 30-Day Episode-of-Care For
                                                   Heart Failure (HF).
PN Payment......................................  Hospital-Level, Risk-Standardized Payment                 2579
                                                   Associated with a 30-day Episode-of-Care For
                                                   Pneumonia.
THA/TKA Payment.................................  Hospital[hyphen]Level,                                     N/A
                                                   Risk[hyphen]Standardized Payment Associated
                                                   with an Episode-of-Care for Primary Elective
                                                   Total Hip Arthroplasty and/or Total Knee
                                                   Arthroplasty.
----------------------------------------------------------------------------------------------------------------
                               Chart-Abstracted Clinical Process of Care Measures
----------------------------------------------------------------------------------------------------------------
PC-01...........................................  Elective Delivery.............................            0469
Sepsis..........................................  Severe Sepsis and Septic Shock: Management                0500
                                                   Bundle (Composite Measure).
----------------------------------------------------------------------------------------------------------------
       EHR-based Clinical Process of Care Measures (that is, Electronic Clinical Quality Measures (eCQMs))
----------------------------------------------------------------------------------------------------------------
ED-2............................................  Admit Decision Time to ED Departure Time for              0497
                                                   Admitted Patients.
Harm--ORAE **...................................  Hospital Harm--Opioid-Related Adverse Events..          (\++\)
PC-05...........................................  Exclusive Breast Milk Feeding.................            0480
Safe Use of Opioids **..........................  Safe Use of Opioids--Concurrent Prescribing...           3316e
STK-02..........................................  Discharged on Antithrombotic Therapy..........            0435
STK-03..........................................  Anticoagulation Therapy for Atrial                        0436
                                                   Fibrillation/Flutter.
STK-05..........................................  Antithrombotic Therapy by the End of Hospital             0438
                                                   Day Two.
STK-06..........................................  Discharged on Statin Medication...............            0439
VTE-1...........................................  Venous Thromboembolism Prophylaxis............            0371
VTE-2...........................................  Intensive Care Unit Venous Thromboembolism                0372
                                                   Prophylaxis.
----------------------------------------------------------------------------------------------------------------
                                   Patient Experience of Care Survey Measures
----------------------------------------------------------------------------------------------------------------
HCAHPS..........................................  Hospital Consumer Assessment of Healthcare         0166 (0228)
                                                   Providers and Systems Survey (including Care
                                                   Transition Measure).
----------------------------------------------------------------------------------------------------------------
* In section VIII.A.6. of the preamble of this proposed rule, we are proposing to remove the claims-only
  Hospital-Wide All-Cause Unplanned Readmission (HWR claims-only) measure (NQF #1789) and in VIII.A.5.b. of the
  preamble of this proposed rule we are proposing to replace it with the Hybrid Hospital-Wide Readmission
  Measure with Claims and Electronic Health Record Data (NQF #2879) (Hybrid HWR measure), beginning with the FY
  2026 payment determination. The proposed removal of the HWR claims-only measure is contingent on our
  finalizing our proposal to adopt the Hybrid HWR measure. We are proposing to align the removal of the HWR
  claims only measure such that its removal aligns with the end of the proposed 2-year voluntary reporting
  period and the beginning of the proposed mandatory data submission and public reporting of the Hybrid HWR
  measure.
** Newly proposed in this proposed rule to add to the eCQM measure set, beginning with the CY 2021 reporting
  period/FY 2023 payment determination.
\+\ Measure is no longer endorsed by the NQF but was endorsed at time of adoption. Section
  1886(b)(3)(B)(viii)(IX)(bb) of the Act authorizes the Secretary to specify a measure that is not endorsed by
  the NQF as long as due consideration is given to measures that have been endorsed or adopted by a consensus
  organization identified by the Secretary. We attempted to find available measures for each of these clinical
  topics that have been endorsed or adopted by a consensus organization and found no other feasible and
  practical measures on the topics for the inpatient setting.
\++\ This measure was submitted for endorsement by NQF's Patient Safety Standing Committee for the Spring 2019
  cycle, with a complete review of measure validity and reliability current scheduled for June 2019.

8. Potential Future Quality Measures
    In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53510 through 
53512), we outlined considerations to guide us in selecting new quality 
measures to adopt into the Hospital IQR Program. We also refer readers 
to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41147 through 41148), 
where we describe the Meaningful Measures Initiative and the quality 
priorities and high impact measurement areas under the Meaningful 
Measures framework that we have identified as relevant and meaningful 
to both patients and providers. In keeping with these considerations, 
we are inviting public comment on the possible future inclusion of the 
following three measures in the Hospital IQR Program. We note that 
these measures are also being considered for potential future inclusion 
in the Promoting Interoperability Program.
a. Hospital Harm--Severe Hypoglycemia eCQM
(1) Background
    Hypoglycemic events in the hospital are among the most common 
adverse drug events.\482\ Hypoglycemia can cause a wide range of 
symptoms, including mild symptoms of dizziness, sweating, and confusion 
to more severe symptoms such as seizure, tachycardia or loss of 
consciousness. Most individuals with hypoglycemia recover fully, but in 
rare instances, hypoglycemia can progress to coma and death.\483\ 
Hypoglycemia (defined as a blood glucose level of less than 70 mg/dl in 
this study) is associated with higher in-hospital mortality, increased 
length of stay, and consequently, increased resource use.\484\ In a 
2003-2004 study examining clinical outcomes associated with 
hypoglycemia in hospitalized people with diabetes, patients who had at 
least one hypoglycemic episode (a blood glucose level of less than 50 
mg/dL) were hospitalized 2.8 days longer than patients who did not 
experience hypoglycemia.\485\ Another retrospective cohort study showed 
hospitalized patients with diabetes who experienced

[[Page 19488]]

hypoglycemia (a blood glucose level of less than 70 mg/dL) had higher 
medical costs (by 38.9 percent), longer length of stay (by 3.0 days), 
and higher odds of being discharged to a skilled nursing facility (odds 
ratio 1.58; 95 percent Confidence Interval 1.48-1.69) than patients 
with diabetes without hypoglycemia (p<0.01 for all).\486\
---------------------------------------------------------------------------

    \482\ Office of Disease Prevention and Health Promotion. (2014). 
National Action Plan for Adverse Drug Event Prevention. Available 
at: https://health.gov/hcq/pdfs/ADE-Action-Plan-508c.pdf.
    \483\ Diabetes Control and Complications Trial Research Group. 
(1993). The effect of intensive treatment of diabetes on the 
development and progression of long-term complications in insulin-
dependent diabetes mellitus. New England Journal of Medicine, 
329(14): 977-86.
    \484\ Krinsley, J.S., Schultz, M.J., Spronk, P.E., van Braam 
Houckgeest, F., van der Sluijs, J.P., Melot, C. & Preiser, J.C. 
(2011). Mild hypoglycemia is strongly associated with increased 
intensive care unit length of stay. Ann Intensive Care, 1, 49.
    \485\ Turchin, A., Matheny, M.E., Shubina, M., Scanlon, J.V., 
Greenwood, B., & Pendergrass, M.L. (2009). Hypoglycemia and clinical 
outcomes in patients with diabetes hospitalized in the general ward. 
Diabetes Care, 32(7): 1153-57.
    \486\ Curkendall, S.M., Natoli, J.L., Alexander, C.M., 
Nathanson, B.H., Haidar, T., & Dubois, R.W. (2009). Economic and 
clinical impact of inpatient diabetic hypoglycemia. Endocrine 
Practice, 15(4): 302-312.
---------------------------------------------------------------------------

    The rate of severe hypoglycemia (a blood glucose level of less than 
40 mg/dL) varies across hospitals indicating an opportunity for 
improvement in care. Severe hypoglycemia rates have been reported to 
range from 2.3 percent to 5 percent of hospitalized patients with 
diabetes, and from 0.4 percent of non-ICU patient days to 1.9 percent 
of ICU patient days.487 488 489 Severe hypoglycemic events 
are largely avoidable by careful use of anti-diabetic medication and 
close monitoring of blood glucose values.
---------------------------------------------------------------------------

    \487\ Nirantharakumar, K., Marshall, T., Kennedy, A., Narendran, 
P., Hemming, K., & Coleman, J.J. (2012). Hypoglycemia is associated 
with increased length of stay and mortality in people with diabetes 
who are hospitalized. Diabetic Medicine, 29(12): e445-e448.
    \488\ Wexler, D.J., Meigs, J.B., Cagliero, E., Nathan, D.M., & 
Grant, R.W. (2007). Prevalence of hyper- and hypoglycemia among 
inpatients with diabetes: A national survey of 44 U.S. hospitals. 
Diabetes Care, 30(2): 367-369.
    \489\ Cook, C.B., Kongable, G.L., Potter, D.J., Abad, V.J., 
Leija, D.E., & Anderson, M. (2009). Inpatient glucose control: A 
glycemic survey of 126 U.S. hospitals. Journal of Hospital Medicine, 
4(9): E7-E14.
---------------------------------------------------------------------------

    Although there are many occurrences of hypoglycemia in hospital 
settings, many of which are preventable, there is currently no measure 
in a CMS quality program that quantifies how often hypoglycemic events 
happen to patients while in inpatient acute care. AHRQ identified 
insulin and other hypoglycemic agents as high-alert medications and 
associated adverse drug events to be included as a measure in the 
Medicare Patient Safety Monitoring System (MPSMS),\490\ signifying the 
importance of measuring this hospital harm. Unlike the MPSMS which 
relies on chart abstracted data, the Hospital Harm--Severe Hypoglycemia 
eCQM identifies hypoglycemic events using direct extraction of 
structured data from the EHR. In addition, the National Action Plan for 
Adverse Drug Event Prevention notes the opportunity for health care 
quality reporting measures and meaningful utilization of EHR data to 
advance hypoglycemic adverse drug event prevention.\491\ To address 
these gaps in measurement, we developed the Hospital Harm--Severe 
Hypoglycemia eCQM to identify the rates of severe hypoglycemic events 
using direct extraction of structured data from the EHR. We believe 
this measure will provide reliable and timely measurement of the rate 
at which severe hypoglycemia events occur in the setting of hospital 
administration of medication during hospitalization, which will create 
transparency for providers and patients with respect to variation in 
rates of these events among hospitals.
---------------------------------------------------------------------------

    \490\ Classen, DC, Jaser, L., Budnitz, D.S. (2010). Adverse Drug 
Events among Hospitalized Medicare Patients: Epidemiology and 
national estimates from a new approach to surveillance. Joint 
Commission Journal on Quality and Patient Safety, 36(1): 12-21.
    \491\ Office of Disease Prevention and Health Promotion. (2014). 
National Action Plan for Adverse Drug Event Prevention. Available 
at: https://health.gov/hcq/pdfs/ADE-Action-Plan-508c.pdf.
---------------------------------------------------------------------------

(2) Overview of Measure
    The Hospital Harm--Severe Hypoglycemia eCQM is an outcome measure 
focusing specifically on in-hospital severe hypoglycemic events in the 
setting of hospital administered antihyperglycemic medications. The 
measure identifies the proportion of patients who experienced a severe 
hypoglycemic event using a low glucose test result of less than 40 mg/
dL, within 24 hours of the administration of an antihyperglycemic 
agent, which indicates harm to a patient. The intent of this measure is 
for hospitals to track and improve their practices of appropriate 
dosing and adequate monitoring of patients receiving glycemic control 
agents, and to avoid patient harm leading to increased risk of 
mortality and disability. This measure addresses the quality priority 
of ``Making Care Safer by Reducing Harm Caused in the Delivery of 
Care'' through the Meaningful Measure Area of ``Preventable Healthcare 
Harm.'' \492\
---------------------------------------------------------------------------

    \492\ More information on CMS' Meaningful Measures Initiative 
can be found at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
---------------------------------------------------------------------------

    This measure is a respecification of a measure of hypoglycemia 
originally endorsed by the NQF, Glycemic Control--Severe Hypoglycemia 
(NQF #2363).\493\ The original measure was not implementable because 
the MAT could not support the measure as specified when it was 
originally developed due to limitations in the Quality Data Model (QDM) 
to express the measure logic or syntax as specified. The measure was 
respecified using the updates to the MAT including expression of the 
logic with CQL to create a measure that can now be implemented.
---------------------------------------------------------------------------

    \493\ For more information on the Glycemic Control--Severe 
Hypoglycemia measure, we refer readers to the measure 
specifications, available at: http://www.qualityforum.org/QPS/MeasureDetails.aspx?standardID=2363&print=1&entityTypeID=1.
---------------------------------------------------------------------------

    The Hospital Harm--Severe Hypoglycemia (MUC18-109) measure was 
included in the publicly available ``List of Measures Under 
Consideration for December 1, 2018.'' \494\ This measure was reviewed 
by the NQF MAP Hospital Workgroup in December 2018 and received 
conditional support pending NQF review and reendorsement once the 
revised measure is fully tested.495 496 MAP stakeholders 
agreed that severe hypoglycemia events are largely avoidable by careful 
use of antihyperglycemic medication and blood glucose monitoring. The 
MAP recommended continuously assessing the low blood glucose threshold 
of <40mg/dL for defining harm events to assess unintended consequences. 
Other recommendations from the MAP included defining the numerator as 
the total number of hypoglycemia events per hospitalization instead of 
the current numerator definition as a count of hospitalizations with at 
least one hypoglycemia event. The numerator definition was discussed at 
length with the measure TEP during development. The TEP members agreed 
with the current numerator definition of a count of hospitalizations 
with at least one hypoglycemic event because this adequately captures 
differences in quality among hospitals while simultaneously minimizing 
measure burden by not requiring hospitals to extract every single 
hypoglycemic event during a hospitalization. We agree with the 
importance of continually monitoring for unintended consequences once 
this measure is implemented. We recognize the importance of measuring 
hyperglycemia in conjunction with hypoglycemia and are currently 
developing a severe hyperglycemia eCQM. For additional information and 
discussion of concerns and considerations raised by the MAP related to 
this measure, we refer readers to the December 2018 NQF MAP

[[Page 19489]]

Hospital Workgroup meeting transcript.\497\ This measure was submitted 
for endorsement by NQF's Patient Safety Standing Committee for the 
Spring 2019 cycle, with a complete review of measure validity and 
reliability currently scheduled for June 2019.
---------------------------------------------------------------------------

    \494\ List of Measures Under Consideration for December 1, 2018. 
Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \495\ 2018-2019 Spreadsheet of Final Recommendations to HHS and 
CMS. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \496\ National Quality Forum, Measure Applications Partnership, 
MAP 2019 Considerations for Implementing Measures in Federal 
Programs: Hospitals. Available at: http://www.qualityforum.org/Publications/2019/02/MAP_2019_Considerations_for_Implementing_Measures_Final_Report_-_Hospitals.aspx.
    \497\ Measure Applications Partnership, December 2018 NQF MAP 
Hospital Workgroup Meeting Transcript. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
---------------------------------------------------------------------------

(3) Data Sources
    The data source for this measure is entirely EHR data. The measure 
is designed to be calculated by the hospitals' EHRs as well as by CMS 
using the patient level data submitted by hospitals to CMS.
    As with all quality measures we develop, testing was performed to 
establish the feasibility of the measure, data elements, and validity 
of the numerator, using clinical adjudicators who validated the EHR 
data compared with medical chart-abstracted data. Testing was completed 
using output from the MAT in multiple hospitals, using multiple EHR 
systems, with the measure shown to be both reliable and valid.
(4) Measure Calculation
    This measure assesses the rate at which severe hypoglycemia events 
caused by hospital administration of medications occur in the acute 
care hospital setting. It assesses the proportion of patients who had 
an antihyperglycemic medication given within the 24 hours prior to the 
harm event; and a laboratory test for glucose with a result of low 
glucose (less than 40 mg/dL); and no subsequent laboratory test for 
glucose with a result greater than 80 mg/dL within 5 minutes of the low 
glucose result. This measure only counts one severe hypoglycemia event 
per patient admission.
    The measure denominator includes all patients 18 years or older 
discharged from an inpatient hospital encounter during the measurement 
period, who were administered at least one antihyperglycemic medication 
during their hospital stay. The measure includes inpatient admissions 
for patients initially seen in the emergency department or in 
observation status and subsequently became an inpatient. There are no 
denominator exclusions for this measure.
    The numerator for this measure is the number of hospitalized 
patients with a blood glucose test result of less than 40 mg/dL 
(indicating severe hypoglycemia) with no repeat glucose test result 
greater than 80 mg/dL within 5 minutes of the low glucose test, and 
where an antihyperglycemic medication was administered within 24 hours 
prior to the low glucose result. We counted instances of low glucose of 
less than 40 mg/dL to identify only severe cases of hypoglycemia. Not 
including severe hypoglycemic events with a repeat test over 80 mg/dL 
within 5 minutes is to avoid counting false positives (mostly from 
point-of-care tests that might have returned an initial erroneous 
result). There are no numerator exclusions for this measure.
    For more information on the Hospital Harm--Severe Hypoglycemia 
eCQM, we refer readers to the measure specifications available on the 
CMS Measure Methodology website, at: https://www.cms.gov/medicare/
quality-initiatives-patient-assessment-instruments/
hospitalqualityinits/measure-methodology.html.
(5) Outcome
    The outcome of interest is to reduce the rate of severe 
hypoglycemia events caused by hospital administration of medications 
that occur in the acute care hospital setting.
    In evaluating our measures, we generally consider the following 
criteria in determining whether risk adjustment is warranted: (1) If 
many patients are at risk of the harm regardless of their age, clinical 
status, comorbidities, or reason for admission; (2) if the majority of 
incidents of the harm are linkable to care provision under the control 
of providers (for example, harms caused by excessive or inappropriate 
medication dosing); and (3) if there is evidence that the risk of a 
harm can be largely ameliorated by best care practices regardless of a 
patient's inherent risk profile. For example, there may be evidence 
that even complex patients with multiple risk factors can avoid harm 
events when providers closely adhere to care guidelines.
    In the case of the Hospital Harm--Severe Hypoglycemia eCQM, there 
is evidence indicating that most hypoglycemic events of this severity 
(<40 mg/dL) are avoidable.498 499 500 501 Although specific 
patients may be particularly vulnerable to hypoglycemia in certain 
settings (for example, due to organ failure and not related to 
administration of diabetic agents), the most common causes are lack of 
caloric intake, overuse of anti-diabetic agents, or both. As these 
causes are controllable in hospital environments, and risk can easily 
be reduced by following best practices, we do not think risk adjustment 
is warranted for this measure. We will continue to evaluate the 
appropriateness of risk adjustment in measure reevaluation.
---------------------------------------------------------------------------

    \498\ Cook, C.B., Kongable, G.L., Potter, D.J., Abad, V.J., 
Leija, D.E., & Anderson, M. (2009). Inpatient glucose control: A 
glycemic survey of 126 U.S. hospitals. Journal of Hospital Medicine, 
4(9), E7-E14.
    \499\ Moghissi, E.S., Korytkowski, M.T., DiNardo, M., et al. 
(2009). American Association of Clinical Endocrinologists and 
American Diabetes Association Consensus Statement on Inpatient 
Glycemic Control. Diabetes Care, 32(6):1119-1131.
    \500\ Office of the Inspector General (OIG). (2010). Adverse 
Events in Hospitals: National Incidence Among Medicare 
Beneficiaries.
    \501\ Wexler, D.J., Meigs, J.B., Cagliero, E., Nathan, D.M., & 
Grant, R.W. (2007). Prevalence of hyper- and hypoglycemia among 
inpatients with diabetes: A national survey of 44 U.S. hospitals. 
Diabetes Care, 30(2): 367-69.
---------------------------------------------------------------------------

    We are inviting public comment on potential future inclusion of the 
Hospital Harm--Severe Hypoglycemia eCQM in the Hospital IQR Program, 
including any potential unintended consequences that might result from 
future adoption of this measure, as well as ways to address those 
potential unintended consequences. We note that we are also considering 
this measure for potential future inclusion in the Promoting 
Interoperability Program.
b. Hospital Harm--Pressure Injury eCQM
(1) Background
    Pressure injuries are a common patient hospital harm and can be 
serious health events. An estimated 1.19 million hospital acquired 
pressure injuries occurred in the year 2015.\502\ Pressure injuries 
commonly can lead to local infection, osteomyelitis, anemia, and 
sepsis,\503\ in addition to causing significant depression, pain, and 
discomfort to patients.\504\ The presence or development of a pressure 
injury can increase the length of a patient's hospital stay by an 
average of four days, which can increase the spending ranging from 
$20,900 to $151,700 per pressure injury.505 506
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    \502\ Agency for Healthcare Research and Quality. National 
Scorecard on Rates of Hospital-Acquired Conditions 2010 to 2015: 
Interim Data From National Efforts to Make Health Care Safer. 
(2016). Available at: https://www.ahrq.gov/professionals/quality-patient-safety/pfp/2015-interim.html?utm_source=AHRQ&utm_medium=PSLS&utm_term=&utm_content=14
&utm_campaign=AHRQ_NSOHAC_2016.
    \503\ Brem, H., Maggi, J., Nierman, D., Rolnitzky, L., Bell, D., 
Rennert, R., Golinko, M., Yan, A., Lyder, C., Vladeck, B. (2010). 
High cost of stage IV. The American Journal of Surgery, 200: 473-
477.
    \504\ Gunningberg, L., Donaldson, N., Aydin, C. & Idvall, E. 
(2012). Exploring variation in pressure ulcer prevalence in Sweden 
and the USA: benchmarking in action. Journal of Evaluation in 
Clinical Practice, 18: 904-910.
    \505\ Agency for Healthcare Research and Quality. National 
Scorecard on Rates of Hospital-Acquired Conditions 2010 to 2015: 
Interim Data From National Efforts to Make Health Care Safer. 
(2016). Available at: https://www.ahrq.gov/professionals/quality-patient-safety/pfp/2015-interim.html?utm_source=AHRQ&utm_medium=PSLS&utm_term=&utm_content=14
&utm_campaign=AHRQ_NSOHAC_2016.
    \506\ Bauer, K., Rock, K., Nazzai, M.J., & Qu, W. (2016). 
Pressure Ulcers in the United States Inpatient Population from 2008 
to 2012: Results of a Retrospective Nationwide Study. Ostomy Wound 
Management, 62(11): 30-38.

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[[Page 19490]]

    The rate of pressure injuries varies across hospitals suggesting 
that there may be opportunity for further improvement. One study of 
51,842 patients found that 4.5 percent of patients developed at least 
one new pressure injury during their hospitalization, with a 3.2 
percent between-state variance.\507\ Another study revealed pressure 
injury prevalence rates in U.S. hospitals participating in a registry 
was 2.0 percent for hospital-acquired pressure injuries,\508\ while a 
third national study found 1.8 percent of inpatients had at least one 
pressure injury based on ICD-9 codes.\509\ Pressure injury is 
considered a serious reportable event by the NQF,\510\ CMS established 
non-payment for pressure injury,\511\ and it is an indicator of the 
quality of nursing care a hospital provides.\512\ It is well-accepted 
that pressure injury can be reduced through best practices \513\ such 
as frequent repositioning, proper skin care, and specialized cushions 
or beds.\514\ AHRQ published data that showed 3.1 million fewer 
incidents of hospital-acquired harm in 2011-2015 compared with 2010; 23 
percent of this reduction was from a reduction in hospital-acquired 
pressure injuries.\515\ Research has also suggested a link between a 
hospital's processes of care and the outcome of hospital-acquired 
pressure injury.\516\ We therefore believe that pressure injuries are 
an important issue to address in the Hospital IQR Program.
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    \507\ Lyder, C.H., Wang, Y., Metersky, M., Curry, M., Kliman, 
R., Verzier, N.R., Hunt, D.R. (2012). Hospital-acquired pressure 
ulcers: results from the national Medicare Patient Safety Monitoring 
System study. Journal of American Geriatrics Society, 60(9): 1603-8.
    \508\ Gunningberg, L., Donaldson, N., Aydin, C. & Idvall, E. 
(2012). Exploring variation in pressure ulcer prevalence in Sweden 
and the USA: benchmarking in action. Journal of Evaluation in 
Clinical Practice, 18: 904-910.
    \509\ Bauer, K., Rock, K., Nazzai, M.J., & Qu, W. (2016). 
Pressure Ulcers in the United States Inpatient Population from 2008 
to 2012: Results of a Retrospective Nationwide Study. Ostomy Wound 
Management, 62(11): 30-38.
    \510\ National Quality Forum, List of SREs. Available at: http://www.qualityforum.org/Topics/SREs/List_of_SREs.aspx.
    \511\ Centers for Medicare & Medicaid Services. Hospital-
Acquired Conditions. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalAcqCond/Hospital-Acquired_Conditions.html.
    \512\ National Quality Forum. (2004). National Voluntary 
Consensus Standards for Nursing-Sensitive Care: An Initial 
Performance Measure Set 2005. Available at: http://www.qualityforum.org/Publications/2004/10/National_Voluntary_Consensus_Standards_for_Nursing-Sensitive_Care__An_Initial_Performance_Measure_Set.aspx.
    \513\ Agency for Healthcare Research and Quality. (2012). 
Preventing Pressure Ulcers in Hospitals: A Toolkit for Improving 
Quality of Care. Available at: https://www.ahrq.gov/sites/default/files/publications/files/putoolkit.pdf.
    \514\ Gunningberg, L., Donaldson, N., Aydin, C. & Idvall, E. 
(2012). Exploring variation in pressure ulcer prevalence in Sweden 
and the USA: benchmarking in action. Journal of Evaluation in 
Clinical Practice, 18: 904-910.
    \515\ Agency for Healthcare Research and Quality. (2016). 
National Scorecard on Rates of Hospital-Acquired Conditions 2010-
2015: Interim Data From Nation Efforts to Make Health Care Safer. 
Available at: https://www.ahrq.gov/professionals/quality-patient-safety/pfp/2015-interim.html.
    \516\ Gunningberg, L., Donaldson, N., Aydin, C. & Idvall, E. 
(2012). Exploring variation in pressure ulcer prevalence in Sweden 
and the USA: benchmarking in action. Journal of Evaluation in 
Clinical Practice, 18: 904-910.
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(2) Overview of Measure
    The intent of the Hospital Harm--Pressure Injury eCQM is to reduce 
pressure injury prevalence by creating transparency in the rate of 
these harms which should encourage hospitals to promote best practices 
such as frequent monitoring of patients at high risk, documenting skin 
assessments, frequent repositioning, proper skin care, and use of 
specialized cushions or beds. This measure identifies pressure injuries 
using direct extraction of structured data from the EHR and will 
provide hospitals with reliable and timely measurement of their 
pressure injury rates as well as creating transparency for providers 
and patients about the variation in rates of these events among 
hospitals. Pressure injuries staged 3 and staged 4 (or unstageable) are 
currently measured and publicly reported in the HAC Reduction Program 
as a component of the CMS Patient Safety and Adverse Events Composite 
(CMS PSI 90) measure, but this potential Hospital Harm--Pressure Injury 
measure improves measurement of pressure injuries by using EHR data 
rather than administrative claims.
    The Hospital Harm--Pressure Injury eCQM was included in the 
publicly available document entitled ``List of Measures Under 
Consideration for December 1, 2018.'' \517\ This measure was reviewed 
by the NQF MAP Hospital Workgroup in December 2018 and received 
conditional support pending NQF review and endorsement once the measure 
is fully tested.\518\ The MAP expressed their broad support for the 
measure and agreed this measure can reduce patient harm due to pressure 
injury. Recommendations from the MAP included, excluding patients 
undergoing certain types of treatment that may not be appropriate to 
receive evidence-based pressure injury reducing interventions, such as 
patients at the end of life, as well as considering clinical data such 
as albumin if the measure were to be risk adjusted in the future. The 
MAP also recommended that the developer consider how multiple pressure 
injuries are identified and assessed in the same encounter. Based on 
the evidence gathered during testing and expert input, the measure is 
currently not risk adjusted and it does not exclude patients with 
certain conditions from the denominator as evidence shows that most 
newly acquired pressure injuries can be mitigated through best care and 
the most common causes of pressure injuries (limited mobility during 
acute illness, friction against skin) put all hospitalized patients at 
similar risk.519 520 This measure only includes one event 
per hospitalization, which was supported by the TEP during measure 
development, to provide a quality signal without imposing undue burden 
on hospitals to have to enumerate every instance of a pressure injury. 
However, this measure was submitted for endorsement by NQF's Patient 
Safety Standing Committee for the Spring 2019 cycle, and these aspects 
of the measure specifications will be considered during NQF scientific 
review currently scheduled for June 2019. For additional information 
and discussion of concerns and considerations raised by the MAP related 
to the measure, we refer readers to the December 2018 NQF MAP Hospital 
Workgroup meeting transcript.\521\
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    \517\ List of Measures Under Consideration for December 1, 2018. 
Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \518\ 2018-2019 Spreadsheet of Final Recommendations to HHS and 
CMS. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \519\ Gunningberg, L., Donaldson, N., Aydin, C., Idvall, E. 
(2011). Exploring variation in pressure ulcer prevalence in Sweden 
and the USA: Benchmarking in action. 18. 10.1111/j.1365-
2753.2011.01702.x. Journal of evaluation in clinical practice., 904-
910.
    \520\ Berlowitz, D., VanDeusen Lukas, C., Parker, V., 
Niederhauser, A., Silver, J., Logan, C., Ayello, E., Zulkowski, K. 
(2012). Preventing Pressure Ulcers in Hospitals--A Toolkit for 
Improving Quality of Care.
    \521\ Measure Application Partnership, 2018 NQF MAP Hospital 
Workgroup Meeting Transcript. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.

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[[Page 19491]]

(3) Data Sources
    The data source for this measure is entirely EHR data. The measure 
is designed to be calculated by the hospitals' EHRs, as well as by CMS 
using the patient level data submitted by hospitals to CMS.
    As with all quality measures we develop, testing was performed to 
confirm the feasibility of the measure, data elements, and validity of 
the numerator, using clinical adjudicators who validated the EHR data 
by comparison to medical chart abstracted data. Testing was completed 
using output from the MAT in multiple hospitals, using multiple EHR 
systems, and the measure was shown to be both reliable and valid. In 
addition, testing showed data element feasibility is higher at 
hospitals with a designated ``pressure injury'' field in the EHR, as 
opposed to a generic ``wound'' field.
(4) Measure Calculation
    This measure assesses the rate at which new hospital-acquired 
pressure injuries occur during an acute care hospitalization. It 
assesses the proportion of encounters with a newly developed stage 2, 
stage 3, stage 4, deep tissue pressure injury, or unstageable pressure 
injury during hospitalization.
    The measure denominator includes all patients 18 years or older 
discharged from an inpatient hospital encounter during the measurement 
period. The measure includes inpatient admissions for patients 
initially seen in the emergency department or in observation status. 
There are no exclusions for this measure.
    The numerator for this electronic outcome measure is defined as the 
number of admissions where a patient has a newly-developed pressure 
injury stage 2, stage 3, stage 4, deep tissue pressure injury, or 
unstageable pressure injury that was not documented as present in the 
first 24 hours of hospital arrival. Measure developers and guideline 
organizations recommend skin assessment within 24 hours of hospital 
arrival.522 523 524 525 This measure assumes that any 
pressure injury not documented within 24 hours of arrival is hospital-
acquired. For more information on the Hospital Harm--Pressure Injury 
eCQM, we refer readers to the measure specifications available on the 
CMS Measure Methodology website, at: https://www.cms.gov/medicare/
quality-initiatives-patient-assessment-instruments/
hospitalqualityinits/measure-methodology.html.
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    \522\ National Pressure Ulcer Advisory Panel. (2016). NPAUAP 
Pressure Injury Stages. Available at: http://www.npuap.org/resources/educational-and-clinical-resources/npuap-pressure-injury-stages/.
    \523\ Agency for Healthcare Research and Quality. (2012). 
Preventing Pressure Ulcers in Hospitals: A Toolkit for Improving 
Quality of Care. Available at: https://www.ahrq.gov/sites/default/files/publications/files/putoolkit.pdf.
    \524\ Catania, K. et al. (2007). PUPPI: The Pressure Ulcer 
Prevention Protocol Interventions. American Journal of Nursing, 
107(4): 44-52.
    \525\ National Quality Forum. (2004). National Voluntary 
Consensus Standards for Nursing-Sensitive Care: An Initial 
Performance Measure Set 2005. Available at: http://www.qualityforum.org/Publications/2004/10/National_Voluntary_Consensus_Standards_for_Nursing-Sensitive_Care__An_Initial_Performance_Measure_Set.aspx.
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(5) Outcome
    The outcome of interest is to reduce the rate at which new 
hospital-acquired pressure injuries occur during an acute care 
hospitalization.
    In evaluating our measures, we generally consider the following 
criteria in determining whether risk adjustment is warranted: (1) If 
many patients are at risk of the harm regardless of their age, clinical 
status, comorbidities, or reason for admission; (2) if the majority of 
incidents of the harm are linkable to care provision under the control 
of providers (for example, harms caused by inappropriate skin care or 
lack of frequent repositioning); and (3) if there is evidence that the 
risk of a harm can be largely ameliorated by best care practices 
regardless of a patient's inherent risk profile. For example, there may 
be evidence that even complex patients with multiple risk factors can 
avoid harm events when providers closely adhere to care guidelines.
    In the case of the Hospital Harm-Pressure Injury eCQM, there is 
evidence indicating that most newly acquired pressure injuries are 
avoidable with best practice.526 527 Although specific 
patients may be particularly vulnerable to pressure injuries in certain 
settings (for example, permanent or prolonged immobility), the most 
common causes are limited mobility during an acute illness and friction 
or shear against sensitive skin. Many hospitalized patients are at risk 
of these injuries. There are many actions hospitals can take to reduce 
patient harm risk, such as conducting a structured risk assessment to 
identify individuals at risk for pressure injury as soon as possible 
upon arrival and repeating at regular intervals, as well as proper skin 
care, nutrition, and careful repositioning of patients. As many of the 
causes can be mitigated through best care in hospital environments, we 
do not think risk adjustment is warranted for this measure. We will 
continue to evaluate the appropriateness of risk adjustment in measure 
reevaluation.
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    \526\ Gunningberg, L., Donaldson, N., Aydin, C., Idvall, E. 
(2011). Exploring variation in pressure ulcer prevalence in Sweden 
and the USA: Benchmarking in action. 18. 10.1111/j.1365-
2753.2011.01702.x. Journal of evaluation in clinical practice., 904-
910.
    \527\ Berlowitz, D., VanDeusen Lukas, C., Parker, V., 
Niederhauser, A., Silver, J., Logan, C., Ayello, E., Zulkowski, K. 
(2012). Preventing Pressure Ulcers in Hospitals--A Toolkit for 
Improving Quality of Care.
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    We are inviting public comment on potential future inclusion of the 
Hospital Harm--Pressure Injury eCQM in the Hospital IQR Program. We are 
specifically seeking public comment on any unintended consequences that 
might result from future adoption of this measure, as well as ways to 
address those potential unintended consequences. We note that we are 
also considering this measure for potential future inclusion in the 
Promoting Interoperability Program.
c. Cesarean Birth (PC-02) eCQM (NQF #0471e)
(1) Background
    A Cesarean section (C-section) is the use of surgery to deliver a 
baby (or babies) in lieu of vaginal delivery. The procedure therefore 
entails surgical and anesthesia risks and requires mothers to undergo 
several days of inpatient, postoperative recovery. A C-section may 
occur on an emergency basis or elective basis.\528\ Elective C-sections 
may be necessary due to preexisting medical conditions, such as high 
blood pressure (preeclampsia), other medical indications, or may be 
preferred for non-medical reasons. Non-medical reasons for elective C-
section can relate to maternal preference, local practice patterns, 
fear of malpractice litigation, reimbursement anomalies, or other 
factors.529 530 531
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    \528\ National Quality Forum, Quality Measure PC-02 (Cesarean 
Birth). Available at: https://www.qualityforum.org/QPS/MeasureDetails.aspx?standardID=291&print=1&entityTypeID=1.
    \529\ Caughey AB, Cahill AG, Guise JM, Rouse DJ. Safe prevention 
of the primary cesarean delivery. Am J Obstet Gynecol. 2014 
Mar;210(3):179-93. doi: 10.1016/j.ajog.2014.01.026.
    \530\ Schifrin BS, Cohen WR. The effect of malpractice claims on 
the use of caesarean section. Best Pract Res Clin Obstet Gynaecol. 
2013 Apr;27(2):269-83. doi: 10.1016/j.bpobgyn.2012.10.004. Epub 2012 
Dec 1. Review.
    \531\ Chen CS, Liu TC, Chen B, Lin CL. The failure of financial 
incentive? The seemingly inexorable rise of cesarean section. Soc 
Sci Med. 2014 Jan;101:47-51. doi: 10.1016/j.socscimed.2013.11.010. 
Epub 2013 Nov 15.
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    The total rate of (emergency and elective) C-sections has risen 
since the 1990s in the United States.\532\ C-sections

[[Page 19492]]

accounted for about one-third of U.S. deliveries in 2016,\533\ and 
there is a considerable amount of variation in the rates based on U.S. 
region, State, and healthcare institution.\534\ U.S. practice 
guidelines have not indicated an optimal rate of C-section or an 
appropriate variance rate, but international studies suggest a 
preference for a lower range than current U.S. 
rates.535 536 537 When medically justified, a C-section can 
effectively prevent maternal and perinatal mortality and morbidities. 
However, clinicians and consensus groups agree that increased C-section 
rates have not improved overall maternal-fetal outcomes and that C-
sections are overused.538 539 Below, we include literature 
outlining maternal and neonatal C-section outcomes.
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    \532\ Osterman, M.J.K., Martin, J.A. (2014). Trends in Low-risk 
Cesarean Delivery in the United States, 1990-2013. National Vital 
Statistics Reports, 63(6): 1-16.
    \533\ Martin, J.A., Hamilton, B.E., Osterman, M.J.K., Driscoll, 
A.K., Drake, P. (2018). Births: Final Data for 2016. National Vital 
Statistics Reports, 67(1): 1-55.
    \534\ Kozhimannil, K.B., Law, M.R. & Virnig, B.A. (2013). 
Cesarean delivery rates vary tenfold among US hospitals; reducing 
variation may address quality and cost issues. Health Affairs, 
32(3): 527-35.
    \535\ National Collaborating Centre for Women's and Children's 
Health. (2011). Caesarean Section: NICE Clinical Guideline 
(commissioned by the United Kingdom National Institute for Health 
and Clinical Excellence).
    \536\ American College of Obstetricians and Gynecologists, 
Society for Maternal-Fetal Medicine. (2014). Safe prevention of the 
primary cesarean delivery. American Journal of Obstetrics and 
Gynecology, 210(3): 179-93.
    \537\ Keag, O.E., Norman, J.E. & Stock, S.J. (2018). Long-term 
risks and benefits associated with cesarean delivery for mother, 
baby, and subsequent pregnancies: Systematic review and meta-
analysis. Plos Med, 15(1): e1002494.
    \538\ American College of Obstetricians and Gynecologists, 
Society for Maternal-Fetal Medicine. (2014). Safe prevention of the 
primary cesarean delivery. American Journal of Obstetrics and 
Gynecology, 210(3): 179-93.
    \539\ National Collaborating Centre for Women's and Children's 
Health. (2011). Caesarean Section: NICE Clinical Guideline 
(commissioned by the United Kingdom National Institute for Health 
and Clinical Excellence).
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    For maternal outcomes, C-sections have significantly higher 
prenatal and postpartum morbidity and mortality (9.2 percent) than 
vaginal births (8.6 percent).\540\ Existing literature largely does not 
distinguish whether inferior outcomes derive from cause (higher risk 
patients undergo C-section) or effect (surgery carries inherent risks 
due to anesthesia, bleeding, infection, postoperative recovery, etc.). 
However, taking an aggregate view of multiple studies over time, it 
appears that C-sections carry a higher risk of subsequent miscarriage, 
placental abnormalities, and repeat C-section.\541\ Conversely, urinary 
incontinence and pelvic organ prolapse occur less frequently after C-
section than after vaginal delivery.\542\
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    \540\ American College of Obstetricians and Gynecologists, 
Society for Maternal-Fetal Medicine. (2014). Safe prevention of the 
primary cesarean delivery. American Journal of Obstetrics and 
Gynecology, 210(3): 179-93.
    \541\ Keag, O.E., Norman, J.E. & Stock, S.J. (2018). Long-term 
risks and benefits associated with cesarean delivery for mother, 
baby, and subsequent pregnancies: Systematic review and meta-
analysis. Plos Med, 15(1): e1002494.
    \542\ Keag, O.E., Norman, J.E. & Stock, S.J. (2018). Long-term 
risks and benefits associated with cesarean delivery for mother, 
baby, and subsequent pregnancies: Systematic review and meta-
analysis. Plos Med, 15(1): e1002494.
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    In terms of neonatal outcomes, C-sections have higher respiratory 
morbidity (1 to 4 percent) than vaginal births (<1 percent).\543\ 
Children delivered by C-section also have a higher risk of asthma and 
obesity.\544\ However, C-sections have better outcomes for shoulder 
dystocia (0 percent versus 1-2 percent).\545\ Again, cause (high risk 
fetuses more likely to be delivered by C-section) versus effect 
(surgery increases risk to the fetus) remains epidemiologically 
obscure. The medical indications for C-section necessarily entail broad 
obstetrician discretion because of the need to: (1) Balance any 
conflicting medical conditions of mother versus fetus; and (2) balance 
C-section against any other competing clinical considerations or 
external constraints (for example, availability of operating room, 
personnel, and/or blood).
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    \543\ American College of Obstetricians and Gynecologists, 
Society for Maternal-Fetal Medicine. (2014). Safe prevention of the 
primary cesarean delivery. American Journal of Obstetrics and 
Gynecology, 210(3): 179-93.
    \544\ Keag, O.E., Norman, J.E. & Stock, S.J. (2018). Long-term 
risks and benefits associated with cesarean delivery for mother, 
baby, and subsequent pregnancies: Systematic review and meta-
analysis. Plos Med, 15(1): e1002494.
    \545\ American College of Obstetricians and Gynecologists, 
Society for Maternal-Fetal Medicine. (2014). Safe prevention of the 
primary cesarean delivery. American Journal of Obstetrics and 
Gynecology, 210(3): 179-93.
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    Furthermore, C-sections receive higher reimbursement than vaginal 
deliveries (typically about 50 percent more). Patient cost sharing may 
differ, depending upon insurance coverage. Insurance experiments 
suggest that higher cost sharing causes patients to consume less health 
care,\546\ but that patients distinguish poorly between necessary and 
unnecessary services. The pervasive use of cesarean births carries 
economic impacts because C-sections are more expensive than vaginal 
deliveries and may be accompanied by adverse outcomes and complications 
which similarly have substantial cost implications.\547\
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    \546\ Aron-Dine, A., Einav, L. & Finkelstein, A. (2013). The 
RAND Health Insurance Experiment, Three Decades Later. The Journal 
of Economic Perspectives, 27(1): 197-222.
    \547\ Kozhimannil, K.B., Law, M.R. & Virnig, B.A. (2013). 
Cesarean delivery rates vary tenfold among US hospitals; reducing 
variation may address quality and cost issues. Health Affairs, 
32(3): 527-35.
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    For these reasons, we are considering including the electronic 
version of PC-02 (NQF #0471e) in the eCQM measure set to enable 
hospitals to track C-sections and reduce unnecessary instances of C-
sections.
(2) Overview of Measure
    The Joint Commission is the steward of the PC-02 measure, which 
assesses the rate of nulliparous women with a normal-term, singleton 
fetus in the vertex position (NTSV) undergoing C-section.\548\ 
Nulliparous women are those who have never given birth. They have a 
lower risk during vaginal birth than do women who have undergone a 
previous C-section.549 550 Full-term births have better 
outcomes than preterm births. Vertex presentations carry less risk than 
breach or transverse presentations.\551\ However, this population still 
includes some patients with medical indications for elective C-section 
(for example, dystocia, chorioamnionitis, pelvic deformity, 
preeclampsia, fetal distress, prolapsed cord, placenta previa, abnormal 
lie, uterine rupture, macrosomia).\552\ While the chart-abstracted and 
eCQM versions of PC-02 do not exclude those medical indications, 
extensive testing of the chart-abstracted version of the measure has 
shown that excluding them does not significantly increase a hospital's 
adjusted C-section rate, partially because the majority of these 
indications are rare in the NTSV population.\553\
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    \548\ National Quality Forum, Quality Measure PC-02 (Cesarean 
Birth). Available at: https://www.qualityforum.org/QPS/MeasureDetails.aspx?standardID=291&print=1&entityTypeID=1.
    \549\ American College of Obstetricians and Gynecologists, 
Society for Maternal-Fetal Medicine. (2014). Safe prevention of the 
primary cesarean delivery. American Journal of Obstetrics and 
Gynecology, 210(3): 179-93.
    \550\ National Quality Forum, Perinatal and Reproductive Health 
2015-2016 Final Report. Available at: http://www.qualityforum.org/Publications/2016/12/Perinatal_and_Reproductive_Health_2015-2016_Final_Report.aspx.
    \551\ American College of Obstetricians and Gynecologists, 
Society for Maternal-Fetal Medicine. (2014). Safe prevention of the 
primary cesarean delivery. American Journal of Obstetrics and 
Gynecology, 210(3): 179-93.
    \552\ Mylonas, I. & Friese, K. (2015). Indications for and Risks 
of Elective Cesarean Section. Deutsches Arzteblatt International, 
112(29-30): 489-95.
    \553\ Centers for Medicare & Medicaid Services. (2015). Cesarean 
Birth (PC-02) Measure Public Comment Summary. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/PC-02-Public-Comment-Summary-Memo.pdf. The 
PC-02 eCQM cannot capture all possible medical indications. Thus, 
PC-02 does not equate to elective C-section for non-medical reasons.

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[[Page 19493]]

    Determining the NTSV C-section rate permits a hospital to compare 
its outcomes to other hospitals while focusing only on a lower-risk 
population. NQF has endorsed the chart-based form of this measure as a 
voluntary consensus standard since 2008.\554\ NQF stated that 
decreasing the rate of unnecessary C-sections ``will result in 
increased patient safety, a substantial decrease in maternal and 
neonatal morbidity and substantial savings in health care costs.'' 
\555\ Reducing the number of NSTV deliveries by C-section would also 
reduce the rate of repeat cesarean births.\556\ We acknowledge that 
there are instances where C-sections are medically indicated, and we 
emphasize that this measure is not intended to discourage practitioners 
from performing C-sections when they are medically indicated. We 
believe that assessing the rate of NTSV C-sections may ultimately 
reduce the occurrence of non-medically indicated C-sections. We have 
encouraged hospitals whose measure rates are higher than rates at other 
hospitals to explore and evaluate differences in the medical and 
nursing management of women in labor.\557\ Further, including this 
measure could help ensure that the Hospital IQR Program includes 
measures which are applicable to rural hospitals. The Rural Health 
Workgroup of the NQF's Measure Applications Partnership also identified 
the chart-abstracted version of PC-02 as a measure that holds 
particular relevance for rural hospitals, noting how important it is to 
focus on best practices in obstetric care in rural areas.\558\
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    \554\ National Quality Forum, Quality Measure PC-02 (Cesarean 
Birth). Available at: https://www.qualityforum.org/QPS/MeasureDetails.aspx?standardID=291&print=1&entityTypeID=1.
    \555\ National Quality Forum (NQF), Perinatal and Reproductive 
Health Project. NQF #0471 PC-02 Cesarean Section: Measure Submission 
and Evaluation Worksheet 5.0. October 24, 2008. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=69252.
    \556\ Curtin, S.C., Gregory, K.D., Korst, L.M., & Uddin, S.F. 
(2015). Maternal Morbidity for Vaginal and Cesarean Deliveries, 
According to Previous Cesarean History: New Data From the Birth 
Certificate, 2013. National Vital Statistics Reports, 64(4): 1-13.
    \557\ Centers for Medicare & Medicaid Services. (2015). Cesarean 
Birth (PC-02) Measure Public Comment Summary. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/PC-02-Public-Comment-Summary-Memo.pdf.
    \558\ National Quality Forum, Measure Applications Partnership. 
(2018). A Core Set of Rural-Relevant Measures and Measuring and 
Improving Access to Care: 2018 Recommendations from the MAP Rural 
Health Workgroup. Available at: http://www.qualityforum.org/Publications/2018/08/MAP_Rural_Health_Final_Report_-_2018.aspx.
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    The PC-02 eCQM was included in a publicly available document 
entitled ``List of Measures Under Consideration for December 1, 2018.'' 
\559\ The MAP Coordinating Committee voted to conditionally support the 
PC-02 eCQM, citing the failure of the eCQM version of the measure to 
attain endorsement by the NQF as an area of concern.\560\ The 
Coordinating Committee encouraged The Joint Commission to resubmit the 
eCQM version of PC-02 to the NQF for endorsement with additional 
clarifying data that has been collected since the previous attempt to 
attain endorsement. The MAP's Final Report of February 15, 2019, 
conditionally supports the PC-02 eCQM for rulemaking pending NQF 
evaluation and endorsement.\561\ The MAP suggested feasibility testing, 
consultation with multiple stakeholders, and examination of unintended 
consequences.
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    \559\ List of Measures Under Consideration for December 1, 2018. 
Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \560\ Measure Applications Partnership, December 2018 NQF MAP 
Hospital Workgroup Meeting Transcript. Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
    \561\ National Quality Forum, Measure Applications Partnership, 
MAP 2019 Considerations for Implementing Measures in Federal 
Programs: Hospitals. Available at: http://www.qualityforum.org/Publications/2019/02/MAP_2019_Considerations_for_Implementing_Measures_Final_Report_-_Hospitals.aspx.
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(3) Data Sources
    Hospitals would provide data for this measure from their EHRs. 
Incorporating this eCQM would align with our goal to encourage greater 
use of EHR data for quality measurement.
(4) Measure Calculation
    This measure assesses the rate of nulliparous women with a term, 
singleton baby in a vertex position delivered by cesarean birth. As the 
measure steward for both the chart-abstracted version of PC-02 (NQF 
#0471) and the eCQM version (NQF #0471e), The Joint Commission 
publishes a detailed methodology for its calculation.\562\
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    \562\ See, for example, The Joint Commission. Specifications 
Manual for Joint Commission National Quality Measures, Measure 
Information Form PC-02. Available at: https://manual.jointcommission.org/releases/TJC2018A1/MIF0167.html.
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    The measure's denominator consists of the number of nulliparous 
women with a singleton, vertex fetus at >=37 weeks of gestation who 
deliver a liveborn infant. Its numerator consists of the subset 
delivering by C-section. The numerator includes women delivering by 
planned C-section due to obstetric indications and for other 
reasons.\563\ This measure excludes patients with abnormal 
presentations or single stillbirth during the encounter, or patients 
with multiple gestations recorded less than or equal to 42 weeks prior 
to the end of the encounter.
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    \563\ List of Measures Under Consideration for December 1, 2018. 
Available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75369.
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    The cohort consists of all patients in the denominator: Nulliparous 
women with a singleton, vertex fetus at >=37 weeks of gestation who 
deliver a liveborn infant. The cohort includes all pertinent patients 
regardless of payer (for example, Medicare, Medicaid, other public 
programs, private insurance, self-pay, charity care) or admission 
source (for example, home, emergency department, nursing home, hospice, 
another hospital, law enforcement).\564\ The cohort for a region, 
hospital, and practitioner may differ from the national rate because of 
higher medical indications for C-section.
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    \564\ Ibid.
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(5) Outcome
    The outcome of interest is the number of C-sections to nulliparous 
women with a term, singleton baby in a vertex position divided by all 
deliveries to nulliparous women with a term, singleton baby in a vertex 
position.\565\
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    \565\ The Joint Commission, Specifications Manual for Joint 
Commission National Quality Measures, Measure Information Form PC-
02. Available at: https://manual.jointcommission.org/releases/TJC2018A1/MIF0167.html.
---------------------------------------------------------------------------

    This measure is not risk adjusted. The Joint Commission decided to 
exclude risk-adjustment from this measure based on careful 
consideration of a Technical Advisory Panel's recommendations and data 
that indicated the results adjusted by age were sensitive to low sample 
sizes and applying age as a risk factor only marginally impacted the 
outcome.\566\ The Joint Commission removed all risk adjustments from 
this measure, effective with discharges beginning July 1, 2016.\567\
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    \566\ National Quality Forum, (2016) Perinatal and Reproductive 
Health 2015-2016 Final Report. Available at: http://www.qualityforum.org/Publications/2016/12/Perinatal_and_Reproductive_Health_2015-2016_Final_Report.aspx.
    \567\ National Quality Forum, Perinatal and Reproductive Health 
2015-2016 Final Report. Available at: http://www.qualityforum.org/Publications/2016/12/Perinatal_and_Reproductive_Health_2015-2016_Final_Report.aspx.

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[[Page 19494]]

    We are inviting public comment on potential future inclusion of the 
Cesarean Birth (PC-02) eCQM (NQF #0471e) in the Hospital IQR Program. 
We are specifically seeking public comment on any unintended 
consequences that might result from future adoption of this measure, as 
well as ways to address those potential unintended consequences. We 
note that we are also considering this measure for potential future 
inclusion in the Promoting Interoperability Program.
9. Accounting for Social Risk Factors: Update on Confidential Reporting 
of Stratified Data for Hospital Quality Measures
a. Background
    We first sought public comment on potentially publicly reporting 
Hospital IQR Program measure data stratified by social risk factors in 
the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 57167 through 57168). In 
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38404), we explained that 
due to the complexity of interpreting stratified measure data, we would 
first consider confidentially reporting such data prior to any future 
public display on the Hospital Compare website. We also noted that 
providing confidential hospital-specific reports (HSRs) would enable us 
to obtain hospital feedback on reporting options and ensure the 
information is valid, reliable, and understandable prior to any future 
public display (82 FR 38404).
    In the FY 2018 IPPS/LTCH PPS rulemaking (82 FR 20070 through 20074; 
38403 through 38409), we presented and responded to comments on whether 
to provide hospitals with confidential results of the Hospital 30-Day, 
All-Cause, Risk-Standardized Readmission Rate (RSRR) Following 
Pneumonia Hospitalization (NQF #0506) (Pneumonia Readmission measure) 
and the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate 
Following Pneumonia Hospitalization (NQF #0468) (Pneumonia Mortality 
measure) stratified by patient dual eligible status as early as summer 
of 2018, and described two potential methodologies designed to 
illuminate potential disparities by calculating outcome measure results 
stratified by patient dual eligible status (a within-hospital method 
and an across-hospital method).\568\ We selected the two pneumonia 
measures as the first measures to potentially stratify because 
pneumonia is a condition that is common in the elderly population and 
because the results of both measures are publicly reported for a large 
cohort of hospitals (83 FR 41598).\569\ We also explained that the 
additional information provided by the two disparity methods 
supplements the overall readmission and mortality measure rates 
publicly reported on the Hospital Compare website by highlighting 
disparities based on patient dual eligible status (82 FR 38405).
---------------------------------------------------------------------------

    \568\ The Within-Hospital Disparity Method (also referred to as 
the Dual Eligible Disparity Method for Within-Hospital Comparison) 
highlights differences in outcomes for dual eligible versus non-dual 
eligible patients within an individual hospital, while the Dual 
Eligible Outcome Method (also referred to as the Dual Eligible 
Outcome Method for Across Hospital Comparison) allows for a 
comparison of performance in care for dual eligible patients across 
hospitals.
    \569\ Assessing Hospital Disparities for Dual Eligible Patients: 
Thirty-Day All-Cause Unplanned Readmission Following Pneumonia 
Hospitalization, Measure Methodology Report for 2018 Confidential 
Reporting. Available at: https://www.qualitynet.org/dcs/ContentServer?cid=%201228776709103&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page.
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    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41598), we explained 
that as a first step, in the interest of simplicity and minimizing 
confusion for hospitals, we planned to provide hospitals with 
confidential HSRs containing stratified results of the Pneumonia 
Readmission measure only, using both disparity methods, during a month-
long confidential reporting period in late summer of 2018. We also 
noted that for the future, we were considering: (1) Expanding our 
efforts to provide stratified data in confidential HSRs for other 
measures; (2) including other social risk factors beyond dual eligible 
status in confidential HSRs; and (3) eventually, making stratified data 
publicly available on the Hospital Compare website (83 FR 41598).
    Confidential HSRs containing the results of Pneumonia Readmission 
measure data using the two disparity methods (disparity results) were 
made available for hospitals and their QIN-QIOs to download through the 
QualityNet Secure Portal from August 24 to September 24, 2018. The 
confidential HSRs also contained additional information to enable a 
more meaningful comparison and comprehensive assessment of the quality 
of care for dual eligible patients, including a hospital's overall 
Pneumonia Readmission measure rate and State and national results for 
each disparity method. To ensure hospitals and stakeholders would have 
sufficient information to understand and interpret their disparity 
results during the confidential reporting period, background materials 
and educational resources were posted on the QualityNet website, 
including detailed instructions for interpreting a hospital's HSR and a 
technical report describing the two disparity methods in detail.\570\ 
We also hosted a National Provider Call and established a monitored 
email inbox to receive and address questions and comments from 
hospitals and other stakeholders during the confidential reporting 
period.\571\
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    \570\ These materials, as well as other confidential reporting 
resources such as Frequently Asked Questions (FAQs), Disparity 
Methods HSR User Guide, and National Provider Call materials, are 
available on the confidential reporting pages of the QualityNet 
website, available at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228776708906.
    \571\ Available at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228776708906.
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b. Additional Confidential Reporting of Measures Stratified Using Two 
Disparity Methods
    As noted above, we have been considering, among other things, 
expanding our efforts to provide stratified data using the two 
disparity methods in confidential HSRs for additional measures. 
Although our preliminary efforts have focused on the Pneumonia 
Readmission measure, the two disparity methods previously used can be 
applied to other outcome measures. We believe that it is important to 
expand our efforts to provide disparity results for additional outcome 
measures because we believe that providing the results of both 
disparity methods alongside a hospital's measure data, as a point of 
reference, allows for a more meaningful comparison. As mentioned, the 
disparity results could supplement the overall measure data already 
publicly reported on the Hospital Compare website by providing 
additional information regarding disparities measured within individual 
hospitals and across hospitals nationally. The disparity results thus 
enable a more comprehensive assessment of quality of care for patients 
with social risk factors and identifies where disparities in health 
care may exist. This approach also furthers Recommendation 2 of NQF's 
Disparities Project final report to use and prioritize stratified 
health equity outcome measures, wherein the two disparity methods were 
highlighted as exemplary of health equity performance measure alignment 
such that data collection burden is minimized, measure impact is 
maximized, and peer group comparisons are enabled.\572\ We believe

[[Page 19495]]

hospitals can use their results from the disparity methods to identify 
and develop strategies to reduce disparities in the quality of care for 
patients with social risk factors, including targeted improvement 
efforts to improve health outcomes for all of their patients, those 
with and without social risk factors (83 FR 41598). As discussed in the 
FY 2019 IPPS/LTCH PPS final rule (83 FR 41599), the two disparity 
methods do not place any additional collection or reporting burden on 
hospitals because dual eligible data are readily available in claims 
data. For additional information on the two disparity methods, we refer 
readers to the technical report describing the methods in detail,\573\ 
as well as the FY 2018 IPPS/LTCH PPS final rule (82 FR 38405 through 
38407).
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    \572\ National Quality Forum. (2017). A Roadmap for Promoting 
Health Equity and Eliminating Disparities: The Four I's for Health 
Equity. Available at: http://www.qualityforum.org/Publications/2017/09/A_Roadmap_for_Promoting_Health_Equity_and_Eliminating_Disparities__The_Four_I_s_for_Health_Equity.aspx.
    \573\ Assessing Hospital Disparities for Dual Eligible Patients: 
Thirty-Day All-Cause Unplanned Readmission Following Pneumonia 
Hospitalization, Measure Methodology Report for 2018 Confidential 
Reporting. Available at: https://www.qualitynet.org/dcs/ContentServer?cid=%201228776709103&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page.
---------------------------------------------------------------------------

    In the spring of 2019, we will continue to provide confidential 
reporting of disparity results for the Pneumonia Readmission measure in 
the confidential HSRs for claims-based measures that are made available 
for hospitals to download through the QualityNet Secure Portal as was 
done in 2018. We are also planning to expand our efforts to apply the 
two disparity methods to additional outcome measures for confidential 
reporting in a phased manner. As a next step, in the spring of 2020, we 
plan to add to the confidential HSRs for claims-based measures the 
confidential reporting of disparity results for five additional claims-
based condition- and procedure-specific readmission measures as 
follows: (1) Hospital 30-Day, All-Cause, Risk-Standardized Readmission 
Rate (RSRR) Following Acute Myocardial Infarction (AMI) Hospitalization 
(NQF #0505) (AMI Readmission measure); (2) Hospital 30-Day, All-Cause, 
Risk-Standardized Readmission Rate (RSRR) Following Coronary Artery 
Bypass Graft (CABG) Surgery (NQF #2515) (CABG Readmission measure); (3) 
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) 
Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization 
(NQF #1891) (COPD Readmission measure); (4) Hospital 30-Day, All-Cause, 
Risk-Standardized Readmission Rate (RSRR) Following Heart Failure (HF) 
Hospitalization (NQF #0330) (HF Readmission measure); and (5) Hospital-
Level 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) 
Following Elective Primary Total Hip Arthroplasty (THA) and/or Total 
Knee Arthroplasty (TKA) (NQF #1551) (THA/TKA Readmission measure). To 
simplify and minimize the number of confidential HSRs that hospitals 
receive, going forward we plan to include hospitals' disparity results 
in the regular annual confidential HSRs for claims-based measure 
results that are made available for hospitals to download through the 
QualityNet Secure Portal each spring, as opposed to a separate 
confidential HSR for only the confidential reporting of disparity 
results as was done for the first confidential reporting of disparity 
results for the Pneumonia Readmission measure in late summer of 2018.
    We believe that expanding our efforts by providing disparity 
results for the six condition- and procedure-specific readmission 
measures discussed above, while a different set of calculations than 
those used in the Hospital Readmissions Reduction Program, can 
complement the stratified methodology used to assess a hospital's 
performance on these measures for payment penalty scoring purposes 
under the Hospital Readmissions Reduction Program. To implement the 
requirements of the 21st Century Cures Act, the Hospital Readmissions 
Reduction Program developed a stratification methodology to account for 
social risk factors by which it assigns hospitals into five peer groups 
based on proportion of dual eligible stays, and assesses hospital 
performance relative to the performance of hospitals within the same 
peer group.\574\ While this approach is used by the Hospital 
Readmissions Reduction Program for purposes of payment calculations, 
the two disparity methods are intended to account for social risk 
factors by providing additional information that identifies potential 
disparities in care provided to dual eligible patients within 
individual hospitals and across hospitals nationally. We believe that 
providing data from the two disparity methods for the readmission 
measures complements the payment stratification approach using these 
measures under the Hospital Readmissions Reduction Program by 
increasing transparency around, and contributing to an improved 
understanding of, differences in care on the basis of patient dual 
eligible status. The two disparity methods and the stratified 
methodology used by the Hospital Readmissions Reduction Program are all 
part of CMS' broader efforts to account for social risk factors in 
quality measurement and value-based purchasing programs. We note that 
the confidential reporting of disparity results discussed in this 
section is not driven by a specific quality program, but rather, is 
intended to supplement already publicly reported measure performance 
data and is only one part of CMS' overall strategy for accounting for 
social risk factors. We refer readers to section IV.G.11. of the 
preamble of this proposed rule for a similar discussion under the 
Hospital Readmissions Reduction Program. In the future, we also plan to 
provide confidential reporting of disparity results for additional 
outcome measures included in other quality programs.
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    \574\ As required by the 21st Century Cures Act, the Hospital 
Readmissions Reduction Program implemented a transitional adjustment 
methodology for dual eligible patients beginning in FY 2019. For 
additional details on the stratified methodology used in the 
Hospital Readmissions Reduction Program, we refer readers to the FY 
2018 IPPS/LTCH PPS final rule (82 FR 38226 through 38237) and the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41436 through 41438).
---------------------------------------------------------------------------

    We plan to continue soliciting feedback from hospitals based on 
their experiences with the confidential disparity methods reporting 
process, which will allow hospitals to understand their disparity 
results prior to any potential future public reporting. As discussed in 
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41600), we have not yet 
determined future plans with respect to publicly reporting stratified 
data, and intend to continue to engage with hospitals and relevant 
stakeholders about their experiences with and recommendations for the 
stratification of measure data, and to ensure the reliability of such 
data before proposing to publicly display stratified measure data in 
the future. Any proposal to display stratified quality measure data on 
the Hospital Compare website would be made through future rulemaking.
    We are inviting public comment on our plans to expand our efforts 
to apply the disparity methods to additional outcome measures for 
confidential reporting in a phased manner, specifically for five 
additional measures (AMI Readmission measure; CABG Readmission measure; 
COPD Readmission measure; HF Readmission measure; and THA/TKA 
Readmission measure) starting in spring of 2020, and additional outcome 
measures after spring of 2020, as discussed above. We refer readers to 
section IV.G.11. of the preamble of this proposed rule for a similar 
discussion under the Hospital Readmissions Reduction Program.

[[Page 19496]]

10. Form, Manner, and Timing of Quality Data Submission
a. Background
    Sections 1886(b)(3)(B)(viii)(I) and (b)(3)(B)(viii)(II) of the Act 
state that the applicable percentage increase for FY 2015 and each 
subsequent year shall be reduced by one-quarter of such applicable 
percentage increase (determined without regard to sections 
1886(b)(3)(B)(ix), (xi), or (xii) of the Act) for any subsection (d) 
hospital that does not submit data required to be submitted on measures 
specified by the Secretary in a form and manner, and at a time, 
specified by the Secretary. Previously, the applicable percentage 
increase for FY 2007 and each subsequent fiscal year until FY 2015 was 
reduced by 2.0 percentage points for subsection (d) hospitals failing 
to submit data in accordance with the description above. In accordance 
with the statute, the FY 2020 payment determination will begin the 
sixth year that the Hospital IQR Program will reduce the applicable 
percentage increase by one-quarter of such applicable percentage 
increase.
    In order to participate in the Hospital IQR Program, hospitals must 
meet specific procedural, data collection, submission, and validation 
requirements. For each Hospital IQR Program payment determination, we 
require that hospitals submit data on each specified measure in 
accordance with the measure's specifications for a particular period of 
time. The data submission requirements, Specifications Manual, and 
submission deadlines are posted on the QualityNet website at: http://www.QualityNet.org/. The technical specifications used for electronic 
clinical quality measures (eCQMs) are contained in the CMS Annual 
Update for the Hospital Quality Reporting Programs (Annual Update). We 
generally update the measure specifications on an annual basis through 
the Annual Update, which includes code updates, logic corrections, 
alignment with current clinical guidelines, and additional guidance for 
hospitals and electronic health record (EHR) vendors to use in order to 
collect and submit data on eCQMs from hospital EHRs. The Annual Update 
and implementation guidance documents are available on the Electronic 
Clinical Quality Improvement (eCQI) Resource Center website at: https://ecqi.healthit.gov/. For example, for the CY 2019 reporting period/FY 
2021 payment determination, hospitals would need to submit eCQM data 
using the May 2018 Annual Update and any applicable addenda. We refer 
readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41602 through 
41603), in which we discuss the transition to Clinical Quality Language 
(CQL) for all eCQM specifications published in CY 2018 for the CY 2019 
reporting period/FY 2021 payment determination and subsequent years 
(beginning with the Annual Update that was published in May 2018 for 
implementation in CY 2019).
    Hospitals must register and submit quality data through the secure 
portion of the QualityNet website. There are safeguards in place in 
accordance with the HIPAA Privacy and Security Rules to protect patient 
information submitted through this website. See 45 CFR parts 160 and 
164, subparts A, C and E.
b. Procedural Requirements
    The Hospital IQR Program's procedural requirements are codified in 
regulation at 42 CFR 412.140. We refer readers to these codified 
regulations for participation requirements, as further explained by the 
FY 2014 IPPS/LTCH PPS final rule (78 FR 50810 through 50811) and the FY 
2017 IPPS/LTCH PPS final rule (81 FR 57168). We are not proposing any 
changes to these procedural requirements in this proposed rule.
c. Data Submission Requirements for Chart-Abstracted Measures
    We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51640 through 51641), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53536 
through 53537), and the FY 2014 IPPS/LTCH PPS final rule (78 FR 50811) 
for details on the Hospital IQR Program data submission requirements 
for chart-abstracted measures. We are not proposing any changes to the 
data submission requirements for chart-abstracted measures in this 
proposed rule.
d. Reporting and Submission Requirements for eCQMs
(1) Background
    For a discussion of our previously finalized eCQMs and policies, we 
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50807 
through 50810; 50811 through 50819), the FY 2015 IPPS/LTCH PPS final 
rule (79 FR 50241 through 50253; 50256 through 50259; and 50273 through 
50276), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49692 through 
49698; and 49704 through 49709), the FY 2017 IPPS/LTCH PPS final rule 
(81 FR 57150 through 57161; and 57169 through 57172), the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38355 through 38361; 38386 through 38394; 
38474 through 38485; and 38487 through 38493), and the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41567 through 41575; 83 FR 41602 through 
41607).
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38361), we finalized 
eCQM reporting and submission requirements such that hospitals are 
required to report only one, self-selected calendar quarter of data for 
four self-selected eCQMs for the CY 2018 reporting period/FY 2020 
payment determination. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41603 through 41604), we extended the same eCQM reporting and 
submission requirements, such that hospitals are required to report 
one, self-selected calendar quarter of data for four self-selected 
eCQMs for the CY 2019 reporting period/FY 2021 payment determination.
    In this proposed rule, we are proposing to establish eCQM reporting 
and submission requirements for the CY 2020 reporting period/FY 2022 
payment determination through the CY 2022 reporting period/FY 2024 
payment determination, as detailed below.
(2) Proposed Reporting and Submission Requirements for eCQMs for the CY 
2020 Reporting Period/FY 2022 Payment Determination
    For the CY 2020 reporting period/FY 2022 payment determination, we 
are proposing to extend the current eCQM reporting and submission 
requirements, such that hospitals would be required to report one, 
self-selected calendar quarter of data for four self-selected eCQMs. We 
believe continuing the same eCQM reporting and submission requirements 
is appropriate because it offers hospitals reporting flexibility and 
does not increase the information collection burden on data submitters, 
allowing them to shift resources to support system upgrades, data 
mapping, and staff training related to eCQM documentation and 
reporting.
    We also refer readers to section VIII.D.6.d.(1) of the preamble of 
this proposed rule for a similar proposal in the Promoting 
Interoperability Programs for the CY 2020 reporting period.
(3) Proposed Reporting and Submission Requirements for eCQMs for the CY 
2021 Reporting Period/FY 2023 Payment Determination
    For the CY 2021 reporting period/FY 2023 payment determination, we 
are proposing to extend the same eCQM reporting and submission 
requirements, such that hospitals would continue to be required to 
report one, self-selected calendar quarter of data for four self-
selected eCQMs for the same reasons as discussed above.

[[Page 19497]]

    We also refer readers to section VIII.D.6.d.(1) of the preamble of 
this proposed rule for a similar proposal in the Medicare Promoting 
Interoperability Program.
(4) Proposed Reporting and Submission Requirements for eCQMs for the CY 
2022 Reporting Period/FY 2024 Payment Determination
    For the CY 2022 reporting period/FY 2024 payment determination, we 
are proposing to modify the eCQM reporting and submission requirements, 
such that hospitals would be required to report one, self-selected 
calendar quarter of data for: (a) Three self-selected eCQMs, and (b) 
the proposed Safe Use of Opioids--Concurrent Prescribing eCQM (NQF 
#3316e), for a total of four eCQMs. We note that the number of calendar 
quarters of data and total number of eCQMs required would remain the 
same.
    This proposal is being made in conjunction with our proposal in 
section VIII.A.5.a.(1) of the preamble of this proposed rule, in which 
we are proposing to adopt the Safe Use of Opioids--Concurrent 
Prescribing eCQM (NQF #3316e) beginning with the CY 2021 reporting 
period/FY 2023 payment determination. We believe this measure has the 
potential to reduce preventable mortality and costs associated with 
other adverse events related to opioid use. As discussed in section 
VIII.A.5.a.(1) of the preamble of this proposed rule, concurrent opioid 
or opioid-benzodiazepine prescription use contributes significantly to 
the overall population's risk of opioid overdose. Currently, however, 
no measure exists to assess nationwide rates of concurrent prescribing 
of opioids and benzodiazepines at the hospital-level.
    In developing this proposal, we also considered an alternative 
whereby hospitals would have the option to select one of the two 
proposed opioids-related eCQMs, the Safe Use of Opioids--Concurrent 
Prescribing eCQM (NQF #3316e) or the Hospital Harm--Opioid-Related 
Adverse Events eCQM, as their fourth required eCQM. However, such an 
approach would add complexity to the eCQM reporting requirements, and 
we believe that the Safe Use of Opioids--Concurrent Prescribing eCQM 
(NQF #3316e) is more closely related to combating the current opioid 
epidemic, as discussed above and in section VIII.A.5.a. of the preamble 
of this proposed rule, than the Hospital Harm--Opioid-Related Adverse 
Events eCQM, which is focused on improved monitoring of patients who 
receive opioids during hospitalization.
    If our proposal to adopt the Safe Use of Opioids--Concurrent 
Prescribing eCQM (NQF #3316e) beginning with the CY 2021 reporting 
period/FY 2023 payment determination is finalized, we are proposing 
that while this measure would be available for hospitals to select as 
one of their four self-selected eCQMs for the CY 2021 reporting period, 
all hospitals would be required to report this eCQM beginning with the 
CY 2022 reporting period/FY 2024 payment determination. We believe this 
measure would provide valuable information on this area of high-risk 
prescribing to providers, and further our efforts to combat the 
negative impacts of the opioid crisis. We also believe this proposal is 
consistent with CMS' goal of incrementally increasing the use of EHR 
data for quality measurement and is responsive to the feedback of some 
stakeholders urging a faster transition to full electronic 
reporting.\575\
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    \575\ The Office of the National Coordinator for Health 
Information Technology. (2018). Strategy on Reducing Regulatory and 
Administrative Burden Relating to the Use of Health IT and EHRs 
(Draft for Public Comment). Available at: https://www.healthit.gov/sites/default/files/page/2018-11/Draft%20Strategy%20on%20Reducing%20Regulatory%20and%20Administrative%20Burden%20Relating.pdf.
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    We note that this proposal is contingent on finalization of our 
proposal in section VIII.A.5.a.(1) of the preamble of this proposed 
rule to adopt the Safe Use of Opioids--Concurrent Prescribing eCQM (NQF 
#3316e). We also refer readers to section VIII.D.6.d.(2) of the 
preamble of this proposed rule for a similar proposal by the Medicare 
Promoting Interoperability Program.
(5) Continuation of Certification Requirements for eCQM Reporting
(A) Requiring Use of 2015 Edition Certification Criteria
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41604 through 
41607), to align the Hospital IQR Program with the Promoting 
Interoperability Program, we finalized a policy to require hospitals to 
use the 2015 Edition certification criteria for certified EHR 
technology (CEHRT) for the CY 2019 reporting period/FY 2021 payment 
determination and subsequent years. We are not proposing any changes to 
this policy in this proposed rule.
(B) Requiring EHR Technology to be Certified to All Available eCQMs
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38391 through 
38393), for the CY 2017 reporting period/FY 2019 payment determination 
and the CY 2018 reporting period/FY 2020 payment determination, we 
finalized a requirement that EHR technology used for eCQM reporting be 
certified to all eCQMs, but noted that such certified EHR technology 
does not need to be recertified each time it is updated to a more 
recent version of the eCQM electronic specifications.
    In this proposed rule, we are proposing to continue the requirement 
that EHRs be certified to all available eCQMs used in the Hospital IQR 
Program for the CY 2020 reporting period/FY 2022 payment determination 
and subsequent years. The 2015 Edition Base EHR definition (as defined 
by HHS' Office of the National Coordinator for Health Information 
Technology (ONC) 2015 Edition Health Information Technology (Health IT) 
Certification Criteria, 2015 Edition Base Electronic Health Record 
(EHR) Definition, and ONC Health IT Certification Program Modifications 
Final Rule (80 FR 62649 through 62655)) requires certified health IT to 
have the capability to capture and query information relevant to health 
care quality,\576\ which can be ensured by meeting the clinical quality 
measure certification criteria to record and export (45 CFR 
170.315(c)(1)). The 2015 Edition Base EHR definition does not require 
certified health IT to meet additional clinical quality measure 
certification criteria such as to import and calculate (45 CFR 
170.315(c)(2)), report (45 CFR 170.315(c)(3)), or filter (45 CFR 
170.315(c)(4)).
---------------------------------------------------------------------------

    \576\ 45 CFR 170.102.
---------------------------------------------------------------------------

    ONC's Health IT Certification Program is ``agnostic'' to settings 
and programs, but can support many different use cases and needs.\577\ 
Because the ONC Health IT Certification Program supports multiple 
program and setting needs, ONC does not include requirements that are 
specific to CMS programs. CMS may impose more stringent requirements 
for EHR-based reporting under its programs.
---------------------------------------------------------------------------

    \577\ ONC, 2015 Edition Final Rule: Overview of the 2015 Edition 
Health IT Certification Criteria & ONC Health IT Certification 
Program Provisions. Available at: https://www.healthit.gov/sites/default/files/onc_2015_edition_final_rule_presentation_10-28-15.pdf.
---------------------------------------------------------------------------

    The Hospital IQR and Promoting Interoperability Programs have 
previously required EHRs to be certified to all available eCQMs used in 
the programs (that is, individual testing of each eCQM) in order to 
support flexibility for hospitals when they select the eCQMs on which 
to report.\578\ When EHRs are certified to all available eCQMs in the 
eCQM measure set, hospitals are able to select and report on those 
measures that best reflect their

[[Page 19498]]

patient populations and reporting capabilities. In addition to 
supporting hospital flexibility, we believe the continuation of this 
requirement promotes more accurate electronic quality reporting by 
incentivizing EHR and other health IT vendors to test all available 
eCQMs and to offer reporting modules with certified eCQMs. This 
requirement would produce greater certainty for hospitals that their 
EHR systems would be capable of accurately calculating the particular 
eCQMs they select to report to CMS. We believe this would help reduce 
burden for hospitals by potentially reducing the frequency of needing 
to consult with their EHR and other health IT vendors to troubleshoot 
implementation or reporting issues.
---------------------------------------------------------------------------

    \578\ 82 FR 38391 through 38393; 83 FR 41672.
---------------------------------------------------------------------------

    We have continued to hear from hospital stakeholders during a 
series of provider listening sessions in 2018 that they believe 
certification is an important part of ensuring successful reporting to 
CMS. In addition, because this has been the current policy for the 
Hospital IQR and Promoting Interoperability Programs (82 FR 38391 
through 38393; 83 FR 41672), vendors and providers should be familiar 
with this requirement, and we expect that most providers' EHR systems 
are already certified to all currently available eCQMs. Since certified 
EHR technology does not need to be recertified each time it is updated 
to a more recent version of the eCQM electronic specifications under 
the Hospital IQR Program (82 FR 38393), there should be no added burden 
with regard to the currently adopted eCQMs in the eCQM measure set.
    We also refer readers to section VIII.D.6.e.(1) of the preamble of 
this proposed rule for a similar proposal for the Promoting 
Interoperability Program.
(6) File Format for EHR Data, Zero Denominator Declarations, and Case 
Threshold Exemptions
    We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 
49705 through 49708) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 
57170) for our previously adopted eCQM file format requirements. Under 
these requirements, hospitals: (1) Must submit eCQM data via the 
Quality Reporting Document Architecture Category I (QRDA I) file format 
as was previously required; (2) may use third parties to submit QRDA I 
files on their behalf; and (3) may either use abstraction or pull the 
data from non-certified sources in order to then input these data into 
CEHRT for capture and reporting QRDA I. Hospitals can continue to meet 
the reporting requirements by submitting data via QRDA I files, zero 
denominator declaration, or case threshold exemption (82 FR 38387). We 
are not proposing any changes to these requirements for eCQMs in this 
proposed rule.
(7) Submission Deadlines for eCQM Data
    We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 
50256 through 50259), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49705 
through 49709), and the FY 2017 IPPS/LTCH PPS final rule (81 FR 57169 
through 57172) for our previously adopted policies to align eCQM data 
reporting periods and submission deadlines for both the Hospital IQR 
and Medicare Promoting Interoperability Programs. In the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57172), we finalized the alignment of the 
Hospital IQR Program eCQM submission deadline with that of the Medicare 
Promoting Interoperability Program--the end of two months following the 
close of the calendar year--for the CY 2017 reporting period/FY 2019 
payment determination and subsequent years. We note the submission 
deadline may be moved to the next business day if it falls on a weekend 
or federal holiday. We are not proposing any changes to the eCQM 
submission deadlines in this proposed rule.
e. Data Submission and Reporting Requirements for Hybrid Measures
(1) Background
    In section VIII.A.5.b. of the preamble of this proposed rule, we 
are proposing to adopt the Hybrid HWR measure in the Hospital IQR 
Program beginning with the FY 2026 payment determination, with 2 years 
of voluntary reporting prior to that time. In the FY 2018 IPPS/LTCH PPS 
final rule (82 FR 38350 through 38355), we finalized voluntary 
reporting of the Hybrid HWR measure for the CY 2018 reporting period. 
For data submission and reporting requirements under the 2018 Voluntary 
Reporting Period, we finalized that the 13 core clinical data elements 
and six linking variables for the Hybrid HWR measure be submitted using 
the QRDA I file format, and that hospitals voluntarily reporting data 
for the Hybrid HWR measure could use EHR technology certified to the 
2014 Edition, the 2015 Edition, or a combination thereof (82 FR 38394 
through 38397). During the 2018 Voluntary Reporting Period, 
participating hospitals and their health IT vendors reported data on 
discharges for the January 1, 2018 through June 30, 2018 reporting 
period by the submission deadline of January 4, 2019, and approximately 
80 hospitals submitted data. We expect that hospitals that voluntarily 
submitted data for this measure will receive confidential hospital-
specific reports detailing submission results from the reporting period 
in early summer of 2019.
(2) Certification and File Format Requirements
    In this proposed rule, we are proposing to require that hospitals 
use EHR technology certified to the 2015 Edition to submit data on the 
Hybrid HWR measure. This is consistent with our policy finalized in the 
FY 2019 IPPS/LTCH PPS final rule (83 FR 41604 through 41607), which 
requires use of the 2015 Edition certification criteria for CEHRT when 
reporting eCQMs beginning with the CY 2019 reporting period/FY 2021 
payment determination.
    In addition, we are proposing that the core clinical data elements 
and linking variables identified in hybrid measure specifications, for 
example as described in section VIII.A.5.b. of the preamble of this 
proposed rule, be submitted using the QRDA I file format. In order to 
ensure that the data have been appropriately connected to the 
encounter, the core clinical data elements specified for risk 
adjustment need to be captured in relation to the start of an inpatient 
encounter. The QRDA I standard enables the creation of an individual 
patient-level quality report that contains quality data for one patient 
for one or more quality measures. Based on the experience of the CY 
2018 Voluntary Reporting Period, the use of the QRDA I file format is 
feasible. In addition, hospitals and health IT vendors have been using 
the QRDA I file format for eCQM reporting for several years.
    For details on the implementation guidance provided for the Hybrid 
HWR measure 2018 Voluntary Reporting Period, we refer readers to the 
2018 CMS QRDA I Implementation Guide for Hospital Quality Reporting and 
the 2018 CMS QRDA I Schematrons and Sample Files for HQR, available on 
the eCQI Resource Center website.\579\ If our proposal to adopt the 
Hybrid HWR measure is finalized, updated implementation guidance, 
schematrons, and sample files will become available on the eCQI 
Resource Center website.
---------------------------------------------------------------------------

    \579\ The Electronic Clinical Quality Improvement (eCQI) 
Resource Center. Eligible Hospitals/Critical Access Hospital eCQMs. 
Available at: https://ecqi.healthit.gov/eligible-hospital/critical-access-hospital-ecqms.
---------------------------------------------------------------------------

    As with eCQM reporting, we also encourage all hospitals and their 
health IT vendors to submit QRDA I files early,

[[Page 19499]]

and to use one of the pre-submission testing tools for electronic 
reporting, such as the CMS Pre-Submission Validation Application (PSVA) 
tool (81 FR 57113), to allow additional time for testing and to make 
sure all required data files are successfully submitted by the 
deadline. The PSVA tool can be downloaded from the Secure File Transfer 
(SFT) section of the QualityNet Secure Portal at: https://cportal.qualitynet.org/QNet/pgm_select.jsp.
(3) Additional Submission Requirements
    In this proposed rule, we are proposing to allow hospitals to meet 
the hybrid measure reporting and submission requirements by submitting 
any combination of data via QRDA I files, zero denominator 
declarations, and/or case threshold exemptions. We recognize the 
challenges associated with electronic reporting and encourage hospitals 
of all sizes to work with their vendors to achieve electronic capture 
and reporting of data necessary for hybrid measure reporting. We also 
acknowledge that there are situations in which a hospital may be 
prepared for electronic reporting, but may not have data to report on a 
particular measure. For example, hospitals with small patient 
populations may not have sufficient patient population to report on 
specific measures, such that those hospitals may find it necessary to 
utilize a zero denominator declaration and/or case threshold exemption. 
In addition, there may be situations in which case number thresholds 
are appropriate, given the burden on hospitals that very seldom have 
the types of cases addressed by certain measures.
    In this proposed rule, we are proposing to apply similar zero 
denominator declaration and case threshold exemption policies to hybrid 
measure reporting as we allow for eCQM reporting. In other words, for a 
zero denominator declaration, if a hospital's EHR is otherwise capable 
of reporting hybrid measure data, but the hospital does not have 
patients that meet the denominator criteria of that hybrid measure, the 
hospital may submit a zero in the denominator for that measure. 
Submission of a zero in the denominator for a hybrid measure would 
count as a successful submission for that hybrid measure for the 
Hospital IQR Program. In addition, for the case threshold exemption, 
hospitals that have five or fewer inpatient discharges per quarter or 
twenty or fewer inpatient discharges per year as defined by a hybrid 
measure's denominator population, would be exempted from reporting on 
that hybrid measure. Hospitals can submit zero denominator declarations 
or case threshold exemptions by logging into the QualityNet Secure 
Portal and completing the Denominator Declaration screen.
(4) Submission Deadlines for Hybrid Measures
    We are proposing that hospitals must submit the core clinical data 
elements and linking variables within three months following the end of 
the applicable reporting period (submissions would be required no later 
than the first business day three months following the end of the 
reporting period) for hybrid measures in the Hospital IQR Program.
    As discussed earlier in this proposed rule, we are proposing that 
the first voluntary reporting period would run from July 1, 2021 
through June 30, 2022. Under this proposal, for example, hospitals 
would be required to submit the core clinical data elements and linking 
variable data no later than Friday, September, 30, 2022, which is the 
first business day three months following the end of the reporting 
period. Similarly, for the July 1, 2022 through June 30, 2023 voluntary 
reporting period, for example, the submission deadline would be Monday, 
October 2, 2023. If our proposal to adopt the Hybrid HWR measure is 
finalized, this submission deadline would apply to all reporting 
periods for which data are submitted.
f. Sampling and Case Thresholds for Chart-Abstracted Measures
    We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 
50221), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641), the FY 2013 
IPPS/LTCH PPS final rule (77 FR 53537), the FY 2014 IPPS/LTCH PPS final 
rule (78 FR 50819), and the FY 2016 IPPS/LTCH PPS final rule (80 FR 
49709) for details on our sampling and case thresholds for the FY 2016 
payment determination and subsequent years. We are not proposing any 
changes to our sampling and case threshold policies in this proposed 
rule.
g. HCAHPS Administration and Submission Requirements
    We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 
50220), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641 through 
51643), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53537 through 
53538), and the FY 2014 IPPS/LTCH PPS final rule (78 FR 50819 through 
50820) for details on previously-adopted HCAHPS submission 
requirements. We also refer hospitals and HCAHPS Survey vendors to the 
official HCAHPS website at: http://www.hcahpsonline.org for new 
information and program updates regarding the HCAHPS Survey, its 
administration, oversight, and data adjustments.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59140 
through 59149), we updated the HCAHPS Survey by removing the 
Communication About Pain questions effective with October 2019 
discharges, for the FY 2021 payment determination and subsequent years, 
and finalizing a policy of not publicly reporting data regarding these 
questions. We are not proposing any changes to the HCAHPS Survey or its 
administration and submission requirements in this proposed rule.
h. Data Submission Requirements for Structural Measures
    There are no remaining structural measures in the Hospital IQR 
Program.
i. Data Submission and Reporting Requirements for CDC NHSN HAI Measures
    For details on the data submission and reporting requirements for 
Healthcare-Associated Infection (HAI) measures reported via the CDC's 
National Healthcare Safety Network (NHSN), we refer readers to the FY 
2012 IPPS/LTCH PPS final rule (76 FR 51629 through 51633; 51644 through 
51645), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53539), the FY 2014 
IPPS/LTCH PPS final rule (78 FR 50821 through 50822), and the FY 2015 
IPPS/LTCH PPS final rule (79 FR 50259 through 50262). The data 
submission deadlines are posted on the QualityNet website at: http://www.QualityNet.org/. We are not proposing any changes to those 
requirements in this proposed rule.
    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41547 through 41553), in which we finalized the removal of five of 
these measures (CLABSI, CAUTI, Colon and Abdominal Hysterectomy SSI, 
MRSA Bacteremia, and CDI) from the Hospital IQR Program. As a result, 
hospitals will not be required to submit any data for those measures 
under the Hospital IQR Program following their removal beginning with 
the CY 2020 reporting period/FY 2022 payment determination. However, 
the five CDC NHSN HAI measures will be included in the HAC Reduction 
and Hospital VBP Programs and reported via the CDC NHSN portal (83 FR 
41474 through 41477; 83 FR 41449 through 41452). Lastly, we refer 
readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41472 through 
41492) as well as sections IV.I.6. and 7. and

[[Page 19500]]

IV.H.5.e. of the preamble of this proposed rule for more information 
and proposals regarding NHSN HAI measure data collection and validation 
under the HAC Reduction Program and use in the HAC Reduction and 
Hospital VBP Programs. We further note that the HCP measure remains in 
the Hospital IQR Program and will continue to be reported via NHSN.
11. Validation of Hospital IQR Program Data
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53539 through 53553), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50822 
through 50835), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50262 
through 50273), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49710 
through 49712), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173 
through 57181), and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38398 
through 38403) for detailed information on chart-abstracted and eCQM 
validation processes and previous updates to these processes for the 
Hospital IQR Program.
    In this proposed rule, we are not proposing any changes to the 
existing processes for validation of chart-abstracted and eCQM measure 
data. We note that if our proposal to adopt the Hybrid HWR measure is 
finalized, we intend to propose a validation process for core clinical 
data elements in future rulemaking.
12. Data Accuracy and Completeness Acknowledgement (DACA) Requirements
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53554) for previously adopted details on DACA requirements. We are not 
proposing any changes to the DACA requirements in this proposed rule.
13. Public Display Requirements
    We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 
47364), the FY 2011 IPPS/LTCH PPS final rule (75 FR 50230), the FY 2012 
IPPS/LTCH PPS final rule (76 FR 51650), the FY 2013 IPPS/LTCH PPS final 
rule (77 FR 53554), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836), 
the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277), the FY 2016 IPPS/
LTCH PPS final rule (80 FR 49712 through 49713), and the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for details on public 
display requirements. The Hospital IQR Program quality measures are 
typically reported on the Hospital Compare website at: http://www.medicare.gov/hospitalcompare, but on occasion are reported on other 
CMS websites such as: https://data.medicare.gov. We are not proposing 
any changes to the public display requirements in this proposed rule.
14. Reconsideration and Appeal Procedures
    We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51650 through 51651), the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50836), and 42 CFR 412.140(e) for details on reconsideration and appeal 
procedures for the FY 2017 payment determination and subsequent years. 
We are not proposing any changes to the reconsideration and appeals 
procedures in this proposed rule.
15. Hospital IQR Program Extraordinary Circumstances Exceptions (ECE) 
Policy
    We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51651 through 51652), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836 
through 50837), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277), the 
FY 2016 IPPS/LTCH PPS final rule (80 FR 49713), the FY 2017 IPPS/LTCH 
PPS final rule (81 FR 57181 through 57182), the FY 2018 IPPS/LTCH PPS 
final rule (82 FR 38409 through 38411), and 42 CFR 412.140(c)(2) for 
details on the current Hospital IQR Program ECE policy. We also refer 
readers to the QualityNet website at: http://www.QualityNet.org/ for 
our current requirements for submission of a request for an exception. 
We are not proposing any changes to the ECE policy in this proposed 
rule.

B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

1. Background
    Section 1866(k) of the Act 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'' or ``PCHs'') that 
specifically applies to PCHs that meet the requirements under 42 CFR 
412.23(f). Section 1866(k)(1) of the Act states that, for FY 2014 and 
each subsequent fiscal year, a PCH must submit data to the Secretary in 
accordance with section 1866(k)(2) of the Act with respect to such 
fiscal year.
    The PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program 
strives to put patients first by ensuring they, along with their 
clinicians, are empowered to make decisions about their own health care 
using data-driven insights that are increasingly aligned with 
meaningful quality measures. To this end, we support technology that 
reduces burden and allows clinicians to focus on providing high quality 
health care to 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 participating in CMS programs. In combination with 
other efforts across the Department of Health and Human Services (HHS), 
we believe the PCHQR Program incentivizes PCHs to improve their health 
care quality and value, while giving patients the tools and information 
needed to make the best decisions.
    For additional background information, including previously 
finalized measures and other policies for the PCHQR Program, we refer 
readers to the following final rules: The FY 2013 IPPS/LTCH PPS final 
rule (77 FR 53556 through 53561); the FY 2014 IPPS/LTCH PPS final rule 
(78 FR 50838 through 50846); the FY 2015 IPPS/LTCH PPS final rule (79 
FR 50277 through 50288); the FY 2016 IPPS/LTCH PPS final rule (80 FR 
49713 through 49723); the FY 2017 IPPS/LTCH PPS final rule (81 FR 57182 
through 57193); the FY 2018 IPPS/LTCH PPS final rule (82 FR 38411 
through 38425); the FY 2019 IPPS/LTCH PPS final rule (83 FR 41609 
through 41624); and the CY 2019 OPPS/ASC final rule with comment period 
(83 FR 59149 through 59154).
    In this proposed rule, we are proposing several new policies for 
the PCHQR Program. We developed these proposals after conducting an 
overall review of the program under our new Meaningful Measures 
Initiative, which is discussed in more detail in I.A.2. of the preamble 
of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41147 through 41148) and 
this FY 2020 proposed rule. The proposals reflect our efforts to ensure 
that the PCHQR Program measure set continues to promote improved health 
outcomes for our beneficiaries. The proposals also reflect our efforts 
to improve the usefulness of the data that we publicly report in the 
PCHQR Program.
2. Proposed Refinement of the Hospital Consumer Assessment of 
Healthcare Providers and Systems (HCAHPS) Survey (NQF #0166): Removal 
of the Pain Management Questions
a. Background
    The HCAHPS Survey (NQF #0166) (OMB Control Number 0938-0981) is the 
first national, standardized, publicly reported survey of patients' 
experience of hospital care and asks discharged patients 32 questions 
about their recent

[[Page 19501]]

hospital stay. In May 2005, the HCAHPS Survey was endorsed for the 
first time by the National Quality Forum (NQF). The HCAHPS Survey is 
available in English, Spanish, Chinese, Russian, Vietnamese, and 
Portuguese versions. The HCAHPS Survey, along with its protocols for 
sampling, data collection and coding, and file submission, can be found 
in the current HCAHPS Quality Assurance Guidelines, which is available 
on the official HCAHPS website at: http://www.hcahpsonline.org/en/quality-assurance/.
    We adopted the HCAHPS Survey into the PCHQR Program beginning with 
the FY 2016 program year in the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50844 through 50845); we refer readers to this final rule for a 
detailed discussion of the survey. Further, we finalized in the FY 2016 
IPPS/LTCH PPS final rule (80 FR 49722) that we would begin publicly 
reporting this measure in the PCHQR Program in CY 2016. For HCAHPS 
Survey data reported in years prior to CY 2018, we refer readers to: 
http://hcahpsonline.org/en/summary-analyses/.
    In this proposed rule, we are proposing to adopt a substantive 
change to the HCAHPS Survey by removing the three Pain Management 
questions beginning with October 1, 2019 discharges, as described 
below.
    The patients treated by the 11 PPS-exempt cancer hospitals eligible 
to participate in the PCHQR Program have been diagnosed with cancer, 
which frequently causes substantial pain. Cancer treatment also 
frequently involves surgery, chemotherapy, and/or radiation therapy, 
all of which can also cause substantial pain beyond that experienced by 
the general Medicare population.\580\ Pain management is therefore an 
important safeguard against the unintended consequences of appropriate 
clinical care in these patients.\581\
---------------------------------------------------------------------------

    \580\ American Cancer Society. ``Cancer Pain.'' Available at: 
https://www.cancer.org/treatment/treatments-and-side-effects/physical-side-effects/pain.html.
    \581\ Mayo Clinic. ``Cancer Pain: Relief is Possible.'' 
Available at: https://www.mayoclinic.org/diseases-conditions/cancer/in-depth/cancer-pain/art-20045118.
---------------------------------------------------------------------------

    The version of the HCAHPS Survey currently implemented in the PCHQR 
Program includes three Pain Management questions, Q12, Q13, and Q14. 
The questions are as follows:
    12. During this hospital stay, did you need medicine for pain?
    1 [ballot] Yes
    2 [ballot] No [rarr] If No, Go to Question 15
    13. During this hospital stay, how often was your pain well 
controlled?
    1 [ballot] Never
    2 [ballot] Sometimes
    3 [ballot] Usually
    4 [ballot] Always
    14. During this hospital stay, how often did the hospital staff do 
everything they could to help you with your pain?
    1 [ballot] Never
    2 [ballot] Sometimes
    3 [ballot] Usually
    4 [ballot] Always
    The pain management questions that the PCHQR Program currently uses 
were previously also adopted as part of the HCAHPS survey used by the 
Hospital IQR Program (71 FR 68202 through 68204) and the Hospital VBP 
Program (76 FR 26510), but the questions have been removed from the 
survey in both of those programs.
    Specifically, in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79862), we noted that that we had received feedback that 
some stakeholders were concerned about the Pain Management dimension 
questions being used in a program, including the Hospital VBP Program, 
where there was any link between scoring well on the questions and 
higher hospital payments (81 FR 79856). Some stakeholders also stated 
that they believed that the linkage of the pain management questions to 
the Hospital VBP Program payment incentives created pressure on 
hospital staff to prescribe more opioids in order to achieve higher 
scores on the pain management dimension. We also noted that many 
factors outside of CMS control could contribute to a perception of a 
link between the questions and opioid prescribing practices, including 
misuse of the survey (such as using it for outpatient emergency room 
care instead of inpatient care, or using it for determining physician 
performance) and failure to recognize that the HCAHPS survey excludes 
certain populations from the sampling frame (such as those with a 
primary substance use disorder diagnosis).
    We stated that we had heard that some hospitals have identified 
patient experience as a potential source of competitive advantage, and 
that some hospitals may be disaggregating their raw HCAHPS data to 
compare, assess, and incentivize individual physicians, nurses and 
other hospital staff. We further stated that some hospitals may be 
using the HCAHPS survey to assess their emergency and outpatient 
departments. We stated that the HCAHPS survey was never intended to be 
used in any of these ways.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79859 
through 79860), we further noted that numerous commenters had offered 
support for the development of modified questions regarding pain 
management for the HCAHPS Survey and that some commenters expressed 
support for modified pain management questions that focused on 
effective communication with patients about pain management-related 
issues. In response, we stated we would follow our standard survey 
development processes, which include drafting alternative questions, 
cognitive interviews and focus group evaluation, field testing, 
statistical analysis, stakeholder input, the Paperwork Reduction Act, 
and NQF endorsement (81 FR 79856).
    We continue to believe that pain control is an appropriate part of 
routine patient care that hospitals should manage and is an important 
concern for patients, their families, and their caregivers. It is 
important to note that the HCAHPS Survey does not specify any 
particular type of pain control method. In addition, appropriate pain 
management includes communication with patients about pain-related 
issues, setting expectations about pain, shared decision-making, and 
proper prescription practices. However, due to some potential confusion 
about the appropriate use of the Pain Management dimension questions in 
the Hospital VBP Program and the public health concern about the 
ongoing prescription opioid overdose epidemic, in an abundance of 
caution, we finalized removal of the Pain Management dimension of the 
HCAHPS Survey in the Patient- and Caregiver-Centered Experience of 
Care/Care Coordination domain of the Hospital VBP Program beginning 
with the FY 2018 program year (81 FR 79862).
    Subsequently, out of an abundance of caution and in the face of a 
nationwide epidemic of opioid over-prescription, in the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38328 through 38342), we finalized a 
refinement to the HCAHPS Survey measure as used in the Hospital IQR 
Program by removing the same pain management questions.
b. Proposal To Refine the HCAHPS Survey by Removing the Existing Pain 
Management Questions
    We are proposing to refine the HCAHPS Survey used in the PCHQR 
Program by removing the three Pain Management questions beginning with 
October 1, 2019 discharges. As discussed in the CY 2019 OPPS/ASC final 
rule with comment period (83 FR

[[Page 19502]]

59141), some hospitals have identified patient experience of care as a 
potential source of competitive advantage, and stakeholders have also 
informed CMS that some hospitals may be disaggregating their raw HCAHPS 
Survey data to compare, assess, and incentivize individual physicians, 
nurses, and other hospital staff. While this issue was raised in regard 
to acute care facilities, we are concerned that similar activity might 
be occurring in PCHs because the incentives to improve patient 
experience exist across care settings.
    We are also concerned about potential confusion about the 
appropriate use of the pain management questions in the PCHQR Program, 
given the public health concern about the ongoing prescription opioid 
overdose epidemic, and believe that removing the pain management 
questions would eliminate any such potential misuse. We note that the 
HCAHPS Quality Assurance Guidelines,\582\ which set forth current 
survey administration protocols, strongly discourage the unofficial use 
of HCAHPS scores for comparisons within hospitals, such as for 
comparisons of particular wards, floors, and individual staff hospital 
members.
---------------------------------------------------------------------------

    \582\ HCAHPS Quality Assurance Guidelines (v.13.0), available 
at: http://www.hcahpsonline.org/en/quality-assurance/.
---------------------------------------------------------------------------

    While we recognize the importance of being able to provide 
performance results within the context of pain management for cancer 
patients, we also note that pain items in generic patient experience 
surveys (for example, HCAHPS) have limitations when implemented. As 
noted above, many factors outside the control of CMS quality program 
requirements may contribute to the perception of a link between the 
pain management questions and opioid prescribing practices, including 
misuse of the HCAHPS Survey (for example, using it for outpatient 
emergency room care instead of inpatient care, or using it for 
determining individual physician performance), and failure to recognize 
that the HCAHPS Survey excludes certain populations from the sampling 
frame (such as those with a primary substance use disorder diagnosis). 
Further, in its draft final report, the President's Commission on 
Combatting Drug Addiction and the Opioid Crisis recommended removal of 
the HCAHPS Pain Management questions in order to ensure providers are 
not incentivized to offer opioids to raise their HCAHPS Survey 
score.\583\ We believe that all of these issues support the removal of 
the pain management questions in the HCAHPS survey used by PCHs.
---------------------------------------------------------------------------

    \583\ President's Commission on Combating Drug Addiction and the 
Opioid Crisis draft report, available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Final_Report_Draft_11-15-2017.pdf.
---------------------------------------------------------------------------

    We also believe that the removal of the questions will promote 
programmatic alignment with both the Hospital IQR Program and the 
Hospital VBP Program. Accordingly, we are proposing to remove the Pain 
Management questions from the version of the HCAHPS Survey currently 
implemented in the PCHQR Program, beginning with the October 1, 2019 
discharges. If finalized as proposed, this would result in the 
reduction of the number of HCAHPS Survey questions from 32 to 29. We 
note that this proposed change would not impact how scores are 
calculated for the remainder of the survey and would not have a 
significant effect on the reliability of the HCAHPS Survey instrument 
as a whole.
    We also are proposing to not publicly report the data collected on 
the Pain Management questions beginning with October 2018 discharges in 
order to address the potential misunderstanding associated with these 
questions as soon as possible. While the data will not be publicly 
reported, we still plan to provide performance results to PCHs in 
confidential preview reports upon the availability of four quarters of 
CY 2018 data, as early as July 2019.
3. Measure Retention and Removal Factors for the PCHQR Program
a. Measure Retention Factors
    We generally retain measures from the previous year's PCHQR Program 
measure set for subsequent years' measure sets, except when we 
specifically propose to remove or replace a measure. We have also 
recognized that there are times when measures may meet one or more of 
the outlined criteria for removal from the program but continue to 
bring value to the program. Therefore, we adopted the following factors 
for consideration in determining whether to retain a measure in the 
PCHQR Program, which also are based on factors established in the 
Hospital IQR Program (81 FR 57182 through 57183):
     Measure aligns with other CMS and HHS policy goals;
     Measure aligns with other CMS programs, including other 
quality reporting programs; and
     Measure supports efforts to move PCHs towards reporting 
electronic measures.
    We are not proposing any changes to these measure retention factors 
in this proposed rule.
b. Measure Removal Factors
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41609 through 
41611), we discussed our existing measure removal factors for the PCHQR 
Program.\584\ We note that these factors are based on factors adopted 
for the Hospital IQR Program (81 FR 57182 through 57183; 83 FR 41540 
through 41544). We also adopted a new measure removal factor, for a 
total of eight measure removal factors:
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    \584\ We note that we previously referred to these factors as 
``criteria'' (for example, 81 FR 57182 through 57183); we now use 
the term ``factors'' to align the PCHQR Program terminology with the 
terminology we use in other CMS quality reporting and pay for 
performance value-based purchasing programs.
---------------------------------------------------------------------------

     Factor 1. Measure performance among PCHs is so high and 
unvarying that meaningful distinctions and improvements in performance 
can no longer be made (that is, ``topped-out'' measures): 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;
     Factor 7. It is not feasible to implement the measure 
specifications; and
     Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.
    We are not proposing any changes to these measure removal factors 
in this proposed rule.
4. Proposed Removal of the Web-Based Structural Measure: External Beam 
Radiotherapy (EBRT) for Bone Metastases From the PCHQR Program 
Beginning With the FY 2022 Program Year
    In this proposed rule, we are proposing to remove the External Beam

[[Page 19503]]

Radiotherapy (EBRT) for Bone Metastases (formerly NQF #1822) \585\ 
measure from the PCHQR Program beginning with the FY 2022 program year, 
based on removal Factor 8: The costs associated with a measure outweigh 
the benefit of its continued use in the program.
---------------------------------------------------------------------------

    \585\ This measure was initially endorsed by NQF, with 
corresponding measure number 1822. This measure lost its NQF 
endorsement in March 2018. National Quality Forum Cancer Project 
Final Report--Spring 2018. Available at: http://www.qualityforum.org/Publications/2018/08/Cancer_Final_Report_-_Spring_2018_Cycle.aspx.
---------------------------------------------------------------------------

a. Background
    We adopted the EBRT measure beginning with the FY 2017 program year 
(October 1, 2015) in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50278 
through 50279). The EBRT measure reports the percentage of patients, 
regardless of age, with a diagnosis of painful bone metastases and no 
history of previous radiation who receive EBRT with an acceptable 
fractionation scheme as defined by the guideline.
    When the EBRT measure was adopted into the PCHQR Program, it 
initially used ``radiation planning'' current procedural terminology 
(CPT) codes that were billable at the physician level. After finalizing 
the measure, we learned that at least one of the 11 PCHs did not have 
access to physician billing data, making reporting complete data on 
this measure unduly burdensome and difficult. To address this issue, 
beginning in March 2016, the measure was updated in the PCHQR Program 
to enable the use of ``radiation delivery'' CPT codes, which are 
billable at the hospital level.\586\
---------------------------------------------------------------------------

    \586\ 2018 EBRT Measure Information Form. Retrieved from: 
https://www.qualitynet.org/dcs/ContentServer?cid=1228774479863&pagename=QnetPublic%2FPage%2FQnetTier4&c=Page.
---------------------------------------------------------------------------

b. Analysis of Measure Use
    After implementation of the updated EBRT measure in the PCHQR 
Program, the measure steward conducted testing of data collection of 
the updated measure in the outpatient setting and discovered that there 
are new and significant concerns regarding the revised ``radiation 
delivery'' CPT coding used to report the EBRT measure. Although this 
testing was done in the outpatient setting, we believe that the issues 
with the measure that were identified in the outpatient setting 
similarly affect the inpatient cancer hospital community, as PCHs need 
to take the same steps as hospital outpatient departments (HOPDs) to 
report the measure using ``radiation delivery'' CPT codes. In 
particular, the measure steward has observed that implementing the 
updated measure in the outpatient setting has proven to be very 
burdensome on hospitals. The use of ``radiation delivery'' CPT codes 
requires more complicated measure exclusions to be used because the 
change to ``radiation delivery'' CPT codes caused the administration of 
EBRT to different anatomic sites to be considered separate cases for 
this measure. Because there is no way to determine the different 
anatomic sites until detailed review of the patient's record is 
complete, sampling has become a significant concern, and confounded the 
task of determining which sites should be included or excluded from the 
measure denominator. In addition, hospitals have difficulty determining 
if sample size requirements for the measure are being met. As a result, 
we believe that the complexity of reporting this measure places 
substantial administrative burden on hospitals.
    We also note that the measure lost NQF endorsement in 2018 and that 
the measure steward is no longer maintaining the measure or seeking NQF 
re-endorsement. As a result, especially because the steward is no 
longer maintaining the measure, we no longer believe that we can ensure 
that the measure is in line with clinical guidelines and standards, 
which further diminishes the value of the measure.
c. Summary
    Ultimately, we believe the burden associated with the measure 
outweighs the value of its inclusion in the PCHQR Program. We are 
proposing, under removal Factor 8, to remove the EBRT measure from the 
PCHQR Program beginning with the FY 2022 program year.
5. Proposed New Quality Measure Beginning With the FY 2022 Program Year
a. Considerations in the Selection of Quality Measures
    Under current policy, we take many principles into consideration 
when developing and selecting measures for the PCHQR Program, and many 
of these principles are modeled on those we use for measure development 
and selection under the Hospital IQR Program. In section I.A.2. of the 
preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41147 through 
41148), we also discuss our Meaningful Measures Initiative and its 
relation to how we will assess and select quality measures for the 
PCHQR Program.
    Section 1866(k)(3)(A) of the Act requires that any measure 
specified by the Secretary must have been endorsed by the entity with a 
contract under section 1890(a) of the Act (the NQF is the entity that 
currently holds this contract). Section 1866(k)(3)(B) of the Act 
provides an exception under which, in the case of a specified area or 
medical topic determined appropriate by the Secretary for which a 
feasible and practical measure has not been endorsed by the entity with 
a contract under section 1890(a) of the Act, the Secretary may specify 
a measure that is not so endorsed as long as due consideration is given 
to measures that have been endorsed or adopted by a consensus 
organization.
    After considering these principles for measure selection in the 
PCHQR Program, in this proposed rule, we are proposing to adopt one new 
measure beginning with the FY 2022 program year, as described below.
b. Proposed New Quality Measure Beginning With the FY 2022 Program 
Year: Surgical Treatment Complications for Localized Prostate Cancer
    We are proposing to adopt the Surgical Treatment Complications for 
Localized Prostate Cancer measure for the FY 2022 program year and 
subsequent years.
(1) Background
    Prostate cancer is the most common non-dermatologic malignancy 
among men in the United States, with an estimated 180,000 new cases/
year.\587\ Approximately 80 percent of patients are diagnosed with 
localized disease and therefore may be eligible for prostate directed 
therapy.\588\ This could involve surgical removal of the prostate, 
radiation therapy, or both. The majority of patients who undergo 
prostate-directed therapy survive, but these treatments can have 
serious and potentially longstanding adverse effects, including 
incontinence, urinary tract obstruction, hydronephrosis, erectile 
dysfunction, urinary fistula formation, hematuria, cystitis, bowel 
fistula, proctitis/colitis, bowel bleeding, diarrhea, rectal/anal 
fissure, abscess, stricture, incision hernia, infection, or 
others.589 590 Patients consistently report

[[Page 19504]]

that these adverse effects, which are patient-centered outcomes, can 
have a significant detrimental impact on their quality of 
life.591 592
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    \587\ Siegel RL, Miller KD, Jemal A. Cancer statistics, 2016. 
CA: a cancer journal for clinicians. 2016;66(1):7-30.
    \588\ Ibid.
    \589\ Bekelman JE, Mitra N, Efstathiou J, et al. Outcomes after 
intensity-modulated versus conformal radiotherapy in older men with 
nonmetastatic prostate cancer. International journal of radiation 
oncology, biology, physics. 2011;81(4):e325-334.
    \590\ Potosky AL, Warren JL, Riedel ER, Klabunde CN, Earle CC, 
Begg CB. Measuring complications of cancer treatment using the SEER-
Medicare data. Medical care. 2002;40(8 Suppl):IV-62-68.
    \591\ Aizer AA, Gu X, Chen MH, et al. Cost implications and 
complications of overtreatment of low-risk prostate cancer in the 
United States. Journal of the National Comprehensive Cancer Network. 
2015; 13(1):61-68.
    \592\ Hayes JH, Ollendorf DA, Pearson SD, et al. Active 
surveillance compared with initial treatment for men with low-risk 
prostate cancer: a decision analysis. JAMA. 2010; 304(21):2373-2380.
---------------------------------------------------------------------------

    Clinical trials and population-based data have been used to 
determine whether different prostate-directed treatments result in 
different patient-centered outcomes. These studies have evaluated a 
range of prostate-directed treatments, including open radical 
prostatectomy, robot-assisted radical prostatectomy, minimally invasive 
radical prostatectomy, brachytherapy, external beam radiation therapy, 
conformal radiation therapy, intensity modulated radiation therapy 
(IMRT), and proton therapy, and have demonstrated that some treatments 
are associated with inferior patient-centered outcomes when compared to 
others. A number of these studies used Medicare claims after therapy 
for prostate cancer to identify specific 
outcomes.593 594 595 Very few studies have explored whether 
the patient-centered outcomes experienced after prostate-directed 
therapy vary by treating facility. However, studies of other cancers 
have demonstrated that outcomes can vary by treating facility. For 
example, operative mortality after major cancer surgery varies 
inversely with hospital volume.\596\
---------------------------------------------------------------------------

    \593\ Schmid M, Meyer CP, Reznor G, et al acial Differences in 
the Surgical Care of Medicare Beneficiaries With Localized Prostate 
Cancer. JAMA oncology. 2016; 2(1):85-93.
    \594\ Jiang R, Tomaszewski JJ, Ward KC, Uzzo RG, Canter DJ. The 
burden of overtreatment: comparison of toxicity between single and 
combined modality radiation therapy among low risk prostate cancer 
patients. The Canadian journal of urology. 2015; 22(1):7648-7655.
    \595\ Loeb S, Carter HB, Berndt SI, Ricker W, Schaeffer EM. 
Complications after prostate biopsy: data from SEER-Medicare. The 
Journal of urology. 2011; 186(5):1830-1834.
    \596\ Begg CB, Cramer LD, Hoskins WJ, Brennan MF. Impact of 
hospital volume on operative mortality for major cancer surgery. 
JAMA. 1998; 280(20):1747-1751.
---------------------------------------------------------------------------

    In recognition of the potential impact of this variation, the 
Surgical Treatment Complications for Localized Prostate Cancer measure 
was developed. This measure is based on the Localized Prostate Cancer 
Standard Set (the Standard Set) developed by the International 
Consortium for Health Outcome Measurement (ICHOM).\597\ The Standard 
Set is a conceptual framework that is supported by a rigorous, 
evidence-based consensus approach to identify the outcomes that matter 
most to prostate cancer patients. The Localized Prostate Cancer 
Standard Set recommends key outcomes that should be measured to improve 
the lives of patients with localized prostate cancer. We believe that 
this measure is in line with the Standard Set framework, which 
recommends measuring complications of prostate-directed surgical 
treatments. We believe the Surgical Treatment Complications for 
Localized Prostate Cancer measure would add value to the PCHQR Program 
measure set, as discussed in detail below.
---------------------------------------------------------------------------

    \597\ Localized Prostate Cancer Standard Set, available at: 
http://www.ichom.org/medical-conditions/localized-prostate-cancer/.
---------------------------------------------------------------------------

(2) Overview of Measure
    The Surgical Treatment Complications for Localized Prostate Cancer 
measure addresses complications of a prostatectomy. The outcomes 
selected for this measure are urinary incontinence (UI) and erectile 
dysfunction (ED). Specifically, the measure uses claims to identify 
urinary incontinence and erectile dysfunction among patients undergoing 
localized prostate cancer surgery and uses this information to derive 
hospital-specific rates. A strong body of literature, including 
numerous recent systematic reviews, have demonstrated the burden of UI 
and ED for men following localized prostate surgery and 
ED.598 599 600 601 602 By identifying facilities where 
adverse outcomes associated with prostatectomy are more common, this 
measure will help to highlight opportunities for quality improvement 
activities that will address and hopefully mitigate unwarranted 
variation in prostatectomy procedures.
---------------------------------------------------------------------------

    \598\ Garcia-Baquero R, Fernandez-Avila CM, Alvarez-Ossorio JL. 
Functional results in the treatment of localized prostate cancer. An 
updated literature review. Rev Int Androl. 2018 Nov 22. pii: S1698-
031X(18)30085-2.
    \599\ Du Y, Long Q, Guan B, Mu L, Tian J, Jiang Y, Bai X, Wu D. 
Robot-Assisted Radical Prostatectomy Is More Beneficial for Prostate 
Cancer Patients: A System Review and Meta-Analysis. Med Sci Monit. 
2018 Jan 14;24:272-287.
    \600\ Wang X, Wu Y, Guo J, Chen H, Weng X, Liu X. Intrafascial 
nerve-sparing radical prostatectomy improves patients' postoperative 
continence recovery and erectile function: A pooled analysis based 
on available literatures. Medicine (Baltimore). 2018 Jul; 
97(29):e11297.
    \601\ Wallis CJD, Glaser A, Hu JC, Huland H, Lawrentschuk N, 
Moon D, Murphy DG, Nguyen PL, Resnick MJ, Nam RK. Survival and 
Complications Following Surgery and Radiation for Localized Prostate 
Cancer: An International Collaborative Review. Eur Urol. 2018 Jan; 
73(1):11-20.
    \602\ Huang X, Wang L, Zheng X, Wang X. Comparison of 
perioperative, functional, and oncologic outcomes between standard 
laparoscopic and robotic-assisted radical prostatectomy: a systemic 
review and meta-analysis. Surg Endosc. 2017 Mar; 31(3):1045-1060.
---------------------------------------------------------------------------

    The proposed measure would be calculated using information from 
Medicare fee-for-service (FFS) claims, resulting in no new data 
reporting for PCHs. We would publicly report the measure results to 
enable patients to make informed decisions about accessing localized 
prostate surgery and about the rates of potential complications. We 
will identify a specified timeframe for public reporting of this 
measure in future rulemaking. In addition, we note that there are 
currently no measures assessing complications of prostate surgery in 
the PCHQR Program measure set.
(3) Data Sources
    We are proposing that we would calculate this measure on a yearly 
basis using Medicare administrative claims data. Specifically, we are 
proposing that the data collection period for each program year would 
span from July 1 of the year 2 years prior to the start of the program 
year to June 30 of the year 1 year prior to the start of the program 
year. Therefore, for the FY 2022 program year, we would begin 
calculating measure rates using PCH claims data from July 1, 2019 
through June 30, 2020.
    During the development of the measure, the measure steward convened 
a technical expert panel (TEP), comprising diverse clinical and quality 
measurement experts from the 11 PPS-exempt cancer hospitals, in 2016. 
We note that the TEP endorsed the ICHOM's recommendation to measure 
prostate-directed surgical treatment complication. Because the measure 
methodology assesses complications pre-surgery and post-surgery 
directed to the prostate, this necessitates the availability of claims 
data. In order to examine data collection burden and data reliability, 
the TEP requested an analysis of using Medicare claims to assess 
treatment complications in the ICHOM standard set. For this purpose, a 
SEER-Medicare dataset \603\ was used to validate Medicare claims data. 
SEER datasets are commonly considered ``gold standard'' data for cancer 
stage and other clinical characteristics, and are often used to 
validate Medicare claims data, which are lacking in these details. The 
results of this analysis showed that the claims-based algorithm used by 
the

[[Page 19505]]

measure could successfully identify patients with prostate cancer, 
thereby substantiating the use of Medicare claims as the data source 
for this measure.
---------------------------------------------------------------------------

    \603\ SEER-Medicare Dataset. Available at: https://healthcaredelivery.cancer.gov/seermedicare/overview/.
---------------------------------------------------------------------------

(4) Measure Calculation
    This outcome measure analyzes hospital/facility-level variation in 
patient-relevant outcomes during the year after prostate-directed 
surgery. Specifically, the measure uses claims to identify urinary 
incontinence and erectile dysfunction among patients undergoing 
localized prostate cancer surgery and uses this information to derive 
hospital-specific rates. Those outcomes are rescaled to a 0-100 scale, 
with 0=worst and 100=best. The numerator includes patients with 
diagnosis claims that could indicate adverse outcomes following 
prostate-directed surgery. The numerator is determined by: (1) 
Calculating the difference in the number of days with claims for 
incontinence or erectile dysfunction in the year after versus the year 
before prostate surgery for each patient; (2) truncating (by 
Winsorizing) to reduce the impact of outliers; (3) rescaling the 
difference from 0 (worst) to 100 (best); and (4) calculating the mean 
score for each hospital based on all of the difference values for all 
of the patients treated at that hospital. The denominator is determined 
by the following: Men age 66 or older at the time of prostate cancer 
diagnosis with at least two ICD diagnosis codes for prostate cancer 
separated by at least 30 days; men who survived at least one year after 
prostate directed therapy; codes for prostate cancer surgery (either 
open or minimally invasive/robotic prostatectomy) at any time after the 
first prostate cancer diagnosis; and continuous enrollment in Medicare 
Parts A and B (and no Medicare Part C (Medicare Advantage) enrollment)) 
from one year before through one year after prostate directed therapy. 
The measure code lists include all codes required for the numerator and 
denominator calculation.\604\
---------------------------------------------------------------------------

    \604\ 2018-2019 Measure Applications Partnership Workgroup Final 
Recommendations Excel spreadsheet. Available at: http://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
---------------------------------------------------------------------------

    The proposed measure excludes patients with metastatic disease, 
patients with more than one nondermatologic malignancy, patients 
receiving chemotherapy, patients receiving radiation, and/or patients 
who die within 1 year after prostatectomy. We note that the validity of 
this measure would be threatened by inclusion of patients who did not 
meet the denominator criteria. Specifically, patients with more than 
one nondermatologic malignancy are excluded because a second cancer 
diagnosis during the measurement period could influence the outcomes. 
Further, patients receiving chemotherapy are excluded because 
guidelines for localized prostate cancers do not recommend chemotherapy 
for routine care; therefore, chemotherapy can indicate advanced disease 
or other unique clinical characteristics. Patients receiving radiation 
therapy are excluded because radiation therapy to the prostate can 
impact the occurrence of complications in these patients. Therefore, 
the impact of the surgery versus the radiation therapy in these 
patients cannot be determined. Lastly, patients who die within 1 year 
after prostatectomy are excluded because death is highly unlikely to be 
related to localized prostate cancer and unlikely to be related to the 
surgical complications. Thus, patients who die within the year 
following surgery likely die from an unrelated reason. As such, the 
measure will be calculated as the numerator divided by the denominator 
(in accordance with the denominator exclusions described above). 
Complete measure specifications for the proposed measure are available 
in the ``2018 Measures Under Consideration List'' Excel file, which can 
be accessed at: http://www.qualityforum.org/map/.
(5) Cohort
    This measure includes adult male Medicare FFS beneficiaries, age 66 
years and older, who have received prostate cancer directed surgery 
within the defined measurement period. We note that this measure cohort 
was determined in accordance with the defined measure denominator and 
its specified exclusions (discussed above) and based on testing 
conducted on the minimum number of patients attributed to the hospital 
associated with the claims for the procedure code for prostatectomy. 
The age of 66 at the time of prostate cancer diagnosis was chosen 
because per the denominator, a patient must have had Medicare claims 
data for 1 year prior to and 1 year after surgery. Additional 
methodology and measure development details are available in the ``2018 
Measures Under Consideration List,'' which can be accessed at: http://www.qualityforum.org/map/.
(6) Risk Adjustment
    The measure steward developed a mock risk-adjustment testing 
protocol based on the case-mix variables identified in the ICHOM data 
dictionary,\605\ and TEP guidance. Specifically, the measure steward 
identified covariates that could be incorporated for potential risk-
adjustment modeling. The covariates were not limited to those available 
in claims data; clinical covariates were also identified for analysis 
from SEER to determine adequacy of claims alone for valid measurement. 
Specifically, the following patient factors were controlled for when 
deriving the patient-level complication score: Age; year of surgery; 
other/unknown prostate cancer grade; and prostatectomy type. 
Hierarchical linear modeling was used to identify which patient, tumor, 
and hospital factors are associated with a higher IED score. After 
review of the results of the mock risk-adjustment testing efforts, it 
was determined that risk adjusting the measure did not yield results 
that demonstrate any statistically significant differences from the 
non-risk-adjusted results. The measure steward analyzed the correlation 
between the unadjusted performance scores and risk-adjusted performance 
scores, and observed that the correlation coefficients were above 95 
percent in both analyses. Consequently, the measure steward elected to 
finalize the development of the measure without the implementation of a 
risk-adjustment model.
---------------------------------------------------------------------------

    \605\ International Consortium for Health Outcomes Measurement 
(ICHOM) in the Localized Prostate Cancer Standard Set. https://www.ichom.org/medical-conditions/localized-prostate-cancer/.
---------------------------------------------------------------------------

(7) Measure Application Partnership (MAP) Assessment of the Proposed 
Measure
    In compliance with section 1890A(a)(2) of the Act, the proposed 
measure was included on a publicly available document entitled ``2018 
Measures under Consideration Spreadsheet,'' \606\ a list of quality and 
efficiency measures under consideration for use in various Medicare 
programs, and was reviewed by the MAP Hospital Workgroup. The MAP noted 
the importance of patient-relevant outcomes for patients who have 
undergone surgical treatment for prostate care, but encouraged CMS to 
resubmit the measure once the measure developer has better streamlined 
the reliability and validity testing methodologies.\607\

[[Page 19506]]

Specifically, the MAP discussed the differences between surgical 
procedures (for example, open, closed, minimally invasive, robotic, 
among others) and recommended that non-open procedures be grouped 
separately.\608\ The MAP also suggested the measure be risk-adjusted 
because of the concern of different rates of complications related to 
how the surgery is performed.\609\
---------------------------------------------------------------------------

    \606\ Measures Application Partnership ``2018 measures Under 
Consideration Spreadsheet.'' Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=88813.
    \607\ MAP 2019 Considerations for Implementing Measures, Final 
Report. Available at: http://www.qualityforum.org/Publications/2019/02/MAP_2019_Considerations_for_Implementing_Measures_Final_Report_-_Hospitals.aspx.
    \608\ Ibid.
    \609\ Ibid.
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    In response to the concern raised by the MAP regarding the grouping 
of surgical procedures, we note that the measure is intended to 
calculate one overall facility rate for accountability purposes. 
However, given the guidance from the MAP, the steward has notified CMS 
that each hospital's performance will be stratified by prostatectomy 
procedure type (open versus not open) to add meaning for consumers and 
for hospital quality improvement. In response to the MAP's question of 
risk-adjustment, we note that risk-adjustment is limited for cancer 
patients when using claims data (for example, cancer stage not captured 
in claims data). Despite this, we reiterate that the steward conducted 
a mock risk-adjustment testing protocol and observed that risk-
adjusting the measure did not demonstrate any statistically significant 
differences. As such, the steward chose not to include the risk-
adjustment methodology for the measure.
    Currently, we are unaware of an alternative quality measure 
assessing this measurement topic that is appropriate for the PCHQR 
Program. This measure is not endorsed by the NQF, and in our 
environmental scan of the NQF measures portfolio, we have not been able 
to identify a feasible and practical endorsed measure that addresses 
surgical procedures for localized prostate cancer. We believe this 
measure meets the requirement under section 1866(k)(3)(B) of the Act, 
which provides that in the case of a specified area or medical topic 
determined appropriate by the Secretary for which a feasible and 
practical measure has not been endorsed by the entity with a contract 
under section 1890(a) of the Act, the Secretary may specify a measure 
that is not so endorsed as long as due consideration is given to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary. In addition, we note this measure aligns 
with recent initiatives to increase the number of outcome measures in 
quality reporting programs. Lastly, this measure also aligns with the 
``Make Care Safer by Reducing Harm Caused in the Delivery of Care'' 
domain of our Meaningful Measures Initiative,\610\ and would fill an 
existing gap area of patient-focused episode of care in the PCHQR 
Program.
---------------------------------------------------------------------------

    \610\ Overview of CMS ``Meaningful Measures'' Initiative. 
Available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2017-Press-releases-items/2017-10-30.html.
---------------------------------------------------------------------------

(8) Proposed Adoption of the Surgical Treatment Complications for 
Localized Prostate Cancer Measure
    We believe this measure would be a valuable addition to the PCHQR 
Program because it is a high impact (as prostate cancer is a prevalent 
disease) outcome measure and it addresses reduction in harm. This is a 
hospital/facility-level, claims-based measure that analyzes variation 
in the occurrence of incontinence and/or erectile dysfunction during 
the year after prostate-directed surgery, which is one of the standard 
treatments for localized prostate cancer. Further, this measure has the 
potential to improve patient outcomes and decrease costs associated 
with managing adverse events. By identifying facilities where adverse 
outcomes associated with prostatectomy are more common, this measure 
would help to highlight opportunities for quality improvement that 
address unwarranted variation. This will facilitate improved compliance 
with guidelines from the American Urology Association (AUA) and other 
professional societies that call for minimizing the potential for 
therapy-related adverse outcomes.\611\
---------------------------------------------------------------------------

    \611\ Prostate Cancer Clinical Guidelines. Available at: http://www.auanet.org/guidelines/clinically-localized-prostate-cancer-new-
(aua/astro/suo-guideline-2017.
---------------------------------------------------------------------------

    Lastly, this measure could be utilized as a tool to foster quality 
improvement and optimize outcomes for patients with localized prostate 
cancer. For the reasons outlined above, we are proposing to adopt the 
Surgical Treatment Complications for Localized Prostate Cancer measure 
for the FY 2022 program year and subsequent years.
c. Summary of Previously Finalized and Proposed PCHQR Program Measures 
for the FY 2022 Program Year and Subsequent Years
    The table below summarizes the PCHQR Program measure set for the FY 
2022 program year if we finalized our proposal to remove the External 
Beam Radiotherapy (EBRT) for Bone Metastases measure and our proposal 
to adopt the proposed Surgical Treatment Complications for Localized 
Prostate Cancer measure.

FY 2022 PCHQR Program Measure Set if Proposals To Remove One Measure and
                     Adopt One Measure are Finalized
------------------------------------------------------------------------
           Short name                NQF No.           Measure name
------------------------------------------------------------------------
            Safety and Healthcare-Associated Infection (HAI)
------------------------------------------------------------------------
CAUTI..........................            0138  Catheter-associated
                                                  Urinary Tract
                                                  Infection (CAUTI)
                                                  Outcome Measure.
CLABSI.........................            0139  Central Line-associated
                                                  Bloodstream Infection
                                                  (CLABSI) Outcome
                                                  Measure.
HCP............................            0431  National Healthcare
                                                  Safety Network (NHSN)
                                                  Influenza Vaccination
                                                  Coverage Among
                                                  Healthcare Personnel.
Colon and Abdominal                        0753  American College of
 Hysterectomy SSI.                                Surgeons--Centers for
                                                  Disease Control and
                                                  Prevention (ACS-CDC)
                                                  Harmonized Procedure
                                                  Specific Surgical Site
                                                  Infection (SSI)
                                                  Outcome Measure
                                                  [currently includes
                                                  SSIs following Colon
                                                  Surgery and Abdominal
                                                  Hysterectomy Surgery].
MRSA...........................            1716  National Healthcare
                                                  Safety Network (NHSN)
                                                  Facility[dash]wide
                                                  Inpatient Hospital-
                                                  onset
                                                  Methicillin[dash]resis
                                                  tant Staphylococcus
                                                  aureus Bacteremia
                                                  Outcome Measure.
CDI............................            1717  National Healthcare
                                                  Safety Network (NHSN)
                                                  Facility[dash]wide
                                                  Inpatient Hospital-
                                                  onset Clostridium
                                                  difficile Infection
                                                  (CDI) Outcome Measure.
------------------------------------------------------------------------
                 Clinical Process/Oncology Care Measures
------------------------------------------------------------------------
EOL-Chemo......................            0210  Proportion of Patients
                                                  Who Died from Cancer
                                                  Receiving Chemotherapy
                                                  in the Last 14 Days of
                                                  Life.
EOL-Hospice....................            0215  Proportion of Patients
                                                  Who Died from Cancer
                                                  Not Admitted to
                                                  Hospice.

[[Page 19507]]

 
N/A............................            0383  Oncology: Plan of Care
                                                  for Pain--Medical
                                                  Oncology and Radiation
                                                  Oncology.
------------------------------------------------------------------------
                 Intermediate Clinical Outcome Measures
------------------------------------------------------------------------
EOL-ICU........................            0213  Proportion of Patients
                                                  Who Died from Cancer
                                                  Admitted to the ICU in
                                                  the Last 30 Days of
                                                  Life.
EOL-3DH........................            0216  Proportion of Patients
                                                  Who Died from Cancer
                                                  Admitted to Hospice
                                                  for Less Than Three
                                                  Days.
------------------------------------------------------------------------
                  Patient Engagement/Experience of Care
------------------------------------------------------------------------
HCAHPS.........................            0166  Hospital Consumer
                                                  Assessment of
                                                  Healthcare Providers
                                                  and Systems.
------------------------------------------------------------------------
                      Claims Based Outcome Measures
------------------------------------------------------------------------
N/A............................             N/A  Admissions and
                                                  Emergency Department
                                                  (ED) Visits for
                                                  Patients Receiving
                                                  Outpatient
                                                  Chemotherapy.
N/A............................            3188  30-Day Unplanned
                                                  Readmissions for
                                                  Cancer Patients.
N/A*...........................             N/A  Surgical Treatment
                                                  Complications for
                                                  Localized Prostate
                                                  Cancer Measure.
------------------------------------------------------------------------
* Measure proposed for adoption for the FY 2022 program year and
  subsequent years.

6. Possible New Quality Measure Topics for Future Years
a. Background
    As discussed in section I.A.2. of the preamble of the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41147 through 41148), we have begun 
analyzing our quality reporting and quality payment programs' measures 
using the framework we developed for the Meaningful Measures 
Initiative. We have also discussed future quality measure topics and 
quality measure domain areas in the FY 2015 IPPS/LTCH PPS final rule 
(79 FR 50280), the FY 2016 IPPS/LTCH PPS final rule (80 FR 4979), the 
FY 2017 IPPS/LTCH PPS final rule (81 FR 25211), the FY 2018 IPPS/LTCH 
PPS final rule (82 FR 38421 through 38423), and the FY 2019 IPPS/LTCH 
PPS final rule (83 FR 41618 through 41621).
    In this proposed rule, we are again seeking public comment on the 
topics we should consider for quality measurement in the PCHQR Program. 
We are particularly interested in public comments on measures that 
could balance the need to assess pain management against efforts to 
ensure that providers are not incentivized to overprescribe opioids to 
patients in the PCH setting. We also are seeking public comment on 
potential future measures that could assess alternative pain management 
methodologies for cancer patients.
b. Overview of Pain Management Issues and Request for Comments on Pain 
Management Measures and Measurement Concepts for the Cancer Patient 
Population
    As discussed earlier, we are proposing to remove the current pain 
management questions from the version of the HCAHPS Survey implemented 
in the PCHQR Program beginning with October 1, 2019 discharges in order 
to avoid any potential unintended consequences related to the 
perception that providers may be incentivized to overprescribe opioids 
to cancer patients. The opioid epidemic is a national crisis, and we 
are interested in the feasibility of adopting quality measures that 
examine a PCH's utilization of pain management strategies other than 
opioid prescriptions when furnishing care to its patients. We recognize 
that unintended opioid overdose fatalities have reached epidemic 
proportions in the last 20 years and are a major public health concern 
in the United States.\612\ As such, reducing the number of unintended 
opioid overdoses is a priority for HHS. Concurrent prescriptions of 
opioids or opioids and benzodiazepines put patients at greater risk of 
unintended opioid overdose due to increased risk of respiratory 
depression.613 614 In addition, an analysis of more than 1 
million hospital admissions in the United States found that over 43 
percent of all patients with nonsurgical admissions were exposed to 
multiple opioids during their hospitalization.\615\ As such, we believe 
that it is imperative to not inadvertently support the over-
prescription of opioids by promoting opioids as a primary pain 
management remedy for cancer patients. In conjunction with that, we 
also recognize the need to be responsive to the unique needs of the 
cancer patient cohort by continually examining the quality measurement 
landscape for quality measures that balance pain management with 
efforts to address the opioid epidemic.
---------------------------------------------------------------------------

    \612\ Rudd, R., Aleshire, N., Zibbell, J., et al. ``Increases in 
Drug and Opioid Overdose Deaths--United States, 2000-2014.'' MMWR, 
Jan 2016. 64(50);1378-82. Available at: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm6450a3.htm.
    \613\ Dowell, D., Haegerich, T., Chou, R. ``CDC Guideline for 
Prescribing Opioids for Chronic Pain--United States, 2016.'' MMWR 
Recomm Rep 2016;65. Available at: http://www.cdc.gov/media/dpk/2016/dpk-opioid-prescription-guidelines.html.
    \614\ Jena, A., et al. ``Opioid prescribing by multiple 
providers in Medicare: retrospective observational study of 
insurance claims.'' BMJ. 2014; 348:g1393 doi: 10.1136/bmj.g1393. 
Available at: http://www.bmj.com/content/348/bmj.g1393.
    \615\ Herzig, S., Rothberg, M., Cheung, M., et al. ``Opioid 
utilization and opioid-related adverse events in nonsurgical 
patients in U.S. hospitals.'' Nov 2013. DOI: 10.1002/jhm.2102. 
Available at: http://onlinelibrary.wiley.com/doi/10.1002/jhm.2102/abstract.
---------------------------------------------------------------------------

    We recognize the importance of including quality measures that 
adequately assess cancer patient pain and quality measures that assess 
a PCH's use of alternative pain management methodologies. We believe 
that these types of measures can assess critical components of cancer 
care. Studies examining the frequency and quality of cancer pain 
management show room for improvement in these areas--for example, a 
systematic review revealed that, despite a 25-percent decrease in 
under-treatment of cancer pain between 2007 and 2013, approximately 
one-third of patients living with cancer still have pain that is 
inadequately treated.\616\ Further, postsurgical complications related 
to inadequate pain management negatively affect patient welfare and 
hospital performance because of extended lengths of stay and 
readmissions, both

[[Page 19508]]

of which increase the cost of care.\617\ This raises concern in the 
context of the patient safety issues related to pain management (that 
is, a patient's physical safety during the administration of sedatives 
and complications associated with catheter administration).\618\ In 
addition, patients who have not been treated adequately for pain 
management may be reluctant to seek medical care for other health 
problems.\619\
---------------------------------------------------------------------------

    \616\ Optimal Pain Management for Patients with Cancer in the 
Modern Era. Available at: https://onlinelibrary.wiley.com/doi/full/10.3322/caac.21453.
    \617\ Patient Safety and Quality: An Evidence-Based Handbook for 
Nurses. Available at: https://www.ncbi.nlm.nih.gov/books/NBK2658/.
    \618\ Ibid.
    \619\ Ibid.
---------------------------------------------------------------------------

    On August 7, 2018, the Alliance of Dedicated Cancer Centers,\620\ 
which is a consortium of cancer hospitals that includes among its 
members 10 of the 11 participating PCHs for the PCHQR Program, convened 
a group of expert stakeholders to discuss and provide recommendations 
regarding best practices for the future of pain measurement among 
cancer patients, within the context of the opioid crisis in the United 
States. Participants included cancer patient advocates, clinicians, 
researchers, and health care quality professionals. The participants 
discussed the pros and cons of various methods to collect and report 
performance measures related to cancer pain and cancer pain management. 
The participants acknowledged the importance of addressing the national 
opioid crisis. However, for cancer patients specifically, the 
participants unanimously supported ongoing pain-related quality 
measurement. Further, the participants indicated that the relatively 
high prevalence of pain symptoms in the cancer patient population,\621\ 
particularly in patients with advanced disease or metastatic cancer, 
underscores the need for feasible, valid, and reliable pain measures. 
They also added that pain assessment offers clinicians the greatest 
utility when the information collected can be used to identify 
personalized pain management goals for patients.
---------------------------------------------------------------------------

    \620\ Alliance of Dedicate Cancer Centers website: http://www.adcc.org/.
    \621\ National Quality Forum. Patient Reported Outcomes (PROs) 
in Performance Measurement. Available at: http://www.qualityforum.org/Publications/2012/12/Patient-Reported_Outcomes_in_Performance_Measurement.aspx. Published 
December 2012.
---------------------------------------------------------------------------

    Further, we are aware of the existence of other cancer-specific, 
non-survey, patient experience assessment tools that evaluate cancer 
patient pain and may be more appropriate than the HCAHPS Survey pain 
questions which we are proposing to remove in this proposed rule. As 
such, we believe there should be consideration given to the use of 
pain-related patient experience items for cancer patients, with a 
shifting focus toward Patient-Reported Outcome (PRO)-Performance 
Measures (PRO-PMs) in the mid and longer term (for example, 3 years, 5 
years). Specifically, a growing body of research demonstrates the 
benefits of integration of PROs into oncology practice, including 
improved patient outcomes and survival.622 623
---------------------------------------------------------------------------

    \622\ Basch E, Deal AM, Dueck AC, et al. Overall Survival 
Results of a Trial Assessing Patient-Reported Outcomes for Symptom 
Monitoring During Routine Cancer Treatment. JAMA. 2017; 318(2):197-
198. doi:10.1001/jama.2017.7156.
    \623\ Denis, F et al. Patient-Reported Outcomes, Mobile 
Technology, and Response Burden. 2018 ASCO Annual Meeting. Abstract 
No: 6500.
---------------------------------------------------------------------------

    Accordingly, we are seeking public comment on measures and 
measurement concepts that can be further developed that would assess 
appropriate pain management in the cancer patient population. Specific 
topics could include measures that assess cancer patient safety, 
patient and family education, and patient experience and engagement 
(specifically PRO-PMs) in the context of cancer pain management. We are 
inviting public comment on the potential future adoption of measures 
that assess post-treatment addiction prevention for cancer patients. 
Lastly, we are inviting public comment on existing measures or 
measurement concepts that evaluate pain management for cancer patients, 
and do not involve opioid use.
7. Maintenance of Technical Specifications for Quality Measures
    We maintain technical specifications for the PCHQR Program 
measures, and we periodically update those specifications. The 
specifications may be found on the QualityNet website at: https://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228774479863.
    We also use a subregulatory process to make nonsubstantive updates 
to measures used for the PCHQR Program (79 FR 50281).
8. Public Display Requirements
a. Background
    Under section 1866(k)(4) of the Act, we are required to establish 
procedures for making the data submitted under the PCHQR Program 
available to the public. Such procedures must ensure that a PCH has the 
opportunity to review the data that are to be made public with respect 
to the PCH prior to such data being made public. Section 1866(k)(4) of 
the Act also provides that the Secretary must report quality measures 
of process, structure, outcome, patients' perspective on care, 
efficiency, and costs of care that relate to services furnished in such 
hospitals on the CMS website.
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57191 through 
57192), we finalized that although we would continue to use rulemaking 
to establish what year we first publicly report data on each measure, 
we would publish the data as soon as feasible during that year. We also 
stated that our intent is to make the data available on at least a 
yearly basis, and that the time period for PCHs to review their data 
before the data are made public would be approximately 30 days in 
length. We announce the exact data review and public reporting 
timeframes on a CMS website and/or on our applicable Listservs.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41623) and the CY 
2019 OPPS/ASC final rule with comment period (83 FR 59149 through 
59153), we finalized our public display requirements for the FY 2021 
program year.
    We recognize the importance of being transparent with stakeholders 
and keeping them abreast of any changes that arise with the PCHQR 
Program measure set. As such, we are making two proposals in this 
proposed rule regarding the timetable for the public display of data 
for specific PCHQR Program measures.
b. Proposed Public Display of the Admissions and Emergency Department 
(ED) Visits for Patients Receiving Outpatient Chemotherapy Measure 
Beginning With CY 2020
    We are proposing to begin public reporting of the Admissions and 
Emergency Department (ED) Visits for Patients Receiving Outpatient 
Chemotherapy measure in CY 2020. In the FY 2017 IPPS/LTCH PPS final 
rule (81 FR 57187), we stated that we would publicly report the risk-
standardized admission rate (RSAR) and risk-standardized ED visit rate 
(RSEDR) for the Admissions and Emergency Department (ED) Visits for the 
Patients Receiving Outpatient Chemotherapy measure for all 
participating PCHs with 25 or more eligible patients per measurement 
period. We stated that this threshold allowed us to maintain a 
reliability of at least 0.4 for publicly reported data (as measured by 
the interclass correlation coefficient (ICC). We also noted that if a 
PCH did not meet the 25-eligible patient threshold, we would include a 
footnote on the Hospital Compare website indicating that the number of 
cases is too small to reliably measure that PCH's rate, but

[[Page 19509]]

that these patients and PCHs would still be included when calculating 
the national rates for both the RSAR and RSEDR (81 FR 57187). To 
prepare PCHs for the public reporting of this measure, we also 
indicated that we would conduct a confidential national reporting (dry 
run) of measure results. The objectives of the confidential national 
reporting were to: (1) Educate PCHs and other stakeholders about the 
measure; (2) allow PCHs to review their measure results and data prior 
to public reporting; (3) answer questions from PCHs and other 
stakeholders; (4) test the production and reporting process; and (5) 
identify potential technical changes to the measure specifications that 
might be needed.
    We recently completed the confidential national reporting for this 
measure and have assessed the preliminary results to ensure data 
accuracy and completeness. Further, we confidentially reported results 
for the measure to the participating PCHs in October 2018, based on 
Medicare claims data that were collected on chemotherapy treatments 
performed from July 1, 2016-June 30, 2017. To execute this confidential 
reporting, we utilized facility-specific reports (FSRs), which allow 
facilities to preview measure results and patient data prior to public 
reporting. The FSRs included the following elements: Measure 
performance results; national results; detailed patient-level data used 
to calculate measure results; and a summary of each facility's patient-
mix. To ensure continuity in the observed measure performance results, 
we intend to complete a subsequent round of confidential national 
reporting in the spring of 2019, using Medicare claims data from July 
1, 2017 through June 30, 2018.
    Given the success of our first round of confidential reporting and 
the associated timeline of our subsequent round of confidential 
reporting, we are proposing to begin publicly reporting performance 
data on the Admissions and Emergency Department (ED) Visits for 
Patients Receiving Outpatient Chemotherapy measure in CY 2020. We 
believe that this proposed timeline allows for more accurate assessment 
of measure results and allows both CMS and the participating PCHs 
adequate time to review all the confidential reporting results.
c. Public Display of Centers for Disease Control and Prevention (CDC) 
National Healthcare Safety Network (NHSN) Measures
(1) Proposed Public Display of the Colon and Abdominal Hysterectomy 
SSI, MRSA, CDI and HCP Measures in CY 2019
    At present, all PCHs are reporting the CDC NHSN Healthcare-
Associated Infection (HAI) Colon and Abdominal Hysterectomy SSI, MRSA, 
CDI, and HCP data to the National Healthcare Safety Network (NHSN) for 
purposes of the PCHQR Program. We finalized in the FY 2019 IPPS/LTCH 
PPS final rule (83 FR 41622) that we would provide stakeholders with 
performance data for these measures as soon as practicable (that is, we 
will publicly report it on the Hospital Compare website via the next 
available Hospital Compare release). In addition, we noted that the CDC 
announced that HAI data reported to the NHSN for 2015 will be used as 
the new baseline, serving as a new ``reference point'' for comparing 
progress.\624\ Currently, these rebaselining efforts--specifically, 
generation and implementation of new predictive models used to 
calculate SIRs--are complete. As such, we are proposing to publicly 
report data for the Colon and Abdominal Hysterectomy SSI, MRSA, CDI, 
and HCP measures beginning with the October 2019 Hospital Compare 
release.
---------------------------------------------------------------------------

    \624\ Centers for Disease Control and Prevention. ``Paving Path 
Forward: 2015 Rebase line.'' Available at: https://www.cdc.gov/nhsn/2015rebaseline/index.html.
---------------------------------------------------------------------------

(2) Continued Deferral of Public Display of the CAUTI and CLABSI 
Measures
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59149 
through 59153), we finalized that we would not remove the Catheter-
Associated Urinary Tract Infection (CAUTI) Outcome Measure (PCH-5/NQF 
#0138) and the Central Line-Associated Bloodstream Infection (CLABSI) 
Outcome Measure (PCH-4/NQF #0139) from the PCHQR measure set. We also 
noted that we will continue to defer public reporting for the CAUTI and 
CLABSI measures (83 FR 59153).
    We are continuing to work alongside the CDC to evaluate the 
performance data for the updated, risk-adjusted versions of the CAUTI 
and CLABSI measures so that we can draw conclusions about their 
statistical significance in accordance with current risk adjustment 
methods defined by CDC. In order to allow adequate time for data 
collection by the CDC, submission of those data to CMS, and our review 
of the data for accuracy and completeness, we believe that the earliest 
we will be able to publicly display information on the revised versions 
of the CAUTI and CLABSI measures will be CY 2022. Therefore, we will 
continue to defer public reporting of the CAUTI and CLABSI measures and 
intend to provide stakeholders with performance data on the measures as 
soon as practicable.
d. Summary of Previously Finalized and Proposed Public Display 
Requirements for the PCHQR Program
    Our previously finalized and proposed public display requirements 
for the PCHQR Program are shown in the following table:

  Previously Finalized and Proposed Public Display Requirements for the
                              PCHQR Program
    [Summary of previously adopted and newly proposed public display
                              requirements]
------------------------------------------------------------------------
                    Measures                         Public reporting
------------------------------------------------------------------------
 HCAHPS (NQF #0166) *...................  2016 and subsequent
                                                   years.
 Oncology: Plan of Care for Pain--        ......................
 Medical Oncology and Radiation Oncology (NQF
 #0383).
 External Beam Radiotherapy for Bone      2017 and subsequent
 Metastases (EBRT) (NQF #1822) **.                 years.
 American College of Surgeons--Centers    October of CY 2019.
 for Disease Control and Prevention (ACS-CDC)
 Harmonized Procedure Specific Surgical Site
 Infection (SSI) Outcome Measure [currently
 includes SSIs following Colon Surgery and
 Abdominal Hysterectomy Surgery] (NQF #0753).
 National Healthcare Safety Network       ......................
 (NHSN) Facility[dash]wide Inpatient Hospital-
 onset Methicillin[dash]resistant Staphylococcus
 aureus Bacteremia Outcome Measure (NQF #1716).
 National Healthcare Safety Network       ......................
 (NHSN) Facility[dash]wide Inpatient Hospital-
 onset Clostridium difficile Infection (CDI)
 Outcome Measure (NQF #1717).
 National Healthcare Safety Network       ......................
 (NHSN) Influenza Vaccination Coverage Among
 Healthcare Personnel (NQF #0431).

[[Page 19510]]

 
 Admissions and Emergency Department      CY 2020.
 (ED) Visits for Patients Receiving Outpatient
 Chemotherapy.
 CAUTI (NQF #0138)......................  Deferred until CY
                                                   2022.
 CLABSI (NQF #0139).....................  ......................
------------------------------------------------------------------------
* In section VIII.B.2.b. of the preamble of this this proposed rule, we
  are proposing that beginning with October 2018 discharges, publicly
  reported data will not include responses Pain Management questions.
** In section VIII.B.4. of the preamble of this this proposed rule, we
  are proposing to remove this measure, beginning with the FY 2022
  program year.

9. Form, Manner, and Timing of Data Submission
a. Background
    Data submission requirements and deadlines for the PCHQR Program 
are posted on the QualityNet website at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772864228.
b. Proposed Confidential National Reporting for Certain Existing PCHQR 
Measures
    We are proposing to conduct a confidential national reporting for 
data collection of the following measures in the PCHQR measure set:
     Proportion of patients who died from cancer receiving 
chemotherapy in the last 14 days of life (NQF #0210);
     Proportion of patients who died from cancer admitted to 
the ICU in the last 30 days of life (NQF #0213);
     Proportion of patients who died from cancer not admitted 
to hospice (NQF #0215);
     Proportion of patients who died from cancer admitted to 
hospice for less than 3 days (NQF #0216); and
     30-Day Unplanned Readmissions for Cancer Patients measure 
(NQF #3188).
(1) Background
    We initially adopted the four end-of-life care measures in the FY 
2018 IPPS/LTCH PPS final rule (82 FR 38414 through 38420) for inclusion 
in the PCHQR Program beginning with the FY 2020 program year. We also 
finalized that the initial data collection period would be from July 1, 
2017 through June 30, 2018 (82 FR 38424). After we adopted the 
measures, the American Society of Clinical Oncology (ASCO), which is 
the measure steward, updated their technical specifications. We believe 
that these updates are not substantive and that we do not need to use 
the rulemaking process to incorporate them. We also note that there has 
been no change in the measures' data source. Specifically, the measures 
will continue to be calculated using Medicare claims data.
    We initially adopted the 30-Day Unplanned Readmissions for Cancer 
Patients measure (NQF #3188) in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41614 through 41616). This is also a claims-based measure; 
adopted for implementation beginning with the FY 2021 program year and 
with an initial data collection period of October 1, 2018 through 
September 30, 2019 (83 FR 41616).
(2) Proposed Confidential National Reporting for Data Collection
    To prepare PCHs for public reporting, we are proposing to conduct 
two confidential reporting periods of measure results prior to public 
reporting. Consistent with previous confidential national reporting 
efforts for measures in the PCHQR Program, the objectives of the 
confidential national reporting are to: (1) Educate PCHs and other 
stakeholders about the measures; (2) allow PCHs to review their measure 
results and data prior to public reporting; (3) answer questions from 
PCHs and other stakeholders; (4) test the production and reporting 
process; and (5) identify potential additional technical changes to the 
measure specifications that might be needed. We believe these 
confidential national reporting activities will enable hospitals to 
gain data collection and reporting experience familiarity with these 
refined measures for their efforts to improve quality and better 
understand the measure specifications and associated data. Confidential 
national reporting is important because it affords CMS an opportunity 
to examine a measure's performance prior to publicly sharing data with 
stakeholders and is a method of ensuring that the publicly reported 
measure performance results are as accurate as possible. Confidential 
national reporting will also allow both CMS and participating PCHs 
adequate time to review all the performance results for the respective 
measures. This will mitigate the possibility of CMS having to suppress 
inaccurate and/or inadequate measure data, because we will have had an 
opportunity to preview it over a broader span of time than the standard 
30-day preview period associated with public reporting.
    For the group end-of-life care measures, we are proposing to 
conduct confidential national reporting using Medicare claims data 
collected from July 1, 2019 through June 30, 2020. For the 30-Day 
Unplanned Readmissions for Cancer Patients measure, we are proposing to 
conduct confidential national reporting using Medicare claims data 
collected from October 1, 2019 through September 30, 2020. We plan to 
include measure results from the confidential national reporting in the 
facility-specific feedback reports (FSRs) that we provide to PCHs. The 
FSRs will include the following elements: Measure performance results, 
national results (based on the performance of the 11 PCHs), detailed 
patient-level data used to calculate measure results and a summary of 
each PCH's patient-mix.
10. Extraordinary Circumstances Exceptions (ECE) Policy Under the PCHQR 
Program
    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41623 through 41624), for a discussion of the Extraordinary 
Circumstances Exceptions (ECE) policy under the PCHQR Program. In this 
proposed rule, we are not proposing any changes to this policy.

C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

1. Background
    The Long-Term Care Hospital Quality Reporting Program (LTCH QRP) is 
authorized by section 1886(m)(5) of the Act, and it applies to all 
hospitals certified by Medicare as long-term care hospitals (LTCHs). 
Under the LTCH QRP, the Secretary must reduce 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 has not complied with the 
LTCH QRP requirements specified for that fiscal year. For more 
information on the requirements we

[[Page 19511]]

have adopted for the LTCH QRP, we refer readers to the FY 2012 IPPS/
LTCH PPS final rule (76 FR 51743 through 51744), the FY 2013 IPPS/LTCH 
PPS final rule (77 FR 53614), the FY 2014 IPPS/LTCH PPS final rule (78 
FR 50853), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50286), the FY 
2016 IPPS/LTCH PPS final rule (80 FR 49723 through 49725), the FY 2017 
IPPS/LTCH PPS final rule (81 FR 57193), the FY 2018 IPPS/LTCH PPS final 
rule (82 FR 38425 through 38426), and the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41624 through 41634).
2. General Considerations Used for the Selection of Measures for the 
LTCH QRP
    For a detailed discussion of the considerations we historically 
used for the selection of LTCH QRP quality, resource use, and other 
measures, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 
FR 49728).
3. Quality Measures Currently Adopted for the FY 2021 LTCH QRP
    The LTCH QRP currently has 15 measures for the FY 2021 LTCH QRP, 
which are set out in the following table:

       Quality Measures Currently Adopted for the FY 2021 LTCH QRP
------------------------------------------------------------------------
          Short name                  Measure name and data source
------------------------------------------------------------------------
                           LTCH CARE Data Set
------------------------------------------------------------------------
Pressure Ulcer/Injury........  Changes in Skin Integrity Post-Acute
                                Care: Pressure Ulcer/Injury.
Application of Falls.........  Application of Percent of Residents
                                Experiencing One or More Falls with
                                Major Injury (Long Stay) (NQF #0674).
Functional Assessment........  Percent of Long-Term Care Hospital (LTCH)
                                Patients with an Admission and Discharge
                                Functional Assessment and a Care Plan
                                That Addresses Function (NQF #2631).
Application of Functional      Application of Percent of Long-Term Care
 Assessment.                    Hospital (LTCH) Patients with an
                                Admission and Discharge Functional
                                Assessment and a Care Plan That
                                Addresses Function (NQF #2631).
Change in Mobility...........  Functional Outcome Measure: Change in
                                Mobility Among Long-Term Care Hospital
                                (LTCH) Patients Requiring Ventilator
                                Support (NQF #2632).
DRR..........................  Drug Regimen Review Conducted With Follow-
                                Up for Identified Issues-Post Acute Care
                                (PAC) Long-Term Care Hospital (LTCH)
                                Quality Reporting Program (QRP).
Compliance with SBT..........  Compliance with Spontaneous Breathing
                                Trial (SBT) by Day 2 of the LTCH Stay.
Ventilator Liberation........  Ventilator Liberation Rate.
------------------------------------------------------------------------
                                  NHSN
------------------------------------------------------------------------
CAUTI........................  National Healthcare Safety Network (NHSN)
                                Catheter-Associated Urinary Tract
                                Infection (CAUTI) Outcome Measure (NQF
                                #0138).
CLABSI.......................  National Healthcare Safety Network (NHSN)
                                Central Line-associated Bloodstream
                                Infection (CLABSI) Outcome Measure (NQF
                                #0139).
CDI..........................  National Healthcare Safety Network (NHSN)
                                Facility-wide Inpatient Hospital-onset
                                Clostridium difficile Infection (CDI)
                                Outcome Measure (NQF #1717).
HCP Influenza Vaccine........  Influenza Vaccination Coverage among
                                Healthcare Personnel (NQF #0431).
------------------------------------------------------------------------
                              Claims-Based
------------------------------------------------------------------------
MSPB LTCH....................  Medicare Spending Per Beneficiary (MSPB)-
                                Post Acute Care (PAC) Long-Term Care
                                Hospital (LTCH) Quality Reporting
                                Program (QRP).
DTC..........................  Discharge to Community--Post Acute Care
                                (PAC) Long-Term Care Hospital (LTCH)
                                Quality Reporting Program (QRP).
PPR..........................  Potentially Preventable 30-Day Post-
                                Discharge Readmission Measure for Long-
                                Term Care Hospital (LTCH) Quality
                                Reporting Program (QRP).
------------------------------------------------------------------------

4. LTCH QRP Quality Measure Proposals Beginning With the FY 2022 LTCH 
QRP
    In this proposed rule, we are proposing to adopt two process 
measures for the LTCH QRP that would satisfy section 1899B(c)(1)(E)(ii) 
of the Act, which requires that the quality measures specified by the 
Secretary include measures with respect to the quality measure domain 
titled ``Accurately communicating the existence of and providing for 
the transfer of health information and care preferences of an 
individual to the individual, family caregiver of the individual, and 
providers of services furnishing items and services to the individual 
when the individual transitions from a post-acute care (PAC) provider 
to another applicable setting, including a different PAC provider, a 
hospital, a critical access hospital, or the home of the individual.'' 
Given the length of this domain title, hereafter, we will refer to this 
quality measure domain as ``Transfer of Health Information.''
    The two measures we are proposing to adopt are: (1) Transfer of 
Health Information to the Provider-Post-Acute Care (PAC); and (2) 
Transfer of Health Information to the Patient-Post-Acute Care (PAC). 
Both of these proposed measures support our Meaningful Measures 
priority of promoting effective communication and coordination of care, 
specifically the Meaningful Measure area of the transfer of health 
information and interoperability.
    In addition to the two measure proposals, we are proposing to 
update the specifications for the Discharge to Community--Post Acute 
Care (PAC) LTCH QRP measure to exclude baseline nursing facility (NF) 
residents from the measure.
a. Proposed Transfer of Health Information to the Provider--Post-Acute 
Care (PAC) Measure
    The proposed Transfer of Health Information to the Provider-Post-
Acute Care (PAC) Measure is a process-based measure that assesses 
whether or not a current reconciled medication list is given to the 
subsequent provider when a patient is discharged or transferred from 
his or her current PAC setting.

[[Page 19512]]

(1) Background
    In 2013, 22.3 percent of all acute hospital discharges were 
discharged to PAC settings, including 11 percent who were discharged to 
home under the care of a home health agency, and 9 percent who were 
discharged to SNFs.\625\ The proportion of patients being discharged 
from an acute care hospital to a PAC setting was greater among 
beneficiaries enrolled in Medicare fee-for-service (FFS). Among 
Medicare FFS patients discharged from an acute hospital, 42 percent 
went directly to PAC settings. Of that 42 percent, 20 percent were 
discharged to a SNF, 18 percent were discharged to a home health agency 
(HHA), 3 percent were discharged to an IRF, and 1 percent were 
discharged to an LTCH.\626\ Of the Medicare FFS beneficiaries with an 
LTCH stay in FYs 2016 and 2017, an estimated 9 percent were discharged 
or transferred to an acute care hospital, 18 percent discharged home 
with home health services, 38 percent discharged or transferred to a 
SNF, and 10 percent discharged or transferred to another PAC setting 
(for example, an IRF, a hospice, or another LTCH).\627\
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    \625\ Tian, W. ``An all-payer view of hospital discharge to 
post-acute care,'' May 2016. Available at: https://www.hcup-us.ahrq.gov/reports/statbriefs/sb205-Hospital-Discharge-Postacute-Care.jsp.
    \626\ Ibid.
    \627\ RTI International analysis of Medicare claims data for 
index stays in LTCH 2016/2017. (RTI program reference: MM150).
---------------------------------------------------------------------------

    The transfer and/or exchange of health information from one 
provider to another can be done verbally (for example, clinician-to-
clinician communication in-person or by telephone), paper-based (for 
example, faxed or printed copies of records), and via electronic 
communication (for example, through a health information exchange (HIE) 
network using an electronic health/medical record (EHR/EMR), and/or 
secure messaging). Health information, such as medication information, 
that is incomplete or missing increases the likelihood of a patient or 
resident safety risk, and is often life-
threatening.628 629 630 631 632 633 Poor communication and 
coordination across health care settings contributes to patient 
complications, hospital readmissions, emergency department visits, and 
medication errors.634 635 636 637 638 639 640 641 642 643 
Communication has been cited as the third most frequent root cause in 
sentinel events, which The Joint Commission defines \644\ as a patient 
safety event that results in death, permanent harm, or severe temporary 
harm. Failed or ineffective patient handoffs are estimated to play a 
role in 20 percent of serious preventable adverse events.\645\ When 
care transitions are enhanced through care coordination activities, 
such as expedited patient information flow, these activities can reduce 
duplication of care services and costs of care, resolve conflicting 
care plans, and prevent medical errors.646 647 648 649 650
---------------------------------------------------------------------------

    \628\ Kwan, J.L., Lo, L., Sampson, M., & Shojania, K.G., 
``Medication reconciliation during transitions of care as a patient 
safety strategy: a systematic review,'' Annals of Internal Medicine, 
2013, Vol. 158(5), pp. 397-403.
    \629\ Boockvar, K.S., Blum, S., Kugler, A., Livote, E., 
Mergenhagen, K.A., Nebeker, J.R., & Yeh, J., ``Effect of admission 
medication reconciliation on adverse drug events from admission 
medication changes,'' Archives of Internal Medicine, 2011, Vol. 
171(9), pp. 860-861.
    \630\ Bell, C.M., Brener, S.S., Gunraj, N., Huo, C., Bierman, 
A.S., Scales, D.C., & Urbach, D.R., ``Association of ICU or hospital 
admission with unintentional discontinuation of medications for 
chronic diseases,'' JAMA, 2011, Vol. 306(8), pp. 840-847.
    \631\ Basey, A.J., Krska, J., Kennedy, T.D., & Mackridge, A.J., 
``Prescribing errors on admission to hospital and their potential 
impact: a mixed-methods study,'' BMJ Quality & Safety, 2014, Vol. 
23(1), pp. 17-25.
    \632\ Desai, R., Williams, C.E., Greene, S.B., Pierson, S., & 
Hansen, R.A., ``Medication errors during patient transitions into 
nursing homes: characteristics and association with patient harm,'' 
The American Journal of Geriatric Pharmacotherapy, 2011, Vol. 9(6), 
pp. 413-422.
    \633\ Boling, P.A., ``Care transitions and home health care,'' 
Clinical Geriatric Medicine, 2009, Vol. 25(1), pp. 135-48.
    \634\ Barnsteiner, J.H., ``Medication Reconciliation: Transfer 
of medication information across settings--keeping it free from 
error,'' The American Journal of Nursing, 2005, Vol. 105(3), pp. 31-
36.
    \635\ Arbaje, A.I., Kansagara, D.L., Salanitro, A.H., Englander, 
H.L., Kripalani, S., Jencks, S.F., & Lindquist, L.A., ``Regardless 
of age: incorporating principles from geriatric medicine to improve 
care transitions for patients with complex needs,'' Journal of 
General Internal Medicine, 2014, Vol. 29(6), pp. 932-939.
    \636\ Jencks, S.F., Williams, M.V., & Coleman, E.A., 
``Rehospitalizations among patients in the Medicare fee-for-service 
program,'' New England Journal of Medicine, 2009, Vol. 360(14), pp. 
1418-1428.
    \637\ Institute of Medicine. ``Preventing medication errors: 
quality chasm series,'' Washington, DC: The National Academies Press 
2007. Available at: https://www.nap.edu/read/11623/chapter/1.
    \638\ Kitson, N.A., Price, M., Lau, F.Y., & Showler, G., 
``Developing a medication communication framework across continuums 
of care using the Circle of Care Modeling approach,'' BMC Health 
Services Research, 2013, Vol. 13(1), pp. 1-10.
    \639\ Mor, V., Intrator, O., Feng, Z., & Grabowski, D.C., ``The 
revolving door of rehospitalization from skilled nursing 
facilities,'' Health Affairs, 2010, Vol. 29(1), pp. 57-64.
    \640\ Institute of Medicine. ``Preventing medication errors: 
quality chasm series,'' Washington, DC: The National Academies Press 
2007. Available at: https://www.nap.edu/read/11623/chapter/1.
    \641\ Kitson, N.A., Price, M., Lau, F.Y., & Showler, G., 
``Developing a medication communication framework across continuums 
of care using the Circle of Care Modeling approach,'' BMC Health 
Services Research, 2013, Vol. 13(1), pp. 1-10.
    \642\ Forster, A.J., Murff, H.J., Peterson, J.F., Gandhi, T.K., 
& Bates, D.W., ``The incidence and severity of adverse events 
affecting patients after discharge from the hospital.'' Annals of 
Internal Medicine, 2003, 138(3), pp. 161-167.
    \643\ King, B.J., Gilmore-Bykovskyi, A.L., Roiland, R.A., 
Polnaszek, B.E., Bowers, B.J., & Kind, A.J. ``The consequences of 
poor communication during transitions from hospital to skilled 
nursing facility: a qualitative study,'' Journal of the American 
Geriatrics Society, 2013, Vol. 61(7), 1095-1102.
    \644\ The Joint Commission, ``Sentinel Event Policy'' available 
at: https://www.jointcommission.org/sentinel_event_policy_and_procedures/.
    \645\ The Joint Commission. ``Sentinel Event Data Root Causes by 
Event Type 2004-2015.'' 2016. Available at: https://www.jointcommission.org/assets/1/23/jconline_Mar_2_2016.pdf.
    \646\ Mor, V., Intrator, O., Feng, Z., & Grabowski, D.C., ``The 
revolving door of rehospitalization from skilled nursing 
facilities,'' Health Affairs, 2010, Vol. 29(1), pp. 57-64.
    \647\ Institute of Medicine, ``Preventing medication errors: 
quality chasm series,'' Washington, DC: The National Academies 
Press, 2007. Available at: https://www.nap.edu/read/11623/chapter/1.
    \648\ Starmer, A.J., Sectish, T.C., Simon, D.W., Keohane, C., 
McSweeney, M.E., Chung, E.Y., Yoon, C.S., Lipsitz, S.R., Wassner, 
A.J., Harper, M.B., & Landrigan, C.P., ``Rates of medical errors and 
preventable adverse events among hospitalized children following 
implementation of a resident handoff bundle,'' JAMA, 2013, Vol. 
310(21), pp. 2262-2270.
    \649\ Pronovost, P., M.M.E. Johns, S. Palmer, R.C. Bono, D.B. 
Fridsma, A. Gettinger, J., Goldman, W. Johnson, M. Karney, C. 
Samitt, R.D. Sriram, A. Zenooz, and Y.C. Wang, Editors. Procuring 
Interoperability: Achieving High-Quality, Connected, and Person-
Centered Care. Washington, DC, 2018. National Academy of Medicine. 
Available at: https://nam.edu/wp-content/uploads/2018/10/Procuring-Interoperability_web.pdf.
    \650\ Balaban R.B., Weissman J.S., Samuel P.A., & Woolhandler, 
S., ``Redefining and redesigning hospital discharge to enhance 
patient care: a randomized controlled study,'' J Gen Intern Med, 
2008, Vol. 23(8), pp. 1228-33.
---------------------------------------------------------------------------

    Care transitions across health care settings have been 
characterized as complex, costly, and potentially hazardous, and may 
increase the risk for multiple adverse outcomes.651 652 The 
rising incidence of preventable adverse events, complications, and 
hospital readmissions have drawn attention to the importance of the 
timely transfer of health information and care preferences at the time 
of transition. Failures of care coordination, including poor 
communication of information, were estimated to cost the U.S. health 
care system between $25 billion and $45

[[Page 19513]]

billion in wasteful spending in 2011.\653\ The communication of health 
information and patient care preferences is critical to ensuring safe 
and effective transitions from one health care setting to 
another.654 655
---------------------------------------------------------------------------

    \651\ Arbaje, A.I., Kansagara, D.L., Salanitro, A.H., Englander, 
H.L., Kripalani, S., Jencks, S.F., & Lindquist, L.A., ``Regardless 
of age: incorporating principles from geriatric medicine to improve 
care transitions for patients with complex needs,'' Journal of 
General Internal Medicine, 2014, Vol. 29(6), pp. 932-939.
    \652\ Simmons, S., Schnelle, J., Slagle, J., Sathe, N.A., 
Stevenson, D., Carlo, M., & McPheeters, M.L., ``Resident safety 
practices in nursing home settings.'' Technical Brief No. 24 
(Prepared by the Vanderbilt Evidence-based Practice Center under 
Contract No. 290-2015-00003-I.) AHRQ Publication No. 16-EHC022-EF. 
Rockville, MD: Agency for Healthcare Research and Quality. May 2016. 
Available at: https://www.ncbi.nlm.nih.gov/books/NBK384624/.
    \653\ Berwick, D.M. & Hackbarth, A.D. ``Eliminating Waste in US 
Health Care,'' JAMA, 2012, Vol. 307(14), pp. 1513-1516.
    \654\ McDonald, K.M., Sundaram, V., Bravata, D.M., Lewis, R., 
Lin, N., Kraft, S.A. & Owens, D.K. Care Coordination. Vol. 7 of: 
Shojania K.G., McDonald K.M., Wachter R.M., Owens D.K., editors. 
``Closing the quality gap: A critical analysis of quality 
improvement strategies.'' Technical Review 9 (Prepared by the 
Stanford University-UCSF Evidence-based Practice Center under 
contract 290-02-0017). AHRQ Publication No. 04(07)-0051-7. 
Rockville, MD: Agency for Healthcare Research and Quality. June 
2006. Available at: https://www.ncbi.nlm.nih.gov/books/NBK44015/.
    \655\ Lattimer, C., ``When it comes to transitions in patient 
care, effective communication can make all the difference,'' 
Generations, 2011, Vol. 35(1), pp. 69-72.
---------------------------------------------------------------------------

    Patients in PAC settings often have complicated medication regimens 
and require efficient and effective communication and coordination of 
care between settings, including detailed transfer of medication 
information.656 657 658 Individuals in PAC settings may be 
vulnerable to adverse health outcomes due to insufficient medication 
information on the part of their health care providers, and the higher 
likelihood for multiple comorbid chronic conditions, polypharmacy, and 
complicated transitions between care settings.659 660 
Preventable adverse drug events (ADEs) may occur after hospital 
discharge in a variety of settings including PAC.\661\ A 2014 Office of 
Inspector General report found that 21 percent of Medicare patients in 
LTCHs experienced adverse events, with 31 percent of those events being 
medication related. Over half of the adverse events and temporary harm 
events were clearly or likely preventable.\662\ Patient stays in LTCHs 
present more opportunities for harm events than other settings because 
the stays are longer. Medication errors and one-fifth of ADEs occur 
during transitions between settings, including admission to or 
discharge from a hospital to home or a PAC setting, or transfer between 
hospitals.663 664
---------------------------------------------------------------------------

    \656\ Starmer A.J, Spector N.D., Srivastava R., West, D.C., 
Rosenbluth, G., Allen, A.D., Noble, E.L., & Landrigen, C.P., 
``Changes in medical errors after implementation of a handoff 
program,'' N Engl J Med, 2014, Vol. 37(1), pp. 1803-1812.
    \657\ Kruse, C.S. Marquez, G., Nelson, D., & Polomares, O., 
``The use of health information exchange to augment patient handoff 
in long-term care: a systematic review,'' Applied Clinical 
Informatics, 2018, Vol. 9(4), pp. 752-771.
    \658\ Brody, A.A., Gibson, B., Tresner-Kirsch, D., Kramer, H., 
Thraen, I., Coarr, M.E., & Rupper, R., ``High prevalence of 
medication discrepancies between home health referrals and Centers 
for Medicare and Medicaid Services home health certification and 
plan of care and their potential to affect safety of vulnerable 
elderly adults,'' Journal of the American Geriatrics Society, 2016, 
Vol. 64(11), pp. e166-e170.
    \659\ Chhabra, P.T., Rattinger, G.B., Dutcher, S.K., Hare, M.E., 
Parsons, K., L., & Zuckerman, I.H., ``Medication reconciliation 
during the transition to and from long-term care settings: a 
systematic review,'' Res Social Adm Pharm, 2012, Vol. 8(1), pp. 60-
75.
    \660\ Health and Human Services Office of Inspector General. 
Adverse Events in Long-Term-Care Hospitals: National Incidence Among 
Medicare Beneficiaries. (OEI-06-14-00530). 2018. Available at: 
https://oig.hhs.gov/oei/reports/oei-06-14-00530.asp.
    \661\ Battles J., Azam I., Grady M., & Reback K., ``Advances in 
patient safety and medical liability,'' AHRQ Publication No. 17-
0017-EF. Rockville, MD: Agency for Healthcare Research and Quality, 
August 2017. Available at: https://www.ahrq.gov/sites/default/files/publications/files/advances-complete_3.pdf.
    \662\ Health and Human Services Office of Inspector General. 
Adverse Events in Long-Term-Care Hospitals: National Incidence Among 
Medicare Beneficiaries. (OEI-06-14-00530). 2018. Available at: 
https://oig.hhs.gov/oei/reports/oei-06-14-00530.asp.
    \663\ Barnsteiner, J.H., ``Medication Reconciliation: Transfer 
of medication information across settings--keeping it free from 
error,'' The American Journal of Nursing, 2005, Vol. 105(3), pp. 31-
36.
    \664\ Gleason, K.M., Groszek, J.M., Sullivan, C., Rooney, D., 
Barnard, C., Noskin, G.A., ``Reconciliation of discrepancies in 
medication histories and admission orders of newly hospitalized 
patients,'' American Journal of Health System Pharmacy, 2004, Vol. 
61(16), pp. 1689-1694.
---------------------------------------------------------------------------

    Patients in PAC settings are often taking multiple medications. 
Consequently, PAC providers regularly are in the position of starting 
complex new medication regimens with little knowledge of the patients 
or their medication history upon admission. Furthermore, inter-facility 
communication barriers delay resolving medication discrepancies during 
transitions of care.\665\ Medication discrepancies are common,\666\ and 
found to occur in 86 percent of all transitions, increasing the 
likelihood of ADEs.667 668 669 Up to 90 percent of patients 
experience at least one medication discrepancy in the transition from 
hospital to home care, and discrepancies occur within all therapeutic 
classes of medications.670 671
---------------------------------------------------------------------------

    \665\ Patterson M., Foust J.B., Bollinger, S., Coleman, C., 
Nguyen, D., ``Inter-facility communication barriers delay resolving 
medication discrepancies during transitions of care,'' Research in 
Social & Administrative Pharmacy (2018), doi: 10.1016/
j.sapharm.2018.05.124.
    \666\ Manias, E., Annaikis, N., Considine, J., Weerasuriya, R., 
& Kusljic, S. ``Patient-, medication- and environment-related 
factors affecting medication discrepancies in older patients,'' 
Collegian, 2017, Vol. 24, pp. 571-577.
    \667\ Tjia, J., Bonner, A., Briesacher, B.A., McGee, S., 
Terrill, E., Miller, K., ``Medication discrepancies upon hospital to 
skilled nursing facility transitions,'' J Gen Intern Med, 2009, Vol. 
24(5), pp. 630-635.
    \668\ Sinvani, L.D., Beizer, J., Akerman, M., Pekmezaris, R., 
Nouryan, C., Lutsky, L., Cal, C., Dlugacz, Y., Masick, K., Wolf-
Klein, G.,``Medication reconciliation in continuum of care 
transitions: a moving target,'' J Am Med Dir Assoc, 2013, Vol. 
14(9), 668-672.
    \669\ Coleman E.A., Parry C., Chalmers S., & Min, S.J., ``The 
Care Transitions Intervention: results of a randomized controlled 
trial,'' Arch Intern Med, 2006, Vol. 166, pp. 1822-28.
    \670\ Corbett C.L., Setter S.M., Neumiller J.J., & Wood, l.D., 
``Nurse identified hospital to home medication discrepancies: 
implications for improving transitional care,'' Geriatr Nurs, 2011, 
Vol. 31(3), pp. 188-96.
    \671\ Setter S.M., Corbett C.F., Neumiller J.J., Gates, B. J., 
Sclar, D.A., & Sonnett, T.E., ``Effectiveness of a pharmacist-nurse 
intervention on resolving medication discrepancies in older patients 
transitioning from hospital to home care: impact of a pharmacy/
nursing intervention,'' Am J Health Syst Pharm, 2009, Vol. 66, pp. 
2027-31.
---------------------------------------------------------------------------

    Transfer of a medication list between providers is necessary for 
medication reconciliation interventions, which have been shown to be a 
cost-effective way to avoid ADEs by reducing 
errors,672 673 674 especially when medications are reviewed 
by a pharmacist using electronic medical records.\675\
---------------------------------------------------------------------------

    \672\ Boockvar, K.S., Blum, S., Kugler, A., Livote, E., 
Mergenhagen, K.A., Nebeker, J.R., & Yeh, J., ``Effect of admission 
medication reconciliation on adverse drug events from admission 
medication changes,'' Archives of Internal Medicine, 2011, Vol. 
171(9), pp. 860-861.
    \673\ Kwan, J.L., Lo, L., Sampson, M., & Shojania, K.G., 
``Medication reconciliation during transitions of care as a patient 
safety strategy: a systematic review,'' Annals of Internal Medicine, 
2013, Vol. 158(5), pp. 397-403.
    \674\ Chhabra, P.T., Rattinger, G.B., Dutcher, S.K., Hare, M.E., 
Parsons, K., L., & Zuckerman, I.H., ``Medication reconciliation 
during the transition to and from long-term care settings: a 
systematic review,'' Res Social Adm Pharm, 2012, Vol. 8(1), pp. 60-
75.
    \675\ Agrawal A, Wu WY. ``Reducing medication errors and 
improving systems reliability using an electronic medication 
reconciliation system,'' The Joint Commission Journal on Quality and 
Patient Safety, 2009, Vol. 35(2), pp. 106-114.
---------------------------------------------------------------------------

(2) Stakeholder and Technical Expert Panel (TEP) Input
    The proposed measure was developed after consideration of feedback 
we received from stakeholders and four TEPs convened by our 
contractors. Further, the proposed measure was developed after 
evaluation of data collected during two pilot tests we conducted in 
accordance with the CMS Measures Management System Blueprint.
    Our measure development contractors constituted a TEP which met on 
September 27, 2016,\676\ January 27,

[[Page 19514]]

2017, and August 3, 2017 \677\ to provide input on a prior version of 
this measure. Based on this input, we updated the measure concept in 
late 2017 to include the transfer of a specific component of health 
information--medication information. Our measure development 
contractors reconvened this TEP on April 20, 2018 for the purpose of 
obtaining expert input on the proposed measure, including the measure's 
reliability, components of face validity, and feasibility of being 
implemented across PAC settings. Overall, the TEP was supportive of the 
proposed measure, affirming that the measure provides an opportunity to 
improve the transfer of medication information. A summary of the April 
20, 2018 TEP proceedings titled ``Transfer of Health Information TEP 
Meeting 4--June 2018'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
---------------------------------------------------------------------------

    \676\ Technical Expert Panel Summary Report: Development of two 
quality measures to satisfy the Improving Medicare Post-Acute Care 
Transformation Act of 2014 (IMPACT Act) Domain of Transfer of health 
Information and Care Preferences When an Individual Transitions to 
Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation 
Facilities (IRFs), Long Term Care Hospitals (LTCHs) and Home Health 
Agencies (HHAs). Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Transfer-of-Health-Information-TEP_Summary_Report_Final-June-2017.pdf.
    \677\ Technical Expert Panel Summary Report: Development of two 
quality measures to satisfy the Improving Medicare Post-Acute Care 
Transformation Act of 2014 (IMPACT Act) Domain of Transfer of health 
Information and Care Preferences When an Individual Transitions to 
Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation 
Facilities (IRFs), Long Term Care Hospitals (LTCHs) and Home Health 
Agencies (HHAs). Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Transfer-of-Health-Information-TEP-Meetings-2-3-Summary-Report_Final_Feb2018.pdf.
---------------------------------------------------------------------------

    Our measure development contractors solicited stakeholder feedback 
on the proposed measure by requesting comment on the CMS Measures 
Management System Blueprint website, and accepted comments that were 
submitted from March 19, 2018 to May 3, 2018. The comments received 
expressed overall support for the measure. Several commenters suggested 
ways to improve the measure, primarily related to what types of 
information should be included at transfer. We incorporated this input 
into development of the proposed measure. The summary report for the 
March 19 to May 3, 2018 public comment period titled ``IMPACT--
Medication Profile Transferred Public Comment Summary Report'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
(3) Pilot Testing
    The proposed measure was tested between June and August 2018 in a 
pilot test that involved 24 PAC facilities/agencies, including five 
IRFs, six SNFs, six LTCHs, and seven HHAs. The 24 pilot sites submitted 
a total of 801 records. Analysis of agreement between coders within 
each participating facility (266 qualifying pairs) indicated a 93-
percent agreement for this measure. Overall, pilot testing enabled us 
to verify its reliability, components of face validity, and feasibility 
of being implemented across PAC settings. Further, more than half of 
the sites that participated in the pilot test stated during the 
debriefing interviews that the measure could distinguish facilities or 
agencies with higher quality medication information transfer from those 
with lower quality medication information transfer at discharge. The 
pilot test summary report titled ``Transfer of Health Information 2018 
Pilot Test Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
(4) Measure Applications Partnership (MAP) Review and Related Measures
    We included the proposed measure in the LTCH QRP section of the 
2018 Measures Under Consideration (MUC) list. The MAP conditionally 
supported this measure pending NQF endorsement, noting that the measure 
can promote the transfer of important medication information. The MAP 
also suggested that CMS consider a measure that can be adapted to 
capture bi-directional information exchange, and recommended that the 
medication information transferred include important information about 
supplements and opioids. More information about the MAP's 
recommendations for this measure is available at: http://www.qualityforum.org/Publications/2019/02/MAP_2019_Considerations_for_Implementing_Measures_Final_Report_-_PAC-LTC.aspx.
    As part of the measure development and selection process, we also 
identified one NQF-endorsed quality measure similar to the proposed 
measure, titled Documentation of Current Medications in the Medical 
Record (NQF #0419, CMS eCQM ID: CMS68v8). This measure was adopted as 
one of the recommended adult core clinical quality measures for 
eligible professionals for the EHR Incentive Program beginning in 2014 
and was also adopted under the Merit-based Incentive Payment System 
(MIPS) quality performance category beginning in 2017. The measure is 
calculated based on the percentage of visits for patients aged 18 years 
and older for which the eligible professional or eligible clinician 
attests to documenting a list of current medications using all 
resources immediately available on the date of the encounter.
    The proposed Transfer of Health Information to the Provider-Post-
Acute Care (PAC) measure addresses the transfer of information whereas 
the NQF-endorsed measure #0419 assesses the documentation of 
medications, but not the transfer of such information. This is 
important as the proposed measure assesses for the transfer of 
medication information for the proposed measure calculation. Further, 
the proposed measure utilizes standardized patient assessment data 
elements (SPADEs), which is a requirement for measures specified under 
the Transfer of Health Information measure domain under section 
1899B(c)(1)(E) of the Act, whereas NQF #0419 does not.
    After review of the NQF-endorsed measure, we determined that the 
proposed Transfer of Health Information to the Provider--Post-Acute 
Care (PAC) measure better addresses the Transfer of Health Information 
measure domain, which requires that at least some of the data used to 
calculate the measure be collected as standardized patient assessment 
data through the post-acute care assessment instruments. Section 
1886(m)(5)(D)(i) of the Act requires that any measure specified by the 
Secretary be endorsed by the entity with a contract under section 
1890(a) of the Act, which is currently the National Quality Form (NQF). 
However, when a feasible and practical measure has not been NQF 
endorsed for a specified area or medical topic determined appropriate 
by the Secretary, section 1886(m)(5)(D)(ii) of the Act allows the 
Secretary to specify a measure that is not NQF endorsed as long as due 
consideration is given to the measures that have been endorsed or 
adopted by a consensus organization identified by the Secretary. For 
the reasons discussed above, we believe that there is currently no 
feasible NQF-endorsed measure that we could adopt under section 
1886(m)(5)(D)(ii) of the Act. However, we note that we intend to submit 
the proposed measure to the NQF for consideration of endorsement when 
feasible.

[[Page 19515]]

(5) Quality Measure Calculation
    The proposed Transfer of Health Information to the Provider--Post-
Acute Care (PAC) quality measure is calculated as the proportion of 
patient stays with a discharge assessment indicating that a current 
reconciled medication list was provided to the subsequent provider at 
the time of discharge. The proposed measure denominator is the total 
number of LTCH patient stays, regardless of payer, ending in discharge 
to a ``subsequent provider,'' which is defined as a short-term general 
acute-care hospital, intermediate care (intellectual and developmental 
disabilities providers), home under care of an organized home health 
service organization or hospice, hospice in an institutional facility, 
a SNF, another LTCH, an IRF, an inpatient psychiatric facility, or a 
CAH. These health care providers were selected for inclusion in the 
denominator because they are identified as subsequent providers on the 
discharge destination item that is currently included on the LTCH 
Continuity Assessment Record and Evaluation Data Set (LTCH CARE Data 
Set or LCDS). The proposed measure numerator is the number of LTCH 
patient stays with an LCDS discharge assessment indicating a current 
reconciled medication list was provided to the subsequent provider at 
the time of discharge. For additional technical information about this 
proposed measure, we refer readers to the document titled, ``Proposed 
Specifications for LTCH QRP Quality Measures and Standardized Patient 
Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html. The data source for the proposed quality measure is the 
LCDS assessment instrument for LTCH patients.
    For more information about the data submission requirements we are 
proposing for this measure, we refer readers to section VIII.C.8.d. of 
the preamble of this proposed rule.
b. Proposed Transfer of Health Information to the Patient--Post-Acute 
Care (PAC) Measure
    Beginning with the FY 2022 LTCH QRP, we are proposing to adopt the 
Transfer of Health Information to the Patient--Post-Acute Care (PAC) 
measure, a measure that satisfies the IMPACT Act domain of Transfer of 
Health Information, with data collection for discharges beginning 
October 1, 2020. This process-based measure assesses whether or not a 
current reconciled medication list was provided to the patient, family, 
or caregiver when the patient was discharged from a PAC setting to a 
private home/apartment, a board and care home, assisted living, a group 
home, transitional living or home under care of an organized home 
health service organization, or a hospice.
(1) Background
    In 2013, 22.3 percent of all acute hospital discharges were 
discharged to PAC settings, including 11 percent who were discharged to 
home under the care of a home health agency.\678\ Of the Medicare FFS 
beneficiaries with an LTCH stay in fiscal years 2016 and 2017, an 
estimated 18 percent were discharged home with home health services, 
nine percent were discharged home with self-care, and two percent were 
discharged with home hospice services.\679\
---------------------------------------------------------------------------

    \678\ Tian, W. ``An all-payer view of hospital discharge to 
postacute care,'' May 2016. Available at: https://www.hcup-us.ahrq.gov/reports/statbriefs/sb205-Hospital-Discharge-Postacute-Care.jsp.
    \679\ RTI International analysis of Medicare claims data for 
index stays in LTCH 2016/2017. (RTI program reference: MM150).
---------------------------------------------------------------------------

    The communication of health information, such as a reconciled 
medication list, is critical to ensuring safe and effective patient 
transitions from health care settings to home and/or other community 
settings. Incomplete or missing health information, such as medication 
information, increases the likelihood of a patient safety risk, often 
life-threatening.680 681 682 683 684 Individuals who use PAC 
care services are particularly vulnerable to adverse health outcomes 
due to their higher likelihood of having multiple comorbid chronic 
conditions, polypharmacy, and complicated transitions between care 
settings.685 686 Upon discharge to home, individuals in PAC 
settings may be faced with numerous medication changes, new medication 
regimes, and follow-up details.687 688 689 The efficient and 
effective communication and coordination of medication information may 
be critical to prevent potentially deadly adverse effects. When care 
coordination activities enhance care transitions, these activities can 
reduce duplication of care services and costs of care, resolve 
conflicting care plans, and prevent medical errors.690 691
---------------------------------------------------------------------------

    \680\ Kwan, J.L., Lo, L., Sampson, M., & Shojania, K.G. 
``Medication reconciliation during transitions of care as a patient 
safety strategy: A systematic review,'' Annals of Internal Medicine, 
2013, Vol. 158(5), pp. 397-403.
    \681\ Boockvar, K.S., Blum, S., Kugler, A., Livote, E., 
Mergenhagen, K.A., Nebeker, J.R., & Yeh, J. ``Effect of admission 
medication reconciliation on adverse drug events from admission 
medication changes,'' Archives of Internal Medicine, 2011, Vol. 
171(9), pp. 860-861.
    \682\ Bell, C.M., Brener, S.S., Gunraj, N., Huo, C., Bierman, 
A.S., Scales, D.C., & Urbach, D.R. ``Association of ICU or hospital 
admission with unintentional discontinuation of medications for 
chronic diseases,'' JAMA, 2011, Vol. 306(8), pp. 840-847.
    \683\ Basey, A.J., Krska, J., Kennedy, T.D., & Mackridge, A.J. 
``Prescribing errors on admission to hospital and their potential 
impact: A mixed-methods study,'' BMJ Quality & Safety, 2014, Vol. 
23(1), pp. 17-25.
    \684\ Desai, R., Williams, C.E., Greene, S.B., Pierson, S., & 
Hansen, R.A. ``Medication errors during patient transitions into 
nursing homes: Characteristics and association with patient harm,'' 
The American Journal of Geriatric Pharmacotherapy, 2011, Vol. 9(6), 
pp. 413-422.
    \685\ Brody, A.A., Gibson, B., Tresner-Kirsch, D., Kramer, H., 
Thraen, I., Coarr, M.E., & Rupper, R. ``High prevalence of 
medication discrepancies between home health referrals and Centers 
for Medicare and Medicaid Services home health certification and 
plan of care and their potential to affect safety of vulnerable 
elderly adults,'' Journal of the American Geriatrics Society, 2016, 
Vol. 64(11), pp. e166-e170.
    \686\ Chhabra, P.T., Rattinger, G.B., Dutcher, S.K. Hare, M.E., 
Parsons, K.L., & Zuckerman, I.H. ``Medication reconciliation during 
the transition to and from long-term care settings: A systematic 
review,'' Res Social Adm Pharm, 2012, Vol. 8(1), pp. 60-75.
    \687\ Brody, A.A., Gibson, B., Tresner-Kirsch, D., Kramer, H., 
Thraen, I., Coarr, M.E., & Rupper, R. ``High prevalence of 
medication discrepancies between home health referrals and Centers 
for Medicare and Medicaid Services home health certification and 
plan of care and their potential to affect safety of vulnerable 
elderly adults,'' Journal of the American Geriatrics Society, 2016, 
Vol. 64(11), pp. e166-e170.
    \688\ Bell, C.M., Brener, S.S., Gunraj, N., Huo, C., Bierman, 
A.S., Scales, D.C., & Urbach, D.R. ``Association of ICU or hospital 
admission with unintentional discontinuation of medications for 
chronic diseases,'' JAMA, 2011, Vol. 306(8), pp. 840-847.
    \689\ Sheehan, O.C., Kharrazi, H., Carl, K.J., Leff, B., Wolff, 
J.L., Roth, D.L., Gabbard, J., & Boyd, C.M. ``Helping older adults 
improve their medication experience (HOME) by addressing medication 
regimen complexity in home healthcare,'' Home Healthcare Now. 2018, 
Vol. 36(1), pp. 10-19.
    \690\ Mor, V., Intrator, O., Feng, Z., & Grabowski, D.C. ``The 
revolving door of rehospitalization from skilled nursing 
facilities,'' Health Affairs, 2010, Vol. 29(1), pp. 57-64.
    \691\ Starmer, A.J., Sectish, T.C., Simon, D.W., Keohane, C., 
McSweeney, M.E., Chung, E.Y., Yoon, C.S., Lipsitz, S.R., Wassner, 
A.J., Harper, M.B., & Landrigan, C.P. ``Rates of medical errors and 
preventable adverse events among hospitalized children following 
implementation of a resident handoff bundle,'' JAMA, 2013, Vol. 
310(21), pp. 2262-2270.
---------------------------------------------------------------------------

    Finally, the transfer of a patient's discharge medication 
information to the patient, family, or caregiver is common practice and 
supported by discharge planning requirements for participation in 
Medicare and Medicaid programs.692 693 Most PAC EHR systems

[[Page 19516]]

generate a discharge medication list to promote patient participation 
in medication management, which has been shown to be potentially useful 
for improving patient outcomes and transitional care.\694\
---------------------------------------------------------------------------

    \692\ CMS, ``Revision to state operations manual (SOM), Hospital 
Appendix A--Interpretive Guidelines for 42 CFR 482.43, Discharge 
Planning'' May 17, 2013. Available at: https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-13-32.pdf.
    \693\ The State Operations Manual Guidance to Surveyors for Long 
Term Care Facilities (Guidance Sec.  483.21(c)(1) Rev. 11-22-17) for 
discharge planning process. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107ap_pp_guidelines_ltcf.pdf.
    \694\ Toles, M., Colon-Emeric, C., Naylor, M.D., Asafu-Adjei, 
J., Hanson, L.C. ``Connect-home: Transitional care of skilled 
nursing facility patients and their caregivers,'' Am Geriatr Soc., 
2017, Vol. 65(10), pp. 2322-2328.
---------------------------------------------------------------------------

(2) Stakeholder and TEP Input
    The proposed measure was developed after consideration of feedback 
we received from stakeholders and four TEPs convened by our 
contractors. Further, the proposed measure was developed after 
evaluation of data collected during two pilot tests we conducted in 
accordance with the CMS Measures Management System Blueprint.
    Our measure development contractors constituted a TEP which met on 
September 27, 2016,\695\ January 27, 2017, and August 3, 2017 \696\ to 
provide input on a prior version of this measure. Based on this input, 
we updated the measure concept in late 2017 to include the transfer of 
a specific component of health information--medication information. Our 
measure development contractors reconvened this TEP on April 20, 2018 
to seek expert input on the measure. Overall, the TEP members supported 
the proposed measure, affirming that the measure provides an 
opportunity to improve the transfer of medication information. Most of 
the TEP members believed that the measure could improve the transfer of 
medication information to patients, families, and caregivers. Several 
TEP members emphasized the importance of transferring information to 
patients and their caregivers in a clear manner using plain language. A 
summary of the April 20, 2018 TEP proceedings titled ``Transfer of 
Health Information TEP Meeting 4--June 2018'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
---------------------------------------------------------------------------

    \695\ Technical Expert Panel Summary Report: Development of two 
quality measures to satisfy the Improving Medicare Post-Acute Care 
Transformation Act of 2014 (IMPACT Act) Domain of Transfer of health 
Information and Care Preferences When an Individual Transitions to 
Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation 
Facilities (IRFs), Long Term Care Hospitals (LTCHs) and Home Health 
Agencies (HHAs). Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Transfer-of-Health-Information-TEP_Summary_Report_Final-June-2017.pdf.
    \696\ Technical Expert Panel Summary Report: Development of two 
quality measures to satisfy the Improving Medicare Post-Acute Care 
Transformation Act of 2014 (IMPACT Act) Domain of Transfer of health 
Information and Care Preferences When an Individual Transitions to 
Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation 
Facilities (IRFs), Long Term Care Hospitals (LTCHs) and Home Health 
Agencies (HHAs). Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Transfer-of-Health-Information-TEP-Meetings-2-3-Summary-Report_Final_Feb2018.pdf.
---------------------------------------------------------------------------

    Our measure development contractors solicited stakeholder feedback 
on the proposed measure by requesting comment on the CMS Measures 
Management System Blueprint website, and accepted comments that were 
submitted from March 19, 2018 to May 3, 2018. Several commenters noted 
the importance of ensuring that the instruction provided to patients 
and caregivers is clear and understandable to promote transparent 
access to medical record information and meet the goals of the IMPACT 
Act. The summary report for the March 19 to May 3, 2018 public comment 
period titled ``IMPACT--Medication Profile Transferred Public Comment 
Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
(3) Pilot Testing
    Between June and August 2018, we held a pilot test involving 24 PAC 
facilities/agencies, including five IRFs, six SNFs, six LTCHs, and 
seven HHAs. The 24 pilot sites submitted a total of 801 assessments. 
Analysis of agreement between coders within each participating facility 
(241 qualifying pairs) indicated an 87-percent agreement for this 
measure. Overall, pilot testing enabled us to verify its reliability, 
components of face validity, and feasibility of being implemented 
across PAC settings. Further, more than half of the sites that 
participated in the pilot test stated, during debriefing interviews, 
that the measure could distinguish facilities or agencies with higher 
quality medication information transfer from those with lower quality 
medication information transfer at discharge. The pilot test summary 
report titled ``Transfer of Health Information 2018 Pilot Test Summary 
Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
(4) Measure Applications Partnership (MAP) Review and Related Measures
    We included the proposed measure in the LTCH QRP section of the 
2018 MUC list. The MAP conditionally supported this measure pending NQF 
endorsement, noting that the measure can promote the transfer of 
important medication information to the patient. The MAP recommended 
that providers transmit medication information to patients that is easy 
to understand because health literacy can impact a person's ability to 
take medication as directed. More information about the MAP's 
recommendations for this measure is available at: http://www.qualityforum.org/Publications/2019/02/MAP_2019_Considerations_for_Implementing_Measures_Final_Report_-_PAC-LTC.aspx.
    Section 1886(m)(5)(D)(i) of the Act, requires that any measure 
specified by the Secretary be endorsed by the entity with a contract 
under section 1890(a) of the Act, which is currently the NQF. However, 
when a feasible and practical measure has not been NQF endorsed for a 
specified area or medical topic determined appropriate by the 
Secretary, section 1886(m)(5)(D)(ii) of the Act allows the Secretary to 
specify a measure that is not NQF endorsed as long as due consideration 
is given to the measures that have been endorsed or adopted by a 
consensus organization identified by the Secretary. Therefore, in the 
absence of any NQF-endorsed measures that address the proposed Transfer 
of Health Information to the Patient--Post-Acute Care (PAC), which 
requires that at least some of the data used to calculate the measure 
be collected as standardized patient assessment data through the post-
acute care assessment instruments, we believe that there is currently 
no feasible NQF-endorsed measure that we could adopt under section 
1886(m)(5)(D)(ii) of the Act. However, we note that we intend to submit 
the proposed measure to the NQF for consideration of endorsement when 
feasible.
(5) Quality Measure Calculation
    The calculation of the proposed Transfer of Health Information to 
the Patient--Post-Acute Care (PAC) measure would be based on the 
proportion of patient stays with a discharge assessment indicating that 
a current

[[Page 19517]]

reconciled medication list was provided to the patient, family, or 
caregiver at the time of discharge.
    The proposed measure denominator is the total number of LTCH 
patient stays, regardless of payer, ending in discharge to a private 
home/apartment, a board and care home, assisted living, a group home, 
transitional living or home under care of an organized home health 
service organization, or a hospice. These locations were selected for 
inclusion in the denominator because they are identified as home 
locations on the discharge destination item that is currently included 
on the LCDS. The proposed measure numerator is the number of LTCH 
patient stays with an LCDS discharge assessment indicating a current 
reconciled medication list was provided to the patient, family, or 
caregiver at the time of discharge. For technical information about 
this proposed measure, we refer readers to the document titled 
``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html. Data for the proposed quality 
measure would be calculated using data from the LCDS assessment 
instrument for LTCH patients.
    For more information about the data submission requirements we are 
proposing for this measure, we refer readers to section VIII.C.8.d. of 
the preamble of this proposed rule.
c. Proposed Update to the Discharge to Community--Post Acute Care (PAC) 
Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP) Measure
    We are proposing to update the specifications for the Discharge to 
Community--PAC LTCH QRP measure to exclude baseline nursing facility 
(NF) residents from the measure. This measure reports an LTCH's risk-
standardized rate of Medicare FFS patients who are discharged to the 
community following an LTCH stay, do not have an unplanned readmission 
to an acute care hospital or LTCH in the 31 days following discharge to 
community, and who remain alive during the 31 days following discharge 
to community. We adopted this measure in the FY 2017 IPPS/LTCH PPS 
final rule (81 FR 57207 through 57215).
    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57211), we addressed 
public comments recommending exclusion of LTCH patients who were 
baseline NF residents, as these patients lived in a NF prior to their 
LTCH stay and may not be expected to return to the community following 
their LTCH stay. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38449), 
we addressed public comments expressing support for a potential future 
modification of the measure that would exclude baseline NF residents; 
commenters stated that the exclusion would result in the measure more 
accurately portraying quality of care provided by LTCHs, while 
controlling for factors outside of LTCH control.
    We assessed the impact of excluding baseline NF residents from the 
measure using CY 2015 and CY 2016 data and found that this exclusion 
impacted both patient- and facility-level discharge to community rates. 
We defined baseline NF residents as LTCH patients who had a long-term 
NF stay in the 180 days preceding their hospitalization and LTCH stay, 
with no intervening community discharge between the NF stay and 
qualifying hospitalization for measure inclusion. Baseline NF residents 
represented 9.2 percent of the measure population after all measure 
exclusions were applied. Observed patient-level discharge to community 
rates were significantly lower for baseline NF residents (1.44 percent) 
compared with non-NF residents (23.89 percent). The national observed 
patient-level discharge to community rate was 21.82 percent when 
baseline NF residents were included in the measure, increasing to 23.89 
percent when they were excluded from the measure. After excluding 
baseline NF residents, 39.2 percent of LTCHs had an increase in their 
risk-standardized discharge to community rate that exceeded the 
increase in the national observed patient-level discharge to community 
rate.
    Based on public comments received and our impact analysis, we are 
proposing to exclude baseline NF residents from the Discharge to 
Community--PAC LTCH QRP measure beginning with the FY 2020 LTCH QRP, 
with baseline NF residents defined as LTCH patients who had a long-term 
NF stay in the 180 days preceding their hospitalization and LTCH stay, 
with no intervening community discharge between the NF stay and 
hospitalization.
    For additional technical information regarding the Discharge to 
Community--PAC LTCH QRP measure, including technical information about 
the proposed exclusion, we refer readers to the document titled 
``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
5. LTCH QRP Quality Measures, Measure Concepts, and Standardized 
Patient Assessment Data Elements Under Consideration for Future Years: 
Request for Information
    We are seeking input on the importance, relevance, appropriateness, 
and applicability of each of the measures, standardized patient 
assessment data elements (SPADEs), and concepts under consideration 
listed in the table below for future years in the LTCH QRP.

 Future Measures, Measure Concepts, and Standardized Patient Assessment
       Data Elements (SPADEs) Under Consideration for the LTCH QRP
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                  Quality Measures and Measure Concepts
------------------------------------------------------------------------
Functional mobility outcomes.
Sepsis.
Opioid use and frequency.
Exchange of electronic health information and interoperability.
Nutritional status.
------------------------------------------------------------------------
         Standardized Patient Assessment Data Elements (SPADEs)
------------------------------------------------------------------------
Cognitive complexity, such as executive function and memory.
Dementia.
Bladder and bowel continence including appliance use and episodes of
 incontinence.

[[Page 19518]]

 
Care preferences, advance care directives, and goals of care.
Caregiver Status.
Veteran Status.
Health disparities and risk factors, including education, sex and gender
 identity, and sexual orientation.
------------------------------------------------------------------------

    While we will not be responding to specific comments submitted in 
response to this Request for Information in the FY 2020 IPPS/LTCH PPS 
final rule, we intend to use this input to inform our future measure 
and SPADE development efforts.
6. Proposed Standardized Patient Assessment Data Reporting Beginning 
With the FY 2022 LTCH QRP
    Section 1886(m)(5)(F)(ii) of the Act requires that, for fiscal year 
2019 and each subsequent year, LTCHs must report standardized patient 
assessment data (SPADE), required under section 1899B(b)(1) of the Act. 
Section 1899B(a)(1)(C) of the Act requires, in part, the Secretary to 
modify the PAC assessment instruments in order for PAC providers, 
including LTCHs, to submit SPADEs under the Medicare program. Section 
1899B(b)(1)(A) of the Act requires PAC providers to submit SPADEs under 
applicable reporting provisions (which, for LTCHs, is the LTCH QRP) 
with respect to the admissions and discharges of an individual (and 
more frequently as the Secretary deems appropriate), and section 
1899B(b)(1)(B) of the Act defines standardized patient assessment data 
as data required for at least the quality measures described in section 
1899B(c)(1) of the Act and that is with respect to the following 
categories: (1) Functional status, such as mobility and self-care at 
admission to a PAC provider and before discharge from a PAC provider; 
(2) cognitive function, such as ability to express ideas and to 
understand, and mental status, such as depression and dementia; (3) 
special services, treatments, and interventions, such as need for 
ventilator use, dialysis, chemotherapy, central line placement, and 
total parenteral nutrition; (4) medical conditions and comorbidities, 
such as diabetes, congestive heart failure, and pressure ulcers; (5) 
impairments, such as incontinence and an impaired ability to hear, see, 
or swallow; and (6) other categories deemed necessary and appropriate 
by the Secretary.
    In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20100 through 
20116), we proposed to adopt SPADEs that would satisfy the first five 
categories. In the FY 2018 IPPS/LTCH PPS final rule, commenters 
expressed support for our adoption of SPADEs in general, including 
support for our broader standardization goal and support for the 
clinical usefulness of specific proposed SPADEs. However, we did not 
finalize the majority of our SPADE proposals in recognition of the 
concern raised by many commenters that we were moving too fast to adopt 
the SPADEs and modify our assessment instruments in light of all of the 
other requirements we were also adopting under the IMPACT Act at that 
time (82 FR 38457 through 38458). In addition, we noted our intention 
to conduct extensive testing to ensure that the standardized patient 
assessment data elements we select are reliable, valid, and appropriate 
for their intended use (82 FR 38451 through 38452).
    We did, however, finalize the adoption of SPADEs for two of the 
categories described in section 1899B(b)(1)(B) of the Act: (1) 
Functional status: Data elements currently reported by LTCHs to 
calculate the measure Application of Percent of Long-Term Care Hospital 
Patients with an Admission and Discharge Functional Assessment and a 
Care Plan That Addresses Function (NQF #2631); and (2) Medical 
conditions and comorbidities: The data elements used to calculate the 
pressure ulcer measures, Percent of Residents or Patients with Pressure 
Ulcers That Are New or Worsened (Short Stay) (NQF #0678) and the 
replacement measure, Changes in Skin Integrity Post-Acute Care: 
Pressure Ulcer/Injury. We stated that these data elements were 
important for care planning, known to be valid and reliable, and 
already being reported by LTCHs for the calculation of quality measures 
(82 FR 38453 through 38454).
    Since we issued the FY 2018 IPPS/LTCH PPS final rule, LTCHs have 
had an opportunity to familiarize themselves with other new reporting 
requirements that we have adopted under the IMPACT Act. We have also 
conducted further testing of the SPADEs, as described more fully below, 
and believe this testing supports the use of the SPADEs in our PAC 
assessment instruments. Therefore, we are now proposing to adopt many 
of the same SPADEs that we previously proposed to adopt, along with 
other SPADEs.
    We are proposing that LTCHs would be required to report these 
SPADEs beginning with the FY 2022 LTCH QRP. If finalized as proposed, 
LTCHs would be required to report these data with respect to LTCH 
admissions and discharges that occur between October 1, 2020 and 
December 31, 2020 for the FY 2022 LTCH QRP. Beginning with the FY 2023 
LTCH QRP, we are proposing that LTCHs must report data with respect to 
admissions and discharges that occur during the subsequent calendar 
year (for example, CY 2021 for the FY 2023 LTCH QRP, CY 2022 for the FY 
2024 LTCH QRP).
    We are also proposing that LTCHs that submit the Hearing, Vision, 
Race, and Ethnicity SPADEs with respect to admission only will be 
deemed to have submitted those SPADEs with respect to both admission 
and discharge, because it is unlikely that the assessment of those 
SPADEs at admission will differ from the assessment of the same SPADEs 
at discharge.
    In selecting the proposed SPADEs below, we considered the burden of 
assessment-based data collection and aimed to minimize additional 
burden by evaluating whether any data that is currently collected 
through one or more PAC assessment instruments could be collected as 
SPADE. In selecting the proposed SPADEs below, we also took into 
consideration the following factors with respect to each data element:
    (1) Overall clinical relevance;
    (2) Interoperable exchange to facilitate care coordination during 
transitions in care;
    (3) Ability to capture medical complexity and risk factors that can 
inform both payment and quality; and
    (4) Scientific reliability and validity, general consensus 
agreement for its usability.
    In identifying the SPADEs proposed below, we also drew on input 
from several sources, including TEPs held by our data element 
contractor, public input, and the results of a recent National Beta 
Test of candidate data elements conducted by our data element 
contractor (hereafter ``National Beta Test'').
    The National Beta Test collected data from 3,121 patients and 
residents across 143 LTCHs, SNFs, IRFs, and HHAs from November 2017 to 
August 2018 to

[[Page 19519]]

evaluate the feasibility, reliability, and validity of the candidate 
data elements across PAC settings. The National Beta Test also gathered 
feedback on the candidate data elements from staff who administered the 
test protocol in order to understand usability and workflow of the 
candidate data elements. More information on the methods, analysis 
plan, and results for the National Beta Test are available in the 
document titled, ``Development and Evaluation of Candidate Standardized 
Patient Assessment Data Elements: Findings from the National Beta Test 
(Volume 2),'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Further, to inform the proposed SPADEs, we took into account 
feedback from stakeholders, as well as from technical and clinical 
experts, including feedback on whether the candidate data elements 
would support the factors described above. Where relevant, we also took 
into account the results of the Post-Acute Care Payment Reform 
Demonstration (PAC PRD) that took place from 2006 to 2012.
7. Proposed Standardized Patient Assessment Data by Category
a. Functional Status Data
    We are proposing to adopt six functional status data elements as 
SPADEs under the category of functional status under section 
1899B(b)(1)(B)(i) of the Act. These six data elements are: Car 
transfer; Walking 10 feet on uneven surfaces; 1-step (curb); 4 steps; 
12 steps; and Picking up object. We are proposing to add these to the 
LCDS as SPADEs under section 1899B(b)(1)(B)(i) of the Act. We adopted 
these six mobility data elements into the SNF, IRF, and HH QRPs as 
SPADEs under their respective patient/resident assessment instruments. 
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38429 through 38430), we 
finalized our definition of ``standardized patient assessment data'' as 
patient assessment questions and response options that are identical in 
all four PAC assessment instruments, and to which identical standards 
and definitions apply. In order for these six mobility data elements to 
be in all four PAC assessment instruments, we are proposing that they 
also meet the definition of standardized patient assessment data for 
functional status under section 1899B(b)(1)(B)(i) of the Act, and that 
the successful reporting of such data under section 1886(m)(5)(F)(i) of 
the Act will also satisfy the requirement to report standardized 
patient assessment data under section 1886(m)(5)(F)(ii) of the Act.
    The data elements listed above were implemented in the IRF QRP and 
SNF QRP when we adopted the quality measures, Change in Mobility Score 
(NQF #2634) and Discharge Mobility Score (NQF #2636), into the IRF QRP 
in the FY 2016 IRF PPS final rule (80 FR 47111 through 47120) and the 
SNF QRP in the FY 2018 SNF PPS final rule (82 FR 36577 through 36593). 
In addition, we implemented these six mobility data elements in the HH 
setting. The CY 2018 HH PPS final rule (82 FR 51733 through 51734) 
finalized that these six mobility data elements meet the definition of 
standardized patient assessment data for functional status under 
section 1899B(b)(1)(B)(i) of the Act.
    The six mobility data elements are currently collected in Section 
GG: Functional Abilities and Goals located in the current versions of 
the MDS, OASIS, and the IRF-PAI assessment instruments. For more 
information on the six functional mobility data elements, we refer 
readers to the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We are proposing to adopt the functional mobility data elements as 
SPADEs for use in the LTCH QRP.
b. Cognitive Function and Mental Status Data
    A number of underlying conditions, including dementia, stroke, 
traumatic brain injury, side effects of medication, metabolic and/or 
endocrine imbalances, delirium, and depression, can affect cognitive 
function and mental status in PAC patient and resident 
populations.\697\ The assessment of cognitive function and mental 
status by PAC providers is important because of the high percentage of 
patients and residents with these conditions,\698\ and because these 
assessments provide opportunity for improving quality of care.
---------------------------------------------------------------------------

    \697\ National Institute on Aging. (2014). Assessing Cognitive 
Impairment in Older Patients. A Quick Guide for Primary Care 
Physicians. Retrieved from: https://www.nia.nih.gov/alzheimers/publication/assessing-cognitive-impairment-older-patients.
    \698\ Gage B., Morley M., Smith L., et al. (2012). Post-Acute 
Care Payment Reform Demonstration (Final report, Volume 4 of 4). 
Research Triangle Park, NC: RTI International.
---------------------------------------------------------------------------

    Symptoms of dementia may improve with pharmacotherapy, occupational 
therapy, or physical activity,699 700 701 and promising 
treatments for severe traumatic brain injury are currently being 
tested.702 For older patients and residents diagnosed with 
depression, treatment options to reduce symptoms and improve quality of 
life include antidepressant medication and 
psychotherapy,703 704 705 706 and targeted services, such as 
therapeutic recreation, exercise, and restorative nursing, to increase 
opportunities for psychosocial interaction.707
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    \699\ Casey D.A., Antimisiaris D., O'Brien J. (2010). Drugs for 
Alzheimer's Disease: Are They Effective? Pharmacology & 
Therapeutics, 35, 208-11.
    \700\ Graff M.J., Vernooij-Dassen M.J., Thijssen M., Dekker J., 
Hoefnagels W.H., Rikkert M.G.O. (2006). Community Based Occupational 
Therapy for Patients with Dementia and their Care Givers: Randomised 
Controlled Trial. BMJ, 333(7580): 1196.
    \701\ Bherer L., Erickson K.I., Liu-Ambrose T. (2013). A Review 
of the Effects of Physical Activity and Exercise on Cognitive and 
Brain Functions in Older Adults. Journal of Aging Research, 657508.
    \702\ Giacino J.T., Whyte J., Bagiella E., et al. (2012). 
Placebo-controlled trial of amantadine for severe traumatic brain 
injury. New England Journal of Medicine, 366(9), 819-826.
    \703\ Alexopoulos G.S., Katz I.R., Reynolds C.F. 3rd, Carpenter 
D., Docherty J.P., Ross R.W. (2001). Pharmacotherapy of depression 
in older patients: A summary of the expert consensus guidelines. 
Journal of Psychiatric Practice, 7(6), 361-376.
    \704\ Arean P.A., Cook B.L. (2002). Psychotherapy and combined 
psychotherapy/pharmacotherapy for late life depression. Biological 
Psychiatry, 52(3), 293-303.
    \705\ Hollon S.D., Jarrett R.B., Nierenberg A.A., Thase M.E., 
Trivedi M., Rush A.J. (2005). Psychotherapy and medication in the 
treatment of adult and geriatric depression: Which monotherapy or 
combined treatment? Journal of Clinical Psychiatry, 66(4), 455-468.
    \706\ Wagenaar D, Colenda CC, Kreft M, Sawade J, Gardiner J, 
Poverejan E. (2003). Treating depression in nursing homes: Practice 
guidelines in the real world. J Am Osteopath Assoc. 103(10), 465-
469.
    \707\ Crespy SD, Van Haitsma K, Kleban M, Hann CJ. Reducing 
Depressive Symptoms in Nursing Home Residents: Evaluation of the 
Pennsylvania Depression Collaborative Quality Improvement Program. J 
Healthc Qual. 2016. Vol. 38, No. 6, pp. e76-e88.
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    In alignment with our Meaningful Measures Initiative, accurate 
assessment of cognitive function and mental status of patients and 
residents in PAC is expected to make care safer by reducing harm caused 
in the delivery of care; promote effective prevention and treatment of 
chronic disease; strengthen person and family engagement as partners in 
their care; and promote effective communication and coordination of 
care. For example, standardized assessment of cognitive function and 
mental status of patients and residents in PAC will support 
establishing a baseline for identifying

[[Page 19520]]

changes in cognitive function and mental status (for example, 
delirium), anticipating the patient's or resident's ability to 
understand and participate in treatments during a PAC stay, ensuring 
patient and resident safety (for example, risk of falls), and 
identifying appropriate support needs at the time of discharge or 
transfer. SPADEs will enable or support clinical decision-making and 
early clinical intervention; person-centered, high quality care through 
facilitating better care continuity and coordination; better data 
exchange and interoperability between settings; and longitudinal 
outcome analysis. Therefore, reliable SPADEs assessing cognitive 
function and mental status are needed in order to initiate a management 
program that can optimize a patient's or resident's prognosis and 
reduce the possibility of adverse events. We describe each of the 
proposed cognitive function and mental status data SPADEs below.
 Brief Interview for Mental Status (BIMS)
    We are proposing that the data elements that comprise the BIMS meet 
the definition of standardized patient assessment data with respect to 
cognitive function and mental status under section 1899B(b)(1)(B)(ii) 
of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20100 through 20101), dementia and cognitive impairment are associated 
with long-term functional dependence and, consequently, poor quality of 
life and increased health care costs and mortality.\708\ This makes 
assessment of mental status and early detection of cognitive decline or 
impairment critical in the PAC setting. The intensity of routine 
nursing care is higher for patients and residents with cognitive 
impairment than those without, and dementia is a significant variable 
in predicting readmission after discharge to the community from PAC 
providers.\709\
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    \708\ Ag[uuml]ero-Torres, H., Fratiglioni, L., Guo, Z., 
Viitanen, M., von Strauss, E., & Winblad, B. (1998). ``Dementia is 
the major cause of functional dependence in the elderly: 3-year 
follow-up data from a population-based study.'' Am J of Public 
Health 88(10): 1452-1456.
    \709\ RTI International. Proposed Measure Specifications for 
Measures Proposed in the FY 2017 LTCH QRP NPRM. Research Triangle 
Park, NC. 2016.
---------------------------------------------------------------------------

    The BIMS is a performance-based cognitive assessment screening tool 
that assesses repetition, recall with and without prompting, and 
temporal orientation. The data elements that make up the BIMS are seven 
questions on the repetition of three words, temporal orientation, and 
recall that result in a cognitive function score. The BIMS was 
developed to be a brief, objective screening tool, with a focus on 
learning and memory. As a brief screener, the BIMS was not designed to 
diagnose dementia or cognitive impairment, but rather to be a 
relatively quick and easy to score assessment that could identify 
cognitively impaired patients as well as those who may be at risk for 
cognitive decline and require further assessment. It is currently in 
use in two of the PAC assessments: The MDS used by SNFs and the IRF-PAI 
used by IRFs. For more information on the BIMS, we refer readers to the 
document titled ``Proposed Specifications for LTCH QRP Quality Measures 
and Standardized Patient Assessment Data Elements,'' available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The data elements that comprise the BIMS were first proposed as 
SPADEs in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20100 through 
20101). In that proposed rule, we stated that the proposal was informed 
by input we received through a call for input published on the CMS 
Measures Management System Blueprint website. Input submitted from 
August 12 to September 12, 2016 expressed support for use of the BIMS, 
noting that it is reliable, feasible to use across settings, and will 
provide useful information about patients and residents. We also stated 
that those commenters had noted that the data collected through the 
BIMS will provide a clearer picture of patient or resident complexity, 
help with the care planning process, and be useful during care 
transitions and when coordinating across providers. A summary report 
for the August 12 to September 12, 2016 public comment period titled 
``SPADE August 2016 Public Comment Summary Report'' is available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the BIMS, with several 
commenters noting the importance of routine assessment of cognitive 
status and supporting the use of the BIMS to identify individuals with 
cognitive impairment. However, commenters expressed concerns about not 
having recent, comprehensive field testing of the proposed data 
elements. In addition, some commenters were critical of the BIMS, 
citing burden of administering the items and its limitation in 
assessing mild cognitive impairment and ``functional'' cognition 
related to executive function and everyday decision-making.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the BIMS was included in the National Beta Test of 
candidate data elements conducted by our data element contractor from 
November 2017 to August 2018. Results of this test found the BIMS to be 
feasible and reliable for use with PAC patients and residents. More 
information about the performance of the BIMS in the National Beta Test 
can be found in the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In, addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the proposed 
standardized patient assessment data elements, and the TEP supported 
the assessment of patient or resident cognitive status at both 
admission and discharge. A summary of the September 17, 2018 TEP 
meeting titled ``SPADE Technical Expert Panel Summary (Third 
Convening)'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our on-going SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. Some commenters expressed concern that the BIMS, if used alone, 
may not be sensitive enough to capture the range of cognitive 
impairments, including mild cognitive impairment. A summary of the

[[Page 19521]]

public input received from the November 27, 2018 stakeholder meeting 
titled ``Input on Standardized Patient Assessment Data Elements 
(SPADEs) Received After November 27, 2018 Stakeholder Meeting'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We understand the concerns raised by stakeholders that BIMS, if 
used alone, may not be sensitive enough to capture the range of 
cognitive impairments, including functional cognition and MCI, but note 
that the purpose of the BIMS data elements as SPADEs is to screen for 
cognitive impairment in a broad population. We also acknowledge that 
further cognitive tests may be required based on a patient's condition 
and will take this feedback into consideration in the development of 
future standardized assessment data elements. However, taking together 
the importance of assessing for cognitive status, stakeholder input, 
and strong test results, we are proposing that the BIMS data elements 
meet the definition of standardized patient assessment data with 
respect to cognitive function and mental status under section 
1899B(b)(1)(B)(ii) of the Act, and to adopt the BIMS as standardized 
patient assessment data for use in the LTCH QRP.
 Confusion Assessment Method (CAM)
    We are proposing that the data elements that comprise the Confusion 
Assessment Method (CAM) meet the definition of standardized patient 
assessment data with respect to cognitive function and mental status 
under section 1899B(b)(1)(B)(ii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20101 through 20102), the CAM was developed to identify the signs and 
symptoms of delirium. It results in a score that suggests whether a 
patient or resident should be assigned a diagnosis of delirium. Because 
patients and residents with multiple comorbidities receive services 
from PAC providers, it is important to assess delirium, which is 
associated with a high mortality rate and prolonged duration of stay in 
hospitalized older adults.\710\ Assessing these signs and symptoms of 
delirium is clinically relevant for care planning by PAC providers.
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    \710\ Fick, D.M., Steis, M.R., Waller, J.L., & Inouye, S.K. 
(2013). ``Delirium superimposed on dementia is associated with 
prolonged length of stay and poor outcomes in hospitalized older 
adults.'' J of Hospital Med 8(9): 500-505.
---------------------------------------------------------------------------

    The CAM is a patient assessment that screens for overall cognitive 
impairment, as well as distinguishes delirium or reversible confusion 
from other types of cognitive impairment. The CAM is currently in use 
in two of the PAC assessments: A four-item version of the CAM is used 
in the MDS in SNFs, and a six-item version of the CAM is used in the 
LCDS in LTCHs. We are proposing to replace the version of the CAM 
currently used in the LCDS with the four-item version of the CAM 
currently used in the MDS. The proposed four-item version assesses 
acute change in mental status, inattention, disorganized thinking, and 
altered level of consciousness. For more information on the CAM, we 
refer readers to the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The data elements that comprise the CAM were first proposed as 
SPADEs in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20101 through 
20102). In that proposed rule, we stated that the proposal was informed 
by input we received through a call for input published on the CMS 
Measures Management System Blueprint website. Input submitted from 
August 12 to September 12, 2016 expressed support for use of the CAM, 
noting that it would provide important information for care planning 
and care coordination and, therefore, contribute to quality 
improvement. We also stated that those commenters noted it is 
particularly helpful in distinguishing delirium and reversible 
confusion from other types of cognitive impairment. A summary report 
for the August 12 to September 12, 2016 public comment period titled 
``SPADE August 2016 Public Comment Summary Report'' is available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments (82 FR 20101 through 20102) in 
support of the CAM. Commenters supported the continued use of the CAM 
in the LCDS. However, commenters expressed concerns about not having 
recent, comprehensive field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the CAM was included in the National Beta Test of 
candidate data elements conducted by our data element contractor from 
November 2017 to August 2018. Results of this test found the CAM to be 
feasible and reliable for use with PAC patients and residents. More 
information about the performance of the CAM in the National Beta Test 
can be found in the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018, for the purpose of soliciting input on the proposed 
standardized patient assessment data elements. Although they did not 
specifically discuss the CAM data elements, the TEP supported the 
assessment of patient or resident cognitive status with respect to both 
admission and discharge. A summary of the September 17, 2018 TEP 
meeting titled ``SPADE Technical Expert Panel Summary (Third 
Convening)'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-
Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-
Initiatives/IMPACT-Act-of-2014/

[[Page 19522]]

IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for delirium, 
stakeholder input, and strong test results, we are proposing that the 
CAM data elements meet the definition of standardized patient 
assessment data with respect to cognitive function and mental status 
under section 1899B(b)(1)(B)(ii) of the Act, and to adopt the CAM as 
standardized patient assessment data for use in the LTCH QRP.
 Patient Health Questionnaire-2 to 9 (PHQ-2 to 9)
    We are proposing that the Patient Health Questionnaire-2 to 9 (PHQ-
2 to 9) data elements meet the definition of standardized patient 
assessment data with respect to cognitive function and mental status 
under section 1899B(b)(1)(B)(ii) of the Act. The proposed data elements 
are based on the PHQ-2 mood interview, which focuses on only the two 
cardinal symptoms of depression, and the longer PHQ-9 mood interview, 
which assesses presence and frequency of nine signs and symptoms of 
depression. The name of the data element, the PHQ-2 to 9, refers to an 
embedded a skip pattern that transitions patients with a threshold 
level of symptoms in the PHQ-2 to the longer assessment of the PHQ-9. 
The skip pattern is described further below.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20102 through 20103), depression is a common and under-recognized 
mental health condition. Assessments of depression help PAC providers 
better understand the needs of their patients and residents by: 
Prompting further evaluation after establishing a diagnosis of 
depression; elucidating the patient's or resident's ability to 
participate in therapies for conditions other than depression during 
their stay; and identifying appropriate ongoing treatment and support 
needs at the time of discharge.
    The proposed PHQ-2 to 9 is based on the PHQ-9 mood interview. The 
PHQ-2 consists of questions about only the first two symptoms addressed 
in the PHQ-9: Depressed mood and anhedonia (inability to feel 
pleasure), which are the cardinal symptoms of depression. The PHQ-2 has 
performed well as both a screening tool for identifying depression, to 
assess depression severity, and to monitor patient mood over 
time.711 712 If a patient demonstrates signs of depressed 
mood and anhedonia under the PHQ-2, then the patient is administered 
the lengthier PHQ-9. This skip pattern (also referred to as a gateway) 
is designed to reduce the length of the interview assessment for 
patients who fail to report the cardinal symptoms of depression. The 
design of the PHQ-2 to 9 reduces the burden that would be associated 
with the full PHQ-9, while ensuring that patients with indications of 
depressive symptoms based on the PHQ-2 receive the longer assessment.
---------------------------------------------------------------------------

    \711\ Li, C., Friedman, B., Conwell, Y., & Fiscella, K. (2007). 
``Validity of the Patient Health Questionnaire 2 (PHQ[hyphen]2) in 
identifying major depression in older people.'' J of the A 
Geriatrics Society, 55(4): 596-602.
    \712\ L[ouml]we, B., Kroenke, K., & Gr[auml]fe, K. (2005). 
``Detecting and monitoring depression with a two-item questionnaire 
(PHQ-2).'' J of Psychosomatic Research, 58(2): 163-171.
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    Components of the proposed data elements are currently used in the 
OASIS for HHAs (PHQ-2) and the MDS for SNFs (PHQ-9). For more 
information on the PHQ-2 to 9, we refer readers to the document titled 
``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We proposed the PHQ-2 data elements as SPADEs in the FY 2018 IPPS/
LTCH PPS proposed rule (82 FR 20102 through 20103). In that proposed 
rule we stated that the proposal was informed by input we received from 
the TEP convened by our data element contractor on April 6 and 7, 2016. 
The TEP members particularly noted that the brevity of the PHQ-2 made 
it feasible to administer with low burden for both assessors and PAC 
patients or residents. A summary of the April 6 and 7, 2016 TEP meeting 
titled ``SPADE Technical Expert Panel Summary (First Convening)'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    That rule proposal was also informed by public input that we 
received through a call for input published on the CMS Measures 
Management System Blueprint website. Input was submitted from August 12 
to September 12, 2016 on three versions of the PHQ depression screener: 
The PHQ-2; the PHQ-9; and the PHQ-2 to 9 with the skip pattern design. 
Many commenters were supportive of the standardized assessment of mood 
in PAC settings, given the role that depression plays in well-being. 
Several commenters expressed support for an approach that would use 
PHQ-2 as a gateway to the longer PHQ-9 while still potentially reducing 
burden on most patients and residents, as well as test administrators, 
and ensuring the administration of the PHQ-9, which exhibits higher 
specificity,\713\ for patients and residents who showed signs and 
symptoms of depression on the PHQ-2. A summary report for the August 12 
to September 12, 2016 public comment period titled ``SPADE August 2016 
Public Comment Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
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    \713\ Arroll B, Goodyear-Smith F, Crengle S, Gunn J, Kerse N, 
Fishman T, et al. Validation of PHQ-2 and PHQ-9 to screen for major 
depression in the primary care population. Annals of family 
medicine. 2010;8(4):348-53. doi: 10.1370/afm.1139 pmid:20644190; 
PubMed Central PMCID: PMC2906530.
---------------------------------------------------------------------------

    In response to our proposal to use the PHQ-2 in the FY 2018 IPPS/
LTCH PPS proposed rule, we received comments agreeing that it was 
important to standardize the assessment of depression in patients 
receiving PAC services. Many commenters also raised concerns about the 
ability of the PHQ-2 to correctly identify all patients with signs and 
symptoms of depression and noted that the proposed PHQ-2 was not 
supported by recent, comprehensive field testing. In response to these 
comments, we carried out additional testing, and we provide our 
findings below.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the PHQ-2 to 9 data elements were included in the 
National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the PHQ-2 to 9 to be feasible and reliable for use with PAC 
patients and residents. More information about the performance of the 
PHQ-2 to 9 in the National Beta Test can be found in the document 
titled ``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of

[[Page 19523]]

soliciting input on the PHQ-2 to 9. The TEP was supportive of the PHQ-2 
to 9 data element set as a screener for signs and symptoms of 
depression. The TEP's discussion noted that symptoms evaluated by the 
full PHQ-9 (for example, concentration, sleep, appetite) had relevance 
to care planning and the overall well-being of the patient or resident, 
but that the gateway approach of the PHQ-2 to 9 would be appropriate as 
a depression screening assessment, as it depends on the well-validated 
PHQ-2 and focuses on the cardinal symptoms of depression. A summary of 
the September 17, 2018 TEP meeting titled ``SPADE Technical Expert 
Panel Summary (Third Convening)'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our on-going SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for depression, 
stakeholder input, and strong test results, in this proposed rule, we 
are proposing that the PHQ-2 to 9 data elements meet the definition of 
standardized patient assessment data with respect to cognitive function 
and mental status under section 1899B(b)(1)(B)(ii) of the Act, and to 
adopt the PHQ-2 to 9 as standardized patient assessment data for use in 
the LTCH QRP.
c. Special Services, Treatments, and Interventions Data
    Special services, treatments, and interventions performed in PAC 
can have a major effect on an individual's health status, self-image, 
and quality of life. The assessment of these special services, 
treatments, and interventions in PAC is important to ensure the 
continuing appropriateness of care for the patients and residents 
receiving them, and to support care transitions from one PAC provider 
to another, an acute care hospital, or discharge. In alignment with our 
Meaningful Measures Initiative, accurate assessment of special 
services, treatments, and interventions of patients and residents 
served by PAC providers is expected to make care safer by reducing harm 
caused in the delivery of care; promote effective prevention and 
treatment of chronic disease; strengthen person and family engagement 
as partners in their care; and promote effective communication and 
coordination of care.
    For example, standardized assessment of special services, 
treatments, and interventions used in PAC can promote patient and 
resident safety through appropriate care planning (for example, 
mitigating risks such as infection or pulmonary embolism associated 
with central intravenous access), and identifying life-sustaining 
treatments that must be continued, such as mechanical ventilation, 
dialysis, suctioning, and chemotherapy, at the time of discharge or 
transfer. Standardized assessment of these data elements will enable or 
support: Clinical decision-making and early clinical intervention; 
person-centered, high quality care through, for example, facilitating 
better care continuity and coordination; better data exchange and 
interoperability between settings; and longitudinal outcome analysis. 
Therefore, reliable data elements assessing special services, 
treatments, and interventions are needed to initiate a management 
program that can optimize a patient's or resident's prognosis and 
reduce the possibility of adverse events.
    A TEP convened by our data element contractor provided input on the 
proposed data elements for special services, treatments, and 
interventions. In a meeting held on January 5 and 6, 2017, this TEP 
found that these data elements are appropriate for standardization 
because they would provide useful clinical information to inform care 
planning and care coordination. The TEP affirmed that assessment of 
these services and interventions is standard clinical practice, and 
that the collection of these data by means of a list and checkbox 
format would conform with common workflow for PAC providers. A summary 
of the January 5 and 6, 2017 TEP meeting titled ``SPADE Technical 
Expert Panel Summary (Second Convening)'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Comments on the category of special services, treatments, and 
interventions were also submitted by stakeholders during the FY 2018 
IPPS/LTCH PPS proposed rule public comment period. Although a few 
commenters noted the burden that the data elements for special 
services, treatments, and interventions will place on assessors and 
providers, we also received support for these data elements, noting 
their ability to inform care planning and care coordination.
    Information on data element performance in the National Beta Test, 
which collected data between November 2017 and August 2018, is reported 
within each data element proposal below. Clinical staff who 
participated in the National Beta Test supported these data elements 
because of their importance in conveying patient or resident 
significant health care needs, complexity, and progress. However, 
clinical staff also noted that, despite the simple ``check box'' format 
of these data element, they sometimes needed to consult multiple 
information sources to determine a patient's or resident's treatments.
 Cancer Treatment: Chemotherapy (IV, Oral, Other)
    We are proposing that the Chemotherapy (IV, Oral, Other) data 
element meets the definition of standardized patient assessment data 
with respect to special services, treatments, and interventions under 
section 1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20103 through 20104), chemotherapy is a type of cancer treatment that 
uses drugs to destroy cancer cells. It is sometimes used when a patient 
has a malignancy (cancer), which is a serious, often life-threatening 
or life-limiting condition. Both intravenous (IV) and oral chemotherapy 
have serious side effects, including nausea/vomiting, extreme fatigue, 
risk of infection due to a suppressed immune system, anemia, and an 
increased risk of bleeding due to low platelet counts. Oral 
chemotherapy can be as potent as chemotherapy given by IV, and can be 
significantly more convenient and less resource-intensive to 
administer. Because of the toxicity of these agents, special care must 
be

[[Page 19524]]

exercised in handling and transporting chemotherapy drugs. IV 
chemotherapy is administered either peripherally or more commonly given 
via an indwelling central line, which raises the risk of bloodstream 
infections. Given the significant burden of malignancy, the resource 
intensity of administering chemotherapy, and the side effects and 
potential complications of these highly-toxic medications, assessing 
the receipt of chemotherapy is important in the PAC setting for care 
planning and determining resource use. The need for chemotherapy 
predicts resource intensity, both because of the complexity of 
administering these potent, toxic drug combinations under specific 
protocols, and because of what the need for chemotherapy signals about 
the patient's underlying medical condition. Furthermore, the resource 
intensity of IV chemotherapy is higher than for oral chemotherapy, as 
the protocols for administration and the care of the central line (if 
present) for IV chemotherapy require significant resources.
    The Chemotherapy (IV, Oral, Other) data element consists of a 
principal data element (Chemotherapy) and three response option sub-
elements: IV chemotherapy, which is generally resource-intensive; Oral 
chemotherapy, which is less invasive and generally requires less 
intensive administration protocols; and a third category, Other, 
provided to enable the capture of other less common chemotherapeutic 
approaches. This third category is potentially associated with higher 
risks and is more resource intensive due to chemotherapy delivery by 
other routes (for example, intraventricular or intrathecal). If the 
assessor indicates that the patient is receiving chemotherapy on the 
principal Chemotherapy data element, the assessor would then indicate 
by which route or routes (for example, IV, Oral, Other) the 
chemotherapy is administered.
    A single Chemotherapy data element that does not include the 
proposed three sub-elements is currently in use in the MDS in SNFs. For 
more information on the Chemotherapy (IV, Oral, Other) data element, we 
refer readers to the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Chemotherapy data element was proposed as a SPADE in the FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 20103 through 20104). In that 
proposed rule, we stated that the proposal was informed by input we 
received through a call for input published on the CMS Measures 
Management System Blueprint website. Input submitted from August 12 to 
September 12, 2016 expressed support for the IV Chemotherapy data 
element and suggested it be included as standardized patient assessment 
data. Commenters stated that assessing the use of chemotherapy services 
is relevant to share across the care continuum to facilitate care 
coordination and care transitions and noted the validity of the data 
element. Commenters also noted the importance of capturing all types of 
chemotherapy, regardless of route, and stated that collecting data only 
on patients and residents who received chemotherapy by IV would limit 
the usefulness of this standardized data element. A summary report for 
the August 12 to September 12, 2016 public comment period titled 
``SPADE August 2016 Public Comment Summary Report'' is available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the special services, 
treatments, and interventions data elements in general; no additional 
comments were received that were specific to the Chemotherapy data 
element other than concerns about not having recent, comprehensive 
field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Chemotherapy data element was included in the 
National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the Chemotherapy data element to be feasible and reliable 
for use with PAC patients and residents. More information about the 
performance of the Chemotherapy data element in the National Beta Test 
can be found in the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions. Although the TEP members did 
not specifically discuss the Chemotherapy data elements, the TEP 
supported the assessment of the special services, treatments, and 
interventions included in the National Beta Test with respect to both 
admission and discharge. A summary of the September 17, 2018 TEP 
meeting titled ``SPADE Technical Expert Panel Summary (Third 
Convening)'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for chemotherapy, 
stakeholder input, and strong test results, we are proposing that the 
Chemotherapy (IV, Oral, Other) data element with a principal data 
element and three sub-elements meets the definition of standardized 
patient assessment data with respect to special services, treatments, 
and interventions under section 1899B(b)(1)(B)(iii) of the Act, and to 
adopt the Chemotherapy (IV, Oral, Other) data element as standardized 
patient assessment data for use in the LTCH QRP.
 Cancer Treatment: Radiation
    We are proposing that the Radiation data element meets the 
definition of

[[Page 19525]]

standardized patient assessment data with respect to special services, 
treatments, and interventions under section 1899B(b)(1)(B)(iii) of the 
Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20104 through 20105), radiation is a type of cancer treatment that uses 
high-energy radioactivity to stop cancer by damaging cancer cell DNA, 
but it can also damage normal cells. Radiation is an important therapy 
for particular types of cancer, and the resource utilization is high, 
with frequent radiation sessions required, often daily for a period of 
several weeks. Assessing whether a patient or resident is receiving 
radiation therapy is important to determine resource utilization 
because PAC patients and residents will need to be transported to and 
from radiation treatments, and monitored and treated for side effects 
after receiving this intervention. Therefore, assessing the receipt of 
radiation therapy, which would compete with other care processes given 
the time burden, would be important for care planning and care 
coordination by PAC providers.
    The proposed data element consists of the single Radiation data 
element. The Radiation data element is currently in use in the MDS in 
SNFs. For more information on the Radiation data element, we refer 
readers to the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Radiation data element was first proposed as a SPADE in the FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 20104 through 20105). In that 
proposed rule, we stated that the proposal was informed by input we 
received through a call for input published on the CMS Measures 
Management System Blueprint website. Input submitted from August 12 to 
September 12, 2016 expressed support for the Radiation data element, 
noting its importance and clinical usefulness for patients in PAC 
settings, due to the side effects and consequences of radiation 
treatment on patients that need to be considered in care planning and 
care transitions, the feasibility of the item, and the potential for it 
to improve quality. A summary report for the August 12 to September 12, 
2016 public comment period titled ``SPADE August 2016 Public Comment 
Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the special services, 
treatments, and interventions data elements in general; no additional 
comments were received that were specific to the Radiation data element 
other than concerns about not having recent, comprehensive field 
testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Radiation data element was included in the National 
Beta Test of candidate data elements conducted by our data element 
contractor from November 2017 to August 2018. Results of this test 
found the Radiation data element to be feasible and reliable for use 
with PAC patients and residents. More information about the performance 
of the Radiation data element in the National Beta Test can be found in 
the document titled ``Proposed Specifications for LTCH QRP Quality 
Measures and Standardized Patient Assessment Data Elements,'' available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present results of the National Beta 
Test and solicit additional comments. General input on the testing and 
item development process and concerns about burden were received from 
stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for radiation, 
stakeholder input, and strong test results, we are proposing that the 
Radiation data element meets the definition of standardized patient 
assessment data with respect to special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act, and to 
adopt the Radiation data element as standardized patient assessment 
data for use in the LTCH QRP.
     Respiratory Treatment: Oxygen Therapy (Intermittent, 
Continuous, High-Concentration Oxygen Delivery System)
    We are proposing that the Oxygen Therapy (Intermittent, Continuous, 
High-Concentration Oxygen Delivery System) data element meets the 
definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act.
    In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20105), we 
proposed a similar set of data elements related to oxygen therapy. 
Oxygen therapy provides a patient or resident with extra oxygen when 
medical conditions such as chronic obstructive pulmonary disease, 
pneumonia, or severe asthma prevent the patient or resident from 
getting enough oxygen from breathing. Oxygen administration is a 
resource-intensive intervention, as it requires specialized equipment 
such as a source of oxygen, delivery systems (for example, oxygen 
concentrator, liquid oxygen containers, and high-pressure systems), the 
patient interface (for example, nasal cannula or mask), and other 
accessories (for example, regulators, filters, tubing). The data 
element proposed here captures patient or resident use of three types 
of oxygen therapy (intermittent, continuous, and high-concentration 
oxygen delivery system), which reflects the intensity of care needed, 
including the level of monitoring and bedside care required. Assessing 
the receipt of this service is

[[Page 19526]]

important for care planning and resource use for PAC providers.
    The proposed data element, Oxygen Therapy, consists of the 
principal Oxygen Therapy data element and three response option sub-
elements: Continuous (whether the oxygen was delivered continuously, 
typically defined as >=14 hours per day); Intermittent; or High-
concentration oxygen delivery system. Based on public comments and 
input from expert advisors about the importance and clinical usefulness 
of documenting the extent of oxygen use, we added a third sub-element, 
high-concentration oxygen delivery system, to the sub-elements, which 
previously included only intermittent and continuous. If the assessor 
indicates that the patient is receiving oxygen therapy on the principal 
oxygen therapy data element, the assessor then would indicate the type 
of oxygen the patient receives (for example, Continuous, Intermittent, 
High-concentration oxygen delivery system).
    These three proposed sub-elements were developed based on similar 
data elements that assess oxygen therapy, currently in use in the MDS 
in SNFs (``Oxygen Therapy''), previously used in the OASIS-C2 (``Oxygen 
(intermittent or continuous)''), and a data element tested in the PAC 
PRD that focused on intensive oxygen therapy (``High O2 Concentration 
Delivery System with FiO2 >40 percent''). For more information on the 
proposed Oxygen Therapy (Continuous, Intermittent, High-concentration 
oxygen delivery system) data element, we refer readers to the document 
titled ``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Oxygen Therapy (Continuous, Intermittent) data element was 
first proposed as a SPADE in the FY 2018 IPPS/LTCH PPS proposed rule 
(82 FR 20105). In that proposed rule, we stated that the proposal was 
informed by input we received on the single data element, Oxygen 
(inclusive of intermittent and continuous oxygen use), through a call 
for input published on the CMS Measures Management System Blueprint 
website. Input submitted from August 12 to September 12, 2016 expressed 
the importance of the Oxygen data element, noting feasibility of this 
item in PAC, and the relevance of it to facilitating care coordination 
and supporting care transitions, but suggesting that the extent of 
oxygen use be documented. A summary report for the August 12 to 
September 12, 2016 public comment period titled ``SPADE August 2016 
Public Comment Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the special services, 
treatments, and interventions data elements in general, which are 
summarized above. In response to our proposal, we received comments in 
support of the Oxygen Therapy (Continuous, Intermittent) data element. 
A commenter also requested the addition of a third sub-element to 
differentiate between receipt of high-flow oxygen (6 or more liters per 
minute) and regular oxygen, noting that it is a form of respiratory 
support commonly used on patients with acute respiratory failure and, 
therefore, could be used as an indicator of patient severity in future 
analysis. We also received public comments related to concerns about 
not having recent, comprehensive field testing of proposed data 
elements. In response to public comments, we added a third sub-element 
to the Oxygen Therapy data element and carried out additional testing, 
which we provide our findings below.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Oxygen Therapy data element was included in the 
National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the Oxygen Therapy data element to be feasible and reliable 
for use with PAC patients and residents. More information about the 
performance of the Oxygen Therapy data element in the National Beta 
Test can be found in the document titled ``Proposed Specifications for 
LTCH QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for oxygen therapy, 
stakeholder input, and strong test results, we are proposing that the 
Oxygen Therapy (Intermittent, Continuous, High-concentration oxygen 
delivery system) data element with a principal data element and three 
sub-elements meets the definition of standardized patient assessment 
data with respect to special services, treatments, and interventions 
under section 1899B(b)(1)(B)(iii) of the Act, and to adopt the Oxygen 
Therapy (Intermittent, Continuous, High-concentration oxygen delivery 
system) data element as standardized patient assessment data for use in 
the LTCH QRP.
 Respiratory Treatment: Suctioning (Scheduled, As Needed)
    We are proposing that the Suctioning (Scheduled, As needed) data 
element meets the definition of standardized patient assessment data 
with respect to special services, treatments, and

[[Page 19527]]

interventions under section 1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20105 through 20106), suctioning is a process used to clear secretions 
from the airway when a person cannot clear those secretions on his or 
her own. It is done by aspirating secretions through a catheter 
connected to a suction source. Types of suctioning include 
oropharyngeal and nasopharyngeal suctioning, nasotracheal suctioning, 
and suctioning through an artificial airway such as a tracheostomy 
tube. Oropharyngeal and nasopharyngeal suctioning are a key part of 
many patients' care plans, both to prevent the accumulation of 
secretions than can lead to aspiration pneumonias (a common condition 
in patients with inadequate gag reflexes), and to relieve obstructions 
from mucus plugging during an acute or chronic respiratory infection, 
which often lead to desaturations and increased respiratory effort. 
Suctioning can be done on a scheduled basis if the patient is judged to 
clinically benefit from regular interventions, or can be done as needed 
when secretions become so prominent that gurgling or choking is noted, 
or a sudden desaturation occurs from a mucus plug. As suctioning is 
generally performed by a care provider rather than independently, this 
intervention can be quite resource intensive if it occurs every hour, 
for example, rather than once a shift. It also signifies an underlying 
medical condition that prevents the patient from clearing his/her 
secretions effectively (such as after a stroke, or during an acute 
respiratory infection). Generally, suctioning is necessary to ensure 
that the airway is clear of secretions which can inhibit successful 
oxygenation of the individual. The intent of suctioning is to maintain 
a patent airway, the loss of which can lead to death, or complications 
associated with hypoxia.
    The Suctioning (Scheduled, As needed) data element consists of a 
principal data element, and two sub-elements: Scheduled; and As needed. 
These sub-elements capture two types of suctioning. Scheduled indicates 
suctioning based on a specific frequency, such as every hour. As needed 
means suctioning only when indicated. If the assessor indicates that 
the patient is receiving suctioning on the principal Suctioning data 
element, the assessor would then indicate the frequency (for example, 
Scheduled, As needed). The proposed data element is based on an item 
currently in use in the MDS in SNFs which does not include our proposed 
two sub-elements, as well as data elements tested in the PAC PRD that 
focused on the frequency of suctioning required for patients with 
tracheostomies (``Trach Tube with Suctioning: Specify most intensive 
frequency of suctioning during stay [Every _ hours]''). For more 
information on the Suctioning data element, we refer readers to the 
document titled ``Proposed Specifications for LTCH QRP Quality Measures 
and Standardized Patient Assessment Data Elements,'' available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Suctioning data elements were first proposed as SPADEs in the 
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20105 through 20106). In 
that proposed rule, we stated that the proposal was informed by input 
we received through a call for input published on the CMS Measures 
Management System Blueprint website. Input submitted from August 12, to 
September 12, 2016 expressed support of the Suctioning data element 
currently used in the MDS in SNFs. The input noted the feasibility of 
this item in PAC, and the relevance of this data element to 
facilitating care coordination and supporting care transitions. We also 
received public comments suggesting that we examine the frequency of 
suctioning in order to better understand the use of staff time, the 
impact on a patient or resident's capacity to speak and swallow, and 
intensity of care required. Based on these comments, we decided to add 
two sub-elements (Scheduled and As needed) to the suctioning element. 
The proposed Suctioning data element includes both the principal 
Suctioning data element that is included on the MDS in SNFs and two 
sub-elements, Scheduled and As needed. A summary report for the August 
12 to September 12, 2016 public comment period titled ``SPADE August 
2016 Public Comment Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the special services, 
treatments, and interventions data elements in general; no additional 
comments were received that were specific to the Suctioning data 
element other than concerns about not having recent, comprehensive 
field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Suctioning data element was included in the National 
Beta Test of candidate data elements conducted by our data element 
contractor from November 2017 to August 2018. Results of this test 
found the Suctioning data element to be feasible and reliable for use 
with PAC patients and residents. More information about the performance 
of the Suctioning data element in the National Beta Test can be found 
in the document titled ``Proposed Specifications for LTCH QRP Quality 
Measures and Standardized Patient Assessment Data Elements,'' available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicited additional comments. General input on the 
testing and item development process and concerns about burden were 
received from stakeholders during this meeting and via email through 
February 1, 2019. A summary of the public input received from the 
November 27, 2018 stakeholder meeting titled ``Input on Standardized 
Patient Assessment Data Elements (SPADEs) Received After November 27, 
2018 Stakeholder Meeting'' is available at: https://www.cms.gov/
Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-
Care-Quality-

[[Page 19528]]

Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for suctioning, 
stakeholder input, and strong test results, we are proposing that the 
Suctioning (Scheduled, As needed) data element with a principal data 
element and two sub-elements meets the definition of standardized 
patient assessment data with respect to special services, treatments, 
and interventions under section 1899B(b)(1)(B)(iii) of the Act, and to 
adopt the Suctioning (Scheduled, As needed) data element as 
standardized patient assessment data for use in the LTCH QRP.
 Respiratory Treatment: Tracheostomy Care
    We are proposing that the Tracheostomy Care data element meets the 
definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20106 through 20107), a tracheostomy provides an air passage to help a 
patient or resident breathe when the usual route for breathing is 
obstructed or impaired. Generally, in all of these cases, suctioning is 
necessary to ensure that the tracheostomy is clear of secretions, which 
can inhibit successful oxygenation of the individual. Often, 
individuals with tracheostomies are also receiving supplemental 
oxygenation. The presence of a tracheostomy, albeit permanent or 
temporary, warrants careful monitoring and immediate intervention if 
the tracheostomy becomes occluded or if the device used becomes 
dislodged. While in rare cases the presence of a tracheostomy is not 
associated with increased care demands (and in some of those instances, 
the care of the ostomy is performed by the patient) in general the 
presence of such as device is associated with increased patient risk, 
and clinical care services will necessarily include close monitoring to 
ensure that no life-threatening events occur as a result of the 
tracheostomy. In addition, tracheostomy care, which primarily consists 
of cleansing, dressing changes, and replacement of the tracheostomy 
cannula (tube), is a critical part of the care plan. Regular cleansing 
is important to prevent infection such as pneumonia and to prevent any 
occlusions with which there are risks for inadequate oxygenation.
    The proposed data element consists of the single Tracheostomy Care 
data element. The proposed data element is currently in use in the MDS 
in SNFs (``Tracheostomy care''). For more information on the 
Tracheostomy Care data element, we refer readers to the document titled 
``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Tracheostomy Care data element was first proposed as a SPADE in 
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20106 through 20107). In 
that proposed rule, we stated that the proposal was informed by input 
we received through a call for input published on the CMS Measures 
Management System Blueprint website. Input submitted from August 12 to 
September 12, 2016 expressed support of the Tracheostomy Care data 
element, noting the feasibility of this item in PAC, and the relevance 
of this data element to facilitating care coordination and supporting 
care transitions. A summary report for the August 12 to September 12, 
2016 public comment period titled ``SPADE August 2016 Public Comment 
Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    During the FY 2018 IPPS/LTCH PPS proposed rule comment period, we 
received public comments in support of the special services, 
treatments, and interventions data elements in general; no additional 
comments were received that were specific to the Tracheostomy Care data 
element other than concerns about not having recent, comprehensive 
field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Tracheostomy Care data element was included in the 
National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the Tracheostomy Care data element to be feasible and 
reliable for use with PAC patients and residents. More information 
about the performance of the Tracheostomy Care data element in the 
National Beta Test can be found in the document titled ``Proposed 
Specifications for LTCH QRP Quality Measures and Standardized Patient 
Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for tracheostomy care, 
stakeholder input, and strong test results, we are proposing that the 
Tracheostomy Care data element meets the definition of standardized 
patient assessment data with respect to special services, treatments, 
and interventions under section 1899B(b)(1)(B)(iii) of the Act, and to 
adopt the Tracheostomy Care data element as standardized patient 
assessment data for use in the LTCH QRP.

[[Page 19529]]

 Respiratory Treatment: Non-Invasive Mechanical Ventilator 
(BiPAP, CPAP)
    We are proposing that the Non-invasive Mechanical Ventilator 
(Bilevel Positive Airway Pressure [BiPAP], Continuous Positive Airway 
Pressure [CPAP]) data element meets the definition of standardized 
patient assessment data with respect to special services, treatments, 
and interventions under section 1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20107), BiPAP and CPAP are respiratory support devices that prevent the 
airways from closing by delivering slightly pressurized air via 
electronic cycling throughout the breathing cycle (BiPAP) or through a 
mask continuously (CPAP). Assessment of non-invasive mechanical 
ventilation is important in care planning, as both CPAP and BiPAP are 
resource-intensive (although less so than invasive mechanical 
ventilation) and signify underlying medical conditions about the 
patient or resident who requires the use of this intervention. 
Particularly when used in settings of acute illness or progressive 
respiratory decline, additional staff (for example, respiratory 
therapists) are required to monitor and adjust the CPAP and BiPAP 
settings and the patient or resident may require more nursing 
resources.
    The proposed data element, Non-invasive Mechanical Ventilator 
(BIPAP, CPAP), consists of the principal Non-invasive Mechanical 
Ventilator data element and two sub-elements: BiPAP and CPAP. If the 
assessor indicates that the patient is receiving non-invasive 
mechanical ventilation on the principal Non-invasive Mechanical 
Ventilator data element, the assessor would then indicate which type 
(that is, BIPAP, CPAP). Data elements that assess non-invasive 
mechanical ventilation are currently included on LCDS for the LTCH 
setting (``Non-invasive Ventilator (BIPAP, CPAP)''), and the MDS for 
the SNF setting (``Non-invasive Mechanical Ventilator (BiPAP/CPAP)''). 
We are proposing to expand the existing ``Non-invasive Ventilator 
(BiPAP, CPAP)'' data element on the LCDS, by retaining and renaming the 
main data element to be Non-invasive Mechanical Ventilator and adding 
two sub-elements for BiPAP and CPAP. For more information on the Non-
invasive Mechanical Ventilator (BIPAP, CPAP) data element, we refer 
readers to the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Non-invasive Mechanical Ventilator data element was first 
proposed as SPADEs in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20107). In that proposed rule, we stated that the proposal was informed 
by input we received through a call for input published on the CMS 
Measures Management System Blueprint website on a single data element, 
BiPAP/CPAP, that captures equivalent clinical information but uses a 
different label, to what is currently in use on the MDS in SNFs and 
LCDS in LTCHs. Input submitted from August 12 to September 12, 2016 
expressed support of the data element, noting the feasibility in PAC, 
and the relevance to facilitating care coordination and supporting care 
transitions. In addition, there was support in the public comment 
responses for separating out BiPAP and CPAP as distinct sub-elements, 
as they are therapies used for different types of patients and 
residents. A summary report for the August 12 to September 12, 2016 
public comment period titled ``SPADE August 2016 Public Comment Summary 
Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the special services, 
treatments, and interventions data elements in general; no additional 
comments were received that were specific to the Non-invasive 
Mechanical Ventilator data element other than concerns about not having 
recent, comprehensive field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Non-invasive Mechanical Ventilator data element was 
included in the National Beta Test of candidate data elements conducted 
by our data element contractor from November 2017 to August 2018. 
Results of this test found the Non-invasive Mechanical Ventilator data 
element to be feasible and reliable for use with PAC patients and 
residents. More information about the performance of the Non-invasive 
Mechanical Ventilator data element in the National Beta Test can be 
found in the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for non-invasive 
mechanical ventilation, stakeholder input, and strong test results, we 
are proposing that the Non-invasive Mechanical Ventilator (BiPAP, CPAP) 
data element, with a principal data element and two sub-elements, meets 
the definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act, and to adopt the Non-invasive 
Mechanical Ventilator (BiPAP, CPAP) data element as standardized 
patient

[[Page 19530]]

assessment data for use in the LTCH QRP.
 Respiratory Treatment: Invasive Mechanical Ventilator
    We are proposing that the Invasive Mechanical Ventilator data 
element meets the definition of standardized patient assessment data 
with respect to special services, treatments, and interventions under 
section 1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20107 through 20108), invasive mechanical ventilation includes 
ventilators and respirators that ventilate the patient through a tube 
that extends via the oral airway into the pulmonary region or through a 
surgical opening directly into the trachea. Thus, assessment of 
invasive mechanical ventilation is important in care planning and risk 
mitigation. Ventilation in this manner is a resource-intensive therapy 
associated with life-threatening conditions without which the patient 
or resident would not survive. However, ventilator use has inherent 
risks requiring close monitoring. Failure to adequately care for the 
patient or resident who is ventilator dependent can lead to iatrogenic 
events such as death, pneumonia and sepsis. Mechanical ventilation 
further signifies the complexity of the patient's underlying medical or 
surgical condition. Of note, invasive mechanical ventilation is 
associated with high daily and aggregate costs.\714\
---------------------------------------------------------------------------

    \714\ Wunsch, H., Linde-Zwirble, W. T., Angus, D.C., Hartman, 
M.E., Milbrandt, E. B., & Kahn, J.M. (2010). ``The epidemiology of 
mechanical ventilation use in the United States.'' Critical Care Med 
38(10): 1947-1953.
---------------------------------------------------------------------------

    The proposed data element, Invasive Mechanical Ventilator, consists 
of a single data element. Data elements that capture invasive 
mechanical ventilation are currently in use in the MDS in SNFs and LCDS 
in LTCHs. We are proposing that this data element will be collected at 
admission from the ``Invasive Mechanical Ventilation Support upon 
Admission to the LTCH'' data element that is already included on the 
LCDS, and through a new, added data element at discharge. For more 
information on the Invasive Mechanical Ventilator data element, we 
refer readers to the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Invasive Mechanical Ventilator data element was first proposed 
as a SPADE in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20107 
through 20108). In that proposed rule, we stated that the proposal was 
informed by input we received through a call for input published on the 
CMS Measures Management System Blueprint website on data elements that 
assess invasive ventilator use and weaning status that were tested in 
the PAC PRD (``Ventilator--Weaning'' and ``Ventilator--Non-Weaning''). 
Input submitted from August 12 to September 12, 2016 expressed support 
for this data element, highlighting the importance of this information 
in supporting care coordination and care transitions. Some commenters 
expressed concern about the appropriateness for standardization, given 
the prevalence of ventilator weaning across PAC providers; the timing 
of administration; how weaning is defined; and how weaning status 
relates to quality of care. These public comments guided our decision 
to propose a single data element focused on current use of invasive 
mechanical ventilation only, which does not attempt to capture weaning 
status. A summary report for the August 12 to September 12, 2016 public 
comment period titled ``SPADE August 2016 Public Comment Summary 
Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the Special Services, 
Treatments, and Interventions data elements in general, and support 
from one commenter on the Invasive Mechanical Ventilator data element. 
However, concerns were expressed about not having recent, comprehensive 
field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Invasive Mechanical Ventilator data element was 
included in the National Beta Test of candidate data elements conducted 
by our data element contractor from November 2017 to August 2018. 
Results of this test found the Invasive Mechanical Ventilator data 
element to be feasible and reliable for use with PAC patients and 
residents. More information about the performance of the Invasive 
Mechanical Ventilator data element in the National Beta Test can be 
found in the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present results of the National Beta 
Test and solicit additional comments. General input on the testing and 
item development process and concerns about burden were received from 
stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for invasive mechanical 
ventilation, stakeholder input, and strong test results, we are 
proposing that the Invasive Mechanical Ventilator data element that 
assesses the use of an invasive mechanical ventilator meets the 
definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act, and to adopt the Invasive Mechanical 
Ventilator data element as

[[Page 19531]]

standardized patient assessment data for use in the LTCH QRP.
 Intravenous (IV) Medications (Antibiotics, Anticoagulants, 
Vasoactive Medications, Other)
    We are proposing that the IV Medications (Antibiotics, 
Anticoagulants, Vasoactive Medications, Other) data element meets the 
definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act.
    We proposed a similar set of data elements related to IV 
medications in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20108 
through 20109). IV medications are solutions of a specific medication 
(for example, antibiotics, anticoagulants) administered directly into 
the venous circulation via a syringe or intravenous catheter (tube). IV 
medications are administered via intravenous push, single, 
intermittent, or continuous infusion through a tube placed into the 
vein. Further, IV medications are more resource intensive to administer 
than oral medications, and signify a higher patient complexity (and 
often higher severity of illness).
    The clinical indications for each of the sub-elements of the IV 
Medications data element (Antibiotics, Anticoagulants, Vasoactive 
Medications, and Other) are very different. IV antibiotics are used for 
severe infections when: The bioavailability of the oral form of the 
medication would be inadequate to kill the pathogen; an oral form of 
the medication does not exist; or the patient is unable to take the 
medication by mouth. IV anticoagulants refer to anti-clotting 
medications (that is, ``blood thinners''). IV anticoagulants are 
commonly used for hospitalized patients who have deep venous 
thrombosis, pulmonary embolism, or myocardial infarction, as well as 
those undergoing interventional cardiac procedures. Vasoactive 
medications refer to the IV administration of vasoactive drugs, 
including vasopressors, vasodilators, and continuous medication for 
pulmonary edema, which increase or decrease blood pressure or heart 
rate. The indications, risks, and benefits of each of these classes of 
IV medications are distinct, making it important to assess each 
separately in PAC. Knowing whether or not patients are receiving IV 
medication and the type of medication provided by each PAC provider 
will improve quality of care.
    The IV Medications (Antibiotics, Anticoagulants, Vasoactive 
Medications, and Other) data element we are proposing consists of a 
principal data element (IV Medications) and four response option sub-
elements: Antibiotics; Anticoagulants; Vasoactive Medications; and 
Other. The Vasoactive Medications sub-element was not proposed in the 
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20108 through 20109). We 
added the Vasoactive Medications sub-element to our proposal in order 
to harmonize the proposed IV Mediciations element with the data 
currently collected in the LCDS.
    If the assessor indicates that the patient is receiving IV 
medications on the principal IV Medications data element, the assessor 
would then indicate which types of medications (for example, 
Antibiotics, Anticoagulants, Vasoactive Medications, Other). An IV 
Medications data element is currently in use on the MDS in SNFs and 
there is a related data element in OASIS that collects information on 
Intravenous and Infusion Therapies. The LCDS in LTCHs currently 
collects data on IV Vasoactive Medications. We are proposing to modify 
the existing IV Vasoactive Medications data element in the LCDS to 
include additional sub-elements included in the standardized form of 
the IV Medications (Antibiotics, Anticoagulation, Vasoactive 
Medications, Other) data element and a principal data element for IV 
Medications. For more information on the IV Medications (Antibiotics, 
Anticoagulants, Vasoactive Medications, Other) data element, we refer 
readers to the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    An IV Medications data element was first proposed as a SPADE in the 
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20108 through 20109). In 
that proposed rule, we stated that the proposal was informed by input 
we received on Vasoactive Medications through a call for input 
published on the CMS Measures Management System Blueprint website. 
Input submitted from August 12 to September 12, 2016 supported this 
data element, with one noting the importance of this data element in 
supporting care transitions. We also stated that these commenters had 
criticized the need for collecting specifically Vasoactive Medications, 
giving feedback that the data element was too narrowly focused. In 
addition, public comment received indicated that the clinical 
significance of vasoactive medications administration alone was not 
high enough in PAC to merit mandated assessment, noting that related 
and more useful information could be captured in an item that assessed 
all IV medication use. A summary report for the August 12 to September 
12, 2016 public comment period titled ``SPADE August 2016 Public 
Comment Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the Special Services, 
Treatments, and Interventions data elements in general; no additional 
comments were received that were specific to the IV Medications data 
element. However, general concerns were expressed about not having 
recent, comprehensive field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the IV Medications data element was included in the 
National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the IV Medications data element to be feasible and reliable 
for use with PAC patients and residents. More information about the 
performance of the IV Medications data element in the National Beta 
Test can be found in the document titled ``Proposed Specifications for 
LTCH QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-
Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-
of-

[[Page 19532]]

2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for IV medications, 
stakeholder input, and strong test results, we are proposing that the 
IV Medications (Antibiotics, Anticoagulation, Vasoactive Medications, 
Other) data element with a principal data element and four sub-elements 
meets the definition of standardized patient assessment data with 
respect to special services, treatments, and interventions under 
section 1899B(b)(1)(B)(iii) of the Act, and to adopt the IV Medications 
(Antibiotics, Anticoagulation, Vasoactive Medications, Other) data 
element as standardized patient assessment data for use in the LTCH 
QRP.
 Transfusions
    We are proposing that the Transfusions data element meets the 
definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20109 through 20110), transfusion refers to introducing blood or blood 
products into the circulatory system of a person. Blood transfusions 
are based on specific protocols, with multiple safety checks and 
monitoring required during and after the infusion in case of adverse 
events. Coordination with the provider's blood bank is necessary, as 
well as documentation by clinical staff to ensure compliance with 
regulatory requirements. In addition, the need for transfusions 
signifies underlying patient complexity that is likely to require care 
coordination and patient monitoring, and impacts planning for 
transitions of care, as transfusions are not performed by all PAC 
providers.
    The proposed data element consists of the single Transfusions data 
element. A data element on transfusion is currently in use in the MDS 
in SNFs (``Transfusions'') and a data element tested in the PAC PRD 
(``Blood Transfusions'') was found feasible for use in each of the four 
PAC settings. For more information on the Transfusions data element, we 
refer readers to the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Transfusions data element was first proposed as a SPADE in the 
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20109 through 20110).
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the Special Services, 
Treatments, and Interventions data elements in general. In response to 
our proposal, we received comments in support of the Transfusions data 
element. A commenter supported the inclusion of the Transfusions data 
element because transfusions are increasingly being performed outside 
of the hospital setting and reporting transfusions as a SPADE will 
contribute to higher quality, coordinated care for patients who rely on 
these life-saving treatments. However, concerns were expressed about 
not having recent, comprehensive field testing of proposed data 
elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Transfusions data element was included in the 
National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the Transfusions data element to be feasible and reliable 
for use with PAC patients and residents. More information about the 
performance of the Transfusions data element in the National Beta Test 
can be found in the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions. Although the TEP did not 
specifically discuss the Transfusions data element, the TEP supported 
the assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for transfusions, 
stakeholder input, and strong test results, we are proposing that the 
Transfusions data element that is currently in use in the MDS in SNFs 
meets the definition of standardized patient assessment data with 
respect to special services, treatments, and interventions under 
section 1899B(b)(1)(B)(iii) of the Act, and to adopt the Transfusion 
data element as standardized patient assessment data for use in the 
LTCH QRP.

[[Page 19533]]

 Dialysis (Hemodialysis, Peritoneal Dialysis)
    We are proposing that the Dialysis (Hemodialysis, Peritoneal 
dialysis) data element meets the definition of standardized patient 
assessment data with respect to special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20110), dialysis is a treatment primarily used to provide replacement 
for lost kidney function. Both forms of dialysis (hemodialysis and 
peritoneal dialysis) are resource intensive, not only during the actual 
dialysis process but before, during and following. Patients and 
residents who need and undergo dialysis procedures are at high risk for 
physiologic and hemodynamic instability from fluid shifts and 
electrolyte disturbances as well as infections that can lead to sepsis. 
Further, patients or residents receiving hemodialysis are often 
transported to a different facility, or at a minimum, to a different 
location in the same facility for treatment. Close monitoring for fluid 
shifts, blood pressure abnormalities, and other adverse effects is 
required prior to, during and following each dialysis session. Nursing 
staff typically perform peritoneal dialysis at the bedside, and as with 
hemodialysis, close monitoring is required.
    The proposed data element, Dialysis (Hemodialysis, Peritoneal 
dialysis) consists of the principal Dialysis data element and two 
response option sub-elements: Hemodialysis; and Peritoneal dialysis. If 
the assessor indicates that the patient is receiving dialysis on the 
principal Dialysis data element, the assessor would then indicate which 
type (Hemodialysis or Peritoneal dialysis). Dialysis data elements are 
currently included on the MDS in SNFs and the LCDS in LTCHs and assess 
the overall use of dialysis. We are proposing to expand the existing 
Dialysis data element currently in the LCDS to include sub-elements for 
Hemodialysis and Peritoneal dialysis.
    As the result of public feedback described below, in this proposed 
rule, we are proposing data elements that include the principal 
Dialysis data element and two sub-elements (Hemodialysis and Peritoneal 
dialysis). For more information on the Dialysis data elements, we refer 
readers to the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Dialysis data element was first proposed as a SPADE in the FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 20110). In that proposed rule, 
we stated that the proposal was informed by input we received on a 
singular Hemodialysis data element through a call for input published 
on the CMS Measures Management System Blueprint website. Input 
submitted from August 12 to September 12, 2016 supported the assessment 
of hemodialysis and recommended that the data element be expanded to 
include peritoneal dialysis. We also noted that several commenters had 
supported the singular Hemodialysis data element, noting the relevance 
of this information for sharing across the care continuum to facilitate 
care coordination and care transitions, the potential for this data 
element to be used to improve quality, and the feasibility for use in 
PAC. In addition, we received comment that the item would be useful in 
improving patient and resident transitions of care. We also noted that 
several commenters had also stated that peritoneal dialysis should be 
included in a standardized data element on dialysis and recommended 
collecting information on peritoneal dialysis in addition to 
hemodialysis. The rationale for including peritoneal dialysis from 
commenters included the fact that patients and residents receiving 
peritoneal dialysis will have different needs at post-acute discharge 
compared to those receiving hemodialysis or not having any dialysis. 
Based on these comments, the Hemodialysis data element was expanded to 
include a principal Dialysis data element and two sub-elements, 
Hemodialysis and Peritoneal dialysis. We are proposing the version of 
the Dialysis element that includes two types of dialysis. A summary 
report for the August 12 to September 12, 2016 public comment period 
titled ``SPADE August 2016 Public Comment Summary Report'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received comments in support of the Special Services, 
Treatments, and Interventions data elements in general. No additional 
comments were received that were specific to the Dialysis data element. 
However, concerns were expressed about not having recent, comprehensive 
field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Dialysis data element was included in the National 
Beta Test of candidate data elements conducted by our data element 
contractor from November 2017 to August 2018. Results of this test 
found the Dialysis data element to be feasible and reliable for use 
with PAC patients and residents. More information about the performance 
of the Dialysis data elements in the National Beta Test can be found in 
the document titled ``Proposed Specifications for LTCH QRP Quality 
Measures and Standardized Patient Assessment Data Elements,'' available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-
Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-
Initiatives/IMPACT-Act-of-2014/

[[Page 19534]]

IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for dialysis, 
stakeholder input, and strong test results, we are proposing that the 
Dialysis (Hemodialysis, Peritoneal dialysis) data element with a 
principal data element and two sub-elements meets the definition of 
standardized patient assessment data with respect to special services, 
treatments, and interventions under section 1899B(b)(1)(B)(iii) of the 
Act, and to adopt the Dialysis (Hemodialysis, Peritoneal dialysis) data 
element as standardized patient assessment data for use in the LTCH 
QRP.
 Intravenous (IV) Access (Peripheral IV, Midline, Central Line)
    We are proposing that the IV Access (Peripheral IV, Midline, 
Central line) data element meets the definition of standardized patient 
assessment data with respect to special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20110 through 20111), patients or residents with central lines, 
including those peripherally inserted or who have subcutaneous central 
line ``port'' access, always require vigilant nursing care to keep 
patency of the lines and ensure that such invasive lines remain free 
from any potentially life-threatening events such as infection, air 
embolism, or bleeding from an open lumen. Clinically complex patients 
and residents are likely to be receiving medications or nutrition 
intravenously. The sub-elements included in the IV Access data element 
distinguish between peripheral access and different types of central 
access. The rationale for distinguishing between a peripheral IV and 
central IV access is that central lines confer higher risks associated 
with life-threatening events such as pulmonary embolism, infection, and 
bleeding.
    The proposed data element, IV Access (Peripheral IV, Midline, 
Central line), consists of the principal IV Access data element and 
three response option sub-elements: Peripheral IV, Midline, and Central 
line. The proposed IV Access data element is not currently included on 
any of the PAC assessment instruments. For more information on the IV 
Access (Peripheral IV, Midline, Central line) data element, we refer 
readers to the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    An IV Access data element was first proposed as a SPADE in the FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 20110 through 20111). In that 
proposed rule, we stated that the proposal was informed by input we 
received on one of the PAC PRD data elements, Central Line Management, 
a type of IV access, through a call for input published on the CMS 
Measures Management System Blueprint website. Input submitted from 
August 12 to September 12, 2016 expressed support for the assessment of 
central line management and recommended that the data element be 
broadened to also include other types of IV access in addition to 
central lines. Several commenters supported the data element, noting 
feasibility and importance for facilitating care coordination and care 
transitions. However, a few commenters recommended that this data 
element be broadened to include peripherally inserted central catheters 
(``PICC lines'') and midline IVs. Based on public comment feedback and 
in consultation with expert input, we expanded the Central Line 
Management data element to include more types of IV access (that is, 
peripheral IV and midline). This expanded version of IV Access is the 
data element being proposed. A summary report for the August 12 to 
September 12, 2016 public comment period titled ``SPADE August 2016 
Public Comment Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the Special Services, 
Treatments, and Interventions data elements in general. No additional 
comments were received that were specific to the IV Access data 
element. However, concerns were expressed about not having recent, 
comprehensive field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the IV Access data element was included in the National 
Beta Test of candidate data elements conducted by our data element 
contractor from November 2017 to August 2018. Results of this test 
found the IV Access data element to be feasible and reliable for use 
with PAC patients and residents. More information about the performance 
of the IV Access data element in the National Beta Test can be found in 
the document titled ``Proposed Specifications for LTCH QRP Quality 
Measures and Standardized Patient Assessment Data Elements,'' available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present results of the National Beta 
Test and solicit additional comments. General input on the testing and 
item development process and concerns about burden were received from 
stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for IV access, 
stakeholder input, and strong test results, we are proposing that the 
IV access (Peripheral IV, Midline, Central line) data element with a 
principal data element and three sub-elements meets the definition of 
standardized patient assessment data with respect to special services, 
treatments, and interventions under section 1899B(b)(1)(B)(iii) of the 
Act,

[[Page 19535]]

and to adopt the IV access (Peripheral IV, Midline, Central line) data 
element as standardized patient assessment data for use in the LTCH 
QRP.
 Nutritional Approach: Parenteral/IV Feeding
    We are proposing that the Parenteral/IV Feeding data element meets 
the definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20111 through 20112), parenteral nutrition/IV feeding refers to a 
patient or resident being fed intravenously using an infusion pump, 
bypassing the usual process of eating and digestion. The need for IV/
parenteral feeding indicates a clinical complexity that prevents the 
patient or resident from meeting his or her nutritional needs 
enterally, and is more resource intensive than other forms of 
nutrition, as it often requires monitoring of blood chemistries and 
maintenance of a central line. Therefore, assessing a patient's or 
resident's need for parenteral feeding is important for care planning 
and resource use. In addition to the risks associated with central and 
peripheral intravenous access, total parenteral nutrition is associated 
with significant risks such as embolism and sepsis.
    The proposed data element consists of the single Parenteral/IV 
Feeding data element. The proposed Parenteral/IV Feeding data element 
is currently in use in the MDS in SNFs, and equivalent or related data 
elements are in use in the LCDS, IRF-PAI, and OASIS. We are proposing 
to replace the existing Total Parenteral Nutrition data element in the 
LCDS with the proposed Parenteral/IV Feeding data element. For more 
information on the Parenteral/IV Feeding data element, we refer readers 
to the document titled ``Proposed Specifications for LTCH QRP Quality 
Measures and Standardized Patient Assessment Data Elements,'' available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Parenteral/IV Feeding data element was first proposed as a 
SPADE in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20111 through 
20112). In that proposed rule, we stated that the proposal was informed 
by input we received on Total Parenteral Nutrition (an item with nearly 
the same meaning as the proposed data element, but with the label used 
in the PAC PRD), through a call for input published on the CMS Measures 
Management System Blueprint website. Input submitted from August 12 to 
September 12, 2016, supported this data element, noting its relevance 
to facilitating care coordination and supporting care transitions. 
After the public input period, the Total Parenteral Nutrition data 
element was renamed Parenteral/IV Feeding, to be consistent with how 
this data element is referred to in the MDS in SNFs. A summary report 
for the August 12 to September 12, 2016 public comment period titled 
``SPADE August 2016 Public Comment Summary Report'' is available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received comments in support of the Special Services, 
Treatments, and Interventions data elements in general. In response to 
our proposal, we received public comments in support of the Parenteral/
IV Feeding data element. Several commenters supported the inclusion of 
nutrition data elements and noted their importance in capturing 
information on additional resources necessary to treat patients with 
altered dietary needs. However, one commenter noted limitations of the 
proposed data elements, such as not recording clinical rationale for 
nutritional or diet needs. We also received public comments expressing 
concern about not having recent, comprehensive field testing of 
proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Parenteral/IV Feeding data element was included in 
the National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the Parenteral/IV Feeding data element to be feasible and 
reliable for use with PAC patients and residents. More information 
about the performance of the Parenteral/IV Feeding data element in the 
National Beta Test can be found in the document titled ``Proposed 
Specifications for LTCH QRP Quality Measures and Standardized Patient 
Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for parenteral/IV 
feeding, stakeholder input, and strong test results, we are proposing 
that the Parenteral/IV Feeding data element meets the definition of 
standardized patient assessment data with respect to special services, 
treatments, and interventions under section 1899B(b)(1)(B)(iii) of the 
Act, and to adopt the Parenteral/IV Feeding data element as 
standardized patient assessment data for use in the LTCH QRP.
 Nutritional Approach: Feeding Tube
    We are proposing that the Feeding Tube data element meets the 
definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act.

[[Page 19536]]

    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20112), the majority of patients admitted to acute care hospitals 
experience deterioration of their nutritional status during their 
hospital stay, making assessment of nutritional status and method of 
feeding if unable to eat orally very important in PAC. A feeding tube 
can be inserted through the nose or the skin on the abdomen to deliver 
liquid nutrition into the stomach or small intestine. Feeding tubes are 
resource intensive and, therefore, are important to assess for care 
planning and resource use. Patients with severe malnutrition are at 
higher risk for a variety of complications.\715\ In PAC settings, there 
are a variety of reasons that patients and residents may not be able to 
eat orally (including clinical or cognitive status).
---------------------------------------------------------------------------

    \715\ Dempsey, D.T., Mullen, J.L., & Buzby, G.P. (1988). ``The 
link between nutritional status and clinical outcome: can 
nutritional intervention modify it?'' Am J of Clinical Nutrition, 
47(2): 352-356.
---------------------------------------------------------------------------

    The proposed data element consists of the single Feeding Tube data 
element. The Feeding Tube data element is currently included in the MDS 
for SNFs, and in the OASIS for HHAs, where it is labeled Enteral 
Nutrition. A related data element, collected in the IRF-PAI for IRFs 
(Tube/Parenteral Feeding), assesses use of both feeding tubes and 
parenteral nutrition. For more information on the Feeding Tube data 
element, we refer readers to the document titled ``Proposed 
Specifications for LTCH QRP Quality Measures and Standardized Patient 
Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Feeding Tube data element was first proposed as a SPADE in the 
FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20112). In that proposed 
rule, we stated that the proposal was informed by input we received 
through a call for input published on the CMS Measures Management 
System Blueprint website. Input submitted from August 12 to September 
12, 2016 on an Enteral Nutrition data element (which is the same as the 
data element we are proposing in this proposed rule, but is used in the 
OASIS under a different name) supported the data element, noting the 
importance of assessing enteral nutrition status for facilitating care 
coordination and care transitions. After the public comment period, the 
Enteral Nutrition data element used in public comment was renamed 
``Feeding Tube'', indicating the presence of an assistive device. A 
summary report for the August 12 to September 12, 2016 public comment 
period titled ``SPADE August 2016 Public Comment Summary Report'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the Special Services, 
Treatments, and Interventions data elements in general. In response to 
our proposal, we received public comments in support of the Feeding 
Tube data element. Several commenters supported the inclusion of 
nutrition data elements, noting their importance when capturing dietary 
needs. However, we also received recommendations to increase the 
specificity of the data element by using more clinical terminology and 
assessing clinical rationale for nutritional or dietary needs as well 
as concerns about not having recent, comprehensive field testing of 
proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Feeding Tube data element was included in the 
National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the Feeding Tube data element to be feasible and reliable 
for use with PAC patients and residents. More information about the 
performance of the Feeding Tube data element in the National Beta Test 
can be found in the document titled ``Proposed Specifications for LTCH 
QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for feeding tubes, 
stakeholder input, and strong test results, we are proposing that the 
Feeding Tube data element meets the definition of standardized patient 
assessment data with respect to special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act, and to 
adopt the Feeding Tube data element as standardized patient assessment 
data for use in the LTCH QRP.
 Nutritional Approach: Mechanically Altered Diet
    We are proposing that the Mechanically Altered Diet data element 
meets the definition of standardized patient assessment data with 
respect to special services, treatments, and interventions under 
section 1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20112 through 20113), the Mechanically Altered Diet data element refers 
to food that has been altered to make it easier for the patient or 
resident to chew and swallow, and this type of diet is used for 
patients and residents who have difficulty performing these functions. 
Patients with severe malnutrition are at higher risk for a variety of 
complications.\716\
---------------------------------------------------------------------------

    \716\ Dempsey, D.T., Mullen, J.L., & Buzby, G.P. (1988). ``The 
link between nutritional status and clinical outcome: can 
nutritional intervention modify it?'' Am J of Clinical Nutrition, 
47(2): 352-356.

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[[Page 19537]]

    In PAC settings, there are a variety of reasons that patients and 
residents may have impairments related to oral feedings, including 
clinical or cognitive status. The provision of a mechanically altered 
diet may be resource intensive, and can signal difficulties associated 
with swallowing/eating safety, including dysphagia. In other cases, it 
signifies the type of altered food source, such as ground or puree, 
that will enable the safe and thorough ingestion of nutritional 
substances and ensure safe and adequate delivery of nourishment to the 
patient. Often, patients on mechanically altered diets also require 
additional nursing supports such as individual feeding, or direct 
observation, to ensure the safe consumption of the food product. 
Assessing whether a patient or resident requires a mechanically altered 
diet is therefore important for care planning and resource 
identification.
    The proposed data element consists of the single Mechanically 
Altered Diet data element. The proposed data element for a mechanically 
altered diet is currently included on the MDS for SNFs. A related data 
element for modified food consistency/supervision is currently included 
on the IRF-PAI for IRFs. Another related data element is included in 
the OASIS for HHAs that collects information about independent eating 
that requires ``a liquid, pureed or ground meat diet.'' For more 
information on the Mechanically Altered Diet data element, we refer 
readers to the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Mechanically Altered Diet data element was first proposed as a 
SPADE in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20112 through 
20113).
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the Special Services, 
Treatments, and Interventions data elements in general. In response to 
our proposal, we received comments in support of the Mechanically 
Altered Diet data element. Several commenters supported the inclusion 
of nutrition data elements noting their importance in capturing 
information on additional resources necessary to treat patients with 
altered dietary needs. However, one commenter noted limitations of the 
proposed data elements, such as not recording clinical rationale for 
nutritional or diet needs. We received further concerns regarding not 
having recent, comprehensive field testing of proposed data elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Mechanically Altered Diet data element was included 
in the National Beta Test of candidate data elements conducted by our 
data element contractor from November 2017 to August 2018. Results of 
this test found the Mechanically Altered Diet data element to be 
feasible and reliable for use with PAC patients and residents. More 
information about the performance of the Mechanically Altered Diet data 
element in the National Beta Test can be found in the document titled 
``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for mechanically 
altered diet, stakeholder input, and strong test results, we are 
proposing that the Mechanically Altered Diet data element meets the 
definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act, and to adopt the Mechanically Altered 
Diet data element as standardized patient assessment data for use in 
the LTCH QRP.
 Nutritional Approach: Therapeutic Diet
    We are proposing that the Therapeutic Diet data element meets the 
definition of standardized patient assessment data with respect to 
special services, treatments, and interventions under section 
1899B(b)(1)(B)(iii) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20113), a therapeutic diet refers to meals planned to increase, 
decrease, or eliminate specific foods or nutrients in a patient or 
resident's diet, such as a low-salt diet, for the purpose of treating a 
medical condition. The use of therapeutic diets among patients in PAC 
provides insight on the clinical complexity of these patients and their 
multiple comorbidities. Therapeutic diets are less resource intensive 
from the bedside nursing perspective, but do signify one or more 
underlying clinical conditions that preclude the patient from eating a 
regular diet. The communication among PAC providers about whether a 
patient is receiving a particular therapeutic diet is critical to 
ensure safe transitions of care.
    The proposed data element consists of the single Therapeutic Diet 
data element. The Therapeutic Diet data element is currently in use in 
the MDS in SNFs. For more information on the Therapeutic Diet data 
element, we refer readers to the document titled ``Proposed 
Specifications for LTCH QRP Quality Measures and Standardized Patient 
Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-
Quality-Initiatives/IMPACT-Act-of-

[[Page 19538]]

2014/IMPACT-Act-Downloads-and-Videos.html.
    The Therapeutic Diet data element was first proposed as a SPADE in 
the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20113).
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the Special Services, 
Treatments, and Interventions data elements in general. Several 
commenters supported the inclusion of nutrition data elements noting 
their importance in capturing information on additional resources 
necessary to treat patients with altered dietary needs. However, one 
commenter noted limitations of the proposed data elements, such as not 
recording clinical rationale for nutritional or diet needs. Other 
commenters recommended the addition of specific terminology to these 
data elements, as well as aligning the definition of Therapeutic Diet 
with the Academy of Nutrition and Dietetics' definition. One commenter 
suggested use of the term ``medically altered diet'' instead of 
``therapeutic diet.'' We also received comments related to concerns 
about not having recent, comprehensive field testing of proposed data 
elements.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Therapeutic Diet data element was included in the 
National Beta Test of candidate data elements conducted by our data 
element contractor from November 2017 to August 2018. Results of this 
test found the Therapeutic Diet data element to be feasible and 
reliable for use with PAC patients and residents. More information 
about the performance of the Therapeutic Diet data element in the 
National Beta Test can be found in the document titled ``Proposed 
Specifications for LTCH QRP Quality Measures and Standardized Patient 
Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on 
September 17, 2018 for the purpose of soliciting input on the special 
services, treatments, and interventions and the TEP supported the 
assessment of the special services, treatments, and interventions 
included in the National Beta Test with respect to both admission and 
discharge. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. A summary of the public input received from the November 27, 2018 
stakeholder meeting titled ``Input on Standardized Patient Assessment 
Data Elements (SPADEs) Received After November 27, 2018 Stakeholder 
Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for therapeutic diet, 
stakeholder input, and strong test results, we are proposing that the 
Therapeutic Diet data element meets the definition of standardized 
patient assessment data with respect to special services, treatments, 
and interventions under section 1899B(b)(1)(B)(iii) of the Act, and to 
adopt the Therapeutic Diet data element as standardized patient 
assessment data for use in the LTCH QRP.
 High-Risk Drug Classes: Use and Indication
    We are proposing that the High-Risk Drug Classes: Use and 
Indication data element meets the definition of standardized patient 
assessment data with respect to special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act.
    Most patients receiving PAC services depend on short- and long-term 
medications to manage their medical conditions. However, as a 
treatment, medications are not without risk; medications are in fact a 
leading cause of adverse events. A study by the U.S. Department of 
Health and Human Services found that 31 percent of adverse events that 
occurred in 2008 among hospitalized Medicare beneficiaries were related 
to medication.\717\ Moreover, changes in a patient's condition, 
medications, and transitions between care settings put patients at risk 
of medication errors and adverse drug events (ADEs). ADEs may be caused 
by medication errors such as drug omissions, errors in dosage, and 
errors in dosing frequency.\718\
---------------------------------------------------------------------------

    \717\ U.S. Department of Health and Human Services. Office of 
Inspector General. Daniel R. Levinson Adverse Events in Hospitals: 
National Incidence Among Medicare Beneficiaries. OEI-06-09-00090. 
November 2010. Available at: https://www.oig.hhs.gov/oei/reports/oei-06-09-00090.pdf.
    \718\ Boockvar KS, Liu S, Goldstein N, Nebeker J, Siu A, Fried 
T. Prescribing discrepancies likely to cause adverse drug events 
after patient transfer. Qual Saf Health Care. 2009;18(1):32-6.
---------------------------------------------------------------------------

    ADEs are known to occur across different types of healthcare 
settings. For example, the incidence of ADEs in the outpatient setting 
has been estimated at 1.15 ADEs per 100 person-months,\719\ while the 
rate of ADEs in the long-term care setting is approximately 9.80 ADEs 
per 100 resident-months.\720\ In the hospital setting, the incidence 
has been estimated at 15 ADEs per 100 admissions.\721\ In addition, 
approximately half of all hospital-related medication errors and 20 
percent of ADEs occur during transitions within, admission to, transfer 
to, or discharge from a hospital.722 723 724 ADEs are more 
common among older adults, who make up most patients receiving PAC 
services. The rate of emergency department visits for ADEs is three 
times higher among adults 65 years of age and older compared to that 
among those younger than age 65.\725\
---------------------------------------------------------------------------

    \719\ Gandhi TK, Seger AC, Overhage JM, et al. Outpatient 
adverse drug events identified by screening electronic health 
records. J Patient Saf 2010;6:91-6.doi:10.1097/PTS.0b013e3181dcae06.
    \720\ Gurwitz JH, Field TS, Judge J, Rochon P, Harrold LR, 
Cadoret C, et al. The incidence of adverse drug events in two large 
academic long-term care facilities. Am J Med. 2005; 118(3):2518. Epub 2005/03/05. Available at: https://doi.org/10.1016/j.amjmed.2004.09.018 PMID: 15745723.
    \721\ Hug BL, Witkowski DJ, Sox CM, Keohane CA, Seger DL, Yoon 
C, Matheny ME, Bates DW. Occurrence of adverse, often preventable, 
events in community hospitals involving nephrotoxic drugs or those 
excreted by the kidney. Kidney Int. 2009; 76:1192-1198. [PubMed: 
19759525].
    \722\ Barnsteiner JH. Medication reconciliation: transfer of 
medication information across settings-keeping it free from error. J 
Infus Nurs. 2005;28(2 Suppl):31-36.
    \723\ Rozich J, Roger, R. Medication safety: one organization's 
approach to the challenge. Journal of Clinical Outcomes Management. 
2001(8):27-34.
    \724\ Gleason KM, Groszek JM, Sullivan C, Rooney D, Barnard C, 
Noskin GA. Reconciliation of discrepancies in medication histories 
and admission orders of newly hospitalized patients. Am J Health 
Syst Pharm. 2004;61(16):1689-1695.
    \725\ Shehab N, Lovegrove MC, Geller AI, Rose KO, Weidle NJ, 
Budnitz DS. US emergency department visits for outpatient adverse 
drug events, 2013-2014. JAMA. doi: 10.1001/jama.2016.16201.
---------------------------------------------------------------------------

    Understanding the types of medication a patient is taking and the

[[Page 19539]]

reason for its use are key facets of a patient's treatment with respect 
to medication. Some classes of drugs are associated with more risk than 
others.\726\ We are proposing one High-Risk Drug Class data element 
with six medication classes as sub-elements. The six medication classes 
we are proposing as response options for the High-Risk Drug Classes: 
Use and Indication data element are: Anticoagulants; antiplatelets; 
hypoglycemics (including insulin); opioids; antipsychotics; and 
antibiotics. These drug classes are high-risk due to the adverse 
effects that may result from use. In particular, bleeding risk is 
associated with anticoagulants and antiplatelets; 727 728 
fluid retention, heart failure, and lactic acidosis are associated with 
hypoglycemics; \729\ misuse is associated with opioids; \730\ fractures 
and strokes are associated with antipsychotics; 731 732 and 
various adverse events such as central nervous systems effects and 
gastrointestinal intolerance are associated with antimicrobials,\733\ 
the larger category of medications that include antibiotics. Moreover, 
some medications in five of the six drug classes included in this data 
element are included in the 2019 Updated Beers Criteria[supreg] list as 
potentially inappropriate medications for use in older adults.\734\ 
Finally, although a complete medication list should record several 
important attributes of each medication (for example, dosage, route, 
stop date), recording an indication for the drug is of crucial 
importance.\735\
---------------------------------------------------------------------------

    \726\ Ibid.
    \727\ Shoeb M, Fang MC. Assessing bleeding risk in patients 
taking anticoagulants. J Thromb Thrombolysis. 2013;35(3):312-319. 
doi: 10.1007/s11239-013-0899-7.
    \728\ Melkonian M, Jarzebowski W, Pautas E. Bleeding risk of 
antiplatelet drugs compared with oral anticoagulants in older 
patients with atrial fibrillation: a systematic review and 
meta[hyphen]analysis. J Thromb Haemost. 2017;15:1500-1510. DOI: 
10.1111/jth.13697.
    \729\ Hamnvik OP, McMahon GT. Balancing Risk and Benefit with 
Oral Hypoglycemic Drugs. The Mount Sinai journal of medicine, New 
York. 2009; 76:234-243.
    \730\ Naples JG, Gellad WF, Hanlon JT. The Role of Opioid 
Analgesics in Geriatric Pain Management. Clin Geriatr Med. 
2016;32(4):725-735.
    \731\ Rigler SK, Shireman TI, Cook-Wiens GJ, Ellerbeck EF, 
Whittle JC, Mehr DR, Mahnken JD. Fracture risk in nursing home 
residents initiating antipsychotic medications. J Am Geriatr Soc. 
2013; 61(5):715-722. [PubMed: 23590366].
    \732\ Wang S, Linkletter C, Dore D et al. Age, antipsychotics, 
and the risk of ischemic stroke in the Veterans Health 
Administration. Stroke 2012;43:28-31. doi:10.1161/
STROKEAHA.111.617191.
    \733\ Faulkner CM, Cox HL, Williamson JC. Unique aspects of 
antimicrobial use in older adults. Clin Infect Dis. 2005;40(7):997-
1004.
    \734\ American Geriatrics Society 2015 Beers Criteria Update 
Expert Panel. American Geriatrics Society. Updated Beers Criteria 
for Potentially Inappropriate Medication Use in Older Adults. J Am 
Geriatr Soc 2015; 63:2227-2246.
    \735\ Li Y, Salmasian H, Harpaz R, Chase H, Friedman C. 
Determining the reasons for medication prescriptions in the EHR 
using knowledge and natural language processing. AMIA Annu Symp 
Proc. 2011;2011:768-76.
---------------------------------------------------------------------------

    The High-Risk Drug Classes: Use and Indication data element 
requires an assessor to record whether or not a patient is taking any 
medications within six drug classes. The six response options for this 
data element are high-risk drug classes with particular relevance to 
PAC patients and residents, as identified by our data element 
contractor. The six data response options are Anticoagulants, 
Antiplatelets, Hypoglycemics, Opioids, Antipsychotics, and Antibiotics. 
For each drug class, the assessor is asked to indicate if the patient 
is taking any medications within the class, and, for drug classes in 
which medications were being taken, whether indications for all drugs 
in the class are noted in the medical record. For example, for the 
response option Anticoagulants, if the assessor indicates that the 
patient is taking anticoagulant medication, the assessor would then 
indicate if an indication is recorded in the medication record for the 
anticoagulant(s).
    The High-Risk Drug Classes: Use and Indication data element that is 
being proposed as a SPADE was developed as part of a larger set of data 
elements to assess medication reconciliation, the process of obtaining 
a patient's multiple medication lists and reconciling any 
discrepancies. For more information on the High-Risk Drug Classes: Use 
and Indication data element, we refer readers to the document titled 
``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We sought public input on the relevance of conducting assessments 
on medication reconciliation and specifically on the proposed High-Risk 
Drug Classes: Use and Indication data element. Our data element 
contractor presented data elements related to medication reconciliation 
to the TEP convened on April 6 and 7, 2016. The TEP supported a focus 
on high-risk drugs, because of higher potential for harm to patients 
and residents, and were in favor of a data element to capture whether 
or not indications for medications were recorded in the medical record. 
A summary of the April 6 and 7, 2016 TEP meeting titled ``SPADE 
Technical Expert Panel Summary (First Convening)'' is available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html. Medication reconciliation data 
elements were also discussed at a second TEP meeting on January 5 and 
6, 2017, convened by our data element contractor. At this meeting, the 
TEP agreed about the importance of evaluating the medication 
reconciliation process, but disagreed about how this could be 
accomplished through standardized assessment. The TEP also disagreed 
about the usability and appropriateness of using the Beers Criteria to 
identify high-risk medications.\736\ A summary of the January 5 and 6, 
2017 TEP meeting titled ``SPADE Technical Expert Panel Summary (Second 
Convening)'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
---------------------------------------------------------------------------

    \736\ American Geriatrics Society 2015 Beers Criteria Update 
Expert Panel. American Geriatrics Society. Updated Beers Criteria 
for Potentially Inappropriate Medication Use in Older Adults. J Am 
Geriatr Soc 2015; 63:2227-2246.
---------------------------------------------------------------------------

    We also solicited public input on data elements related to 
medication reconciliation during a public input period from April 26 to 
June 26, 2017. Several commenters expressed support for the medication 
reconciliation data elements that were put on display, noting the 
importance of medication reconciliation in preventing medication errors 
and stated that the items seemed feasible and clinically useful. A few 
commenters were critical of the choice of 10 drug classes posted during 
that comment period, arguing that ADEs are not limited to high-risk 
drugs, and raised issues related to training assessors to correctly 
complete a valid assessment of medication reconciliation. A summary 
report for the April 26 to June 26, 2017 public comment period titled 
``SPADE May-June 2017 Public Comment Summary Report'' is available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The High-Risk Drug Classes: Use and Indication data element was 
included in the National Beta Test of candidate data elements conducted 
by our data element contractor from November 2017 to

[[Page 19540]]

August 2018. Results of this test found the High-Risk Drug Classes: Use 
and Indication data element to be feasible and reliable for use with 
PAC patients and residents. More information about the performance of 
the High-Risk Drug Classes: Use and Indication data element in the 
National Beta Test can be found in the document titled ``Proposed 
Specifications for LTCH QRP Quality Measures and Standardized Patient 
Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In, addition, our contractor convened a TEP on September 17, 2018 
for the purpose of soliciting input on the standardized patient 
assessment data elements. The TEP acknowledged the challenges of 
assessing medication safety, but was supportive of some of the data 
elements focused on medication reconciliation that were tested in the 
National Beta Test. The TEP was especially supportive of the focus on 
the six high-risk drug classes and using these classes to assess 
whether the indication for a drug is recorded. A summary of the 
September 17, 2018 TEP meeting titled ``SPADE Technical Expert Panel 
Summary (Third Convening)'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. These 
activities provided updates on the field-testing work and solicited 
feedback on data elements considered for standardization, including the 
High-Risk Drug Classes: Use and Indication data element. One 
stakeholder group was critical of the six drug classes included as 
response options in the High-Risk Drug Classes: Use and Indication data 
element, noting that potentially risky medications (for example, muscle 
relaxants) are not included in this list; that there may be important 
differences between drugs within classes (for example, more recent 
versus older style antidepressants); and that drug allergy information 
is not captured. Finally, on November 27, 2018, our data element 
contractor hosted a public meeting of stakeholders to present the 
results of the National Beta Test and solicit additional comments. 
General input on the testing and item development process and concerns 
about burden were received from stakeholders during this meeting and 
via email through February 1, 2019. In addition, one commenter 
questioned whether the time to complete the High-Risk Drug Classes: Use 
and Indication data element would differ across settings. A summary of 
the public input received from the November 27, 2018 stakeholder 
meeting titled ``Input on Standardized Patient Assessment Data Elements 
(SPADEs) Received After November 27, 2018 Stakeholder Meeting'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for the use and having 
indications recorded for high-risk drugs, stakeholder input, and strong 
test results, we are proposing that the High-Risk Drug Classes: Use and 
Indication data element meets the definition of standardized patient 
assessment data with respect to special services, treatments, and 
interventions under section 1899B(b)(1)(B)(iii) of the Act, and to 
adopt the High-Risk Drug Classes: Use and Indication data element as 
standardized patient assessment data for use in the LTCH QRP.
d. Medical Condition and Comorbidity Data
    Assessing medical conditions and comorbidities is critically 
important for care planning and safety for patients and residents 
receiving PAC services, and the standardized assessment of selected 
medical conditions and comorbidities across PAC providers is important 
for managing care transitions and understanding medical complexity.
    Below we discuss our proposals for data elements related to the 
medical condition of pain as standardized patient assessment data. 
Appropriate pain management begins with a standardized assessment, and 
thereafter establishing and implementing an overall plan of care that 
is person-centered, multi-modal, and includes the treatment team and 
the patient. Assessing and documenting the effect of pain on sleep, 
participation in therapy, and other activities may provide information 
on undiagnosed conditions and comorbidities and the level of care 
required, and do so more objectively than subjective numerical scores. 
With that, we assess that taken separately and together, these proposed 
data elements are essential for care planning, consistency across 
transitions of care, and identifying medical complexities including 
undiagnosed conditions. We also conclude that it is the standard of 
care to always consider the risks and benefits associated with a 
personalized care plan, including the risks of any pharmacological 
therapy, especially opioids.\737\ We also conclude that in addition to 
assessing and appropriately treating pain through the optimum mix of 
pharmacologic, non-pharmacologic, and alternative therapies, while 
being cognizant of current prescribing guidelines, clinicians in 
partnership with patients are best able to mitigate factors that 
contribute to the current opioid crisis.738 739 740
---------------------------------------------------------------------------

    \737\ Department of Health and Human Services: Pain Management 
Best Practices Inter-Agency Task Force. Draft Report on Pain 
Management Best Practices: Updates, Gaps, Inconsistencies, and 
Recommendations. Accessed April 1, 2019. https://www.hhs.gov/sites/default/files/final-pmtf-draft-report-on-pain-management%20-best-practices-2018-12-12-html-ready-clean.pdf.
    \738\ Department of Health and Human Services: Pain Management 
Best Practices Inter-Agency Task Force. Draft Report on Pain 
Management Best Practices: Updates, Gaps, Inconsistencies, and 
Recommendations. Accessed April 1, 2019. https://www.hhs.gov/sites/default/files/final-pmtf-draft-report-on-pain-management%20-best-practices-2018-12-12-html-ready-clean.pdf.
    \739\ Fishman SM, Carr DB, Hogans B, et al. Scope and Nature of 
Pain- and Analgesia-Related Content of the United States Medical 
Licensing Examination (USMLE). Pain Med Malden Mass. 2018;19(3):449-
459. doi:10.1093/pm/pnx336.
    \740\ Fishman SM, Young HM, Lucas Arwood E, et al. Core 
competencies for pain management: results of an interprofessional 
consensus summit. Pain Med Malden Mass. 2013;14(7):971-981. 
doi:10.1111/pme.12107.
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    In alignment with our Meaningful Measures Initiative, accurate 
assessment of medical conditions and comorbidities of patients and 
residents in PAC is expected to make care safer by reducing harm caused 
in the delivery of care; promote effective prevention and treatment of 
chronic disease; strengthen person and family engagement as partners in 
their care; and promote effective communication and coordination of 
care. The SPADEs will enable or support clinical decision-making and 
early clinical intervention; person-centered, high quality care 
through: Facilitating better care continuity and coordination; better 
data exchange and interoperability between settings; and longitudinal 
outcome analysis. Therefore, reliable data elements assessing medical 
conditions and comorbidities are needed in order to initiate a 
management program that can optimize a patient or resident's prognosis 
and reduce the possibility of adverse events.

[[Page 19541]]

    We are inviting comment that apply specifically to the standardized 
patient assessment data for the category of medical conditions and 
comorbidities, specifically on:
 Pain Interference (Pain Effect on Sleep, Pain Interference 
With Therapy Activities, and Pain Interference With Day-to-Day 
Activities)
    In acknowledgement of the opioid crisis, we specifically are 
seeking comment on whether or not we should add these pain items in 
light of those concerns. Commenters should address to what extent the 
collection of the SPADES described below through patient queries might 
encourage providers to prescribe opioids.
    We are proposing that a set of three data elements on the topic of 
Pain Interference (Pain Effect on Sleep, Pain Interference with Therapy 
Activities, and Pain Interference with Day-to-Day Activities) meet the 
definition of standardized patient assessment data with respect to 
medical condition and comorbidity data under section 1899B(b)(1)(B)(iv) 
of the Act.
    The practice of pain management began to undergo significant 
changes in the 1990s because the inadequate, non-standardized, non-
evidence-based assessment and treatment of pain became a public health 
issue.\741\ In pain management, a critical part of providing 
comprehensive care is performance of a thorough initial evaluation, 
including assessment of both the medical and any biopsychosocial 
factors causing or contributing to the pain, with a treatment plan to 
address the causes of pain and to manage pain that persists over 
time.\742\ Quality pain management, based on current guidelines and 
evidence-based practices, can minimize unnecessary opioid prescribing 
both by offering alternatives or supplemental treatment to opioids and 
by clearly stating when they may be appropriate, and how to utilize 
risk-benefit analysis for opioid and non-opioid treatment 
modalities.\743\
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    \741\ Institute of Medicine. Relieving Pain in America: A 
Blueprint for Transforming Prevention, Care, Education, and 
Research. Washington (DC): National Academies Press (US); 2011. 
http://www.ncbi.nlm.nih.gov/books/NBK91497/.
    \742\ Department of Health and Human Services: Pain Management 
Best Practices Inter-Agency Task Force. Draft Report on Pain 
Management Best Practices: Updates, Gaps, Inconsistencies, and 
Recommendations. Accessed April 1, 2019. https://www.hhs.gov/sites/default/files/final-pmtf-draft-report-on-pain-management%20-best-practices-2018-12-12-html-ready-clean.pdf.
    \743\ National Academies. Pain Management and the Opioid 
Epidemic: Balancing Societal and Individual Benefits and Risks of 
Prescription Opioid Use. Washington DC: National Academies of 
Sciences, Engineering, and Medicine.; 2017.
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    Pain is not a surprising symptom in PAC patients and residents, 
where healing, recovery, and rehabilitation often require regaining 
mobility and other functions after an acute event. Standardized 
assessment of pain that interferes with function is an important first 
step towards appropriate pain management in PAC settings. The National 
Pain Strategy called for refined assessment items on the topic of pain, 
and describes the need for these improved measures to be implemented in 
PAC assessments.\744\ Further, the focus on pain interference, as 
opposed to pain intensity or pain frequency, was supported by the TEP 
convened by our data element contractor as an appropriate and 
actionable metric for assessing pain. A summary of the September 17, 
2018 TEP meeting titled ``SPADE Technical Expert Panel Summary (Third 
Convening)'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
---------------------------------------------------------------------------

    \744\ National Pain Strategy: A Comprehensive Population-Health 
Level Strategy for Pain. Available at: https://iprcc.nih.gov/sites/default/files/HHSNational_Pain_Strategy_508C.pdf.
---------------------------------------------------------------------------

    We appreciate the important concerns related to the misuse and 
overuse of opioids in the treatment of pain and to that end we note 
that in this proposed rule we have also proposed a SPADE that assesses 
for the use of, as well as importantly the indication for that use of, 
high risk drugs, including opioids. Further, in the FY 2017 IPPS/LTCH 
PPS final rule (81 FR 57193), we adopted the Drug Regimen Review 
Conducted With Follow-Up for Identified Issues-Post Acute Care (PAC) 
Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP) measure 
which assesses whether PAC providers were responsive to potential or 
actual clinically significant medication issue(s), which includes 
issues associated with use and misuse of opioids for pain management, 
when such issues were identified.
    We also note that the proposed SPADE related to pain assessment are 
not associated with any particular approach to management. Since the 
use of opioids is associated with serious complications, particularly 
in the elderly,745 746 747 an array of successful non-
pharmacologic and non-opioid approaches to pain management may be 
considered. PAC providers have historically used a range of pain 
management strategies, including non-steroidal anti-inflammatory drugs, 
ice, transcutaneous electrical nerve stimulation (TENS) therapy, 
supportive devices, acupuncture, and the like. In addition, non-
pharmacological interventions for pain management include, but are not 
limited to, biofeedback, application of heat/cold, massage, physical 
therapy, nerve block, stretching and strengthening exercises, 
chiropractic, electrical stimulation, radiotherapy, and 
ultrasound.748 749 750
---------------------------------------------------------------------------

    \745\ Chau, D.L., Walker, V., Pai, L., & Cho, L.M. (2008). 
Opiates and elderly: use and side effects. Clinical interventions in 
aging, 3(2), 273-8.
    \746\ Fine, P.G. (2009). Chronic Pain Management in Older 
Adults: Special Considerations. Journal of Pain and Symptom 
Management, 38(2): S4-S14.
    \747\ Solomon, D.H., Rassen, J.A., Glynn, R.J., Garneau, K., 
Levin, R., Lee, J., & Schneeweiss, S.. (2010). Archives Internal 
Medicine, 170(22):1979-1986.
    \748\ Byrd L. Managing chronic pain in older adults: a long-term 
care perspective. Annals of Long-Term Care: Clinical Care and Aging. 
2013;21(12):34-40.
    \749\ Kligler, B., Bair, M.J., Banerjea, R. et al. (2018). 
Clinical Policy Recommendations from the VHA State-of-the-Art 
Conference on Non-Pharmacological Approaches to Chronic 
Musculoskeletal Pain. Journal of General Internal Medicine, 33(Suppl 
1): 16. https://doi.org/10.1007/s11606-018-4323-z.
    \750\ Chou, R., Deyo, R., Friedly, J., et al. (2017). 
Nonpharmacologic Therapies for Low Back Pain: A Systematic Review 
for an American College of Physicians Clinical Practice Guideline. 
Annals of Internal Medicine, 166(7):493-505.
---------------------------------------------------------------------------

    We believe that standardized assessment of pain interference will 
support PAC clinicians in applying best-practices in pain management 
for chronic and acute pain, consistent with current clinical 
guidelines. For example, the standardized assessment of both opioids 
and pain interference would support providers in successfully tapering 
patients/residents who arrive in the PAC setting with long-term opioid 
use off of opioids onto non-pharmacologic treatments and non-opioid 
medications, as recommended by the Society for Post-Acute and Long-Term 
Care Medicine,\751\ and consistent with HHS' 5-Point Strategy To Combat 
the Opioid Crisis \752\ which includes ``Better Pain Management.''
---------------------------------------------------------------------------

    \751\ Society for Post-Acute and Long-Term Care Medicine (AMDA). 
(2018). Opioids in Nursing Homes: Position Statement. Available at: 
https://paltc.org/opioids%20in%20nursing%20homes.
    \752\ https://www.hhs.gov/opioids/about-the-epidemic/hhs-response/index.html.
---------------------------------------------------------------------------

    The Pain Interference data element set consists of three data 
elements: Pain Effect on Sleep, Pain Interference with Therapy 
Activities, and Pain Interference with Day-to-Day Activities. Pain 
Effect on Sleep assesses the frequency with which pain effects a 
patient's sleep. Pain Interference with Therapy Activities assesses the 
frequency with which pain interferes with a patient's ability to 
participate in therapies. Pain Interference with Day-to-Day Activities 
assesses the extent to

[[Page 19542]]

which pain interferes with a patient's ability to participate in day-
to-day activities excluding therapy.
    A similar data element on the effect of pain on activities is 
currently included in the OASIS. A similar data element on the effect 
on sleep is currently included in the MDS instrument. For more 
information on the Pain Interference data elements, we refer readers to 
the document titled ``Proposed Specifications for LTCH QRP Quality 
Measures and Standardized Patient Assessment Data Elements,'' available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We sought public input on the relevance of conducting assessments 
on pain and specifically on the larger set of Pain Interview data 
elements included in the National Beta Test. The proposed data elements 
were supported by comments from the TEP meeting held by our data 
element contractor on April 7 to 8, 2016. The TEP affirmed the 
feasibility and clinical utility of pain as a concept in a standardized 
assessment. The TEP agreed that data elements on pain interference with 
ability to participate in therapies versus other activities should be 
addressed. Further, during a more recent convening of the same TEP on 
September 17, 2018, the TEP supported the interview-based pain data 
elements included in the National Beta Test. The TEP members were 
particularly supportive of the items that focused on how pain 
interferes with activities (that is, Pain Interference data elements), 
because understanding the extent to which pain interferes with function 
would enable clinicians to determine the need for appropriate pain 
treatment. A summary of the September 17, 2018 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Third Convening)'' is available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We held a public input period in 2016 to solicit feedback on the 
standardization of pain and several other items that were under 
development in prior efforts. From the prior public comment period, we 
included several pain data elements (Pain Effect on Sleep; Pain 
Interference--Therapy Activities; Pain Interference--Other Activities) 
in a second call for public input, open from April 26 to June 26, 2017. 
The items we sought comment on were modified from all stakeholder and 
test efforts. Commenters provided general comments about pain 
assessment in general in addition to feedback on the specific pain 
items. A few commenters shared their support for assessing pain, the 
potential for pain assessment to improve the quality of care, and for 
the validity and reliability of the data elements. Commenters affirmed 
that the item of pain and the effect on sleep would be suitable for PAC 
settings. Commenters' main concerns included redundancy with existing 
data elements, feasibility and utility for cross-setting use, and the 
applicability of interview-based items to patients and residents with 
cognitive or communication impairments, and deficits. A summary report 
for the April 26 to June 26, 2017 public comment period titled ``SPADE 
May-June 2017 Public Comment Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Pain Interference data elements were included in the National 
Beta Test of candidate data elements conducted by our data element 
contractor from November 2017 to August 2018. Results of this test 
found the Pain Interference data elements to be feasible and reliable 
for use with PAC patients and residents. More information about the 
performance of the Pain Interference data elements in the National Beta 
Test can be found in the document titled ``Proposed Specifications for 
LTCH QRP Quality Measures and Standardized Patient Assessment Data 
Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. In addition, one commenter expressed strong support for the Pain 
data elements and was encouraged by the fact that this portion of the 
assessment goes beyond merely measuring the presence of pain. A summary 
of the public input received from the November 27, 2018 stakeholder 
meeting titled ``Input on Standardized Patient Assessment Data Elements 
(SPADEs) Received After November 27, 2018 Stakeholder Meeting'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for the effect of pain 
on function, stakeholder input, and strong test results, we are 
proposing that the three data elements (Pain Effect on Sleep, Pain 
Interference with Therapy Activities, and Pain Interference with Day-
to-Day Activities) that comprise the set of Pain Interference data 
elements meet the definition of standardized patient assessment data 
with respect to medical conditions and comorbidities under section 
1899B(b)(1)(B)(iv) of the Act, and to adopt the Pain Interference data 
elements as standardized patient assessment data for use in the LTCH 
QRP.
e. Impairment Data
    Hearing and vision impairments are conditions that, if unaddressed, 
affect activities of daily living, communication, physical functioning, 
rehabilitation outcomes, and overall quality of life. Sensory 
limitations can lead to confusion in new settings, increase isolation, 
contribute to mood disorders, and impede accurate assessment of other 
medical conditions. Failure to appropriately assess, accommodate, and 
treat these conditions increases the likelihood that patients will 
require more intensive and prolonged treatment. Onset of these 
conditions can be gradual, so individualized assessment with accurate 
screening tools and follow-up evaluations are essential to determining 
which patients need hearing- or vision-specific medical attention or 
assistive devices and accommodations, including auxiliary aids and/or 
services, and to ensure that person-directed care plans are developed 
to accommodate a patient's or resident's needs. Accurate diagnosis and 
management of hearing or vision impairment would likely improve 
rehabilitation outcomes and care transitions, including transition from 
institutional-based care to the community. Accurate assessment of 
hearing and vision impairment would be expected to lead to appropriate 
treatment, accommodations, including

[[Page 19543]]

the provision of auxiliary aids and services during the stay, and 
ensure that patients continue to have their vision and hearing needs 
met when they leave the facility.
    In alignment with our Meaningful Measures Initiative, we expect 
accurate individualized assessment, treatment, and accommodation of 
hearing and vision impairments of patients and residents in PAC to make 
care safer by reducing harm caused in the delivery of care; promote 
effective prevention and treatment of chronic disease; strengthen 
person and family engagement as partners in their care; and promote 
effective communication and coordination of care. For example, 
standardized assessment of hearing and vision impairments used in PAC 
will support ensuring patient safety (for example, risk of falls), 
identifying accommodations needed during the stay, and appropriate 
support needs at the time of discharge or transfer. Standardized 
assessment of these data elements will enable or support clinical 
decision-making and early clinical intervention; person-centered, high 
quality care (for example, facilitating better care continuity and 
coordination); better data exchange and interoperability between 
settings; and longitudinal outcome analysis. Therefore, reliable data 
elements assessing hearing and vision impairments are needed to 
initiate a management program that can optimize a patient or resident's 
prognosis and reduce the possibility of adverse events.
 Hearing
    We are proposing that the Hearing data element meets the definition 
of standardized patient assessment data with respect to impairments 
data under section 1899B(b)(1)(B)(v) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20114 through 20115), accurate assessment of hearing impairment is 
important in the PAC setting for care planning and resource use. 
Hearing impairment has been associated with lower quality of life, 
including poorer physical, mental, and social functioning, and 
emotional health.753 754 Treatment and accommodation of 
hearing impairment led to improved health outcomes, including but not 
limited to quality of life.755 For example, hearing loss in 
elderly individuals has been associated with depression and cognitive 
impairment,756 757 758 higher rates of incident cognitive 
impairment and cognitive decline,759 and less time in 
occupational therapy.760 Accurate assessment of hearing 
impairment is important in the PAC setting for care planning and 
defining resource use.
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    \753\ Dalton DS, Cruickshanks KJ, Klein BE, Klein R, Wiley TL, 
Nondahl DM. The impact of hearing loss on quality of life in older 
adults. Gerontologist. 2003;43(5):661-668.
    \754\ Hawkins K, Bottone FG, Jr., Ozminkowski RJ, et al. The 
prevalence of hearing impairment and its burden on the quality of 
life among adults with Medicare Supplement Insurance. Qual Life Res. 
2012;21(7):1135-1147.
    \755\ Horn KL, McMahon NB, McMahon DC, Lewis JS, Barker M, 
Gherini S. Functional use of the Nucleus 22-channel cochlear implant 
in the elderly. The Laryngoscope. 1991;101(3):284-288.
    \756\ Sprinzl GM, Riechelmann H. Current trends in treating 
hearing loss in elderly people: A review of the technology and 
treatment options--a mini-review. Gerontology. 2010;56(3):351-358.
    \757\ Lin FR, Thorpe R, Gordon-Salant S, Ferrucci L. Hearing 
Loss Prevalence and Risk Factors Among Older Adults in the United 
States. The Journals of Gerontology Series A: Biological Sciences 
and Medical Sciences. 2011;66A(5):582-590.
    \758\ Hawkins K, Bottone FG, Jr., Ozminkowski RJ, et al. The 
prevalence of hearing impairment and its burden on the quality of 
life among adults with Medicare Supplement Insurance. Qual Life Res. 
2012;21(7):1135-1147.
    \759\ Lin FR, Metter EJ, O'Brien RJ, Resnick SM, Zonderman AB, 
Ferrucci L. Hearing Loss and Incident Dementia. Arch Neurol. 
2011;68(2):214-220.
    \760\ Cimarolli VR, Jung S. Intensity of Occupational Therapy 
Utilization in Nursing Home Residents: The Role of Sensory 
Impairments. J Am Med Dir Assoc. 2016;17(10):939-942.
---------------------------------------------------------------------------

    The proposed data element consists of the single Hearing data 
element. This data consists of one question that assesses level of 
hearing impairment. This data element is currently in use in the MDS in 
SNFs. For more information on the Hearing data element, we refer 
readers to the document titled ``Proposed Specifications for LTCH QRP 
Quality Measures and Standardized Patient Assessment Data Elements,'' 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Hearing data element was first proposed as a SPADE in the FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 20114 through 20115). In that 
proposed rule, we stated that the proposal was informed by input we 
received on the PAC PRD form of the data element (``Ability to Hear'') 
through a call for input published on the CMS Measures Management 
System Blueprint website. Input submitted from August 12 to September 
12, 2016 recommended that hearing, vision, and communication 
assessments be administered at the beginning of patient assessment 
process. A summary report for the August 12 to September 12, 2016 
public comment period titled ``SPADE August 2016 Public Comment Summary 
Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received public comments in support of the Hearing data 
element as well as concerns about not having recent, comprehensive 
field testing of proposed data elements. Commenters were supportive of 
adopting the Hearing data element for standardized cross-setting use, 
noting that it would help address the needs of patient and residents 
with disabilities and that failing to identify impairments during the 
initial assessment can result in inaccurate diagnoses of impaired 
language or cognition and can invalidate other information obtained 
from patient assessment.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed rule, the Hearing data element was included in the National 
Beta Test of candidate data elements conducted by our data element 
contractor from November 2017 to August 2018. Results of this test 
found the Hearing data element to be feasible and reliable for use with 
PAC patients and residents. More information about the performance of 
the Hearing data element in the National Beta Test can be found in the 
document titled ``Proposed Specifications for LTCH QRP Quality Measures 
and Standardized Patient Assessment Data Elements,'' available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on January 
5 and 6, 2017 for the purpose of soliciting input on all the SPADEs, 
including the Hearing data element. The TEP affirmed the importance of 
standardized assessment of hearing impairment in PAC patients and 
residents. A summary of the January 5 and 6, 2017 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Second Convening)'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing

[[Page 19544]]

SPADE development efforts. Finally, on November 27, 2018, our data 
element contractor hosted a public meeting of stakeholders to present 
the results of the National Beta Test and solicit additional comments. 
General input on the testing and item development process and concerns 
about burden were received from stakeholders during this meeting and 
via email through February 1, 2019. In addition, a commenter expressed 
support for the Hearing data element and suggested administration at 
the beginning of the patient assessment to maximize utility. A summary 
of the public input received from the November 27, 2018 stakeholder 
meeting titled ``Input on Standardized Patient Assessment Data Elements 
(SPADEs) Received After November 27, 2018 Stakeholder Meeting'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for hearing, 
stakeholder input, and strong test results, we are proposing that the 
Hearing data element meets the definition of standardized patient 
assessment data with respect to impairments under section 
1899B(b)(1)(B)(v) of the Act, and to adopt the Hearing data element as 
standardized patient assessment data for use in the LTCH QRP.
 Vision
    We are proposing that the Vision data element meets the definition 
of standardized patient assessment data with respect to impairments 
under section 1899B(b)(1)(B)(v) of the Act.
    As described in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 
20115 through 20116), evaluation of an individual's ability to see is 
important for assessing for risks such as falls and provides 
opportunities for improvement through treatment and the provision of 
accommodations, including auxiliary aids and services, which can 
safeguard patients and improve their overall quality of life. Further, 
vision impairment is often a treatable risk factor associated with 
adverse events and poor quality of life. For example, individuals with 
visual impairment are more likely to experience falls and hip fracture, 
have less mobility, and report depressive 
symptoms.761 762 763 764 765 766 767 Individualized initial 
screening can lead to life-improving interventions such as 
accommodations, including the provision of auxiliary aids and services, 
during the stay and/or treatments that can improve vision and prevent 
or slow further vision loss. In addition, vision impairment is often a 
treatable risk factor associated with adverse events which can be 
prevented and accommodated during the stay. Accurate assessment of 
vision impairment is important in the LTCH setting for care planning 
and defining resource use.
---------------------------------------------------------------------------

    \761\ Colon-Emeric CS, Biggs DP, Schenck AP, Lyles KW. Risk 
factors for hip fracture in skilled nursing facilities: who should 
be evaluated? Osteoporos Int. 2003;14(6):484-489.
    \762\ Freeman EE, Munoz B, Rubin G, West SK. Visual field loss 
increases the risk of falls in older adults: the Salisbury eye 
evaluation. Invest Ophthalmol Vis Sci. 2007;48(10):4445-4450.
    \763\ Keepnews D, Capitman JA, Rosati RJ. Measuring patient-
level clinical outcomes of home health care. J Nurs Scholarsh. 
2004;36(1):79-85.
    \764\ Nguyen HT, Black SA, Ray LA, Espino DV, Markides KS. 
Predictors of decline in MMSE scores among older Mexican Americans. 
J Gerontol A Biol Sci Med Sci. 2002;57(3):M181-185.
    \765\ Prager AJ, Liebmann JM, Cioffi GA, Blumberg DM. Self-
reported Function, Health Resource Use, and Total Health Care Costs 
Among Medicare Beneficiaries With Glaucoma. JAMA ophthalmology. 
2016;134(4):357-365.
    \766\ Rovner BW, Ganguli M. Depression and disability associated 
with impaired vision: the MoVies Project. J Am Geriatr Soc. 
1998;46(5):617-619.
    \767\ Tinetti ME, Ginter SF. The nursing home life-space 
diameter. A measure of extent and frequency of mobility among 
nursing home residents. J Am Geriatr Soc. 1990;38(12):1311-1315.
---------------------------------------------------------------------------

    The proposed data element consists of the single Vision data 
element (Ability To See in Adequate Light) that consists of one 
question with five response categories. The Vision data element that we 
are proposing for standardization was tested as part of the development 
of the MDS and is currently in use in that assessment in SNFs. Similar 
data elements, but with different wording and fewer response option 
categories, are in use in the OASIS. For more information on the Vision 
data element, we refer readers to the document titled ``Proposed 
Specifications for LTCH QRP Quality Measures and Standardized Patient 
Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The Vision data element was first proposed as a SPADE in the FY 
2018 IPPS/LTCH PPS proposed rule (82 FR 20115 through 20116). In that 
proposed rule, we stated that the proposal was informed by input we 
received on the Ability to See in Adequate Light data element (version 
tested in the PAC PRD with three response categories) through a call 
for input published on the CMS Measures Management System Blueprint 
website. Although the data element on which we solicited input differed 
from the proposed data element, input submitted from August 12 to 
September 12, 2016 supported the assessment of vision in PAC settings 
and the useful information such a vision data element would provide. 
The commenters stated that the Ability to See item would provide 
important information that would facilitate care coordination and care 
planning, and consequently improve the quality of care. Other 
commenters suggested it would be helpful as an indicator of resource 
use and noted that the item would provide useful information about the 
abilities of patients and residents to care for themselves. Additional 
commenters noted that the item could feasibly be implemented across PAC 
providers and that its kappa scores from the PAC PRD support its 
validity. Some commenters noted a preference for MDS version of the 
Vision data element over the form put forward in public comment, citing 
the widespread use of this data element. A summary report for the 
August 12 to September 12, 2016 public comment period titled ``SPADE 
August 2016 Public Comment Summary Report'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In response to our proposal in the FY 2018 IPPS/LTCH PPS proposed 
rule, we received comments in support of the Vision data element as 
well as concerns about not having recent, comprehensive field testing 
of proposed data elements. Commenters supported addressing the needs of 
persons with disabilities and noted the importance of the Vision data 
element because unaddressed impairments during the initial assessment 
can result in inaccurate diagnoses of impaired language or cognition 
and can invalidate other information obtained from the patient 
assessment. Commenters recommended that hearing, vision, and 
communication assessments be administered at the beginning of the 
patient assessment process. One commenter expressed concern that the 
Ability to See data element would not capture all aspects of functional 
vision--that is, the person's ability to use vision to complete daily 
activities and participate in environments--because it fails to assess 
visual field and low contract visual acuity.
    Subsequent to receiving comments on the FY 2018 IPPS/LTCH PPS 
proposed

[[Page 19545]]

rule, the Vision data element was included in the National Beta Test of 
candidate data elements conducted by our data element contractor from 
November 2017 to August 2018. Results of this test found the Vision 
data element to be feasible and reliable for use with PAC patients and 
residents. More information about the performance of the Vision data 
element in the National Beta Test can be found in the document titled 
``Proposed Specifications for LTCH QRP Quality Measures and 
Standardized Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In addition, our data element contractor convened a TEP on January 
5 and 6, 2017 for the purpose of soliciting input on all the SPADEs, 
including the Vision data element. The TEP affirmed the importance of 
standardized assessment of vision impairment in PAC patients and 
residents. A summary of the January 5 and 6, 2017 TEP meeting titled 
``SPADE Technical Expert Panel Summary (Second Convening)'' is 
available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We also held Special Open Door Forums and small-group discussions 
with PAC providers and other stakeholders in 2018 for the purpose of 
updating the public about our ongoing SPADE development efforts. 
Finally, on November 27, 2018, our data element contractor hosted a 
public meeting of stakeholders to present the results of the National 
Beta Test and solicit additional comments. General input on the testing 
and item development process and concerns about burden were received 
from stakeholders during this meeting and via email through February 1, 
2019. In addition, a commenter expressed support for the Vision data 
element and suggested administration at the beginning of the patient 
assessment to maximize utility. A summary of the public input received 
from the November 27, 2018 stakeholder meeting titled ``Input on 
Standardized Patient Assessment Data Elements (SPADEs) Received After 
November 27, 2018 Stakeholder Meeting'' is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    Taking together the importance of assessing for vision, stakeholder 
input, and strong test results, we are proposing that the Vision data 
element meets the definition of standardized patient assessment data 
with respect to impairments under section 1899B(b)(1)(B)(v) of the Act, 
and to adopt the Vision data element as standardized patient assessment 
data for use in the LTCH QRP.
f. Proposed New Category: Social Determinants of Health
(1) Proposed Social Determinants of Health Data Collection To Inform 
Measures and Other Purposes
    Subparagraph (A) of section 2(d)(2) of the IMPACT Act requires CMS 
to assess appropriate adjustments to quality measures, resource 
measures, and other measures, and to assess and implement appropriate 
adjustments to payment under Medicare, based on those measures, after 
taking into account studies conducted by ASPE on social risk factors 
(described below) and other information, and based on an individual's 
health status and other factors. Subparagraph (C) of section 2(d)(2) of 
the IMPACT Act further requires the Secretary to carry out periodic 
analyses, at least every 3 years, based on the factors referred to 
subparagraph (A) so as to monitor changes in possible relationships. 
Subparagraph (B) of section 2(d)(2) of the IMPACT Act requires CMS to 
collect or otherwise obtain access to data necessary to carry out the 
requirement of the paragraph (both assessing adjustments described 
above in such subparagraph (A) and for periodic analyses in such 
subparagraph (C)). Accordingly we are proposing to use our authority 
under subparagraph (B) of section 2(d)(2) of the IMPACT Act to 
establish a new data source for information to meet the requirements of 
subparagraphs (A) and (C) of section 2(d)(2) of the IMPACT Act. In this 
rule, we are proposing to collect and access data about social 
determinants of health (SDOH) to perform CMS' responsibilities under 
subparagraphs (A) and (C) of section 2(d)(2) of the IMPACT Act, as 
explained in more detail below. Social determinants of health, also 
known as social risk factors, or health-related social needs, are the 
socioeconomic, cultural and environmental circumstances in which 
individuals live that impact their health. We are proposing to collect 
information on seven proposed SDOH SPADE data elements relating to 
race, ethnicity, preferred language, interpreter services, health 
literacy, transportation, and social isolation; a detailed discussion 
of each of the proposed SDOH data elements is found in section 
VIII.C.7.f.(2) of the preamble of this proposed rule.
    We are also proposing to use the assessment instrument for the LTCH 
QRP, the LCDS, described as a PAC assessment instrument under section 
1899B(a)(2)(B) of the Act, to collect these data via an existing data 
collection mechanism. We believe this approach will provide CMS with 
access to data with respect to the requirements of section 2(d)(2) of 
the IMPACT Act, while minimizing the reporting burden on PAC health 
care providers by relying on a data reporting mechanism already used 
and an existing system to which PAC health care providers are already 
accustomed.
    The IMPACT Act includes several requirements applicable to the 
Secretary, in addition to those imposing new data reporting obligations 
on certain PAC providers as discussed in section VIII.C.7.f.(2) of the 
preamble of this proposed rule. Subparagraphs (A) and (B) of section 
2(d)(1) of the IMPACT Act require the Secretary, acting through the 
Office of the Assistant Secretary for Planning and Evaluation (ASPE), 
to conduct two studies that examine the effect of risk factors, 
including individuals' socioeconomic status, on quality, resource use 
and other measures under the Medicare program. The first ASPE study was 
completed in December 2016 and is discussed below, and the second study 
is to be completed in the fall of 2019. We recognize that ASPE, in its 
studies, is considering a broader range of social risk factors than the 
SDOH data elements in this proposal, and address both PAC and non-PAC 
settings. We acknowledge that other data elements may be useful to 
understand, and that some of those elements may be of particular 
interest in non-PAC settings. For example, for beneficiaries receiving 
care in the community, as opposed to an in-patient facility, housing 
stability and food insecurity may be more relevant. We will continue to 
take into account the findings from both of ASPE's reports in future 
policy making.
    One of the ASPE's first actions under the IMPACT Act was to 
commission the National Academies of Sciences, Engineering, and 
Medicine (NASEM) to define and conceptualize socioeconomic status for 
the purposes of ASPE's two studies under section 2(d)(1) of the IMPACT 
Act. The NASEM convened a panel of experts in the field and conducted 
an extensive literature

[[Page 19546]]

review. Based on the information collected, the 2016 NASEM panel report 
titled, ``Accounting for Social Risk Factors in Medicare Payment: 
Identifying Social Risk Factors,'' concluded that the best way to 
assess how social processes and social relationships influence key 
health-related outcomes in Medicare beneficiaries is through a 
framework of social risk factors instead of socioeconomic status. 
Social risk factors discussed in the NASEM report include socioeconomic 
position, race, ethnicity, gender, social context, and community 
context. These factors are discussed at length in chapter 2 of the 
NASEM report, titled ``Social Risk Factors.'' \768\ Consequently NASEM 
framed the results of its report in terms of ``social risk factors'' 
rather than ``socioeconomic status'' or ``sociodemographic status.'' 
The full text of the ``Social Risk Factors'' NASEM report is available 
for reading on the website at: https://www.nap.edu/read/21858/chapter/1.
---------------------------------------------------------------------------

    \768\ National Academies of Sciences, Engineering, and Medicine. 
2016. Accounting for social risk factors in Medicare payment: 
Identifying social risk factors. Chapter 2. Washington, DC: The 
National Academies Press.
---------------------------------------------------------------------------

    Each of the data elements we are proposing to collect and access 
pursuant to our authority under section 2(d)(2)(B) of the IMPACT Act is 
identified in the 2016 NASEM report as a social risk factor that has 
been shown to impact care use, cost and outcomes for Medicare 
beneficiaries. CMS uses the term social determinants of health (SDOH) 
to denote social risk factors, which is consistent with the objectives 
of Healthy People 2020.\769\
---------------------------------------------------------------------------

    \769\ Social Determinants of Health. Healthy People 2020. 
https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-of-health. (February 2019).
---------------------------------------------------------------------------

    ASPE issued its first Report to Congress, titled ``Social Risk 
Factors and Performance Under Medicare's Value-Based Purchasing 
Programs,'' under section 2(d)(1)(A) of the IMPACT Act on December 21, 
2016.\770\ Using NASEM's social risk factors framework, ASPE focused on 
the following social risk factors, in addition to disability: (1) Dual 
enrollment in Medicare and Medicaid as a marker for low income, (2) 
residence in a low-income area, (3) Black race, (4) Hispanic ethnicity, 
and; (5) residence in a rural area. ASPE acknowledged that the social 
risk factors examined in its report were limited due to data 
availability. The report also noted that the data necessary to 
meaningfully attempt to reduce disparities and identify and reward 
improved outcomes for beneficiaries with social risk factors have not 
been collected consistently on a national level in post-acute care 
settings. Where these data have been collected, the collection 
frequently involves lengthy questionnaires. More information on the 
Report to Congress on Social Risk Factors and Performance under 
Medicare's Value-Based Purchasing Programs, including the full report, 
is available on the website at: https://aspe.hhs.gov/social-risk-factors-and-medicares-value-based-purchasing-programs-reports.
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    \770\ U.S. Department of Health and Human Services, Office of 
the Assistant Secretary for Planning and Evaluation. 2016. Report to 
Congress: Social Risk Factors and Performance Under Medicare's 
Value-Based Payment Programs. Washington, DC.
---------------------------------------------------------------------------

    Section 2(d)(2) of the IMPACT Act relates to CMS activities and 
imposes several responsibilities on the Secretary relating to quality, 
resource use, and other measures under Medicare. As mentioned 
previously, under subparagraph (A) of section 2(d)(2) of the IMPACT 
Act, the Secretary is required, on an ongoing basis, taking into 
account the ASPE studies and other information, and based on an 
individual's health status and other factors, to assess appropriate 
adjustments to quality, resource use, and other measures, and to assess 
and implement appropriate adjustments to Medicare payments based on 
those measures. Section 2(d)(2)(A)(i) of the IMPACT Act applies to 
measures adopted under subsections (c) and (d) of section 1899B of the 
Act and to other measures under Medicare. However, CMS' ability to 
perform these analyses, and assess and make appropriate adjustments is 
hindered by limits of existing data collections on SDOH data elements 
for Medicare beneficiaries. In its first study in 2016, in discussing 
the second study, ASPE noted that information relating to many of the 
specific factors listed in the IMPACT Act, such as health literacy, 
limited English proficiency, and Medicare beneficiary activation, are 
not available in Medicare data.
    Subparagraph 2(d)(2)(A) of the IMPACT Act specifically requires the 
Secretary to take the studies and considerations from ASPE's reports to 
Congress, as well as other information as appropriate, into account in 
assessing and implementing adjustments to measures and related payments 
based on measures in Medicare. The results of the ASPE's first study 
demonstrated that Medicare beneficiaries with social risk factors 
tended to have worse outcomes on many quality measures, and providers 
who treated a disproportionate share of beneficiaries with social risk 
factors tended to have worse performance on quality measures. As a 
result of these findings, ASPE suggested a three-pronged strategy to 
guide the development of value-based payment programs under which all 
Medicare beneficiaries receive the highest quality healthcare services 
possible.
    The three components of this strategy are to: (1) Measure and 
report quality of care for beneficiaries with social risk factors; (2) 
set high, fair quality standards for care provided to all 
beneficiaries; and (3) reward and support better outcomes for 
beneficiaries with social risk factors. In discussing how measuring and 
reporting quality for beneficiaries with social risk factors can be 
applied to Medicare quality payment programs, the report offered nine 
considerations across the three-pronged strategy, including enhancing 
data collection and developing statistical techniques to allow 
measurement and reporting of performance for beneficiaries with social 
risk factors on key quality and resource use measures.
    Congress, in section 2(d)(2)(B) of the IMPACT Act, required the 
Secretary to collect or otherwise obtain access to the data necessary 
to carry out the provisions of paragraph (2) of section 2(d)of the 
IMPACT Act through both new and existing data sources. Taking into 
consideration NASEM's conceptual framework for social risk factors 
discussed above, ASPE's study, considerations under section 2(d)(1)(A) 
of the IMPACT Act, as well as the current data constraints of ASPE's 
first study and its suggested considerations, we are proposing to 
collect and access data about SDOH under section 2(d)(2) of the IMPACT 
Act. Our collection and use of the SDOH data described in section 
VIII.C.7.f.(1) of the preamble of this proposed rule, under section 
2(d)(2) of the IMPACT Act, would be independent of our proposal below 
(in section VIII.C.7.f.(2) of the preamble of this proposed rule) and 
our authority to require submission of that data for use as SPADE under 
section 1899B(a)(1)(B) of the Act.
    Accessing standardized data relating to the SDOH data elements on a 
national level is necessary to permit CMS to conduct periodic analyses, 
to assess appropriate adjustments to quality measures, resource use 
measures, and other measures, and to assess and implement appropriate 
adjustments to Medicare payments based on those measures. We agree with 
ASPE's observations, in the value-based purchasing context, that the 
ability to measure and track quality, outcomes, and costs for 
beneficiaries with social

[[Page 19547]]

risk factors over time is critical as policymakers and providers seek 
to reduce disparities and improve care for these groups. Collecting the 
data as proposed will provide the basis for our periodic analyses of 
the relationship between an individual's health status and other 
factors and quality, resource use, and other measures, as required by 
section 2(d)(2) of the IMPACT Act, and to assess appropriate 
adjustments. These data will also permit us to develop the statistical 
tools necessary to maximize the value of Medicare data, reduce costs 
and improve the quality of care for all beneficiaries. Collecting and 
accessing SDOH data in this way also supports the three-part strategy 
put forth in the first ASPE report, specifically ASPE's consideration 
to enhance data collection and develop statistical techniques to allow 
measurement and reporting of performance for beneficiaries with social 
risk factors on key quality and resource use measures.
    For the reasons discussed above, we are proposing under section 
2(d)(2) of the IMPACT Act, to collect the data on the following SDOH: 
(1) Race, as described in section VIII.C.7.f.(2)(a) of the preamble of 
this proposed rule; (2) Ethnicity, as described in section 
VIII.C.7.f.(2)(a) of the preamble of this proposed rule; (3) Preferred 
Language, as described in section VIII.C.7.f.(2)(b) of the preamble of 
this proposed rule; (4) Interpreter Services as described in section 
VIII.C.7.f.(2)(b) of the preamble of this proposed rule; (5) Health 
Literacy, as described in section VIII.C.7.f.(2)(c) of the preamble of 
this proposed rule; (6) Transportation, as described in section 
VIII.C.7.f.(2)(d) of the preamble of this proposed rule; and (7) Social 
Isolation, as described in section VIII.C.7.f.(2)(e) of the preamble of 
this proposed rule. These data elements are discussed in more detail 
below in section VIII.C.7.f.(2) of the preamble of this proposed rule. 
We welcome comment on this proposal.
(2) Standardized Patient Assessment Data
    Section 1899B(b)(1)(B)(vi) of the Act authorizes the Secretary to 
collect SPADEs with respect to other categories deemed necessary and 
appropriate. Below we are proposing to create a Social Determinants of 
Health SPADE category under section 1899B(b)(1)(B)(vi) of the Act. In 
addition to collecting SDOH data for the purposes outlined above under 
section 2(d)(2)(B) of the IMPACT Act, we are also proposing to collect 
as SPADE these same data elements (race, ethnicity, preferred language, 
interpreter services, health literacy, transportation, and social 
isolation) under section 1899B(b)(1)(B)(vi) of the Act. We believe that 
this proposed new category of Social Determinants of Health will inform 
provider understanding of individual patient risk factors and treatment 
preferences, facilitate coordinated care and care planning, and improve 
patient outcomes. We are proposing to deem this category necessary and 
appropriate, for the purposes of SPADE, because using common standards 
and definitions for PAC data elements is important in ensuring 
interoperable exchange of longitudinal information between PAC 
providers and other providers to facilitate coordinated care, 
continuity in care planning, and the discharge planning process from 
post-acute care settings.
    All of the Social Determinants of Health data elements we are 
proposing under section 1899B(b)(1)(B)(vi) of the Act have the capacity 
to take into account treatment preferences and care goals of patients 
and to inform our understanding of patient complexity and risk factors 
that may affect care outcomes. While acknowledging the existence and 
importance of additional SDOH, we are proposing to assess some of the 
factors relevant for patients receiving post-acute care that PAC 
settings are in a position to impact through the provision of services 
and supports, such as connecting patients with identified needs with 
transportation programs, certified interpreters, or social support 
programs.
    As previously mentioned, and described in more detail below, we are 
proposing to adopt the following seven data elements as SPADE under the 
proposed Social Determinants of Health category: Race, ethnicity, 
preferred language, interpreter services, health literacy, 
transportation, and social isolation. To select these data elements, we 
reviewed the research literature, a number of validated assessment 
tools and frameworks for addressing SDOH currently in use (for example, 
Health Leads, NASEM, Protocol for Responding to and Assessing Patients' 
Assets, Risks, and Experiences (PRAPARE), and ICD-10), and we engaged 
in discussions with stakeholders. We also prioritized balancing the 
reporting burden for PAC providers with our policy objective to collect 
SPADEs that will inform care planning and coordination and quality 
improvement across care settings. Furthermore, incorporating SDOH data 
elements into care planning has the potential to reduce readmissions 
and help beneficiaries achieve and maintain their health goals.
    We also considered feedback received during a listening session 
that we held on December 13, 2018. The purpose of the listening session 
was to solicit feedback from health systems, research organizations, 
advocacy organizations and state agencies, and other members of the 
public on collecting patient-level data on SDOH across care settings, 
including consideration of race, ethnicity, spoken language, health 
literacy, social isolation, transportation, sex, gender identity, and 
sexual orientation. We also gave participants an option to submit 
written comments. A full summary of the listening session, titled 
``Listening Session on Social Determinants of Health Data Elements: 
Summary of Findings,'' includes a list of participating stakeholders 
and their affiliations, and is available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
(a) Race and Ethnicity
    The persistence of racial and ethnic disparities in health and 
health care is widely documented, including in PAC 
settings.771 772 773 774 775 Despite the trend toward 
overall improvements in quality of care and health outcomes, the Agency 
for Healthcare Research and Quality, in its National Healthcare Quality 
and Disparities Reports, consistently indicates that racial and ethnic 
disparities persist, even after controlling for factors such as income, 
geography, and insurance.\776\ For example, racial and ethnic 
minorities tend to have higher rates of infant mortality, diabetes and 
other chronic conditions, and visits to the emergency department, and 
lower

[[Page 19548]]

rates of having a usual source of care and receiving immunizations such 
as the flu vaccine.\777\ Studies have also shown that African Americans 
are significantly more likely than white Americans to die prematurely 
from heart disease and stroke.\778\ However, our ability to identify 
and address racial and ethnic health disparities has historically been 
constrained by data limitations, particularly for smaller populations 
groups such as Asians, American Indians and Alaska Natives, and Native 
Hawaiians and other Pacific Islanders.\779\
---------------------------------------------------------------------------

    \771\ 2017 National Healthcare Quality and Disparities Report. 
Rockville, MD: Agency for Healthcare Research and Quality; September 
2018. AHRQ Pub. No. 18-0033-EF.
    \772\ Fiscella, K. and Sanders, M.R. Racial and Ethnic 
Disparities in the Quality of Health Care. (2016). Annual Review of 
Public Health. 37:375-394.
    \773\ 2018 National Impact Assessment of the Centers for 
Medicare & Medicaid Services (CMS) Quality Measures Reports. 
Baltimore, MD: U.S. Department of Health and Human Services, Centers 
for Medicare and Medicaid Services; February 28, 2018.
    \774\ Smedley, B.D., Stith, A.Y., & Nelson, A.R. (2003). Unequal 
treatment: Confronting racial and ethnic disparities in health care. 
Washington, DC, National Academy Press.
    \775\ Chase, J., Huang, L. and Russell, D. (2017). Racial/ethnic 
disparities in disability outcomes among post-acute home care 
patients. J of Aging and Health. 30(9):1406-1426.
    \776\ National Healthcare Quality and Disparities Reports. 
(December 2018). Agency for Healthcare Research and Quality, 
Rockville, MD. http://www.ahrq.gov/research/findings/nhqrdr/index.html.
    \777\ National Center for Health Statistics. Health, United 
States, 2017: With special feature on mortality. Hyattsville, 
Maryland. 2018.
    \778\ HHS. Heart disease and African Americans. 2016b. (October 
24, 2016). http://minorityhealth.hhs.gov/omh/browse.aspx?lvl=4&lvlid=19.
    \779\ National Academies of Sciences, Engineering, and Medicine; 
Health and Medicine Division; Board on Population Health and Public 
Health Practice; Committee on Community-Based Solutions to Promote 
Health Equity in the United States; Baciu A, Negussie Y, Geller A, 
et al., editors. Communities in Action: Pathways to Health Equity. 
Washington (DC): National Academies Press (US); 2017 Jan 11. 2, The 
State of Health Disparities in the United States. Available from: 
https://www.ncbi.nlm.nih.gov/books/NBK425844/.
---------------------------------------------------------------------------

    The ability to improve understanding of and address racial and 
ethnic disparities in PAC outcomes requires the availability of better 
data. There is currently a Race and Ethnicity data element, collected 
in the MDS, LCDS, IRF-PAI, and OASIS, that consists of a single 
question, which aligns with the 1997 Office of Management and Budget 
(OMB) minimum data standards for federal data collection efforts.\780\ 
The 1997 OMB Standard lists five minimum categories of race: (1) 
American Indian or Alaska Native; (2) Asian; (3) Black or African 
American; (4) Native Hawaiian or Other Pacific Islander; (5) and White. 
The 1997 OMB Standard also lists two minimum categories of ethnicity: 
(1) Hispanic or Latino; and (2) Not Hispanic or Latino. The 2011 HHS 
Data Standards requires a two-question format when self-identification 
is used to collect data on race and ethnicity. Large federal surveys 
such as the National Health Interview Survey, Behavioral Risk Factor 
Surveillance System, and the National Survey on Drug Use and Health, 
have implemented the 2011 HHS race and ethnicity data standards. CMS 
has similarly updated the Medicare Current Beneficiary Survey, Medicare 
Health Outcomes Survey, and the Health Insurance Marketplace 
Application for Health Coverage with the 2011 HHS data standards. More 
information about the HHS Race and Ethnicity Data Standards are 
available on the website at: https://minorityhealth.hhs.gov/omh/browse.aspx?lvl=3&lvlid=54.
---------------------------------------------------------------------------

    \780\ ``Revisions to the Standards for the Classification of 
Federal Data on Race and Ethnicity (Notice of Decision)''. Federal 
Register 62:210 (October 30, 1997) pp. 58782-58790. Available from: 
https://www.govinfo.gov/content/pkg/FR-1997-10-30/pdf/97-28653.pdf.
---------------------------------------------------------------------------

    We are proposing to revise the current Race and Ethnicity data 
element for purposes of this proposal to conform to the 2011 HHS Data 
Standards for person-level data collection, while also meeting the 1997 
OMB minimum data standards for race and ethnicity. Rather than one data 
element that assesses both race and ethnicity, we are proposing two 
separate data elements: One for Race and one for Ethnicity, that would 
conform with the 2011 HHS Data Standards and the 1997 OMB Standard. In 
accordance with the 2011 HHS Data Standards, a two-question format 
would be used for the proposed race and ethnicity data elements.
    The proposed Race data element asks, ``What is your race?'' We are 
proposing to include fourteen response options under the race data 
element: (1) White; (2) Black or African American; (3) American Indian 
or Alaska Native; (4) Asian Indian; (5) Chinese; (6) Filipino; (7) 
Japanese; (8) Korean; (9) Vietnamese; (10) Other Asian; (11) Native 
Hawaiian; (12) Guamanian or Chamorro; (13) Samoan; and, (14) Other 
Pacific Islander.
    The proposed Ethnicity data element asks, ``Are you Hispanic, 
Latino/a, or Spanish origin?'' We are proposing to include five 
response options under the ethnicity data element: (1) Not of Hispanic, 
Latino/a, or Spanish origin; (2) Mexican, Mexican American, Chicano/a; 
(3) Puerto Rican; (4) Cuban; and, (5) Another Hispanic, Latino, or 
Spanish Origin.
    We believe that the two proposed data elements for race and 
ethnicity conform to the 2011 HHS Data Standards for person-level data 
collection, while also meeting the 1997 OMB minimum data standards for 
race and ethnicity, because under those standards, more detailed 
information on population groups can be collected if those additional 
categories can be aggregated into the OMB minimum standard set of 
categories.
    In addition, we received stakeholder feedback during the December 
13, 2018 SDOH listening session on the importance of improving response 
options for race and ethnicity as a component of health care 
assessments and for monitoring disparities. Some stakeholders 
emphasized the importance of allowing for self-identification of race 
and ethnicity for more categories than are included in the 2011 HHS 
Standard to better reflect state and local diversity, while 
acknowledging the burden of coding an open-ended health care assessment 
question across different settings.
    We believe that the proposed modified race and ethnicity data 
elements more accurately reflect the diversity of the U.S. population 
than the current race/ethnicity data element included in MDS, LCDS, 
IRF-PAI, and OASIS.781 782 783 784 We believe, and research 
consistently shows, that improving how race and ethnicity data are 
collected is an important first step in improving quality of care and 
health outcomes. Addressing disparities in access to care, quality of 
care, and health outcomes for Medicare beneficiaries begins with 
identifying and analyzing how SDOH, such as race and ethnicity, align 
with disparities in these areas.\785\ Standardizing self-reported data 
collection for race and ethnicity allows for the equal comparison of 
data across multiple healthcare entities.\786\ By collecting and 
analyzing these data, CMS and other healthcare entities will be able to 
identify challenges and monitor progress. The growing diversity of the 
U.S. population and knowledge of racial and ethnic disparities within 
and across population groups supports the collection of more granular 
data beyond the 1997 OMB minimum standard for reporting categories. The 
2011 HHS race and ethnicity data standard includes additional detail 
that may be used by

[[Page 19549]]

PAC providers to target quality improvement efforts for racial and 
ethnic groups experiencing disparate outcomes. For more information on 
the Race and Ethnicity data elements, we refer readers to the document 
titled ``Proposed Specifications for LTCH QRP Measures and Standardized 
Patient Assessment Data Elements,'' available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
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    \781\ Penman-Aguilar, A., Talih, M., Huang, D., Moonesinghe, R., 
Bouye, K., Beckles, G. (2016). Measurement of Health Disparities, 
Health Inequities, and Social Determinants of Health to Support the 
Advancement of Health Equity. J Public Health Manag Pract. 22 Suppl 
1: S33-42.
    \782\ Ramos, R., Davis, J.L., Ross, T., Grant, C.G., Green, B.L. 
(2012). Measuring health disparities and health inequities: do you 
have REGAL data? Qual Manag Health Care. 21(3):176-87.
    \783\ IOM (Institute of Medicine). 2009. Race, Ethnicity, and 
Language Data: Standardization for Health Care Quality Improvement. 
Washington, DC: The National Academies Press.
    \784\ ``Revision of Standards for Maintaining, Collecting, and 
Presenting Federal Data on Race and Ethnicity: Proposals From 
Federal Interagency Working Group (Notice and Request for 
Comments).'' Federal Register 82: 39 (March 1, 2017) p. 12242.
    \785\ National Academies of Sciences, Engineering, and Medicine; 
Health and Medicine Division; Board on Population Health and Public 
Health Practice; Committee on Community-Based Solutions to Promote 
Health Equity in the United States; Baciu A, Negussie Y, Geller A, 
et al., editors. Communities in Action: Pathways to Health Equity. 
Washington (DC): National Academies Press (US); 2017 Jan 11. 2, The 
State of Health Disparities in the United States. Available from: 
https://www.ncbi.nlm.nih.gov/books/NBK425844/.
    \786\ IOM (Institute of Medicine). 2009. Race, Ethnicity, and 
Language Data: Standardization for Health Care Quality Improvement. 
Washington, DC: The National Academies Press.
---------------------------------------------------------------------------

    In an effort to standardize the submission of race and ethnicity 
data among IRFs, HHAs, SNFs and LTCHs, for the purposes outlined in 
section 1899B(a)(1)(B) of the Act, while minimizing the reporting 
burden, we are proposing to adopt the Race and Ethnicity data elements 
described above as SPADEs with respect to the proposed Social 
Determinants of Health category.
    Specifically, we are proposing to replace the current Race/
Ethnicity data element with the proposed Race and Ethnicity data 
elements on the LCDS. We are also proposing that LTCHs that submit the 
Race and Ethnicity data elements with respect to admission will be 
considered to have submitted with respect to discharge as well, because 
it is unlikely that the results of these assessment findings will 
change between the start and end of the LTCH stay, making the 
information submitted with respect to a patient's admission the same 
with respect to a patient's discharge.
(b) Preferred Language and Interpreter Services
    More than 64 million Americans speak a language other than English 
at home, and nearly 40 million of those individuals have limited 
English proficiency (LEP).\787\ Individuals with LEP have been shown to 
receive worse care and have poorer health outcomes, including higher 
readmission rates.788 789 790 Communication with individuals 
with LEP is an important component of high quality health care, which 
starts by understanding the population in need of language services. 
Unaddressed language barriers between a patient and provider care team 
negatively affects the ability to identify and address individual 
medical and non-medical care needs, to convey and understand clinical 
information, as well as discharge and follow up instructions, all of 
which are necessary for providing high quality care. Understanding the 
communication assistance needs of patients with LEP, including 
individuals who are Deaf or hard of hearing, is critical for ensuring 
good outcomes.
---------------------------------------------------------------------------

    \787\ U.S. Census Bureau, 2013-2017 American Community Survey 5-
Year Estimates.
    \788\ Karliner LS, Kim SE, Meltzer DO, Auerbach AD. Influence of 
language barriers on outcomes of hospital care for general medicine 
inpatients. J Hosp Med. 2010 May-Jun;5(5):276-82. doi: 10.1002/
jhm.658.
    \789\ Kim EJ, Kim T, Paasche-Orlow MK, et al. Disparities in 
Hypertension Associated with Limited English Proficiency. J Gen 
Intern Med. 2017 Jun;32(6):632-639. doi: 10.1007/s11606-017-3999-9.
    \790\ National Academies of Sciences, Engineering, and Medicine. 
2016. Accounting for social risk factors in Medicare payment: 
Identifying social risk factors. Washington, DC: The National 
Academies Press.
---------------------------------------------------------------------------

    Presently, the preferred language of patients and need for 
interpreter services are assessed in two PAC assessment tools. The LCDS 
and the MDS use the same two data elements to assess preferred language 
and whether a patient or resident needs or wants an interpreter to 
communicate with health care staff. The MDS initially implemented 
preferred language and interpreter services data elements to assess the 
needs of SNF residents and patients and inform care planning. For 
alignment purposes, the LCDS later adopted the same data elements for 
LTCHs. The 2009 NASEM (formerly Institute of Medicine) report on 
standardizing data for health care quality improvement emphasizes that 
language and communication needs should be assessed as a standard part 
of health care delivery and quality improvement strategies.\791\
---------------------------------------------------------------------------

    \791\ IOM (Institute of Medicine). 2009. Race, Ethnicity, and 
Language Data: Standardization for Health Care Quality Improvement. 
Washington, DC: The National Academies Press.
---------------------------------------------------------------------------

    In developing our proposal for a standardized language data element 
across PAC settings, we considered the current preferred language and 
interpreter services data elements that are in LCDS and MDS. We also 
considered the 2011 HHS Primary Language Data Standard and peer-
reviewed research. The current preferred language data element in LCDS 
and MDS asks, ``What is your preferred language?'' Because the 
preferred language data element is open-ended, the patient or resident 
is able to identify their preferred language, including American Sign 
Language (ASL). Finally, we considered the recommendations from the 
2009 NASEM (formerly Institute of Medicine) report, ``Race, Ethnicity, 
and Language Data: Standardization for Health Care Quality 
Improvement.'' In it, the committee recommended that organizations 
evaluating a patient's language and communication needs for health care 
purposes, should collect data on the preferred spoken language and on 
an individual's assessment of his/her level of English proficiency.
    A second language data element in LCDS and MDS asks, ``Do you want 
or need an interpreter to communicate with a doctor or health care 
staff?'' and includes yes or no response options. In contrast, the 2011 
HHS Primary Language Data Standard recommends either a single question 
to assess how well someone speaks English or, if more granular 
information is needed, a two-part question to assess whether a language 
other than English is spoken at home and if so, identify that language. 
However, neither option allows for a direct assessment of a patient's 
or resident's preferred spoken or written language nor whether they 
want or need interpreter services for communication with a doctor or 
care team, both of which are an important part of assessing patient and 
resident needs and the care planning process. More information about 
the HHS Data Standard for Primary Language is available on the website 
at: https://minorityhealth.hhs.gov/omh/browse.aspx?lvl=3&lvlid=54.
    Research consistently recommends collecting information about an 
individual's preferred spoken language and evaluating those responses 
for purposes of determining language access needs in health care.\792\ 
However, using ``preferred spoken language'' as the metric does not 
adequately account for people whose preferred language is ASL, which 
would necessitate adopting an additional data element to identify 
visual language. The need to improve the assessment of language 
preferences and communication needs across PAC settings should be 
balanced with the burden associated with data collection on the 
provider and patient. Therefore we are proposing to retain the 
Preferred Language and Interpreter Services data elements currently in 
use on the LCDS.
---------------------------------------------------------------------------

    \792\ Guerino, P. and James, C. Race, Ethnicity, and Language 
Preference in the Health Insurance Marketplaces 2017 Open Enrollment 
Period. Centers for Medicare & Medicaid Services, Office of Minority 
Health. Data Highlight: Volume 7--April 2017. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Data-Highlight-Race-Ethnicity-and-Language-Preference-Marketplace.pdf.
---------------------------------------------------------------------------

    In addition, we received feedback during the December 13, 2018 
listening session on the importance of evaluating and acting on 
language preferences early to facilitate communication and allowing for 
patient self-identification of preferred language. Although the 
discussion about language was focused on preferred spoken language, 
there was

[[Page 19550]]

general consensus among participants that stated language preferences 
may or may not accurately indicate the need for interpreter services, 
which supports collecting and evaluating data to determine language 
preference, as well as the need for interpreter services. An alternate 
suggestion was made to inquire about preferred language specifically 
for discussing health or health care needs. While this suggestion does 
allow for ASL as a response option, we do not have data indicating how 
useful this question might be for assessing the desired information and 
thus we are not including this question in our proposal.
    Improving how preferred language and need for interpreter services 
data are collected is an important component of improving quality by 
helping PAC providers and other providers understand patient needs and 
develop plans to address them. For more information on the Preferred 
Language and Interpreter Services data elements, we refer readers to 
the document titled ``Proposed Specifications for LTCH QRP Measures and 
Standardized Patient Assessment Data Elements,'' available on the 
website at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In an effort to standardize the submission of language data among 
IRFs, HHAs, SNFs and LTCHs, for the purposes outlined in section 
1899B(a)(1)(B) of the Act, while minimizing the reporting burden, we 
are proposing to adopt the Preferred Language and Interpreter Services 
data elements currently used on the LCDS, and describe above, as SPADEs 
with respect to the Social Determinants of Health category.
(c) Health Literacy
    The Department of Health and Human Services defines health literacy 
as ``the degree to which individuals have the capacity to obtain, 
process, and understand basic health information and services needed to 
make appropriate health decisions.'' \793\ Similar to language 
barriers, low health literacy can interfere with communication between 
the provider and patient and the ability for patients or their 
caregivers to understand and follow treatment plans, including 
medication management. Poor health literacy is linked to lower levels 
of knowledge about health, worse health outcomes, and the receipt of 
fewer preventive services, but higher medical costs and rates of 
emergency department use.\794\
---------------------------------------------------------------------------

    \793\ U.S. Department of Health and Human Services, Office of 
Disease Prevention and Health Promotion. National action plan to 
improve health literacy. Washington (DC): Author; 2010.
    \794\ National Academies of Sciences, Engineering, and Medicine. 
2016. Accounting for social risk factors in Medicare payment: 
Identifying social risk factors. Washington, DC: The National 
Academies Press.
---------------------------------------------------------------------------

    Health literacy is prioritized by Healthy People 2020 as an 
SDOH.\795\ Healthy People 2020 is a long-term, evidence-based effort 
led by the Department of Health and Human Services that aims to 
identify nationwide health improvement priorities and improve the 
health of all Americans. Although not designated as a social risk 
factor in NASEM's 2016 report on accounting for social risk factors in 
Medicare payment, the NASEM noted that health literacy is impacted by 
other social risk factors and can affect access to care as well as 
quality of care and health outcomes.\796\ Assessing for health literacy 
across PAC settings would facilitate better care coordination and 
discharge planning. A significant challenge in assessing the health 
literacy of individuals is avoiding excessive burden on patients and 
health care providers. The majority of existing, validated health 
literacy assessment tools use multiple screening items, generally with 
no fewer than four, which would make them burdensome if adopted in MDS, 
LCDS, IRF-PAI, and OASIS.
---------------------------------------------------------------------------

    \795\ Social Determinants of Health. Healthy People 2020. 
https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-of-health. (February 2019).
    \796\ U.S. Department of Health & Human Services, Office of the 
Assistant Secretary for Planning and Evaluation. Report to Congress: 
Social Risk Factors and Performance Under Medicare's Value-Based 
Purchasing Programs. Available at: https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs. Washington, DC: 2016.
---------------------------------------------------------------------------

    The Single Item Literacy Screener (SILS) question asks, ``How often 
do you need to have someone help you when you read instructions, 
pamphlets, or other written material from your doctor or pharmacy?'' 
Possible response options are: (1) Never; (2) Rarely; (3) Sometimes; 
(4) Often; and (5) Always. The SILS question, which assesses reading 
ability, (a primary component of health literacy), tested reasonably 
well against the 36 item Short Test of Functional Health Literacy in 
Adults (S-TOFHLA), a thoroughly vetted and widely adopted health 
literacy test, in assessing the likelihood of low health literacy in an 
adult sample from primary care practices participating in the Vermont 
Diabetes Information System.797 798 The S-TOFHLA is a more 
complex assessment instrument developed using actual hospital related 
materials such as prescription bottle labels and appointment slips, and 
often considered the instrument of choice for a detailed evaluation of 
health literacy.\799\ Furthermore, the S-TOFHLA instrument is 
proprietary and subject to purchase for individual entities or 
users.\800\ Given that SILS is publicly available, shorter and easier 
to administer than the full health literacy screen, and research found 
that a positive result on the SILS demonstrates an increased likelihood 
that an individual has low health literacy, we are proposing to use the 
single-item reading question for health literacy in the standardized 
data collection across PAC settings. We believe that use of this data 
element will provide sufficient information about the health literacy 
of LTCH patients to facilitate appropriate care planning, care 
coordination, and interoperable data exchange across PAC settings.
---------------------------------------------------------------------------

    \797\ Morris, N.S., MacLean, C.D., Chew, L.D., & Littenberg, B. 
(2006). The Single Item Literacy Screener: Evaluation of a brief 
instrument to identify limited reading ability. BMC family practice, 
7, 21. doi:10.1186/1471-2296-7-21.
    \798\ Brice, J.H., Foster, M.B., Principe, S., Moss, C., Shofer, 
F.S., Falk, R.J., Ferris, M.E., DeWalt, D.A. (2013). Single-item or 
two-item literacy screener to predict the S-TOFHLA among adult 
hemodialysis patients. Patient Educ Couns. 94(1):71-5.
    \799\ University of Miami, School of Nursing & Health Studies, 
Center of Excellence for Health Disparities Research. Test of 
Functional Health Literacy in Adults (TOFHLA). (March 2019). 
Available from: https://elcentro.sonhs.miami.edu/research/measures-library/tofhla/index.html.
    \800\ Nurss, J.R., Parker, R.M., Williams, M.V., &Baker, D.W. 
David W. (2001). TOFHLA. Peppercorn Books & Press. Available from: 
http://www.peppercornbooks.com/catalog/information.php?info_id=5.
---------------------------------------------------------------------------

    In addition, we received feedback during the December 13, 2018 SDOH 
listening session on the importance of recognizing health literacy as 
more than understanding written materials and filling out forms, as it 
is also important to evaluate whether patients understand their 
conditions. However, the NASEM recently recommended that health care 
providers implement health literacy universal precautions instead of 
taking steps to ensure care is provided at an appropriate literacy 
level based on individualized assessment of health literacy.\801\ Given 
the dearth of Medicare data on health literacy and gaps in addressing 
health literacy in practice,

[[Page 19551]]

we recommend the addition of a health literacy data element.
---------------------------------------------------------------------------

    \801\ Hudson, S., Rikard, R.V., Staiculescu, I. & Edison, K. 
(2017). Improving health and the bottom line: The case for health 
literacy. In Building the case for health literacy: Proceedings of a 
workshop. Washington, DC: The National Academies Press.
---------------------------------------------------------------------------

    The proposed Health Literacy data element is consistent with 
considerations raised by NASEM and other stakeholders and research on 
health literacy, which demonstrates an impact on health care use, cost, 
and outcomes.\802\ For more information on the proposed Health Literacy 
data element, we refer readers to the document titled ``Proposed 
Specifications for LTCH QRP Measures and Standardized Patient 
Assessment Data Elements,'' available on the website at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
---------------------------------------------------------------------------

    \802\ National Academies of Sciences, Engineering, and Medicine. 
2016. Accounting for Social Risk Factors in Medicare Payment: 
Identifying Social Risk Factors. Washington, DC: The National 
Academies Press.
---------------------------------------------------------------------------

    In an effort to standardize the submission of health literacy data 
among IRFs, HHAs, SNFs and LTCHs, for the purposes outlined in section 
1899B(a)(1)(B) of the Act, while minimizing the reporting burden, we 
are proposing to adopt the SILS question, described above for the 
Health Literacy data element, as SPADE under the Social Determinants of 
Health category. We are proposing to add the Health Literacy data 
element to the LCDS.
(d) Transportation
    Transportation barriers commonly affect access to necessary health 
care, causing missed appointments, delayed care, and unfilled 
prescriptions, all of which can have a negative impact on health 
outcomes.\803\ Access to transportation for ongoing health care and 
medication access needs, particularly for those with chronic diseases, 
is essential to successful chronic disease management. Adopting a data 
element to collect and analyze information regarding transportation 
needs across PAC settings would facilitate the connection to programs 
that can address identified needs. We are therefore proposing to adopt 
as SPADE a single transportation data element that is from the Protocol 
for Responding to and Assessing Patients' Assets, Risks, and 
Experiences (PRAPARE) assessment tool and currently part of the 
Accountable Health Communities (AHC) Screening Tool.
---------------------------------------------------------------------------

    \803\ Syed, S.T., Gerber, B.S., and Sharp, L.K. (2013). 
Traveling Towards Disease: Transportation Barriers to Health Care 
Access. J Community Health. 38(5): 976-993.
---------------------------------------------------------------------------

    The proposed Transportation data element from the PRAPARE tool 
asks, ``Has lack of transportation kept you from medical appointments, 
meetings, work, or from getting things needed for daily living?'' The 
three response options are: (1) Yes, it has kept me from medical 
appointments or from getting my medications; (2) Yes, it has kept me 
from non-medical meetings, appointments, work, or from getting things 
that I need; and (3) No. The patient would be given the option to 
select all responses that apply. We are proposing to use the 
transportation data element from the PRAPARE Tool, with permission from 
National Association of Community Health Centers (NACHC), after 
considering research on the importance of addressing transportation 
needs as a critical SDOH.\804\
---------------------------------------------------------------------------

    \804\ Health Research & Educational Trust. (2017, November). 
Social determinants of health series: Transportation and the role of 
hospitals. Chicago, IL. Available at: www.aha.org/transportation.www.aha.org/transportation.
---------------------------------------------------------------------------

    The proposed data element is responsive to research on the 
importance of addressing transportation needs as a critical SDOH and 
would adopt the Transportation item from the PRAPARE tool.\805\ This 
data element comes from the national PRAPARE social determinants of 
health assessment protocol, developed and owned by NACHC, in 
partnership with the Association of Asian Pacific Community Health 
Organization, the Oregon Primary Care Association, and the Institute 
for Alternative Futures. Similarly the Transportation data element used 
in the AHC Screening Tool was adapted from the PRAPARE tool. The AHC 
screening tool was implemented by the Center for Medicare and Medicaid 
Innovation's AHC Model and developed by a panel of interdisciplinary 
experts that looked at evidence-based ways to measure SDOH, including 
transportation. While the transportation access data element in the AHC 
screening tool serves the same purposes as our proposed SPADE 
collection about transportation barriers, the AHC tool has binary yes 
or no response options that do not differentiate between challenges for 
medical versus non-medical appointments and activities. We believe that 
this is an important nuance for informing PAC discharge planning to a 
community setting, as transportation needs for non-medical activities 
may differ than for medical activities and should be taken into 
account.\806\ We believe that use of this data element will provide 
sufficient information about transportation barriers to medical and 
non-medical care for LTCH patients to facilitate appropriate discharge 
planning and care coordination across PAC settings. As such, we are 
proposing to adopt the Transportation data element from PRAPARE. More 
information about development of the PRAPARE tool is available on the 
website at: https://protect2.fireeye.com/url?k=7cb6eb44-20e2f238-7cb6da7b-0cc47adc5fa2-1751cb986c8c2f8c&u=http://www.nachc.org/prapare.
---------------------------------------------------------------------------

    \805\ Health Research & Educational Trust. (2017, November). 
Social determinants of health series: Transportation and the role of 
hospitals. Chicago, IL. Available at: www.aha.org/transportation.
    \806\ Northwestern University. (2017). PROMIS Item Bank v. 1.0--
Emotional Distress--Anger--Short Form 1.
---------------------------------------------------------------------------

    In addition, we received stakeholder feedback during the December 
13, 2018 SDOH listening session on the impact of transportation 
barriers on unmet care needs. While recognizing that there is no 
consensus in the field about whether providers should have 
responsibility for resolving patient transportation needs, discussion 
focused on the importance of assessing transportation barriers to 
facilitate connections with available community resources.
    Adding a Transportation data element to the collection of SPADE 
would be an important step to identifying and addressing SDOH that 
impact health outcomes and patient experience for Medicare 
beneficiaries. For more information on the Transportation data element, 
we refer readers to the document titled ``Proposed Specifications for 
LTCH QRP Measures and Standardized Patient Assessment Data Elements,'' 
available on the website at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In an effort to standardize the submission of transportation data 
among IRFs, HHAs, SNFs and LTCHs, for the purposes outlined in section 
1899B(a)(1)(B) of the Act, while minimizing the reporting burden, we 
are proposing to adopt the Transportation data element described above 
as SPADE with respect to the proposed Social Determinants of Health 
category. If finalized as proposed, we would add the Transportation 
data element to the LCDS.
(e) Social Isolation
    Distinct from loneliness, social isolation refers to an actual or 
perceived lack of contact with other people, such as living alone or 
residing in a remote

[[Page 19552]]

area.807 808 Social isolation tends to increase with age, is 
a risk factor for physical and mental illness, and a predictor of 
mortality.809 810 811 Post-acute care providers are well-
suited to design and implement programs to increase social engagement 
of patients, while also taking into account individual needs and 
preferences. Adopting a data element to collect and analyze information 
about social isolation in LTCHs and across PAC settings would 
facilitate the identification of patients who are socially isolated and 
who may benefit from engagement efforts.
---------------------------------------------------------------------------

    \807\ Tomaka, J., Thompson, S., and Palacios, R. (2006). The 
Relation of Social Isolation, Loneliness, and Social Support to 
Disease Outcomes Among the Elderly. J of Aging and Health. 18(3): 
359-384.
    \808\ Social Connectedness and Engagement Technology for Long-
Term and Post-Acute Care: A Primer and Provider Selection Guide. 
(2019). Leading Age. Available at: https://www.leadingage.org/white-papers/social-connectedness-and-engagement-technology-long-term-and-post-acute-care-primer-and#1.1.
    \809\ Landeiro, F., Barrows, P., Nuttall Musson, E., Gray, A.M., 
and Leal, J. (2017). Reducing Social Loneliness in Older People: A 
Systematic Review Protocol. BMJ Open. 7(5): e013778.
    \810\ Ong, A.D., Uchino, B.N., and Wethington, E. (2016). 
Loneliness and Health in Older Adults: A Mini-Review and Synthesis. 
Gerontology. 62:443-449.
    \811\ Leigh-Hunt, N., Bagguley, D., Bash, K., Turner, V., 
Turnbull, S., Valtorta, N., and Caan, W. (2017). An overview of 
systematic reviews on the public health consequences of social 
isolation and loneliness. Public Health. 152:157-171.
---------------------------------------------------------------------------

    We are proposing to adopt as SPADE a single social isolation data 
element that is currently part of the AHC Screening Tool. The AHC item 
was selected from the Patient-Reported Outcomes Measurement Information 
System (PROMIS[supreg]) Item Bank on Emotional Distress and asks, ``How 
often do you feel lonely or isolated from those around you?'' The five 
response options are: (1) Never; (2) Rarely; (3) Sometimes; (4) Often; 
and (5) Always.\812\ The AHC Screening Tool was developed by a panel of 
interdisciplinary experts that looked at evidence-based ways to measure 
SDOH, including social isolation. More information about the AHC 
Screening Tool is available on the website at: https://innovation.cms.gov/Files/worksheets/ahcm-screeningtool.pdf.
---------------------------------------------------------------------------

    \812\ Northwestern University. (2017). PROMIS Item Bank v. 1.0--
Emotional Distress--Anger--Short Form 1.
---------------------------------------------------------------------------

    In addition, we received stakeholder feedback during the December 
13, 2018 SDOH listening session on the value of receiving information 
on social isolation for purposes of care planning. Some stakeholders 
also recommended assessing social isolation as an SDOH as opposed to 
social support.
    The proposed Social Isolation data element is consistent with NASEM 
considerations about social isolation as a function of social 
relationships that impacts health outcomes and increases mortality 
risk, as well as the current work of a NASEM committee examining how 
social isolation and loneliness impact health outcomes in adults 50 
years and older. We believe that adding a Social Isolation data element 
would be an important component of better understanding patient 
complexity and the care goals of patients, thereby facilitating care 
coordination and continuity in care planning across PAC settings. For 
more information on the Social Isolation data element, we refer readers 
to the document titled ``Proposed Specifications for LTCH QRP Measures 
and Standardized Patient Assessment Data Elements,'' available on the 
website at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    In an effort to standardize the submission of social isolation data 
among IRFs, HHAs, SNFs and LTCHs, for the purposes outlined in section 
1899B(a)(1)(B) of the Act, while minimizing the reporting burden, we 
are proposing to adopt the Social Isolation data element described 
above as SPADE with respect to the proposed Social Determinants of 
Health category. We are proposing to add the Social Isolation data 
element to the LCDS.
    We are soliciting comment on these proposals.
8. Proposed Form, Manner, and Timing of Data Submission Under the LTCH 
QRP
a. Background
    We refer readers to the regulations at Sec.  412.560(b) for 
information regarding the current policies for reporting LTCH QRP data.
b. Update to the CMS System for Reporting Quality Measures and 
Standardized Patient Assessment Data and Associated Procedural 
Proposals
    LTCHs are currently required to submit LCDS data to CMS using the 
Quality Improvement and Evaluation System (QIES) Assessment and 
Submission Processing (ASAP) system. We have recently migrated to a new 
internet Quality Improvement and Evaluation System (iQIES) that will 
enable real-time upgrades, and we are proposing to designate that 
system as the data submission system for the LTCH QRP beginning October 
1, 2019. We are also proposing to revise our regulations at Sec.  
412.560(d)(1) by replacing the reference to ``Quality Improvement and 
Evaluation System (QIES) Assessment Submission and Processing (ASAP) 
system'' with ``CMS designated data submission system'', and to revise 
Sec.  412.560(d)(3) and Sec.  412.560(f)(1) by replacing the references 
to ``QIES ASAP system'' with ``CMS designated data submission system'' 
effective October 1, 2019. In addition, we are proposing to notify the 
public of any future changes to the CMS designated system using 
subregulatory mechanisms such as website postings, listserv messaging, 
and webinars.
c. Proposed Reporting Requirement Updates Beginning With the FY 2022 
LTCH QRP
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20515), we sought 
public comment on moving the implementation date of any new version of 
the LCDS from April to October of the same year. In the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41633), we summarized the comments we 
received on this topic. After considering those comments, and to align 
with the MDS and IRF-PAI implementation dates, in this proposed rule, 
we are proposing to move the implementation date of any new version of 
the LCDS from April to October, beginning October 1, 2020. This would 
provide LTCHs an additional 6 months to prepare for any changes to the 
reporting requirements.
    We are also proposing that, for the first program year in which 
measures or standardized patient assessment data are adopted, LTCHs 
would only be required to report data on patients who are admitted and 
discharged during the last quarter (October 1 to December 31) of the 
calendar year that applies to the program year. For subsequent program 
years, LTCHs would be required to report data on patients who are 
admitted and discharged during the 12-month calendar year that applies 
to the program year.
    The tables below illustrate the proposed quarterly data collection 
reporting periods and data submission deadlines using the FY 2022 LTCH 
QRP and FY 2023 LTCH QRP. The data submission deadline applies to all 
measures and standardized patient assessment data except the Influenza 
Vaccination Coverage Among Healthcare Personnel (NQF #0431)

[[Page 19553]]

measure data, which is submitted annually.

Initial Reporting Period for Quality Measures * and Standardized Patient
          Assessment Data Reporting for the FY 2022 LTCH QRP **
------------------------------------------------------------------------
                                             Proposed data submission
   Proposed data collection quarterly     quarterly deadlines beginning
            reporting period                with the FY 2022 LTCH QRP
------------------------------------------------------------------------
CY 2020 Q4: 10/1/2020-12/31/2020.......  CY 2020 Q4 Deadline: May 15,
                                          2021.
------------------------------------------------------------------------
* The submission deadline for the Influenza Vaccination Coverage Among
  Healthcare Personnel measure (NQF #0431) is annual, not quarterly. The
  proposed data collection reporting period for the Influenza
  Vaccination Coverage Among Healthcare Personnel measure (NQF #0431)
  for the FY 2022 LTCH QRP is 10/1/2020-3/31/2021 and its proposed
  deadline is May 15, 2021.
** Applies to data reporting using the LCDS and CDC's NHSN.


 Calendar Year Reporting Period for Quality Measures * and Standardized
      Patient Assessment Data Reporting for the FY 2023 LTCH QRP **
------------------------------------------------------------------------
                                             Proposed data submission
   Proposed data collection quarterly     quarterly deadlines beginning
            reporting period                with the FY 2023 LTCH QRP
------------------------------------------------------------------------
CY 2021 Q1: 1/1/2021-3/31/2021.........  CY 2021 Q1 Deadline: August 15,
                                          2021.
CY 2021 Q2: 4/1/2021-6/30/2021.........  CY 2021 Q2 Deadline: November
                                          15, 2021.
CY 2021 Q3: 7/1/2021-9/30/2021.........  CY 2021 Q3 Deadline: February
                                          15, 2022.
CY 2021 Q4: 10/1/2021-12/31/2021.......  CY 2021 Q4 Deadline: May 15,
                                          2022.
------------------------------------------------------------------------
* The submission deadline for the Influenza Vaccination Coverage Among
  Healthcare Personnel measure (NQF #0431) is annual, not quarterly. The
  proposed data collection reporting period for the Influenza
  Vaccination Coverage Among Healthcare Personnel measure (NQF #0431)
  for the FY 2023 LTCH QRP is 10/1/2021-3/31/2022 and its proposed
  deadline is May 15, 2022.
** Applies to data reporting using the LCDS and CDC's NHSN.

d. Proposed Schedule for Reporting the Transfer of Health Information 
Quality Measures Beginning With the FY 2022 LTCH QRP
    As discussed in section VIII.C.4. of the preamble of this proposed 
rule, we are proposing to adopt the Transfer of Health Information to 
the Provider--Post-Acute Care (PAC) and Transfer of Health Information 
to the Patient--Post-Acute Care (PAC) quality measures beginning with 
the FY 2022 LTCH QRP. We also are proposing that LTCHs would report the 
data on those measures using the LCDS. LTCHs would be required to 
collect data on both measures for all patients beginning with October 
1, 2020 discharges. We refer readers to the tables in section 
VIII.C.8.c. of the preamble of this proposed rule for an illustration 
of the initial and calendar year reporting cycles.
e. Proposed Schedule for Reporting Standardized Patient Assessment Data 
Elements Beginning With the FY 2022 LTCH QRP
    As discussed in section VIII.C.7. of the preamble of this proposed 
rule, we are proposing to adopt SPADEs beginning with the FY 2022 LTCH 
QRP. We are proposing that LTCHs would report the data using the LCDS. 
Similar to the proposed schedule for reporting the Transfer of Health 
Information to the Provider--Post-Acute Care (PAC) and Transfer of 
Health Information to the Patient--Post-Acute Care (PAC) quality 
measures, LTCHs would be required to collect the SPADEs for all 
patients beginning with October 1, 2020 admissions and discharges. 
LTCHs that submit data with respect to admission for the Hearing, 
Vision, Race, and Ethnicity SPADEs would be considered to have 
submitted data with respect to discharge. We refer readers to the 
tables in section VIII.C.8.c. of the preamble of this proposed rule for 
an illustration of the initial and calendar year reporting cycles.
9. Proposed Removal of the List of Compliant LTCHs
    In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49754 through 
49755), we finalized that we would publish a list of LTCHs that 
successfully met the reporting requirements for the applicable payment 
determination on the LTCH QRP website and update the list on an annual 
basis.
    We have received feedback from stakeholders that this list offers 
minimal benefit. Although the posting of successful providers was the 
final step in the applicable payment determination process, it does not 
provide new information or clarification to the providers regarding 
their annual payment update status. Therefore, in this proposed rule, 
we are proposing that we will no longer publish a list of compliant 
LTCHs on the LTCH QRP website effective beginning with the FY 2020 
payment determination.
10. Proposed Policies Regarding Public Display of Measure Data for the 
LTCH QRP
    Section 1886(m)(5)(E) of the Act requires the Secretary to 
establish procedures for making the LTCH QRP data available to the 
public after ensuring that LTCHs have the opportunity to review their 
data prior to public display. Measure data are currently displayed on 
the LTCH Compare website, an interactive web tool that assists 
individuals by providing information on LTCH quality of care. For more 
information on LTCH Compare, we refer readers to our website at: 
https://www.medicare.gov/longtermcarehospitalcompare/. For a more 
detailed discussion about our policies regarding public display of LTCH 
QRP measure data and procedures for the opportunity to review and 
correct data and information, we refer readers to the FY 2017 IPPS/LTCH 
PPS final rule (81 FR 57231 through 57236). In this proposed rule, we 
are proposing to begin publicly displaying data for the Drug Regimen 
Review Conducted With Follow-Up for Identified Issues--Post Acute Care 
(PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP) 
measure beginning CY 2020 or as soon as technically feasible. We 
finalized the Drug Regimen Review Conducted With Follow-Up for 
Identified Issues--Post Acute Care (PAC) Long-Term Care Hospital (LTCH) 
Quality Reporting Program (QRP) measure in the FY 2017

[[Page 19554]]

IPPS/LTCH PPS final rule (81 FR 57219 through 57223).
    Data collection for this assessment-based measure began with 
patients admitted and discharged on or after July 1, 2018. We are 
proposing to display data based on four rolling quarters, initially 
using discharges from January 1, 2019 through December 31, 2019 
(Quarter 1 2019 through Quarter 4 2019). To ensure the statistical 
reliability of the data, we are proposing that we would not publicly 
report an LTCH's performance on the measure if the LTCH had fewer than 
20 eligible cases in any four consecutive rolling quarters. LTCHs that 
have fewer than 20 eligible cases would be distinguished with a 
footnote that states: ``The number of cases/patient stays is too small 
to publicly report.''

D. Proposed Changes to the Medicare and Medicaid Promoting 
Interoperability Programs

1. Background
a. Statutory Authority for the Medicare and Medicaid Promoting 
Interoperability Programs
    The HITECH Act (Title IV of Division B of the ARRA, together with 
Title XIII of Division A of the ARRA) authorizes incentive payments 
under Medicare and Medicaid for the adoption and meaningful use of 
certified electronic health record technology (CEHRT). Incentive 
payments under Medicare were available to eligible hospitals and CAHs 
for certain payment years (as authorized under sections 1886(n) and 
1814(l) of the Act, respectively) if they successfully demonstrated 
meaningful use of CEHRT, which included reporting on clinical quality 
measures (CQMs) using CEHRT. Incentive payments were available to 
Medicare Advantage (MA) organizations under section 1853(m)(3) of the 
Act for certain affiliated hospitals that meaningfully used CEHRT. In 
accordance with the timeframe set forth in the statute, these incentive 
payments under Medicare generally are no longer available, except for 
Puerto Rico eligible hospitals (for more information on the Medicare 
incentive payments available to Puerto Rico eligible hospitals, we 
refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41672 
through 41675).
    Sections 1886(b)(3)(B)(ix) and 1814(l)(4) of the Act also establish 
downward payment adjustments under Medicare, beginning with FY 2015, 
for eligible hospitals and CAHs that do not successfully demonstrate 
meaningful use of CEHRT for certain associated reporting periods. 
Section 1853(m)(4) of the Act establishes a negative payment adjustment 
to the monthly prospective payments of a qualifying MA organization if 
its affiliated eligible hospitals are not meaningful users of CEHRT, 
beginning in 2015.
    Section 1903(a)(3)(F)(i) of the Act establishes 100 percent Federal 
financial participation (FFP) to States for providing incentive 
payments to eligible Medicaid providers (described in section 
1903(t)(2) of the Act) to adopt, implement, upgrade and meaningfully 
use CEHRT.
b. Goals of Proposed Changes to the Medicare and Medicaid Promoting 
Interoperability Programs
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41635), we affirmed 
our commitment to furthering interoperability by changing the name of 
the EHR Incentive Program to the Promoting Interoperability Program. As 
we look toward the future of the Promoting Interoperability Program, 
the general goals of our proposals in this proposed rule include: (1) A 
priority of stability within the program after the recent changes made 
in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41634 through 41677) 
while continuing to further interoperability through the use of CEHRT; 
(2) reducing administrative burden; (3) continued use of the 2015 
Edition CEHRT; and (4) improving patient access to their EHRs so they 
can make fully informed health care decisions.
2. EHR Reporting Period
a. Proposed Change to the EHR Reporting Period in CY 2019 for Eligible 
Hospitals
    Under Sec.  495.4, in the definition of ``EHR reporting period for 
a payment adjustment year,'' for 2019, if an eligible hospital has not 
successfully demonstrated it is a meaningful EHR user in a prior year, 
the EHR reporting period is any continuous 90-day period within CY 2019 
and applies for the FY 2020 and 2021 payment adjustment years. For the 
FY 2020 payment adjustment year, the EHR reporting period must end 
before and the eligible hospital must successfully register for and 
attest to meaningful use no later than October 1, 2019.
    We are proposing that, if we finalize our proposal to modify the 
Query of PDMP measure to require a ``yes/no'' attestation response 
instead of a numerator/denominator, as discussed in greater detail in 
section VIII.D.3.b. of the preamble of this proposed rule, we would 
eliminate the October 1, 2019 deadline for an eligible hospital that 
has not successfully demonstrated it is a meaningful EHR user in a 
prior year. This proposal would provide such eligible hospitals all of 
CY 2019 to complete their respective 90-day EHR reporting period for 
the FY 2020 payment adjustment year. We are proposing to revise the 
definition of ``EHR reporting period for a payment adjustment year'' at 
42 CFR 495.4 to reflect this proposal.
b. Proposed EHR Reporting Period in CY 2021
    As finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41636), 
and codified in the definitions of ``EHR reporting period'' and ``EHR 
reporting period for a payment adjustment year'' at 42 CFR 495.4, the 
EHR reporting period in CY 2020 is a minimum of any continuous 90-day 
period in CY 2020 for new and returning participants in the Promoting 
Interoperability Programs attesting to CMS or their State Medicaid 
agency. Eligible professionals, eligible hospitals, and CAHs may select 
an EHR reporting period of a minimum of any continuous 90-day period in 
CY 2020 from January 1, 2020 through December 31, 2020.
    For CY 2021, we are proposing an EHR reporting period of a minimum 
of any continuous 90-day period in CY 2021 for new and returning 
participants (eligible hospitals and CAHs) in the Medicare Promoting 
Interoperability Program attesting to CMS. We believe that this is an 
appropriate length of time for the EHR reporting period because of the 
updates to measures and other changes being proposed in this proposed 
rule. In addition, a minimum of any continuous 90-day period in CY 2021 
would offer stability to the Promoting Interoperability Program after 
the changes that were finalized in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41634 through 41677). We are proposing corresponding changes to 
the definitions of ``EHR reporting period'' and ``EHR reporting period 
for a payment adjustment year'' at 42 CFR 495.4.
    In the July 28, 2010 final rule titled ``Medicare and Medicaid 
Programs; Electronic Health Record Incentive Program'' at 75 FR 44319, 
we established that, in accordance with section 1903(t)(5)(D) of the 
Act, in no case may any Medicaid eligible hospital receive an incentive 
after 2021 (see 42 CFR 495.310(f)). Therefore, December 31, 2021 is the 
last date that States could make Medicaid Promoting Interoperability 
Program payments to Medicaid eligible hospitals (other than pursuant to 
a successful appeal related to 2021 or a prior year). For additional 
discussion of this issue, we refer readers

[[Page 19555]]

to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41676 through 41677) and 
the CY 2019 PFS/QPP final rule (83 FR 59704 through 59706). As 
discussed in those rules, the same deadline applies to Medicaid 
Promoting Interoperability Program incentive payments to Medicaid 
eligible professionals, under section 1903(t)(4)(A)(iii) of the Act and 
42 CFR 495.310(a)(2)(v). To help States meet this deadline, in the CY 
2019 PFS/QPP final rule (83 FR 59704 through 59706), we changed the CY 
2021 EHR and CQM reporting periods for Medicaid eligible professionals. 
However, we did not change the 2021 EHR and CQM reporting periods for 
Medicaid eligible hospitals in that rule, and are not proposing to do 
so in this proposed rule.
    That is because, based on attestation data and information from 
State Medicaid Health Information Technology Plans regarding the number 
of years States disburse Medicaid Promoting Interoperability Program 
payments to hospitals, we believe that there will be no hospitals 
eligible to receive Medicaid Promoting Interoperability Program 
payments in 2021 due to the requirement that, after 2016, eligible 
hospitals cannot receive a Medicaid Promoting Interoperability Program 
payment unless they have received such a payment for the prior fiscal 
year. At this time, we believe that there are no Medicaid-only eligible 
hospitals or ``dually-eligible'' hospitals (those that are eligible for 
an incentive payment under Medicare for meaningful use of CEHRT and/or 
subject to the Medicare payment reduction for failing to demonstrate 
meaningful use of CEHRT, and are also eligible to earn a Medicaid 
incentive payment for meaningful use of CEHRT) that will be able to 
receive Medicaid Promoting Interoperability Program payments in 2021. 
We invited comments on whether this belief was accurate in the CY 2019 
PFS/QPP rulemaking (83 FR 35873) and received one comment agreeing with 
us, but we also stated that we would solicit additional comments on 
this issue in a proposed rule that is more specifically related to 
hospital payment (83 FR 59705 through 59706). Accordingly, we are again 
inviting comments on whether we are correct in thinking that there are 
no hospitals that would be able to receive Medicaid Promoting 
Interoperability Program payments in 2021. If this is not true, we are 
seeking comment on how we should adjust 2021 reporting periods for 
Medicaid eligible hospitals in a manner that limits the burden on 
hospitals and States.
b. Promoting Interoperability Measures: Actions Must Occur Within the 
EHR Reporting Period
    Stakeholders have questioned whether the actions in the numerator 
for the Medicare Promoting Interoperability Program are limited to the 
EHR reporting period or if we allow the numerator to continue to 
increment outside of the EHR reporting period but within the calendar 
year. We note that we had issued a frequently asked question (FAQ 
number 8231 \813\) applicable to the Medicare and Medicare EHR 
Incentive Programs. The FAQ stated that, regarding the reporting of 
numerators, ``the . . . numerator is not constrained to the EHR 
reporting period unless expressly stated in the numerator statement.'' 
The FAQ went further to state that, for some measures, ``the actions 
may reasonably fall outside of the EHR reporting period time frame but 
must take place no earlier than the start of the reporting year and no 
later than the date of attestation, in order for patients to be counted 
in the numerator.'' When we adopted a new scoring methodology and 
revised objectives and measures for eligible hospitals and CAHs under 
the Medicare Promoting Interoperability Program last year in the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41634 through 41677), we neglected 
to state whether the policy in the FAQ would still be applicable in 
light of the changes to the objectives and measures. As we have 
established an EHR reporting period that is a minimum of 90 consecutive 
days, eligible hospitals and CAHs may select an EHR reporting period 
that ranges from 90 days to the entire CY so that the numerators would 
increment over a longer period of time. Therefore, we are proposing 
that, beginning with the EHR reporting period in CY 2020, for eligible 
hospitals and CAHs that submit an attestation to CMS under the Medicare 
Promoting Interoperability Program, both the numerators and 
denominators of measures in the Medicare Promoting Interoperability 
Program would only increment based on actions that have occurred during 
the EHR reporting period that was selected by the eligible hospital or 
CAH. We are proposing to codify this proposed policy at Sec.  
495.24(e)(1)(ii).
---------------------------------------------------------------------------

    \813\ https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/FAQs.pdf.
---------------------------------------------------------------------------

    However, there is one exception to this proposed policy, and that 
is the Security Risk Analysis measure. In the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41644), we finalized that the actions included in the 
Security Risk Analysis measure may occur any time during the calendar 
year in which the EHR reporting period occurs. We are proposing to 
revise Sec.  495.24(e)(4)(iii) to reflect this existing policy for the 
Security Risk Analysis measure.
    While this proposed policy is reflected in certain denominators and 
measure descriptions in the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41659 through 41660), we did not apply this policy to all of the 
measures. As mentioned above, our intent is to have this policy apply 
to all measures of the Medicare Promoting Interoperability Program, 
with the Security Risk Analysis measure being the only exception. 
Currently, the following measures limit the actions to the EHR 
reporting period: E-Prescribing; Query of PDMP; Verify Opioid Treatment 
Agreement; Support Electronic Referral Loops by Sending Health 
Information; Provide Patients Electronic Access to Their Health 
Information; and Support Electronic Referral Loops by Receiving and 
Incorporating Health Information. The measures associated with the 
Public Health and Clinical Data Exchange Objective do not contain this 
limitation.
    However, these proposals would not apply to the Medicaid Promoting 
Interoperability Program. In the FY 2019 IPPS/LTCH PPS final rule (83 
FR 41658 through 41665), we removed several measures from the Medicare 
Promoting Interoperability Program that remained in the Medicaid 
Promoting Interoperability Program for eligible hospitals. Among those 
are measures that we believe it would be appropriate to continue our 
current policy of allowing eligible hospitals to count actions in the 
numerator that were taken outside the EHR reporting period, but within 
the calendar year in which the EHR reporting period occurs and no later 
than the date of attestation. For example, Objective 6: Coordination of 
Care through Patient Engagement, Measure 1 (view, download, or 
transmit) and Measure 2 (secure messaging) allow hospitals to count 
actions taken outside of the EHR reporting period in the numerator. We 
believe that the patient engagement that this objective promotes is 
important throughout the entire year and not just during the hospital's 
chosen EHR reporting period. We believe it is a more appropriate policy 
to continue to allow eligible hospitals to report actions in the 
numerators of these measures that are taken outside of the EHR 
reporting period, but within the calendar year in which the EHR 
reporting period occurs and no later than the date of attestation. 
Therefore, we are not proposing to change to the Medicaid Promoting 
Interoperability

[[Page 19556]]

Program policy for either eligible hospitals or eligible professionals. 
Unless the numerator of a measure is specifically restricted to the EHR 
reporting period in the measure specifications, we will continue to 
allow health care providers to include actions taken before, during, or 
after the EHR reporting period if the period is less than one full 
year; however, these actions must be taken no earlier than the start of 
the same year as the EHR reporting period and no later than the date of 
attestation.
    We do not believe this variation in policies would place burden on 
any health care providers. While our current policy gives discretion to 
health care providers who attest to a State Medicaid agency to include 
actions taken outside of the EHR reporting period, it does not require 
them to do so. Eligible hospitals that attest to a State Medicaid 
agency may choose to follow the policy proposed in this proposed rule 
for eligible hospitals and CAHs that attest to CMS under the Medicare 
Promoting Interoperability Program and only include actions taken 
within the EHR reporting period. Similarly, eligible professionals that 
attest to a State Medicaid agency may choose to follow the policy 
adopted for the MIPS Promoting Interoperability performance category.
3. Proposed Changes to Measures Under the Electronic Prescribing 
Objective
a. Background
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41648 through 
41656), we adopted two opioid measures as for the Electronic 
Prescribing objective: (1) Query of Prescription Drug Monitoring 
Program (PDMP), which is optional in CY 2019 and required beginning in 
CY 2020; and (2) Verify Opioid Treatment Agreement, which is optional 
in CY 2019 and 2020. In addition, we stated that we intended to propose 
in rulemaking this year that EHR-PDMP integration would be required 
beginning in CY 2020 as part of the Query of PDMP measure (83 FR 
41652). We believe incorporating a requirement for integration between 
PDMPs and the CEHRT utilized by eligible hospitals and CAHs would 
advance access to and usability of PDMP data by health care providers 
and reduce health care provider burden associated with the actions of 
this measure. Integration could reflect a variety of different 
approaches for interaction between EHRs and PDMPs that are currently 
being pursued in different locations and settings.
    We received extensive comments on the Query of PDMP measure and our 
intent to require EHR-PDMP integration, as well as on the Verify Opioid 
Treatment Agreement measure, from stakeholders both during the comment 
period for the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 41648 through 
41656), and subsequently through public forums and correspondence. 
While this feedback is the main catalyst for our proposals, below, 
there have also been significant legislative changes that have the 
potential to positively impact the Promoting Interoperability Program, 
specifically the Substance Use--Disorder Prevention that Promotes 
Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT 
for Patients and Communities Act) (Pub. L. 115-271). This legislation 
was enacted to address the opioid crisis and affects a wide range of 
HHS programs and policies. While this legislation is not the main 
reason for our proposals, we believe it may significantly affect the 
maturation, requirements, and use of PDMPs and State networks upon 
which the Query of PDMP measure is dependent.
    In this proposed rule, we are aiming to be responsive to the 
comments that we have received from stakeholders since the FY 2019 
IPPS/LTCH PPS final rule was published and to take into account certain 
aspects of the SUPPORT for Patients and Communities Act that may have 
implications for the policy goals of the Promoting Interoperability 
Program.
    As explained in further detail below, we are proposing to make 
certain changes to the Query of PDMP and Verify Opioid Treatment 
Agreement measures. In section VIII.D.6.b. of the preamble of this 
proposed rule, we are proposing to adopt two opioid clinical quality 
measures beginning with the reporting period in CY 2021. In section 
VIII.D.7.a. and b. of the preamble of this proposed rule, we are also 
requesting information on potential new opioid use disorder (OUD) 
prevention and treatment-related measures. We believe the request for 
information will help to inform future rulemaking and not only help 
prevent and treat substance use disorder, but allow us to adopt 
measures that enable flexibility without added burden for health care 
providers. We value stakeholders' continued interest in and support for 
combating the nation's opioid epidemic.
b. Query of PDMP Measure
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41637 through 
41645), we finalized that the Query of PDMP measure is optional and 
available for bonus points for CY 2019, and required in CY 2020. We 
stated that we would be moving towards requiring EHR-PDMP integration 
in CY 2020 (83 FR 41652). We gave eligible hospitals and CAHs 
flexibility in implementing this measure, including the flexibility to 
query the PDMP in any manner allowed under their State law (83 FR 
41649).
    However, we have received substantial feedback from health IT 
vendors and hospitals that this flexibility presents unintended 
challenges, such as the significant burden associated with IT system 
design and development needed to accommodate the measure and any future 
changes to it. During the FY 2019 IPPS/LTCH PPS proposed rule comment 
period (83 FR 41649 through 41653) and after the final rule was 
published, these stakeholders stated that it is premature to require 
the Query of PDMP measure in CY 2020 especially given the maturation 
needed in PDMP development.
    We agree with stakeholders that PDMPs are still maturing in their 
development and use. As stated by the Substance Abuse and Mental Health 
Services Administration (SAMHSA), ``PDMPs operate independently within 
states and are not currently linked into a larger system; therefore, no 
comprehensive national PDMP prescription data are available. Moreover, 
there is no uniform way of accessing PDMP data across states, as data 
platforms differ by state.'' \814\
---------------------------------------------------------------------------

    \814\ https://www.samhsa.gov/capt/sites/default/files/resources/pdmp-overview.pdf.
---------------------------------------------------------------------------

    Stakeholders also mentioned the challenge posed by the current lack 
of integration of PDMPs into the EHR workflow. Historically, health 
care providers have had to go outside of the EHR workflow in order to 
separately log in to and access the State PDMP. In addition, 
stakeholders noted the wide variation in whether PDMP data can be 
stored in the EHR. By integrating PDMP data into the health record, 
health care providers can improve clinical decision making by utilizing 
this information to identify potential opioid use disorders, inform the 
development of care plans, and develop effective interventions. ONC is 
currently engaged in an assessment to better understand the current 
state of policy and technical factors impacting PDMP integration across 
States. This assessment is exploring factors like PDMP data 
integration, standards and hubs used to facilitate interstate PMDP data 
exchange, access permissions, and laws

[[Page 19557]]

and regulations governing PDMP data storage.
    In October 2018, the SUPPORT for Patients and Communities Act 
became law, signifying an important investment and approach for our 
nation in combating the opioid epidemic. The provisions of this law aim 
to provide for opioid use disorder prevention, recovery, and treatment 
and aim to increase access to evidence-based treatment and follow-up 
care included through legislative changes specific to the Medicare and 
Medicaid programs. Specifically, with respect to PDMPs, the SUPPORT for 
Patients and Communities Act includes new requirements and federal 
funding for PDMP enhancement, integration, and interoperability, and 
establishes mandatory use of PDMPs by certain Medicaid providers, in an 
effort to help reduce opioid misuse and overprescribing, and in an 
effort to help promote the overall effective prevention and treatment 
of opioid use disorder.
    Section 5042(a) of the SUPPORT for Patients and Communities Act 
added section 1944 to the Act, titled ``Requirements relating to 
qualified prescription drug monitoring programs and prescribing certain 
controlled substances.'' This section increases federal Medicaid 
matching rates during FY 2019 and 2020 for certain State expenditures 
relating to qualified PDMPs administered by States. Under section 
1944(b)(1) of the Act, to be a qualified PDMP, a PDMP must facilitate 
access by a covered provider to, at a minimum, the following 
information with respect to a covered individual, in as close to real-
time as possible: Information regarding the prescription drug history 
of a covered individual with respect to controlled substances; the 
number and type of controlled substances prescribed to and filled for 
the covered individual during at least the most recent 12-month period; 
and the name, location, and contact information of each covered 
provider who prescribed a controlled substance to the covered 
individual during at the least the most recent 12-month period. Under 
section 1944(b)(2) of the Act, a qualified PDMP must also facilitate 
the integration of the information described in section 1944(b)(1) of 
the Act into the workflow of a covered provider, which may include the 
electronic system used by the covered provider for prescribing 
controlled substances.
    Section 1944(f) of the Act establishes, for FY 2019 and FY 2020, a 
100 percent Federal Medicaid matching rate for state expenditures to 
design, develop, or implement a PDMP that meets the requirements 
outlined in section 1944(b)(1) and (2) of the Act, and to make 
connections to that PDMP. Section 1944(f)(2) of the Act specifies that, 
to qualify for the 100 percent Federal matching rate, a State must have 
in place agreements with all contiguous States that, when combined, 
enable covered providers in all the contiguous States to access, 
through the PDMP, all information described in 1944(b)(1) of the Act. 
Section 5042(b) of the SUPPORT for Patients and Communities Act 
requires CMS, in consultation with the Centers for Disease Control and 
Prevention (CDC), to issue guidance not later than October 1, 2019 on 
best practices on the uses of PDMPs required of prescribers and on 
protecting the privacy of Medicaid beneficiary information maintained 
in and accessed through PDMPs. Further, section 5042(c) of the SUPPORT 
for Patients and Communities Act requires that HHS develop and publish, 
not later than October 1, 2020, model practices to assist State 
Medicaid program operations in identifying and implementing strategies 
to utilize data-sharing agreements described in section 1944(b) of the 
Act for the following purposes: Monitoring and preventing fraud, waste, 
and abuse; and improving health care for individuals enrolled in 
Medicaid who transition in and out of Medicaid coverage, who may have 
sources of health care coverage in addition to Medicaid coverage, or 
who pay for prescription drugs with cash. We note that section 7162 of 
the SUPPORT for Patients and Communities Act also supports PDMP 
integration as part of the CDC's grant programs aimed at efficiency and 
enhancement by States, including improvement in the intrastate and 
interstate interoperability of PDMPs.
    In addition, the explanatory statement that accompanied Title II of 
Division H of the Consolidated Appropriations Act, 2018 (Pub. L. 115-
141),\815\ encouraged the CDC to work with the ONC to enhance the 
integration of PDMPs and EHRs. As part of this effort, the CDC and ONC 
are collaborating to expand upon previous and leverage input from 
current federal efforts to advance and scale PDMP integration with 
health IT systems. This collaboration includes testing and refining 
standard-based approaches to enable effective integration into clinical 
workflows, exploring emerging technical solutions to enhance access and 
use of PDMP data, providing technical resources to a variety of 
stakeholders to advance and scale the interoperability of health IT 
systems and PDMPs, and incorporating policy considerations, as 
relevant, to inform the implementation and success of integration 
approaches.
---------------------------------------------------------------------------

    \815\ https://www.govinfo.gov/content/pkg/CREC-2018-03-22/html/CREC-2018-03-22-pt3-PgH2697.htm.
---------------------------------------------------------------------------

    We understand that there is wide variation across the country in 
how health care providers are implementing and integrating PDMP queries 
into health IT and clinical workflows, and that it could be burdensome 
for health care providers if we were to narrow the measure to allow 
only a single workflow. At the same time, we have heard extensive 
feedback from EHR developers that incorporating the ability to count 
the number of PDMP queries in CEHRT would require more robust 
certification specifications and standards. These stakeholders state 
that health IT developers may face significant cost burdens under the 
current flexibility allowed for health care providers if they either 
fully develop numerator and denominator calculations for all the 
potential use cases and are required to change the specification at a 
later date. Developers have noted that the costs of additional 
development will likely be passed on to health care providers without 
additional benefit as this development would be solely for the purpose 
of calculating the measure rather than furthering the clinical goal of 
the measure.
    Given the stakeholder concerns discussed above regarding the lack 
of integration, the recent enactment of the SUPPORT for Patients and 
Communities Act (in particular, its provisions specific to Medicaid 
providers and qualified PDMPs), and the activities funded by the CDC, 
we believe that additional time is needed to evaluate the changing PDMP 
landscape prior to requiring a Query of PDMP measure, or introducing 
requirements related to EHR-PDMP integration.
    Therefore, we are proposing to make the Query of PDMP measure 
optional in CY 2020 and eligible for 5 bonus points, and we are 
proposing corresponding changes to the regulations at Sec. Sec.  
495.24(e)(5)(ii)(B) and 495.24(e)(5)(iii)(B). Making the measure 
optional in CY 2020 would allow time for further integration of PDMPs 
and EHRs to minimize the burden on eligible hospitals and CAHs 
reporting this measure while still giving hospitals an opportunity to 
report on and earn points for the measure. We are proposing that, in 
the event we finalize the proposed changes to the Query of PDMP 
measure, the e-Prescribing measure would be worth up to 10 points in CY 
2020 and subsequent years, and we are proposing corresponding changes 
to the regulations at Sec.  495.24(e)(5)(iii)(A).

[[Page 19558]]

    In addition, beginning with the EHR reporting period in CY 2019, we 
are proposing to remove the numerator and denominator that we 
established for the Query of PDMP measure in the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41649 through 41653) and instead require a ``yes/no'' 
response. Under this proposal, the measure description at Sec.  
495.24(e)(5)(iii)(B) and 83 FR 41653 would remain the same, but instead 
of submitting numerator and denominator information for the measure, 
eligible hospitals and CAHs would submit a ``yes/no'' response during 
attestation. A ``yes'' response would indicate that for at least one 
Schedule II opioid electronically prescribed using CEHRT during the EHR 
reporting period, the eligible hospital or CAH used data from CEHRT to 
conduct a query of a PDMP for prescription drug history, except where 
prohibited and in accordance with applicable law.
    We are proposing these changes to the measure to give us more time 
to restructure the measure and develop a robust measure that meets the 
needs of both health care providers and other stakeholders. Because 
currently there are not standards-based interfaces between CEHRT and 
the PDMPs, health care providers must manually track the number of 
times that they query the PDMP outside of CEHRT. We are proposing these 
changes to reduce the burden on health care providers of having to 
manually keep track of information related to the measure and to 
mitigate the burden on health IT developers who would otherwise have to 
develop the measure's numerator and denominator calculations when we 
expect to propose changes to the measure in the near future. Therefore, 
health care providers and health IT developers have suggested that, 
given the current state, there would be a significant reduction in 
burden by allowing health care providers to satisfy the measure by 
submitting a ``yes/no'' attestation, rather than reporting a numerator 
and denominator.
    We are also proposing this change to help reduce the burden of 
manually counting on health care providers and the need to mitigate the 
burden on developers caused by the developing the measure's numerator 
and denominator calculations when the measure is expected to be 
modified in the near future. Health care providers and developers have 
suggested that, given the current state, there would be a significant 
reduction in burden by allowing health care providers to satisfy the 
measure by submitting a ``yes/no'' attestation, rather than reporting a 
numerator and denominator. We do not believe that these changes would 
result in additional costs (time or money) for health care providers, 
and instead would reduce the burden of manually tracking information 
needed to report on this measures in its current form.
    We also are proposing to remove the exclusions associated with the 
Query of PDMP measure beginning in CY 2020, and we are proposing 
corresponding changes to the regulations at Sec. Sec.  495.24(e)(5)(iv) 
and 495.24(e)(5)(v)(B) through (D). For CY 2019, we did not provide 
exclusions for the Query of PDMP and Verify Opioid Treatment Agreement 
measures because they were optional and eligible for bonus points, and 
similarly, we do not believe exclusions would be necessary for the 
Query of PDMP measure if we finalize our proposal to make the measure 
optional and eligible for bonus points in CY 2020.
    Finally, we are proposing to address the scoring of the Query of 
PDMP measure. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41644), we 
stated that the measure is optional in CY 2019 and worth ``up to 5 
bonus points.'' Our intent, however, was to refer to a full 5 bonus 
points; we did not intend for the optional measure to be scored based 
on performance in CY 2019. In the FY 2019 IPPS/LTCH PPS proposed rule 
(83 FR 20522 through 20523), we provided tables illustrating the 
proposed new scoring methodology and a numerical example of how that 
scoring methodology would be applied for CY 2019. We referred to these 
tables again in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41642). The 
table containing the numerical example demonstrates our intent to award 
a full 5 bonus points for the measure regardless of the eligible 
hospital or CAH's performance rate. We are proposing to revise Sec.  
495.24(e)(5)(iii)(B) to better reflect our intended policy that the 
Query of PDMP measure is worth a full 5 bonus points (not up to 5 bonus 
points) in CY 2019, and in the event we finalize the proposed changes 
to the Query of PDMP measure discussed above, in CY 2020 as well. In 
the event we finalize those proposed changes, if an eligible hospital 
or CAH submits a ``yes'' for this measure, it would earn 5 bonus points 
in CY 2019 and 2020.
    We also welcome comments on future timing for requiring a measure 
that includes EHR-PDMP integration and on the value of the measure for 
advancing the effective prevention and treatment of opioid use disorder 
especially in relation to the requirements of the SUPPORT for Patients 
and Communities Act described above. Specifically, we are interested in 
stakeholder comments related to potential opportunities for the 
Medicare Promoting Interoperability Program to take into account 
States' Medicaid investments and requirements.
    We also note that some stakeholders have asked us to define a value 
set for controlled substances for the opioid-related measures, Query of 
PDMP and Verify Opioid Treatment Agreement. In the FY 2019 IPPS/LTCH 
PPS final rule (83 FR 41648 through 41656), for the Query of PDMP and 
Verify Opioid Treatment Agreement measures, we defined opioids as 
Schedule II controlled substances under 21 CFR 1308.12. We recognize 
that some challenges remain related to electronic prescribing of 
controlled substances, including more restrictive State laws and lack 
of products both for health care providers and pharmacies that include 
the necessary functionalities. We anticipate working closely with the 
DEA on future technical requirements that can better support 
measurement of adoption and use of electronic prescribing of controlled 
substances, which may include the definition of a value set related to 
such measures. As more information on developing technical requirements 
becomes available, we will provide additional information.
    As we seek comment and continue to advance this measure, we are 
excited about future innovations that may help improve PDMPs and 
support the electronic prescribing of controlled substances. We 
envision a future state where PDMP data is integrated into the clinical 
workflow and where clinicians do not have to access multiple systems to 
find and reconcile the information. Rather, all the functions would be 
contained within one system. While we may have a long distance to go to 
get to this state, we feel that it is an achievable goal for the future 
of the Medicare Promoting Interoperability Program.
c. Verify Opioid Treatment Agreement Measure
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41653 through 
41656), we finalized the Verify Opioid Treatment Agreement measure as 
optional in both CYs 2019 and 2020. Since we proposed this measure (83 
FR 20528 through 20530), we have received feedback from stakeholders 
that this measure presents significant implementation challenges, leads 
to an increase in burden, and does not further interoperability. Below, 
we outline some of the ongoing concerns we have heard during the 
comment period and since the measure was finalized in the FY 2019 IPPS/
LTCH

[[Page 19559]]

PPS final rule (83 FR 41653 through 41656).
(1) Lack of Certification Standards and Criteria
    Stakeholders have continued to express concern regarding the lack 
of defined data elements, structure, standards and criteria for the 
electronic exchange of opioid treatment agreements and how this impacts 
verifying whether there is an opioid treatment agreement to meet this 
measure. We acknowledged these concerns in the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41653 through 41656).
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41654), we stated 
that there are a number of ways certified health IT may be able to 
support the electronic exchange of opioid abuse-related treatment data, 
such as the care plan template within the Consolidated-Clinical 
Document Architecture (C-CDA). We noted that this information could be 
considered as part of an opioid treatment agreement, even though we did 
not define the elements of one. However, we understand that while such 
standards may include relevant information, the lack of clarity around 
a specific standard to support incorporation of an opioid treatment 
agreement presents an additional source of burden to health care 
providers seeking to report on the measure.
(2) Calculating 30 Cumulative Day Look-Back Period
    Another area where stakeholders have expressed concern is how to 
calculate 30 cumulative days of Schedule II opioid prescriptions in a 
6-month period. One possible solution we offered was to utilize the 
NCPDP 10.6 Medication History query. In the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41655), we noted that the Medication History query does not 
contain a discrete field for prescription days and relies on third 
party data that may not be discrete. Since the FY 2019 IPPS/LTCH PPS 
final rule was published, stakeholders have continued to express this 
concern and impress upon us that the 30 cumulative day total in a 6-
month look-back period cannot be automatically calculated, requiring 
health care providers to engage in a burdensome, manual calculation 
process if they wish to report on this measure.
    In addition, we have heard concerns over which medications should 
be used to determine the 30 cumulative day threshold. For example, 
stakeholders were unsure if medications given while a patient is 
admitted to the hospital should count towards the 30 cumulative days 
and also how as needed, or PRN, medications should be addressed.
    Stakeholders have also noted how this measure could present timing 
challenges. For example, it may cause patients being discharged on 
opioids to be delayed in their discharge to account for the possible 
time consuming nature of having to search for an opioid treatment 
agreement.
(3) Unintended Burden Caused by Lack of Definition and Standards
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41653), we did not 
define what constitutes an opioid treatment agreement. While we 
believed that this would allow flexibility for health care providers to 
determine which elements they felt were most important to an opioid 
treatment agreement, we have heard from stakeholders that the lack of 
definition and standards around what would constitute an opioid 
treatment agreement has created an unintended burden. Specifically, 
some stakeholders felt that we should define an opioid treatment 
agreement so that eligible hospitals and CAHs would have a standardized 
definition of an opioid treatment agreement and the criteria to make up 
an opioid treatment agreement. However, other stakeholders noted that 
given the lack of consensus within the industry on what should or 
should not be included in an opioid treatment agreement and on the 
clinical efficacy of various options for such agreements, that it would 
be inappropriate for us to define what should constitute an opioid 
treatment agreement at this time.
    We have heard from stakeholders that the challenges described above 
result in a measure that is vague, burdensome to measure and does not 
necessarily offer a clinical value to the health care providers or 
support the clinical goal of supporting OUD treatment. Therefore, we 
are proposing to remove the Verify Opioid Treatment Agreement measure 
from the Promoting Interoperability Program beginning with the EHR 
reporting period in CY 2020, and we are proposing corresponding changes 
to the regulations at Sec. Sec.  495.24(e)(5)(ii)(B) and 
495.24(e)(5)(iii)(C).
    While we are proposing to remove the Verify Opioid Treatment 
Agreement measure, we believe there may be other opioid measures that 
would be more effective in combatting the opioid epidemic, offer value 
for health care providers in measuring the impacts of health IT-enabled 
resources on OUD prevention and treatment, and engage patients in care 
coordination and planning. In section VIII.D.6.b. of the preamble of 
this proposed rule, we are proposing to adopt two opioid clinical 
quality measures beginning with the reporting period in CY 2021. We 
also are seeking public comment on a series of questions regarding new 
opioid measures in section VIII.D.7.a. and b. of the preamble of this 
proposed rule.
    Finally, we are proposing to address the scoring of the Verify 
Opioid Treatment Agreement measure. In the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41644) we stated that the measure is optional in CYs 2019 
and 2020 and worth ``up to five bonus points.'' As with the Query of 
PDMP measure discussed in section VIII.D.3.b. of the preamble of this 
proposed rule, above, our intent was to refer to a full 5 bonus points; 
we did not intend for the optional Verify Opioid Treatment Agreement 
measure to be scored based on performance in CY 2019 or CY 2020. 
Accordingly, we are proposing to revise Sec.  495.24(e)(5)(iii)(C) to 
better reflect our intended policy that the Verify Opioid Treatment 
Agreement measure is worth a full 5 bonus points (not up to 5 bonus 
points) in CY 2019, and in the event we do not finalize our proposal to 
remove the measure beginning with CY 2020, in CY 2020 as well.
4. Health Information Exchange Objective: Support Electronic Referral 
Loops by Receiving and Incorporating Health Information
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41661), we finalized 
the Support Electronic Referral Loops by Receiving and Incorporating 
Health Information measure. Although the numerator and denominator of 
the measure state that CEHRT must be used (83 FR 41661), we 
inadvertently omitted a reference to the use of CEHRT from the measure 
description in the regulations at Sec.  495.24(e)(6)(ii)(B). In 
addition, we stated at 83 FR 41660 that an eligible hospital or CAH 
must use the capabilities and standards for CEHRT at 45 CFR 
170.315(b)(1) and (b)(2).
    In an effort to more clearly capture the previously established 
policy, we are proposing to revise the regulations for the Support 
Electronic Referral Loops by Receiving and Incorporate Health 
Information measure. We are proposing to revise Sec.  
495.24(e)(6)(ii)(B) to provide that the electronic summary of care 
record must be received using CEHRT and that clinical information 
reconciliation for medication, medication allergy, and current problem 
list must be conducted using CEHRT.

[[Page 19560]]

5. Proposed Changes to the Scoring Methodology for Eligible Hospitals 
and CAHs Attesting to CMS Under the Medicare Promoting Interoperability 
Program for an EHR Reporting Period in CY 2020
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41636 through 
41668), we finalized under Sec.  495.24(e) a new performance-based 
scoring methodology and changes to the objectives and measures for 
eligible hospitals and CAHs that submit an attestation to CMS under the 
Medicare Promoting Interoperability Program beginning with the EHR 
reporting period in CY 2019. For more information, we refer readers to 
that final rule (83 FR 41636 through 41668) and Sec.  495.24(e). As 
previously discussed in sections VIII.D.3. and 4. of the preamble of 
this proposed rule, we are proposing for CY 2020 to: (1) Remove the 
Verify Opioid Treatment Agreement measure; (2) continue the Query of 
PDMP measure as optional with 5 bonus points; and (3) change the 
maximum points available for the e Prescribing measure to 10 points 
beginning in CY 2020, in the event we finalize the proposed changes to 
the Query of PDMP measure. The tables below reflects the proposed 
policy for the objectives, measures, and maximum points available for 
the EHR reporting period in CY 2020. The maximum points available do 
not include points that would be redistributed in the event that an 
exclusion is claimed.

                 Proposed Performance-Based Scoring Methodology EHR Reporting Period in CY 2020
----------------------------------------------------------------------------------------------------------------
                Objective                             Measure                          Maximum points
----------------------------------------------------------------------------------------------------------------
Electronic Prescribing..................  e-Prescribing *................  10 points.
                                          Bonus: Query of PDMP *.........  5 points (bonus).
Health Information Exchange.............  Support Electronic Referral      20 points.
                                           Loops by Sending Health
                                           Information.
                                          Support Electronic Referral      20 points.
                                           Loops by Receiving and
                                           Incorporating Health
                                           Information.
Provider to Patient Exchange............  Provide Patients Electronic      40 points.
                                           Access to Their Health
                                           Information.
Public Health and Clinical Data Exchange  Choose any two:................  10 points.
                                           Syndromic Surveillance
                                           Reporting.
                                           Immunization Registry
                                           Reporting.
                                           Electronic Case
                                           Reporting.
                                           Public Health Registry
                                           Reporting.
                                           Clinical Data Registry
                                           Reporting.
                                           Electronic Reportable
                                           Laboratory Result Reporting.
----------------------------------------------------------------------------------------------------------------
Note. The Security Risk Analysis measure is required, but will not be scored.
* Measures with proposed changes to scoring are denoted with an asterisk (*).

6. Clinical Quality Measurement for Eligible Hospitals and Critical 
Access Hospitals (CAHs) Participating in the Medicare and Medicaid 
Promoting Interoperability Programs
a. Background and Current CQMs
    Under sections 1814(l)(3)(A), 1886(n)(3)(A), and 
1903(t)(6)(C)(i)(II) of the Act and the definition of ``meaningful EHR 
user'' under 42 CFR 495.4, eligible hospitals and CAHs must report on 
clinical quality measures (referred to as CQMs) selected by CMS using 
CEHRT, as part of being a meaningful EHR user under the Medicare and 
Medicaid Promoting Interoperability Programs.
    The table below lists the CQMs available for eligible hospitals and 
CAHs to report under the Medicare and Medicaid Promoting 
Interoperability Programs beginning with the reporting period in CY 
2020 (83 FR 41670 through 41671).

       CQMs for Eligible Hospitals and CAHs Beginning With CY 2020
------------------------------------------------------------------------
 
------------------------------------------------------------------------
ED-2........................  Admit Decision Time                   0497
                               to ED Departure
                               Time for Admitted
                               Patients (ED-2).
PC-05.......................  Exclusive Breast                      0480
                               Milk Feeding.
STK-02......................  Discharged on                         0435
                               Antithrombotic
                               Therapy.
STK-03......................  Anticoagulation                       0436
                               Therapy for Atrial
                               Fibrillation/
                               Flutter.
STK-05......................  Antithrombotic                        0438
                               Therapy by the End
                               of Hospital Day Two.
STK-06......................  Discharged on Statin                  0439
                               Medication.
VTE-1.......................  Venous                                0371
                               Thromboembolism
                               Prophylaxis.
VTE-2.......................  Intensive Care Unit                   0372
                               Venous
                               Thromboembolism
                               Prophylaxis.
------------------------------------------------------------------------

b. Proposed Additional CQMs for Reporting Periods Beginning With CY 
2021
    As we have stated previously in rulemaking (82 FR 38479), we plan 
to continue to align the CQM reporting requirements for the Promoting 
Interoperability Programs with similar requirements under the Hospital 
IQR Program. To do this in a way that would minimize burden, while 
maintaining a set of meaningful clinical quality measures and 
continuing to incentivize improvement in the quality of care provided 
to patients, we are proposing to adopt two new opioid-related clinical 
quality measures and are seeking comments on whether we should consider 
proposing to adopt the Hybrid Hospital-Wide Readmission (HWR) Measure 
with Claims and EHR Data in future rulemaking for the Promoting 
Interoperability Program.
    In this proposed rule, we are proposing to add the following two 
opioid-related CQMs to the Promoting Interoperability Program measure 
set beginning with the reporting period in CY 2021: (1) Safe Use of 
Opioids--Concurrent Prescribing CQM (NQF #3316e); and (2) Hospital 
Harm--Opioid-Related Adverse Events eCQM.

[[Page 19561]]

We are also proposing to adopt these measures under the Hospital IQR 
Program and we refer readers to the discussion of the Hospital IQR 
Program in sections VIII.A.5.a. of the preamble of this proposed rule 
for more information about these proposed measures.
    We believe these opioid-related measures are valuable patient 
safety measures and are responsive to stakeholder feedback expressing 
support for CQMs that focus on higher priority measurement areas and 
patient outcomes. While both measures are designed to reduce adverse 
events or harms associated with opioid use, the main focus of each 
measure's intent is different.
    The Safe Use of Opioids--Concurrent Prescribing CQM (NQF #3316e) 
seeks to reduce preventable mortality and the costs of adverse events 
associated with opioid use by encouraging heath care providers to 
identify patients who have concurrent prescriptions for opioids or 
opioids and benzodiazepines, and discouraging health care providers 
from prescribing these drugs concurrently, whenever possible. 
Concurrent prescriptions of opioids or opioids and benzodiazepines 
place patients at a greater risk of unintentional overdose due to the 
increased risk of respiratory depression. Therefore, we are proposing 
to adopt the Safe Use of Opioids--Concurrent Prescribing CQM (NQF 
#3316e) beginning with the reporting period in CY 2021. The Safe Use of 
Opioids--Concurrent Prescribing CQM seeks to encourage health care 
providers to identify patients who have concurrent prescriptions for 
opioids or opioids and benzodiazepines, and discourage health care 
providers from prescribing these drugs concurrently, whenever possible. 
The goal of the measure is to provide a patient-centric measure to help 
systems identify and monitor patients at risk, and, ultimately, reduce 
the risk of harm to patients across the continuum of care.
    The Hospital Harm--Opioid-Related Adverse Events eCQM is designed 
to reduce adverse events associated with the administration of opioids 
in the hospital setting by assessing the administration of naloxone as 
an indicator of harm. Implementation of the measure can lead to safer 
patient care by incentivizing hospitals to track and improve their 
monitoring and response to patients administered opioids during 
hospitalization, and to avoid harm, such as respiratory depression, 
which can lead to brain damage and death. This EHR-based measure 
focuses, specifically, on in-hospital opioid-related adverse events, by 
requiring evidence of hospital opioid administration, prior to the 
naloxone administration, during the first 24 hours after hospital 
arrival. This ensures that the harm was hospital-acquired and not due 
to an overdose that happened outside of the hospital. We believe that 
this measure will provide hospitals with reliable and timely 
measurement of their opioid-related adverse event rates, which is a 
high-priority measurement area, and therefore we are proposing to adopt 
the Hospital Harm--Opioid-Related Adverse Events eCQM beginning with 
the reporting period in CY 2021.
    We acknowledge that some stakeholders have expressed concern that 
some providers could withhold the use of naloxone for patients who are 
in respiratory depression, believing that may help those providers 
avoid poor performance on the proposed Hospital Harm--Opioid-Related 
Adverse Events eCQM (83 FR 41591). Therefore, we are soliciting public 
comment on the potential for this measure to disincentivize the 
appropriate use of naloxone in the hospital setting or withholding 
opioids when they are medically necessary in patients requiring 
palliative care or who are at end of life out of an overabundance of 
caution.
c. Request for Information (RFI) Regarding Potential Adoption of the 
Hybrid Hospital-Wide Readmission (HWR) Measure With Claims and EHR Data 
(Hybrid HWR Measure) for Reporting Periods Beginning With CY 2023
    We refer readers to section VIII.A.5.b. of the preamble of this 
proposed rule for a discussion of our proposals under the Hospital IQR 
Program to adopt the Hybrid Hospital-Wide Readmission (HWR) Measure 
with Claims and EHR Data, beginning with the July 1, 2023 through June 
30, 2024 reporting period. The Hybrid HWR measure is designed to 
capture all unplanned readmissions that arise from acute clinical 
events requiring urgent re-hospitalization within 30 days of discharge, 
and it provides a facility-wide picture of this aspect of care quality 
for Medicare fee-for-service (FFS) beneficiaries who are 65 years or 
older and hospitalized in non-federal hospitals. In addition, the 
measure reports a single summary risk-standardized readmission rate 
(RSRR) of unplanned, all-cause readmission within 30 days of hospital 
discharge for any eligible condition, and indicates the hospital-level 
standardized readmission ratios (SRR) for each category. The discharge 
condition categories or procedure categories for this measure are: (1) 
Surgery/gynecology; (2) general medicine; (3) cardiorespiratory; (4) 
cardiovascular; and (5) neurology.
    We are seeking comment on whether we should consider proposing to 
adopt the Hybrid HWR CQM in future rulemaking for the Promoting 
Interoperability Program starting with the reporting period in CY 2023. 
We note that the Hospital IQR Program, as discussed in sections 
VIII.A.5.b. and VIII.A.10.e. of the preamble of this proposed rule, is 
proposing that this Hybrid HWR measure be required with the reporting 
period from July 1, 2023 through June 30, 2024. The 12-month 
measurement period that runs from July 1 through June 30 is consistent 
with the calculation of the Hospital IQR Program's current HWR claims-
only measure; however, it does not align with the reporting period for 
CQMs, which is one self-selected calendar quarter.
d. Proposed CQM Reporting Periods and Criteria for the Medicare and 
Medicaid Promoting Interoperability Programs in CY 2020, 2021, and 2022
(1) Proposed CQM Reporting Periods and Criteria in CY 2020 and 2021
    For CY 2020 and 2021, we are proposing generally the same CQM 
reporting periods and criteria as established in the FY 2019 IPPS/LTCH 
PPS final rule for the Medicare and Medicaid Promoting Interoperability 
Programs in CY 2019 (83 FR 41671). We are proposing that the CQM 
reporting period and criteria under the Medicare and Medicaid Promoting 
Interoperability Programs for eligible hospitals and CAHs reporting 
CQMs electronically would be as follows: For eligible hospitals and 
CAHs participating only in the Promoting Interoperability Program, or 
participating in the both Promoting Interoperability Program and the 
Hospital IQR Program, report one, self-selected calendar quarter of 
data for four self-selected CQMs from the set of available CQMs. We are 
proposing the following reporting criteria for eligible hospitals and 
CAHs that report CQMs by attestation under the Medicare Promoting 
Interoperability Program as a result of electronic reporting not being 
feasible--report on all CQMs from the set of available CQMs. For 
eligible hospitals and CAHs that report CQMs by attestation, we 
previously established a CQM reporting period of the full CY 
(consisting of 4 quarterly data reporting periods) (80 FR 62893).
    We are proposing a submission period for the Medicare Promoting 
Interoperability Program that would be the 2 months following the close 
of the calendar year, ending February 28, 2021

[[Page 19562]]

(for the CQM reporting period in CY 2020) and February 28, 2022 (for 
the CQM reporting period in CY 2021). With regard to the Medicaid 
Promoting Interoperability Program, we provide States with the 
flexibility to determine the method of reporting CQMs (attestation or 
electronic reporting) and the submission periods for reporting CQMs, 
subject to prior approval by CMS.
    We believe that continuing the same CQM reporting and submission 
requirements is appropriate because it continues to offer hospitals 
reporting flexibility and does not increase the information collection 
burden on data submitters. In addition, we believe that alignment with 
the requirements of the Hospital IQR program reduces burden for 
hospitals as they may report once and fulfill the requirements of both 
programs.
(2) Proposed CQM Reporting Periods and Criteria in CY 2022
    For CY 2022, we are proposing that the CQM reporting period and 
criteria under the Medicare Promoting Interoperability Program for 
eligible hospitals and CAHs reporting CQMs electronically would be as 
follows--for eligible hospitals and CAHs participating only in the 
Promoting Interoperability Program or participating in both the 
Promoting Interoperability Program and in the Hospital IQR Program, 
report one, self-selected calendar quarter of data for: (a) Three self-
selected CQMs from the set of available CQMs; and (b) the proposed Safe 
Use of Opioids--Concurrent Prescribing CQM (NQF #3316e), for a total of 
four CQMs. Under this proposal, we would not change the number of CQMs 
that hospitals must report while ensuring that health care providers 
still have meaningful choice among the set of available CQMs. We are 
proposing the following reporting criteria for eligible hospitals and 
CAHs that report CQMs by attestation under the Medicare Promoting 
Interoperability Program as a result of electronic reporting not being 
feasible--report on all CQMs from the set of available CQMs. For 
eligible hospitals and CAHs that report CQMs by attestation, we 
previously established a CQM reporting period of the full CY 
(consisting of 4 quarterly data reporting periods) (80 FR 62893).
    We are proposing that the submission period for the Medicare 
Promoting Interoperability Program would be the 2 months following the 
close of the calendar year 2022, ending February 28, 2023.
    We also refer readers to section VIII.A.10.d. of the preamble of 
this proposed rule for the reporting and submission requirements 
associated with the proposal to add the Safe Use of Opioids--Concurrent 
Prescribing CQM (NQF #3316e) to the measure set for the Hospital IQR 
Program.
e. CQM Reporting Form and Method Requirements for the Medicare 
Promoting Interoperability Program in CY 2020
(1) Requiring EHR Technology To Be Certified to All Available CQMs
    We are proposing to continue requiring that EHRs be certified to 
all available CQMs adopted for the Medicare Promoting Interoperability 
Program for CY 2020 and subsequent years. This policy was previously 
finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38483 through 
38485) for CY 2018 and in the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41671 through 41672) for CY 2019. We require this so that eligible 
hospitals and CAHs have flexibility in selecting the CQMs to report 
that best reflect their patient populations and reporting capabilities. 
In addition, this requirement would produce greater certainty for 
eligible hospitals and CAHs that their EHR systems would be capable of 
accurately calculating the particular CQMs they select to report to 
CMS. Because this is the current policy for the Hospital IQR and 
Medicare Promoting Interoperability Programs, vendors and health care 
providers should be familiar with this requirement, and their EHR 
systems should already be certified to all currently available CQMs.
    We refer readers to section VIII.A.10.d.(5)(B) of the preamble of 
this proposed rule for a similar proposal for hospitals under the 
Hospital IQR Program.
(2) Other CQM Form and Method Requirements
    As we stated in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49759 
through 49760), for the reporting periods in 2016 and future years, we 
are requiring QRDA-I for CQM electronic submissions for the Medicare 
EHR Incentive (now Promoting Interoperability) Program. As noted in the 
FY 2016 IPPS/LTCH PPS final rule (80 FR 49760), States would continue 
to have the option, subject to our prior approval, to allow or require 
QRDA-III for CQM reporting.
    The form and method of electronic submission are further explained 
in subregulatory guidance and the certification process. For example, 
the following documents are updated annually to reflect the most recent 
CQM electronic specifications: The CMS Implementation Guide for QRDA; 
program specific performance calculation guidance; and CQM electronic 
specifications and guidance documents. These documents are located on 
the eCQI Resource Center web page at: https://ecqi.healthit.gov/. For 
further information on CQM reporting, we refer readers to the EHR 
Incentive Program (now Promoting Interoperability Program) website 
where guides and tip sheets are located at: http://www.cms.gov/ehrincentiveprograms.
    For the reporting period in CY 2020, we are proposing the following 
for CQM submission under the Medicare Promoting Interoperability 
Program:
     Eligible hospitals and CAHs participating in the Medicare 
Promoting Interoperability Program (single program participation)--
electronically report CQMs through QualityNet Portal.
     Eligible hospital and CAH options for electronic reporting 
for multiple programs (that is, Promoting Interoperability Program and 
Hospital IQR Program participation)--electronically report through 
QualityNet Portal.
    As noted in the 2015 EHR Incentive Programs final rule (80 FR 
62894), starting in 2018, eligible hospitals and CAHs participating in 
the Medicare EHR Incentive Program must electronically report CQMs 
where feasible; and attestation to CQMs will no longer be an option 
except in certain circumstances where electronic reporting is not 
feasible. For the Medicaid Promoting Interoperability Program, States 
continue to be responsible for determining whether and how electronic 
reporting of CQMs would occur, or if they wish to allow reporting 
through attestation. Any changes that States make to their CQM 
reporting methods must be submitted through the State Medicaid Health 
IT Plan (SMHP) process for CMS review and approval prior to being 
implemented.
    For CY 2020, we are proposing to continue our policy regarding the 
electronic submission of CQMs, which requires the use of the most 
recent version of the CQM electronic specification for each CQM to 
which the EHR is certified. For the CY 2020 electronic reporting of 
CQMs, this means eligible hospitals and CAHs are required to use the 
2018 CQM specifications update (published in May 2018) and any 
applicable addenda available on the eCQI Resource Center web page at: 
https://ecqi.healthit.gov/. As noted in the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41635 through 41636), participants are required to use

[[Page 19563]]

2015 Edition CEHRT for the Medicare and Medicaid Promoting 
Interoperability Programs, beginning with the EHR reporting period in 
CY 2019. We reiterate that an EHR certified for CQMs under the 2015 
Edition certification criteria does not have to be recertified each 
time it is updated to a more recent version of the CQMs (82 FR 38485).
(3) Proposed Modification to Reporting Methods for CQMs Beginning With 
the Reporting Period in CY 2023
    We currently allow eligible hospitals and CAHs to report CQMs by 
attestation for the Medicare Promoting Interoperability Program only in 
certain circumstances where electronic reporting is not feasible (80 FR 
62893 through 62894). Beginning with the CQM reporting period in CY 
2023, we are proposing to eliminate attestation as a method for 
reporting CQMs for the Medicare Promoting Interoperability Program and 
instead require all eligible hospitals and CAHs to submit their CQM 
data electronically through the reporting methods available for the 
Hospital IQR Program. We believe that data submitted electronically is 
preferable so that we can use the data to analyze trends across 
hospitals and further refine quality data in the future. Limiting the 
available reporting methods to electronic submission would enable us to 
have a more robust data set so that we can ensure that hospitals are 
delivering effective, safe, efficient, patient-centered, equitable, and 
timely care. Also, we believe that we are allowing an adequate 
transition period for eligible hospitals and CAHs to migrate to 
electronic submission.
7. Future Direction of the Promoting Interoperability Program
a. Request for Information (RFI) on Potential Opioid Measures for 
Future Inclusion in the Promoting Interoperability Program
    In the past, the Promoting Interoperability Program measures 
focused on very general process focused actions supported by health IT. 
In the Medicare and Medicaid Programs; Electronic Health Record 
Incentive Program--Stage 3 and Modifications to Meaningful Use in 2015 
through 2017 final rule (80 FR 62766 through 62768), we sought to 
expand the potential for Medicare and Medicaid Promoting 
Interoperability Program measures to include more complex measures and 
closer relationships to high priority health outcomes.
    In this RFI, we are seeking comment on Promoting Interoperability 
program measures in addition to the CQMs we are proposing to adopt in 
section VIII.D.6.b. of the preamble of this proposed rule ((1) Safe Use 
of Opioids--Concurrent Prescribing CQM (NQF #3316e); and (2) Hospital 
Harm--Opioid-Related Adverse Events eCQM) that might be relevant to 
specific clinical priorities or goals related to addressing OUD 
prevention and treatment. As the Query of PDMP measure matures, we 
believe it will be essential in improving prescribing practices. As 
outlined in section VIII.D.3.c. of the preamble of this proposed rule, 
stakeholders indicated that the Verify Opioid Treatment Agreement 
measure presented significant implementation challenges for eligible 
hospitals and CAHs. Therefore, we are seeking comment on potential new 
measures for OUD prevention and treatment that could be included in 
future years of the Promoting Interoperability Program. We welcome all 
comments, but we are seeking comment specifically on possible OUD 
prevention and treatment measures that include the following 
characteristics:
     Are applicable to all hospital settings (for example, 
rural, urban, small hospitals, large hospitals);
     Are represented by a measure description, numerator/
denominator or ``yes/no'' attestation statement, and possible 
exclusions;
     Include evidence of positive impact on outcome-focused 
improvement activities, and the opioid crisis overall;
     Leverage the capabilities of CEHRT, including: automatic 
calculation and reporting of numerator, denominator, exclusions and 
exceptions, and timing elements to reduce quality measurement and 
reporting burdens to the greatest extent possible;
     Are based on well-defined clinical concepts, measure logic 
and timing elements that can be captured by CEHRT in standard clinical 
workflow and/or routine business operations. Well-defined clinical 
concepts include those that can be discretely represented by available 
clinical and/or claims vocabularies such as SNOMED CT, LOINC, RxNorm, 
ICD-10 or CPT; and
     Align with clinical workflows in such a way that data used 
in the calculation of the measure is collected as part of a standard 
workflow and does not require any additional steps or actions by the 
health care provider.
b. Request for Information (RFI) on NQF and CDC Opioid Quality Measures
    We also are specifically seeking public comment on the development 
of potential measures for consideration for the Promoting 
Interoperability Program that are based on existing efforts to measure 
clinical and process improvements specifically related to the opioid 
epidemic, including the opioid quality measures endorsed by the 
National Quality Forum (NQF) and the CDC Quality Improvement (QI) 
opioid measures discussed below. The NQF measures represent a reference 
point for evaluating opioid prescribing behaviors based on measures 
that have undergone the rigorous NQF measure endorsement process. The 
CDC guidelines ``encourage careful and selective use of opioid therapy 
in the context of managing chronic pain through . . . an evidence-based 
prescribing guideline.'' \816\ The guidelines have led to the 
development of CDC measures on prescribing practices on which are 
seeking comment. We believe that these measures may help participants 
understand the relationship between the measure description and the use 
of health IT to support the actions of the measures.
---------------------------------------------------------------------------

    \816\ https://www.cdc.gov/drugoverdose/pdf/prescribing/CDC-DUIP-QualityImprovementAndCareCoordination-508.pdf.
---------------------------------------------------------------------------

    For example, the measures may describe a clinical concept, such as 
the CDC Measure 12: Counsel on Risks and Benefits Annually. The actions 
for this activity can be supported by CEHRT through the use of 
standards to record key health information for the patient and to 
identify which patients should be included in the denominator based on 
information in the medication list, information gained through 
medication reconciliation of data received through health information 
exchange with another health care provider, and/or information 
incorporated after a query of a PDMP is completed. The actions for the 
numerator could include leveraging CEHRT to provide patient-specific 
education, to capture or record Patient-Generated Health Data (PGHD), 
to engage in secure messaging with the patient and ensure the patient 
is engaging with their record through a patient portal or an API.
    We believe that the clinical actions identified within both the NQF 
quality measures and the CDC QI opioid measures can be supported by the 
standards and functionalities of certified health IT and we welcome 
public comment on the specific use cases for health IT implementation 
for the potential measure actions. We recognize that modifications to 
the NQF and CDC measures may be necessary to make the measures as 
applicable as possible to all participants of the Promoting 
Interoperability Program, and are

[[Page 19564]]

seeking comment on any modifications that would be necessary. In 
addition, we note that there is some overlap between some of the NQF 
quality measures and the CDC QI opioid measures and are seeking comment 
on whether there are ways in which the two sets of measures could be 
correlated to support potential new measures of the meaningful use of 
health IT for the Promoting Interoperability Programs. Finally, we are 
seeking comment on which measures might best advance the implementation 
and use of interoperable health IT and encourage information exchange 
between care teams and with patients.
(1) NQF Quality Measures
    Three NQF-endorsed quality measures stewarded by the Pharmacy 
Quality Alliance (PQA) to evaluate patients with prescriptions for 
opioids in combination with benzodiazepines, at high-dosage, or from 
multiple prescribes and pharmacies. Each measure was evaluated and 
recommended for endorsement by the NQF's Patient Safety Standing 
Committee \817\ and endorsed by the Consensus Standards Approval 
Committee.\818\ These measures, NQF #2940, #2950, and #2951 were 
recommended by the NQF Measure Application Partnership for inclusion on 
the December 2018 Measures Under Consideration List for the Medicare 
Shared Savings Program. (As noted in section VIII.D.6.b. of the 
preamble of this proposed rule, we are also proposing to add two 
opioid-related CQMs to the Promoting Interoperability Program CQM 
measure set beginning with the reporting period in CY 2021, including 
the NQF-endorsed measure, Safe Use of Opioids--Concurrent Prescribing 
(NQF #3316e), a CQM.) We are seeking comment on the following three NQF 
measures for possible inclusion in the Promoting Interoperability 
Program and any modifications that may be necessary to maximize their 
use in the Promoting Interoperability Program:
---------------------------------------------------------------------------

    \817\ https://www.qualityforum.org/News_And_Resources/Press_Releases/2017/NQF_Statement_on_Endorsement_of_Opioid_Patient_Safety_Measures.aspx.
    \818\ Ibid.
---------------------------------------------------------------------------

     Use of Opioids at High Dosage in Persons Without Cancer 
(NQF #2940).
     Use of Opioids from Multiple Providers in Persons Without 
Cancer (NQF #2950).
     Use of Opioids from Multiple Providers and at High Dosage 
in Persons Without Cancer (NQF #2951).
    We believe these measures relate to activities that hold promise in 
combatting the opioid epidemic and can be supported using CEHRT to 
complete the actions of the measures and are seeking comment on the 
best method to incorporate the description of the use of technology 
into measure guidance if these measures were considered for use by 
participants. For example, the actions related to the Use of Opioids 
from Multiple Providers in Persons Without Cancer (NQF #2950) measure 
could include using health IT to electronically prescribe the 
medication, to query a PDMP, to identify other care team members, to 
conduct medication reconciliation based on information received through 
health information exchange with other health care providers, and 
recording key health information in a structured format. Additional 
information regarding each measure can be found using NQF's Quality 
Positioning System at: http://www.qualityforum.org/QPS/QPSTool.aspx.
(2) CDC Quality Improvement (QI) Opioid Measures
    We believe there may be promise in the CDC QI opioid measures based 
on the prescribing best practices found in Appendix B in the CDC 
document ``Quality Improvement and Care Coordination: Implementing the 
CDC Guideline for Prescribing Opioids for Chronic Pain'' (Implementing 
the CDC Prescribing Guideline).\819\
---------------------------------------------------------------------------

    \819\ https://www.cdc.gov/drugoverdose/pdf/prescribing/CDC-DUIP-QualityImprovementAndCareCoordination-508.pdf.
---------------------------------------------------------------------------

    CDC developed its Implementing the CDC Prescribing Guideline 
document to help health care providers and systems integrate the CDC 
Prescribing Guideline \820\ and the associated QI opioid measures found 
in the Implementing the CDC Prescribing Guideline document into their 
clinical practices. The CDC developed 16 QI opioid measures to align 
with the recommendations in the CDC Prescribing Guideline and to 
improve opioid prescribing. These measures are intended to provide 
healthcare systems tracking of their implementation of the recommended 
practices. We believe this is generally consistent with the to the 
objective and measure concept of the Promoting Interoperability Program 
where the recommendation in the CDC Prescribing Guideline is the 
overarching objective and the QI opioid measure is a description of the 
patient population focus (denominator) and the desired action 
(numerator). The Implementing the CDC Prescribing Guideline document 
also includes practice-level strategies to help organize and improve 
the management and coordination of long-term opioid therapy:
---------------------------------------------------------------------------

    \820\ https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm.
---------------------------------------------------------------------------

     Using an interdisciplinary team approach.
     Establishing practice policies and standards.
     Using EHR data to develop registries and track QI opioid 
measures.
    These measures address treatment guidelines for both initial 
treatment practices and long-term treatment and outcomes. Examples of 
measures related to short term OUD prevention and treatment activities 
include:
     CDC Measure 2: Check PDMP Before Prescribing Opioids.
     CDC Measure 4: Evaluate Within Four Weeks of Starting 
Opioids.
    Examples of measures related to long term OUD prevention and 
treatment activities include:
     CDC Measure 11: Check PDMP Quarterly.
     CDC Measure 12: Counsel On Risks and Benefits Annually.
    The data sources from these measures include State PDMP data or the 
practice EHR data field.
    The CDC and the Agency for Healthcare Research and Quality are also 
developing electronic clinical decision support tools which can provide 
real-time clinical decision support (CDS) for some of the best 
practices included in the Implementing the CDC Prescribing Guideline 
document.\821\ In the context of quality improvement measures, 
components of these CDS artifacts, including the clinical conditions or 
prescribed medications that trigger the decision support are the same 
well-defined clinical concepts required for developing quality 
improvement measures for the Promoting Interoperability Program related 
to OUD prevention and treatment. This creates a tight linkage between 
the guidelines, the recommended clinical actions based on the 
guidelines, and the improved outcomes based on the recommended clinical 
actions.
---------------------------------------------------------------------------

    \821\ https://cds.ahrq.gov/cdsconnect/topic/opioids-and-pain-management.
---------------------------------------------------------------------------

    Therefore, we are seeking comment on which of the 16 CDC QI opioid 
measures have value for potential consideration for the Promoting 
Interoperability Program. We are further seeking comment on whether we 
should consider a different type of measurement concept for the OUD 
prevention and treatment measures, such as reporting on a set of cross 
cutting activities and measures to earn credit in the Promoting 
Interoperability Program (for example, a set of one CDS,

[[Page 19565]]

the related CDC QI opioid measure, and a potentially relevant clinical 
quality measure).
    We refer readers to Implementing the CDC Prescribing Guideline 
document and the related measures available in Appendix B of that 
document available at: https://www.cdc.gov/drugoverdose/pdf/prescribing/CDC-DUIP-QualityImprovementAndCareCoordination-508.pdf.
c. Request for Information (RFI) on a Metric To Improve Efficiency of 
Providers Within EHRs
    One of the benefits of adopting EHRs is increasing the efficiency 
of health care processes and generating cost savings by eliminating 
time-consuming paper-based processes. Through the use of EHRs, health 
care providers are able to automate administrative aspects of delivery 
system management such as coding and scheduling, easily locate patient 
information in electronic charts, and streamline communications with 
other health care providers through electronic means.
    However, research also points to variable results from the 
implementation of health IT across practice settings, suggesting health 
IT adoption is not a universal remedy for inefficient practice. 
Stakeholders continue to describe ways in which the potential benefits 
of EHRs have not been fully realized, pointing to non-optimized 
electronic workflows and poor system design that can increase rather 
than reduce administrative burden, contributing to physician 
burnout.\822\ We believe in the value of EHRs in today's health care 
environment and understand the way forward must include reductions in 
persistent sources of technology-related burden, and more effective use 
of technology to achieve true efficiency gains.
---------------------------------------------------------------------------

    \822\ https://www.ahrq.gov/professionals/clinicians-providers/ahrq-works/burnout/index.html.
---------------------------------------------------------------------------

    In November 2018, ONC released the draft report ``Strategy on 
Reducing Regulatory and Administrative Burden Relating to the Use of 
Health IT and EHRs,'' \823\ as required by section 4001 of the 21st 
Century Cures Act. In the draft report, ONC describes a variety of 
factors that may contribute to EHR-related burden, and provides draft 
recommendations for how HHS as well as other stakeholders may be able 
to address these factors. Specifically, the draft report discusses 
processes where adoption of improved electronic processes could reduce 
EHR-related burden, such as processes related to prior authorization 
requests. The draft report also discusses EHR usability and design 
challenges which may contribute to EHR-related burden, and identifies 
best practices for design, as well as a variety of emerging system 
features which may improve efficiency in health IT usage. We believe 
further adoption of more efficient workflows and technologies such as 
those identified in the draft report will help health care providers 
with overall improvements in patient care and interoperability, and we 
are seeking comment on how such implementation of such processes can be 
effectively measured and encouraged as part of the Promoting 
Interoperability Program.
---------------------------------------------------------------------------

    \823\ https://www.healthit.gov/sites/default/files/page/2018-11/Draft%20Strategy%20on%20Reducing%20Regulatory%20and%20Administrative%20Burden%20Relating.pdf.
---------------------------------------------------------------------------

    We are also interested in comments regarding how to measure and 
incentivize efficiency as it relates to the meaningful use of CEHRT and 
the furthering of interoperability. In 2017, the NQF released ``A 
Measurement Framework to Assess Nationwide Progress Related to 
Interoperable Health Information Exchange to Support the National 
Quality Strategy,'' \824\ which included discussion of measure concepts 
of productivity and efficiency, which can result from the use of health 
IT, specifically health information exchange. For instance, the NQF 
report identifies a measure concept for the ``percentage of reduction 
of duplicate labs and imaging over time,'' which could capture the 
impact of electronic availability of imaging studies on duplicative 
studies that are often conducted when health care providers do not have 
the ability to locate an existing study. However, we recognize that 
there are challenges associated with tying such measures of economic 
efficiency to a single factor such as electronic workflow 
improvements.\825\
---------------------------------------------------------------------------

    \824\ https://www.qualityforum.org/Publications/2017/09/Interoperability_2016-2017_Final_Report.aspx.
    \825\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2699907/.
---------------------------------------------------------------------------

    Consistent with our commitment to reducing administrative burden, 
increasing efficiencies, and improving beneficiary experience via the 
Patients over Paperwork initiative,\826\ we are seeking stakeholder 
feedback on a potential metric to evaluate health care provider 
efficiency using EHRs. Specifically, we are looking at the following 
questions:
---------------------------------------------------------------------------

    \826\ https://www.cms.gov/About-CMS/story-page/patients-over-paperwork.html.
---------------------------------------------------------------------------

     What do stakeholders believe would be useful ways to 
measure the efficiency of health care processes due to the use of 
health IT? What are measurable outcomes demonstrating greater 
efficiency in costs or resource use that can be linked to the use of 
health IT-enabled processes? This includes measure description, 
numerator/denominator or ``yes/no'' reporting, and exclusions.
     What are specific technologies, capabilities, or system 
features (beyond those currently addressed in the Promoting 
Interoperability Program) that can increase the efficiency of health 
care provider interactions with technology systems, for instance, 
alternate authentication technologies that can simplify health care 
provider logon? How could we reward health care providers for adoption 
and use of these technologies?
     What are key administrative processes that could benefit 
from more efficient electronic workflows, for instance, conducting 
prior authorization requests? How could we measure and reward health 
care providers for uptake of more efficient electronic workflows?
d. Request for Information (RFI) on Including Medicare Promoting 
Interoperability Program Data on the Hospital Compare Website
    As the Medicare Promoting Interoperability Program continues to 
evolve, we are seeking comment on posting Medicare Promoting 
Interoperability Program measure(s) on the Hospital Compare website.
    Section 1886(n)(4)(B) of the Act requires the Secretary to post in 
an easily understandable format a list of the names and other relevant 
data, as determined appropriate by the Secretary, of eligible hospitals 
and CAHs who are meaningful EHR users under the Medicare FFS program, 
on a CMS website. In addition, section 1886(n)(4)(B) of the Act 
requires the Secretary to ensure that an eligible hospital or CAH has 
the opportunity to review the other relevant data that are to be made 
public with respect to the eligible hospital or CAH prior to such data 
being made public. We believe an eligible hospital or CAH's performance 
rate on one or more of the Medicare Promoting Interoperability Program 
measures would constitute other relevant data because it would help 
consumers make informed decisions regarding their health care team, 
such as knowing whether and to what extent their health care provider 
is involved in health information exchange or providing patients with 
electronic access to their health information.
    As we considers posting information regarding the Medicare 
Promoting Interoperability Program measures in

[[Page 19566]]

the future, we are seeking comment on the following:
     Of the six required measures and one bonus measure that 
would apply for an EHR reporting period in CY 2020, how many and which 
ones should we consider posting?
     What process should be in place to allow eligible 
hospitals and CAHs the opportunity to review the data prior to 
publication? This includes comment on how many days the preview period 
should be for eligible hospitals and CAHs to review data prior to 
publication and a correction process for those who may have identified 
an error in their data.
     We are seeking comment on posting the data on the our 
Hospital Compare website, found at: www.medicare.gov/hospitalcompare.\827\
---------------------------------------------------------------------------

    \827\ https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/hospitalqualityinits/hospitalcompare.html.
---------------------------------------------------------------------------

e. Request for Information (RFI) on the Provider to Patient Exchange 
Objective
    In March 2018, the White House Office of American Innovation and 
the CMS Administrator announced the launch of MyHealthEData, and our 
role in improving patient access and advancing interoperability. As 
part of the MyHealthEData initiative, we are taking a patient-centered 
approach to health information access and moving to a system in which 
patients have immediate access to their computable health information 
and can be assured that their health information will follow them as 
they move throughout the health care system from provider to provider, 
payer to payer. To accomplish this, we have launched several 
initiatives related to data sharing and interoperability to empower 
patients and encourage plan and provider competition. One example is 
our overhaul of the EHR Incentive Program and Advancing Care 
Information performance category under the MIPS to create the new 
Promoting Interoperability programs, which put a heavy emphasis on 
patient access to their health information through the Provide Patients 
Electronic Access to Their Health Information measure.
    Through the Provide Patients Electronic Access to Their Health 
Information measure, we are ensuring that patients have access to their 
information through any application of their choice that is configured 
to meet the technical specifications of the Application Programing 
Interface (API) in the eligible hospital or CAH's CEHRT. To make these 
APIs fully useful to patients, they should provide immediate access to 
updated information whenever the patient needs that information, should 
be always available, configured using standardized technology and 
contain the information a patient needs to make informed decisions 
about their care.
    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20537 through 
20538), we introduced a potential future Promoting Interoperability 
Program concept which explored creating a set of priority health IT 
activities that would serve as alternatives to the traditional 
Promoting Interoperability Program measures. We specifically noted that 
the 21st Century Cures Act requires HHS to take steps to enable the 
electronic sharing of health information, including helping to ensure 
interoperability for health care providers and settings across the care 
continuum. We requested public comment on whether eligible hospitals 
and CAHs should earn credit by attesting to health IT or 
interoperability activities in lieu of reporting on specific measures. 
We identified specific health IT activities and sought public comment 
on those and additional activities that would add value for patients 
and health care providers, are relevant to patient care and clinical 
workflows, support alignment with existing objectives, promote 
flexibility, are feasible for implementation, are innovative in the use 
of health IT, and promote interoperability. We received feedback in 
support of this future concept.
    One such activity we specifically requested comment on was a health 
IT activity in which eligible hospitals and CAHs could obtain credit in 
the Promoting Interoperability Program if they maintain an ``open 
API,'' or standards-based API, which allows patients to access their 
health information through a preferred third party application. An API 
can be thought of as a set of commands, functions, protocols, or tools 
published by one software developer (``developer A'') that enables 
other software developers to create programs (applications or ``apps'') 
that can interact with developer A's software without needing to know 
the internal workings of developer A's software, all while maintaining 
consumer privacy data standards. This is how API technology enables the 
seamless user experiences associated with applications familiar from 
other aspects of many consumers' daily lives, such as travel and 
personal finance. Standardized, transparent, and pro-competitive API 
technology can enable similar benefits to consumers of health care 
services.\828\
---------------------------------------------------------------------------

    \828\ ONC has made available a succinct, non-technical overview 
of APIs in context of consumers' access to their own medical 
information across multiple providers' EHR systems, which is 
available at the HealthIT.gov website at: https://www.healthit.gov/api-education-module/story_html5.html.
---------------------------------------------------------------------------

    We received feedback from several commenters regarding concerns 
that an ``open'' API may open the door to patient data without 
security, leaving eligible hospitals and CAHs' EHR systems open for 
cyber-attacks. We wish to note, however, that the term ``open API'' 
does not imply that any and all applications or application developers 
would have unfettered access to individuals' personal or sensitive 
information nor would it allow for any reduction in the required 
protections for privacy and security of patient health information. In 
addition, with respect to patient access, a patient will need to 
authenticate themselves to a health care organization that is the 
steward of their data (for example, username and password) and the 
access provided to an app will be for that one patient. The overall 
HIPAA Security Rule and other cybersecurity obligations that apply to 
HIPAA Covered Entities remain the same and would need to be applied to 
an API in the same way they are currently applied to any and all other 
interfaces a health care organization deploys in production.
    ONC's 21st Century Cures Act proposed rule (84 FR 7424 through 
7610) includes new proposals that focus on how certified health IT can 
use APIs to allow health information to be accessed, exchanged, and 
used without special effort through the use of APIs or successor 
technology or standards, as provided for under applicable law. For 
instance, ONC has proposed to adopt a new criterion for a standards-
based API at Sec.  170.315(g)(10). This standards-based API criterion 
would replace the existing API criterion with one that requires the use 
of the HL7 Fast Healthcare Interoperability Resources (FHIR[supreg]) 
standard. ONC has also proposed a series of requirements for the 
standards-based API that would improve interoperability by focusing on 
standardized, transparent, and pro-competitive API practices.
    ONC has proposed to make the standards-based API criterion part of 
the 2015 Edition base EHR definition, which would ensure that this 
functionality is ultimately included in the CEHRT definition required 
for participation in the Promoting Interoperability Program. If 
finalized, ONC has proposed that health IT

[[Page 19567]]

developers would have 24 months from the publication of the final rule 
to implement these changes to certified health IT products.
(1) Immediate Access
    The existing Provide Patients Electronic Access to Their Health 
Information measure specifies that the eligible hospital or CAH provide 
the patient timely access to view online, download, and transmit his or 
her health information, and further specifies that patient health 
information must be made available to the patient within 36 hours of 
its availability to the eligible hospital or CAH. We believe it is 
critical for patients to have access to their health information when 
making decisions about their care. In the recently published Medicare 
and Medicaid Programs; Patient Protection and Affordable Care Act; 
Interoperability and Patient Access for Medicare Advantage Organization 
and Medicaid Managed Care Plans, State Medicaid Agencies, CHIP Agencies 
and CHIP Managed Care Entities, Issuers of Qualified Health Plans in 
the Federally-facilitated Exchanges and Health Care Providers proposed 
rule (84 FR 7610 through 7680), (hereinafter referred to as the CMS 
Interoperability and Patient Access proposed rule), we proposed that 
certain health plans and payers be required to make patient health 
information available through an open, standards-based API no later 
than one business day after it is received by the health plan or payer.
    Recognizing the importance of patients having access to their 
complete health information, including clinical information from the 
eligible hospital or CAH's CEHRT, and appreciating the new technical 
flexibility a standards-based API provides, we are seeking comment on 
whether eligible hospitals and CAHs should make patient health 
information available immediately through the open, standards-based 
API, no later than one business day after it is available to the 
eligible hospital or CAH in their CEHRT. We are also seeking comment on 
the barriers to more immediate access to patient information. And, we 
are seeking comment on if there are specific data elements that may be 
more or less feasible to share no later than one business day.
(2) Persistent Access and Standards-Based APIs
    As discussed above, the ONC 21st Century Cures Act proposed rule 
(84 FR 7479), includes a proposal for adoption of API conditions of 
certification that ensure a standards-based API is implemented in a 
manner that provides unimpeded access to technical documentation, is 
non-discriminatory, preserves rights of access, and minimizes costs or 
other burdens that could result in special effort. The ONC 21st Century 
Cures Act proposed rule (84 FR 7575), also includes requirements for 
the standardized API related to privacy and security to ensure that 
patient health information is protected.
    The existing Provide Patients Electronic Access to Their Health 
Information measure does not specify the overall operational 
expectations associated with enabling patients' access to their health 
information. For instance, the measure only specifies that access must 
be ``timely.'' As a result, we are requesting public comment on whether 
we should revise the measure to be more specific with respect to the 
experience, patients should have regarding their access. For instance, 
in the ONC 21st Century Cures Act proposed rule (84 FR 7481 through 
7484) there is a proposal regarding requirements around persistent 
access to APIs, which would accommodate a patient's routine access to 
their health information without needing to reauthorize their app and 
re-authenticate themselves. We are seeking comment on whether the 
Promoting Interoperability Program measure should be updated to 
reinforce this proposed technical requirement for persistent access.
    As we work to advance interoperability and empower patients through 
access to their health information, we continue to explore the role of 
APIs. We support ONC's 21st Century Cures Act proposed rule (84 FR 
7424) proposal to move to an HL7 FHIR[supreg]-based API under 2015 
Edition certification (84 FR 7479). Health care providers committed to 
a standards-based API could benefit from joining in on the industry's 
new FHIR standards framework to reduce burden in, and improve on, 
quality measurement through automation and simplification. Use of FHIR-
based APIs could help push forward interoperability regardless of EHR 
systems used providing standardized way to share information.
    Understanding this, we are, specifically, seeking public comment on 
the following question: If ONC's proposal for a FHIR-based API 
certification criteria is finalized, would stakeholders support a 
possible bonus under the Promoting Interoperability Programs for early 
adoption of a certified FHIR-based API in the intermediate time before 
ONC's final rule's compliance date for implementation of a FHIR 
standard for certified APIs?
(3) Available Data
    Recognizing the overall burden that switching EHR systems places on 
health care providers, ONC has introduced a new proposal that seeks to 
minimize that burden. In the 21st Century Cures Act proposed rule (84 
FR 7424 through 7610), ONC has proposed to adopt a new 2015 Edition 
certification criterion for the Electronic Health Information (EHI) 
export in 45 CFR 170.315(b)(10). The purpose of this criterion is to 
provide patients and health IT users the ability to securely export the 
entire electronic health record for a single patient, or all patients, 
in a computable, electronic format, and facilitate receiving the health 
IT system's interpretation, and use of the EHI, to the extent that is 
reasonably practicable using the existing technology of developers. 
This patient-focused export capability complements other provisions of 
the proposed rule that support patients' access to their EHI, including 
information that may eventually be accessible via the proposed 
standardized API in 45 CFR 170.215. It is also complementary to the 
proposals in the CMS Interoperability and Patient Access proposed rule, 
which has proposed to require certain health plans under CMS to provide 
patients access to their health data through a standardized API.
    Building on these proposals, we are seeking comment on an 
alternative measure under the Provider to Patient Exchange objective 
that would require health care providers to use technology certified to 
the EHI criteria to provide the patient(s) their complete electronic 
health data contained within an EHR.
    Specifically, we are seeking comment on the following questions:
     Do stakeholders believe that incorporating this 
alternative measure into the Provider to Patient Exchange objective 
will be effective in encouraging the availability of all data stored in 
health IT systems?
     In relation to the Provider to Patient Exchange objective 
as a whole, how should a measure focused on using the proposed total 
EHI export function in CEHRT be scored?
     If this certification criterion is finalized and 
implemented, should a measure based on the criterion be established as 
a bonus measure? Should this measure be established as an attestation 
measure?
     In the long term, how do stakeholders believe such an 
alternative measure would impact burden?

[[Page 19568]]

     What data elements do stakeholders believe are of greatest 
clinical value or would be of most use to health care providers to 
share in a standardized electronic format if the complete record was 
not immediately available?
    In addition to the above questions, we have some general questions 
that are related to health IT activities, for which we are also seeking 
public comment:
     Do stakeholders believe that we should consider including 
a health IT activity that promotes engagement in the health information 
exchange across the care continuum that would encourage bi-directional 
exchange of health information with community partners, such as post-
acute care, long term care, behavioral health, and home and community 
based services to promote better care coordination for patients with 
chronic conditions and complex care needs? If so, what criteria should 
we consider when implementing a health information exchange across the 
care continuum health IT activity in the Promoting Interoperability 
Program?
     What criteria should we employ, such as specific goals or 
areas of focus, to identify high priority health IT activities for the 
future of the program?
     Are there additional health IT activities we should 
consider recognizing in lieu of reporting on existing measures and 
objectives that would most effectively advance priorities for 
nationwide interoperability and spur innovation?
(4) Patient Matching
    ONC has stated that patient matching is critically important to 
interoperability and the nation's health IT infrastructure as health 
care providers must be able to share patient health information and 
accurately match a patient to his or her data from a different health 
care provider in order for many anticipated interoperability benefits 
to be realized. We continue to support ONC's work promoting the 
development of patient matching initiatives. Per Congress `guidance, 
ONC is looking at innovative ways to provide technical assistance to 
private sector-led initiatives to further develop accurate patient 
matching solutions in order to promote interoperability without 
requiring a unique patient identifier (UPI). We understand the 
significant health information privacy and security concerns raised 
around the development of a UPI standard and the current prohibition 
against using HHS funds to adopt a UPI standard.
    Recognizing Congress' statement regarding patient matching and 
stakeholder comments stating that a patient matching solution would 
accomplish the goals of a UPI, we are seeking comment for future 
consideration on ways for ONC and CMS to continue to facilitate private 
sector efforts on a workable and scalable patient matching strategy so 
that the lack of a specific UPI does not impede the free flow of 
information. We are also seeking comment on how we may leverage our 
program authority to provide support to those working to improve 
patient matching. We note that we intend to use comments we receive for 
the development of policy and future rulemaking.
f. Request for Information (RFI) on Integration of Patient-Generated 
Health Data Into EHRs Using CEHRT
    The Medicare and Medicaid Promoting Interoperability Programs are 
continuously seeking ways to prioritize the advanced use of CEHRT 
functionalities, encourage movement away from paper-based processes 
that increase heath care provider burden, and empower individual 
beneficiaries to take a more impactful role in managing their health to 
achieve their goals. Increased availability of patient-generated health 
data (PGHD) \829\ offers health care providers an opportunity to 
monitor and track a patient's health-related data from information that 
is provided by the patient and not the provider. Increasingly 
affordable wearable devices, sensors, and other technologies capture 
PGHD, providing new ways to monitor and track a patient's healthcare 
experience. Capturing important health information through devices and 
other tools between medical visits could help improve care management 
and patient outcomes, potentially resulting in increased cost savings. 
Although many types of PGHD are being used in clinical settings today, 
the continuous collection and integration of patients' health-data into 
EHRs to inform clinical care has not been widely achieved across the 
health care system.
---------------------------------------------------------------------------

    \829\ For more information, we refer readers to: https://www.healthit.gov/topic/scientific-initiatives/patient-generated-health-data.
---------------------------------------------------------------------------

    In the 2015 Edition Health IT Certification Criteria final rule (80 
FR 62661; 45 CFR 170.315(e)(3), ONC finalized a criterion for patient 
health information capture functionality within certified health IT 
that allows a user to identify, record, and access information directly 
and electronically shared by a patient. We finalized a PGHD measure 
requiring health care providers to incorporate patient generated health 
data or data from a nonclinical setting into CEHRT (80 FR 62851). 
However, we removed this measure in the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41663 through 41664), due to concerns that the measure was 
not fully health IT-based and could include paper-based actions, an 
approach which did not align with program priorities to advance the use 
of CEHRT. Stakeholder comments regarding this measure also noted that 
manual processes to conduct actions associated with the measure could 
increase health care provider reporting burden and that there was 
confusion over which types of data would be applicable and the 
situations in which the patient data would apply (83 FR 41663 through 
41664). At the same time, there was ample support from the public for 
ONC and CMS to continue to advance certified health IT capabilities to 
capture PGHD.
    However, we continue to believe that it is important for the 
Promoting Interoperability Program to explore new ways to incentivize 
health care providers who take proactive steps to advance the emerging 
use of PGHD. As relevant technologies and standards continue to evolve, 
there may be new program approaches through which we can address 
challenges related to emerging standards for PGHD capture, appropriate 
clinical workflows for receiving and reviewing PGHD, and advance the 
technical architecture needed to support PGHD use.
    In 2018, ONC released the white paper ``Conceptualizing a Data 
Infrastructure for the Capture, Use, and Sharing of Patient-Generated 
Health Data in Care Delivery and Research through 2024,'' \830\ which 
describes key challenges, opportunities and enabling actions for 
different stakeholders, including clinicians, to advance the use of 
PGHD. For instance, the report identifies an enabling action around 
supporting ``clinicians to work within and across organizations to 
incorporate prioritized PGHD use cases into their workflows.'' This 
action urges clinicians and care teams to identify priority use cases 
and relevant PGHD types that would be valuable to improving care 
delivery for patient populations. It also highlights the importance of 
developing clinical workflows that avoid overwhelming the care team 
with extraneous data, by encouraging care teams to develop management 
strategies for shared responsibilities around collecting, verifying, 
and analyzing PGHD. A second enabling action the white paper identifies 
for clinicians is ``collaboration between clinicians and

[[Page 19569]]

developers to advance technologies supporting PGHD interpretation and 
use.'' This enabling action highlights feedback for developers about 
prioritized use cases and application features as critical to ensuring 
that the necessary refinements are made to technology solutions to 
effectively support the capture and use of PGHD. Finally, the report 
encourages ``clinicians in providing patient education to encourage 
PGHD capture and use in ways that maximize data quality,'' recognizing 
the important role that clinicians can play in helping patients 
understand how to share PGHD, the differences between solicited and 
unsolicited PGHD, and how PGHD are relevant for the patient's care.
---------------------------------------------------------------------------

    \830\ https://www.healthit.gov/sites/default/files/onc_pghd_final_white_paper.pdf.
---------------------------------------------------------------------------

    Considering the enabling actions for clinicians identified in the 
white paper, we are interested in ways that the Promoting 
Interoperability Program could adopt new elements related to PGHD that: 
(1) Represent clearly defined uses of health IT; (2) are linked to 
positive outcomes for patients; and (3) advance the capture, use, and 
sharing of PGHD. In considering how the Promoting Interoperability 
Program could continue to advance the use of PGHD, we also note that a 
future program element related to PGHD would not necessarily need to be 
implemented as a traditional measure requiring reporting of a numerator 
and denominator. For instance, in the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 20538), we requested comment on the concept of ``health 
IT'' or ``interoperability'' activities to which a health care provider 
could attest, potentially in lieu of reporting on measures associated 
with certain objectives. By addressing the use of PGHD through such a 
concept, rather than traditional measure reporting, we could 
potentially reduce the reporting burden associated with a new PGHD-
related program element.
    We are inviting stakeholder comment on these concepts, and the 
specific questions below:
     What specific use cases for capture of PGHD as part of 
treatment and care coordination across clinical conditions and care 
settings are most promising for improving patient outcomes? For 
instance, use of PGHD for capturing advanced directives and pre/post-
operation instructions in surgery units.
     Should the Promoting Interoperability Program explore ways 
to include bonus points for health care providers engaging in 
activities that pilot promising technical solutions or approaches for 
capturing PGHD and incorporating it into CEHRT using standards-based 
approaches?
     Should inpatient health care providers be expected to 
collect information from their patients outside of scheduled 
appointments or procedures? What are the benefits and concerns about 
doing so?
     Should the Promoting Interoperability Program explore ways 
to reward health care providers for implementing best practices 
associated with optimizing clinical workflows for obtaining, reviewing, 
and analyzing PGHD?
    We believe the bi-directional availability of data, meaning that 
both patients and their health care providers have real-time access to 
the patient's electronic health record, is critical. This includes 
patients being able to import their health data into their medical 
record and have it be available to health care providers. We welcome 
input on how we can encourage and enable health care providers to 
advance capture, exchange, and use of PGHD.
g. Request for Information (RFI) on Engaging in Activities That Promote 
the Safety of the EHR
    The widespread adoption of EHRs has transformed the way health care 
is delivered, offering improved availability of patient health 
information, supporting more informed clinical decision making, and 
reduce medical errors.\831\ However, many stakeholders have identified 
risks to patient safety as one of the unintended consequences that may 
result from implementation of EHRs. By disrupting established workflows 
and presenting clinicians with new challenges, EHR implementation may 
increase the incidence of certain errors, resulting in harm to 
patients.
---------------------------------------------------------------------------

    \831\ https://www.healthit.gov/topic/health-it-basics/improved-patient-care-using-ehrs.
---------------------------------------------------------------------------

    As we continue to advance the use of CEHRT in health care, we are 
seeking comment on how to further mitigate the specific safety risks 
that may arise from technology implementation. Specifically, we are 
seeking comment on ways that the Promoting Interoperability Program may 
reward hospitals for engaging in activities that can help to reduce 
errors associated with EHR implementation.
    For instance, we are requesting comment on a potential future 
change to the program under which hospitals would receive points 
towards their Promoting Interoperability Program score for attesting to 
performance of an assessment based on one of the ONC SAFER Guides. The 
SAFER Guides (available at: https://www.healthit.gov/topic/safety/safer-guides) are designed to help healthcare organizations conduct 
self-assessments to optimize the safety and safe use of EHRs in nine 
different areas: High Priority Practices, Organizational 
Responsibilities, Contingency Planning, System Configuration, System 
Interfaces, Patient Identification, Computerized Provider Order Entry, 
Test Results Reporting and Follow-Up, and Clinician Communication.
    Each of the SAFER Guides is based on the best evidence available, 
including a literature review, expert opinion, and field testing at a 
wide range of healthcare organizations, from small ambulatory practices 
to large health systems. A number of EHR developers currently utilize 
the SAFER Guides as part of their health care provider training 
modules.
    Specifically, we might consider offering points towards the 
Promoting Interoperability Program score to hospitals that attest to 
conducting an assessment based on the High Priority Practices \832\ 
and/or the Organizational Responsibilities \833\ SAFER Guides which 
cover many foundational concepts from across the guides. Alternatively 
we might consider awarding points for review of all nine of the SAFER 
Guides. We are also inviting comments on alternatives to the SAFER 
Guides, including appropriate assessments related to patient safety, 
which should also be considered as part of any future bonus option.
---------------------------------------------------------------------------

    \832\ https://www.healthit.gov/sites/default/files/safer/guides/safer_high_priority_practices.pdf.
    \833\ https://www.healthit.gov/sites/default/files/safer/guides/safer_organizational_responsibilities.pdf.
---------------------------------------------------------------------------

    We are requesting comment on the ideas above, as well as inviting 
stakeholders to suggest other approaches we might take to rewarding 
activities that promote reduction of safety risks associated with EHR 
implementation as part of the Promoting Interoperability Program.

IX. MedPAC Recommendations

    Under section 1886(e)(4)(B) of the Act, the Secretary must consider 
MedPAC's recommendations regarding hospital inpatient payments. Under 
section 1886(e)(5) of the Act, the Secretary must publish in the annual 
proposed and final IPPS rules the Secretary's recommendations regarding 
MedPAC's recommendations. We have reviewed MedPAC's March 2019 ``Report 
to the Congress: Medicare Payment Policy'' and have given the 
recommendations in the report consideration in conjunction with the 
proposed policies set forth in this proposed rule. MedPAC

[[Page 19570]]

recommendations for the IPPS for FY 2020 are addressed in Appendix B to 
this proposed rule.
    For further information relating specifically to the MedPAC reports 
or to obtain a copy of the reports, contact MedPAC at (202) 653-7226, 
or visit MedPAC's website at: http://www.medpac.gov.

X. Other Required Information

A. Publicly Available Files

    IPPS-related data are available on the internet for public use. The 
data can be found on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. 
Following is a listing of the IPPS-related data files that are 
available.
    Commenters interested in discussing any data files used in 
construction of this proposed rule should contact Michael Treitel at 
(410) 786-4552.
1. CMS Wage Data Public Use File
    This file contains the hospital hours and salaries from Worksheet 
S-3, Parts II and III from FY 2016 Medicare cost reports used to create 
the proposed FY 2020 IPPS wage index. Multiple versions of this file 
are created each year. For a discussion of the release of different 
versions of this file, we refer readers to section III.L. of the 
preamble of this proposed rule.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.html.
    Periods Available: FY 2007 through FY 2020 IPPS Update.
2. CMS Occupational Mix Data Public Use File
    This file contains the CY 2016 occupational mix survey data to be 
used to compute the occupational mix adjusted wage indexes. Multiple 
versions of this file are created each year. For a discussion of the 
release of different versions of this file, we refer readers to section 
III.L. of the preamble of this proposed rule.
    Media: Internet at: https://www.cms.gov/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.html.
    Period Available: FY 2020 IPPS Update.
3. Provider Occupational Mix Adjustment Factors for Each Occupational 
Category Public Use File
    This file contains each hospital's occupational mix adjustment 
factors by occupational category. Two versions of these files are 
created each year to support the rulemaking.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-AService-Payment/AcuteInpatientPPS/Wage-Index-Files.html.
    Period Available: FY 2020 IPPS Update.
4. Other Wage Index Files
    CMS releases other wage index analysis files after each proposed 
and final rule.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.html.
    Periods Available: FY 2005 through FY 2020 IPPS Update.
5. FY 2020 IPPS SSA/FIPS CBSA State and County Crosswalk
    This file contains a crosswalk of State and county codes used by 
the Federal Information Processing Standards (FIPS), county name, and a 
list of Core-Based Statistical Areas (CBSAs).
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html (on the navigation panel 
on the left side of the page, click on the FY 2020 proposed rule home 
page or the FY 2020 final rule home page) or https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
    Period Available: FY 2020 IPPS Update.
6. HCRIS Cost Report Data
    The data included in this file contain cost reports with fiscal 
years ending on or after September 30, 1996. These data files contain 
the highest level of cost report status.
    Media: Internet at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Downloadable-Public-Use-Files/Cost-Reports/Cost-Reports-by-Fiscal-Year.html.
    (We note that data are no longer offered on a CD. All of the data 
collected are now available free for download from the cited website.)
7. Provider-Specific File
    This file is a component of the PRICER program used in the MAC's 
system to compute DRG/MS-DRG payments for individual bills. The file 
contains records for all prospective payment system eligible hospitals, 
including hospitals in waiver States, and data elements used in the 
prospective payment system recalibration processes and related 
activities. Beginning with December 1988, the individual records were 
enlarged to include pass-through per diems and other elements.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ProspMedicareFeeSvcPmtGen/psf_text.html.
    Period Available: Quarterly Update.
8. CMS Medicare Case-Mix Index File
    This file contains the Medicare case-mix index by provider number 
based on the MS-DRGs assigned to the hospital's discharges using the 
GROUPER version in effect on the date of the discharge. The case-mix 
index is a measure of the costliness of cases treated by a hospital 
relative to the cost of the national average of all Medicare hospital 
cases, using DRG/MS-DRG weights as a measure of relative costliness of 
cases. Two versions of this file are created each year to support the 
rulemaking.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html, or for the more recent data files, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html 
(on the navigation panel on the left side of page, click on the 
specific fiscal year proposed rule home page or fiscal year final rule 
home page desired).
    Periods Available: FY 1985 through FY 2020.
9. MS-DRG Relative Weights (Also Table 5--MS-DRGs)
    This file contains a listing of MS-DRGs, MS-DRG narrative 
descriptions, relative weights, and geometric and arithmetic mean 
lengths of stay for each fiscal year. Two versions of this file are 
created each year to support the rulemaking.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html, or for the more recent data files, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html 
(on the navigation panel on the left side of page, click on the 
specific fiscal year proposed rule home page or the fiscal year final 
rule home page desired).
    Periods Available: FY 2005 through FY 2020 IPPS Update.
10. IPPS Payment Impact File
    This file contains data used to estimate payments under Medicare's 
hospital inpatient prospective payment systems for operating and 
capital-related

[[Page 19571]]

costs. The data are taken from various sources, including the Provider-
Specific File, HCRIS Cost Report Data, MedPAR Limited Data Sets, and 
prior impact files. The data set is abstracted from an internal file 
used for the impact analysis of the changes to the prospective payment 
systems published in the Federal Register. Two versions of this file 
are created each year to support the rulemaking.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Historical-Impact-Files-for-FY-1994-through-Present.html.
    Periods Available: FY 1994 through FY 2020 IPPS Update.
11. AOR/BOR Tables
    This file contains data used to develop the MS-DRG relative 
weights. It contains mean, maximum, minimum, standard deviation, and 
coefficient of variation statistics by MS-DRG for length of stay and 
standardized charges. The BOR tables are ``Before Outliers Removed'' 
and the AOR is ``After Outliers Removed.'' (Outliers refer to 
statistical outliers, not payment outliers.)
    Two versions of this file are created each year to support the 
rulemaking.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html, or for the more recent data files, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html 
(on the navigation panel on the left side of page, click on the 
specific fiscal year proposed rule home page or fiscal year final rule 
home page desired).
    Periods Available: FY 2005 through FY 2020 IPPS Update.
12. Prospective Payment System (PPS) Standardizing File
    This file contains information that standardizes the charges used 
to calculate relative weights to determine payments under the hospital 
inpatient operating and capital prospective payment systems. Variables 
include wage index, cost-of-living adjustment (COLA), case-mix index, 
indirect medical education (IME) adjustment, disproportionate share, 
and the Core-Based Statistical Area (CBSA). The file supports the 
rulemaking.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html (on the navigation panel 
on the left side of the page, click on the FY 2020 proposed rule home 
page or the FY 2020 final rule home page) or https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
    Period Available: FY 2020 IPPS Update.
13. Hospital Readmissions Reduction Program Supplemental File
    This file contains information on the calculation of the Hospital 
Readmissions Reduction Program (HRRP) payment adjustment. Variables 
include the proxy excess readmission ratios for acute myocardial 
infarction (AMI), pneumonia (PN) and heart failure (HF), coronary 
obstruction pulmonary disease (COPD), total hip arthroplasty (THA)/
total knee arthroplasty (TKA), and coronary artery bypass grafting 
(CABG) and the proxy readmissions payment adjustment for each provider 
included in the program. In addition, the file contains information on 
the number of cases for each of the applicable conditions excluded in 
the calculation of the readmission payment adjustment factors as well 
as other information used in the calculation of the annual payment 
adjustment factors. The file supports the rulemaking.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html (on the navigation panel 
on the left side of the page, click on the FY 2020 proposed rule home 
page or the FY 2020 final rule home page) or https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
    Period Available: FY 2020 IPPS Update.
14. Medicare Disproportionate Share Hospital (DSH) Supplemental File
    This file contains information on the calculation of the 
uncompensated care payments for FY 2020. Variables include the data 
used to determine a hospital's share of uncompensated care payments, 
total uncompensated care payments and estimated per claim uncompensated 
care payment amounts. The file supports the rulemaking.
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html (on the navigation panel 
on the left side of the page, click on the FY 2020 proposed rule home 
page or the FY 2020 final rule home page) or https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
    Period Available: FY 2020 IPPS Update.
15. New Technology Thresholds File
    This file contains the cost thresholds by MS-DRG used to evaluate 
applications for new technology add-on payments for the fiscal year 
that follows the fiscal year that is otherwise the subject of the 
rulemaking. Two versions of this file are created each year to support 
rulemaking. (We note that the information in this file was previously 
provided in Table 10 of the annual IPPS proposed and final rules (83 FR 
41739).)
    Media: Internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html (on the navigation panel 
on the left side of the page, click on the FY 2019 final rule home page 
for the FY 2020 application thresholds, or click on the FY 2020 
proposed rule home page for the proposed FY 2021 application thresholds 
or on the FY 2020 final rule home page for the final FY 2021 
application thresholds) or https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download.html.
    Periods Available: For FY 2020 and FY 2021 applications.

B. Collection of Information Requirements

1. Statutory Requirement for Solicitation of Comments
    Under the Paperwork Reduction Act (PRA) of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the PRA of 1995 requires that 
we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    In this proposed rule, we are soliciting public comment on each of 
these issues for the following sections of this document that contain 
information collection requirements (ICRs).

[[Page 19572]]

2. ICRs for Application for GME Resident Slots
    The information collection requirements associated with the 
preservation of resident cap positions from closed hospitals, addressed 
in section IV.J.3. of the preamble of this proposed rule are not 
subject to the Paperwork Reduction Act, as stated in section 5506 of 
the Affordable Care Act.
3. ICRs for the Hospital Inpatient Quality Reporting (IQR) Program
a. Background
    The Hospital IQR Program (formerly referred to as the Reporting 
Hospital Quality Data for Annual Payment Update (RHQDAPU) Program) was 
originally established to implement section 501(b) of the MMA, Public 
Law 108-173. OMB has currently approved 2,520,100 hours of burden and 
approximately $92.2 million under OMB Control Number 0938-1022, 
accounting for information collection burden experienced by 3,300 IPPS 
hospitals and 1,100 non-IPPS hospitals for the FY 2021 payment 
determination. Below we describe the burden changes with regards to 
collection of information under OMB Control Number 0938-1022 for IPPS 
hospitals due to the proposed policies in this proposed rule.
    In section VIII.A.5.b. of the preamble of this proposed rule, we 
are proposing to adopt the Hybrid Hospital-Wide Readmission Measure 
with Claims and Electronic Health Record Data (Hybrid HWR measure) (NQF 
#2879) in a stepwise approach, beginning with two years of voluntary 
reporting which would run from July 1, 2021 through June 30, 2022, and 
from July 1, 2022 through June 30, 2023, before requiring reporting of 
the measure for the reporting period that would run from July 1, 2023 
through June 30, 2024, impacting the FY 2026 payment determination and 
subsequent years. We are also proposing reporting and submission 
requirements for the Hybrid HWR measure. We expect these proposals will 
affect our collection of information burden estimates. Details on these 
proposals, as well as the expected burden changes, are discussed 
further below.
    In section VIII.A. of the preamble of this proposed rule, we also 
are proposing to: (1) Adopt two opioid-related eCQMs beginning with the 
CY 2021 reporting period/FY 2023 payment determination: (a) Safe Use of 
Opioids--Concurrent Prescribing eCQM (NQF #3316e), and (b) Hospital 
Harm--Opioid-Related Adverse Events eCQM; (2) remove the claims-only 
version of the Hospital-Wide All-Cause Readmission measure beginning 
with the FY 2026 payment determination; (3) extend the current eCQM 
reporting and submission requirements for the CY 2020 reporting period/
FY 2022 payment determination and CY 2021 reporting period/FY 2023 
payment determination; (4) change the eCQM reporting and submission 
requirements for the CY 2022 reporting period/FY 2024 payment 
determination, such that hospitals would be required to report one, 
self-selected calendar quarter of data for: (a) Three self-selected 
eCQMs, and (b) the proposed Safe Use of Opioids--Concurrent Prescribing 
eCQM (NQF #3316e), for a total of four eCQMs; and (5) continue the 
requirement that EHRs be certified to all available eCQMs used in the 
Hospital IQR Program for the CY 2020 reporting period/FY 2022 payment 
determination and subsequent years. As discussed further below, we do 
not expect these policies to affect our information collection burden 
estimates.
    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38501 through 38504) 
and FY 2019 IPPS/LTCH PPS final rule (83 FR 41689 through 41694), we 
estimated that reporting measures for the Hospital IQR Program could be 
accomplished by staff with a median hourly wage of $18.29 per hour. We 
note that since then, more recent wage data have become available, and 
we are updating the wage rate used in these calculations in this 
proposed rule. The most recent data from the Bureau of Labor Statistics 
reflects a median hourly wage of $18.83 per hour for a Medical Records 
and Health Information Technician professional.\834\ We calculated the 
cost of overhead, including fringe benefits, at 100 percent of the 
median hourly wage, consistent with previous years. This is necessarily 
a rough adjustment, both because fringe benefits and overhead costs 
vary significantly by employer and methods of estimating these costs 
vary widely in the literature. Nonetheless, we believe that doubling 
the hourly wage rate ($18.83 x 2 = $37.66) to estimate total cost is a 
reasonably accurate estimation method. Accordingly, we will calculate 
cost burden to hospitals using a wage plus benefits estimate of $37.66 
per hour throughout the discussion below for the Hospital IQR Program.
---------------------------------------------------------------------------

    \834\ U.S. Bureau of Labor Statistics. Occupational Outlook 
Handbook, Medical Records and Health Information Technicians. 
Available at: https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
---------------------------------------------------------------------------

b. Information Collection Burden Estimate for the Proposed Adoption of 
Two eCQMs Beginning With the CY 2021 Reporting Period/FY 2023 Payment 
Determination
    In section VIII.A.5.a. of the preamble of this proposed rule, we 
are proposing to adopt two opioid-related eCQMs beginning with the CY 
2021 reporting period/FY 2023 payment determination:
     Safe Use of Opioids--Concurrent Prescribing eCQM (NQF 
#3316e); and
     Hospital Harm--Opioid-Related Adverse Events eCQM.
    We do not believe that adding two new eCQMs to the measure set will 
affect the information collection burden of submitting information to 
CMS under the Hospital IQR Program. As discussed in section 
VIII.A.10.d.(2) and (3) of the preamble of this proposed rule, we are 
proposing to extend, for the CYs 2020 and 2021 reporting periods/FYs 
2022 and 2023 payment determinations, our current eCQM reporting 
requirements, which require hospitals to submit one self-selected 
calendar quarter of data for four self-selected eCQMs each year. These 
new proposed measures would be added to the eight available eCQMs in 
the eCQM measure set from which hospitals may choose to report in order 
to satisfy these requirements.\835\ In other words, while these two new 
proposed measures would be added to the eCQM measure set, hospitals 
would not be required to report more than a total of four eCQMs as 
currently required. Therefore, we do not expect adopting these measures 
will impact our burden estimates. However, we refer readers to section 
I.K. of Appendix A of this proposed rule for a discussion of the 
potential costs associated with the implementation of new eCQMs that 
are not strictly related to information collection burden.
---------------------------------------------------------------------------

    \835\ We note that in section VIII.A.9.d.(4) of the preamble of 
this proposed rule we are proposing that, beginning with the CY 2022 
reporting period, hospitals must report data on the Safe Use of 
Opioids--Concurrent Prescribing eCQM (NQF #3316e) as one of the four 
required eCQMs.
---------------------------------------------------------------------------

c. Information Collection Burden Estimate for the Proposed Voluntary 
Reporting Periods and Subsequent Adoption of the Hybrid Hospital-Wide 
Readmission Measure With Claims and Electronic Health Record Data 
(Hybrid HWR Measure)
    In section VIII.A.5.b. of the preamble of this proposed rule, we 
are proposing to establish two additional voluntary reporting periods 
for the Hybrid Hospital-Wide Readmission Measure with Claims and 
Electronic Health Record Data (NQF #2879) (Hybrid HWR

[[Page 19573]]

measure). The first voluntary reporting period would run from July 1, 
2021 through June 30, 2022, and the second would run from July 1, 2022 
through June 30, 2023. We also are proposing to require reporting of 
the Hybrid HWR measure immediately thereafter and for subsequent years, 
beginning with the reporting period which runs from July 1, 2023 
through June 30, 2024 and which would affect the FY 2026 payment 
determination.
    As a hybrid measure, this measure uses both claims-based data and 
EHR data, specifically, a set of core clinical data elements consisting 
of vital signs and laboratory test information and patient linking 
variables collected from hospitals' EHR systems. We do not expect any 
additional burden to hospitals to report the claims-based portion of 
this measure, because these data are already reported to the Medicare 
program for payment purposes.
    However, we do expect that hospitals will experience burden in 
reporting the EHR data. To report the EHR data, as discussed earlier in 
this proposed rule, we are proposing that hospitals would use the same 
submission process required for eCQM reporting; specifically, these 
data would be required to be reported using QRDA I files submitted to 
the CMS data receiving system, and using EHR technology certified to 
the 2015 Edition of CEHRT. Accordingly, we expect the burden associated 
with reporting of this measure to be similar to our estimates for eCQM 
reporting; that is, 10 minutes per measure, per quarter. Therefore, 
using the estimate of 10 minutes per measure per quarter (10 minutes x 
1 measure x 4 quarters = 40 minutes), we estimate that our proposal 
will result in a burden increase of 0.67 hours (40 minutes) per 
hospital per year. Beginning with the first voluntary reporting period, 
which runs from July 1, 2021 through June 30, 2022, we estimate an 
annual burden increase of 2,211 hours across participating hospitals 
(0.67 hours x 3,300 IPPS hospitals). Using the updated wage estimate 
described above, we estimate this to represent a cost increase of 
$83,266 ($37.66 hourly wage x 2,211 annual hours) across hospitals. We 
acknowledge that reporting during the first two years of this proposal 
is voluntary, but if our proposal to adopt the Hybrid HWR measure is 
finalized, we will encourage all hospitals to submit data for the 
Hybrid HWR measure during these voluntary reporting periods. For that 
reason, our burden estimates are based on the assumption that all 
hospitals will participate across the two voluntary reporting periods 
(July 1, 2021 through June 30, 2022, and July 1, 2022 through June 30, 
2023), the reporting period in which public reporting begins (July 1, 
2023 through June 30, 2024), and subsequent reporting periods.
d. Information Collection Burden Estimate for Proposed Removal of 
Claims-Only Hospital-Wide All-Cause Readmission Measure (HWR Claims-
Only Measure) Beginning With the FY 2026 Payment Determination
    In section VIII.A.6. of the preamble of this proposed rule, we are 
proposing to remove the HWR claims-only measure, beginning with the FY 
2026 payment determination when the Hybrid HWR measure begins to be 
publicly reported. Because the HWR claims-only measure is calculated 
using data that are already reported to the Medicare program for 
payment purposes, we do not anticipate that removing this measure would 
decrease our previously finalized burden estimates.
e. Information Collection Burden Estimates for Proposals Related to 
eCQM Reporting and Submission Requirements
(1) Information Collection Burden Estimates for Proposed eCQM Reporting 
and Submission Requirements for the CYs 2020 and 2021 Reporting 
Periods/FYs 2022 and 2023 Payment Determinations
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41602 through 
41607), we finalized eCQM reporting and submission requirements such 
that hospitals submit one, self-selected calendar quarter of data for 
four eCQMs in the Hospital IQR Program measure set for the CY 2019 
reporting period/FY 2021 payment determination. Our related information 
collection estimates were discussed at 83 FR 41689 through 41694. In 
sections VIII.A.10.(d)(2) and (3) of the preamble of this proposed 
rule, we are proposing to extend the current requirements for two 
additional years, the CY 2020 reporting period/FY 2022 payment 
determination and the CY 2021 reporting period/FY 2023 payment 
determination. We believe there will be no change to the burden 
estimate due to these proposals because the previous burden estimate of 
40 minutes per hospital per year (10 minutes per record x 4 eCQMs x 1 
quarter) associated with the eCQM reporting and submission requirements 
finalized for the CY 2019 reporting period/FY 2021 payment 
determination would also apply to the CY 2020 reporting period/FY 2022 
payment determination and the CY 2021 reporting period/FY 2023 payment 
determination.
(2) Information Collection Burden Estimate for Proposed eCQM Reporting 
and Submission Requirements for the CY 2022 Reporting Period/FY 2024 
Payment Determination
    In section VIII.A.10.d.(4) of the preamble of this proposed rule, 
for the CY 2022 reporting period/FY 2024 payment determination, we are 
proposing to change the eCQM reporting and submission requirements, 
such that hospitals would be required to report one, self-selected 
calendar quarter of data for: (1) Three self-selected eCQMs, and (2) 
the proposed Safe Use of Opioids--Concurrent Prescribing eCQM (NQF 
#3316e), for a total of four eCQMs. We note that the number of calendar 
quarters of data and total number of eCQMs required would remain the 
same. We believe there will be no change to the burden estimate because 
hospitals would still be required to submit one, self-selected calendar 
quarter of data for a total of four eCQMs in the Hospital IQR Program 
measure set.
(3) Information Collection Burden Estimate for Proposal To Require That 
EHRs Be Certified to All Available eCQMs
    In section VIII.A.10.d.(5)(B) of the preamble of this proposed 
rule, we are proposing to continue requiring that EHRs be certified to 
all available eCQMs in the Hospital IQR Program measure set for the CY 
2020 reporting period/FY 2022 payment determination and subsequent 
years. We do not believe that hospitals will experience an increase in 
burden associated with this proposal because the use of EHR technology 
that is certified to all available eCQMs has been required for the 
Promoting Interoperability Program (83 FR 41672). However, we refer 
readers to section I.K. of Appendix A of this proposed rule for a 
discussion of the potential costs associated with this proposal that 
are not strictly related to information collection burden.
f. Summary of Information Collection Burden Estimates for the Hospital 
IQR Program
    In summary, under OMB Control Number 0938-1022, we estimate a total 
information collection burden increase of 2,211 hours associated with 
our proposal to adopt the Hybrid Hospital-Wide All-Cause Readmission 
(Hybrid HWR) measure and a total cost increase related to this 
information collection of approximately $83,266 (which also reflects 
use of an updated hourly wage

[[Page 19574]]

rate as discussed above), beginning with the first voluntary reporting 
period which runs July 1, 2021 through June 30, 2022. These are the 
total changes to the information collection burden estimates. We will 
submit the revised information collection estimates to OMB for approval 
under OMB Control Number 0938-1022.

                               Hospital IQR Program FY 2024 Payment Determination Information Collection Burden Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Annual recordkeeping and reporting requirements under OMB control No. 0938-1022  for the FY 2024
                                                                                           payment determination
                                                 -------------------------------------------------------------------------------------------------------
                                                                                           Average                   Proposed    Previously
                                                                                            number       Annual       annual     finalized       Net
                    Activity                       Estimated      Number     Number of     records       burden       burden       annual     difference
                                                    time per    reporting       IPPS         per        (hours)      (hours)       burden     in annual
                                                     record      quarters    hospitals     hospital       per         across      (hours)       burden
                                                   (minutes)     per year    reporting       per        hospital       IPPS     across IPPS     hours
                                                                                           quarter                  hospitals    hospitals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hybrid HWR Measure Reporting....................          10            4        3,300            1         0.67        2,211          N/A        2,211
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Change in Information Collection Burden Hours: 2,211.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Cost Estimate: Updated Hourly Wage ($37.66) x Change in Burden Hours (2,211) = $83,266.
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) 
Program
a. Background
    As discussed in sections VIII.B. of the preamble of this proposed 
rule, section 1866(k)(1) of the Act requires, for purposes of FY 2014 
and each subsequent fiscal year, that a hospital described in section 
1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH) 
submit data in accordance with section 1866(k)(2) of the Act with 
respect to such fiscal year. There is no financial impact to PCH 
Medicare payment if a PCH does not participate.
    We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41694 through 41696), the CY 2019 OPPS/ASC final rule with comment 
period ((83 FR 59149 through 59153), and OMB Control Number 0938-1175 
for a detailed discussion of the most recently finalized burden 
estimates for the program requirements that we have previously adopted. 
Below we discuss only changes in burden that would result from the 
proposals in this proposed rule.
    In the FY 2018 IPPS/LTCH PPS final rule, we finalized a proposal to 
utilize the median hourly wage rate, in accordance with the Bureau of 
Labor Statistics (BLS), to calculate our burden estimates going forward 
(82 FR 38505). The BLS describes Medical Records and Health Information 
Technicians as those responsible for organizing and managing health 
information data; therefore, we believe it is reasonable to assume that 
these individuals will be tasked with abstracting clinical data for 
submission for the PCHQR Program. In the FY 2019 IPPS/LTCH PPS final 
rule (83 FR 41695), we utilized a median hourly wage of $18.29 per 
hour.\836\
---------------------------------------------------------------------------

    \836\ In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38505), we 
finalized an hourly wage estimate of $18.29 per hour, plus 100 
percent overhead and fringe benefits, for the PCHQR Program using 
Bureau of Labor Statistics information.
---------------------------------------------------------------------------

    We note that since then, more recent wage data have become 
available, and we are updating the wage rate used in these 
calculations. The most recent data from the Bureau of Labor Statistics 
reflects a median hourly wage of $18.83 \837\ per hour for a Medical 
Records and Health Information Technician professional. We have 
finalized a policy to calculate the cost of overhead, including fringe 
benefits, at 100 percent of the mean hourly wage (82 FR 38505). This is 
necessarily a rough adjustment, both because fringe benefits and 
overhead costs vary significantly from employer-to-employer and because 
methods of estimating these costs vary widely from study-to-study. 
Nonetheless, we believe that doubling the hourly wage rate ($18.83 x 2 
= $37.66) to estimate total cost is a reasonably accurate estimation 
method and allows for a conservative estimate of hourly costs. This 
approach is consistent with our previously finalized burden calculation 
methodology (82 FR 38505). Accordingly, we calculate cost burden to 
PCHs using a wage plus benefits estimate of $37.66 per hour throughout 
the discussion below.
---------------------------------------------------------------------------

    \837\ Occupational Employment and Wages. Available at: https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
---------------------------------------------------------------------------

b. Estimated Burden of PCHQR Program Proposals for the FY 2022 Program 
Year
(1) Proposed Removal of One Web-Based Structural Measure
    As discussed in section VIII.B.4. of the preamble of this proposed 
rule, we are proposing to remove one web-based, structural measure 
beginning with the FY 2022 program year: External Beam Radiotherapy 
(EBRT) for Bone Metastases (formerly NQF #1822). As finalized in the FY 
2019 IPPS/LTCH PPS final rule, we utilize a time estimate of 15-minutes 
per measure when assessing web-based and/or structural measures (83 FR 
41694). As such, we estimate a reduction of 15 minutes per PCH, and a 
total annual reduction of approximately 3 hours for all 11 PCHs (.25 
hour x 11 PCHs), due to the proposed removal of this measure.
(2) Proposed New Quality Measure Beginning With the FY 2022 Program 
Year
    In section VIII.B.5. of the preamble of this proposed rule, we are 
proposing to adopt the Surgical Treatment Complications for Localized 
Prostate Cancer claims-based measure beginning with the FY 2022 program 
year. Because this measure is claims-based, we do not anticipate any 
increase in burden on PCHs related to our proposal to adopt this 
measure, as it does not require facilities to submit any additional 
data.
c. Summary of Burden Estimates Related to the PCHQR Program Proposals 
for the FY 2022 Program Year
    In summary, if our proposals to remove the External Beam 
Radiotherapy (EBRT) for Bone Metastases (formerly NQF #1822) measure 
and to adopt the Surgical Treatment Complications for Localized 
Prostate Cancer claims-based

[[Page 19575]]

measure are finalized as proposed, we estimate an overall burden 
decrease of approximately 3 hours across all 11 PCHs. Coupled with our 
estimated salary costs, we estimate that these proposed changes would 
result in a reduction in annual labor costs of approximately $113 (3 
hours x $37.66 hourly labor cost) across the 11 PCHs beginning with the 
FY 2022 PCHQR Program. Further, the PCHQR Program measure set would 
consist of 15 measures for the FY 2022 program year. The burden 
associated with these reporting requirements is currently approved 
under OMB control number 0938-1175. The information collection will be 
revised and submitted to OMB.
5. ICRs for the Hospital Value-Based Purchasing (VBP) Program
    In section IV.H. of the preamble of this proposed rule, we discuss 
proposed requirements for the Hospital VBP Program. Specifically, in 
this proposed rule, with respect to quality measures, we are proposing 
to calculate scores for the five NHSN HAI measures used in the Hospital 
VBP Program using the same data that the HAC Reduction Program uses for 
purposes of calculating NHSN HAI measure scores under that program, 
beginning on January 1, 2020 for CY 2020 measure data, which would 
apply to the Hospital VBP Program starting with data for the FY 2022 
program year performance period. Because scores for these measures will 
be calculated using the same data that we use to calculate scores for 
the same measures in the HAC Reduction Program, there will be no new 
data collection burden associated with these measures under the 
Hospital VBP Program.
6. ICRs for the Long-Term Care Hospital Quality Reporting Program (LTCH 
QRP)
    In section VIII.C. of the preamble of this proposed rule, we are 
proposing to adopt two Transfer of Health Information quality measures 
as well as standardized patient assessment data elements (SPADEs) 
beginning with the FY 2022 LTCH QRP.
    We estimate the data elements for the two proposed Transfer of 
Health Information quality measures will take 1.2 minutes of clinical 
staff time to report data on discharge. We believe that the additional 
LTCH CARE Data Set data elements will be completed by registered nurses 
and licensed vocational nurses. Individual LTCHs determine the staffing 
resources necessary. We estimate 102,468 discharges from 415 LTCHs 
annually. This equates to an increase of 2,049 hours in burden for all 
LTCHs (0.02 hours x 102,468 discharges). Given 0.7 minutes of 
registered nurse time at $70.72 per hour and 0.5 minutes of licensed 
vocational nurse time at $43.96 per hour to complete an average of 247 
sets of LTCH CARE Data Set assessments per provider per year, we 
estimated the total cost will be increased by $289.76 per LTCH 
annually, or $120,252 for all LTCHs annually. This increase in burden 
will be accounted for in the information collection under OMB control 
number 0938-1163.
    We estimate the proposed SPADEs will take 11.3 minutes of clinical 
staff time to report data on admission and 10.5 minutes of clinical 
staff time to report data on discharge, for a total of 21.8 minutes. We 
believe that the additional LTCH CARE Data Set data elements will be 
completed by registered nurses and licensed vocational nurses. 
Individual LTCHs determine the staffing resources necessary. We 
estimate 102,468 discharges from 415 LTCHs annually. This equates to an 
increase of 37,195 hours in burden for all LTCHs (0.363 hours x 102,468 
discharges). Given 11.6 minutes of registered nurse time at $70.72 per 
hour and 10.2 minutes of licensed vocational nurse time at $43.96 per 
hour to complete an average of 247 sets of LTCH CARE Data Set 
assessments per provider per year, we estimated the total cost will be 
increased by $5,209.86 per LTCH annually, or $2,162,093 for all LTCHs 
annually. This increase in burden will be accounted for in the 
information collection under OMB control number 0938-1163.
    Overall, the proposed changes added 11.3 minutes of clinical staff 
time to report data on admission and 11.7 minutes of clinical staff 
time to report data on discharge, for a total of 23.0 minutes. As a 
result, the cost associated with the proposed changes to the LTCH QRP 
is estimated at $5,499.63 per LTCH annually or $2,282,346 for all LTCHs 
annually.
7. ICRs Relating to the Hospital-Acquired Condition (HAC) Reduction 
Program
    In section IV.I. of the preamble of this proposed rule, we discuss 
proposed requirements for the HAC Reduction Program. In this proposed 
rule, we are not proposing to remove any measures or adopt any new 
measures into the HAC Reduction Program. The HAC Reduction Program has 
adopted six measures. We do not believe that the claims-based CMS PSI 
90 measure in the HAC Reduction Program creates or reduces any burden 
for hospitals because it is collected using Medicare FFS claims 
hospitals are already submitting to the Medicare program for payment 
purposes. We note the burden associated with collecting and submitting 
data for the HAI measures (CDI, CAUTI, CLABSI, MRSA, and Colon and 
Abdominal Hysterectomy SSI) via the NHSN system is captured under a 
separate OMB control number, 0920-0666, and therefore will not impact 
our burden estimates.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41478 through 
41484), we finalized our policy to validate NHSN HAI measures under the 
HAC Reduction Program, which will require hospitals to submit 
validation templates for the NHSN HAI measures beginning with Q3 CY 
2020 discharges. We previously estimated that this policy will result 
in a net neutral shift of 43,200 hours and approximately $1,580,256.00 
with no overall net increase in burden to the HAC Reduction Program (83 
FR 41151). OMB has currently approved these 43,200 hours of burden and 
approximately $1.6 million under OMB control number 0938-1352, 
accounting for information collection requirements experienced by 3,300 
IPPS hospitals for FY 2021 program year.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41697), we used an 
hourly wage estimate of $18.29 per hour to estimate information 
collection costs.\838\ We note that, since then, more recent wage data 
have become available, and we are updating the wage rate used in these 
calculations in this proposed rule. The most recent data from the 
Bureau of Labor Statistics reflects a median hourly wage of $18.83 
\839\ per hour for a Medical Records and Health Information Technician 
professional. We calculate the cost of overhead, including fringe 
benefits, at 100 percent of the hourly wage estimate, as has been done 
under the Hospital IQR Program in the previous years (82 FR 38504 
through 38505; 83 FR 41689 through 41690). This is necessarily a rough 
adjustment, both because fringe benefits and overhead costs vary 
significantly from employer-to-employer and because methods of 
estimating these costs vary widely from study-to-study. Nonetheless, we 
believe that doubling the hourly wage rate ($18.83 x 2 = $37.66) to 
estimate total cost is a

[[Page 19576]]

reasonably accurate estimation method. Accordingly, we calculate cost 
burden to hospitals using a wage plus benefits estimate of $37.66 per 
hour.
---------------------------------------------------------------------------

    \838\ In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41697), we 
finalized an hourly wage estimate of $18.29 per hour, plus 100 
percent overhead and fringe benefits, for the HAC Reduction Program 
using Bureau of Labor Statistics information.
    \839\ Occupational Employment and Wages. Available at: https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
---------------------------------------------------------------------------

    We estimate a reporting burden of 80 hours (20 hours per record x 1 
record per hospital per quarter x 4 quarters) per hospital selected for 
validation per year to submit the CLABSI and CAUTI templates, and 64 
hours (16 hours per record x 1 record per hospital per quarter x 4 
quarters) per hospital selected for validation per year to submit the 
MRSA and CDI templates. We estimate a total burden shift of 43,200 
hours ([80 hours per hospital to submit CLABSI and CAUTI templates + 64 
hours per hospital to submit MRSA and CDI templates] x 300 hospitals 
selected for validation) and approximately $1,626,912.00 (43,200 hours 
x $37.66 per hour \840\) as a result of our policy to validate NHSN HAI 
data under the HAC Reduction Program. A non-substantive information 
collection request will be submitted to OMB under control number 0938-
1352 to account for the updated costs.
---------------------------------------------------------------------------

    \840\ Occupational Employment and Wages. Available at: https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
---------------------------------------------------------------------------

8. ICRs Relating to the Hospital Readmissions Reduction Program
    In section IV.G. of the preamble of this proposed rule, we discuss 
proposed requirements for the Hospital Readmissions Reduction Program. 
In this proposed rule, we are not proposing to adopt any new measures 
into the Hospital Readmissions Reduction Program. All six of the 
Hospital Readmissions Reduction Program's measures are claims-based 
measures. We do not believe that continuing to use these claims-based 
measures creates or reduces any burden for hospitals because they will 
continue to be collected using Medicare FFS claims that hospitals are 
already submitting to the Medicare program for payment purposes.
9. ICRs for the Promoting Interoperability Programs
a. Background
    In section VIII.D. of the preamble of this proposed rule, we 
discuss proposed requirements for the Promoting Interoperability 
Programs. OMB has currently approved 623,562.19 total burden hours and 
approximately $61 million under OMB control number 0938-1278, 
accounting for information collection burden experienced by 
approximately 3,300 eligible hospitals and CAHs (Medicare-only and 
dual-eligible) that attest to CMS under the Medicare Promoting 
Interoperability Program. The collection of information burden analysis 
below will focus on eligible hospitals and CAHs that attest to the 
objectives and measures, and report CQMs, under the Medicare Promoting 
Interoperability Program for the reporting period in CY 2020.
b. Summary of Proposals for Eligible Hospitals and CAHs That Attest to 
CMS Under the Medicare Promoting Interoperability Program for CY 2020
    In section VIII.D.3.b. of the preamble of this proposed rule, we 
are proposing to change the reporting requirement for the Query of 
Prescription Drug Monitoring Program (PDMP) measure from numerator and 
denominator to a ``yes/no'' response beginning with CY 2019 for 
eligible hospitals and CAHs that attest to CMS under the Medicare 
Promoting Interoperability Program. We expect this proposal to affect 
our collection of information burden estimates for CY 2019 and CY 2020.
    This proposed rule also includes the following proposals for 
eligible hospitals and CAHs that attest to CMS under the Medicare 
Promoting Interoperability Program, which we do not expect to affect 
our collection of information burden estimates for CY 2020: (1) 
Eliminate the requirement that, for the FY 2020 payment adjustment 
year, for an eligible hospital that has not successfully demonstrated 
it is a meaningful EHR user in a prior year, the EHR reporting period 
in CY 2019 must end before and the eligible hospital must successfully 
register for and attest to meaningful use no later than October 1, 2019 
deadline; (2) establish an EHR reporting period of a minimum of any 
continuous 90-day period in CY 2021 for new and returning participants 
(eligible hospitals and CAHs) in the Medicare Promoting 
Interoperability Program attesting to CMS; (3) require that the 
Medicare Promoting Interoperability Program measure actions must occur 
within the EHR reporting period beginning with the EHR reporting period 
in CY 2020; (4) revise the Query of PDMP measure to make it an optional 
measure worth five bonus points in CY 2020, remove the exclusions 
associated with this measure in CY 2020, and clearly state our intended 
policy that the measure is worth a full 5 bonus points in CY 2019 and 
CY 2020; (5) change the maximum points available for the e-Prescribing 
measure to 10 points beginning in CY 2020, in the event we finalize the 
proposed changes to the Query of PDMP measure; (6) remove the Verify 
Opioid Treatment Agreement measure beginning in CY 2020 and clearly 
state our intended policy that the measure is worth a full 5 bonus 
points in CY 2019; and (7) revise the Support Electronic Referral Loops 
by Receiving and Incorporating Health Information measure to more 
clearly capture the previously established policy regarding CHERT use. 
We also are proposing to amend our regulations to incorporate several 
of these proposals.
    Although we are proposing to remove the Verify Opioid Treatment 
Agreement measure, we do not anticipate a change of burden for the 
Electronic Prescribing objective that this measure is associated with. 
In the Medicare and Medicaid Programs; Electronic Health Record 
Incentive Program--Stage 3 and Modifications to Meaningful Use in 2015 
Through 2017 final rule (80 FR 62917), we estimated it would take an 
individual provider or designee approximately 10 minutes to attest to 
each objective and associated measure that requires a numerator and 
denominator to be generated. For objectives and associated measures 
requiring a numerator and denominator, we limit our estimates to 
actions taken in the presence of certified EHR technology. We do not 
anticipate a provider will maintain two recordkeeping systems when 
certified EHR technology is present. Therefore, we assume that all 
patient records that will be counted in the denominator will be kept 
using certified EHR technology. In addition, our estimates, provided in 
Table 21--Burden Estimates Stage 3--495.24 of the Medicare and Medicaid 
Programs; Electronic Health Record Incentive Program--Stage 3 and 
Modifications to Meaningful Use in 2015 Through 2017 final rule (80 FR 
62918 through 62922), are calculated at the objective level, not for 
each individual measure being reported. We relied on this approach to 
create our burden estimates and determined that removing the Verify 
Opioid Treatment Agreement measure would not change burden since 
eligible hospitals and CAHs would still have to calculate a numerator 
and denominator for the e-Prescribing measure, which is associated with 
the Electronic Prescribing objective.
    We anticipate that the burden will decrease for the Electronic 
Prescribing objective due to the proposal to require a ``yes/no'' 
response instead of a numerator/denominator manual calculation for the 
Query of PDMP measure. The current numerator/denominator response for 
the Query of PDMP measure may require an eligible hospital or CAH to 
manually calculate the numerators and denominators

[[Page 19577]]

outside of the certified EHR technology. The burden that was calculated 
for the Electronic Prescribing objective included the numerator/
denominator calculated by the certified EHR technology, which is 10 
minutes per respondent, plus the calculations performed manually 
outside of the certified EHR technology for the Query of PDMP measure, 
which we estimated at 40 minutes per respondent. We estimated that all 
eligible hospitals and CAHs would take 40 minutes per respondent to 
complete this measure by using the data found in certified EHR 
technology and manually tracking the number of times that they query 
the PDMP outside of certified EHR technology. This is a reduction in 
total burden of 40 minutes per respondent from FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41698) reporting estimates which we estimate a total 
burden estimate of 7 hours and 10.8 minutes per respondent. With the 
proposed reporting requirement change for the Query of PDMP measure 
from a numerator and denominator to a ``yes/no'' response beginning CY 
2019, the certified EHR technology would be able to capture all of the 
actions required for the measures associated with the Electronic 
Prescribing objective; as a result, we estimate 10 minutes per 
respondent for this objective.
    In section VIII.D.6. of the preamble of this proposed rule, we are 
making a number of proposals with respect to the reporting of CQM data, 
including proposing to add two opioid-related measures beginning with 
the reporting period in CY 2021 and proposing the reporting period, 
reporting criteria, submission period, and form and method requirements 
for CQM reporting in CY 2020. However, for the reporting period in CY 
2020, these proposals are continuations of current policies and 
therefore we do not believe that there would be a change in burden for 
CY 2020.
c. Information Collection Burden Estimates for the Proposed Update to 
the Query of PDMP Measure
    In section VIII.D.3.b. of the preamble of this proposed rule, we 
are proposing to change the Query of PDMP measure's reporting 
requirement from a numerator and denominator to a ``yes/no'' response 
beginning in CY 2019. We stated in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41652) that we acknowledge that due to the varying integration 
of PDMPs into EHR systems, additional time, workflow changes and manual 
data capture and calculation would be needed to complete the query. 
This would result in some eligible hospitals and CAHs having to 
manually calculate the numerator and denominator for the Query of PDMP 
measure. We estimated that the action for eligible hospitals and CAHs 
to manually capture this measure would be a total of 40 minutes 
respectively for CY 2019 and CY 2020. By proposing to reduce the Query 
of PDMP measure reporting requirement from a numerator and denominator 
to a ``yes/no'' response, manual calculation would not be required by 
eligible hospitals and CAHs. We estimate that the change in reporting 
requirement for the Query of PDMP measure would result in a reduction 
of collection of information burden of 2,200 hours for eligible 
hospitals and CAHs that attest to CMS under the Medicare Promoting 
Interoperability Program for CY 2020. The total saving for CY 2019 and 
CY 2020 is 4,400 collection of information burden hours.

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                      Total time (+/-
              Proposal                 Estimated time for    Total time (+/- hours)    Estimated time for      Total time (+/-      hours) for CYs 2019
                                        reporting CY 2019          for CY 2019         reporting CY 2020      hours) for CY 2020          and 2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change reporting requirement for     3300 eligible           -132,000 minutes or -   3300 eligible          -132,100 minutes or -  -264,000 minutes or -
 the Query of PDMP measure.           hospitals and CAHs x    2,200 hours.            hospitals and CAHs x   2,200 hours.           4,400 hours.
                                      40 minutes.                                     47 minutes.
--------------------------------------------------------------------------------------------------------------------------------------------------------

d. Summary of Collection of Information Burden Estimates
1. Summary of Estimates Used To Calculate the Collection of Information 
Burden
    In the Medicare and Medicaid Programs; Electronic Health Record 
Incentive Program--Stage 3 and Modifications to Meaningful Use in 2015 
Through 2017 final rule (80 FR 62917), we estimated it would take an 
individual provider or designee approximately 10 minutes to attest to 
each objective and associated measure that requires a numerator and 
denominator to be generated. The measures that require a ``yes/no'' 
response would take approximately one minute to complete. We estimated 
that the Security Risk Analysis measure would take approximately 6 
hours for an individual provider or designee to complete (we note this 
measure is still part of the program, but is not subject to 
performance-based scoring). We continue to believe these are 
appropriate burden estimates for reporting and have used this 
methodology in our proposed collection of information burden estimates 
for this proposed rule.
    Given the proposals in this proposed rule, we estimate a total 
burden estimate of 6 hours 31 minutes per respondent. This is a 
reduction in total burden of 40 minutes per respondent from FY 2019 
IPPS/LTCH PPS final rule (83 FR 41698) reporting estimates which we 
estimate a total burden estimate of 7 hours and 10.8 minutes per 
respondent. This represents a reduction of 2,200 total reporting hours 
(40 minutes * 3300 respondents = 2,200 hours) for the Medicare 
Promoting Interoperability Program.

Medicare Promoting Interoperability Program Estimated Annual Information Collection Burden Per Respondent for CY
                              2020: Sec.   495.24(e)--Objectives/Measures Medicare
                                            [Eligible hospitals/CAHs]
----------------------------------------------------------------------------------------------------------------
                                                                           Burden estimate per eligible hospital
                Objective                             Measure                             and CAH
----------------------------------------------------------------------------------------------------------------
N/A.....................................  Security Risk Analysis.........  6 hours.

[[Page 19578]]

 
Electronic Prescribing..................  e-Prescribing measure..........  10 minutes.
                                          Query of PDMP..................
Health Information Exchange.............  Support Electronic Referral      10 minutes.
                                           Loops by Sending Health
                                           Information.
                                          Support Electronic Referral
                                           Loops by Receiving and
                                           Incorporating Health.
Provider to Patient Exchange............  Provide Patients Electronic      10 minutes.
                                           Access to Their Health
                                           Information.
Public Health and Clinical Data Exchange   Syndromic Surveillance  1 minute.
                                           Reporting.
                                           Immunization Registry
                                           Reporting.
                                           Electronic Case
                                           Reporting.
                                           Public Health Registry
                                           Reporting.
                                           Clinical Data
                                           Registry--Reporting.
                                           Electronic Reportable
                                           Laboratory Result Reporting.
                                                                          --------------------------------------
    Total Burden Estimate per Respondent  ...............................  6 hours 31 minutes (6.52 hours).
----------------------------------------------------------------------------------------------------------------

2. Hourly Labor Costs
    In the Medicare and Medicaid Programs; Electronic Health Record 
Incentive Program--Stage 3 and Modifications to Meaningful Use in 2015 
Through 2017 final rule (80 FR 62917), we estimated a mean hourly rate 
of $63.46 for the staff involved in attesting to EHR technology, 
meaningful use objectives and associated measures, and electronically 
submitting the clinical quality measures. We also used the mean hourly 
rate of $67.25 for the staff involved in attesting the objectives and 
measures under Sec.  495.24(e) in the FY 2019 IPPS/LTCH PPS final rule 
(83 FR 41698). Based on more recent 2017 data from the Bureau of Labor 
Statistics (BLS), we are proposing to update this rate to $68.22 per 
hour for CY 2020.\841\
---------------------------------------------------------------------------

    \841\ https://www.bls.gov/oes/2017/may/oes231011.htm.
---------------------------------------------------------------------------

    Based on the number of respondents for the Medicare Promoting 
Interoperability Program, the estimated burden response per respondent 
and the hourly labor cost of reporting, we estimate a total cost of 
$1,442,512.50 for CY 2019 and $1,463,319 for CY 2020.

                   Medicare Promoting Interoperability Program Estimated Annual Information Collection Burden (Total Cost) for CY 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Burden per                       Hourly labor
                Regulations section                    Number of        Number of         response       Total annual       cost of       Total cost ($)
                                                      respondents       responses         (hours)       burden (hours)   reporting ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.   495.24(e)..................................           3,300            3,300              6.5           21,494           $67.25     1,442,512.50
--------------------------------------------------------------------------------------------------------------------------------------------------------


                   Medicare Promoting Interoperability Program Estimated Annual Information Collection Burden (Total Cost) for CY 2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Burden per                       Hourly labor
                Regulations section                    Number of        Number of         response       Total annual       cost of       Total cost ($)
                                                      respondents       responses         (hours)       burden (hours)   reporting ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.   495.24(e)..................................           3,300            3,300              6.5           21,494            68.22        1,463,319
--------------------------------------------------------------------------------------------------------------------------------------------------------

    This estimate takes into account the reduction of 2,200 total 
reporting hours per CY and the finalized hourly labor cost for CY 2019 
and the proposed updated hourly labor cost for CY 2020. This estimate 
represents a cost reduction of $150,909.00 ($1,593,421.50-
$1,442,512.50) for the CY 2019 and $130,102.50 ($1,593,421.50-
$1,463,319) for the CY 2020 when comparing to the total cost from the 
FY 2019 IPPS/LTCH PPS final rule (83 FR 41698) estimates.
10. ICRs for New Technology Add-On Payments
    Section II.H. of the preamble of this proposed rule discusses new 
technology add-on payments. Applicants for these add-on payments must 
submit a formal request that includes information used to demonstrate 
that the medical service or technology meets the new technology add-on 
payment criteria. The burden associated with this application process 
is the time and effort necessary for an applicant to complete and 
submit the application and associated supporting information. The 
burden associated with this requirement is subject to the PRA, and is 
currently approved under OMB control number 0938-1347.
    Section II.H.8. of the preamble of this proposed rule discusses a 
proposed alternative inpatient new technology

[[Page 19579]]

add-on payment pathway for transformative new devices. The burden 
associated with the changes that would be needed to the new technology 
add-on payment application process if this proposal is finalized will 
be discussed in a forthcoming revision of the information collection 
requirement (ICR) request currently approved under OMB control number 
0938-1347. The revised ICR request is currently under development. 
However, upon completion of the revised ICR request, we will detail the 
proposed revisions of the ICR and publish the required 60-day and 30-
day notices to solicit public comments in accordance with the 
requirements of the PRA.
11. Summary of All Burden in This Proposed Rule
    Below is a chart reflecting the total burden and associated costs 
for the provisions included in this proposed rule.

------------------------------------------------------------------------
                                    Burden hours
    Information collection       increase/decrease       Cost (+/-) *
           requests                   (+/-) *
------------------------------------------------------------------------
Application for GME Resident                    N/A                  N/A
 Slots........................
Hospital Inpatient Quality                   +2,211             +$83,266
 Reporting Program............
Hospital Value-Based                            N/A                  N/A
 Purchasing Program \1\.......
HAC Reduction Program.........                  N/A                  N/A
Hospital Readmissions                           N/A                  N/A
 Reduction Program \2\........
Promoting Interoperability                   -2,200            -$130,102
 Programs.....................
LTCH Quality Reporting Program              +39,244          +$2,282,346
PPS-Exempt Cancer Hospital                       -3                -$113
 Quality Reporting Program....
                               -----------------------------------------
    Total.....................              +39,252          +$2,235,397
------------------------------------------------------------------------
* Numbers rounded.
\1\ Because the FY 2022 Hospital VBP Program will use data that are also
  used to calculate quality measures in other programs and Medicare fee-
  for-service claims data that hospitals are already submitting to CMS
  for payment purposes, the program does not anticipate any change in
  burden associated with this proposed rule.
\2\ Because the Hospital Readmissions Reduction Program measures are all
  collected via Medicare fee-for-service claims that hospitals are
  already submitting to CMS for payment purposes, there is no unique
  information collection burden associated with the program.

C. Response to Comments

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

XI. Provider Reimbursement Review Board Appeals

    The Provider Reimbursement Review Board (PRRB) was established in 
1972 to handle Medicare Part A provider cost reimbursement appeals. 
Congress' intent with the creation of the PRRB was to provide an 
administrative appeals forum for Medicare payment disputes, and an 
opportunity for providers who are dissatisfied with the reimbursement 
determination made by their Medicare contractor or CMS to request and 
be afforded a hearing to adjudicate the issues involved.
    Between 2015 and 2017, Medicare Part A providers filed cost report 
appeals at a higher rate than were resolved. On average, 3,000 appeals 
were filed per year and approximately 2,200 were resolved. The appeals 
inventory is now over 10,000 (including approximately 5,000 group 
appeals). The resolution process can take an average of 4 years, 
excluding cases in district court. CMS, providers, and MACs must expend 
considerable time and resources preparing and processing appeals.
    As part of CMS' ongoing efforts to reduce provider burden, we are 
examining the growing inventory of PRRB appeals. To date, we have 
identified certain action initiatives that could be implemented with 
the goal to: Decrease the number of appeals submitted; decrease the 
number of appeals in inventory; reduce the time to resolution; and 
increase customer satisfaction. Some examples of these initiatives are 
as follows:
     Develop standard formats and more structured data for 
submitting cost reports and supplemental and supporting documentation.
     Create more clear standards for documentation to be used 
in auditing of cost reports.
     Enhance the Medicare Cost Report Electronic Filing (MCReF) 
portal by creating more automation for letter notifications, increasing 
provider transparency during the cost report reconciliation process, 
and improving the ability for providers to see where they are in the 
process.
     Explore opportunities to improve the process for claiming 
DSH Medicaid eligible days as part of the annual Medicare cost report 
submission and settlement process.
     Utilize artificial intelligence (AI) design risk protocols 
based on historical audit outcomes and empirical data to drive the 
audit and desk review processes.
     Triage the current appeals inventory and expand the 
provider's utilization of PRRB rules 46 and 47.2.3 (that is, resolve 
appeal issues through the cost report reopening process).
    As part of this effort, in section IV.F.5. of the preamble of this 
proposed rule, we are requesting public comments on PRRB appeals 
related to a hospital's Medicaid fraction in the DSH payment adjustment 
calculation.

List of Subjects

42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Puerto Rico, 
Reporting and recordkeeping requirements.

42 CFR Part 495

    Administrative practice and procedure, Electronic health records, 
Health facilities, Health professions, Health maintenance organizations 
(HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
and Medicaid Services is proposing to amend 42 CFR Chapter IV as set 
forth below:

[[Page 19580]]

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

0
 1. The authority citation for part 412 is revised to read as follows:

    Authority:  42 U.S.C. 1302 and 1395hh.

0
2. Section 412.64 is amended by adding paragraph (d)(1)(viii) to read 
as follows:


Sec.  412.64  Federal rates for inpatient operating costs for Federal 
fiscal year 2005 and subsequent fiscal years.

* * * * *
    (d) * * *
    (1) * * *
    (viii) For fiscal year 2020 and subsequent fiscal years, the 
percentage increase in the market basket index (as defined in Sec.  
413.40(a)(3) of this chapter) for prospective payment hospitals, 
subject to the provisions of paragraphs (d)(2) and (3) of this section, 
less a multifactor productivity adjustment (as determined by CMS).
* * * * *
0
 3. Section 412.87 is amended by--
0
a. Redesignating paragraph (c) as paragraph (d);
0
b. Adding a new paragraph (c); and
0
c. Revising newly redesignated paragraph (d).
    The addition and revision read as follows:


Sec.  412.87   Additional payment for new medical services and 
technologies: General provisions.

* * * * *
    (c) Eligibility criteria for alternative pathway for certain 
transformative new devices. For discharges occurring on or after 
October 1, 2020, CMS provides for additional payments (as specified in 
Sec.  412.88) beyond the standard DRG payments and outlier payments to 
a hospital for discharges involving covered inpatient hospital services 
that are new medical devices, if the following conditions are met:
    (1) A new medical device has received Food and Drug Administration 
(FDA) marketing authorization and is part of the FDA's Breakthrough 
Devices Program.
    (2) A medical device that meets the condition in paragraph (c)(1) 
of this section will be considered new for not less than 2 years and 
not more than 3 years after the point at which data begin to become 
available reflecting the inpatient hospital code (as defined in section 
1886(d)(5)(K)(iii) of the Social Security Act) assigned to the new 
technology (depending on when a new code is assigned and data on the 
new technology become available for DRG recalibration). After CMS has 
recalibrated the DRGs, based on available data, to reflect the costs of 
an otherwise new medical technology, the medical technology will no 
longer be considered ``new'' under the criterion of this section.
    (3) The new medical device meets the conditions described in 
paragraph (b)(3) of this section.
    (d) Announcement of determinations and deadline for consideration 
of new medical service or technology applications. CMS will consider 
whether a new medical service or technology meets the eligibility 
criteria specified in paragraph (b) or paragraph (c) of this section 
and announce the results in the Federal Register as part of its annual 
updates and changes to the IPPS. CMS will only consider any particular 
new medical service or technology for add-on payments under paragraph 
(b) or paragraph (c) of this section, and not both. In addition, CMS 
will only consider, for add-on payments for a particular fiscal year, 
an application for which the new medical service or technology has 
received FDA approval or clearance by July 1 prior to the particular 
fiscal year.
0
 4. Section 412.88 is amended by revising paragraphs (a)(2) and (b) to 
read as follows:


Sec.  412.88   Additional payment for new medical service or 
technology.

    (a) * * *
    (2)(i) For discharges occurring before October 1, 2019. If the 
costs of the discharge (determined by applying the operating cost-to-
charge ratios as described in Sec.  412.84(h)) exceed the full DRG 
payment, an additional amount equal to the lesser of--
    (A) 50 percent of the costs of the new medical service or 
technology; or
    (B) 50 percent of the amount by which the costs of the case exceed 
the standard DRG payment.
    (ii) For discharges occurring on or after October 1, 2019. If the 
costs of the discharge (determined by applying the operating cost-to-
charge ratios as described in Sec.  412.84(h)) exceed the full DRG 
payment, an additional amount equal to the lesser of--
    (A) 65 percent of the costs of the new medical service or 
technology; or
    (B) 65 percent of the amount by which the costs of the case exceed 
the standard DRG payment.
    (b)(1) For discharges occurring before October 1, 2019. Unless a 
discharge case qualifies for outlier payment under Sec.  412.84, 
Medicare will not pay any additional amount beyond the DRG payment plus 
50 percent of the estimated costs of the new medical service or 
technology.
    (2) For discharges occurring on or after October 1, 2019. Unless a 
discharge case qualifies for outlier payment under Sec.  412.84, 
Medicare will not pay any additional amount beyond the DRG payment plus 
65 percent of the estimated costs of the new medical service or 
technology.
0
5. Section 412.101 is amended by revising paragraph (e) to read as 
follows:


Sec.  412.101  Special treatment: Inpatient hospital payment adjustment 
for low-volume hospitals.

* * * * *
    (e) Special treatment regarding hospitals operated by the Indian 
Health Service (IHS) or a Tribe. (1) For discharges occurring in FY 
2018 and subsequent fiscal years--
    (i) A hospital operated by the IHS or a Tribe will be considered to 
meet the applicable mileage criterion specified under paragraph (b)(2) 
of this section if it is located more than the specified number of road 
miles from the nearest subsection (d) hospital operated by the IHS or a 
Tribe.
    (ii) A hospital, other than a hospital operated by the IHS or a 
Tribe, will be considered to meet the applicable mileage criterion 
specified under paragraph (b)(2) of this section if it is located more 
than the specified number of road miles from the nearest subsection (d) 
hospital other than a subsection (d) hospital operated by the IHS or a 
Tribe.
    (2) Subject to the requirements set forth in Sec.  405.1885 of this 
chapter, a hospital may request the application of the policy described 
in paragraph (e)(1) of this section for discharges occurring in FY 2011 
through FY 2017.
0
6. Section 412.103 is amended by--
0
a. Revising paragraph (b)(3);
0
b. Adding paragraph (g)(1)(iii);
0
c. Revising paragraph (g)(2)(iii); and
0
d. Adding paragraphs (g)(3) and (4).
    The revisions and additions read as follows:


Sec.  412.103  Special treatment: Hospitals located in urban areas and 
that apply for reclassification as rural.

* * * * *
    (b) * * *
    (3) Submission of application. An application may be submitted to 
the CMS Regional Office by the requesting hospital by mail or by 
facsimile or other electronic means.
* * * * *
    (g) * * *
    (1) * * *
    (iii) The provisions of paragraphs (g)(1)(i) and (ii) of this 
section are effective for all written requests submitted by hospitals 
before October 1, 2019 to cancel rural reclassifications.

[[Page 19581]]

    (2) * * *
    (iii) The provisions of paragraphs (g)(2)(i) and (ii) of this 
section are effective for all written requests submitted by hospitals 
on or after October 1, 2007 and before October 1, 2019, to cancel rural 
reclassifications.
    (3) Cancellation of rural reclassification on or after October 1, 
2019. For all written requests submitted by hospitals on or after 
October, 1, 2019 to cancel rural reclassifications, a hospital may 
cancel its rural reclassification by submitting a written request to 
the CMS Regional Office not less than 120 days prior to the end of a 
Federal fiscal year. The hospital's cancellation of the classification 
is effective beginning with the next Federal fiscal year.
    (4) Special rule for hospitals that opt to receive county out-
migration adjustment. A rural reclassification will be considered 
canceled effective for the next Federal fiscal year when a hospital, by 
submitting a request to CMS within 45 days of the date of public 
display of the proposed rule for the next Federal fiscal year at the 
Office of the Federal Register, opts to accept and receives its county 
out-migration wage index adjustment determined under section 
1886(d)(13) of the Act in lieu of its geographic reclassification 
described under section 1886(d)(8)(B) of the Act.
0
7. Section 412.106 is amended by adding paragraph (g)(1)(iii)(C)(6) to 
read as follows:


Sec.  412.106   Special treatment: Hospitals that serve a 
disproportionate share of low-income patients.

* * * * *
    (g) * * *
    (1) * * *
    (iii) * * *
    (C) * * *
    (6) For fiscal year 2020, CMS will base its estimates of the amount 
of hospital uncompensated care on data on uncompensated care costs, 
defined as charity care costs plus non-Medicare and non-reimbursable 
Medicare bad debt costs from 2015 cost reports from the most recent 
HCRIS database extract, except that, for Puerto Rico hospitals and 
Indian Health Service or Tribal hospitals, CMS will base its estimates 
on utilization data for Medicaid and Medicare SSI patients, as 
determined by CMS in accordance with paragraphs (b)(2)(i) and (b)(4) of 
this section, using data on Medicaid utilization from 2013 cost reports 
from the most recent HCRIS database extract and the most recent 
available year of data on Medicare SSI utilization (or, for Puerto Rico 
hospitals, a proxy for Medicare SSI utilization data);
* * * * *
0
 8. Section 412.152 is amended by revising the definitions of 
``Aggregate payments for excess readmissions'', ``Applicable 
condition'', ``Base operating DRG payment amount'', and ``Dual-
eligible'' to read as follows:


Sec.  412.152  Definitions for the Hospital Readmissions Reduction 
Program.

* * * * *
    Aggregate payments for excess readmissions is, for a hospital for 
the applicable period, the sum, for the applicable conditions, of the 
product for each applicable condition of:
    (1) The base operating DRG payment amount for the hospital for the 
applicable period for such condition or procedure;
    (2) The number of admissions for such condition or procedure for 
the hospital for the applicable period;
    (3) The excess readmission ratio for the hospital for the 
applicable period minus the peer-group median excess readmission ratio 
(ERR); and
    (4) The neutrality modifier, a multiplicative factor that equates 
total Medicare savings under the current stratified methodology to the 
previous non-stratified methodology.
    Applicable condition is a condition or procedure selected by the 
Secretary--
    (1) Among the conditions and procedures for which--
    (i) Readmissions represent conditions or procedures that are high 
volume or high expenditures; and
    (ii) Measures of such readmissions have been endorsed by the entity 
with a contract under section 1890(a) of the Act and such endorsed 
measures have exclusions for readmissions that are unrelated to the 
prior discharge (such as a planned readmission or transfer to another 
applicable hospital); or
    (2) Among other conditions and procedures as determined appropriate 
by the Secretary. In expanding the applicable conditions, the Secretary 
will seek endorsement of the entity with a contract under section 
1890(a) of the Act, but may apply such measures without such an 
endorsement in the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the entity with a contract under section 
1890(a) of the Act as long as due consideration is given to measures 
that have been endorsed or adopted by a consensus organization 
identified by the Secretary.
* * * * *
    Base operating DRG payment amount is the wage-adjusted DRG 
operating payment plus any applicable new technology add-on payments 
under subpart F of this part. This amount is determined without regard 
to any payment adjustments under the Hospital Value-Based Purchasing 
Program, as specified under Sec.  412.162. This amount does not include 
any additional payments for indirect medical education under Sec.  
412.105, the treatment of a disproportionate share of low-income 
patients under Sec.  412.106, outliers under subpart F of this part, 
and a low volume of discharges under Sec.  412.101. With respect to a 
sole community hospital that receives payments under Sec.  412.92(d) or 
a Medicare-dependent, small rural hospital that receives payments under 
Sec.  412.108(c), this amount also includes the difference between the 
hospital-specific payment rate and the Federal payment rate determined 
under subpart D of this part. With respect to a hospital that is paid 
under section 1814(b)(3) of the Act, this amount is an amount equal to 
the wage-adjusted DRG payment amount plus new technology payments that 
would be paid to such hospitals, absent the provisions of section 
1814(b)(3) of the Act.
    Dual-eligible. (1) For payment adjustment factor calculations prior 
to the FY 2021 program year, is a patient beneficiary who has been 
identified as having full benefit status in both the Medicare and 
Medicaid programs in the State Medicare Authorization Act (MMA) files 
for the month the beneficiary was discharged from the hospital; and
    (2) For payment adjustment factor calculations beginning in the FY 
2021 program year, is a patient beneficiary who has been identified as 
having full benefit status in both the Medicare and Medicaid programs 
in data sourced from the State MMA files for the month the beneficiary 
was discharged from the hospital, except for those patient 
beneficiaries who die in the month of discharge, which will be 
identified using the previous month's data as sourced from the State 
MMA files.
* * * * *
0
9. Section 412.154 is amended by redesignating paragraph (e)(4) as 
paragraph (e)(6) and adding paragraphs (e)(4) and (5) to read as 
follows:


Sec.  412.154   Payment adjustments under the Hospital Readmissions 
Reduction Program.

* * * * *
    (e) * * *
    (4) The neutrality modifier.
    (5) The proportion of dual-eligibles.
* * * * *

[[Page 19582]]

0
10. Section 412.172 is amended by revising paragraphs (f)(2) and (4) to 
read as follows:


Sec.  412.172  Payment adjustments under the Hospital-Acquired 
Condition Reduction Program.

* * * * *
    (f) * * *
    (2) Hospitals will have a period of 30 days after the receipt of 
the information provided under paragraph (f)(1) of this section to 
review and submit corrections for the hospital-acquired condition 
program scores for each condition that is used to calculate the total 
hospital-acquired condition score for the fiscal year.
* * * * *
    (4) CMS will post the total hospital-acquired condition score and 
the score on each measure for each hospital on the Hospital Compare 
website.
* * * * *
0
11. Section 412.230 is amended by revising paragraph (a)(4) to read as 
follows:


Sec.  412.230   Criteria for an individual hospital seeking 
redesignation to another rural area or an urban area.

    (a) * * *
    (4) Application of criteria. In applying the numeric criteria 
contained in paragraphs (b)(1) and (2) and (d)(1)(iii) and (iv) of this 
section, rounding of numbers to meet the mileage or qualifying 
percentage standards is not permitted.
* * * * *
0
12. Section 412.256 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  412.256  Application requirements.

    (a) * * *
    (1) An application must be submitted to the MGCRB according to the 
method prescribed by the MGCRB.
* * * * *
0
13. Section 412.522 is amended by adding paragraphs (d)(3) through (6) 
to read as follows:


Sec.  412.522   Application of site neutral payment rate.

* * * * *
    (d) * * *
    (3) For cost reporting periods beginning on or after October 1, 
2019, if a long-term care hospital's discharge payment percentage for 
the cost reporting period is not at least 50 percent, discharges in all 
cost reporting periods beginning after the notification described under 
paragraph (d)(2) of this section will be paid under the payment 
adjustment described in paragraph (d)(4) of this section until 
reinstated under paragraph (d)(5) or (6) of this section.
    (4) For cost reporting periods subject to the payment adjustment 
under paragraph (d)(3) of this section, the payment for all discharges 
consists of--
    (i) An amount comparable to the hospital inpatient prospective 
payment system amount as determined under Sec.  412.529(d)(4)(i)(A) and 
(d)(4)(ii); and
    (ii) If applicable, an additional payment for high cost outlier 
cases based on the fixed-loss amount established for the hospital 
inpatient prospective payment system in effect at the time of the LTCH 
discharge.
    (5) For full reinstatement--
    (i) When the discharge payment percentage for a cost reporting 
period is at least 50 percent, the payment adjustment described in 
paragraph (d)(4) of this section will be discontinued for cost 
reporting periods beginning on or after the notification described 
under paragraph (d)(2) of this section.
    (ii) A long-term care hospital reinstated under paragraph (d)(5)(i) 
of this section will be subject to the payment adjustment under 
paragraph (d)(4) of this section if, after being reinstated, it again 
meets the criteria in paragraph (d)(3) of this section.
    (6) For special probationary reinstatement--
    (i) A hospital that would be subject to the payment adjustment 
under paragraph (d)(4) of this section for a cost reporting period will 
have the payment adjustment delayed for that period if, for the period 
of at least 5 consecutive months of the immediately preceding 6-month 
period, the discharge payment percentage is at least 50 percent.
    (ii) For any cost reporting period for which the payment adjustment 
under paragraph (d)(4) of this section was delayed under paragraph 
(d)(6)(i) of this section, the payment adjustment under paragraph 
(d)(4) of this section will be applied if the discharge payment 
percentage for such cost reporting period is not at least 50 percent.
0
14. Section 412.523 is amended by adding paragraph (c)(3)(xvi) to read 
as follows:


Sec.  412.523   Methodology for calculating the Federal prospective 
payment rate.

* * * * *
    (c) * * *
    (3) * * *
    (xvi) For long-term care prospective payment system fiscal year 
beginning October 1, 2019, and ending September 30, 2020. The long-term 
care hospital prospective payment system standard Federal payment rate 
for the long-term care hospital prospective payment system beginning 
October 1, 2019 and ending September 30, 2020 is the standard Federal 
payment rate for the previous long-term care prospective payment system 
fiscal year updated by 2.7 percent and further adjusted, as 
appropriate, as described in paragraph (d) of this section.
* * * * *
0
 15. Section 412.560 is amended by revising paragraphs (d)(1) and (3) 
and (f)(1) to read as follows:


Sec.  412.560  Requirements under the Long-Term Care Hospital Quality 
Reporting Program (LTCH QRP).

* * * * *
    (d) * * *
    (1) Written letter of non-compliance decision. Long-term care 
hospitals that do not meet the requirement in paragraph (b) of this 
section for a program year will receive a notification of non-
compliance sent through at least one of the following methods: The CMS 
designated data submission system, the United States Postal Service, or 
via an email from the MAC.
* * * * *
    (3) CMS decision on reconsideration request. CMS will notify long-
term care hospitals, in writing, of its final decision regarding any 
reconsideration request through at least one of the following methods: 
The CMS designated data submission system, the United States Postal 
Service, or via an email from the MAC.
* * * * *
    (f) * * *
    (1) Long-term care hospitals must meet or exceed two separate data 
completeness thresholds: One threshold set at 80 percent for completion 
of measures data and standardized patient assessment data collected 
using the LTCH CARE Data Set submitted through the CMS designated data 
submission system; and a second threshold set at 100 percent for 
measures data collected and submitted using the CDC NHSN.
* * * * *

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED 
PAYMENT RATES FOR SKILLED NURSING FACILITIES

0
16. The authority for part 413 is revised to read as follows:

    Authority:  42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), 
(i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww.


[[Page 19583]]


0
 17. Section 413.70 is amended by revising paragraph (b)(5)(i)(C) and 
adding paragraph (b)(5)(i)(D) to read as follows:


Sec.  413.70   Payment for services of a CAH.

* * * * *
    (b) * * *
    (5) * * *
    (i) * * *
    (C) Effective for cost reporting periods beginning on or after 
October 1, 2011 and on or before September 30, 2019, payment for 
ambulance services furnished by a CAH or an entity that is owned and 
operated by a CAH is 101 percent of the reasonable costs of the CAH or 
the entity in furnishing those services, but only if the CAH or the 
entity is the only provider or supplier of ambulance services located 
within a 35-mile drive of the CAH. If there is no provider or supplier 
of ambulance services located within a 35-mile drive of the CAH and 
there is an entity that is owned and operated by a CAH that is more 
than a 35-mile drive from the CAH, payment for ambulance services 
furnished by that entity is 101 percent of the reasonable costs of the 
entity in furnishing those services, but only if the entity is the 
closest provider or supplier of ambulance services to the CAH. (D) 
Effective for cost reporting periods beginning on or after October 1, 
2019, payment for ambulance services furnished by a CAH or by a CAH-
owned and operated entity is 101 percent of the reasonable costs of the 
CAH or the entity in furnishing those services, but only if the CAH or 
the entity is the only provider or supplier of ambulance services 
located within a 35-mile drive of the CAH, excluding ambulance 
providers or suppliers that are not legally authorized to furnish 
ambulance services to transport individuals to or from the CAH. If 
there is no provider or supplier of ambulance services located within a 
35-mile drive of the CAH and there is an entity that is owned and 
operated by a CAH that is more than a 35-mile drive from the CAH, 
payment for ambulance services furnished by that entity is 101 percent 
of the reasonable costs of the entity in furnishing those services, but 
only if the entity is the closest provider or supplier of ambulance 
services to the CAH.
* * * * *

PART 495--STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY 
INCENTIVE PROGRAM

0
 18. The authority citation for part 495 continues to read as follows:

    Authority:  42 U.S.C. 1302 and 1395hh.

0
 19. Section 495.4 is amended--
0
 a. In the definition of ``EHR reporting period'', by adding paragraph 
(2)(v); and
0
 b. In the definition of ``EHR reporting period for a payment 
adjustment year'', by revising paragraph (2)(iii)(A) and adding 
paragraphs (2)(v) and (3)(v).
    The additions and revision read as follows:


Sec.  495.4  Definitions.

* * * * *
    EHR reporting period. * * *
    (2) * * *
    (v) For the FY 2021 payment year as follows: Under the Medicare 
Promoting Interoperability Program, for a Puerto Rico eligible 
hospital, any continuous 90-day period within CY 2021.
    EHR reporting period for a payment adjustment year. * * *
    (2) * * *
    (iii) * * *
    (A) If an eligible hospital has not successfully demonstrated it is 
a meaningful EHR user in a prior year, the EHR reporting period is any 
continuous 90-day period within CY 2019 and applies for the FY 2020 and 
FY 2021 payment adjustment years.
* * * * *
    (v) The following are applicable for 2021:
    (A) If an eligible hospital has not successfully demonstrated it is 
a meaningful EHR user in a prior year, the EHR reporting period is any 
continuous 90-day period within CY 2021 and applies for the FY 2022 and 
2023 payment adjustment years. For the FY 2022 payment adjustment year, 
the EHR reporting period must end before and the eligible hospital must 
successfully register for and attest to meaningful use no later than 
October 1, 2021.
    (B) If in a prior year an eligible hospital has successfully 
demonstrated it is a meaningful EHR user, the EHR reporting period is 
any continuous 90-day period within CY 2021 and applies for the FY 2023 
payment adjustment year.
    (3) * * *
    (v) The following are applicable for 2021:
    (A) If a CAH has not successfully demonstrated it is a meaningful 
EHR user in a prior year, the EHR reporting period is any continuous 
90-day period within CY 2021 and applies for the FY 2021 payment 
adjustment year.
    (B) If in a prior year a CAH has successfully demonstrated it is a 
meaningful EHR user, the EHR reporting period is any continuous 90-day 
period within CY 2021 and applies for the FY 2021 payment adjustment 
year.
* * * * *
0
 20. Section 495.24 is amended by revising paragraphs (e)(1), 
(e)(4)(iii), (e)(5)(ii)(B), (e)(5)(iii) through (v), and (e)(6)(ii)(B) 
to read as follows:


Sec.  495.24   Stage 3 meaningful use objectives and measures for EPs, 
eligible hospitals and CAHs for 2019 and subsequent years.

* * * * *
    (e) * * *
    (1) General rule. (i) Except as specified in paragraph (e)(2) of 
this section, eligible hospitals and CAHs must meet all objectives and 
associated measures of the Stage 3 criteria specified in this paragraph 
(e) and earn a total score of at least 50 points to meet the definition 
of a meaningful EHR user.
    (ii) Beginning in CY 2020, the numerator and denominator of 
measures increment based on actions occurring during the EHR reporting 
period selected by the eligible hospital or CAH, unless otherwise 
indicated.
* * * * *
    (4) * * *
    (iii) Security risk analysis measure. Conduct or review a security 
risk analysis in accordance with the requirements under 45 CFR 
164.308(a)(1), including addressing the security (including encryption) 
of data created or maintained by CEHRT in accordance with requirements 
under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement 
security updates as necessary, and correct identified security 
deficiencies as part of the provider's risk management process. Actions 
included in the security risk analysis measure may occur any time 
during the calendar year in which the EHR reporting period occurs.
    (5) * * *
    (ii) * * *
    (B) In 2020 and subsequent years, eligible hospitals and CAHs must 
meet the e-Prescribing measure in paragraph (e)(5)(iii)(A) of this 
section and have the option to report on the query of PDMP measure in 
paragraph (e)(5)(iii)(B) of this section. In 2020 and subsequent years, 
the electronic prescribing objective in paragraph (e)(5)(i) of this 
section is worth up to 15 points.
    (iii) Measures--(A) e-Prescribing measure. Subject to paragraph 
(e)(3) of this section, at least one hospital discharge medication 
order for permissible prescriptions (for new and changed prescriptions) 
is queried for a drug formulary and transmitted electronically using 
CEHRT. This measure is worth up to 10 points in CY 2019 and subsequent 
years.
    (B) Query of prescription drug monitoring program (PDMP) measure. 
Subject to paragraph (e)(3) of this section, for at least one Schedule 
II

[[Page 19584]]

opioid electronically prescribed using CEHRT during the EHR reporting 
period, the eligible hospital or CAH uses data from CEHRT to conduct a 
query of a Prescription Drug Monitoring Program (PDMP) for prescription 
drug history, except where prohibited and in accordance with applicable 
law. This measure is worth 5 bonus points in CY 2019 and CY 2020.
    (C) Verify opioid treatment agreement measure. Subject to paragraph 
(e)(3) of this section, for at least one unique patient for whom a 
Schedule II opioid was electronically prescribed by the eligible 
hospital or CAH using CEHRT during the EHR reporting period, if the 
total duration of the patient's Schedule II opioid prescriptions is at 
least 30 cumulative days within a 6-month look-back period, the 
eligible hospital or CAH seeks to identify the existence of a signed 
opioid treatment agreement and incorporates it into the patient's 
electronic health record using CEHRT. This measure is worth 5 bonus 
points in CY 2019.
    (iv) Exclusions in accordance with paragraph (e)(2) of this section 
and redistribution of points. An exclusion claimed under paragraph 
(e)(5)(v) of this section will redistribute 10 points in CY 2019 and CY 
2020 equally among the measures associated with the health information 
exchange objective under paragraph (e)(6) of this section.
    (v) Exclusion in accordance with paragraph (e)(2) of this section. 
Beginning with the EHR reporting period in CY 2019, any eligible 
hospital or CAH that does not have an internal pharmacy that can accept 
electronic prescriptions and there are no pharmacies that accept 
electronic prescriptions within 10 miles at the start of the eligible 
hospital or CAH's EHR reporting period may be excluded from the measure 
specified in paragraph (e)(5)(iii)(A) of this section.
    (6) * * *
    (ii) * * *
    (B) Support electronic referral loops by receiving and 
incorporating health information measure: Subject to paragraph (e)(3) 
of this section, for at least one electronic summary of care record 
received using CEHRT for patient encounters during the EHR reporting 
period for which an eligible hospital or CAH was the receiving party of 
a transition of care or referral, or for patient encounters during the 
EHR reporting period in which the eligible hospital or CAH has never 
before encountered the patient, the eligible hospital or CAH conducts 
clinical information reconciliation for medication, medication allergy, 
and current problem list using CEHRT.
* * * * *

    Dated: March 26, 2019.
Seema Verma,
Administrator, Centers for Medicare and Medicaid Services.

    Dated: April 2, 2019.
Alex M. Azar II,
Secretary, Department of Health and Human Services.

    Note:  The following Addendum and Appendices will not appear in 
the Code of Federal Regulations.

Addendum--Schedule of Standardized Amounts, Update Factors, Rate-of-
Increase Percentages Effective With Cost Reporting Periods Beginning on 
or After October 1, 2019, and Payment Rates for LTCHs Effective for 
Discharges Occurring on or After October 1, 2019

I. Summary and Background

    In this Addendum, we are setting forth a description of the methods 
and data we used to determine the proposed prospective payment rates 
for Medicare hospital inpatient operating costs and Medicare hospital 
inpatient capital-related costs for FY 2020 for acute care hospitals. 
We also are setting forth the rate-of-increase percentage for updating 
the target amounts for certain hospitals excluded from the IPPS for FY 
2020. We note that, because certain hospitals excluded from the IPPS 
are paid on a reasonable cost basis subject to a rate-of-increase 
ceiling (and not by the IPPS), these hospitals are not affected by the 
proposed figures for the standardized amounts, offsets, and budget 
neutrality factors. Therefore, in this proposed rule, we are setting 
forth the rate-of-increase percentage for updating the target amounts 
for certain hospitals excluded from the IPPS that will be effective for 
cost reporting periods beginning on or after October 1, 2019.
    In addition, we are setting forth a description of the methods and 
data we used to determine the proposed LTCH PPS standard Federal 
payment rate that would be applicable to Medicare LTCHs for FY 2020.
    In general, except for SCHs and MDHs, for FY 2020, each hospital's 
payment per discharge under the IPPS is based on 100 percent of the 
Federal national rate, also known as the national adjusted standardized 
amount. This amount reflects the national average hospital cost per 
case from a base year, updated for inflation.
    SCHs are paid based on whichever of the following rates yields the 
greatest aggregate payment: The Federal national rate (including, as 
discussed in section IV.G. of the preamble of this proposed rule, 
uncompensated care payments under section 1886(r)(2) of the Act); the 
updated hospital-specific rate based on FY 1982 costs per discharge; 
the updated hospital-specific rate based on FY 1987 costs per 
discharge; the updated hospital-specific rate based on FY 1996 costs 
per discharge; or the updated hospital-specific rate based on FY 2006 
costs per discharge.
    Under section 1886(d)(5)(G) of the Act, MDHs historically were paid 
based on the Federal national rate or, if higher, the Federal national 
rate plus 50 percent of the difference between the Federal national 
rate and the updated hospital-specific rate based on FY 1982 or FY 1987 
costs per discharge, whichever was higher. However, section 5003(a)(1) 
of Public Law 109-171 extended and modified the MDH special payment 
provision that was previously set to expire on October 1, 2006, to 
include discharges occurring on or after October 1, 2006, but before 
October 1, 2011. Under section 5003(b) of Public Law 109-171, if the 
change results in an increase to an MDH's target amount, we must rebase 
an MDH's hospital specific rates based on its FY 2002 cost report. 
Section 5003(c) of Public Law 109-171 further required that MDHs be 
paid based on the Federal national rate or, if higher, the Federal 
national rate plus 75 percent of the difference between the Federal 
national rate and the updated hospital specific rate. Further, based on 
the provisions of section 5003(d) of Public Law 109-171, MDHs are no 
longer subject to the 12-percent cap on their DSH payment adjustment 
factor. Section 50205 of the Bipartisan Budget Act of 2018 extended the 
MDH program for discharges on or after October 1, 2017 through 
September 30, 2022.
    As discussed in section IV.B. of the preamble of this proposed 
rule, in accordance with section 1886(d)(9)(E) of the Act as amended by 
section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-
113), for FY 2020, subsection (d) Puerto Rico hospitals will continue 
to be paid based on 100 percent of the national standardized amount. 
Because Puerto Rico hospitals are paid 100 percent of the national 
standardized amount and are subject to the same national standardized 
amount as subsection (d) hospitals that receive the full update, our 
discussion below does not include references to the Puerto Rico 
standardized amount or the Puerto Rico-specific wage index.
    As discussed in section II. of this Addendum, we are proposing to 
make changes in the determination of the prospective payment rates for 
Medicare

[[Page 19585]]

inpatient operating costs for acute care hospitals for FY 2020. In 
section III. of this Addendum, we discuss our proposed policy changes 
for determining the prospective payment rates for Medicare inpatient 
capital-related costs for FY 2020. In section IV. of this Addendum, we 
are setting forth the rate-of-increase percentage for determining the 
rate-of-increase limits for certain hospitals excluded from the IPPS 
for FY 2020. In section V. of this Addendum, we discuss proposed policy 
changes for determining the LTCH PPS standard Federal rate for LTCHs 
paid under the LTCH PPS for FY 2020. The tables to which we refer to in 
the preamble of this proposed rule are listed in section VI. of this 
Addendum and are available via the internet on the CMS website.

II. Proposed Changes to Prospective Payment Rates for Hospital 
Inpatient Operating Costs for Acute Care Hospitals for FY 2020

    The basic methodology for determining prospective payment rates for 
hospital inpatient operating costs for acute care hospitals for FY 2005 
and subsequent fiscal years is set forth under Sec.  412.64. The basic 
methodology for determining the prospective payment rates for hospital 
inpatient operating costs for hospitals located in Puerto Rico for FY 
2005 and subsequent fiscal years is set forth under Sec. Sec.  412.211 
and 412.212. Below we discuss the factors we are proposing to use for 
determining the proposed prospective payment rates for FY 2020.
    In summary, the proposed standardized amounts set forth in Tables 
1A, 1B, and 1C that are listed and published in section VI. of this 
Addendum (and available via the internet on the CMS website) reflect--
     Equalization of the standardized amounts for urban and 
other areas at the level computed for large urban hospitals during FY 
2004 and onward, as provided for under section 1886(d)(3)(A)(iv)(II) of 
the Act.
     The labor-related share that is applied to the 
standardized amounts to give the hospital the highest payment, as 
provided for under sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the 
Act. For FY 2020, 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 national standardized 
amount. We refer readers to section IV.B. of the preamble of this 
proposed rule for a complete discussion on the proposed FY 2020 
inpatient hospital update. Below is a table with these four scenarios:

                          Proposed FY 2020 Applicable Percentage Increases for the IPPS
----------------------------------------------------------------------------------------------------------------
                                                     Hospital        Hospital      Hospital did    Hospital did
                                                     submitted       submitted      NOT submit      NOT submit
                                                   quality data    quality data    quality data    quality data
                     FY 2020                         and is a      and is NOT a      and is a      and is NOT a
                                                  meaningful EHR  meaningful EHR  meaningful EHR  meaningful EHR
                                                       user            user            user            user
----------------------------------------------------------------------------------------------------------------
Proposed Market Basket                                       3.2             3.2             3.2             3.2
 Rate[dash]of[dash]Increase.....................
Proposed Adjustment for Failure to Submit                      0               0            -0.8            -0.8
 Quality Data under Section 1886(b)(3)(B)(viii)
 of the Act.....................................
Proposed Adjustment for Failure to be a                        0            -2.4               0            -2.4
 Meaningful EHR User under Section
 1886(b)(3)(B)(ix) of the Act...................
Proposed MFP Adjustment under Section                       -0.5            -0.5            -0.5            -0.5
 1886(b)(3)(B)(xi) of the Act...................
Proposed Applicable Percentage Increase Applied              2.7             0.3             1.9            -0.5
 to Standardized Amount.........................
----------------------------------------------------------------------------------------------------------------

    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 2020.
     An adjustment to the standardized amount to ensure budget 
neutrality for DRG recalibration and reclassification, as provided for 
under section 1886(d)(4)(C)(iii) of the Act.
     An adjustment to ensure the wage index and labor-related 
share changes (depending on the fiscal year) are budget neutral, as 
provided for under section 1886(d)(3)(E)(i) of the Act (as discussed in 
the FY 2006 IPPS final rule (70 FR 47395) and the FY 2010 IPPS final 
rule (74 FR 44005). We note that section 1886(d)(3)(E)(i) of the Act 
requires that when we compute such budget neutrality, we assume that 
the provisions of section 1886(d)(3)(E)(ii) of the Act (requiring a 62-
percent labor-related share in certain circumstances) had not been 
enacted.
     An adjustment to ensure the effects of geographic 
reclassification are budget neutral, as provided for under section 
1886(d)(8)(D) of the Act, by removing the FY 2019 budget neutrality 
factor and applying a revised factor.
     A positive adjustment of 0.5 percent in FYs 2019 through 
2023 as required under section 414 of the MACRA.
     An adjustment to ensure the effects of the Rural Community 
Hospital Demonstration program are budget neutral as required under 
section 410A(c)(2) of Public Law 108-173. This demonstration program is 
required under section 410A of Public Law 108-173, as amended by 
sections 3123 and 10313 of Public Law 111-148, which extended the 
demonstration program for an additional 5 years, as amended by section 
15003 of Public Law 114-255

[[Page 19586]]

which amended section 410A of Public Law 108-173 to provide for a 10-
year extension of the demonstration program (in place of the 5-year 
extension required by the Affordable Care Act) beginning on the date 
immediately following the last day of the initial 5-year period under 
section 410A(a)(5) of Public Law 108-173.
     An adjustment to the standardized amount (using our 
exceptions and adjustments authority under section 1886(d)(5)(I)(i) of 
the Act) to implement in a budget neutral manner our proposed 
transition (described in section III.N.3.d. of the preamble of this 
proposed rule) for hospitals negatively impacted due to proposed 
changes to the wage index. We refer readers to section III.N. of the 
preamble of this proposed rule for a detailed discussion.
     An adjustment to remove the FY 2019 outlier offset and 
apply an offset for FY 2020, as provided for in section 1886(d)(3)(B) 
of the Act.
    For FY 2020, consistent with current law, we are proposing to apply 
the rural floor budget neutrality adjustment to hospital wage indexes. 
In addition, our proposals to increase the wage index values for 
hospitals with a wage index value in the lowest quartile of the wage 
index values across all hospitals and offset the estimated increase in 
IPPS payments by decreasing the wage index values for hospitals with a 
wage index value in the highest quartile of the wage index values 
across all hospitals (high wage index hospitals) are adjustments 
applied to hospital wage indexes. We refer readers to section III.N. of 
the preamble of this proposed rule for a detailed discussion. Also, 
consistent with section 3141 of the Affordable Care Act, instead of 
applying a State-level rural floor budget neutrality adjustment to the 
wage index, we are proposing to apply a uniform, national budget 
neutrality adjustment to the FY 2020 wage index for the rural floor.

A. Calculation of the Proposed Adjusted Standardized Amount

1. Standardization of Base-Year Costs or Target Amounts
    In general, the national standardized amount is based on per 
discharge averages of adjusted hospital costs from a base period 
(section 1886(d)(2)(A) of the Act), updated and otherwise adjusted in 
accordance with the provisions of section 1886(d) of the Act. The 
September 1, 1983 interim final rule (48 FR 39763) contained a detailed 
explanation of how base-year cost data (from cost reporting periods 
ending during FY 1981) were established for urban and rural hospitals 
in the initial development of standardized amounts for the IPPS.
    Sections 1886(d)(2)(B) and 1886(d)(2)(C) of the Act require us to 
update base-year per discharge costs for FY 1984 and then standardize 
the cost data in order to remove the effects of certain sources of cost 
variations among hospitals. These effects include case-mix, differences 
in area wage levels, cost-of-living adjustments for Alaska and Hawaii, 
IME costs, and costs to hospitals serving a disproportionate share of 
low-income patients.
    For FY 2020, we are proposing to continue to use the national 
labor-related and nonlabor-related shares (which are based on the 2014-
based hospital market basket) that were used in FY 2019. Specifically, 
under section 1886(d)(3)(E) of the Act, the Secretary estimates, from 
time to time, the proportion of payments that are labor-related and 
adjusts 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 
proportion of hospitals' costs that are attributable to wages and wage-
related costs as the ``labor-related share.'' For FY 2020, as discussed 
in section III. of the preamble of this proposed rule, we are proposing 
to continue to use a labor-related share of 68.3 percent for the 
national standardized amounts for all IPPS hospitals (including 
hospitals in Puerto Rico) that have a wage index value that is greater 
than 1.0000. Consistent with section 1886(d)(3)(E) of the Act, we are 
proposing to apply the wage index to a labor-related share of 62 
percent of the national standardized amount for all IPPS hospitals 
(including hospitals in Puerto Rico) whose wage index values are less 
than or equal to 1.0000.
    The proposed standardized amounts for operating costs appear in 
Tables 1A, 1B, and 1C that are listed and published in section VI. of 
the Addendum to this proposed rule and are available via the internet 
on the CMS website.
2. Computing the National Average Standardized Amount
    Section 1886(d)(3)(A)(iv)(II) of the Act requires that, beginning 
with FY 2004 and thereafter, an equal standardized amount be computed 
for all hospitals at the level computed for large urban hospitals 
during FY 2003, updated by the applicable percentage update. 
Accordingly, we are proposing to calculate the FY 2020 national average 
standardized amount irrespective of whether a hospital is located in an 
urban or rural location.
3. Updating the National Average Standardized Amount
    Section 1886(b)(3)(B) of the Act specifies the applicable 
percentage increase used to update the standardized amount for payment 
for inpatient hospital operating costs. We note that, in compliance 
with section 404 of the MMA, in this proposed rule, we are proposing to 
use the 2014-based IPPS operating and capital market baskets for FY 
2020. As discussed in section IV.B. of the preamble of this proposed 
rule, in accordance with section 1886(b)(3)(B) of the Act, as amended 
by section 3401(a) of the Affordable Care Act, we are proposing to 
reduce the FY 2020 applicable percentage increase (which for this 
proposed rule is based on IGI's fourth quarter 2018 forecast of the 
2014-based IPPS market basket) by the MFP adjustment (the 10-year 
moving average of MFP for the period ending FY 2020) of 0.5 percentage 
point, which for this proposed rule is also calculated based on IGI's 
fourth quarter 2018 forecast.
    Based on IGI's 2018 fourth quarter forecast of the hospital market 
basket increase (as discussed in Appendix B of this proposed rule), the 
forecast of the hospital market basket increase for FY 2020 for this 
proposed rule is 3.2 percent. As discussed earlier, for FY 2020, 
depending on whether a hospital submits quality data under the rules 
established in accordance with section 1886(b)(3)(B)(viii) of the Act 
and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the 
Act, there are four possible applicable percentage increases that can 
be applied to the standardized amount. We refer readers to section 
IV.B. of the preamble of this proposed rule for a complete discussion 
on the FY 2020 inpatient hospital update to the standardized amount. We 
also refer readers to the table above for the four possible applicable 
percentage increases that would be applied to update the national 
standardized amount. The proposed standardized amounts shown in Tables 
1A through 1C that are published in section VI. of this Addendum and 
that are available via the internet on the CMS website reflect these 
differential amounts.
    Although the update factors for FY 2020 are set by law, we are 
required by section 1886(e)(4) of the Act to recommend, taking into 
account MedPAC's recommendations, appropriate update factors for FY 
2020 for both IPPS hospitals and hospitals and hospital units excluded 
from the IPPS. Section 1886(e)(5)(A) of the Act requires that we 
publish our recommendations in the Federal

[[Page 19587]]

Register for public comment. Our recommendation on the update factors 
is set forth in Appendix B of this proposed rule.
4. Methodology for Calculation of the Average Standardized Amount
    The methodology we used to calculate the proposed FY 2020 
standardized amount is as follows:
     To ensure we are only including hospitals paid under the 
IPPS in the calculation of the standardized amount, we applied the 
following inclusion and exclusion criteria: Include hospitals whose 
last four digits fall between 0001 and 0879 (section 2779A1 of Chapter 
2 of the State Operations Manual on the CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/som107c02.pdf); exclude CAHs at the time of this proposed rule; exclude 
hospitals in Maryland (because these hospitals are paid under an all 
payer model under section 1115A of the Act); and remove PPS-excluded 
cancer hospitals that have a ``V'' in the fifth position of their 
provider number or a ``E'' or ``F'' in the sixth position.
     As in the past, we are proposing to adjust the FY 2020 
standardized amount to remove the effects of the FY 2019 geographic 
reclassifications and outlier payments before applying the FY 2020 
updates. We then applied budget neutrality offsets for outliers and 
geographic reclassifications to the standardized amount based on 
proposed FY 2020 payment policies.
     We do not remove the prior year's budget neutrality 
adjustments for reclassification and recalibration of the DRG relative 
weights and for updated wage data because, in accordance with sections 
1886(d)(4)(C)(iii) and 1886(d)(3)(E) of the Act, estimated aggregate 
payments after updates in the DRG relative weights and wage index 
should equal estimated aggregate payments prior to the changes. If we 
removed the prior year's adjustment, we would not satisfy these 
conditions.
    Budget neutrality is determined by comparing aggregate IPPS 
payments before and after making changes that are required to be budget 
neutral (for example, changes to MS-DRG classifications, recalibration 
of the MS-DRG relative weights, updates to the wage index, and 
different geographic reclassifications). We include outlier payments in 
the simulations because they may be affected by changes in these 
parameters.
     Consistent with our methodology established in the FY 2011 
IPPS/LTCH PPS final rule (75 FR 50422 through 50433), because IME 
Medicare Advantage payments are made to IPPS hospitals under section 
1886(d) of the Act, we believe these payments must be part of these 
budget neutrality calculations. However, we note that it is not 
necessary to include Medicare Advantage IME payments in the outlier 
threshold calculation or the outlier offset to the standardized amount 
because the statute requires that outlier payments be not less than 5 
percent nor more than 6 percent of total ``operating DRG payments,'' 
which does not include IME and DSH payments. We refer readers to the FY 
2011 IPPS/LTCH PPS final rule for a complete discussion on our 
methodology of identifying and adding the total Medicare Advantage IME 
payment amount to the budget neutrality adjustments.
     Consistent with the methodology in the FY 2012 IPPS/LTCH 
PPS final rule, in order to ensure that we capture only fee-for-service 
claims, we are only including claims with a ``Claim Type'' of 60 (which 
is a field on the MedPAR file that indicates a claim is an FFS claim).
     Consistent with our methodology established in the FY 2017 
IPPS/LTCH PPS final rule (81 FR 57277), in order to further ensure that 
we capture only FFS claims, we are excluding claims with a ``GHOPAID'' 
indicator of 1 (which is a field on the MedPAR file that indicates a 
claim is not an FFS claim and is paid by a Group Health Organization).
     Consistent with our methodology established in the FY 2011 
IPPS/LTCH PPS final rule (75 FR 50422 through 50423), we examine the 
MedPAR file and remove pharmacy charges for anti-hemophilic blood 
factor (which are paid separately under the IPPS) with an indicator of 
``3'' for blood clotting with a revenue code of ``0636'' from the 
covered charge field for the budget neutrality adjustments. We also 
remove organ acquisition charges from the covered charge field for the 
budget neutrality adjustments because organ acquisition is a pass-
through payment not paid under the IPPS.
     The participation of hospitals under the BPCI (Bundled 
Payments for Care Improvement) Advanced Model started 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 the BPCI Advanced Model 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: https://innovation.cms.gov/initiatives/bpci-advanced/.
    For FY 2020, consistent with how we treated hospitals that 
participated in the BPCI Advanced Model in the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41259), we are proposing to include all applicable 
data from subsection (d) hospitals participating in the BPCI Advanced 
Model in our IPPS payment modeling and ratesetting calculations. We 
believe it is appropriate to include all applicable data from the 
subsection (d) hospitals participating in the BPCI Advanced Model in 
our IPPS payment modeling and ratesetting calculations because these 
hospitals are still receiving regular IPPS fee-for-service payments 
under section 1886(d) of the Act. For the same reasons, we also are 
proposing to include all applicable data from subsection (d) hospitals 
participating in the Comprehensive Care for Joint Replacement (CJR) 
Model in our IPPS payment modeling and ratesetting calculations.
     Consistent with our methodology established in the FY 2013 
IPPS/LTCH PPS final rule (77 FR 53687 through 53688), we believe that 
it is appropriate to include adjustments for the Hospital Readmissions 
Reduction Program and the Hospital VBP Program (established under the 
Affordable Care Act) within our budget neutrality calculations.
    Both the hospital readmissions payment adjustment (reduction) and 
the hospital VBP payment adjustment (redistribution) are applied on a 
claim-by-claim basis by adjusting, as applicable, the base-operating 
DRG payment amount for individual subsection (d) hospitals, which 
affects the overall sum of aggregate payments on each side of the 
comparison within the budget neutrality calculations.
    In order to properly determine aggregate payments on each side of 
the comparison, consistent with the approach we have taken in prior 
years, for FY 2020 and subsequent years, we are proposing to apply a 
proposed proxy based on the prior fiscal year hospital readmissions 
payment adjustment (for FY 2020, this would be FY 2019 final

[[Page 19588]]

adjustment factors) and a proposed proxy based on the prior fiscal year 
hospital VBP payment adjustment (for FY 2020, this would be FY 2019 
final adjustment factors) on each side of the comparison, consistent 
with the methodology that we adopted in the FY 2013 IPPS/LTCH PPS final 
rule (77 FR 53687 through 53688). That is, we are proposing to apply a 
proxy readmissions payment adjustment factor and a proxy hospital VBP 
payment adjustment factor from the prior final rule on both sides of 
our comparison of aggregate payments when determining all budget 
neutrality factors described in section II.A.4. of this Addendum.
    For the purpose of calculating the proposed proxy FY 2020 
readmissions payment adjustment factors, for both this proposed rule 
and the final rule, as discussed in section IV.H. of the preamble of 
this proposed rule, we are proposing to use the proportion of dually-
eligible Medicare beneficiaries, excess readmission ratios, and 
aggregate payments for excess readmissions from the prior fiscal year's 
applicable period because, at the time of the development of this 
proposed rule and the final rule, hospitals will not yet have had the 
opportunity to review and correct the data (program calculations based 
on the proposed FY 2020 applicable period of July 1, 2015 to June 30, 
2018) before the data are made public under our policy regarding the 
reporting of hospital-specific readmission rates, consistent with 
section 1886(q)(6) of the Act. (For additional information on our 
general policy for the reporting of hospital-specific readmission 
rates, consistent with section 1886(q)(6) of the Act, we refer readers 
to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53399 through 53400) and 
section IV.G. of the preamble of this proposed rule.)
    In addition, for FY 2020, for the purpose of modeling aggregate 
payments when determining all budget neutrality factors, we are 
proposing to use proxy hospital VBP payment adjustment factors for FY 
2020 that are based on data from the prior fiscal year's applicable 
period because hospitals have not yet had an opportunity to review and 
submit corrections for their data from the FY 2020 performance period. 
(For additional information on our policy regarding the review and 
correction of hospital-specific measure rates under the Hospital VBP 
Program, consistent with section 1886(o)(10)(A)(ii) of the Act, we 
refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53578 
through 53581), the CY 2012 OPPS/ASC final rule with comment period (76 
FR 74544 through 74547), and the Hospital Inpatient VBP final rule (76 
FR 26534 through 26536).)
     The Affordable Care Act also established section 1886(r) 
of the Act, which modifies the methodology for computing the Medicare 
DSH payment adjustment beginning in FY 2014. Beginning in FY 2014, IPPS 
hospitals receiving Medicare DSH payment adjustments receive an 
empirically justified Medicare DSH payment equal to 25 percent of the 
amount that would previously have been received under the statutory 
formula set forth under section 1886(d)(5)(F) of the Act governing the 
Medicare DSH payment adjustment. In accordance with section 1886(r)(2) 
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 
and any additional statutory adjustment, will be available to make 
additional payments to Medicare DSH hospitals based on their share of 
the total amount of uncompensated care reported by Medicare DSH 
hospitals for a given time period. In order to properly determine 
aggregate payments on each side of the comparison for budget 
neutrality, prior to FY 2014, we included estimated Medicare DSH 
payments on both sides of our comparison of aggregate payments when 
determining all budget neutrality factors described in section II.A.4. 
of this Addendum.
    To do this for FY 2020 (as we did for the last 6 fiscal years), we 
are proposing to include estimated empirically justified Medicare DSH 
payments that will be paid in accordance with section 1886(r)(1) of the 
Act and estimates of the additional uncompensated care payments made to 
hospitals receiving Medicare DSH payment adjustments as described by 
section 1886(r)(2) of the Act. That is, we are proposing to consider 
estimated empirically justified Medicare DSH payments at 25 percent of 
what would otherwise have been paid, and also the estimated additional 
uncompensated care payments for hospitals receiving Medicare DSH 
payment adjustments on both sides of our comparison of aggregate 
payments when determining all budget neutrality factors described in 
section II.A.4. of this Addendum.
     When calculating total payments for budget neutrality, to 
determine total payments for SCHs, we model total hospital-specific 
rate payments and total Federal rate payments and then include 
whichever one of the total payments is greater. As discussed in section 
IV.F. of the preamble of this proposed rule and below, we are proposing 
to continue to use the FY 2014 finalized methodology under which we 
take into consideration uncompensated care payments in the comparison 
of payments under the Federal rate and the hospital-specific rate for 
SCHs. Therefore, we are proposing to include estimated uncompensated 
care payments in this comparison.
    Similarly, for MDHs, as discussed in section IV.F. of the preamble 
of this proposed rule, when computing payments under the Federal 
national rate plus 75 percent of the difference between the payments 
under the Federal national rate and the payments under the updated 
hospital-specific rate, we are proposing to continue to take into 
consideration uncompensated care payments in the computation of 
payments under the Federal rate and the hospital-specific rate for 
MDHs.
     We are proposing to include an adjustment to the 
standardized amount for those hospitals that are not meaningful EHR 
users in our modeling of aggregate payments for budget neutrality for 
FY 2020. Similar to FY 2019, we are including this adjustment based on 
data on the prior year's performance. Payments for hospitals will be 
estimated based on the proposed applicable standardized amount in 
Tables 1A and 1B for discharges occurring in FY 2020.
     In our determination of all proposed budget neutrality 
factors described in section II.A.4. of this Addendum, we use transfer-
adjusted discharges. Specifically, we calculated the transfer-adjusted 
discharges using the statutory expansion of the postacute care transfer 
policy to include discharges to hospice care by a hospice program as 
discussed in section IV.A.2.b. of the preamble of this proposed rule.
a. Proposed Recalibration of MS-DRG Relative Weights
    Section 1886(d)(4)(C)(iii) of the Act specifies that, beginning in 
FY 1991, the annual DRG reclassification and recalibration of the 
relative weights must be made in a manner that ensures that aggregate 
payments to hospitals are not affected. As discussed in section II.H. 
of the preamble of this proposed rule, we normalized the recalibrated 
MS-DRG relative weights by an adjustment factor so that the average 
case relative weight after recalibration is equal to the average case 
relative weight prior to recalibration. However, equating the average 
case relative weight after recalibration to the average case relative 
weight before recalibration does not necessarily achieve budget 
neutrality with respect to aggregate

[[Page 19589]]

payments to hospitals because payments to hospitals are affected by 
factors other than average case relative weight. Therefore, as we have 
done in past years, we are proposing to make a budget neutrality 
adjustment to ensure that the requirement of section 1886(d)(4)(C)(iii) 
of the Act is met.
    For FY 2020, to comply with the requirement that MS-DRG 
reclassification and recalibration of the relative weights be budget 
neutral for the standardized amount and the hospital-specific rates, we 
used FY 2018 discharge data to simulate payments and compared the 
following:
     Aggregate payments using the FY 2019 labor-related share 
percentages, the FY 2019 relative weights, and the FY 2019 pre-
reclassified wage data, and applied the proposed FY 2020 hospital 
readmissions payment adjustments and estimated FY 2020 hospital VBP 
payment adjustments; and
     Aggregate payments using the FY 2019 labor-related share 
percentages, the proposed FY 2020 relative weights, and the FY 2019 
pre-reclassified wage data, and applied the proposed FY 2020 hospital 
readmissions payment adjustments and estimated FY 2020 hospital VBP 
payment adjustments applied above.
    Based on this comparison, we computed a proposed budget neutrality 
adjustment factor equal to 0.998768 and applied this factor to the 
standardized amount. As discussed in section IV. of this Addendum, we 
also are proposing to apply the MS-DRG reclassification and 
recalibration budget neutrality factor of 0.998768 to the hospital-
specific rates that are effective for cost reporting periods beginning 
on or after October 1, 2019.
b. Updated Wage Index--Budget Neutrality Adjustment
    Section 1886(d)(3)(E)(i) of the Act requires us to update the 
hospital wage index on an annual basis beginning October 1, 1993. This 
provision also requires us to make any updates or adjustments to the 
wage index in a manner that ensures that aggregate payments to 
hospitals are not affected by the change in the wage index. Section 
1886(d)(3)(E)(i) of the Act requires that we implement the wage index 
adjustment in a budget neutral manner. However, section 
1886(d)(3)(E)(ii) of the Act sets the labor-related share at 62 percent 
for hospitals with a wage index less than or equal to 1.0000, and 
section 1886(d)(3)(E)(i) of the Act provides that the Secretary shall 
calculate the budget neutrality adjustment for the adjustments or 
updates made under that provision as if section 1886(d)(3)(E)(ii) of 
the Act had not been enacted. In other words, this section of the 
statute requires that we implement the updates to the wage index in a 
budget neutral manner, but that our budget neutrality adjustment should 
not take into account the requirement that we set the labor-related 
share for hospitals with wage indexes less than or equal to 1.0000 at 
the more advantageous level of 62 percent. Therefore, for purposes of 
this budget neutrality adjustment, section 1886(d)(3)(E)(i) of the Act 
prohibits us from taking into account the fact that hospitals with a 
wage index less than or equal to 1.0000 are paid using a labor-related 
share of 62 percent. Consistent with current policy, for FY 2020, we 
are proposing to adjust 100 percent of the wage index factor for 
occupational mix. We describe the occupational mix adjustment in 
section III.E. of the preamble of this proposed rule.
    To compute a proposed budget neutrality adjustment factor for wage 
index and labor-related share percentage changes, we used FY 2018 
discharge data to simulate payments and compared the following:
     Aggregate payments using the proposed FY 2020 relative 
weights and the FY 2019 pre-reclassified wage indexes, applied the FY 
2019 labor-related share of 68.3 percent to all hospitals (regardless 
of whether the hospital's wage index was above or below 1.0000), and 
applied the proposed FY 2020 hospital readmissions payment adjustment 
and the estimated FY 2020 hospital VBP payment adjustment; and
     Aggregate payments using the proposed FY 2020 relative 
weights and the proposed FY 2020 pre-reclassified wage indexes, applied 
the proposed labor-related share for FY 2020 of 68.3 percent to all 
hospitals (regardless of whether the hospital's wage index was above or 
below 1.0000), and applied the same proposed FY 2020 hospital 
readmissions payment adjustments and estimated FY 2020 hospital VBP 
payment adjustments applied above.
    In addition, we applied the proposed MS-DRG reclassification and 
recalibration budget neutrality adjustment factor (derived in the first 
step) to the proposed payment rates that were used to simulate payments 
for this comparison of aggregate payments from FY 2019 to FY 2020. By 
applying this methodology, we determined a proposed budget neutrality 
adjustment factor of 1.000915 for proposed changes to the wage index.
c. Reclassified Hospitals--Proposed Budget Neutrality Adjustment
    Section 1886(d)(8)(B) of the Act provides that certain rural 
hospitals are deemed urban. In addition, section 1886(d)(10) of the Act 
provides for the reclassification of hospitals based on determinations 
by the MGCRB. Under section 1886(d)(10) of the Act, a hospital may be 
reclassified for purposes of the wage index.
    Under section 1886(d)(8)(D) of the Act, the Secretary is required 
to adjust the standardized amount to ensure that aggregate payments 
under the IPPS after implementation of the provisions of sections 
1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are equal to the 
aggregate prospective payments that would have been made absent these 
provisions. We note that, with regard to the requirement under section 
1886(d)(8)(C)(iii) of the Act, in our calculation of a proposed budget 
neutrality adjustment factor, we applied the provisions of our proposal 
discussed in section III.N. of the preamble of this proposed rule to 
exclude the wage data of urban hospitals that have reclassified as 
rural under section 1886(d)(8)(E) of the Act (as implemented in Sec.  
412.103) from the calculation of ``the wage index for rural areas in 
the State in which the county is located.'' We refer readers to the FY 
2015 IPPS final rule (79 FR 50371 through 50372) for a complete 
discussion regarding the requirement of section 1886(d)(8)(C)(iii) of 
the Act. We further note that the wage index adjustments provided for 
under section 1886(d)(13) of the Act are not budget neutral. Section 
1886(d)(13)(H) of the Act provides that any increase in a wage index 
under section 1886(d)(13) shall not be taken into account in applying 
any budget neutrality adjustment with respect to such index under 
section 1886(d)(8)(D) of the Act. To calculate the proposed budget 
neutrality adjustment factor for FY 2020, we used FY 2018 discharge 
data to simulate payments and compared the following:
     Aggregate payments using the proposed FY 2020 labor-
related share percentages, the proposed FY 2020 relative weights, and 
the proposed FY 2020 wage data prior to any reclassifications under 
sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act, and applied 
the proposed FY 2020 hospital readmissions payment adjustments and the 
estimated FY 2020 hospital VBP payment adjustments; and
     Aggregate payments using the proposed FY 2020 labor-
related share percentages, the proposed FY 2020 relative weights, and 
the proposed FY 2020 wage data after such

[[Page 19590]]

reclassifications, and applied the same proposed FY 2020 hospital 
readmissions payment adjustments and the estimated FY 2020 hospital VBP 
payment adjustments applied above.
    We note that the reclassifications applied under the second 
simulation and comparison are those listed in Table 2 associated with 
this proposed rule, which is available via the internet on the CMS 
website. This table reflects reclassification crosswalks proposed for 
FY 2020, and apply the proposed policies explained in section III. of 
the preamble of this proposed rule. Based on these simulations, we 
calculated a proposed budget neutrality adjustment factor of 0.986451 
to ensure that the effects of these provisions are budget neutral, 
consistent with the statute.
    The proposed FY 2020 budget neutrality adjustment factor was 
applied to the proposed standardized amount after removing the effects 
of the FY 2019 budget neutrality adjustment factor. We note that the 
proposed FY 2020 budget neutrality adjustment reflects FY 2020 wage 
index reclassifications approved by the MGCRB or the Administrator at 
the time of development of this proposed rule.
d. Rural Floor Budget Neutrality Adjustment
    Under Sec.  412.64(e)(4), we make an adjustment to the wage index 
to ensure that aggregate payments after implementation of the rural 
floor under section 4410 of the BBA (Pub. L. 105-33) is equal to the 
aggregate prospective payments that would have been made in the absence 
of this provision. Consistent with section 3141 of the Affordable Care 
Act and as discussed in section III.G. of the preamble of this proposed 
rule and codified at Sec.  412.64(e)(4)(ii), the budget neutrality 
adjustment for the rural floor is a national adjustment to the wage 
index. We note, as discussed in section III.N. of the preamble of this 
proposed rule, we are proposing to calculate the rural floor without 
including the wage data of urban hospitals that have reclassified as 
rural under section 1886(d)(8)(E) of the Act (as implemented in Sec.  
412.103).
    Similar to our calculation in the FY 2015 IPPS/LTCH PPS final rule 
(79 FR 50369 through 50370), for FY 2020, we are proposing to calculate 
a national rural Puerto Rico wage index. Because there are no rural 
Puerto Rico hospitals with established wage data, our calculation of 
the proposed FY 2020 rural Puerto Rico wage index is based on the 
policy adopted in the FY 2008 IPPS final rule with comment period (72 
FR 47323). That is, we use the unweighted average of the wage indexes 
from all CBSAs (urban areas) that are contiguous (share a border with) 
to the rural counties to compute the rural floor (72 FR 47323; 76 FR 
51594). Under the OMB labor market area delineations, except for 
Arecibo, Puerto Rico (CBSA 11640), all other Puerto Rico urban areas 
are contiguous to a rural area. Therefore, based on our existing 
policy, the proposed FY 2020 rural Puerto Rico wage index is calculated 
based on the average of the proposed FY 2020 wage indexes for the 
following urban areas: Aguadilla-Isabela, PR (CBSA 10380); Guayama, PR 
(CBSA 25020); Mayaguez, PR (CBSA 32420); Ponce, PR (CBSA 38660); San 
German, PR (CBSA 41900); and San Juan-Carolina-Caguas, PR (CBSA 41980).
    To calculate the proposed national rural floor budget neutrality 
adjustment factor, we used FY 2018 discharge data to simulate payments 
and the proposed post-reclassified national wage indexes and compared 
the following:
     National simulated payments without the proposed national 
rural floor; and
     National simulated payments with the proposed national 
rural floor.
    Based on this comparison, we determined a proposed national rural 
floor budget neutrality adjustment factor of 0.996316. The national 
adjustment was applied to the national wage indexes to produce a 
proposed national rural floor budget neutral wage index.
e. Proposed Rural Community Hospital Demonstration Program Adjustment
    In section IV.K. of the preamble of this proposed rule, we discuss 
the Rural Community Hospital Demonstration program, which was 
originally authorized for a 5-year period by section 410A of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA) (Pub. L. 108-173), and extended for another 5-year period by 
sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111-148). 
Subsequently, section 15003 of the 21st Century Cures Act (Pub. L. 114-
255), enacted December 13, 2016, amended section 410A of Public Law 
108-173 to require a 10-year extension period (in place of the 5-year 
extension required by the Affordable Care Act, as further discussed 
below). We make an adjustment to the standardized amount to ensure the 
effects of the Rural Community Hospital Demonstration program are 
budget neutral as required under section 410A(c)(2) of Public Law 108-
173. We refer readers to section IV.K. of the preamble of this proposed 
rule for complete details regarding the Rural Community Hospital 
Demonstration.
    With regard to budget neutrality, as mentioned earlier, we make an 
adjustment to the standardized amount to ensure the effects of the 
Rural Community Hospital Demonstration are budget neutral, as required 
under section 410A(c)(2) of Public Law 108-173. For FY 2020, the total 
amount that we are proposing to apply to make an adjustment to the 
standardized amounts to ensure the effects of the Rural Community 
Hospital Demonstration program are budget neutral is $47,038,507. 
Accordingly, using the most recent data available to account for the 
estimated costs of the demonstration program, for FY 2020, we computed 
a proposed factor of 0.999580 for the Rural Community Hospital 
Demonstration budget neutrality adjustment that will be applied to the 
IPPS standard Federal payment rate. We refer readers to section IV.K. 
of the preamble of this proposed rule for complete details regarding 
the calculation of the amount we are applying to make an adjustment to 
the standardized amount.
    We note that, as discussed in section IV.K. of the preamble of this 
proposed rule, if updated or additional data become available prior to 
issuance of the FY 2020 IPPS/LTCH PPS final rule, we would use those 
data to the extent appropriate to determine the budget neutrality 
offset amount for FY 2020. We refer readers to section IV.K. of the 
preamble of this proposed rule for complete details regarding the 
availability of additional data prior to the FY 2020 IPPS/LTCH PPS 
final rule.
f. Proposed Policy for Lowest and Highest Quartile Wage Index Hospitals
    As discussed in section III.N. of the preamble of this proposed 
rule, to address wage index disparities, we are proposing to increase 
the wage index values for hospitals with a wage index value below the 
25th percentile wage index value across all hospitals. In addition, 
under our proposal, in order to offset the estimated increase in IPPS 
payments to hospitals with wage index values below the 25th percentile, 
we are proposing to decrease the wage index values for hospitals with a 
wage index value above the 75th percentile wage index value across all 
hospitals (high wage index hospitals). We note that this budget 
neutrality adjustment is applied to the wage index and not to the 
standardized amount. In addition, we are proposing that our proposed 
policy to increase the wage index for hospitals with wage indexes below 
the 25th percentile would be budget neutral using our authority under 
both section 1886(d)(3)(E) of the Act, which gives the

[[Page 19591]]

Secretary broad authority to adjust 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, and requires 
those adjustments to be budget neutral, and our exceptions and 
adjustments authority under section 1886(d)(5)(I) of the Act. We refer 
readers to section III.N. of the preamble of this proposed rule for a 
complete discussion regarding this proposal.
g. Proposed Transition Budget Neutrality Adjustment Reflecting the 
Proposed FY 2020 Wage Index Changes
    In section III.N. of the preamble of this proposed rule, we state 
that we recognize that, absent further adjustments, the combined effect 
of the proposed changes to the FY 2020 wage index could lead to 
significant decreases in the wage index values for some hospitals 
depending on the data for the final rule. Therefore, for FY 2020, we 
are proposing a transition wage index to help mitigate any significant 
decreases in the wage index values of hospitals compared to their final 
wage indexes for FY 2019. Specifically, we are proposing to place a 5-
percent cap on any decrease in a hospital's wage index from the 
hospital's final wage index in FY 2019. In other words, we are 
proposing that a hospital's final wage index for FY 2020 would not be 
less than 95 percent of its final wage index for FY 2019. For FY 2020, 
we are proposing to use our exceptions and adjustments authority under 
section 1886(d)(5)(I)(i) of the Act to apply a budget neutrality 
adjustment to the standardized amount so that our proposed transition 
for hospitals negatively impacted (described in section III.N.3.d. of 
the preamble of this proposed rule) is implemented in a budget neutral 
manner. We refer readers to section III.N. of the preamble of this 
proposed rule for a complete discussion regarding this proposal.
    To calculate a proposed transition budget neutrality adjustment 
factor for FY 2020, we used FY 2018 discharge data to simulate payments 
and compared the following:
     Aggregate payments using the proposed FY 2020 labor-
related share percentages, the proposed FY 2020 relative weights, and 
the proposed FY 2020 wage index for each hospital after adjusting the 
wage indexes under the proposed policy for lowest and highest quartile 
wage index hospitals but without the proposed 5-percent cap, and 
applied the proposed FY 2020 hospital readmissions payment adjustments 
and the estimated FY 2020 hospital VBP payment adjustments, and the 
proposed operating outlier reconciliation adjusted outlier percentage; 
and
     Aggregate payments using the proposed FY 2020 labor-
related share percentages, the proposed FY 2020 relative weights, and 
the proposed FY 2020 wage index for each hospital after adjusting the 
wage indexes under the proposed policy for lowest and highest quartile 
wage index hospitals and with the proposed 5-percent cap, and applied 
the same proposed FY 2020 hospital readmissions payment adjustments and 
the estimated FY 2020 hospital VBP payment adjustments applied above, 
and the proposed operating outlier reconciliation adjusted outlier 
percentage.
    This proposed FY 2020 budget neutrality adjustment factor was 
applied to the proposed standardized amount. Based on this comparison, 
we determined a proposed transition budget neutrality adjustment factor 
of 0.998349. We note that Table 2 associated with this proposed rule 
(which is available via the internet on the CMS website) contains the 
proposed wage index by provider before adjusting the wage indexes under 
the proposed policy for lowest and highest quartile wage index 
hospitals and the proposed 5-percent cap and the proposed wage index by 
provider after the application of these proposals.
h. Proposed Adjustment for FY 2020 Required Under Section 414 of Public 
Law 114-10 (MACRA)
    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 percent positive adjustment for 
each of FYs 2018 through 2023. (As noted in the FY 2018 IPPS/LTCH PPS 
proposed and final rules, section 15005 of the 21st Century Cures Act 
(Pub. L. 114-255), which was enacted December 13, 2016, reduced the 
adjustment for FY 2018 from 0.5 percentage points to 0.4588 percentage 
points.) Therefore, for FY 2020, we are proposing to implement the 
required +0.5 percent adjustment to the standardized amount. This is a 
permanent adjustment to the payment rates.
i. Proposed Outlier Payments
    Section 1886(d)(5)(A) of the Act provides for payments in addition 
to the basic prospective payments for ``outlier'' cases involving 
extraordinarily high costs. To qualify for outlier payments, a case 
must have costs greater than the sum of the prospective payment rate 
for the MS-DRG, any IME and DSH payments, uncompensated care payments, 
any new technology add-on payments, and the ``outlier threshold'' or 
``fixed-loss'' amount (a dollar amount by which the costs of a case 
must exceed payments in order to qualify for an outlier payment). We 
refer to the sum of the prospective payment rate for the MS-DRG, any 
IME and DSH payments, uncompensated care payments, any new technology 
add-on payments, and the outlier threshold as the outlier ``fixed-loss 
cost threshold.'' To determine whether the costs of a case exceed the 
fixed-loss cost threshold, a hospital's CCR is applied to the total 
covered charges for the case to convert the charges to estimated costs. 
Payments for eligible cases are then made based on a marginal cost 
factor, which is a percentage of the estimated costs above the fixed-
loss cost threshold. The marginal cost factor for FY 2020 is 80 
percent, or 90 percent for burn MS-DRGs 927, 928, 929, 933, 934 and 
935. We have used a marginal cost factor of 90 percent since FY 1989 
(54 FR 36479 through 36480) for designated burn DRGs as well as a 
marginal cost factor of 80 percent for all other DRGs since FY 1995 (59 
FR 45367).
    In accordance with section 1886(d)(5)(A)(iv) of the Act, outlier 
payments for any year are projected to be not less than 5 percent nor 
more than 6 percent of total operating DRG payments (which does not 
include IME and DSH payments) plus outlier payments. Similar to prior 
years, when setting the outlier threshold, we compute the percent 
target by dividing the total operating outlier payments by the total 
operating DRG payments plus outlier payments. As discussed in the next 
section, for FY 2020 we are proposing to incorporate an estimate of 
outlier reconciliation when setting the outlier threshold. We do not 
include any other payments such as IME and DSH within the outlier 
target amount. Therefore, it is not necessary to include Medicare 
Advantage IME payments in the outlier threshold calculation. Section 
1886(d)(3)(B) of the Act requires the Secretary to reduce the average 
standardized amount by a factor to account for the estimated proportion 
of total DRG payments made to outlier cases. More information on 
outlier

[[Page 19592]]

payments may be found on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/outlier.htm.
(1) Proposed Methodology To Incorporate an Estimate of Outlier 
Reconciliation in the FY 2020 Outlier Fixed-Loss Cost Threshold
    The regulations in 42 CFR 412.84(i)(4) state that any outlier 
reconciliation at cost report settlement will be based on operating and 
capital cost-to-charge ratios (CCRs) calculated based on a ratio of 
costs to charges computed from the relevant cost report and charge data 
determined at the time the cost report coinciding with the discharge is 
settled. We have instructed MACs to identify for CMS any instances 
where: (1) A hospital's actual CCR for the cost reporting period 
fluctuates plus or minus 10 percentage points compared to the interim 
CCR used to calculate outlier payments when a bill is processed; and 
(2) the total outlier payments for the hospital exceeded $500,000.00 
for that cost reporting period. If we determine that a hospital's 
outlier payments should be reconciled, we reconcile both operating and 
capital outlier payments. We refer readers to section 20.1.2.5 of 
Chapter 3 of the Medicare Claims Processing Manual (available on the 
CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf) for complete details regarding outlier 
reconciliation. The regulation at Sec.  412.84(m) further states that 
at the time of any outlier reconciliation under Sec.  412.84(i)(4), 
outlier payments may be adjusted to account for the time value of any 
underpayments or overpayments. Section 20.1.2.6 of Chapter 3 of the 
Medicare Claims Processing Manual contains instructions on how to 
assess the time value of money for reconciled outlier amounts.
    If the operating CCR of a hospital subject to outlier 
reconciliation is lower at cost report settlement compared to the 
operating CCR used for payment, the hospital will owe CMS money because 
it received an outlier overpayment at the time of claim payment. 
Conversely, if the operating CCR increases at cost report settlement 
compared to the operating CCR used for payment, CMS will owe the 
hospital money because the hospital outlier payments were underpaid. In 
prior fiscal years, commenters have requested that CMS incorporate 
outlier reconciliation in the development of the outlier threshold.
    As we have stated in prior rulemaking, outlier reconciliation is a 
function of the cost report, and MACs record the outlier reconciliation 
amount on each provider's cost report. Therefore, as the MACs continue 
to perform these outlier reconciliations, they record these amounts on 
the cost report, which are then publicly available through the HCRIS 
database. Therefore, the outlier reconciliation data used in the 
following proposed process would be publicly available through the cost 
report.
    In the FY 2004 IPPS final rule (68 FR 45476 through 45477), we 
included an estimate for outlier reconciliation that identified and 
adjusted the CCRs of hospitals in our calculation of the outlier fixed 
loss threshold. However, outlier cases are difficult to predict with 
regard to their occurrence for any individual hospital. Generally, an 
outlier payment is made if the estimated costs of the case exceed the 
sum of the outlier threshold plus the relevant payment amounts. There 
are many different variables that determine whether a case will be 
eligible for an outlier payment, including the CCR, the estimated costs 
of the case, the payment amounts, and the outlier threshold itself. We 
refer readers to section II.C.1. of this Addendum for additional detail 
regarding how the outlier payment is computed. In addition, predicting 
both the specific hospitals that will have outlier payments reconciled 
and the dollar amount of any such outlier reconciliation is difficult, 
which makes incorporating reconciliation into the modeling of the 
outlier threshold challenging.
    In the FY 2019 IPPS/LTCH PPS final rule and other prior rulemaking, 
we have stated that we continue to believe that, due to the policy 
implemented in the June 9, 2003 Outlier Final Rule (68 FR 34494), CCRs 
will no longer fluctuate as significantly and, therefore, few hospitals 
will actually have their outlier payments reconciled upon cost report 
settlement. In addition, we stated that it is difficult to predict the 
specific hospitals that will have fluctuating CCRs and outlier payments 
reconciled in any given year. In the FY 2019 IPPS/LTCH PPS final rule, 
in response to comments expressing concern with CMS' decision not to 
consider outlier reconciliation in developing the outlier threshold, we 
stated that we intended to revisit this issue in next year's proposed 
rule (that is, this FY 2020 proposed rule) as we continue to consider 
the feasibility of including outlier reconciliation in the modeling of 
the outlier threshold.
    Since the issuance of the FY 2019 IPPS/LTCH PPS final rule, we have 
continued to consider how outlier reconciliation could be included in 
the modeling of the outlier threshold. Rather than trying to predict 
which claims and/or hospitals may be subject to outlier reconciliation 
for FY 2020, we believe a methodology that incorporates an estimate of 
outlier reconciliation dollars based on actual outlier reconciliation 
amounts reported in historical cost reports would be a more feasible 
approach and provide a better estimate and predictor of outlier 
reconciliation for the upcoming fiscal year. We believe this proposed 
methodology would address concerns on the impact of outlier 
reconciliation on the modeling of the outlier threshold.
    We also believe the cost report data available in the HCRIS may be 
sufficiently complete for certain historical fiscal years to allow for 
calculating an estimate of outlier reconciliation for FY 2020. We 
issued Change Request 7192 on December 3, 2010 (available via the 
internet on the CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R2111CP.pdf) which updated a 
utility to reprice outlier claims for purposes of outlier 
reconciliation. Prior to this update, cost reports subject to outlier 
reconciliation were being held open until there was a mechanism to 
perform the outlier reconciliation. The outlier reconciliation amounts 
on the cost report are reflected in HCRIS once the cost report is final 
settled. As MACs began performing the outlier reconciliations, they 
were able to final settle many of these cost reports and the data for 
outlier reconciliation began to become available in HCRIS. However, 
even with a utility available beginning in 2010, not all cost reports 
were final settled for reasons other than outlier reconciliation. 
Therefore, HCRIS may not have reflected all of the hospitals subject to 
outlier reconciliation. We believe that many of these other reasons for 
the delay in cost reports being final settled have now been resolved. 
In contrast to prior years, HCRIS now contains more final settled cost 
reports that include outlier reconciliation, in particular for FY 2014, 
as we discuss below, which can be used to develop an annual estimate of 
total dollars related to outlier reconciliation payments based on this 
historical cost report data. Therefore, for FY 2020, we are proposing 
to incorporate into the outlier model the total outlier reconciliation 
dollars based on historical data. We are providing below a step-by-step 
explanation of how we are proposing to incorporate these dollars into 
the model.
    Currently, outlier reconciliation is among the last steps before 
the cost

[[Page 19593]]

report is final settled. In order to determine if a hospital meets the 
outlier reconciliation criteria, all cost report adjustments must be 
finalized in order to compare the final settled operating CCR from the 
cost report to the operating CCR used for the original claim payment. 
Generally, MACs attempt to have a cost report final settled 12 months 
after the cost report is submitted by the provider to CMS. However, 
there are sometimes issues or adjustments that are unique to the cost 
report that extend the final settlement beyond 12 months. This will 
delay the MAC from recording the outlier reconciliation amounts on the 
cost report, which will also delay the availability of these amounts in 
HCRIS. Because of these potential delays, we are proposing to use the 
historical outlier reconciliation amounts from the FY 2014 cost reports 
(cost reports with a begin date on or after October 1, 2013, and on or 
before September 30, 2014), which are currently the most recent and 
complete set of outlier reconciliation data, which are finalized and/or 
approved by the MAC as of the time of development of this FY 2020 
proposed rule. We note that approximately 90 percent of the FY 2014 
cost reports are final settled, as compared to approximately 60 percent 
of the FY 2015 cost reports that are final settled. As of the December 
2018 HCRIS, 16 of the FY 2014 cost reports and 8 of the FY 2015 cost 
reports had completed outlier reconciliation amounts. Therefore, we 
believe that the FY 2014 cost reports provide the most recent and 
complete available data to estimate the effect of outlier 
reconciliation dollars on the outlier cost threshold. We considered 
using FY 2015 cost report data. However, because, as previously noted, 
the FY 2015 and later years cost reports have a larger percent of not 
final settled cost reports, outlier reconciliation dollars for these 
years may not be sufficiently available in the HCRIS. Therefore, we 
currently believe that it may not be appropriate to use those more 
recent cost reports to estimate outlier reconciliation for the FY 2020 
proposed and final rules. In order to prospectively determine the 
outlier threshold, we are proposing to use the FY 2014 cost reports 
from the most recent publically available HCRIS extract at the time of 
development of the proposed and final rules. For this FY 2020 proposed 
rule, we used the December 2018 HCRIS extract to calculate the proposed 
percentage adjustment for outlier reconciliation. For the FY 2020 final 
rule, we are proposing to use the latest quarterly HCRIS extract that 
is publically available at the time of the development of that rule 
which, for FY 2020, would be the March 2019 extract. We believe 
hospitals that have a FY 2014 cost report approved for outlier 
reconciliation will have had their cost reports final settled by the 
issuance of this proposed rule and, therefore, would have outlier 
reconciliation estimates available for use in the FY 2020 final rule.
    We are proposing the following methodology to incorporate a 
projection of outlier payment reconciliations for the FY 2020 outlier 
threshold calculation.
    Step 1.--Use the Federal FY 2014 cost reports for hospitals paid 
under the IPPS from the most recent publicly available quarterly HCRIS 
extract available at the time of development of the proposed and final 
rules, and exclude sole community hospitals (SCHs) that were paid under 
their hospital-specific rate (that is, if Worksheet E, Part A, Line 48 
is greater than Line 47). We used the December 2018 HCRIS extract for 
this proposed rule and expect to use the March 2019 HCRIS extract for 
the FY 2020 final rule.
    Step 2.--Calculate the aggregate amount of historical total of 
operating outlier reconciliation dollars (Worksheet E, Part A, Line 
2.01) using the Federal FY 2014 cost reports from Step 1.
    Step 3.--Calculate the aggregate amount of total Federal operating 
payments using the Federal FY 2014 cost reports from Step 1. The total 
Federal operating payments consist of the Federal payments (Worksheet 
E, Part A, Line 1.01 and Line 1.02, plus Line 1.03 and Line 1.04), 
outlier payments (Worksheet E, Part A, Line 2 and Line 2.02), and the 
outlier reconciliation payments (Worksheet E, Part A, Line 2.01). We 
note that a negative amount on Worksheet E, Part A, Line 2.01 for 
outlier reconciliation indicates an amount that was owed by the 
hospital, and a positive amount indicates this amount was paid to the 
hospital.
    Step 4.--Divide the amount from Step 2 by the amount from Step 3 
and multiply the resulting amount by 100 to produce the percentage of 
total operating outlier reconciliation dollars to total Federal 
operating payments for FY 2014. This percentage amount would be used to 
adjust the outlier target for FY 2020 as described in Step 5.
    Step 5.--Because the outlier reconciliation dollars are only 
available on the cost reports, and not in the Medicare claims data in 
the MedPAR file used to model the outlier threshold, we are proposing 
to target 5.1 percent minus the percentage determined in Step 4 in 
determining the outlier threshold. Using the FY 2014 cost reports based 
on the December 2018 HCRIS extract, because the aggregate outlier 
reconciliation dollars from Step 2 are negative, we are targeting an 
amount higher than 5.1 percent for outlier payments for FY 2020 under 
our proposed methodology.
    For this FY 2020 proposed rule, based on the December 2018 HCRIS, 
16 hospitals had an outlier reconciliation amount recorded on Worksheet 
E, Part A, Line 2.01 for total operating outlier reconciliation dollars 
of negative $24,433,087 (Step 2). The total Federal operating payments 
based on the December 2018 HCRIS was $82,969,541,296 (Step 3). The 
ratio (Step 4) is a negative 0.029448 percent, which, when rounded to 
the second digit, is negative 0.03 percent. Therefore, for FY 2020, we 
are proposing to incorporate a projection of outlier reconciliation 
dollars by targeting an outlier threshold at 5.13 percent [5.1 percent-
(-.03 percent)]. When the percentage of operating outlier 
reconciliation dollars to total Federal operating payments is negative 
(such is the case when the aggregate amount of outlier reconciliation 
is negative), the effect is a decrease to the outlier threshold 
compared to an outlier threshold that is calculated without including 
this estimate of operating outlier reconciliation dollars. In section 
II.A.4.i.(2) of this Addendum, we provide the FY 2020 outlier threshold 
as calculated for this proposed rule both with and without including 
this proposed percentage estimate of operating outlier reconciliation.
    As explained earlier, we believe this is an appropriate method to 
include outlier reconciliation dollars in the outlier model because it 
uses the total outlier reconciliation dollars based on historic data 
rather than predicting which specific hospitals will have outlier 
payments reconciled for FY 2020. However, we would continue to use a 
5.1 percent target (or an outlier offset factor of 0.949) in 
calculating the outlier offset to the standardized amount. In the past, 
the outlier offset was six decimals because we targeted and set the 
threshold at 5.1 percent by adjusting the standardized amount by the 
outlier offset until operating outlier payments divided by total 
operating Federal payments plus operating outlier payments equaled 
approximately 5.1 percent (this approximation resulted in an offset 
beyond three decimals). However, under our proposed methodology, we 
believe a three decimal offset of 0.949 reflecting 5.1 percent is 
appropriate rather than the

[[Page 19594]]

unrounded six decimal offset that we have calculated for prior fiscal 
years. Specifically, as discussed in section II.A.5. of this Addendum, 
we are proposing to determine an outlier adjustment by applying a 
factor to the standardized amount that accounts for the projected 
proportion of total estimated FY 2020 operating Federal payments paid 
as outliers. Our proposed modification to the outlier threshold 
methodology is designed to adjust the total estimated outlier payments 
for FY 2020 by incorporating the projection of negative outlier 
reconciliation. That is, under this proposal, total estimated outlier 
payments for FY 2020 would be the sum of the estimated FY 2020 outlier 
payments based on the claims data from the outlier model and the 
estimated FY 2020 total operating outlier reconciliation dollars. We 
believe the proposed methodology would more accurately estimate the 
outlier adjustment to the standardized amount by increasing the 
accuracy of the calculation of the total estimated FY 2020 operating 
Federal payments paid as outliers. In other words, the net effect of 
our outlier proposal to incorporate a projection for outlier 
reconciliation dollars into the threshold methodology would be that FY 
2020 outlier payments (which include the estimated recoupment 
percentage for FY 2020 of 0.03 percent) would be 5.1 percent of total 
operating Federal payments plus total outlier payments. Therefore, the 
operating outlier offset to the standardized amount is 0.949 (1-0.051).
    Although we are not making any proposals with respect to the 
methodology for FY 2021 and subsequent fiscal years, the above-
described proposed methodology could advance by one year the cost 
reports used to determine the historical outlier reconciliation (for 
example, for FY 2021, the FY 2015 outlier reconciliations would be 
expected to be complete). We are considering additional options in 
order to have available more recent estimates of outlier reconciliation 
for future rulemaking.
    We establish an outlier threshold that is applicable to both 
hospital inpatient operating costs and hospital inpatient capital 
related costs (58 FR 46348). Similar to the calculation of the proposed 
adjustment to the standardized amount to account for the projected 
proportion of operating payments paid as outlier payments, as discussed 
in greater detail in section III.A.2. of this Addendum, we are 
proposing to reduce the FY 2020 capital standard Federal rate by an 
adjustment factor to account for the projected proportion of capital 
IPPS payments paid as outliers. The regulations in 42 CFR 412.84(i)(4) 
state that any outlier reconciliation at cost report settlement will be 
based on operating and capital CCRs calculated based on a ratio of 
costs to charges computed from the relevant cost report and charge data 
determined at the time the cost report coinciding with the discharge is 
settled. As such, any reconciliation also applies to capital outlier 
payments. As part of our proposal for FY 2020 to incorporate into the 
outlier model the total outlier reconciliation dollars from the most 
recent and most complete fiscal year cost report data, we also are 
proposing to adjust our estimate of FY 2020 capital outlier payments to 
incorporate a projection of capital outlier reconciliation payments 
when determining the adjustment factor to be applied to the capital 
standard Federal rate to account for the projected proportion of 
capital IPPS payments paid as outliers. To do so, we are proposing to 
use the following methodology, which generally parallels the proposed 
methodology to incorporate a projection of operating outlier 
reconciliation payments for the FY 2020 outlier threshold calculation.
    Step 1.--Use the Federal FY 2014 cost reports for hospitals paid 
under the IPPS from the most recent publicly available quarterly HCRIS 
extract available at the time of development of the proposed and final 
rules, and exclude SCHs that were paid under their hospital-specific 
rate (that is, if Worksheet E, Part A, Line 48 is greater than Line 
47). We used the December 2018 HCRIS extract for this proposed rule and 
expect to use the March 2019 HCRIS extract for the FY 2020 final rule.
    Step 2.--Calculate the aggregate amount of the historical total of 
capital outlier reconciliation dollars (Worksheet E, Part A, Line 93, 
Column 1) using the Federal FY 2014 cost reports from Step 1.
    Step 3.--Calculate the aggregate amount of total capital Federal 
payments using the Federal FY 2014 cost reports from Step 1. The total 
capital Federal payments consist of the capital DRG payments, including 
capital indirect medical education (IME) and capital disproportionate 
share hospital (DSH) payments (Worksheet E, Part A, Line 50, Column 1) 
and the capital outlier reconciliation payments (Worksheet E, Part A, 
Line 93, Column 1). We note that a negative amount on Worksheet E, Part 
A, Line 93 for capital outlier reconciliation indicates an amount that 
was owed by the hospital, and a positive amount indicates this amount 
was paid to the hospital.
    Step 4.--Divide the amount from Step 2 by the amount from Step 3 
and multiply the resulting amount by 100 to produce the percentage of 
total capital outlier reconciliation dollars to total capital Federal 
payments for FY 2014. This percentage amount would be used to adjust 
the estimate of capital outlier payments for FY 2020 as described in 
Step 5.
    Step 5.--Because the outlier reconciliation dollars are only 
available on the cost reports, and not in the specific Medicare claims 
data in the MedPAR file used to estimate outlier payments, we are 
proposing that the estimate of capital outlier payments for FY 2020 
would be determined by adding the percentage in Step 4 to the estimated 
percentage of capital outlier payments otherwise determined using the 
shared outlier threshold that is applicable to both hospital inpatient 
operating costs and hospital inpatient capital-related costs. (We note 
that this percentage is added for capital outlier payments but 
subtracted in the analogous step for operating outlier payments. We 
have a unified outlier payment methodology that uses a shared threshold 
to identify outlier cases for both operating and capital payments. The 
difference stems from the fact that operating outlier payments are 
determined by first setting a ``target'' percentage of operating 
outlier payments relative to aggregate operating payments which 
produces the outlier threshold. Once the shared threshold is set, it is 
used to estimate the percentage of capital outlier payments to total 
capital payments based on that threshold. Because the threshold is 
already set based on the operating target, rather than adjusting the 
threshold (or operating target), we adjust the percentage of capital 
outlier to total capital payments to account for the estimated effect 
of capital outlier reconciliation payments. This percentage is adjusted 
by adding the capital outlier reconciliation percentage from Step 4 to 
the estimate of the percentage of capital outlier payments to total 
capital payments based on the shared threshold.) Because the aggregate 
capital outlier reconciliation dollars from Step 2 are negative, the 
estimate of capital outlier payments for FY 2020 under our proposed 
methodology would be lower than the percentage of capital outlier 
payments otherwise determined using the shared outlier threshold.
    For this FY 2020 proposed rule, the estimated percentage of FY 2020 
capital outlier payments otherwise determined using the shared outlier 
threshold is 5.39 percent (estimated capital outlier payments of 
$433,416,367 divided by

[[Page 19595]]

(estimated capital outlier payments of $433,416,367 plus the estimated 
total capital Federal payment of $7,603,919,535)). Based on the 
December 2018 HCRIS, 16 hospitals had an outlier reconciliation amount 
recorded on Worksheet E, Part A, Line 93 for total capital outlier 
reconciliation dollars of negative $3,860,075 (Step 2). The total 
Federal capital payments based on the December 2018 HCRIS was 
$7,506,907,042 (Step 3) which results in a ratio (Step 4) of -0.05 
percent. Therefore, for FY 2020, taking into account projected capital 
outlier reconciliation payments under our proposed methodology would 
decrease the estimated percentage of FY 2020 aggregate capital outlier 
payments by 0.05 percent.
    As explained in our discussion of the outlier threshold methodology 
above, we believe this is an appropriate method to include capital 
outlier reconciliation dollars in the estimated percentage of capital 
outlier payments because it uses the total outlier reconciliation 
dollars based on historic data rather than predicting which specific 
hospitals will have outlier payments reconciled for FY 2020. As 
discussed in section III.A.2. of this Addendum, we are proposing to 
incorporate the capital outlier reconciliation dollars from Step 5 when 
applying the outlier adjustment factor in determining the capital 
Federal rate based on the estimated percentage of capital outlier 
payments to total capital Federal rate payments for FY 2020.
    We are inviting public comment on our proposed methodology for 
projecting the estimate of outlier reconciliation and incorporating 
that estimate into the modeling for the fixed-loss cost outlier 
threshold and our proposed methodology for projecting the estimate of 
capital outlier reconciliation and incorporating that estimate into the 
modeling of the estimate of FY 2020 capital outlier payments for 
purposes of determining the capital outlier adjustment factor.
(2) Proposed FY 2020 Outlier Fixed-Loss Cost Threshold
    In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50977 through 
50983), in response to public comments on the FY 2013 IPPS/LTCH PPS 
proposed rule, we made changes to our methodology for projecting the 
outlier fixed-loss cost threshold for FY 2014. We refer readers to the 
FY 2014 IPPS/LTCH PPS final rule for a detailed discussion of the 
changes.
    As we have done in the past, to calculate the proposed FY 2020 
outlier threshold, we simulated payments by applying proposed FY 2020 
payment rates and policies using cases from the FY 2018 MedPAR file. As 
noted in section II.C. of this Addendum, we specify the formula used 
for actual claim payment which is also used by CMS to project the 
outlier threshold for the upcoming fiscal year. The difference is the 
source of some of the variables in the formula. For example, operating 
and capital CCRs for actual claim payment are from the PSF while CMS 
uses an adjusted CCR (as described below) to project the threshold for 
the upcoming fiscal year. In addition, charges for a claim payment are 
from the bill while charges to project the threshold are from the 
MedPAR data with an inflation factor applied to the charges (as 
described earlier).
    In order to determine the proposed FY 2020 outlier threshold, we 
inflated the charges on the MedPAR claims by 2 years, from FY 2018 to 
FY 2020. To produce the most stable measure of charge inflation, we 
applied the following inclusion and exclusion criteria of hospitals 
claims in our measure of charge inflation:
     Include hospitals whose last four digits fall between 0001 
and 0899 (section 2779A1 of Chapter 2 of the State Operations Manual on 
the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/som107c02.pdf); include CAHs that were IPPS 
hospitals for the time period of the MedPAR data being used to 
calculate the charge inflation factor; include hospitals in Maryland; 
and remove PPS-excluded cancer hospitals who have a ``V'' in the fifth 
position of their provider number or a ``E'' or ``F'' in the sixth 
position.
     Include providers that are in both periods of charge data 
that are used to calculate the 1-year average annual rate-of-change in 
charges per case. We note this is consistent with the methodology used 
since FY 2014 and are providing this as a technical clarification.
     We excluded Medicare Advantage IME claims for the reasons 
described in section I.A.4. of this Addendum. We refer readers to the 
FY 2011 IPPS/LTCH PPS final rule for a complete discussion on our 
methodology of identifying and adding the total Medicare Advantage IME 
payment amount to the budget neutrality adjustments.
     In order to ensure that we capture only FFS claims, we 
included claims with a ``Claim Type'' of 60 (which is a field on the 
MedPAR file that indicates a claim is an FFS claim).
     In order to further ensure that we capture only FFS 
claims, we excluded claims with a ``GHOPAID'' indicator of 1 (which is 
a field on the MedPAR file that indicates a claim is not an FFS claim 
and is paid by a Group Health Organization).
     We examined the MedPAR file and removed pharmacy charges 
for anti-hemophilic blood factor (which are paid separately under the 
IPPS) with an indicator of ``3'' for blood clotting with a revenue code 
of ``0636'' from the covered charge field. We also removed organ 
acquisition charges from the covered charge field because organ 
acquisition is a pass-through payment not paid under the IPPS.
    Our general methodology to inflate the charges computes the 1-year 
average annual rate-of-change in charges per case which is then applied 
twice to inflate the charges on the MedPAR claims by 2 years (for 
example, FY 2018 to FY 2020). Specifically, under the methodology we 
have used since FY 2014, we compare the average charge per case from 
the latest 12 month period of MedPAR claims data available at the time 
of the proposed rule and the final rule to the average charge per case 
for the 12 month period from the prior year. For example, for the FY 
2019 IPPS/LTCH PPS proposed rule (83 FR 20581), we used the December 
2017 update of MedPAR claims data to calculate the average charges per 
case for the periods of January through December for CYs 2016 and 2017. 
Because the publicly released MedPAR claims do not contain claims 
beyond the end of the Federal fiscal year, the data for the last 
quarter of CY 2017 were not included in the publicly available December 
2017 release. As we have in prior rulemaking, we included in the FY 
2019 proposed rule a table grouping the claims data used in the 
calculation by quarter, and also made available on the CMS website more 
detailed summary tables by provider with the monthly charges that were 
used to compute the charge inflation factor.
    As summarized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41718), we have continued to receive comments expressing concern with 
what commenters stated was a lack of transparency with respect to the 
charge inflation component of the fixed-loss threshold calculation. The 
commenters concluded that, in the absence of access to the data or more 
specific data and information about how CMS arrived at the totals used 
in the charge inflation calculation, their ability to comment or to 
review the calculation of the charge inflation factor was limited.
    Another commenter stated that CMS has not made the necessary data 
available or any guidance that describes whether and how CMS edited 
such data to arrive at the total of quarterly charges

[[Page 19596]]

and charges per case used to measure charge inflation. Consequently, 
the commenter stated that the table of quarterly charges provided in 
the proposed rule was not useful in assessing the accuracy of the 
charge inflation figure that CMS used in the proposed rule to calculate 
the outlier threshold.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41718), we noted 
that we responded to similar comments in the FY 2015 IPPS/LTCH PPS 
final rule (79 FR 50375), the FY 2016 IPPS/LTCH PPS final rule (80 FR 
49779 through 49780), the FY 2017 IPPS/LTCH PPS final rule (81 FR 
57283), and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38524). We also 
explained that we have not yet been able to restructure the files (such 
as ensuring that personal identification information is compliant with 
privacy regulations) for release with the publication of the proposed 
rule and the final rule, and we continue to be confronted with the 
dilemma of either using older data that commenters can access earlier 
or using the most up-to-date data which will be more accurate, but will 
not be available to the public until after publication of the proposed 
and final rules. We stated that we continue to prefer using the latest 
data available at the time of the development of the proposed and final 
rules to compute the charge inflation factor because we believe it 
leads to greater accuracy in the calculation of the fixed-loss cost 
outlier threshold. We also noted that commenters did not recommend 
using charge data from a different period to compute the charge 
inflation factor. However, we stated that, for this FY 2020 IPPS/LTCH 
PPS proposed rule, we are continuing to consider using data that 
commenters can access earlier.
    For this FY 2020 IPPS/LTCH PPS proposed rule, after further 
consideration, we believe balancing our preference to use the latest 
available data from the MedPAR files and stakeholders' concerns about 
being able to use publicly available MedPAR files to review the charge 
inflation factor can be achieved by modifying our methodology to use 
the publicly available Federal fiscal year period (that is, for FY 
2020, we would use the charge data from Federal fiscal years 2017 and 
2018), rather than the most recent data available to CMS. That is, for 
FY 2020, we are proposing to use the charge data from Federal fiscal 
years 2017 and 2018 to calculate the 1-year average annual rate-of-
change in charges per case for purposes of calculating both the 
proposed and final charge inflation factors, rather than the charge 
data from CYs 2017 and 2018 for purposes of calculating the proposed 
charge inflation factor and charge data from the periods April 1, 2017 
through March 31, 2018 and April 1, 2018 through March 31, 2019 for 
purposes of calculating the final charge inflation factor as we would 
under our prior methodology. We believe there are benefits to using 
comparable Federal fiscal year periods rather than the most recent 
available data to calculate charge inflation, such as seasonality 
effects and the completeness of claims (that is, run-out). 
Specifically, under the methodology used for FYs 2014 through 2019, 
there is no run-out time between some of the claims and the MedPAR 
release. For example, under our current methodology, the most recent 
data available for purposes of this proposed rule would be the December 
2018 MedPAR release, with the final month of charge data being December 
2018, and for the FY 2020 IPPS/LTCH PPS final rule, the most recent 
data available would be the March 2019 MedPAR release, with the final 
month of charge data being March 2019. With no run-out time between the 
end of the claims data period and the MedPAR release, some claims are 
not included from the last month of the applicable MedPAR release due 
to factors such as when the claim is submitted and claims processing 
time. In comparison, there is a 3-month run-out between the end of 
Federal fiscal year 2018 (September 30, 2018) and the December 2018 
MedPAR release (cut-off as of December 31, 2018) for the proposed rule 
and a 6-month run-out between the end of Federal fiscal year 2018 
(September 30, 2018) and the March 2019 MedPAR release (cut off as of 
March 31, 2019) for the final rule, which allows for more completeness 
in those FY 2018 claims. In addition to the completeness of the data, 
we believe this would also address commenters' concerns regarding 
transparency with respect to the data used to calculate the charge 
inflation factor. Adopting a methodology that uses charge data based on 
Federal fiscal years would allow for the MedPAR data to be readily 
available after publication of the proposed and final rules.
    After further consideration of the issue and for the reasons 
discussed above, we are proposing to use the publicly available MedPAR 
files for the 2 most recent Federal fiscal year time periods to 
calculate the charge inflation factor beginning in FY 2020. 
Specifically, for this proposed rule, we used the December 2017 MedPAR 
file of FY 2017 (October 1, 2016 through September 30, 2017) charge 
data (released in conjunction with the FY 2019 IPPS/LTCH PPS proposed 
rule) and the December 2018 MedPAR file of FY 2018 (October 1, 2017 
through September 30, 2018) charge data (released in conjunction with 
this FY 2020 IPPS/LTCH PPS proposed rule) to compute the proposed 
charge inflation factor. In addition, we are proposing that, for the FY 
2020 final rule, we would use the most recent available data; that is, 
the MedPAR files from March 2018 for the FY 2017 charge data and the 
MedPAR files from March 2019 for the FY 2018 charge data. Because these 
data are publicly available at the time of the issuance of the proposed 
and final rules, we are proposing that, beginning with the FY 2020 
final rule, we would no longer provide the table of quarterly charges 
that we have included in prior rulemaking, if this proposed change to 
our methodology is finalized. (We note that we are providing this 
information in this proposed rule for comparison purposes below.) We 
are inviting public comments on this proposed change to our methodology 
to use in this proposed rule the December 2017 and December 2018 MedPAR 
releases for the respective FY 2017 and FY 2018 October to September 
applicable periods rather than the respective CY 2017 and CY 2018 
January to December applicable periods for purposes of calculating the 
proposed charge inflation factor for the FY 2020 outlier threshold 
calculation.
    For FY 2020, under this proposed methodology, to compute the 1-year 
average annual rate-of-change in charges per case, we compared the 
average covered charge per case of $58,355.91 ($562,621,348,420/
9,641,206) from October 1, 2016 through September 31, 2017, to the 
average covered charge per case of $61,533.91 ($583,577,793,654/
9,483,841) from October 1, 2017 through September 31, 2018. This rate-
of-change was 5.4 percent (1.05446) or 11.2 percent (1.11189) over 2 
years. The billed charges are obtained from the claims from the MedPAR 
file and inflated by the inflation factor specified above.
    We also are providing below our calculation of the 1-year average 
annual rate-of-change in charges per case based on the December 2018 
MedPAR release with applicable periods of January to December for CY 
2017 and CY 2018 for comparison consistent with the methodology we used 
for FYs 2014 through 2019. As we did for prior rulemaking, we grouped 
claims by quarter and present the sum total for each time period in the 
table that follows. Specifically, under the methodology we used for FYs 
2014

[[Page 19597]]

through 2019, the 1-year average annualized rate-of-change in charges 
per case for FY 2020 is computed by comparing the average covered 
charge per case of $59,137.57 ($572,976,462,154/9,688,874) from January 
1, 2017 through December 31, 2017 to the average covered charge per 
case of $62,241.46 ($549,618,561,649/8,830,425) from January 1, 2018 
through December 31, 2018. This rate-of-change was 5.2 percent 
(1.05249) or 10.8 percent (1.10775) over 2 years.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Covered charges                                   Covered charges
                                                          (January 1, 2017      Cases (January 1, 2017      (January 1, 2018      Cases (January 1, 2018
                       Quarter                          through December 31,     through December 31,     through December 31,     through December 31,
                                                               2017)                    2017)                    2018)                    2018)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Jan-Mar.............................................         $149,423,349,880                2,550,360         $155,383,152,668                2,507,345
Apr-Jun.............................................          141,253,933,908                2,407,205          144,511,911,637                2,336,261
Jul-Sep.............................................          137,549,332,685                2,328,520          138,928,539,807                2,238,344
Oct-Dec.............................................          144,749,845,681                2,402,789          110,794,957,537                1,748,475
                                                     ---------------------------------------------------------------------------------------------------
    Total...........................................          572,976,462,154                9,688,874          549,618,561,649                8,830,425
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As we have done in the past, in this FY 2020 IPPS/LTCH PPS proposed 
rule, we are proposing to establish the proposed FY 2020 outlier 
threshold using hospital CCRs from the December 2018 update to the 
Provider-Specific File (PSF)--the most recent available data at the 
time of the development of this proposed rule. We are proposing to 
apply the following edits to providers' CCRs in the PSF. We believe 
these edits are appropriate in order to accurately model the outlier 
threshold. We first search for Indian Health Service providers and 
those providers assigned the statewide average CCR from the current 
fiscal year. We then replace these CCRs with the statewide average CCR 
for the upcoming fiscal year. We also assign the statewide average CCR 
(for the upcoming fiscal year) to those providers that have no value in 
the CCR field in the PSF or whose CCRs exceed the ceilings described 
later in this section (3.0 standard deviations from the mean of the log 
distribution of CCRs for all hospitals). We do not apply the adjustment 
factors described below to hospitals assigned the statewide average 
CCR. For FY 2020, we also are proposing to continue to apply an 
adjustment factor to the CCRs to account for cost and charge inflation 
(as explained below). We also are proposing that, if more recent data 
become available, we would use that data to calculate the final FY 2020 
outlier threshold.
    In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50979), we adopted a 
new methodology to adjust the CCRs. Specifically, we finalized a policy 
to compare the national average case-weighted operating and capital CCR 
from the most recent update of the PSF to the national average case-
weighted operating and capital CCR from the same period of the prior 
year.
    Therefore, as we have done since FY 2014, we are proposing to 
adjust the CCRs from the December 2018 update of the PSF by comparing 
the percentage change in the national average case-weighted operating 
CCR and capital CCR from the December 2017 update of the PSF to the 
national average case-weighted operating CCR and capital CCR from the 
December 2018 update of the PSF. We note that we used total transfer-
adjusted cases from FY 2018 to determine the national average case-
weighted CCRs for both sides of the comparison. As stated in the FY 
2014 IPPS/LTCH PPS final rule (78 FR 50979), we believe that it is 
appropriate to use the same case count on both sides of the comparison 
because this will produce the true percentage change in the average 
case-weighted operating and capital CCR from one year to the next 
without any effect from a change in case count on different sides of 
the comparison.
    Using the proposed methodology above, for this proposed rule, we 
calculated a proposed December 2017 operating national average case-
weighted CCR of 0.263267 and a proposed December 2018 operating 
national average case-weighted CCR of 0.256730. We then calculated the 
percentage change between the two national operating case-weighted CCRs 
by subtracting the proposed December 2017 operating national average 
case-weighted CCR from the proposed December 2018 operating national 
average case-weighted CCR and then dividing the result by the proposed 
December 2017 national operating average case-weighted CCR. This 
resulted in a proposed national operating CCR adjustment factor of 
0.975167.
    We used the same methodology proposed above to adjust the capital 
CCRs. Specifically, we calculated a proposed December 2017 capital 
national average case-weighted CCR of 0.022094 and a proposed December 
2018 capital national average case-weighted CCR of 0.021121. We then 
calculated the percentage change between the two national capital case-
weighted CCRs by subtracting the proposed December 2017 capital 
national average case-weighted CCR from the proposed December 2018 
capital national average case-weighted CCR and then dividing the result 
by the proposed December 2017 capital national average case-weighted 
CCR. This resulted in a proposed national capital CCR adjustment factor 
of 0.955983.
    For purposes of estimating the proposed outlier threshold for FY 
2020, we used a wage index that is based on the proposed FY 2020 wage 
index that hospitals would be paid. This includes our proposal to 
remove urban to rural reclassifications from the calculation of the 
rural floor, the frontier State floor adjustment in accordance with 
section 10324(a) of the Affordable Care Act, and the out-migration 
adjustment as added by section 505 of Public Law 108-173, and 
incorporates our FY 2020 wage index proposals to (1) increase the wage 
index values for hospitals with a wage index value below the 25th 
percentile wage index value across all hospitals and offset the 
estimated increase in IPPS payments to hospitals with wage index values 
below the 25th percentile by decreasing the wage index values for 
hospitals with a wage index value above the 75th percentile wage index 
value across all hospitals, and (2) apply a 5-percent cap for FY 2020 
on any decrease in a hospital's final wage index from the hospital's 
final wage index in FY 2019. If we did not take the above into account, 
our estimate of total FY 2020 payments would be too low, and, as a 
result, our proposed outlier threshold would be too high, such that 
estimated outlier payments would be less than our projected 5.13 
percent of total payments (which reflects the estimate of outlier 
reconciliation).
    As described in sections IV.G. and IV.H., respectively, of the 
preamble of

[[Page 19598]]

this proposed rule, sections 1886(q) and 1886(o) of the Act establish 
the Hospital Readmissions Reduction Program and the Hospital VBP 
Program, respectively. We do not believe that it is appropriate to 
include the proposed hospital VBP payment adjustments and the hospital 
readmissions payment adjustments in the proposed outlier threshold 
calculation or the proposed outlier offset to the standardized amount. 
Specifically, consistent with our definition of the base operating DRG 
payment amount for the Hospital Readmissions Reduction Program under 
Sec.  412.152 and the Hospital VBP Program under Sec.  412.160, outlier 
payments under section 1886(d)(5)(A) of the Act are not affected by 
these payment adjustments. Therefore, outlier payments would continue 
to be calculated based on the unadjusted base DRG payment amount (as 
opposed to using the base-operating DRG payment amount adjusted by the 
hospital readmissions payment adjustment and the hospital VBP payment 
adjustment). Consequently, we are proposing to exclude the proposed 
hospital VBP payment adjustments and the estimated hospital 
readmissions payment adjustments from the calculation of the proposed 
outlier fixed-loss cost threshold.
    We note that, to the extent section 1886(r) of the Act modifies the 
DSH payment methodology under section 1886(d)(5)(F) of the Act, the 
uncompensated care payment under section 1886(r)(2) of the Act, like 
the empirically justified Medicare DSH payment under section 1886(r)(1) 
of the Act, may be considered an amount payable under section 
1886(d)(5)(F) of the Act such that it would be reasonable to include 
the payment in the outlier determination under section 1886(d)(5)(A) of 
the Act. As we have done since the implementation of uncompensated care 
payments in FY 2014, for FY 2020, we also are proposing to allocate an 
estimated per-discharge uncompensated care payment amount to all cases 
for the hospitals eligible to receive the uncompensated care payment 
amount in the calculation of the outlier fixed-loss cost threshold 
methodology. We continue to believe that allocating an eligible 
hospital's estimated uncompensated care payment to all cases equally in 
the calculation of the outlier fixed-loss cost threshold would best 
approximate the amount we would pay in uncompensated care payments 
during the year because, when we make claim payments to a hospital 
eligible for such payments, we would be making estimated per-discharge 
uncompensated care payments to all cases equally. Furthermore, we 
continue to believe that using the estimated per-claim uncompensated 
care payment amount to determine outlier estimates provides 
predictability as to the amount of uncompensated care payments included 
in the calculation of outlier payments. Therefore, consistent with the 
methodology used since FY 2014 to calculate the outlier fixed-loss cost 
threshold, for FY 2020, we are proposing to include estimated FY 2020 
uncompensated care payments in the computation of the proposed outlier 
fixed-loss cost threshold. Specifically, we are proposing to use the 
estimated per-discharge uncompensated care payments to hospitals 
eligible for the uncompensated care payment for all cases in the 
calculation of the proposed outlier fixed-loss cost threshold 
methodology.
    Using this methodology, we used the formula described in section 
I.C.1. of this Addendum to simulate and calculate the Federal payment 
rate and outlier payments for all claims. In addition, as described in 
the earlier section to this Addendum, we are proposing to incorporate 
an estimate of FY 2020 outlier reconciliation in the methodology for 
determining the outlier threshold. Under this proposed approach, we 
determined a threshold of $26,994 and calculated total operating 
Federal payments of $90,721,309,065 and total outlier payments of 
$4,905,819,657. We then divided total outlier payments by total 
operating Federal payments plus total outlier payments and determined 
that this threshold matched with the 5.13 percent target, which 
reflects our proposal to incorporate an estimate of outlier 
reconciliation in the determination of the outlier threshold (as 
discussed in more detail in the previous section of this Addendum). We 
note that, if calculated without applying our proposed methodology for 
incorporating an estimate of outlier reconciliation in the 
determination of the outlier threshold, the proposed threshold would be 
$27,154. We are proposing an outlier fixed-loss cost threshold for FY 
2020 equal to the prospective payment rate for the MS-DRG, plus any 
IME, empirically justified Medicare DSH payments, estimated 
uncompensated care payment, and any add-on payments for new technology, 
plus $26,994.
(2) Other Proposed Changes Concerning Outliers
    As stated in the FY 1994 IPPS final rule (58 FR 46348), we 
establish an outlier threshold that is applicable to both hospital 
inpatient operating costs and hospital inpatient capital-related costs. 
When we modeled the combined operating and capital outlier payments, we 
found that using a common threshold resulted in a lower percentage of 
outlier payments for capital-related costs than for operating costs. We 
project that the threshold for FY 2020 of $26,994 (which reflects our 
proposed methodology to incorporate an estimate of outlier 
reconciliations) would result in outlier payments that will equal 5.1 
percent of operating DRG payments and 5.33 percent of capital payments 
based on the Federal rate.
    In accordance with section 1886(d)(3)(B) of the Act and as 
discussed above, we are proposing to reduce the FY 2020 standardized 
amount by 5.1 percent to account for the projected proportion of 
payments paid as outliers.
    The proposed outlier adjustment factors that would be applied to 
the operating standardized amount and capital Federal rate based on the 
proposed FY 2020 outlier threshold are as follows:

------------------------------------------------------------------------
                                           Operating
                                          standardized   Capital federal
                                            amounts           rate *
------------------------------------------------------------------------
National..............................           0.949        0.9466388
------------------------------------------------------------------------
* The proposed adjustment factor for the capital Federal rate includes
  an adjustment to the estimated percentage of FY 2020 capital outlier
  payments for capital outlier reconciliation, as discussed above and in
  section II.A.4.j.(1) in the Addendum to this proposed rule.

    We are proposing to apply the outlier adjustment factors to the 
proposed FY 2020 payment rates after removing the effects of the FY 
2019 outlier adjustment factors on the standardized amount.
    To determine whether a case qualifies for outlier payments, we 
currently apply hospital-specific CCRs to the total covered charges for 
the case. Estimated operating and capital costs for the case are 
calculated separately by applying

[[Page 19599]]

separate operating and capital CCRs. These costs are then combined and 
compared with the outlier fixed-loss cost threshold.
    Under our current policy at Sec.  412.84, we calculate operating 
and capital CCR ceilings and assign a statewide average CCR for 
hospitals whose CCRs exceed 3.0 standard deviations from the mean of 
the log distribution of CCRs for all hospitals. Based on this 
calculation, for hospitals for which the MAC computes operating CCRs 
greater than 1.151 or capital CCRs greater than 0.141, or hospitals for 
which the MAC is unable to calculate a CCR (as described under Sec.  
412.84(i)(3) of our regulations), statewide average CCRs are used to 
determine whether a hospital qualifies for outlier payments. Table 8A 
listed in section VI. of this Addendum (and available only via the 
internet on the CMS website) contains the proposed statewide average 
operating CCRs for urban hospitals and for rural hospitals for which 
the MAC is unable to compute a hospital-specific CCR within the above 
range. These statewide average ratios would be effective for discharges 
occurring on or after October 1, 2019 and would replace the statewide 
average ratios from the prior fiscal year. Table 8B listed in section 
VI. of this Addendum (and available via the internet on the CMS 
website) contains the comparable proposed statewide average capital 
CCRs. As previously stated, the proposed CCRs in Tables 8A and 8B would 
be used during FY 2020 when hospital-specific CCRs based on the latest 
settled cost report either are not available or are outside the range 
noted above. Table 8C listed in section VI. of this Addendum (and 
available via the internet on the CMS website) contains the proposed 
statewide average total CCRs used under the LTCH PPS as discussed in 
section V. of this Addendum.
    We finally note that we published a manual update (Change Request 
3966) to our outlier policy on October 12, 2005, which updated Chapter 
3, Section 20.1.2 of the Medicare Claims Processing Manual. The manual 
update covered an array of topics, including CCRs, reconciliation, and 
the time value of money. We encourage hospitals that are assigned the 
statewide average operating and/or capital CCRs to work with their MAC 
on a possible alternative operating and/or capital CCR as explained in 
Change Request 3966. Use of an alternative CCR developed by the 
hospital in conjunction with the MAC can avoid possible overpayments or 
underpayments at cost report settlement, thereby ensuring better 
accuracy when making outlier payments and negating the need for outlier 
reconciliation. We also note that a hospital may request an alternative 
operating or capital CCR at any time as long as the guidelines of 
Change Request 3966 are followed. In addition, as mentioned above, we 
published an additional manual update (Change Request 7192) to our 
outlier policy on December 3, 2010, which also updated Chapter 3, 
Section 20.1.2 of the Medicare Claims Processing Manual. The manual 
update outlines the outlier reconciliation process for hospitals and 
Medicare contractors. To download and view the manual instructions on 
outlier reconciliation, we refer readers to the CMS website: http://www.cms.hhs.gov/manuals/downloads/clm104c03.pdf.
(3) FY 2018 Outlier Payments
    Our current estimate, using available FY 2018 claims data, is that 
actual outlier payments for FY 2018 were approximately 4.94 percent of 
actual total MS-DRG payments. Therefore, the data indicate that, for FY 
2018, the percentage of actual outlier payments relative to actual 
total payments is lower than we projected for FY 2018. Consistent with 
the policy and statutory interpretation we have maintained since the 
inception of the IPPS, we do not make retroactive adjustments to 
outlier payments to ensure that total outlier payments for FY 2018 are 
equal to 5.1 percent of total MS-DRG payments. As explained in the FY 
2003 Outlier Final Rule (68 FR 34502), if we were to make retroactive 
adjustments to all outlier payments to ensure total payments are 5.1 
percent of MS-DRG payments (by retroactively adjusting outlier 
payments), we would be removing the important aspect of the prospective 
nature of the IPPS. Because such an across-the-board adjustment would 
either lead to more or less outlier payments for all hospitals, 
hospitals would no longer be able to reliably approximate their payment 
for a patient while the patient is still hospitalized. We believe it 
would be neither necessary nor appropriate to make such an aggregate 
retroactive adjustment. Furthermore, we believe it is consistent with 
the statutory language at section 1886(d)(5)(A)(iv) of the Act not to 
make retroactive adjustments to outlier payments. This section states 
that outlier payments be equal to or greater than 5 percent and less 
than or equal to 6 percent of projected or estimated (not actual) MS-
DRG payments. We believe that an important goal of a PPS is 
predictability. Therefore, we believe that the fixed-loss outlier 
threshold should be projected based on the best available historical 
data and should not be adjusted retroactively. A retroactive change to 
the fixed-loss outlier threshold would affect all hospitals subject to 
the IPPS, thereby undercutting the predictability of the system as a 
whole.
    We note that, because the MedPAR claims data for the entire FY 2019 
will not be available until after September 30, 2019, we are unable to 
provide an estimate of actual outlier payments for FY 2019 based on FY 
2019 claims data in this proposed rule. We will provide an estimate of 
actual FY 2019 outlier payments in the FY 2021 IPPS/LTCH PPS proposed 
rule.
5. Proposed FY 2020 Standardized Amount
    The adjusted standardized amount is divided into labor-related and 
nonlabor-related portions. Tables 1A and 1B listed and published in 
section VI. of this Addendum (and available via the internet on the CMS 
website) contain the national standardized amounts that we are 
proposing to apply to all hospitals, except hospitals located in Puerto 
Rico, for FY 2020. The proposed standardized amount for hospitals in 
Puerto Rico is shown in Table 1C listed and published in section VI. of 
this Addendum (and available via the internet on the CMS website). The 
proposed amounts shown in Tables 1A and 1B differ only in that the 
labor-related share applied to the standardized amounts in Table 1A is 
68.3 percent, and the labor-related share applied to the standardized 
amounts in Table 1B is 62 percent. In accordance with sections 
1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act, we are proposing to 
apply a labor-related share of 62 percent, unless application of that 
percentage would result in lower payments to a hospital than would 
otherwise be made. In effect, the statutory provision means that we 
will apply a labor-related share of 62 percent for all hospitals whose 
wage indexes are less than or equal to 1.0000.
    In addition, Tables 1A and 1B include the proposed standardized 
amounts reflecting the proposed applicable percentage increases for FY 
2020.
    The proposed labor-related and nonlabor-related portions of the 
national average standardized amounts for Puerto Rico hospitals for FY 
2020 are set forth in Table 1C listed and published in section VI. of 
this Addendum (and available via the internet on the CMS website). 
Similar to above, section 1886(d)(9)(C)(iv) of the Act, as amended by 
section 403(b) of Public Law 108-173, provides that the labor-related 
share for hospitals located in Puerto Rico be 62 percent, unless the

[[Page 19600]]

application of that percentage would result in lower payments to the 
hospital.
    The following table illustrates the changes from the FY 2019 
national standardized amounts to the proposed FY 2020 national 
standardized amounts. The second through fifth columns display the 
changes from the FY 2019 standardized amounts for each applicable 
proposed FY 2020 standardized amount. The first row of the table shows 
the updated (through FY 2019) average standardized amount after 
restoring the FY 2019 offsets for outlier payments and the geographic 
reclassification budget neutrality. The MS-DRG reclassification and 
recalibration and wage index budget neutrality adjustment factors are 
cumulative. Therefore, those FY 2019 adjustment factors are not removed 
from this table. Additionally, for FY 2020, we have applied the 
proposed budget neutrality factor for the proposed policy for lowest 
quartile wage index hospitals and proposed transition, described above.
BILLING CODE 4120-01-P

[[Page 19601]]

[GRAPHIC] [TIFF OMITTED] TP03MY19.027


[[Page 19602]]


[GRAPHIC] [TIFF OMITTED] TP03MY19.028

BILLING CODE 4120-01-C

B. Proposed Adjustments for Area Wage Levels and Cost-of-Living

    Tables 1A through 1C, as published in section VI. of this Addendum 
(and available via the internet on the CMS website), contain the 
proposed labor-related and nonlabor-related shares that we are 
proposing to use to calculate the prospective payment rates for 
hospitals located in the 50 States, the District of Columbia, and 
Puerto Rico for FY 2020. This section addresses two types of 
adjustments to the standardized amounts that are made in determining 
the proposed prospective payment rates as described in this Addendum.
1. Proposed Adjustment for Area Wage Levels
    Sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act require 
that we make an adjustment to the labor-related portion of the national 
prospective payment rate to account for area differences in hospital 
wage levels. This adjustment is made by multiplying the labor-related 
portion of the adjusted standardized amounts by the appropriate wage 
index for the area in which the hospital is located. For FY 2020, as 
discussed in section IV.B.3. of the preamble of this proposed rule, we 
are proposing to apply a labor-related share of 68.3 percent for the 
national standardized amounts for all IPPS hospitals (including 
hospitals in Puerto Rico) that have a wage index value that is greater 
than 1.0000. Consistent with section 1886(d)(3)(E) of the Act, we are 
proposing to apply the wage index to a labor-related share of 62 
percent of the national standardized amount for all IPPS hospitals 
(including hospitals in Puerto Rico) whose wage index values are less 
than or equal to 1.0000. In section III. of the preamble of this 
proposed rule, we discuss the data and methodology for the proposed FY 
2020 wage index.
2. Proposed Adjustment for Cost-of-Living in Alaska and Hawaii
    Section 1886(d)(5)(H) of the Act provides discretionary authority 
to the Secretary to make adjustments as the Secretary deems appropriate 
to take into account the unique circumstances of hospitals located in 
Alaska and Hawaii. Higher labor-related costs for these two States are 
taken into account in the adjustment for area wages described above. To 
account for higher nonlabor-related costs for these two States, we 
multiply the nonlabor-related portion of the standardized amount for 
hospitals located in Alaska and Hawaii by an adjustment factor.
    In the FY 2013 IPPS/LTCH PPS final rule, we established a 
methodology to update the COLA factors for Alaska and Hawaii that were 
published by the U.S. Office of Personnel Management (OPM) every 4 
years (at the same time as the update to the labor-related share of the 
IPPS market basket), beginning in FY 2014. We refer readers to the FY 
2013 IPPS/LTCH PPS proposed and final rules for additional background 
and a detailed description of this methodology (77 FR 28145 through 
28146 and 77 FR 53700 through 53701, respectively).
    For FY 2018, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38530 
through 38531), we updated the COLA factors published by OPM for 2009 
(as these are the last COLA factors OPM published prior to 
transitioning from COLAs to locality pay) using the methodology that we 
finalized in the FY 2013 IPPS/LTCH PPS final rule.
    Based on the policy finalized in the FY 2013 IPPS/LTCH PPS final 
rule, we are proposing to continue to use the same COLA factors in FY 
2020 that were used in FY 2019 to adjust the nonlabor-related portion 
of the standardized amount for hospitals located in Alaska and Hawaii. 
Below is a table listing the proposed COLA factors for FY 2020.

[[Page 19603]]



  Proposed FY 2020 Cost-of-Living Adjustment Factors: Alaska and Hawaii
                                Hospitals
------------------------------------------------------------------------
                                                          Cost of living
                          Area                              adjustment
                                                              factor
------------------------------------------------------------------------
Alaska:
    City of Anchorage and 80-kilometer (50-mile) radius             1.25
     by road............................................
    City of Fairbanks and 80-kilometer (50-mile) radius             1.25
     by road............................................
    City of Juneau and 80-kilometer (50-mile) radius by             1.25
     road...............................................
    Rest of Alaska......................................            1.25
    City and County of Honolulu.........................            1.25
    County of Hawaii....................................            1.21
    County of Kauai.....................................            1.25
    County of Maui and County of Kalawao................            1.25
------------------------------------------------------------------------

    Based on the policy finalized in the FY 2013 IPPS/LTCH PPS final 
rule, the next update to the COLA factors for Alaska and Hawaii would 
occur at the same time as the update to the labor-related share of the 
IPPS market basket (no later than FY 2022).

C. Calculation of the Proposed Prospective Payment Rates

General Formula for Calculation of the Prospective Payment Rates for FY 
2020
    In general, the operating prospective payment rate for all 
hospitals (including hospitals in Puerto Rico) paid under the IPPS, 
except SCHs and MDHs, for FY 2020 equals the Federal rate (which 
includes uncompensated care payments).
    Under current law, the MDH program has been extended for discharges 
through September 30, 2022.
    SCHs are paid based on whichever of the following rates yields the 
greatest aggregate payment: The Federal national rate (which, as 
discussed in section IV.F. of the preamble of this proposed rule, 
includes uncompensated care payments); the updated hospital-specific 
rate based on FY 1982 costs per discharge; the updated hospital-
specific rate based on FY 1987 costs per discharge; the updated 
hospital-specific rate based on FY 1996 costs per discharge; or the 
updated hospital-specific rate based on FY 2006 costs per discharge to 
determine the rate that yields the greatest aggregate payment.
    The prospective payment rate for SCHs for FY 2020 equals the higher 
of the applicable Federal rate, or the hospital-specific rate as 
described below. The prospective payment rate for MDHs for FY 2020 
equals the higher of the Federal rate, or the Federal rate plus 75 
percent of the difference between the Federal rate and the hospital-
specific rate as described below. For MDHs, the updated hospital-
specific rate is based on FY 1982, FY 1987, or FY 2002 costs per 
discharge, whichever yields the greatest aggregate payment.
1. Operating and Capital Federal Payment Rate and Outlier Payment 
Calculation
    Note: The formula below is used for actual claim payment and is 
also used by CMS to project the outlier threshold for the upcoming 
fiscal year. The difference is the source of some of the variables in 
the formula. For example, operating and capital CCRs for actual claim 
payment are from the PSF while CMS uses an adjusted CCR (as described 
above) to project the threshold for the upcoming fiscal year. In 
addition, charges for a claim payment are from the bill, while charges 
to project the threshold are from the MedPAR data with an inflation 
factor applied to the charges (as described earlier).
    Step 1--Determine the MS-DRG and MS-DRG relative weight for each 
claim based on the ICD-10-CM procedure and diagnosis codes on the 
claim.
    Step 2--Select the applicable average standardized amount depending 
on whether the hospital submitted qualifying quality data and is a 
meaningful EHR user, as described above.
    Step 3--Compute the operating and capital Federal payment rate:

Federal Payment Rate for Operating Costs = MS-DRG Relative Weight x 
[(Labor-Related Applicable Standardized Amount x Applicable CBSA Wage 
Index) + (Nonlabor-Related Applicable Standardized Amount x Cost-of-
Living Adjustment)] x (1 + IME + (DSH * 0.25))
Federal Payment for Capital Costs = MS-DRG Relative Weight x Federal 
Capital Rate x Geographic Adjustment Fact x (1 + IME + DSH)

    Step 4--Determine operating and capital costs:

Operating Costs = (Billed Charges x Operating CCR)
Capital Costs = (Billed Charges x Capital CCR).

    Step 5--Compute operating and capital outlier threshold (CMS 
applies a geographic adjustment to the operating and capital outlier 
threshold to account for local cost variation):

Operating CCR to Total CCR = (Operating CCR)/(Operating CCR + Capital 
CCR)
Operating Outlier Threshold = [Fixed Loss Threshold x ((Labor-Related 
Portion x CBSA Wage Index) + Nonlabor-Related portion)] x Operating CCR 
to Total CCR + Federal Payment with IME, DSH + Uncompensated Care 
Payment + New Technology Add-On Payment Amount
Capital CCR to Total CCR = (Capital CCR)/(Operating CCR + Capital CCR)
Capital Outlier Threshold = (Fixed Loss Threshold x Geographic 
Adjustment Factor x Capital CCR to Total CCR) + Federal Payment with 
IME and DSH

    Step 6--Compute operating and capital outlier payments:

Marginal Cost Factor = 0.80 or 0.90 (depending on the MS-DRG)
Operating Outlier Payment = (Operating Costs--Operating Outlier 
Threshold) x Marginal Cost Factor
Capital Outlier Payment = (Capital Costs--Capital Outlier Threshold) x 
Marginal Cost Factor

    The payment rate may then be further adjusted for hospitals that 
qualify for a low-volume payment adjustment under section 1886(d)(12) 
of the Act and 42 CFR 412.101(b). The base-operating DRG payment amount 
may be further adjusted by the hospital readmissions payment adjustment 
and the hospital VBP payment adjustment as described under sections 
1886(q) and 1886(o) of the Act, respectively. Payments also may be 
reduced by the 1-percent adjustment under the HAC Reduction Program as 
described in section 1886(p) of the Act. We also make new technology 
add-on payments in accordance with section 1886(d)(5)(K) and (L) of the 
Act. Finally, we add the uncompensated care payment to the

[[Page 19604]]

total claim payment amount. As noted in the formula above, we take 
uncompensated care payments and new technology add-on payments into 
consideration when calculating outlier payments.
2. Hospital-Specific Rate (Applicable Only to SCHs and MDHs)
a. Calculation of Hospital-Specific Rate
    Section 1886(b)(3)(C) of the Act provides that SCHs are paid based 
on whichever of the following rates yields the greatest aggregate 
payment: The Federal rate; the updated hospital-specific rate based on 
FY 1982 costs per discharge; the updated hospital-specific rate based 
on FY 1987 costs per discharge; the updated hospital-specific rate 
based on FY 1996 costs per discharge; or the updated hospital-specific 
rate based on FY 2006 costs per discharge to determine the rate that 
yields the greatest aggregate payment.
    As noted above, the MDH program has been extended under current law 
for discharges occurring through September 30, 2022. For MDHs, the 
updated hospital-specific rate is based on FY 1982, FY 1987, or FY 2002 
costs per discharge, whichever yields the greatest aggregate payment.
    For a more detailed discussion of the calculation of the hospital-
specific rates, we refer readers to the FY 1984 IPPS interim final rule 
(48 FR 39772); the April 20, 1990 final rule with comment period (55 FR 
15150); the FY 1991 IPPS final rule (55 FR 35994); and the FY 2001 IPPS 
final rule (65 FR 47082).
b. Updating the FY 1982, FY 1987, FY 1996, FY 2002 and FY 2006 
Hospital-Specific Rate for FY 2019
    Section 1886(b)(3)(B)(iv) of the Act provides that the applicable 
percentage increase applicable 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). Because the Act sets the update 
factor for SCHs and MDHs equal to the update factor for all other IPPS 
hospitals, the update to the hospital-specific rates for SCHs and MDHs 
is subject to the amendments to section 1886(b)(3)(B) of the Act made 
by sections 3401(a) and 10319(a) of the Affordable Care Act. 
Accordingly, the proposed applicable percentage increases to the 
hospital-specific rates applicable to SCHs and MDHs are the following:

----------------------------------------------------------------------------------------------------------------
                                                     Hospital        Hospital      Hospital did    Hospital did
                                                     submitted       submitted      NOT submit      NOT submit
                                                   quality data    quality data    quality data    quality data
                     FY 2020                         and is a      and is NOT a      and is a      and is NOT a
                                                  meaningful EHR  meaningful EHR  meaningful EHR  meaningful EHR
                                                       user            user            user            user
----------------------------------------------------------------------------------------------------------------
Proposed Market Basket                                       3.2             3.2             3.2             3.2
 Rate[dash]of[dash]Increase.....................
Proposed Adjustment for Failure to Submit                      0               0            -0.8            -0.8
 Quality Data under Section 1886(b)(3)(B)(viii)
 of the Act.....................................
Proposed Adjustment for Failure to be a                        0            -2.4               0            -2.4
 Meaningful EHR User under Section
 1886(b)(3)(B)(ix) of the Act...................
Proposed MFP Adjustment under Section                       -0.5            -0.5            -0.5            -0.5
 1886(b)(3)(B)(xi) of the Act...................
Proposed Applicable Percentage Increase Applied              2.7             0.3             1.9            -0.5
 to Standardized Amount.........................
----------------------------------------------------------------------------------------------------------------

    For a complete discussion of the applicable percentage increase 
applied to the hospital-specific rates for SCHs and MDHs, we refer 
readers to section IV.B. of the preamble of this proposed rule.
    In addition, because SCHs and MDHs use the same MS-DRGs as other 
hospitals when they are paid based in whole or in part on the hospital-
specific rate, the hospital-specific rate is adjusted by a budget 
neutrality factor to ensure that changes to the MS-DRG classifications 
and the recalibration of the MS-DRG relative weights are made in a 
manner so that aggregate IPPS payments are unaffected. Therefore, the 
proposed hospital-specific rate for an SCH or an MDH is adjusted by the 
proposed MS-DRG reclassification and recalibration budget neutrality 
factor of 0.998768, as discussed in section III. of this Addendum. The 
resulting rate is used in determining the payment rate that an SCH or 
MDH would receive for its discharges beginning on or after October 1, 
2019. We note that, in this proposed rule, for FY 2020, we are not 
proposing to make a documentation and coding adjustment to the 
hospital-specific rate. We refer readers to section II.D. of the 
preamble of this proposed rule for a complete discussion regarding our 
proposed policies and previously finalized policies (including our 
historical adjustments to the payment rates) relating to the effect of 
changes in documentation and coding that do not reflect real changes in 
case-mix.

III. Proposed Changes to Payment Rates for Acute Care Hospital 
Inpatient Capital-Related Costs for FY 2020

    The PPS for acute care hospital inpatient capital-related costs was 
implemented for cost reporting periods beginning on or after October 1, 
1991. The basic methodology for determining Federal capital prospective 
rates is set forth in the regulations at 42 CFR 412.308 through 
412.352. Below we discuss the factors that we are proposing to use to 
determine the capital Federal rate for FY 2020, which would be 
effective for discharges occurring on or after October 1, 2019.
    All hospitals (except ``new'' hospitals under Sec.  412.304(c)(2)) 
are paid based on the capital Federal rate. We annually update the 
capital standard Federal rate, as provided in Sec.  412.308(c)(1), to 
account for capital input price increases and other factors. The 
regulations at Sec.  412.308(c)(2) also provide that the capital 
Federal rate be adjusted annually by a factor equal to the estimated 
proportion of outlier payments under the capital Federal rate to total 
capital payments under the capital Federal rate. In addition, Sec.  
412.308(c)(3) requires that the capital Federal rate be reduced by an 
adjustment factor equal to the estimated proportion of payments for 
exceptions under Sec.  412.348. (We note that, as discussed in the FY 
2013 IPPS/LTCH PPS final rule (77 FR 53705), there is generally no 
longer a need for an exceptions payment adjustment factor.) However, in 
limited circumstances, an additional payment exception for 
extraordinary circumstances is provided for under Sec.  412.348(f) for 
qualifying hospitals. Therefore, in accordance with Sec.  
412.308(c)(3), an exceptions payment adjustment factor may need to be 
applied if such payments are made. Section 412.308(c)(4)(ii) requires 
that

[[Page 19605]]

the capital standard Federal rate be adjusted so that the effects of 
the annual DRG reclassification and the recalibration of DRG weights 
and changes in the geographic adjustment factor (GAF) are budget 
neutral.
    Section 412.374 provides for payments to hospitals located in 
Puerto Rico under the IPPS for acute care hospital inpatient capital-
related costs, which currently specifies capital IPPS payments to 
hospitals located in Puerto Rico are based on 100 percent of the 
Federal rate.

A. Determination of the Proposed Federal Hospital Inpatient Capital-
Related Prospective Payment Rate Update for FY 2020

    In the discussion that follows, we explain the factors that we are 
proposing to use to determine the capital Federal rate for FY 2020. In 
particular, we explain why the proposed FY 2020 capital Federal rate 
would increase approximately 0.96 percent, compared to the FY 2019 
capital Federal rate. As discussed in the impact analysis in Appendix A 
to this proposed rule, we estimate that capital payments per discharge 
would increase approximately 1.9 percent during that same period. 
Because capital payments constitute approximately 10 percent of 
hospital payments, a 1-percent change in the capital Federal rate 
yields only approximately a 0.1 percent change in actual payments to 
hospitals.

1. Projected Capital Standard Federal Rate Update

    Under Sec.  412.308(c)(1), the capital standard Federal rate is 
updated on the basis of an analytical framework that takes into account 
changes in a capital input price index (CIPI) and several other policy 
adjustment factors. Specifically, we adjust the projected CIPI rate of 
change, as appropriate, each year for case-mix index-related changes, 
for intensity, and for errors in previous CIPI forecasts. The proposed 
update factor for FY 2020 under that framework is 1.5 percent based on 
a projected 1.5 percent increase in the 2014-based CIPI, a proposed 0.0 
percentage point adjustment for intensity, a proposed 0.0 percentage 
point adjustment for case-mix, a proposed 0.0 percentage point 
adjustment for the DRG reclassification and recalibration, and a 
proposed forecast error correction of 0.0 percentage point. As 
discussed in section III.C. of this Addendum, we continue to believe 
that the CIPI is the most appropriate input price index for capital 
costs to measure capital price changes in a given year. We also explain 
the basis for the FY 2020 CIPI projection in that same section of this 
Addendum. Below we describe the proposed policy adjustments that we are 
proposing to apply in the update framework for FY 2020.
    The case-mix index is the measure of the average DRG weight for 
cases paid under the IPPS. Because the DRG weight determines the 
prospective payment for each case, any percentage increase in the case-
mix index corresponds to an equal percentage increase in hospital 
payments.
    The case-mix index can change for any of several reasons:
     The average resource use of Medicare patient changes 
(``real'' case-mix change);
     Changes in hospital documentation and coding of patient 
records result in higher-weighted DRG assignments (``coding effects''); 
and
     The annual DRG reclassification and recalibration changes 
may not be budget neutral (``reclassification effect'').
    We define real case-mix change as actual changes in the mix (and 
resource requirements) of Medicare patients, as opposed to changes in 
documentation and coding behavior that result in assignment of cases to 
higher-weighted DRGs, but do not reflect higher resource requirements. 
The capital update framework includes the same case-mix index 
adjustment used in the former operating IPPS update framework (as 
discussed in the May 18, 2004 IPPS proposed rule for FY 2005 (69 FR 
28816)). (We no longer use an update framework to make a recommendation 
for updating the operating IPPS standardized amounts, as discussed in 
section II. of Appendix B to the FY 2006 IPPS final rule (70 FR 
47707).)
    For FY 2020, we are projecting a 0.5 percent total increase in the 
case-mix index. We estimated that the real case-mix increase would 
equal 0.5 percent for FY 2020. The net adjustment for change in case-
mix is the difference between the projected real increase in case-mix 
and the projected total increase in case-mix. Therefore, the proposed 
net adjustment for case-mix change in FY 2020 is 0.0 percentage point.
    The capital update framework also contains an adjustment for the 
effects of DRG reclassification and recalibration. This adjustment is 
intended to remove the effect on total payments of prior year's changes 
to the DRG classifications and relative weights, in order to retain 
budget neutrality for all case-mix index-related changes other than 
those due to patient severity of illness. Due to the lag time in the 
availability of data, there is a 2-year lag in data used to determine 
the adjustment for the effects of DRG reclassification and 
recalibration. For example, we have data available to evaluate the 
effects of the FY 2018 DRG reclassification and recalibration as part 
of our update for FY 2020. We assume, for purposes of this adjustment, 
that the estimate of FY 2018 DRG reclassification and recalibration 
would result in no change in the case-mix when compared with the case-
mix index that would have resulted if we had not made the 
reclassification and recalibration changes to the DRGs. Therefore, we 
are proposing to make a 0.0 percentage point adjustment for 
reclassification and recalibration in the update framework for FY 2020.
    The capital update framework also contains an adjustment for 
forecast error. The input price index forecast is based on historical 
trends and relationships ascertainable at the time the update factor is 
established for the upcoming year. In any given year, there may be 
unanticipated price fluctuations that may result in differences between 
the actual increase in prices and the forecast used in calculating the 
update factors. In setting a prospective payment rate under the 
framework, we make an adjustment for forecast error only if our 
estimate of the change in the capital input price index for any year is 
off by 0.25 percentage point or more. There is a 2-year lag between the 
forecast and the availability of data to develop a measurement of the 
forecast error. Historically, when a forecast error of the CIPI is 
greater than 0.25 percentage point in absolute terms, it is reflected 
in the update recommended under this framework. A forecast error of -
0.1 percentage point was calculated for the FY 2018 update, for which 
there are historical data. That is, current historical data indicated 
that the forecasted FY 2018 CIPI (1.3 percent) used in calculating the 
FY 2018 update factor was 0.1 percentage point higher than actual 
realized price increases (1.2 percent). As this does not exceed the 
0.25 percentage point threshold, we are not proposing an adjustment for 
forecast error in the update for FY 2020.
    Under the capital IPPS update framework, we also make an adjustment 
for changes in intensity. Historically, we calculate this adjustment 
using the same methodology and data that were used in the past under 
the framework for operating IPPS. The intensity factor for the 
operating update framework reflects how hospital services are utilized 
to produce the final product, that is, the discharge. This component 
accounts for changes in the use of quality-enhancing services, for 
changes within DRG severity, and for expected modification

[[Page 19606]]

of practice patterns to remove noncost-effective services. Our 
intensity measure is based on a 5-year average.
    We calculate case-mix constant intensity as the change in total 
cost per discharge, adjusted for price level changes (the CPI for 
hospital and related services) and changes in real case-mix. Without 
reliable estimates of the proportions of the overall annual intensity 
changes that are due, respectively, to ineffective practice patterns 
and the combination of quality-enhancing new technologies and 
complexity within the DRG system, we assume that one-half of the annual 
change is due to each of these factors. The capital update framework 
thus provides an add-on to the input price index rate of increase of 
one-half of the estimated annual increase in intensity, to allow for 
increases within DRG severity and the adoption of quality-enhancing 
technology.
    In this proposed rule, we are proposing to continue to use a 
Medicare-specific intensity measure that is based on a 5-year adjusted 
average of cost per discharge for FY 2020 (we refer readers to the FY 
2011 IPPS/LTCH PPS final rule (75 FR 50436) for a full description of 
our Medicare-specific intensity measure). Specifically, for FY 2020, we 
are proposing to use an intensity measure that is based on an average 
of cost per discharge data from the 5-year period beginning with FY 
2013 and extending through FY 2017. Based on these data, we estimated 
that case-mix constant intensity declined during FYs 2013 through 2017. 
In the past, when we found intensity to be declining, we believed a 
zero (rather than a negative) intensity adjustment was appropriate. 
Consistent with this approach, because we estimated that intensity 
would decline during that 5-year period, we believe it is appropriate 
to continue to apply a zero intensity adjustment for FY 2020. 
Therefore, we are proposing to make a 0.0 percentage point adjustment 
for intensity in the update for FY 2020.
    Above we described the basis of the components we used to develop 
the proposed 1.5 percent capital update factor under the capital update 
framework for FY 2020, as shown in the following table.

       Proposed FY 2020 Update Factor to the Capital Federal Rate
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Capital Input Price Index *....................................      1.5
Intensity......................................................      0.0
Case-Mix Adjustment Factors:
    Real Across DRG Change.....................................      0.5
    Projected Case-Mix Change..................................      0.5
Subtotal.......................................................      1.5
Effect of FY 2018 Reclassification and Recalibration...........      0.0
Forecast Error Correction......................................      0.0
Total Proposed Update..........................................      1.5
------------------------------------------------------------------------
* The capital input price index represents the 2014-based CIPI.

2. Outlier Payment Adjustment Factor
    Section 412.312(c) establishes a unified outlier payment 
methodology for inpatient operating and inpatient capital-related 
costs. A shared threshold is used to identify outlier cases for both 
inpatient operating and inpatient capital-related payments. Section 
412.308(c)(2) provides that the standard Federal rate for inpatient 
capital-related costs be reduced by an adjustment factor equal to the 
estimated proportion of capital-related outlier payments to total 
inpatient capital-related PPS payments. The outlier threshold is set so 
that operating outlier payments are projected to be 5.1 percent of 
total operating IPPS DRG payments. For FY 2020, we are proposing to 
incorporate the estimated outlier reconciliation payment amounts into 
the outlier threshold model. (For more details on our proposal to 
incorporate estimated outlier reconciliation payment amounts into the 
outlier threshold model, we refer readers to section II.A.4.h. of this 
Addendum.)
    For FY 2019, we estimated that outlier payments for capital-related 
PPS payments would equal 5.06 percent of inpatient capital-related 
payments based on the capital Federal rate in FY 2019. Based on the 
threshold discussed in section II.A. of this Addendum, we estimate that 
prior to taking into account projected capital outlier reconciliation 
payments, outlier payments for capital-related costs would equal 5.39 
percent for inpatient capital-related payments based on the proposed 
capital Federal rate in FY 2020. However, using the methodology 
outlined in section II.A.4.h. of this Addendum, we estimate that taking 
into account projected capital outlier reconciliation payments would 
decrease FY 2020 aggregate estimated capital outlier payments by 0.05 
percent. Therefore, accounting for estimated capital outlier 
reconciliation, the estimated outlier payments for capital-related PPS 
payments would equal 5.34 percent (5.39 percent-0.05 percent) of 
inpatient capital-related payments based on the capital Federal rate in 
FY 2020. Accordingly, we are proposing to apply an outlier adjustment 
factor of 0.9466 in determining the capital Federal rate for FY 2020. 
Thus, we estimate that the percentage of capital outlier payments to 
total capital Federal rate payments for FY 2020 would be higher than 
the percentage for FY 2019.
    The outlier reduction factors are not built permanently into the 
capital rates; that is, they are not applied cumulatively in 
determining the capital Federal rate. The proposed FY 2020 outlier 
adjustment of 0.9466 is a 0.29 percent change from the FY 2019 outlier 
adjustment of 0.9494. Therefore, the proposed net change in the outlier 
adjustment to the capital Federal rate for FY 2020 is 0.9971 (0.9466/
0.9494; calculation performed on unrounded numbers) so that the 
proposed outlier adjustment would decrease the FY 2020 capital Federal 
rate by approximately 0.29 percent compared to the FY 2019 outlier 
adjustment.
3. Budget Neutrality Adjustment Factor for Changes in DRG 
Classifications and Weights and the GAF
    Section 412.308(c)(4)(ii) requires that the capital Federal rate be 
adjusted so that aggregate payments for the fiscal year based on the 
capital Federal rate, after any changes resulting from the annual DRG 
reclassification and recalibration and changes in the GAF, are 
projected to equal aggregate payments that would have been made on the 
basis of the capital Federal rate without such changes.
    In section III.N. of the preamble of this proposed rule, we discuss 
our proposals to address wage index disparities between high and low 
wage index hospitals. Specifically, we are proposing to: (1) Increase 
the wage index for hospitals with a wage index value below the 25th 
percentile wage index, where the increase in the wage index value for 
these hospitals would be equal to half the difference between the 
otherwise applicable final wage index value for a year for that 
hospital and the 25th percentile wage index value for that year across 
all hospitals; (2) decrease the wage index for hospitals with a wage 
index value above the 75th percentile wage index, where the wage index 
value for these hospitals would be decreased by a percentage of the 
difference between the otherwise applicable final wage index value for 
a year for that hospital and the 75th percentile wage index value for 
that year across all hospitals in order to offset the estimated 
aggregate increase in payments for a fiscal year under the proposal 
under (1) above; (3) calculate the rural floor without including the 
wage data of urban hospitals that have reclassified as rural under 
section 1886(d)(8)(E) of the Act (as

[[Page 19607]]

implemented in Sec.  412.103) and remove urban to rural 
reclassifications under Sec.  412.103 from the calculation of ``the 
wage index for rural areas in the State in which the county is 
located'' in applying the provisions of section 1886(d)(8)(C)(iii) of 
the Act; and (4) place a 5-percent cap in FY 2020 on any decrease in a 
hospital's wage index from the hospital's final wage index in FY 2019. 
These proposals directly affect the GAF because it is calculated based 
on the hospital wage index value that is applicable to the hospital 
under 42 CFR part 412, subpart D (Basic Methodology for Determining 
Prospective Payment Federal Rates for Inpatient Operating Costs). Given 
these proposed changes would affect the GAFs, we are proposing to 
augment our historical methodology for computing the budget neutrality 
factor for proposed changes in the GAFs. Historically, we determine a 
budget neutrality factor for changes in the GAF that accounts for 
changes resulting from the update to the wage data, wage index 
reclassifications and redesignations, and the rural floor in a single 
step. (We note that this historical GAF budget neutrality factor does 
not reflect changes in the frontier State adjustment or the out-
migration adjustment because these statutory adjustments to the wage 
index are not budget neutral.)
    In light of these proposed changes to the wage index, which 
directly affect the GAF, we are proposing to compute a budget 
neutrality factor for proposed changes in the GAFs in two steps. Under 
our proposed 2-step methodology, we first calculate a factor to ensure 
budget neutrality for proposed changes to the FY 2020 GAFs due to the 
update to the wage data, wage index reclassifications and 
redesignations, including our proposal to remove urban to rural 
reclassifications under Sec.  412.103 from the calculation of ``the 
wage index for rural areas in the State in which the county is 
located'' in applying the provisions of section 1886(d)(8)(C)(iii) of 
the Act, and the rural floor, including our proposal to calculate the 
rural floor without including the wage data of urban hospitals that 
have reclassified as rural under Sec.  412.103, consistent with our 
historical GAF budget neutrality factor methodology. In the second 
step, we would calculate a factor to ensure budget neutrality for 
proposed changes to the FY 2020 GAFs due to our proposal to increase 
the wage index for hospitals with a wage index value below the 25th 
percentile wage index, decrease the wage index for hospitals with a 
wage index value above the 75th percentile wage index, and place a 5-
percent cap on any decrease in a hospital's wage index from the 
hospital's final wage index in FY 2019. In this section, we refer to 
these three proposals as the proposed lowest quartile hospital wage 
index adjustment, the proposed highest quartile hospital wage index 
adjustment, and the proposed 5-percent cap on wage index decreases. We 
discuss our proposed 2-step calculation of the GAF budget neutrality 
factors below.
    To determine the GAF budget neutrality factors for FY 2020, we 
first compared estimated aggregate capital Federal rate payments based 
on the FY 2019 MS-DRG classifications and relative weights and the FY 
2019 GAFs to estimated aggregate capital Federal rate payments based on 
the FY 2019 MS-DRG classifications and relative weights and the FY 2020 
GAFs without incorporating the effects on the GAFs of our proposed 
lowest quartile hospital wage index adjustment, the proposed highest 
quartile hospital wage index adjustment, and the proposed 5-percent cap 
on wage index decreases. To achieve budget neutrality for these 
proposed changes in the GAFs, we calculated an incremental GAF budget 
neutrality adjustment factor of 0.9999 for FY 2020. Next, we compared 
estimated aggregate capital Federal rate payments based on the FY 2020 
GAFs with and without incorporating the effects on the GAFs of the 
proposed lowest quartile hospital wage index adjustment, the proposed 
highest quartile hospital wage index adjustment, and the proposed 5-
percent cap on wage index decreases. For this calculation, estimated 
aggregate capital Federal rate payments were calculated using the 
proposed FY 2020 MS-DRG classifications and relative weights, and the 
proposed FY 2020 GAFs (both with and without incorporating the effects 
on the GAF of our proposed lowest quartile hospital wage index 
adjustment, the proposed highest quartile hospital wage index 
adjustment, and the proposed 5-percent cap on wage index decreases). 
(We note that, for this calculation, the GAFs included the out-
migration and frontier State adjustments.) To achieve budget neutrality 
for the effects of the proposed lowest quartile hospital wage index 
adjustment, the proposed highest quartile hospital wage index 
adjustment, and the proposed 5-percent cap on wage index decreases on 
the FY 2020 GAFs, we calculated an incremental GAF budget neutrality 
adjustment factor of 0.9977. Therefore, to achieve budget neutrality 
for the proposed changes in the GAFs, based on the proposed 
calculations described above, we are proposing to apply an incremental 
budget neutrality adjustment factor of 0.9976 (0.9999 x 0.9977) for FY 
2020 to the previous cumulative FY 2019 adjustment factor.
    We also compared estimated aggregate capital Federal rate payments 
based on the FY 2019 MS-DRG classifications and relative weights and 
the proposed FY 2020 GAFs to estimated aggregate capital Federal rate 
payments based on the cumulative effects of the proposed FY 2020 MS-DRG 
classifications and relative weights and the proposed FY 2020 GAFs 
without the effects of the proposed lowest quartile hospital wage index 
adjustment, the proposed highest quartile hospital wage index 
adjustment, and the proposed 5-percent cap on wage index decreases. The 
proposed incremental adjustment factor for DRG classifications and 
changes in relative weights is 0.99998. The proposed incremental 
adjustment factor for MS-DRG classifications and changes in relative 
weights (0.99998) and for changes in the GAFs through FY 2020 (0.9976) 
is 0.9976 (0.99998 x 0.9976). We note that all the values are 
calculated with unrounded numbers.
    The GAF/DRG budget neutrality adjustment factors are built 
permanently into the capital rates; that is, they are applied 
cumulatively in determining the capital Federal rate. This follows the 
requirement under Sec.  412.308(c)(4)(ii) that estimated aggregate 
payments each year be no more or less than they would have been in the 
absence of the annual DRG reclassification and recalibration and 
changes in the GAFs.
    The methodology used to determine the recalibration and geographic 
adjustment factor (GAF/DRG) budget neutrality adjustment is similar to 
the methodology used in establishing budget neutrality adjustments 
under the IPPS for operating costs. One difference is that, under the 
operating IPPS, the budget neutrality adjustments for the effect of 
geographic reclassifications are determined separately from the effects 
of other changes in the hospital wage index and the MS-DRG relative 
weights. Under the capital IPPS, there is a single GAF/DRG budget 
neutrality adjustment factor for changes in the GAF (including 
geographic reclassification and the proposed lowest quartile hospital 
wage index adjustment, the proposed highest quartile hospital wage 
index adjustment, and the proposed 5-percent cap on wage index 
decreases described above) and the MS-DRG relative weights. In 
addition, there is no adjustment for the effects that geographic 
reclassification or the proposed lowest quartile hospital wage

[[Page 19608]]

index adjustment and the proposed 5-percent cap on wage index decreases 
described above have on the other payment parameters, such as the 
payments for DSH or IME.
    The proposed incremental GAF/DRG adjustment factor of 0.9976 (the 
product of the proposed incremental GAF budget neutrality adjustment 
factor of 0.9976 and the proposed incremental DRG budget neutrality 
adjustment factor of 0.99998) accounts for the MS-DRG reclassifications 
and recalibration and for changes in the GAFs. As noted above, it also 
incorporates the effects on the GAFs of FY 2020 geographic 
reclassification decisions made by the MGCRB compared to FY 2019 
decisions and the proposed lowest quartile hospital wage index 
adjustment, the proposed highest quartile hospital wage index 
adjustment, and the proposed 5-percent cap on wage index decreases 
described above. However, it does not account for changes in payments 
due to changes in the DSH and IME adjustment factors.
4. Proposed Capital Federal Rate for FY 2020
    For FY 2019, we established a capital Federal rate of $459.41 (83 
FR 41729, as corrected at 83 FR 49845). We are proposing to establish 
an update of 1.5 percent in determining the FY 2020 capital Federal 
rate for all hospitals. As a result of this proposed update and the 
proposed budget neutrality factors discussed earlier, we are proposing 
to establish a national capital Federal rate of $463.81 for FY 2020. 
The proposed national capital Federal rate for FY 2020 was calculated 
as follows:
     The proposed FY 2020 update factor is 1.015; that is, the 
proposed update is 1.5 percent.
     The proposed FY 2020 budget neutrality adjustment factor 
that is applied to the capital Federal rate for changes in the MS-DRG 
classifications and relative weights and changes in the GAFs is 0.9976.
     The proposed FY 2020 outlier adjustment factor is 0.9466.
    We are providing the following chart that shows how each of the 
proposed factors and adjustments for FY 2020 affects the computation of 
the proposed FY 2020 national capital Federal rate in comparison to the 
FY 2019 national capital Federal rate. The proposed FY 2020 update 
factor has the effect of increasing the capital Federal rate by 1.5 
percent compared to the FY 2019 capital Federal rate. The proposed GAF/
DRG budget neutrality adjustment factor has the effect of decreasing 
the capital Federal rate by 0.24 percent. The proposed FY 2020 outlier 
adjustment factor has the effect of decreasing the capital Federal rate 
by 0.29 percent compared to the FY 2019 capital Federal rate. The 
combined effect of all the proposed changes would increase the national 
capital Federal rate by approximately 0.96 percent, compared to the FY 
2019 national capital Federal rate.

  Comparison of Factors and Adjustments: FY 2019 Capital Federal Rate and the Proposed FY 2020 Capital Federal
                                                      Rate
----------------------------------------------------------------------------------------------------------------
                                                                    Proposed FY      Proposed        Proposed
                                                      FY 2019          2020           change      percent change
----------------------------------------------------------------------------------------------------------------
Update Factor \1\...............................          1.0140          1.0150           1.015            1.50
GAF/DRG Adjustment Factor \1\...................          0.9969          0.9976          0.9976           -0.24
Outlier Adjustment Factor \2\...................          0.9494          0.9466          0.9971           -0.29
Capital Federal Rate............................         $459.41         $463.81          1.0096        \3\ 0.96
----------------------------------------------------------------------------------------------------------------
\1\ The proposed update factor and the GAF/DRG budget neutrality adjustment factors are built permanently into
  the capital Federal rates. Thus, for example, the proposed incremental change from FY 2019 to FY 2020
  resulting from the application of the proposed 0.9976 GAF/DRG budget neutrality adjustment factor for FY 2020
  is a net change of 0.9976 (or -0.24 percent).
\2\ The outlier reduction factor is not built permanently into the capital Federal rate; that is, the factor is
  not applied cumulatively in determining the capital Federal rate. Thus, for example, the proposed net change
  resulting from the application of the proposed FY 2020 outlier adjustment factor is 0.9466/0.9494 or 0.9971
  (or -0.29 percent) (calculation performed on unrounded numbers).
\3\ Percent change may not sum due to rounding.

B. Calculation of the Proposed Inpatient Capital-Related Prospective 
Payments for FY 2020

    For purposes of calculating payments for each discharge during FY 
2020, the capital Federal rate is adjusted as follows: (Standard 
Federal Rate) x (DRG Weight) x (GAF) x (COLA for hospitals located in 
Alaska and Hawaii) x (1 + DSH Adjustment Factor + IME Adjustment 
Factor, if applicable). The result is the adjusted capital Federal 
rate.
    Hospitals also may receive outlier payments for those cases that 
qualify under the thresholds established for each fiscal year. Section 
412.312(c) provides for a single set of thresholds to identify outlier 
cases for both inpatient operating and inpatient capital-related 
payments. The proposed outlier thresholds for FY 2020 are in section 
II.A. of this Addendum. For FY 2020, a case will qualify as a cost 
outlier if the cost for the case plus the (operating) IME and DSH 
payments (including both the empirically justified Medicare DSH payment 
and the estimated uncompensated care payment, as discussed in section 
II.A.4.h.(1) of this Addendum) is greater than the prospective payment 
rate for the MS-DRG plus the proposed fixed-loss amount of $26,994.
    Currently, as provided under Sec.  412.304(c)(2), we pay a new 
hospital 85 percent of its reasonable costs during the first 2 years of 
operation, unless it elects to receive payment based on 100 percent of 
the capital Federal rate. Effective with the third year of operation, 
we pay the hospital based on 100 percent of the capital Federal rate 
(that is, the same methodology used to pay all other hospitals subject 
to the capital PPS).

C. Capital Input Price Index

1. Background
    Like the operating input price index, the capital input price index 
(CIPI) is a fixed-weight price index that measures the price changes 
associated with capital costs during a given year. The CIPI differs 
from the operating input price index in one important aspect--the CIPI 
reflects the vintage nature of capital, which is the acquisition and 
use of capital over time. Capital expenses in any given year are 
determined by the stock of capital in that year (that is, capital that 
remains on hand from all current and prior capital acquisitions). An 
index measuring capital price changes needs to reflect this vintage 
nature of capital. Therefore, the CIPI

[[Page 19609]]

was developed to capture the vintage nature of capital by using a 
weighted-average of past capital purchase prices up to and including 
the current year.
    We periodically update the base year for the operating and capital 
input price indexes to reflect the changing composition of inputs for 
operating and capital expenses. For this FY 2020 IPPS/LTCH PPS proposed 
rule, we are proposing to use the rebased and revised IPPS operating 
and capital market baskets that reflect a 2014 base year. For a 
complete discussion of this rebasing, we refer readers to section IV. 
of the preamble of the FY 2018 IPPS/LTCH PPS final rule (82 FR 38170).
2. Forecast of the CIPI for FY 2020
    Based on IHS Global Inc.'s fourth quarter 2018 forecast, for this 
proposed rule, we are forecasting the 2014-based CIPI to increase 1.5 
percent in FY 2020. This reflects a projected 1.7 percent increase in 
vintage-weighted depreciation prices (building and fixed equipment, and 
movable equipment), and a projected 3.6 percent increase in other 
capital expense prices in FY 2020, partially offset by a projected 0.6 
percent decline in vintage-weighted interest expense prices in FY 2020. 
The weighted average of these three factors produces the forecasted 1.5 
percent increase for the 2014-based CIPI in FY 2020.

IV. Proposed Changes to Payment Rates for Excluded Hospitals: Rate-of-
Increase Percentages for FY 2020

    Payments for services furnished in children's hospitals, 11 cancer 
hospitals, and hospitals located outside the 50 States, the District of 
Columbia and Puerto Rico (that is, short-term acute care hospitals 
located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, 
and American Samoa) that are excluded from the IPPS are made on the 
basis of reasonable costs based on the hospital's own historical cost 
experience, subject to a rate-of-increase ceiling. A per discharge 
limit (the target amount, as defined in Sec.  413.40(a) of the 
regulations) is set for each hospital, based on the hospital's own cost 
experience in its base year, and updated annually by a rate-of-increase 
percentage specified in Sec.  413.40(c)(3). In addition, as specified 
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38536), effective for 
cost reporting periods beginning during FY 2018, the annual update to 
the target amount for extended neoplastic disease care hospitals 
(hospitals described in Sec.  412.22(i) of the regulations) also is the 
rate-of-increase percentage specified in Sec.  413.40(c)(3). (We note 
that, in accordance with Sec.  403.752(a), religious nonmedical health 
care institutions (RNHCIs) are also subject to the rate-of-increase 
limits established under Sec.  413.40 of the regulations.)
    The FY 2020 rate-of-increase percentage for updating the target 
amounts for the 11 cancer hospitals, children's hospitals, the short-
term acute care hospitals located in the U.S. Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa, RNHCIs, and extended 
neoplastic disease care hospitals is the estimated percentage increase 
in the IPPS operating market basket for FY 2020, in accordance with 
applicable regulations at Sec.  413.40. Based on IGI's 2018 fourth 
quarter forecast, we estimated that the 2014-based IPPS operating 
market basket update for FY 2020 is 3.2 percent (that is, the estimate 
of the market basket rate-of-increase). However, we are proposing that 
if more recent data become available for the final rule, we would use 
them to calculate the IPPS operating market basket update for FY 2020. 
Therefore, for children's hospitals, the 11 cancer hospitals, hospitals 
located outside the 50 States, the District of Columbia, and Puerto 
Rico (that is, short-term acute care hospitals located in the U.S. 
Virgin Islands, Guam, the Northern Mariana Islands, and American 
Samoa), extended neoplastic disease care hospitals, and RNHCIs, the FY 
2020 rate-of-increase percentage that would be applied to the FY 2019 
target amounts, in order to determine the FY 2020 target amounts is 3.2 
percent.
    The IRF PPS, the IPF PPS, and the LTCH PPS are updated annually. We 
refer readers to section VII. of the preamble of this proposed rule and 
section V. of the Addendum to this proposed rule for the proposed 
updated changes to the Federal payment rates for LTCHs under the LTCH 
PPS for FY 2020. The annual updates for the IRF PPS and the IPF PPS are 
issued by the agency in separate Federal Register documents.

V. Proposed Changes to the Payment Rates for the LTCH PPS for FY 2020

A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2020

1. Overview
    In section VII. of the preamble of this proposed rule, we discuss 
our proposed annual updates to the payment rates, factors, and specific 
policies under the LTCH PPS for FY 2020.
    Under Sec.  412.523(c)(3) of the regulations, for LTCH PPS FYs 2012 
through 2019, we updated the standard Federal payment rate by the most 
recent estimate of the LTCH PPS market basket at that time, including 
additional statutory adjustments required by sections 1886(m)(3) 
(citing sections 1886(b)(3)(B)(xi)(II), and 1886(m)(4) of the Act as 
set forth in the regulations at Sec. Sec.  412.523(c)(3)(viii) through 
(c)(3)(xv)). (For a summary of the payment rate development prior to FY 
2012, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 
38310 through 38312) and references therein.)
    Section 1886(m)(3)(A) specifies that, for rate year 2020 and each 
subsequent rate year, any annual update to the standard Federal payment 
rate shall be reduced by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act (which we refer to as ``the 
multifactor productivity (MFP) adjustment'') as discussed in section 
VII.D.2. of the preamble of this proposed rule.
    This section of the Act further provides that the application of 
section 1886(m)(3)(B) of the Act may result in the annual update being 
less than zero for a rate year, and may result in payment rates for a 
rate year being less than such payment rates for the preceding rate 
year. (As noted in section VII.D.2.a. of the preamble of this proposed 
rule, the annual update to the LTCH PPS occurs on October 1 and we have 
adopted the term ``fiscal year'' (FY) rather than ``rate year'' (RY) 
under the LTCH PPS beginning October 1, 2010. Therefore, for purposes 
of clarity, when discussing the annual update for the LTCH PPS, 
including the provisions of the Affordable Care Act, we use the term 
``fiscal year'' rather than ``rate year'' for 2011 and subsequent 
years.)
    For LTCHs that fail to submit the required quality reporting data 
in accordance with the LTCH QRP, the annual update is reduced by 2.0 
percentage points as required by section 1886(m)(5) of the Act.
2. Development of the Proposed FY 2020 LTCH PPS Standard Federal 
Payment Rate
    Consistent with our historical practice, for FY 2020, we are 
proposing to apply the annual update to the LTCH PPS standard Federal 
payment rate from the previous year. Furthermore, in determining the 
proposed LTCH PPS standard Federal payment rate for FY 2020, we also 
are proposing to make certain regulatory adjustments, consistent with 
past practices. Specifically, in determining the proposed FY 2020 LTCH 
PPS standard Federal payment rate, we are proposing to apply a budget 
neutrality adjustment factor for the changes related to the area wage 
level adjustment (that is, changes

[[Page 19610]]

to the wage data and labor-related share) in accordance with Sec.  
412.523(d)(4) and a temporary budget neutrality adjustment factor 
(applied to LTCH PPS standard Federal payment rate cases only) for the 
cost of the elimination of the 25-percent threshold policy for FY 2020 
(discussed in VII.D. of the preamble of this proposed rule).
    In this FY 2020 IPPS/LTCH PPS proposed rule, we are proposing to 
establish an annual update to the LTCH PPS standard Federal payment 
rate of 2.7 percent. Accordingly, as reflected in proposed Sec.  
412.523(c)(3)(xvi), we are proposing to apply a factor of 1.027 to the 
FY 2019 LTCH PPS standard Federal payment rate of $41,558.68 to 
determine the proposed FY 2020 LTCH PPS standard Federal payment rate. 
Also, as reflected in proposed Sec.  412.523(c)(3)(xvi), applied in 
conjunction with the provisions of Sec.  412.523(c)(4), we are 
proposing to establish an annual update to the LTCH PPS standard 
Federal payment rate of 0.7 percent (that is, a proposed update factor 
of 1.007) for FY 2020 for LTCHs that fail to submit the required 
quality reporting data for FY 2020 as required under the LTCH QRP. 
Additionally, we are proposing to apply a temporary budget neutrality 
adjustment factor of 0.990741 to the LTCH PPS standard Federal payment 
rate for the cost of the elimination of the 25-percent threshold policy 
for FY 2020 after removing the temporary budget neutrality adjustment 
factor of 0.990884 that was applied to the LTCH PPS standard Federal 
payment rate for the cost of the elimination of the 25-percent 
threshold policy for FY 2019 (or a temporary, one-time factor of 
0.999856 as discussed in VII.D. of the preamble of this proposed rule). 
Consistent with Sec.  412.523(d)(4), we also are proposing to apply an 
area wage level budget neutrality factor to the proposed FY 2020 LTCH 
PPS standard Federal payment rate of 1.0064747, based on the best 
available data at this time, to ensure that any changes to the area 
wage level adjustment (that is, the proposed annual update of the wage 
index values and labor-related share) would not result in any change 
(increase or decrease) in estimated aggregate LTCH PPS standard Federal 
rate payments. Accordingly, we are proposing to establish an LTCH PPS 
standard Federal payment rate of $42,950.91 (calculated as $41,558.68 x 
0.999856 x 1.027 x 1.0064747) for FY 2020 (calculations performed on 
rounded numbers). For LTCHs that fail to submit quality reporting data 
for FY 2020, in accordance with the requirements of the LTCH QRP under 
section 1866(m)(5) of the Act, we are proposing to establish an LTCH 
PPS standard Federal payment rate of $42,114.47 (calculated as 
$41,558.68 x 0.999856 x 1.007 x 1.0064747) (calculations performed on 
rounded numbers) for FY 2020.

B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS for FY 
2020

1. Background
    Under the authority of section 123 of the BBRA, as amended by 
section 307(b) of the BIPA, we established an adjustment to the LTCH 
PPS standard Federal payment rate to account for differences in LTCH 
area wage levels under Sec.  412.525(c). The labor-related share of the 
LTCH PPS standard Federal payment rate is adjusted to account for 
geographic differences in area wage levels by applying the applicable 
LTCH PPS wage index. The applicable LTCH PPS wage index is computed 
using wage data from inpatient acute care hospitals without regard to 
reclassification under section 1886(d)(8) or section 1886(d)(10) of the 
Act.
2. Proposed Geographic Classifications (Labor Market Areas) for the 
LTCH PPS Standard Federal Payment Rate
    In adjusting for the differences in area wage levels under the LTCH 
PPS, the labor-related portion of an LTCH's Federal prospective payment 
is adjusted by using an appropriate area wage index based on the 
geographic classification (labor market area) in which the LTCH is 
located. Specifically, the application of the LTCH PPS area wage level 
adjustment under existing Sec.  412.525(c) is made based on the 
location of the LTCH--either in an ``urban area,'' or a ``rural area,'' 
as defined in Sec.  412.503. Under Sec.  412.503, an ``urban area'' is 
defined as a Metropolitan Statistical Area (MSA) (which includes a 
Metropolitan division, where applicable), as defined by the Executive 
OMB and a ``rural area'' is defined as any area outside of an urban 
area (75 FR 37246).
    The CBSA-based geographic classifications (labor market area 
definitions) currently used under the LTCH PPS, effective for 
discharges occurring on or after October 1, 2014, are based on the OMB 
labor market area delineations based on the 2010 Decennial Census data. 
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. We adopted these labor market area 
delineations because they are based on the best available data that 
reflect the local economies and area wage levels of the hospitals that 
are currently located in these geographic areas. We also believe that 
these OMB delineations will ensure that the LTCH PPS area wage level 
adjustment most appropriately accounts for and reflects the relative 
hospital wage levels in the geographic area of the hospital as compared 
to the national average hospital wage level. We noted that this policy 
was consistent with the IPPS policy adopted in FY 2015 under Sec.  
412.64(b)(1)(ii)(D) of the regulations (79 FR 49951 through 49963). 
(For additional information on the CBSA-based labor market area 
(geographic classification) delineations currently used under the LTCH 
PPS and the history of the labor market area definitions used under the 
LTCH PPS, we refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 
FR 50180 through 50185).)
    In general, it is our historical practice to update the CBSA-based 
labor market area delineations annually based on the most recent 
updates issued by OMB. 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. OMB 
Bulletin No. 17-01, issued August 15, 2017, establishes the current 
delineations for the Nation's statistical areas, and the corresponding 
changes to the CBSA-based labor market areas were adopted in the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41731). A copy of this bulletin 
may be obtained on the website at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf.
    We believe the current CBSA-based labor market area delineations as 
established in OMB Bulletin 17-01 and adopted in the FY 2019 IPPS/LTCH 
PPS final rule (83 FR 41731) will ensure that the LTCH PPS area wage 
level adjustment most appropriately accounts for and reflects the 
relative hospital wage levels in the geographic area of the hospital as 
compared to the national average hospital wage level based on the best 
available data that reflect the local economies and area wage levels of 
the hospitals that are currently located in these geographic areas (81 
FR 57298). Therefore, we are proposing to continue to use the CSBA-
based labor market area delineations adopted under the LTCH PPS, 
effective October 1, 2019 (as adopted in the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41731)). Accordingly, the proposed FY 2020 LTCH PPS 
wage index values in Tables 12A and 12B

[[Page 19611]]

listed in section VI. of the Addendum to this proposed rule (which are 
available via the internet on the CMS website) reflect the CBSA-based 
labor market area delineations as described above. We noted that, as 
discussed in section III.A.2. of the preamble of this proposed rule, 
these CBSA-based delineations also are being proposed to be used under 
the IPPS.
3. Proposed Labor-Related Share for the LTCH PPS Standard Federal 
Payment Rate
    Under the payment adjustment for the differences in area wage 
levels under Sec.  412.525(c), the labor-related share of an LTCH's 
standard Federal payment rate payment is adjusted by the applicable 
wage index for the labor market area in which the LTCH is located. The 
LTCH PPS labor-related share currently represents the sum of the labor-
related portion of operating costs and a labor-related portion of 
capital costs using the applicable LTCH PPS market basket. Additional 
background information on the historical development of the labor-
related share under the LTCH PPS can be found in the RY 2007 LTCH PPS 
final rule (71 FR 27810 through 27817 and 27829 through 27830) and the 
FY 2012 IPPS/LTCH PPS final rule (76 FR 51766 through 51769 and 51808).
    For FY 2013, we rebased and revised the market basket used under 
the LTCH PPS by adopting a 2009-based LTCH-specific market basket. In 
addition, beginning in FY 2013, we determined the labor-related share 
annually as the sum of the relative importance of each labor-related 
cost category of the 2009-based LTCH-specific market basket for the 
respective fiscal year based on the best available data. (For more 
details, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 
FR 53477 through 53479).) As noted previously, we rebased and revised 
the 2009-based LTCH-specific market basket to reflect a 2013 base year. 
In conjunction with that policy, as discussed in section VII.D. of the 
preamble of this FY 2020 IPPS/LTCH PPS proposed rule, we are proposing 
to establish that the LTCH PPS labor-related share for FY 2020 is the 
sum of the FY 2020 relative importance of each labor-related cost 
category in the 2013-based LTCH market basket using the most recent 
available data.
    Specifically, we are proposing to establish that the labor-related 
share for FY 2020 includes the sum of the labor-related portion of 
operating costs from the 2013-based LTCH market basket (that is, the 
sum of the FY 2020 relative importance share of Wages and Salaries; 
Employee Benefits; Professional Fees: Labor-Related; Administrative and 
Facilities Support Services; Installation, Maintenance, and Repair 
Services; All Other: Labor-related Services) and a portion of the 
relative importance of the Capital-Related cost weight from the 2013-
based LTCH PPS market basket. Based on IGI's fourth quarter 2018 
forecast of the 2013-based LTCH market basket, we are proposing to 
establish a labor-related share under the LTCH PPS for FY 2020 of 66.0 
percent. (We note that a proposed labor-related share of 66.0 percent 
is the same as the labor-related share for FY 2019, and although the 
relative importance of some components of the market basket have 
changed, the proposed labor-related share remains at 66.0 percent when 
aggregating these components and rounding to one decimal.) This 
proposed labor-related share is determined using the same methodology 
as employed in calculating all previous LTCH PPS labor-related shares. 
Consistent with our historical practice, we also are proposing that if 
more recent data became available, we would use that data, if 
appropriate, to determine the final FY 2020 labor-related share in the 
final rule.
    The proposed labor-related share for FY 2020 is the sum of the FY 
2020 relative importance of each labor-related cost category, and would 
reflect the different rates of price change for these cost categories 
between the base year (2013) and FY 2020. The sum of the relative 
importance for FY 2020 for operating costs (Wages and Salaries; 
Employee Benefits; Professional Fees: Labor-Related; Administrative and 
Facilities Support Services; Installation, Maintenance, and Repair 
Services; All Other: Labor-Related Services) is 61.9 percent. The 
portion of capital-related costs that is influenced by the local labor 
market is estimated to be 46 percent (the same percentage applied to 
the 2009-based LTCH-specific market basket). Because the relative 
importance for capital-related costs under our policies is 9.0 percent 
of the 2013-based LTCH market basket in FY 2020, we are proposing to 
take 46 percent of 9.0 percent to determine the labor-related share of 
capital-related costs for FY 2020 (0.46 x 9.0). The result is 4.1 
percent, which we added to 61.9 percent for the operating cost amount 
to determine the total proposed labor-related share for FY 2020. 
Therefore, we are proposing to establish that the labor-related share 
under the LTCH PPS for FY 2020 is 66.0 percent.
4. Proposed Wage Index for FY 2020 for the LTCH PPS Standard Federal 
Payment Rate
    Historically, we have established LTCH PPS area wage index values 
calculated from acute care IPPS hospital wage data without taking into 
account geographic reclassification under sections 1886(d)(8) and 
1886(d)(10) of the Act (67 FR 56019). The area wage level adjustment 
established under the LTCH PPS is based on an LTCH's actual location 
without regard to the ``urban'' or ``rural'' designation of any related 
or affiliated provider.
    In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41732), we 
calculated the FY 2019 LTCH PPS area wage index values using the same 
data used for the FY 2019 acute care hospital IPPS (that is, data from 
cost reporting periods beginning during FY 2015), without taking into 
account geographic reclassification under sections 1886(d)(8) and 
1886(d)(10) of the Act, as these were the most recent complete data 
available at that time. In that same final rule, we indicated that we 
computed the FY 2019 LTCH PPS area wage index values, consistent with 
the urban and rural geographic classifications (labor market areas) 
that were in place at that time and consistent with the pre-
reclassified IPPS wage index policy (that is, our historical policy of 
not taking into account IPPS geographic reclassifications in 
determining payments under the LTCH PPS). As with the IPPS wage index, 
wage data for multicampus hospitals with campuses located in different 
labor market areas (CBSAs) are apportioned to each CBSA where the 
campus (or campuses) are located. We also continued to use our existing 
policy for determining area wage index values for areas where there are 
no IPPS wage data.
    Consistent with our historical methodology, as discussed in this FY 
2020 IPPS/LTCH PPS proposed rule, to determine the applicable area wage 
index values for the FY 2020 LTCH PPS standard Federal payment rate, 
under the broad authority of section 123 of the BBRA, as amended by 
section 307(b) of the BIPA, we are proposing to use wage data collected 
from cost reports submitted by IPPS hospitals for cost reporting 
periods beginning during FY 2016, without taking into account 
geographic reclassification under sections 1886(d)(8) and 1886(d)(10) 
of the Act because these data are the most recent complete data 
available. We also note that these are the same data we are proposing 
to use to compute the proposed FY 2020 acute care hospital

[[Page 19612]]

inpatient wage index, as discussed in section III. of the preamble of 
this proposed rule. We are proposing to compute the proposed FY 2020 
LTCH PPS standard Federal payment rate area wage index values 
consistent with the ``urban'' and ``rural'' geographic classifications 
(that is, labor market area delineations, including the proposed 
updates, as previously discussed in section V.B. of this Addendum) and 
our historical policy of not taking into account IPPS geographic 
reclassifications under sections 1886(d)(8) and 1886(d)(10) of the Act 
in determining payments under the LTCH PPS. We also are proposing to 
continue to apportion the wage data for multicampus hospitals with 
campuses located in different labor market areas to each CBSA where the 
campus or campuses are located, consistent with the IPPS policy. 
Lastly, consistent with our existing methodology for determining the 
LTCH PPS wage index values, for FY 2020, we are proposing to continue 
to use our existing policy for determining area wage index values for 
areas where there are no IPPS wage data. Under our existing 
methodology, the LTCH PPS wage index value for urban CBSAs with no IPPS 
wage data would be determined by using an average of all of the urban 
areas within the State, and the LTCH PPS wage index value for rural 
areas with no IPPS wage data would be determined by using the 
unweighted average of the wage indices from all of the CBSAs that are 
contiguous to the rural counties of the State.
    Based on the FY 2016 IPPS wage data that we are proposing to use to 
determine the proposed FY 2020 LTCH PPS standard Federal payment rate 
area wage index values in this proposed rule, there are no IPPS wage 
data for the urban area of Hinesville, GA (CBSA 25980). Consistent with 
the methodology discussed above, we calculated the proposed FY 2020 
wage index value for CBSA 25980 as the average of the wage index values 
for all of the other urban areas within the State of Georgia (that is, 
CBSAs 10500, 12020, 12060, 12260, 15260, 16860, 17980, 19140, 23580, 
31420, 40660, 42340, 46660 and 47580), as shown in Table 12A, which is 
listed in section VI. of the Addendum to this proposed rule and 
available via the internet on the CMS website. Likewise, based on this 
same FY 2016 IPPS wage data that we are proposing to use to determine 
the proposed FY 2020 LTCH PPS standard Federal payment rate area wage 
index values in this proposed rule, there are no IPPS wage data for the 
urban area of Carson City, NV (CBSA 16810). Consistent with the 
methodology discussed above, we calculated the proposed FY 2020 wage 
index value for CBSA 16810 as the average of the wage index values for 
all of the other urban areas within the State of Nevada (that is, CBSAs 
29820 and 39900, as shown in Table 12A, which is listed in section VI. 
of the Addendum to this proposed rule and available via the internet on 
the CMS website). We note that, as IPPS wage data are dynamic, it is 
possible that urban areas without IPPS wage data will vary in the 
future.
    Based on the FY 2016 IPPS wage data that we are proposing to use to 
determine the proposed FY 2020 LTCH PPS standard Federal payment rate 
area wage index values in this proposed rule, there are no rural areas 
without IPPS hospital wage data. Therefore, it is not necessary to use 
our established methodology to calculate a proposed LTCH PPS standard 
Federal payment rate wage index value for proposed rural areas with no 
IPPS wage data for FY 2020. We note that, as IPPS wage data are 
dynamic, it is possible that the number of rural areas without IPPS 
wage data will vary in the future. The proposed FY 2020 LTCH PPS 
standard Federal payment rate wage index values that would be 
applicable for LTCH PPS standard Federal payment rate discharges 
occurring on or after October 1, 2019, through September 30, 2020, are 
presented in Table 12A (for urban areas) and Table 12B (for rural 
areas), which are listed in section VI. of the Addendum to this 
proposed rule and available via the internet on the CMS website.
    Historically, we have calculated the LTCH PPS wage index values 
using unadjusted wage index values from the IPPS hospitals. 
Stakeholders have frequently commented on certain aspects of the wage 
index values and their impact on payments. In this proposed rule, we 
are soliciting public comments on concerns that stakeholders may have 
regarding the wage index used to adjust LTCH PPS payments and 
suggestions for possible updates and improvements to the geographic 
adjustment of LTCH PPS payments.
5. Proposed Budget Neutrality Adjustment for Changes to the LTCH PPS 
Standard Federal Payment Rate Area Wage Level Adjustment
    Historically, the LTCH PPS wage index and labor-related share are 
updated annually based on the latest available data. Under Sec.  
412.525(c)(2), any changes to the area wage index values or labor-
related share are to be made in a budget neutral manner such that 
estimated aggregate LTCH PPS payments are unaffected; that is, will be 
neither greater than nor less than estimated aggregate LTCH PPS 
payments without such changes to the area wage level adjustment. Under 
this policy, we determine an area wage level adjustment budget 
neutrality factor that will be applied to the standard Federal payment 
rate to ensure that any changes to the area wage level adjustments are 
budget neutral such that any changes to the area wage index values or 
labor-related share would not result in any change (increase or 
decrease) in estimated aggregate LTCH PPS payments. Accordingly, under 
Sec.  412.523(d)(4), we apply an area wage level adjustment budget 
neutrality factor in determining the standard Federal payment rate, and 
we also established a methodology for calculating an area wage level 
adjustment budget neutrality factor. (For additional information on the 
establishment of our budget neutrality policy for changes to the area 
wage level adjustment, we refer readers to the FY 2012 IPPS/LTCH PPS 
final rule (76 FR 51771 through 51773 and 51809).)
    In this FY 2020 IPPS/LTCH PPS proposed rule, for FY 2020 LTCH PPS 
standard Federal payment rate cases, in accordance with Sec.  
412.523(d)(4), we are proposing to apply an area wage level adjustment 
budget neutrality factor to adjust the LTCH PPS standard Federal 
payment rate to account for the estimated effect of the proposed 
adjustments or updates to the area wage level adjustment under Sec.  
412.525(c)(1) on estimated aggregate LTCH PPS payments using a 
methodology that is consistent with the methodology we established in 
the FY 2012 IPPS/LTCH PPS final rule (76 FR 51773). Specifically, we 
are proposing to determine an area wage level adjustment budget 
neutrality factor that would be applied to the LTCH PPS standard 
Federal payment rate under Sec.  412.523(d)(4) for FY 2020 using the 
following methodology:
    Step 1--We simulated estimated aggregate LTCH PPS standard Federal 
payment rate payments using the FY 2019 wage index values and the FY 
2019 labor-related share of 66.0 percent (as established in the FY 2019 
IPPS/LTCH PPS final rule (83 FR 41732)).
    Step 2--We simulated estimated aggregate LTCH PPS standard Federal 
payment rate payments using the proposed FY 2020 wage index values (as 
shown in Tables 12A and 12B listed in the Addendum to this proposed 
rule and available via the internet on the CMS website) and the 
proposed FY 2020 labor-related share of 66.0 percent

[[Page 19613]]

(based on the latest available data as previously discussed in this 
Addendum).
    Step 3--We calculated the ratio of these estimated total LTCH PPS 
standard Federal payment rate payments by dividing the estimated total 
LTCH PPS standard Federal payment rate payments using the FY 2019 area 
wage level adjustments (calculated in Step 1) by the estimated total 
LTCH PPS standard Federal payment rate payments using the proposed FY 
2020 area wage level adjustments (calculated in Step 2) to determine 
the proposed area wage level adjustment budget neutrality factor for FY 
2020 LTCH PPS standard Federal payment rate payments.
    Step 4--We then applied the proposed FY 2020 area wage level 
adjustment budget neutrality factor from Step 3 to determine the 
proposed FY 2020 LTCH PPS standard Federal payment rate after the 
application of the proposed FY 2020 annual update (discussed previously 
in section V.A. of this Addendum).
    We note that, with the exception of cases subject to the 
transitional blended payment rate provisions and certain temporary 
exemptions for certain spinal cord specialty hospitals and certain 
severe wound cases, under the dual rate LTCH PPS payment structure, 
only LTCH PPS cases that meet the statutory criteria to be excluded 
from the site neutral payment rate (that is, LTCH PPS standard Federal 
payment rate cases) are paid based on the LTCH PPS standard Federal 
payment rate. Because the area wage level adjustment under Sec.  
412.525(c) is an adjustment to the LTCH PPS standard Federal payment 
rate, we only used data from claims that would have qualified for 
payment at the LTCH PPS standard Federal payment rate if such rate had 
been in effect at the time of discharge to calculate the proposed FY 
2020 LTCH PPS standard Federal payment rate area wage level adjustment 
budget neutrality factor described above. Moreover, we note that the 
estimated proposed LTCH PPS standard Federal payment rate used in the 
calculations in Steps 1 through 4 above include the one-time budget 
neutrality adjustment factor for the estimated cost of eliminating the 
25-percent threshold policy in FY 2020, as discussed in section VII.D. 
of the preamble of this proposed rule.
    For this proposed rule, using the steps in the methodology 
previously described, we determined a proposed FY 2020 LTCH PPS 
standard Federal payment rate area wage level adjustment budget 
neutrality factor of 1.0064747. Accordingly, in section V.A. of the 
Addendum to this proposed rule, to determine the proposed FY 2020 LTCH 
PPS standard Federal payment rate, we are proposing to apply an area 
wage level adjustment budget neutrality factor of 1.0064747, in 
accordance with Sec.  412.523(d)(4).

C. Proposed LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located 
in Alaska and Hawaii

    Under Sec.  412.525(b), a cost-of-living adjustment (COLA) is 
provided for LTCHs located in Alaska and Hawaii to account for the 
higher costs incurred in those States. Specifically, we apply a COLA to 
payments to LTCHs located in Alaska and Hawaii by multiplying the 
nonlabor-related portion of the standard Federal payment rate by the 
applicable COLA factors established annually by CMS. Higher labor-
related costs for LTCHs located in Alaska and Hawaii are taken into 
account in the adjustment for area wage levels previously described. 
The methodology used to determine the COLA factors for Alaska and 
Hawaii is based on a comparison of the growth in the Consumer Price 
Indexes (CPIs) for Anchorage, Alaska, and Honolulu, Hawaii, relative to 
the growth in the CPI for the average U.S. city as published by the 
Bureau of Labor Statistics (BLS). It also includes a 25-percent cap on 
the CPI-updated COLA factors. Under our current policy, we update the 
COLA factors using the methodology described above every 4 years (at 
the same time as the update to the labor-related share of the IPPS 
market basket), and we last updated the COLA factors for Alaska and 
Hawaii published by OPM for 2009 in FY 2018 (82 FR 38539 through 
38540).
    We continue to believe that determining updated COLA factors using 
this methodology would appropriately adjust the nonlabor-related 
portion of the LTCH PPS standard Federal payment rate for LTCHs located 
in Alaska and Hawaii. Therefore, in this FY 2020 IPPS/LTCH PPS proposed 
rule, for FY 2020, under the broad authority conferred upon the 
Secretary by section 123 of the BBRA, as amended by section 307(b) of 
the BIPA, to determine appropriate payment adjustments under the LTCH 
PPS, we are proposing to continue to use the COLA factors based on the 
2009 OPM COLA factors updated through 2016 by the comparison of the 
growth in the CPIs for Anchorage, Alaska, and Honolulu, Hawaii, 
relative to the growth in the CPI for the average U.S. city as 
established in the FY 2018 IPPS/LTCH PPS final rule. (For additional 
details on our current methodology for updating the COLA factors for 
Alaska and Hawaii and for a discussion on the FY 2018 COLA factors, we 
refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38539 
through 38540).)

 Proposed Cost-of-Living Adjustment Factors for Alaska and Hawaii Under
                        the LTCH PPS for FY 2020
------------------------------------------------------------------------
                                                            Proposed FY
                          Area                                 2020
------------------------------------------------------------------------
Alaska:
    City of Anchorage and 80-kilometer (50-mile) radius             1.25
     by road............................................
    City of Fairbanks and 80-kilometer (50-mile) radius             1.25
     by road............................................
    City of Juneau and 80-kilometer (50-mile) radius by             1.25
     road...............................................
    Rest of Alaska......................................            1.25
Hawaii:
    City and County of Honolulu.........................            1.25
    County of Hawaii....................................            1.21
    County of Kauai.....................................            1.25
    County of Maui and County of Kalawao................            1.25
------------------------------------------------------------------------


[[Page 19614]]

D. Proposed Adjustment for LTCH PPS High Cost Outlier (HCO) Cases

1. HCO Background
    From the beginning of the LTCH PPS, we have included an adjustment 
to account for cases in which there are extraordinarily high costs 
relative to the costs of most discharges. Under this policy, additional 
payments are made based on the degree to which the estimated cost of a 
case (which is calculated by multiplying the Medicare allowable covered 
charge by the hospital's overall hospital CCR) exceeds a fixed-loss 
amount. This policy results in greater payment accuracy under the LTCH 
PPS and the Medicare program, and the LTCH sharing the financial risk 
for the treatment of extraordinarily high-cost cases.
    We retained the basic tenets of our HCO policy in FY 2016 when we 
implemented the dual rate LTCH PPS payment structure under section 1206 
of Public Law 113-67. LTCH discharges that meet the criteria for 
exclusion from the site neutral payment rate (that is, LTCH PPS 
standard Federal payment rate cases) are paid at the LTCH PPS standard 
Federal payment rate, which includes, as applicable, HCO payments under 
Sec.  412.523(e). LTCH discharges that do not meet the criteria for 
exclusion are paid at the site neutral payment rate, which includes, as 
applicable, HCO payments under Sec.  412.522(c)(2)(i). In the FY 2016 
IPPS/LTCH PPS final rule, we established separate fixed-loss amounts 
and targets for the two different LTCH PPS payment rates. Under this 
bifurcated policy, the historic 8-percent HCO target was retained for 
LTCH PPS standard Federal payment rate cases, with the fixed-loss 
amount calculated using only data from LTCH cases that would have been 
paid at the LTCH PPS standard Federal payment rate if that rate had 
been in effect at the time of those discharges. For site neutral 
payment rate cases, we adopted the operating IPPS HCO target (currently 
5.1 percent) and set the fixed-loss amount for site neutral payment 
rate cases at the value of the IPPS fixed-loss amount. Under the HCO 
policy for both payment rates, an LTCH receives 80 percent of the 
difference between the estimated cost of the case and the applicable 
HCO threshold, which is the sum of the LTCH PPS payment for the case 
and the applicable fixed-loss amount for such case.
    In order to maintain budget neutrality, consistent with the budget 
neutrality requirement for HCO payments to LTCH PPS standard Federal 
rate payment cases, we also adopted a budget neutrality requirement for 
HCO payments to site neutral payment rate cases by applying a budget 
neutrality factor to the LTCH PPS payment for those site neutral 
payment rate cases. (We refer readers to Sec.  412.522(c)(2)(i) of the 
regulations for further details.) We note that, during the 2-year 
transitional period, the site neutral payment rate HCO budget 
neutrality factor did not apply to the LTCH PPS standard Federal 
payment rate portion of the blended payment rate at Sec.  412.522(c)(3) 
payable to site neutral payment rate cases. (For additional details on 
the HCO policy adopted for site neutral payment rate cases under the 
dual rate LTCH PPS payment structure, including the budget neutrality 
adjustment for HCO payments to site neutral payment rate cases, we 
refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49617 
through 49623).)
2. Determining LTCH CCRs Under the LTCH PPS
a. Background
    As noted above, CCRs are used to determine payments for HCO 
adjustments for both payment rates under the LTCH PPS and also are used 
to determine payments for site neutral payment rate cases. As noted 
earlier, in determining HCO and the site neutral payment rate payments 
(regardless of whether the case is also an HCO), we generally calculate 
the estimated cost of the case by multiplying the LTCH's overall CCR by 
the Medicare allowable charges for the case. An overall CCR is used 
because the LTCH PPS uses a single prospective payment per discharge 
that covers both inpatient operating and capital-related costs. The 
LTCH's overall CCR is generally computed based on the sum of LTCH 
operating and capital costs (as described in Section 150.24, Chapter 3, 
of the Medicare Claims Processing Manual (Pub. 100-4)) as compared to 
total Medicare charges (that is, the sum of its operating and capital 
inpatient routine and ancillary charges), with those values determined 
from either the most recently settled cost report or the most recent 
tentatively settled cost report, whichever is from the latest cost 
reporting period. However, in certain instances, we use an alternative 
CCR, such as the statewide average CCR, a CCR that is specified by CMS, 
or one that is requested by the hospital. (We refer readers to Sec.  
412.525(a)(4)(iv) of the regulations for further details regarding HCO 
adjustments for either LTCH PPS payment rate and Sec.  
412.522(c)(1)(ii) for the site neutral payment rate.)
    The LTCH's calculated CCR is then compared to the LTCH total CCR 
ceiling. Under our established policy, an LTCH with a calculated CCR in 
excess of the applicable maximum CCR threshold (that is, the LTCH total 
CCR ceiling, which is calculated as 3 standard deviations from the 
national geometric average CCR) is generally assigned the applicable 
statewide CCR. This policy is premised on a belief that calculated CCRs 
above the LTCH total CCR ceiling are most likely due to faulty data 
reporting or entry, and CCRs based on erroneous data should not be used 
to identify and make payments for outlier cases.
b. LTCH Total CCR Ceiling
    Consistent with our historical practice, we are proposing to use 
the most recent data available to determine the LTCH total CCR ceiling 
for FY 2020 in this proposed rule. Specifically, in this proposed rule, 
using our established methodology for determining the LTCH total CCR 
ceiling based on IPPS total CCR data from the December 2018 update of 
the Provider Specific File (PSF), which is the most recent data 
available, we are proposing to establish an LTCH total CCR ceiling of 
1.247 under the LTCH PPS for FY 2020 in accordance with Sec.  
412.525(a)(4)(iv)(C)(2) for HCO cases under either payment rate and 
Sec.  412.522(c)(1)(ii) for the site neutral payment rate. (For 
additional information on our methodology for determining the LTCH 
total CCR ceiling, we refer readers to the FY 2007 IPPS final rule (71 
FR 48118 through 48119).)
c. LTCH Statewide Average CCRs
    Our general methodology for determining the statewide average CCRs 
used under the LTCH PPS is similar to our established methodology for 
determining the LTCH total CCR ceiling because it is based on ``total'' 
IPPS CCR data. (For additional information on our methodology for 
determining statewide average CCRs under the LTCH PPS, we refer readers 
to the FY 2007 IPPS final rule (71 FR 48119 through 48120).) Under the 
LTCH PPS HCO policy for cases paid under either payment rate at Sec.  
412.525(a)(4)(iv)(C)(2), the current SSO policy at Sec.  
412.529(f)(4)(iii)(B), and the site neutral payment rate at Sec.  
412.522(c)(1)(ii), the MAC may use a statewide average CCR, which is 
established annually by CMS, if it is unable to determine an accurate 
CCR for an LTCH in one of the following circumstances: (1) New LTCHs 
that have not yet submitted their first Medicare cost report (a new 
LTCH is defined as an entity that has not accepted assignment of an 
existing hospital's provider agreement in accordance with

[[Page 19615]]

Sec.  489.18); (2) LTCHs whose calculated CCR is in excess of the LTCH 
total CCR ceiling; and (3) other LTCHs for whom data with which to 
calculate a CCR are not available (for example, missing or faulty 
data). (Other sources of data that the MAC may consider in determining 
an LTCH's CCR include data from a different cost reporting period for 
the LTCH, data from the cost reporting period preceding the period in 
which the hospital began to be paid as an LTCH (that is, the period of 
at least 6 months that it was paid as a short-term, acute care 
hospital), or data from other comparable LTCHs, such as LTCHs in the 
same chain or in the same region.)
    Consistent with our historical practice of using the best available 
data, in this proposed rule, using our established methodology for 
determining the LTCH statewide average CCRs, based on the most recent 
complete IPPS ``total CCR'' data from the December 2018 update of the 
PSF, we are proposing to establish LTCH PPS statewide average total 
CCRs for urban and rural hospitals that will be effective for 
discharges occurring on or after October 1, 2019, through September 30, 
2020, in Table 8C listed in section VI. of the Addendum to this 
proposed rule (and available via the internet on the CMS website). 
Consistent with our historical practice, we also are proposing that if 
more recent data become available, we would use that data to determine 
the LTCH PPS statewide average total CCRs for FY 2020 in the final 
rule.
    Under the current LTCH PPS labor market areas, all areas in 
Delaware, the District of Columbia, New Jersey, and Rhode Island are 
classified as urban. Therefore, there are no rural statewide average 
total CCRs listed for those jurisdictions in Table 8C. This policy is 
consistent with the policy that we established when we revised our 
methodology for determining the applicable LTCH statewide average CCRs 
in the FY 2007 IPPS final rule (71 FR 48119 through 48121) and is the 
same as the policy applied under the IPPS. In addition, although 
Connecticut and Nevada have areas that are designated as rural, in our 
calculation of the LTCH statewide average CCRs, there was no data 
available from short-term, acute care IPPS hospitals to compute a rural 
statewide average CCR or there were no short-term, acute care IPPS 
hospitals or LTCHs located in these areas as of December 2018. 
Therefore, consistent with our existing methodology, we are proposing 
to use the national average total CCR for rural IPPS hospitals for 
rural Connecticut and Nevada in Table 8C. Furthermore, consistent with 
our existing methodology, in determining the urban and rural statewide 
average total CCRs for Maryland LTCHs paid under the LTCH PPS, we are 
proposing to continue to use, as a proxy, the national average total 
CCR for urban IPPS hospitals and the national average total CCR for 
rural IPPS hospitals, respectively. We are using this proxy because we 
believe that the CCR data in the PSF for Maryland hospitals may not be 
entirely accurate (as discussed in greater detail in the FY 2007 IPPS 
final rule (71 FR 48120)).
d. Reconciliation of HCO Payments
    Under the HCO policy for cases paid under either payment rate at 
Sec.  412.525(a)(4)(iv)(D), the payments for HCO cases are subject to 
reconciliation. Specifically, any such payments are reconciled at 
settlement based on the CCR that was calculated based on the cost 
report coinciding with the discharge. For additional information on the 
reconciliation policy, we refer readers to Sections 150.26 through 
150.28 of the Medicare Claims Processing Manual (Pub. 100-4), as added 
by Change Request 7192 (Transmittal 2111; December 3, 2010), and the RY 
2009 LTCH PPS final rule (73 FR 26820 through 26821).
3. High-Cost Outlier Payments for LTCH PPS Standard Federal Payment 
Rate Cases
a. Proposed Changes to High-Cost Outlier Payments for LTCH PPS Standard 
Federal Payment Rate Cases
    Under the regulations at Sec.  412.525(a)(2)(ii) and as required by 
section 1886(m)(7) of the Act, the fixed-loss amount for HCO payments 
is set each year so that the estimated aggregate HCO payments for LTCH 
PPS standard Federal payment rate cases are 99.6875 percent of 8 
percent (that is, 7.975 percent) of estimated aggregate LTCH PPS 
payments for LTCH PPS standard Federal payment rate cases. (For more 
details on the requirements for high-cost outlier payments in FY 2018 
and subsequent years under section 1886(m)(7) of the Act and additional 
information regarding high-cost outlier payments prior to FY 2018, we 
refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38542 
through 38544).)
b. Proposed Fixed-Loss Amount for LTCH PPS Standard Federal Payment 
Rate Cases for FY 2020
    When we implemented the LTCH PPS, we established a fixed-loss 
amount so that total estimated outlier payments are projected to equal 
8 percent of total estimated payments under the LTCH PPS (67 FR 56022 
through 56026). When we implemented the dual rate LTCH PPS payment 
structure beginning in FY 2016, we established that, in general, the 
historical LTCH PPS HCO policy would continue to apply to LTCH PPS 
standard Federal payment rate cases. That is, the fixed-loss amount and 
target for LTCH PPS standard Federal payment rate cases would be 
determined using the LTCH PPS HCO policy adopted when the LTCH PPS was 
first implemented, but we limited the data used under that policy to 
LTCH cases that would have been LTCH PPS standard Federal payment rate 
cases if the statutory changes had been in effect at the time of those 
discharges.
    To determine the applicable fixed-loss amount for LTCH PPS standard 
Federal payment rate cases, we estimate outlier payments and total LTCH 
PPS payments for each LTCH PPS standard Federal payment rate case (or 
for each case that would have been a LTCH PPS standard Federal payment 
rate case if the statutory changes had been in effect at the time of 
the discharge) using claims data from the MedPAR files. In accordance 
with Sec.  412.525(a)(2)(ii), the applicable fixed-loss amount for LTCH 
PPS standard Federal payment rate cases results in estimated total 
outlier payments being projected to be equal to 7.975 percent of 
projected total LTCH PPS payments for LTCH PPS standard Federal payment 
rate cases. We use MedPAR claims data and CCRs based on data from the 
most recent PSF (or from the applicable statewide average CCR if an 
LTCH's CCR data are faulty or unavailable) to establish an applicable 
fixed-loss threshold amount for LTCH PPS standard Federal payment rate 
cases.
    In this FY 2020 IPPS/LTCH PPS proposed rule, we are proposing to 
continue to use our current methodology to calculate an applicable 
fixed-loss amount for LTCH PPS standard Federal payment rate cases for 
FY 2020 using the best available data that would maintain estimated HCO 
payments at the projected 7.975 percent of total estimated LTCH PPS 
payments for LTCH PPS standard Federal payment rate cases (based on the 
payment rates and policies for these cases presented in this proposed 
rule).
    Specifically, based on the most recent complete LTCH data available 
at this time (that is, LTCH claims data from the December 2018 update 
of the FY 2018 MedPAR file and CCRs from the December 2018 update of 
the PSF), we are proposing to determine a proposed fixed-loss amount 
for LTCH PPS standard Federal payment rate cases for FY 2020 of $29,997 
that would result in estimated outlier payments projected to

[[Page 19616]]

be equal to 7.975 percent of estimated FY 2020 payments for such cases. 
Under this proposal, we would continue to make an additional HCO 
payment for the cost of an LTCH PPS standard Federal payment rate case 
that exceeds the HCO threshold amount that is equal to 80 percent of 
the difference between the estimated cost of the case and the outlier 
threshold (the sum of the proposed adjusted LTCH PPS standard Federal 
payment rate payment and the proposed fixed-loss amount for LTCH PPS 
standard Federal payment rate cases of $29,997).
    We note that the proposed fixed-loss amount for HCO cases that 
would be paid under the LTCH PPS standard Federal payment rate in FY 
2020 of $29,997 is significantly higher than the FY 2019 fixed-loss 
amount of $27,121 (as corrected at 83 FR 49845). However, based on the 
most recent available data at the time of the development of this FY 
2020 IPPS/LTCH PPS proposed rule, we found that the current FY 2019 HCO 
threshold of $27,121 results in estimated HCO payments for LTCH PPS 
standard Federal payment rate cases of approximately 8.24 percent of 
the estimated total LTCH PPS payments in FY 2018, which exceeds the 
7.975 percent target by 0.265 percentage points. We continue to believe 
that, as discussed in detail in the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38542 through 38543), this increase is largely attributable to 
the rate-of-change (that is, increase) in the Medicare allowable 
charges on the claims data in addition to updates to CCRs from the 
March 2018 update of the PSF to the December 2018 update of the PSF. 
Consistent with our historical practice of using the best data 
available, we are proposing that, when determining the fixed-loss 
amount for LTCH PPS standard Federal payment rate cases for FY 2020 in 
the final rule, we would use the most recent available LTCH claims data 
and CCR data at the time.
4. Proposed High-Cost Outlier Payments for Site Neutral Payment Rate 
Cases
    Under Sec.  412.525(a), site neutral payment rate cases receive an 
additional HCO payment for costs that exceed the HCO threshold that is 
equal to 80 percent of the difference between the estimated cost of the 
case and the applicable HCO threshold (80 FR 49618 through 49629). In 
the following discussion, we note that the statutory transitional 
payment method for cases that are paid the site neutral payment rate 
for LTCH discharges occurring in cost reporting periods beginning 
during FY 2016 through FY 2019 used a blended payment rate, which is 
determined as 50 percent of the site neutral payment rate amount for 
the discharge and 50 percent of the LTCH PPS standard Federal payment 
rate amount for the discharge (Sec.  412.522(c)(3)). As such, for FY 
2020 discharges paid under the transitional payment method, the 
discussion below pertains only to the site neutral payment rate portion 
of the blended payment rate under Sec.  412.522(c)(3)(i).
    When we implemented the application of the site neutral payment 
rate in FY 2016, in examining the appropriate fixed-loss amount for 
site neutral payment rate cases issue, we considered how LTCH 
discharges based on historical claims data would have been classified 
under the dual rate LTCH PPS payment structure and the CMS' Office of 
the Actuary projections regarding how LTCHs will likely respond to our 
implementation of policies resulting from the statutory payment 
changes. We again relied on these considerations and actuarial 
projections in FY 2017 and FY 2018 because the historical claims data 
available in each of these years were not all subject to the LTCH PPS 
dual rate payment system. Similarly, for FY 2019, we continued to rely 
on these considerations and actuarial projections because, due to the 
transitional blended payment policy for site neutral payment rate 
cases, FY 2017 claims for these cases were not subject to the full 
effect of the site neutral payment rate.
    For FYs 2016 through 2019, at that time our actuaries projected 
that the proportion of cases that would qualify as LTCH PPS standard 
Federal payment rate cases versus site neutral payment rate cases under 
the statutory provisions would remain consistent with what is reflected 
in the historical LTCH PPS claims data. Although our actuaries did not 
project an immediate change in the proportions found in the historical 
data, they did project cost and resource changes to account for the 
lower payment rates. Our actuaries also projected that the costs and 
resource use for cases paid at the site neutral payment rate would 
likely be lower, on average, than the costs and resource use for cases 
paid at the LTCH PPS standard Federal payment rate and would likely 
mirror the costs and resource use for IPPS cases assigned to the same 
MS-DRG, regardless of whether the proportion of site neutral payment 
rate cases in the future remains similar to what is found based on the 
historical data. As discussed in the FY 2016 IPPS/LTCH PPS final rule 
(80 FR 49619), this actuarial assumption is based on our expectation 
that site neutral payment rate cases would generally be paid based on 
an IPPS comparable per diem amount under the statutory LTCH PPS payment 
changes that began in FY 2016, which, in the majority of cases, is much 
lower than the payment that would have been paid if these statutory 
changes were not enacted. In light of these projections and 
expectations, we discussed that we believed that the use of a single 
fixed-loss amount and HCO target for all LTCH PPS cases would be 
problematic. In addition, we discussed that we did not believe that it 
would be appropriate for comparable LTCH PPS site neutral payment rate 
cases to receive dramatically different HCO payments from those cases 
that would be paid under the IPPS (80 FR 49617 through 49619 and 81 FR 
57305 through 57307). For those reasons, we stated that we believed 
that the most appropriate fixed-loss amount for site neutral payment 
rate cases for FYs 2016 through 2019 would be equal to the IPPS fixed-
loss amount for that particular fiscal year. Therefore, we established 
the fixed-loss amount for site neutral payment rate cases as the 
corresponding IPPS fixed-loss amounts for FYs 2016 through 2019. In 
particular, in FY 2019, we established the fixed-loss amount for site 
neutral payment rate cases as the FY 2019 IPPS fixed-loss amount of 
$25,743 (as corrected at 83 FR 49845).
    As noted earlier, because not all claims in the data used for this 
FY 2020 IPPS/LTCH PPS proposed rule were subject to the unblended site 
neutral payment rate, we continue to rely on the same considerations 
and actuarial projections used in FYs 2016 through 2019 when developing 
a fixed-loss amount for site neutral payment rate cases for FY 2020. 
Because our actuaries continue to project that site neutral payment 
rate cases in FY 2020 will continue to mirror an IPPS case paid under 
the same MS-DRG, we continue to believe that it would be inappropriate 
for comparable LTCH PPS site neutral payment rate cases to receive 
dramatically different HCO payments from those cases paid under the 
IPPS. More specifically, as with FYs 2016 through 2019, our actuaries 
project that the costs and resource use for FY 2020 cases paid at the 
site neutral payment rate would likely be lower, on average, than the 
costs and resource use for cases paid at the LTCH PPS standard Federal 
payment rate and will likely mirror the costs and resource use for IPPS 
cases assigned to the same MS-DRG, regardless of whether the proportion 
of site neutral payment rate cases in the future remains similar to 
what was found based on the historical data. (Based on the most recent 
FY 2018

[[Page 19617]]

LTCH claims data used in the development of this FY 2020 IPPS/LTCH PPS 
proposed rule, approximately 71 percent of LTCH cases would have been 
paid the LTCH PPS standard Federal payment rate and approximately 29 
percent of LTCH cases would have been paid the site neutral payment 
rate for discharges occurring in FY 2018.)
    For these reasons, we continue to believe that the most appropriate 
proposed fixed-loss amount for site neutral payment rate cases for FY 
2020 is the proposed IPPS fixed-loss amount for FY 2020. Therefore, 
consistent with past practice, in this FY 2020 IPPS/LTCH PPS proposed 
rule, we are proposing that the applicable HCO threshold for site 
neutral payment rate cases is the sum of the site neutral payment rate 
for the case and the proposed IPPS fixed-loss amount. That is, we are 
proposing a fixed-loss amount for site neutral payment rate cases of 
$26,994, which is the same proposed FY 2020 IPPS fixed-loss amount 
discussed in section II.A.4.j.(1) of the Addendum to this proposed 
rule. We continue to believe this policy would reduce differences 
between HCO payments for similar cases under the IPPS and site neutral 
payment rate cases under the LTCH PPS and promote fairness between the 
two systems. Accordingly, for FY 2020, we are proposing to calculate a 
HCO payment for site neutral payment rate cases with costs that exceed 
the HCO threshold amount that is equal to 80 percent of the difference 
between the estimated cost of the case and the outlier threshold (the 
sum of the site neutral payment rate payment and the proposed fixed-
loss amount for site neutral payment rate cases of $26,994).
    In establishing a HCO policy for site neutral payment rate cases, 
we established a budget neutrality adjustment under Sec.  
412.522(c)(2)(i). We established this requirement because we believed, 
and continue to believe, that the HCO policy for site neutral payment 
rate cases should be budget neutral, just as the HCO policy for LTCH 
PPS standard Federal payment rate cases is budget neutral, meaning that 
estimated site neutral payment rate HCO payments should not result in 
any change in estimated aggregate LTCH PPS payments.
    To ensure that estimated HCO payments payable to site neutral 
payment rate cases in FY 2020 would not result in any increase in 
estimated aggregate FY 2020 LTCH PPS payments, under the budget 
neutrality requirement at Sec.  412.522(c)(2)(i), it is necessary to 
reduce site neutral payment rate payments (or the portion of the 
blended payment rate payment for FY 2020 discharges occurring in LTCH 
cost reporting periods beginning before October 1, 2019) by 5.1 percent 
to account for the estimated additional HCO payments payable to those 
cases in FY 2020. In order to achieve this, for FY 2020, in general, we 
are proposing to continue to use the policy adopted for FY 2019.
    As discussed earlier, consistent with the IPPS HCO payment 
threshold, we estimate the proposed fixed-loss threshold of $26,994 
results in HCO payments for site neutral payment rate cases to equal 
5.1 percent of the site neutral payment rate payments that are based on 
the IPPS comparable per diem amount. As such, to ensure estimated HCO 
payments payable for site neutral payment rate cases in FY 2020 would 
not result in any increase in estimated aggregate FY 2020 LTCH PPS 
payments, under the budget neutrality requirement at Sec.  
412.522(c)(2)(i), it is necessary to reduce the site neutral payment 
rate amount paid under Sec.  412.522(c)(1)(i) by 5.1 percent to account 
for the estimated additional HCO payments payable for site neutral 
payment rate cases in FY 2020. In order to achieve this, for FY 2020, 
we are proposing to apply a budget neutrality factor of 0.949 (that is, 
the decimal equivalent of a 5.1 percent reduction, determined as 1.0 - 
5.1/100 = 0.949) to the site neutral payment rate for those site 
neutral payment rate cases paid under Sec.  412.522(c)(1)(i). We note 
that, consistent with our current policy, this proposed HCO budget 
neutrality adjustment would not be applied to the HCO portion of the 
site neutral payment rate amount (81 FR 57309).

E. Proposed Update to the IPPS Comparable Amount To Reflect the 
Statutory Changes to the IPPS DSH Payment Adjustment Methodology

    In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50766), we 
established a policy to reflect the changes to the Medicare IPPS DSH 
payment adjustment methodology made by section 3133 of the Affordable 
Care Act in the calculation of the ``IPPS comparable amount'' under the 
SSO policy at Sec.  412.529 and the ``IPPS equivalent amount'' under 
the 25-percent threshold payment adjustment policy at Sec.  412.534 and 
Sec.  412.536. Historically, the determination of both the ``IPPS 
comparable amount'' and the ``IPPS equivalent amount'' includes an 
amount for inpatient operating costs ``for the costs of serving a 
disproportionate share of low-income patients.'' Under the statutory 
changes to the Medicare DSH payment adjustment methodology that began 
in FY 2014, in general, eligible IPPS hospitals receive an empirically 
justified Medicare DSH payment equal to 25 percent of the amount they 
otherwise would have received under the statutory formula for Medicare 
DSH payments prior to the amendments made by the Affordable Care Act. 
The remaining amount, equal to an estimate of 75 percent of the amount 
that otherwise would have been paid as Medicare DSH payments, reduced 
to reflect changes in the percentage of individuals who are uninsured 
and any additional statutory adjustment, is made available to make 
additional payments to each hospital that qualifies for Medicare DSH 
payments and that has uncompensated care. The additional uncompensated 
care payments 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 IPPS hospitals that 
receive Medicare DSH payments.
    To reflect the statutory changes to the Medicare DSH payment 
adjustment methodology in the calculation of the ``IPPS comparable 
amount'' and the ``IPPS equivalent amount'' under the LTCH PPS, we 
stated that we will include a reduced Medicare DSH payment amount that 
reflects the projected percentage of the payment amount calculated 
based on the statutory Medicare DSH payment formula prior to the 
amendments made by the Affordable Care Act that will be paid to 
eligible IPPS hospitals as empirically justified Medicare DSH payments 
and uncompensated care payments in that year (that is, a percentage of 
the operating Medicare DSH payment amount that has historically been 
reflected in the LTCH PPS payments that are based on IPPS rates). We 
also stated that the projected percentage will be updated annually, 
consistent with the annual determination of the amount of uncompensated 
care payments that will be made to eligible IPPS hospitals. We believe 
that this approach results in appropriate payments under the LTCH PPS 
and is consistent with our intention that the ``IPPS comparable 
amount'' and the ``IPPS equivalent amount'' under the LTCH PPS closely 
resemble what an IPPS payment would have been for the same episode of 
care, while recognizing that some features of the IPPS cannot be 
translated directly into the LTCH PPS (79 FR 50766 through 50767).
    For FY 2020, as discussed in greater detail in section IV.F.3. of 
the preamble of this proposed rule, based on the most recent data 
available, our estimate of 75 percent of the amount that would

[[Page 19618]]

otherwise have been paid as Medicare DSH payments (under the 
methodology outlined in section 1886(r)(2) of the Act) is adjusted to 
67.14 percent of that amount to reflect the change in the percentage of 
individuals who are uninsured. The resulting amount is then used to 
determine the amount available to make uncompensated care payments to 
eligible IPPS hospitals in FY 2020. In other words, the amount of the 
Medicare DSH payments that would have been made prior to the amendments 
made by the Affordable Care Act will be adjusted to 50.36 percent (the 
product of 75 percent and 67.14 percent) and the resulting amount will 
be used to calculate the uncompensated care payments to eligible 
hospitals. As a result, for FY 2020, we project that the reduction in 
the amount of Medicare DSH payments pursuant to section 1886(r)(1) of 
the Act, along with the payments for uncompensated care under section 
1886(r)(2) of the Act, will result in overall Medicare DSH payments of 
75.36 percent of the amount of Medicare DSH payments that would 
otherwise have been made in the absence of the amendments made by the 
Affordable Care Act (that is, 25 percent + 50.36 percent = 75.36 
percent).
    Therefore, for FY 2020, we are proposing to establish that the 
calculation of the ``IPPS comparable amount'' under Sec.  412.529 would 
include an applicable operating Medicare DSH payment amount that is 
equal to 75.36 percent of the operating Medicare DSH payment amount 
that would have been paid based on the statutory Medicare DSH payment 
formula absent the amendments made by the Affordable Care Act. 
Furthermore, consistent with our historical practice, we are proposing 
that if more recent data become available, we would use that data to 
determine this factor in the final rule.

F. Computing the Proposed Adjusted LTCH PPS Federal Prospective 
Payments for FY 2020

    Section 412.525 sets forth the adjustments to the LTCH PPS standard 
Federal payment rate. Under the dual rate LTCH PPS payment structure, 
only LTCH PPS cases that meet the statutory criteria to be excluded 
from the site neutral payment rate are paid based on the LTCH PPS 
standard Federal payment rate. Under Sec.  412.525(c), the LTCH PPS 
standard Federal payment rate is adjusted to account for differences in 
area wages by multiplying the labor-related share of the LTCH PPS 
standard Federal payment rate for a case by the applicable LTCH PPS 
wage index (the proposed FY 2020 values are shown in Tables 12A through 
12B listed in section VI. of the Addendum to this proposed rule and are 
available via the internet on the CMS website). The LTCH PPS standard 
Federal payment rate is also adjusted to account for the higher costs 
of LTCHs located in Alaska and Hawaii by the applicable COLA factors 
(the proposed FY 2020 factors are shown in the chart in section V.C. of 
this Addendum) in accordance with Sec.  412.525(b). In this proposed 
rule, we are proposing to establish an LTCH PPS standard Federal 
payment rate for FY 2020 of $42,950.91, as discussed in section V.A. of 
the Addendum to this proposed rule. We illustrate the methodology to 
adjust the proposed LTCH PPS standard Federal payment rate for FY 2020 
in the following example:
    Example: During FY 2020, a Medicare discharge that meets the 
criteria to be excluded from the site neutral payment rate, that is, an 
LTCH PPS standard Federal payment rate case, is from an LTCH that is 
located in Chicago, Illinois (CBSA 16974). The proposed FY 2020 LTCH 
PPS wage index value for CBSA 16974 is 1.0347 (obtained from Table 12A 
listed in section VI. of the Addendum to this proposed rule and 
available via the internet on the CMS website). The Medicare patient 
case is classified into MS-LTC-DRG 189 (Pulmonary Edema & Respiratory 
Failure), which has a proposed relative weight for FY 2020 of 0.9602 
(obtained from Table 11 listed in section VI. of the Addendum to this 
proposed rule and available via the internet on the CMS website). The 
LTCH submitted quality reporting data for FY 2020 in accordance with 
the LTCH QRP under section 1886(m)(5) of the Act.
    To calculate the LTCH's total adjusted Federal prospective payment 
for this Medicare patient case in FY 2020, we computed the wage-
adjusted proposed Federal prospective payment amount by multiplying the 
unadjusted proposed FY 2020 LTCH PPS standard Federal payment rate 
($42,950.91) by the proposed labor-related share (66.0 percent) and the 
proposed wage index value (1.0347). This wage-adjusted amount was then 
added to the proposed nonlabor-related portion of the unadjusted 
proposed LTCH PPS standard Federal payment rate (34.0 percent; adjusted 
for cost of living, if applicable) to determine the adjusted proposed 
LTCH PPS standard Federal payment rate, which is then multiplied by the 
proposed MS-LTC-DRG relative weight (0.9602) to calculate the total 
adjusted proposed LTCH PPS standard Federal prospective payment for FY 
2020 ($42,185.97). The table below illustrates the components of the 
calculations in this example.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Unadjusted Proposed LTCH PPS Standard Federal                 $42,950.91
 Prospective Payment Rate...............................
Proposed Labor-Related Share............................         x 0.660
Proposed Labor-Related Portion of the Proposed LTCH PPS     = $28,347.60
 Standard Federal Payment Rate..........................
Proposed Wage Index (CBSA 16974)........................        x 1.0347
Proposed Wage-Adjusted Labor Share of the Proposed LTCH     = $29,331.26
 PPS Standard Federal Payment Rate......................
Proposed Nonlabor-Related Portion of the Proposed LTCH      + $14,603.31
 PPS Standard Federal Payment Rate ($42,950.91 x 0.340).
Adjusted Proposed LTCH PPS Standard Federal Payment         = $43,934.57
 Amount.................................................
Proposed MS-LTC-DRG 189 Relative Weight.................        x 0.9602
                                                         ---------------
    Total Adjusted Proposed LTCH PPS Standard Federal       = $42,185.97
     Prospective Payment................................
------------------------------------------------------------------------

VI. Tables Referenced in This Proposed Rule Generally Available Through 
the Internet on the CMS Website

    This section lists the tables referred to throughout the preamble 
of this proposed rule and in the Addendum. In the past, a majority of 
these tables were published in the Federal Register as part of the 
annual proposed and final rules. However, similar to FYs 2012 through 
2019, for the FY 2020 rulemaking cycle, the IPPS and LTCH PPS tables 
will not be published in the Federal Register in the annual IPPS/LTCH 
PPS proposed and final rules and will be available through the 
internet. Specifically, all IPPS tables listed below, with the 
exception of IPPS Tables 1A, 1B, 1C, and 1D, and LTCH PPS Table 1E, 
will generally be available through the internet. IPPS Tables 1A, 1B, 
1C, and 1D, and LTCH PPS Table 1E are displayed at the end of this 
section and will continue to be published in the Federal Register as 
part of the annual proposed and final rules. For additional discussion 
of the

[[Page 19619]]

information included in the IPPS and LTCH PPS tables associated with 
the IPPS/LTCH PPS proposed and final rules, as well as prior changes to 
the information included in these tables, we refer readers to the FY 
2019 IPPS/LTCH PPS final rule (83 FR 41739 through 41740).
    In addition, under the HAC Reduction Program, established by 
section 3008 of the Affordable Care Act, a hospital's total payment may 
be reduced by 1 percent if it is in the lowest HAC performance 
quartile. The hospital-level data for the FY 2020 HAC Reduction Program 
will be made publicly available once it has undergone the review and 
corrections process.
    As discussed in section IV.G. of the preamble of this proposed 
rule, the proposed fiscal year readmissions payment adjustment factors, 
which are typically included in Table 15 of the rules, 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 2020 applicable period of July 1, 2015 to June 30, 2018) 
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 2020, we 
will post Table 15 (which will be available via the internet on the CMS 
website) to display the final FY 2020 readmissions payment adjustment 
factors that will be applicable to discharges occurring on or after 
October 1, 2019. We expect Table 15 will be posted on the CMS website 
in the fall of 2019.
    Readers who experience any problems accessing any of the tables 
that are posted on the CMS websites identified below should contact 
Michael Treitel at (410) 786-4552.
    The following IPPS tables for this proposed rule are generally 
available through the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the 
screen titled, ``FY 2020 IPPS Proposed Rule Home Page'' or ``Acute 
Inpatient--Files for Download.''

Table 2.--Proposed Case-Mix Index and Wage Index Table by CCN--FY 2020
Table 3.--Proposed Wage Index Table by CBSA--FY 2020
Table 4.--Proposed List of Counties Eligible for the Out-Migration 
Adjustment under Section 1886(d)(13) of the Act--FY 2020
Table 5.--Proposed List of Medicare Severity Diagnosis-Related Groups 
(MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic 
Mean Length of Stay--FY 2020
Table 6A.--New Diagnosis Codes--FY 2020
Table 6B.--New Procedure Codes--FY 2020
Table 6C.--Invalid Diagnosis Codes--FY 2020
Table 6D.--Invalid Procedure Codes--FY 2020
Table 6E.--Revised Diagnosis Code Titles--FY 2020
Table 6F.--Revised Procedure Code Titles--FY 2020
Table 6G.1.--Proposed Secondary Diagnosis Order Additions to the CC 
Exclusions List--FY 2020
Table 6G.2.--Proposed Principal Diagnosis Order Additions to the CC 
Exclusions List--FY 2020
Table 6H.1.--Proposed Secondary Diagnosis Order Deletions to the CC 
Exclusions List--FY 2020
Table 6H.2.--Proposed Principal Diagnosis Order Deletions to the CC 
Exclusions List--FY 2020
Table 6I.1.--Proposed Additions to the MCC List--FY 2020
Table 6I.2.--Proposed Deletions to the MCC List--FY 2020
Table 6J.1.--Proposed Additions to the CC List--FY 2020
Table 6J.2.--Proposed Deletions to the CC List--FY 2020
Table 6P.--ICD-10-CM and ICD-10-PCS Codes for Proposed MS-DRG Changes--
FY 2020 (Table 6P contains multiple tables, 6P.1a. through 6P.1e., that 
include the ICD-10-CM and ICD-10-PCS code lists relating to proposed 
specific MS-DRG changes. These tables are referred to throughout 
section II.F. of the preamble of this proposed rule.)
Table 7A.--Proposed Medicare Prospective Payment System Selected 
Percentile Lengths of Stay: FY 2018 MedPAR Update--December 2018 
GROUPER Version 36 MS-DRGs
Table 7B.--Proposed Medicare Prospective Payment System Selected 
Percentile Lengths of Stay: FY 2018 MedPAR Update--December 2018 
GROUPER Version 37 MS-DRGs
Table 8A.--Proposed FY 2020 Statewide Average Operating Cost-to-Charge 
Ratios (CCRs) for Acute Care Hospitals (Urban and Rural)
Table 8B.--Proposed FY 2020 Statewide Average Capital Cost-to-Charge 
Ratios (CCRs) for Acute Care Hospitals
Table 16.--Proposed Proxy Hospital Value-Based Purchasing (VBP) Program 
Adjustment Factors for FY 2020
Table 18.--Proposed FY 2020 Medicare DSH Uncompensated Care Payment 
Factor 3

    The following LTCH PPS tables for this FY 2020 proposed rule are 
available through the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation 
Number CMS-1716-P:

Table 8C.--Proposed FY 2020 Statewide Average Total Cost-to-Charge 
Ratios (CCRs) for LTCHs (Urban and Rural)
Table 11.--Proposed MS-LTC-DRGs, Relative Weights, Geometric Average 
Length of Stay, and Short-Stay Outlier (SSO) Threshold for LTCH PPS 
Discharges Occurring from October 1, 2019 through September 30, 2020
Table 12A.--Proposed LTCH PPS Wage Index for Urban Areas for Discharges 
Occurring from October 1, 2019 through September 30, 2020
Table 12B.--Proposed LTCH PPS Wage Index for Rural Areas for Discharges 
Occurring from October 1, 2019 through September 30, 2020

 Table 1A--Proposed National Adjusted Operating Standardized Amounts, Labor/Nonlabor (68.3 Percent Labor Share/31.7 Percent Nonlabor Share if Wage Index
                                                               Is Greater Than 1)--FY 2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospital submitted quality data and is   Hospital submitted quality data and  Hospital did NOT submit quality data  Hospital did NOT submit quality data
 a meaningful EHR user  (update = 2.7   is NOT a meaningful EHR user (update  and is a meaningful EHR user (update    and is NOT a  meaningful EHR user
               percent)                            = 0.3 percent)                        = 1.9 percent)                    (update = -0.5 percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
       Labor             Nonlabor             Labor             Nonlabor            Labor             Nonlabor            Labor             Nonlabor
--------------------------------------------------------------------------------------------------------------------------------------------------------
       $3,977.31           $1,845.99          $3,884.36          $1,802.85          $3,946.33          $1,831.61          $3,853.38          $1,788.47
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 19620]]


 Table 1B--Proposed National Adjusted Operating Standardized Amounts, Labor/Nonlabor (62 Percent Labor Share/38 Percent Nonlabor Share if Wage Index Is
                                                            Less Than or Equal To 1)--FY 2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
 Hospital submitted quality data  and    Hospital submitted quality data and  Hospital did NOT submit quality data  Hospital did NOT submit quality data
 is a meaningful EHR  user  (update =   is NOT a meaningful EHR user (update  and is a meaningful EHR user (update    and is NOT a  meaningful EHR user
             2.7 percent)                          = 0.3 percent)                        = 1.9 percent)                    (update = -0.5 percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
       Labor             Nonlabor             Labor             Nonlabor            Labor             Nonlabor            Labor             Nonlabor
--------------------------------------------------------------------------------------------------------------------------------------------------------
       $3,610.45           $2,212.85          $3,526.07          $2,161.14          $3,582.32          $2,195.62          $3,497.95          $2,143.90
--------------------------------------------------------------------------------------------------------------------------------------------------------


     Table 1C--Proposed Adjusted Operating Standardized Amounts for Hospitals in Puerto Rico, Labor/Nonlabor
 (National: 62 Percent Labor Share/38 Percent Nonlabor Share Because Wage Index Is Less Than or Equal to 1);--FY
                                                      2020
----------------------------------------------------------------------------------------------------------------
                                       Rates if wage index is greater than 1        Rates if wage index is less
                                   ----------------------------------------------       than or equal to 1
        Standardized amount                                                      -------------------------------
                                            Labor                 Nonlabor             Labor         Nonlabor
----------------------------------------------------------------------------------------------------------------
National \1\......................  Not Applicable.......  Not Applicable.......       $3,610.45       $2,212.85
----------------------------------------------------------------------------------------------------------------
\1\ For FY 2020, there are no CBSAs in Puerto Rico with a national wage index greater than 1.


    Table 1D--Proposed Capital Standard Federal Payment Rate--FY 2020
------------------------------------------------------------------------
                                                               Rate
------------------------------------------------------------------------
National...............................................         $463.81
------------------------------------------------------------------------


   Table 1E--Proposed LTCH PPS Standard Federal Payment Rate--FY 2020
------------------------------------------------------------------------
                                          Full update    Reduced  update
                                         (2.7 percent)   * (0.7 percent)
------------------------------------------------------------------------
Standard Federal Rate.................      $42,950.91       $42,114.47
------------------------------------------------------------------------
* For LTCHs that fail to submit quality reporting data for FY 2020 in
  accordance with the LTCH Quality Reporting Program (LTCH QRP), the
  annual update is reduced by 2.0 percentage points as required by
  section 1886(m)(5) of the Act.

Appendix A: Economic Analyses

I. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule is necessary in order to make payment and 
policy changes under the Medicare IPPS for Medicare acute care 
hospital inpatient services for operating and capital-related costs 
as well as for certain hospitals and hospital units excluded from 
the IPPS. This proposed rule also is necessary to make payment and 
policy changes for Medicare hospitals under the LTCH PPS. Also as we 
note below, the primary objective of the IPPS and the LTCH PPS is to 
create incentives for hospitals to operate efficiently and minimize 
unnecessary costs, while at the same time ensuring that payments are 
sufficient to adequately compensate hospitals for their legitimate 
costs in delivering necessary care to Medicare beneficiaries. In 
addition, we share national goals of preserving the Medicare 
Hospital Insurance Trust Fund.
    We believe that the proposed changes in this proposed rule, such 
as the proposed updates to the IPPS and LTCH PPS rates, are needed 
to further each of these goals while maintaining the financial 
viability of the hospital industry and ensuring access to high 
quality health care for Medicare beneficiaries. We expect that these 
proposed changes would ensure that the outcomes of the prospective 
payment systems are reasonable and equitable, while avoiding or 
minimizing unintended adverse consequences.

B. Overall Impact

    We have examined the impacts of this proposed rule as required 
by Executive Order 12866 on Regulatory Planning and Review 
(September 30, 1993), Executive Order 13563 on Improving Regulation 
and Regulatory Review (January 18, 2011), the Regulatory Flexibility 
Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of 
the Social Security Act, section 202 of the Unfunded Mandates Reform 
Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 
on Federalism (August 4, 1999), the Congressional Review Act (5 
U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation and 
Controlling Regulatory Costs (January 30, 2017).
    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). 
Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) Having an annual effect on the economy of $100 million or more 
in any 1 year, or adversely and materially affecting a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or tribal governments or 
communities (also referred to as ``economically significant''); (2) 
creating a serious inconsistency or otherwise interfering with an 
action taken or planned by another agency; (3) materially altering 
the budgetary impacts of entitlement grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
raising novel legal or policy issues arising out of legal mandates, 
the President's priorities, or the principles set forth in the 
Executive Order.
    We have determined that this proposed rule is a major rule as 
defined in 5 U.S.C. 804(2). We estimate that the proposed changes 
for FY 2020 acute care hospital operating and capital payments would 
redistribute amounts in excess of $100 million to acute care 
hospitals. The proposed applicable percentage increase to the IPPS 
rates required by the statute, in conjunction with other proposed 
payment changes in this proposed rule, would result in an estimated 
$4.67 billion increase in FY 2020 payments,

[[Page 19621]]

primarily driven by a combined $4.4 billion increase in FY 2020 
operating payments and uncompensated care payments, and a net 
increase of $300 million resulting from estimated changes in FY 2020 
capital payments, new technology add-on payments, and low-volume 
hospital payments. These proposed changes are relative to payments 
made in FY 2019. The impact analysis of the capital payments can be 
found in section I.I. of this Appendix. In addition, as described in 
section I.J. of this Appendix, LTCHs are expected to experience an 
increase in payments by $37 million in FY 2020 relative to FY 2019.
    Our operating impact estimate includes the proposed 0.5 
percentage point adjustment required under section 414 of the MACRA 
applied to the IPPS standardized amount, as discussed in section 
II.D. of the preamble of this proposed rule. In addition, our 
operating payment impact estimate includes the proposed 2.7 percent 
hospital update to the standardized amount (which includes the 
estimated 3.2 percent market basket update less the proposed 0.5 
percentage point for the multifactor productivity adjustment (MFP)). 
The estimates of IPPS operating payments to acute care hospitals do 
not reflect any changes in hospital admissions or real case-mix 
intensity, which will also affect overall payment changes.
    The analysis in this Appendix, in conjunction with the remainder 
of this document, demonstrates that this proposed rule is consistent 
with the regulatory philosophy and principles identified in 
Executive Orders 12866 and 13563, the RFA, and section 1102(b) of 
the Act. This proposed rule would affect payments to a substantial 
number of small rural hospitals, as well as other classes of 
hospitals, and the effects on some hospitals may be significant. 
Finally, in accordance with the provisions of Executive Order 12866, 
the Executive Office of Management and Budget has reviewed this 
proposed rule.

C. Objectives of the IPPS and the LTCH PPS

    The primary objective of the IPPS and the LTCH PPS is to create 
incentives for hospitals to operate efficiently and minimize 
unnecessary costs, while at the same time ensuring that payments are 
sufficient to adequately compensate hospitals for their legitimate 
costs in delivering necessary care to Medicare beneficiaries. In 
addition, we share national goals of preserving the Medicare 
Hospital Insurance Trust Fund.
    We believe that the proposed changes in this proposed rule would 
further each of these goals while maintaining the financial 
viability of the hospital industry and ensuring access to high 
quality health care for Medicare beneficiaries. We expect that these 
proposed changes would ensure that the outcomes of the prospective 
payment systems are reasonable and equitable, while avoiding or 
minimizing unintended adverse consequences.
    Because this proposed rule contains a range of policies, we 
refer readers to the section of the proposed rule where each policy 
is discussed. These sections include the rationale for our 
decisions, including the need for the proposed policy.

D. Limitations of Our Analysis

    The following quantitative analysis presents the projected 
effects of our proposed policy changes, as well as statutory changes 
effective for FY 2020, on various hospital groups. We estimate the 
effects of individual proposed policy changes by estimating payments 
per case, while holding all other payment policies constant. We use 
the best data available, but, generally unless specifically 
indicated, we do not attempt to make adjustments for future changes 
in such variables as admissions, lengths of stay, case-mix, changes 
to the Medicare population, or incentives. In addition, we discuss 
limitations of our analysis for specific proposed policies in the 
discussion of those proposed policies as needed.

E. Hospitals Included in and Excluded From the IPPS

    The prospective payment systems for hospital inpatient operating 
and capital-related costs of acute care hospitals encompass most 
general short-term, acute care hospitals that participate in the 
Medicare program. There were 29 Indian Health Service hospitals in 
our database, which we excluded from the analysis due to the special 
characteristics of the prospective payment methodology for these 
hospitals. Among other short-term, acute care hospitals, hospitals 
in Maryland are paid in accordance with the Maryland Total Cost of 
Care Model, and hospitals located outside the 50 States, the 
District of Columbia, and Puerto Rico (that is, 6 short-term acute 
care hospitals located in the U.S. Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa) receive payment for 
inpatient hospital services they furnish on the basis of reasonable 
costs, subject to a rate-of-increase ceiling.
    As of March 2019, there were 3,242 IPPS acute care hospitals 
included in our analysis. This represents approximately 54 percent 
of all Medicare-participating hospitals. The majority of this impact 
analysis focuses on this set of hospitals. There also are 
approximately 1,403 CAHs. These small, limited service hospitals are 
paid on the basis of reasonable costs, rather than under the IPPS. 
IPPS-excluded hospitals and units, which are paid under separate 
payment systems, include IPFs, IRFs, LTCHs, RNHCIs, children's 
hospitals, 11 cancer hospitals, 1 extended neoplastic disease care 
hospital, and 6 short-term acute care hospitals located in the 
Virgin Islands, Guam, the Northern Mariana Islands, and American 
Samoa. Changes in the prospective payment systems for IPFs and IRFs 
are made through separate rulemaking. Payment impacts of proposed 
changes to the prospective payment systems for these IPPS-excluded 
hospitals and units are not included in this proposed rule. The 
impact of the proposed update and policy changes to the LTCH PPS for 
FY 2020 is discussed in section I.J. of this Appendix.

F. Effects on Hospitals and Hospital Units Excluded From the IPPS

    As of March 2019, there were 96 children's hospitals, 11 cancer 
hospitals, 6 short-term acute care hospitals located in the Virgin 
Islands, Guam, the Northern Mariana Islands and American Samoa, 1 
extended neoplastic disease care hospital, and 16 RNHCIs being paid 
on a reasonable cost basis subject to the rate-of-increase ceiling 
under Sec.  413.40. (In accordance with Sec.  403.752(a) of the 
regulation, RNHCIs are paid under Sec.  413.40.) Among the remaining 
providers, 297 rehabilitation hospitals and 832 rehabilitation 
units, and approximately 384 LTCHs, are paid the Federal prospective 
per discharge rate under the IRF PPS and the LTCH PPS, respectively, 
and 543 psychiatric hospitals and 1,050 psychiatric units are paid 
the Federal per diem amount under the IPF PPS. As stated previously, 
IRFs and IPFs are not affected by the proposed rate updates 
discussed in this proposed rule. The impacts of the proposed changes 
on LTCHs are discussed in section I.J. of this Appendix.
    For children's hospitals, the 11 cancer hospitals, the 6 short-
term acute care hospitals located in the Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa, the 1 extended 
neoplastic disease care hospital, and RNHCIs, the proposed update of 
the rate-of-increase limit (or target amount) is the estimated FY 
2020 percentage increase in the 2014-based IPPS operating market 
basket, consistent with section 1886(b)(3)(B)(ii) of the Act, and 
Sec. Sec.  403.752(a) and 413.40 of the regulations. Consistent with 
current law, based on IGI's 2018 fourth quarter forecast of the 
2014-based IPPS market basket increase, we are estimating the 
proposed FY 2020 update to be 3.2 percent (that is, the estimate of 
the market basket rate-of-increase). We are proposing that if more 
recent data become available for the final rule, we would use such 
data to calculate the IPPS operating market basket update for FY 
2020. However, the Affordable Care Act requires an adjustment for 
multifactor productivity (proposed 0.5 percentage point for FY 
2020), resulting in a proposed 2.7 percent applicable percentage 
increase for IPPS hospitals that submit quality data and are 
meaningful EHR users, as discussed in section IV.B. of the preamble 
of this proposed rule. Children's hospitals, the 11 cancer 
hospitals, the 6 short-term acute care hospitals located in the 
Virgin Islands, Guam, the Northern Mariana Islands, and American 
Samoa, the 1 extended neoplastic disease care hospital, and RNHCIs 
that continue to be paid based on reasonable costs subject to rate-
of-increase limits under Sec.  413.40 of the regulations are not 
subject to the reductions in the applicable percentage increase 
required under the Affordable Care Act. Therefore, for those 
hospitals paid under Sec.  413.40 of the regulations, the proposed 
update is the percentage increase in the 2014-based IPPS operating 
market basket for FY 2020, estimated at 3.2 percent.
    The impact of the proposed update in the rate-of-increase limit 
on those excluded hospitals depends on the cumulative cost increases 
experienced by each excluded hospital since its applicable base 
period. For excluded hospitals that have maintained their cost 
increases at a level below the rate-of-increase limits since their 
base period, the major effect is on the level of incentive payments 
these excluded hospitals receive. Conversely, for excluded hospitals 
with cost increases above the cumulative update in

[[Page 19622]]

their rate-of-increase limits, the major effect is the amount of 
excess costs that would not be paid.
    We note that, under Sec.  413.40(d)(3), an excluded hospital 
that continues to be paid under the TEFRA system and whose costs 
exceed 110 percent of its rate-of-increase limit receives its rate-
of-increase limit plus the lesser of: (1) 50 percent of its 
reasonable costs in excess of 110 percent of the limit; or (2) 10 
percent of its limit. In addition, under the various provisions set 
forth in Sec.  413.40, hospitals can obtain payment adjustments for 
justifiable increases in operating costs that exceed the limit.

G. Quantitative Effects of the Proposed Policy Changes Under the 
IPPS for Operating Costs

1. Basis and Methodology of Estimates

    In this proposed rule, we are announcing proposed policy changes 
and payment rate updates for the IPPS for FY 2020 for operating 
costs of acute care hospitals. The proposed FY 2020 updates to the 
capital payments to acute care hospitals are discussed in section 
I.I. of this Appendix.
    Based on the overall proposed percentage change in payments per 
case estimated using our payment simulation model, we estimate that 
total FY 2020 operating payments would increase by 3.6 percent, 
compared to FY 2019. In addition to the proposed applicable 
percentage increase, this amount reflects the proposed +0.5 
percentage point permanent adjustment to the standardized amount 
required under section 414 of MACRA. The impacts do not reflect 
changes in the number of hospital admissions or real case-mix 
intensity, which would also affect overall payment changes.
    We have prepared separate impact analyses of the proposed 
changes to each system. This section deals with the proposed changes 
to the operating inpatient prospective payment system for acute care 
hospitals. Our payment simulation model relies on the most recent 
available claims data to enable us to estimate the impacts on 
payments per case of certain proposed changes in this proposed rule. 
However, there are other proposed changes for which we do not have 
data available that would allow us to estimate the payment impacts 
using this model. For those proposed changes, we have attempted to 
predict the payment impacts based upon our experience and other more 
limited data.
    The data used in developing the quantitative analyses of 
proposed changes in payments per case presented in this section are 
taken from the FY 2018 MedPAR file and the most current Provider-
Specific File (PSF) that are used for payment purposes. Although the 
analyses of the proposed changes to the operating PPS do not 
incorporate cost data, data from the most recently available 
hospital cost reports were used to categorize hospitals. Our 
analysis has several qualifications. First, in this analysis, we do 
not make adjustments for future changes in such variables as 
admissions, lengths of stay, or underlying growth in real case-mix. 
Second, due to the interdependent nature of the IPPS payment 
components, it is very difficult to precisely quantify the impact 
associated with each proposed change. Third, we use various data 
sources to categorize hospitals in the tables. In some cases, 
particularly the number of beds, there is a fair degree of variation 
in the data from the different sources. We have attempted to 
construct these variables with the best available source overall. 
However, for individual hospitals, some miscategorizations are 
possible.
    Using cases from the FY 2018 MedPAR file, we simulate payments 
under the operating IPPS given various combinations of payment 
parameters. As described previously, Indian Health Service hospitals 
and hospitals in Maryland were excluded from the simulations. The 
impact of the proposed payments under the capital IPPS, and the 
impact of the proposed payments for costs other than inpatient 
operating costs, are not analyzed in this section. Estimated payment 
impacts of the capital IPPS for FY 2020 are discussed in section 
I.I. of this Appendix.
    We discuss the following proposed changes:
     The effects of the application of the proposed 
applicable percentage increase of 2.7 percent (that is, a 3.2 
percent market basket update with a proposed reduction of 0.5 
percentage point for the multifactor productivity adjustment), and a 
proposed 0.5 percentage point adjustment required under section 414 
of the MACRA to the IPPS standardized amount, and the proposed 
applicable percentage increase (including the market basket update 
and the proposed multifactor productivity adjustment) to the 
hospital-specific rates.
     The effects of the proposed changes to the relative 
weights and MS-DRG GROUPER.
     The effects of the proposed changes in hospitals' wage 
index values reflecting updated wage data from hospitals' cost 
reporting periods beginning during FY 2016, compared to the FY 2015 
wage data, to calculate the proposed FY 2020 wage index.
     The effects of the geographic reclassifications by the 
MGCRB (as of publication of this proposed rule) that will be 
effective for FY 2020.
     The effects of the proposed rural floor with the 
application of the national budget neutrality factor to the wage 
index and the proposal to calculate the FY 2020 rural floor without 
including the wage data of hospitals that have reclassified as rural 
under Sec.  412.103.
     The effects of the proposed frontier State wage index 
adjustment under the statutory provision that requires hospitals 
located in States that qualify as frontier States to not have a wage 
index less than 1.0. This provision is not budget neutral.
     The effects of the implementation of section 
1886(d)(13) of the Act, as added by section 505 of Public Law 108-
173, which provides for an increase in a hospital's wage index if a 
threshold percentage of residents of the county where the hospital 
is located commute to work at hospitals in counties with higher wage 
indexes for FY 2020. This provision is not budget neutral.
     The effects of the proposals to increase the wage index 
for hospitals with wage index values below the 25th percentile wage 
index value (that is, the proposed lowest quartile wage index 
adjustment), the associated proposal to decrease the wage index for 
hospitals with wage index values above the 75th percentile wage 
index value for budget neutrality purposes (that is, the proposed 
highest quartile wage index adjustment), and to apply a transition 
policy in FY 2020 pursuant to which a 5-percent cap would be placed 
on any decrease in a hospital's wage index compared to its final FY 
2019 wage index value (that is, the proposed 5-percent cap).
     The total estimated change in payments based on the 
proposed FY 2020 policies relative to payments based on FY 2019 
policies, including estimated changes in outlier payments.
    To illustrate the impact of the proposed FY 2020 changes, our 
analysis begins with a FY 2019 baseline simulation model using: The 
FY 2019 applicable percentage increase of 1.35 percent; the 0.5 
percentage point adjustment required under section 414 of the MACRA 
applied to the IPPS standardized amount; the FY 2019 MS-DRG GROUPER 
(Version 36); the FY 2019 CBSA designations for hospitals based on 
the OMB definitions from the 2010 Census; the FY 2019 wage index; 
and no MGCRB reclassifications. Outlier payments are set at 5.1 
percent of total operating MS-DRG and outlier payments for modeling 
purposes.
    Section 1886(b)(3)(B)(viii) of the Act, as added by section 
5001(a) of Public Law 109-171, as amended by section 4102(b)(1)(A) 
of the ARRA (Pub. L. 111-5) and by section 3401(a)(2) of the 
Affordable Care Act (Pub. L. 111-148), provides that, for FY 2007 
and each subsequent year through FY 2014, the update factor will 
include a reduction of 2.0 percentage points for any subsection (d) 
hospital that does not submit data on measures in a form and manner, 
and at a time specified by the Secretary. Beginning in FY 2015, the 
reduction is one-quarter of such applicable percentage increase 
determined without regard to section 1886(b)(3)(B)(ix), (xi), or 
(xii) of the Act, or one-quarter of the market basket update. 
Therefore, for FY 2020, we are proposing that hospitals that do not 
submit quality information under rules established by the Secretary 
and that are meaningful EHR users under section 1886(b)(3)(B)(ix) of 
the Act would receive an applicable percentage increase of 1.9 
percent. At the time this impact was prepared, 39 hospitals are 
estimated to not receive the full market basket rate-of-increase for 
FY 2020 because they failed the quality data submission process or 
did not choose to participate, but are meaningful EHR users. For 
purposes of the simulations shown later in this section, we modeled 
the proposed payment changes for FY 2020 using a reduced update for 
these hospitals.
    For FY 2020, in accordance with section 1886(b)(3)(B)(ix) of the 
Act, a hospital that has been identified as not a meaningful EHR 
user will be subject to a reduction of three-quarters of such 
applicable percentage increase determined without regard to section 
1886(b)(3)(B)(ix), (xi), or (xii) of the Act. Therefore, for FY 
2020, we are proposing that hospitals that are identified as not 
being meaningful EHR users and do submit quality information under 
section 1886(b)(3)(B)(viii) of the Act would receive an applicable

[[Page 19623]]

percentage increase of 0.3 percent. At the time this impact analysis 
was prepared, 211 hospitals are estimated to not receive the full 
market basket rate-of-increase for FY 2020 because they are 
identified as not meaningful EHR users that do submit quality 
information under section 1886(b)(3)(B)(viii) of the Act. For 
purposes of the simulations shown in this section, we modeled the 
proposed payment changes for FY 2020 using a reduced update for 
these hospitals.
    Hospitals that are identified as not meaningful EHR users under 
section 1886(b)(3)(B)(ix) of the Act and also do not submit quality 
data under section 1886(b)(3)(B)(viii) of the Act would receive a 
proposed applicable percentage increase of -0.5 percent, which 
reflects a one-quarter reduction of the market basket update for 
failure to submit quality data and a three-quarter reduction of the 
market basket update for being identified as not a meaningful EHR 
user. At the time this impact was prepared, 32 hospitals are 
estimated to not receive the full market basket rate-of-increase for 
FY 2020 because they are identified as not meaningful EHR users that 
do not submit quality data under section 1886(b)(3)(B)(viii) of the 
Act.
    Each proposed policy change, statutory or otherwise, is then 
added incrementally to this baseline, finally arriving at an FY 2020 
model incorporating all of the proposed changes. This simulation 
allows us to isolate the effects of each change.
    Our comparison illustrates the proposed percent change in 
payments per case from FY 2019 to FY 2020. Two factors not discussed 
separately have significant impacts here. The first factor is the 
proposed update to the standardized amount. In accordance with 
section 1886(b)(3)(B)(i) of the Act, we are proposing to update the 
standardized amounts for FY 2020 using a proposed applicable 
percentage increase of 2.7 percent. This includes our forecasted 
IPPS operating hospital market basket increase of 3.2 percent with a 
proposed 0.5 percentage point reduction for the multifactor 
productivity adjustment. Hospitals that fail to comply with the 
quality data submission requirements and are meaningful EHR users 
would receive a proposed update of 1.9 percent. This proposed update 
includes a reduction of one-quarter of the market basket update for 
failure to submit these data. Hospitals that do comply with the 
quality data submission requirements but are not meaningful EHR 
users would receive a proposed update of 0.3 percent, which includes 
a reduction of three-quarters of the market basket update. 
Furthermore, hospitals that do not comply with the quality data 
submission requirements and also are not meaningful EHR users would 
receive a proposed update of -0.5 percent. Under section 
1886(b)(3)(B)(iv) of the Act, the update to the hospital-specific 
amounts for SCHs and MDHs is also equal to the applicable percentage 
increase, or 2.7 percent, if the hospital submits quality data and 
is a meaningful EHR user.
    A second significant factor that affects the proposed changes in 
hospitals' payments per case from FY 2019 to FY 2020 is the change 
in hospitals' geographic reclassification status from one year to 
the next. That is, payments may be reduced for hospitals 
reclassified in FY 2019 that are no longer reclassified in FY 2020. 
Conversely, payments may increase for hospitals not reclassified in 
FY 2019 that are reclassified in FY 2020.

2. Analysis of Table I

    Table I displays the results of our analysis of the proposed 
changes for FY 2020. The table categorizes hospitals by various 
geographic and special payment consideration groups to illustrate 
the varying impacts on different types of hospitals. The top row of 
the table shows the overall impact on the 3,242 acute care hospitals 
included in the analysis.
    The next four rows of Table I contain hospitals categorized 
according to their geographic location: All urban, which is further 
divided into large urban and other urban; and rural. There are 2,476 
hospitals located in urban areas included in our analysis. Among 
these, there are 1,268 hospitals located in large urban areas 
(populations over 1 million), and 1,208 hospitals in other urban 
areas (populations of 1 million or fewer). In addition, there are 
766 hospitals in rural areas. The next two groupings are by bed-size 
categories, shown separately for urban and rural hospitals. The last 
groupings by geographic location are by census divisions, also shown 
separately for urban and rural hospitals.
    The second part of Table I shows hospital groups based on 
hospitals' FY 2020 payment classifications, including any 
reclassifications under section 1886(d)(10) of the Act. For example, 
the rows labeled urban, large urban, other urban, and rural show 
that the numbers of hospitals paid based on these categorizations 
after consideration of geographic reclassifications (including 
reclassifications under sections 1886(d)(8)(B) and 1886(d)(8)(E) of 
the Act that have implications for capital payments) are 2,188, 
1,283, 905, and 1,054, respectively.
    The next three groupings examine the impacts of the proposed 
changes on hospitals grouped by whether or not they have GME 
residency programs (teaching hospitals that receive an IME 
adjustment) or receive Medicare DSH payments, or some combination of 
these two adjustments. There are 2,127 nonteaching hospitals in our 
analysis, 865 teaching hospitals with fewer than 100 residents, and 
250 teaching hospitals with 100 or more residents.
    In the DSH categories, hospitals are grouped according to their 
DSH payment status, and whether they are considered urban or rural 
for DSH purposes. The next category groups together hospitals 
considered urban or rural, in terms of whether they receive the IME 
adjustment, the DSH adjustment, both, or neither.
    The next three rows examine the impacts of the proposed changes 
on rural hospitals by special payment groups (SCHs, MDHs and RRCs). 
There were 380 RRCs, 305 SCHs, 149 MDHs, 143 hospitals that are both 
SCHs and RRCs, and 17 hospitals that are both MDHs and RRCs.
    The next series of groupings are based on the type of ownership 
and the hospital's Medicare utilization expressed as a percent of 
total inpatient days. These data were taken from the FY 2017 or FY 
2016 Medicare cost reports.
    The next grouping concerns the geographic reclassification 
status of hospitals. The first subgrouping is based on whether a 
hospital is reclassified or not. The second and third subgroupings 
are based on whether urban and rural hospitals were reclassified by 
the MGCRB for FY 2020 or not, respectively. The fourth subgrouping 
displays hospitals that reclassified from urban to rural in 
accordance with section 1886(d)(8)(E) of the Act. The fifth 
subgrouping displays hospitals deemed urban in accordance with 
section 1886(d)(8)(B).
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BILLING CODE 4120-01-C

a. Effects of the Proposed Hospital Update and Other Proposed 
Adjustments (Column 1)

    As discussed in section IV.B. of the preamble of this proposed 
rule, this column includes the proposed hospital update, including 
the proposed 3.2 percent market basket update and the proposed 
reduction of 0.5 percentage point for the multifactor productivity 
adjustment. In addition, as discussed in section II.D. of the 
preamble of this proposed rule, this column includes the FY 2020 
+0.5 percentage point adjustment required under section 414 of the 
MACRA. As a result, we are proposing to make a 3.2 percent update to 
the national standardized amount. This column also includes the 
proposed update to the hospital-specific rates which includes the 
proposed 3.2 percent market basket update and the proposed

[[Page 19632]]

reduction of 0.5 percentage point for the multifactor productivity 
adjustment. As a result, we are proposing to make a 2.7 percent 
update to the hospital-specific rates.
    Overall, hospitals would experience a 3.1 percent increase in 
payments primarily due to the combined effects of the proposed 
hospital update to the national standardized amount and the proposed 
hospital update to the hospital-specific rate. Hospitals that are 
paid under the hospital-specific rate would experience a 2.7 percent 
increase in payments; therefore, hospital categories containing 
hospitals paid under the hospital-specific rate would experience a 
lower than average increase in payments.

b. Effects of the Proposed Changes to the MS-DRG Reclassifications and 
Relative Cost-Based Weights With Recalibration Budget Neutrality 
(Column 2)

    Column 2 shows the effects of the proposed changes to the MS-
DRGs and relative weights with the application of the proposed 
recalibration budget neutrality factor to the standardized amounts. 
Section 1886(d)(4)(C)(i) of the Act requires us annually to make 
appropriate classification changes in order to reflect changes in 
treatment patterns, technology, and any other factors that may 
change the relative use of hospital resources. Consistent with 
section 1886(d)(4)(C)(iii) of the Act, we calculated a proposed 
recalibration budget neutrality factor to account for the changes in 
MS-DRGs and relative weights to ensure that the overall payment 
impact is budget neutral.
    As discussed in section II.E. of the preamble of this proposed 
rule, the FY 2020 MS-DRG relative weights will be 100 percent cost-
based and 100 percent MS-DRGs. For FY 2020, the MS-DRGs are 
calculated using the FY 2018 MedPAR data grouped to the proposed 
Version 37 (FY 2020) MS-DRGs. The methodology to calculate the 
proposed relative weights and the reclassification changes to the 
GROUPER are described in more detail in section II.G. of the 
preamble of this proposed rule.
    The ``All Hospitals'' line in Column 2 indicates that proposed 
changes due to the MS-DRGs and relative weights would result in a 
0.0 percent change in payments with the application of the proposed 
recalibration budget neutrality factor of 0.998768 to the 
standardized amount. As discussed in section II.F.14. of the 
preamble of this proposed rule, as a result of our comprehensive CC/
MCC analysis of the diagnosis codes, we proposed changes to the 
severity levels of many codes. Hospital categories that generally 
treat cases in the higher MS-DRG severity levels, such as large 
urban hospitals, would experience a decrease in their payments, 
while hospitals that generally treat fewer of these cases would 
experience a slight increase in their payments under the proposed 
relative weights. For example, rural hospitals would experience a 
0.2 percent increase in payments in part because rural hospitals 
tend to treat fewer cases in higher MS-DRG severity levels. 
Conversely, teaching hospitals with more than 100 residents would 
experience a slight decrease in payments of 0.1 percent as those 
hospitals typically treat more cases in higher MS-DRG severity 
levels.

c. Effects of the Proposed Wage Index Changes (Column 3)

    Column 3 shows the impact of the proposed updated wage data 
using FY 2016 cost report data, with the application of the proposed 
wage budget neutrality factor. 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 the Core Based Statistical Areas (CBSAs) established by 
OMB. The current statistical standards used in FY 2020 are based on 
OMB standards published on February 28, 2013 (75 FR 37246 and 
37252), and 2010 Decennial Census data (OMB Bulletin No. 13-01), as 
updated in OMB Bulletin Nos. 15-01 and 17-01. (We refer readers to 
the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963) for 
a full discussion on our adoption of the OMB labor market area 
delineations, based on the 2010 Decennial Census data, effective 
beginning with the FY 2015 IPPS wage index, to the FY 2017 IPPS/LTCH 
PPS final rule (81 FR 56913) for a discussion of our adoption of the 
CBSA updates in OMB Bulletin No. 15-01, which were effective 
beginning with the FY 2017 wage index, and to the FY 2019 IPPS/LTCH 
PPS final rule (83 FR 41362) for a discussion of our adoption of the 
CBSA update in OMB Bulletin No. 17-01 for the FY 2019 wage index.)
    Section 1886(d)(3)(E) of the Act requires that, beginning 
October 1, 1993, we annually update the wage data used to calculate 
the wage index. In accordance with this requirement, the proposed 
wage index for acute care hospitals for FY 2020 is based on data 
submitted for hospital cost reporting periods, beginning on or after 
October 1, 2015 and before October 1, 2016. The estimated impact of 
the updated wage data using the FY 2016 cost report data and the OMB 
labor market area delineations on hospital payments is isolated in 
Column 3 by holding the other proposed payment parameters constant 
in this simulation. That is, Column 3 shows the proposed percentage 
change in payments when going from a model using the FY 2019 wage 
index, based on FY 2015 wage data, the labor-related share of 68.3 
percent, under the OMB delineations and having a 100-percent 
occupational mix adjustment applied, to a model using the proposed 
FY 2020 pre-reclassification wage index based on FY 2016 wage data 
with the labor-related share of 68.3 percent, under the OMB 
delineations, also having a 100-percent occupational mix adjustment 
applied, while holding other payment parameters, such as use of the 
proposed Version 37 MS-DRG GROUPER constant. The proposed FY 2020 
occupational mix adjustment is based on the CY 2016 occupational mix 
survey.
    In addition, the column shows the impact of the application of 
the proposed wage budget neutrality to the national standardized 
amount. In FY 2010, we began calculating separate wage budget 
neutrality and recalibration budget neutrality factors, in 
accordance with section 1886(d)(3)(E) of the Act, which specifies 
that budget neutrality to account for wage index changes or updates 
made under that subparagraph must be made without regard to the 62 
percent labor-related share guaranteed under section 
1886(d)(3)(E)(ii) of the Act. Therefore, for FY 2020, we are 
proposing to calculate the proposed wage budget neutrality factor to 
ensure that payments under updated wage data and the labor-related 
share of 68.3 percent are budget neutral, without regard to the 
lower labor-related share of 62 percent applied to hospitals with a 
wage index less than or equal to 1.0. In other words, the wage 
budget neutrality is calculated under the assumption that all 
hospitals receive the higher labor-related share of the standardized 
amount. The proposed FY 2020 wage budget neutrality factor is 
1.000915 and the overall proposed payment change is 0 percent.
    Column 3 shows the impacts of updating the wage data using FY 
2016 cost reports. Overall, the new wage data and the labor-related 
share, combined with the proposed wage budget neutrality adjustment, 
would lead to no change for all hospitals, as shown in Column 3.
    In looking at the wage data itself, the national average hourly 
wage would increase 1.02 percent compared to FY 2019. Therefore, the 
only manner in which to maintain or exceed the previous year's wage 
index was to match or exceed the proposed 1.02 percent increase in 
the national average hourly wage. Of the 3,204 hospitals with wage 
data for both FYs 2019 and 2020, 1,620 or 50.6 percent would 
experience an average hourly wage increase of 1.02 percent or more.
    The following chart compares the shifts in wage index values for 
hospitals due to the proposed changes in the average hourly wage 
data for FY 2020 relative to FY 2019. Among urban hospitals, 3 would 
experience a decrease of 10 percent or more, and 3 urban hospitals 
would experience an increase of 10 percent or more. Sixty-three 
urban hospitals would experience an increase or decrease of at least 
5 percent or more but less than 10 percent. Among rural hospitals, 
none would experience an increase of 10 percent or more, and none 
would experience a decrease of 10 percent or more. Two rural 
hospitals would experience an increase or decrease of at least 5 
percent or more but less than 10 percent. However, 750 rural 
hospitals would experience increases or decreases of less than 5 
percent, while 2,381 urban hospitals would experience increases or 
decreases of less than 5 percent. Two urban hospitals and 0 rural 
hospitals would experience no change to their wage index. These 
figures reflect proposed changes in the ``pre-reclassified, 
occupational mix-adjusted wage index,'' that is, the wage index 
before the application of geographic reclassification, the rural 
floor, the out-migration adjustment, and other wage index exceptions 
and adjustments. (We refer readers to sections III.G. through III.L. 
of the preamble of this proposed rule for a complete discussion of 
the exceptions and adjustments to the wage index.) We note that the 
``post-reclassified wage index'' or ``payment wage index,'' which is 
the wage index that includes all such exceptions and adjustments (as 
reflected in Tables 2 and 3 associated with this proposed rule, 
which are available via the internet on the CMS website) is used

[[Page 19633]]

to adjust the labor-related share of a hospital's standardized 
amount, either 68.3 percent or 62 percent, depending upon whether a 
hospital's wage index is greater than 1.0 or less than or equal to 
1.0. Therefore, the proposed pre-reclassified wage index figures in 
the following chart may illustrate a somewhat larger or smaller 
proposed change than would occur in a hospital's payment wage index 
and total payment.
    The following chart shows the projected impact of proposed 
changes in the area wage index values for urban and rural hospitals.

------------------------------------------------------------------------
                                                Number of hospitals
  Proposed FY 2020 percentage change in  -------------------------------
         area wage index values                Urban           Rural
------------------------------------------------------------------------
Increase 10 percent or more.............               3               0
Increase greater than or equal to 5                   38               2
 percent and less than 10 percent.......
Increase or decrease less than 5 percent           2,381             750
Decrease greater than or equal to 5                   25               0
 percent and less than 10 percent.......
Decrease 10 percent or more.............               3               0
Unchanged...............................               2               0
------------------------------------------------------------------------

d. Effects of MGCRB Reclassifications (Column 4)

    Our impact analysis to this point has assumed acute care 
hospitals are paid on the basis of their actual geographic location 
(with the exception of ongoing policies that provide that certain 
hospitals receive payments on bases other than where they are 
geographically located). The proposed changes in Column 4 reflect 
the per case payment impact of moving from this baseline to a 
simulation incorporating the MGCRB decisions for FY 2020.
    By spring of each year, the MGCRB makes reclassification 
determinations that will be effective for the next fiscal year, 
which begins on October 1. The MGCRB may approve a hospital's 
reclassification request for the purpose of using another area's 
wage index value. Hospitals may appeal denials of MGCRB decisions to 
the CMS Administrator. Further, hospitals have 45 days from the date 
the IPPS proposed rule is issued in the Federal Register to decide 
whether to withdraw or terminate an approved geographic 
reclassification for the following year (we refer readers to the 
discussion of our clarification of this policy in section III.I.2. 
of the preamble to this proposed rule.
    The overall effect of geographic reclassification is required by 
section 1886(d)(8)(D) of the Act to be budget neutral. Therefore, 
for purposes of this impact analysis, we are proposing to apply an 
adjustment of 0.986451 to ensure that the effects of the 
reclassifications under sections 1886(d)(8)(B) and (C) and 
1886(d)(10) of the Act are budget neutral (section II.A. of the 
Addendum to this proposed rule). We note that, with regard to the 
requirement under section 1886(d)(8)(C)(iii) of the Act, in our 
calculation of the proposed budget neutrality adjustment of 
0.986451, we applied the provisions of our proposal discussed in 
section III.N. of the preamble of this proposed rule to exclude the 
wage data of urban hospitals that have reclassified as rural under 
section 1886(d)(8)(E) of the Act from the calculation of ``the wage 
index for rural areas in the State in which the county is located'' 
(section II.A.4. of the Addendum to this proposed rule). Geographic 
reclassification generally benefits hospitals in rural areas. We 
estimate that the geographic reclassification would increase 
payments to rural hospitals by an average of 1.0 percent. By region, 
all the rural hospital categories would experience increases in 
payments due to MGCRB reclassifications.
    Table 2 listed in section VI. of the Addendum to this proposed 
rule and available via the internet on the CMS website reflects the 
reclassifications for FY 2020.

e. Effects of the Proposed Rural Floor, Including Application of 
National Budget Neutrality (Column 5)

    As discussed in section III.B. of the preamble of the FY 2009 
IPPS final rule, the FY 2010 IPPS/RY 2010 LTCH PPS final rule, the 
FYs 2011 through 2019 IPPS/LTCH PPS final rules, and this FY 2020 
IPPS/LTCH PPS proposed rule, section 4410 of Public Law 105-33 
established the rural floor by requiring that the wage index for a 
hospital in any urban area cannot be less than the wage index 
applicable to hospitals located in rural areas in the same State. We 
will apply a uniform budget neutrality adjustment to the wage index. 
Column 5 shows the effects of the proposed rural floor.
    The Affordable Care Act requires that we apply one rural floor 
budget neutrality factor to the wage index nationally. We have 
calculated a proposed FY 2020 rural floor budget neutrality factor 
to be applied to the wage index of 0.996316, which would reduce wage 
indexes by 0.37 percent.
    Column 5 shows the projected impact of the proposed rural floor 
with the national rural floor budget neutrality factor applied to 
the wage index based on the OMB labor market area delineations. The 
column compares the post-reclassification FY 2020 wage index of 
providers before the rural floor adjustment and the post-
reclassification FY 2020 wage index of providers with the rural 
floor adjustment based on the OMB labor market area delineations. 
Only urban hospitals can benefit from the rural floor. Because the 
provision is budget neutral, all other hospitals (that is, all rural 
hospitals and those urban hospitals to which the adjustment is not 
made) would experience a decrease in payments due to the budget 
neutrality adjustment that is applied nationally to their wage 
index. We note that, as discussed in section III.N of the preamble 
of this proposed rule, we are proposing to calculate the FY 2020 
rural floor without including the wage data of hospitals that have 
reclassified as rural under Sec.  412.103. This column reflects 
effects of this proposed change to the rural floor calculation 
methodology.
    We estimate that 166 hospitals would receive the rural floor in 
FY 2020. We note that there are approximately 87 fewer hospitals 
receiving the proposed rural floor in FY 2020 than in FY 2019. This 
is due, in part, to our proposal to calculate the rural floor for FY 
2020 and subsequent fiscal years without including the wage data of 
hospitals that have reclassified as rural under Sec.  412.103. This 
proposal would impact States whose rural floors were heavily 
influenced by the wage data of hospitals that reclassified under 
Sec.  412.103, such as Massachusetts and Arizona. All IPPS hospitals 
in our model would have their wage index reduced by the proposed 
rural floor budget neutrality adjustment of 0.996316. We project 
that, in aggregate, rural hospitals would experience a 0.1 percent 
decrease in payments as a result of the application of the proposed 
rural floor budget neutrality because the rural hospitals do not 
benefit from the rural floor, but have their wage indexes downwardly 
adjusted to ensure that the application of the rural floor is budget 
neutral overall. We project that, in the aggregate, hospitals 
located in urban areas would experience no change in payments 
because increases in payments to hospitals benefitting from the 
rural floor offset decreases in payments to nonrural floor urban 
hospitals whose wage index is downwardly adjusted by the rural floor 
budget neutrality factor. Urban hospitals in the New England region 
would experience a 0.3 percent increase in payments primarily due to 
the application of the rural floor in Massachusetts. Ten urban 
providers in Massachusetts are expected to receive the rural floor 
wage index value, including the rural floor budget neutrality 
adjustment, which would increase payments overall to hospitals in 
Massachusetts by an estimated $21 million. We estimate that 
Massachusetts hospitals would receive approximately a 0.5 percent 
increase in IPPS payments due to the application of the rural floor 
in FY 2020.
    Urban Puerto Rico hospitals are expected to experience a 0.2 
percent increase in payments as a result of the application of the 
proposed rural floor for FY 2020.
    The table below shows a comparison of the payment impact of the 
rural floor (with budget neutrality) by State based on the proposed 
FY 2020 rural floor and the payment impact of the rural floor (with 
budget neutrality) by State based on the FY 2019 rural floor. 
Columns 1a through 4a in the table below reflect the FY 2019 rural 
floor

[[Page 19634]]

calculation. The FY 2019 rural floor, as published in the October 3, 
2018 Final Rule Correction Notice (83 FR 49836), was calculated by 
including the wage data of hospitals that reclassified as rural 
under Sec.  412.103. As indicated earlier, for FY 2020 and 
subsequent fiscal years, we are proposing to calculate the rural 
floor without including the wage data of hospitals that have 
reclassified as rural under Sec.  412.103. Columns 1b through 4b in 
the table below reflect this proposed FY 2020 rural floor 
calculation. Columns 1a and 1b of the table display the number of 
IPPS hospitals located in each State in FY 2019 and FY 2020, 
respectively. Columns 2a and 2b display the number of hospitals in 
each State that received the rural floor wage index for FY 2019 
(column 2a) and those that would receive the rural floor wage index 
for FY 2020 (column 2b). Columns 3a and 3b display the percentage 
change in total payments to hospitals in each State due to the 
application of the rural floor with national budget neutrality for 
FY 2019 (column 3a) and FY 2020 (column 3b). To show the percentage 
change in total payments for FY 2019 and FY 2020, in columns 3a and 
3b, respectively, we calculated total payments using the post-
reclassification wage index of providers prior to the rural floor 
adjustment and total payments using the post-reclassification wage 
index of providers with the rural floor adjustment for FY 2019 and 
FY 2020, respectively. The differences in those payments are 
reflected in columns 3a and 3b. Columns 4a and 4b display the 
payment amount that hospitals in each State would gain or lose due 
to the application of the FY 2019 rural floor with national budget 
neutrality (column 4a) and the estimated payment amount that 
hospitals in each State would gain or lose due to the application of 
the proposed FY 2020 rural floor with national budget neutrality 
(column 4b). We note that columns 2b, 3b, and 4b of this table do 
not include the application of the proposal to increase the wage 
index for hospitals with a wage index value below the 25th 
percentile wage index, the associated budget neutrality proposal to 
decrease the wage index for hospitals with a wage index value above 
the 75th percentile wage index, or the proposed 5-percent cap.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C

f. Effects of the Application of the Proposed Frontier State Wage Index 
and Proposed Out-Migration Adjustment (Column 6)

    This column shows the combined effects of the application of 
section 10324(a) of the Affordable Care Act, which requires that we 
establish a minimum post-reclassified wage index of 1.00 for all 
hospitals located in ``frontier States,'' and the effects of section 
1886(d)(13) of the Act, as added by section 505 of Public Law 108-
173, which 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 area with a higher wage index. These two wage index 
provisions are not budget neutral and would increase

[[Page 19638]]

payments overall by 0.1 percent compared to the provisions not being 
in effect.
    The term ``frontier States'' is defined in the statute as States 
in which at least 50 percent of counties have a population density 
less than 6 persons per square mile. Based on these criteria, 5 
States (Montana, Nevada, North Dakota, South Dakota, and Wyoming) 
are considered frontier States and 45 hospitals located in those 
States would receive a frontier wage index of 1.0000. Overall, this 
provision is not budget neutral and is estimated to increase IPPS 
operating payments by approximately $63 million. Urban hospitals 
located in the West North Central region would experience an 
increase in payments by 0.6 percent, because many of the hospitals 
located in this region are frontier State hospitals.
    In addition, section 1886(d)(13) of the Act, as added by section 
505 of Public Law 108-173, 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 area with a higher wage index. 
Hospitals located in counties that qualify for the payment 
adjustment will receive an increase in the wage index that is equal 
to a weighted average of the difference between the wage index of 
the resident county, post-reclassification and the higher wage index 
work area(s), weighted by the overall percentage of workers who are 
employed in an area with a higher wage index. There are an estimated 
171 providers that would receive the out-migration wage adjustment 
in FY 2020. Rural hospitals generally would qualify for the 
adjustment, resulting in a 0.1 percent increase in payments. This 
provision appears to benefit section 401 hospitals and RRCs in that 
they would each experience a 0.2 percent increase in payments. This 
out-migration wage adjustment also is not budget neutral, and we 
estimate the impact of these providers receiving the out-migration 
increase would be approximately $40 million.

g. Effects of Application of the Proposed Lowest Quartile and Highest 
Quartile Wage Index Policies and Proposed 5-Percent Transition

    Column 7 shows the effects of the proposed wage index adjustment 
for hospitals with a wage index value below the 25th percentile wage 
index value, the associated budget neutrality proposal to decrease 
the wage index for hospitals with a wage index value above the 75th 
percentile wage index, and the proposed transition policy placing a 
5-percent cap for FY 2020 on any decrease in a hospital's wage index 
from its final FY 2019 wage index. As discussed in section III.N. of 
the preamble to this proposed rule, we are proposing that hospitals 
with a wage index value below the 25th percentile wage index value 
would receive an increase to their wage index value of half the 
difference between the otherwise applicable final wage index value 
for a year for that hospital and the 25th percentile wage index 
value for that year across all hospitals. We also are proposing to 
decrease the wage index for hospitals with a wage index value above 
the 75th percentile in order to ensure our proposed increase to the 
wage index for hospitals with a wage index value below the 25th 
percentile is budget neutral. In addition, for FY 2020, we are 
proposing to apply a 5-percent cap on any decrease in a hospital's 
wage index from the hospital's final wage index in FY 2019 (which 
would include any decrease resulting from our proposal to not 
include urban to rural reclassifications in the rural floor 
calculation).
    We are proposing that the overall effect of the application of 
the proposed wage index adjustment for hospitals with a wage index 
value below the 25th percentile would be budget neutral. In order to 
ensure that the overall effect of the application of the proposed 
wage index adjustment for hospitals with a wage index value below 
the 25th percentile is budget neutral, we are proposing to reduce 
the wage index of hospitals with wage index values above the 75th 
percentile by a constant factor of the difference between the 
hospital's otherwise applicable wage index and the 75th percentile 
(as described in section III.N.3.b. of this proposed rule). In 
addition, we are proposing to implement the proposed 5-percent cap 
on any decrease in a hospital's wage index in a budget neutral 
manner under the authority at section 1886(d)(5)(I) of the Act. 
Therefore, for purposes of this impact analysis, we are proposing to 
apply a budget neutrality adjustment factor of 0.998349 to the FY 
2020 standardized amount to implement the proposed 5-percent cap in 
a budget neutral manner.
    To show the effects of the proposed lowest and highest quartile 
wage index adjustments and the proposed 5-percent cap, column 7 
compares payments calculated with the FY 2020 proposed wage index 
prior to the application of: (a) The proposed adjustment for 
hospitals with a wage index value below the 25th percentile; (b) the 
proposed adjustment for hospitals with a wage index value above the 
75th percentile; and (c) the proposed 5-percent cap on any decrease 
in a hospital's wage index to payments calculated using the FY 2020 
proposed wage index with the above mentioned adjustments applied 
(that is, the proposed lowest quartile wage index adjustment, the 
proposed highest quartile wage index adjustment, and the proposed 5-
percent cap). The combined effect of these three proposals generally 
benefits hospitals in rural areas. For example, we estimate that the 
proposed adjustments for hospitals with a wage index value below the 
25th percentile wage index and above the 75th percentile wage index 
and the proposed 5-percent cap on any decrease in a hospital's wage 
index would increase payments to rural hospitals by an average of 
0.4 percent. By region, rural South Atlantic and West South Central 
hospital categories would experience increases in payments by 0.7 
and 0.8 percent, respectively. Puerto Rico providers would 
experience a 12.7 percent increase in payments due to the 
application of the proposed lowest quartile wage index adjustment 
because they generally have the lowest wage index values.

h. Effects of All FY 2020 Proposed Changes (Column 8)

    Column 8 shows our estimate of the proposed changes in payments 
per discharge from FY 2019 and FY 2020, resulting from all proposed 
changes reflected in this proposed rule for FY 2020. It includes 
combined effects of the year-to-year change of the previous columns 
in the table.
    The proposed average increase in payments under the IPPS for all 
hospitals is approximately 3.5 percent for FY 2020 relative to FY 
2019 and for this row is primarily driven by the proposed changes 
reflected in Column 1. Column 8 includes the proposed annual 
hospital update of 2.7 percent to the national standardized amount. 
This proposed annual hospital update includes the proposed 3.2 
percent market basket update and the proposed 0.5 percentage point 
reduction for the multifactor productivity adjustment. As discussed 
in section II.D. of the preamble of this proposed rule, this column 
also includes the +0.5 percentage point adjustment required under 
section 414 of the MACRA. Hospitals paid under the hospital-specific 
rate would receive a 2.7 percent hospital update. As described in 
Column 1, the proposed annual hospital update with the proposed +0.5 
percent adjustment for hospitals paid under the national 
standardized amount, combined with the proposed annual hospital 
update for hospitals paid under the hospital-specific rates, would 
result in a 3.5 percent increase in payments in FY 2020 relative to 
FY 2019. This estimated increase also reflects an estimated increase 
in outlier payments of 0.5 percent (from our current estimate of FY 
2019 outlier payments of approximately 4.6 percent to 5.1 percent 
projected for FY 2020 based on the FY 2018 MedPAR data used for this 
proposed rule calculated for purposes of this impact analysis). 
There are also interactive effects among the various factors 
comprising the payment system that we are not able to isolate, which 
contribute to our estimate of the proposed changes in payments per 
discharge from FY 2019 and FY 2020 in Column 8.
    Overall payments to hospitals paid under the IPPS due to the 
proposed applicable percentage increase and proposed changes to 
policies related to MS-DRGs, geographic adjustments, and outliers 
are estimated to increase by 3.5 percent for FY 2020. Hospitals in 
urban areas would experience a 3.5 percent increase in payments per 
discharge in FY 2020 compared to FY 2019. Hospital payments per 
discharge in rural areas are estimated to increase by 3.6 percent in 
FY 2020.

3. Impact Analysis of Table II

    Table II below presents the projected impact of the proposed 
changes for FY 2020 for urban and rural hospitals and for the 
different categories of hospitals shown in Table I. It compares the 
estimated average payments per discharge for FY 2019 with the 
estimated proposed average payments per discharge for FY 2020, as 
calculated under our models. Therefore, this table presents, in 
terms of the average dollar amounts paid per discharge, the combined 
effects of the proposed changes presented in Table I. The estimated 
percentage changes shown in the last column of Table II equal the 
estimated percentage changes in average payments per discharge from 
Column 8 of Table I.

[[Page 19639]]



   Table II--Impact Analysis of Proposed Changes for FY 2020 Acute Care Hospital Operating Prospective Payment
                                                     System
                                            [Payments per discharge]
----------------------------------------------------------------------------------------------------------------
                                                             Estimated          Estimated
                                          Number of       average  FY 2019  proposed  average  Proposed  FY 2020
                                          hospitals         payment per      FY 2020  payment        changes
                                                             discharge         per discharge
                                                    (1)                (2)                (3)                (4)
----------------------------------------------------------------------------------------------------------------
All Hospitals.......................              3,242             12,722             13,169                3.5
By Geographic Location:
    Urban hospitals.................              2,476             13,083             13,542                3.5
    Large urban areas...............              1,268             13,512             13,965                3.4
    Other urban areas...............              1,208             12,695             13,161                3.7
    Rural hospitals.................                766              9,507              9,850                3.6
Bed Size (Urban):
    0-99 beds.......................                643             10,365             10,742                3.6
    100-199 beds....................                759             10,799             11,166                3.4
    200-299 beds....................                431             11,908             12,312                3.4
    300-499 beds....................                424             13,186             13,657                3.6
    500 or more beds................                219             16,176             16,753                3.6
Bed Size (Rural):
    0-49 beds.......................                302              8,138              8,538                4.9
    50-99 beds......................                272              9,070              9,397                3.6
    100-149 beds....................                108              9,396              9,747                3.7
    150-199 beds....................                 45             10,063             10,390                3.2
    200 or more beds................                 39             10,995             11,322                  3
Urban by Region:
    New England.....................                112             14,419             14,659                1.7
    Middle Atlantic.................                307             14,637             15,087                3.1
    South Atlantic..................                399             11,666             12,077                3.5
    East North Central..............                386             12,317             12,756                3.6
    East South Central..............                147             10,956             11,448                4.5
    West North Central..............                157             12,618             13,145                4.2
    West South Central..............                375             12,087             12,511                3.5
    Mountain........................                169             13,474             13,882                  3
    Pacific.........................                374             16,369             17,036                4.1
    Puerto Rico.....................                 50             10,011             11,372               13.6
Rural by Region:
    New England.....................                 20             13,020             13,315                2.3
    Middle Atlantic.................                 53              9,462              9,752                3.1
    South Atlantic..................                120              8,832              9,146                3.6
    East North Central..............                114              9,728             10,054                3.4
    East South Central..............                150              8,378              8,742                4.3
    West North Central..............                 93             10,140             10,479                3.3
    West South Central..............                142              8,346              8,718                4.5
    Mountain........................                 50             11,616             12,004                3.3
    Pacific.........................                 24             13,038             13,511                3.6
By Payment Classification:
    Urban hospitals.................              2,188             12,808             13,259                3.5
    Large urban areas...............              1,283             13,500             13,953                3.4
    Other urban areas...............                905             11,827             12,276                3.8
    Rural areas.....................              1,054             12,489             12,927                3.5
Teaching Status:
    Nonteaching.....................              2,127             10,470             10,844                3.6
    Fewer than 100 residents........                865             12,053             12,476                3.5
    100 or more residents...........                250             18,611             19,257                3.5
Urban DSH:
    Non-DSH.........................                538             10,979             11,389                3.7
    100 or more beds................              1,393             13,225             13,687                3.5
    Less than 100 beds..............                352              9,704             10,035                3.4
Rural DSH:
    SCH.............................                256             10,588             10,908                  3
    RRC.............................                442             13,267             13,735                3.5
    100 or more beds................                 31             10,829             11,142                2.9
    Less than 100 beds..............                230              7,737              8,133                5.1
Urban teaching and DSH:
    Both teaching and DSH...........                776             14,386             14,889                3.5
    Teaching and no DSH.............                 84             12,239             12,692                3.7
    No teaching and DSH.............                969             10,835             11,213                3.5
    No teaching and no DSH..........                359             10,155             10,550                3.9
Special Hospital Types:

[[Page 19640]]

 
    RRC.............................                380             13,332             13,821                3.7
    SCH.............................                305             11,467             11,819                3.1
    MDH.............................                149              8,369              8,702                  4
    SCH and RRC.....................                143             11,736             12,080                2.9
    MDH and RRC.....................                 17             10,287             10,553                2.6
Type of Ownership:
    Voluntary.......................              1,893             12,819             13,266                3.5
    Proprietary.....................                852             11,212             11,618                3.6
    Government......................                496             14,213             14,720                3.6
Medicare Utilization as a Percent of
 Inpatient Days:
    0-25............................                596             15,799             16,342                3.4
    25-50...........................              2,122             12,520             12,966                3.6
    50-65...........................                414             10,126             10,455                3.2
    Over 65.........................                 73              7,473              8,010                7.2
FY 2020 Reclassifications by the
 Medicare Geographic Classification
 Review Board:
    All Reclassified Hospitals......                957             12,966             13,401                3.4
    Non-Reclassified Hospitals......              2,285             12,583             13,038                3.6
    Urban Hospitals Reclassified....                679             13,560             14,013                3.3
    Urban Non-reclassified Hospitals              1,753             12,808             13,271                3.6
    Rural Hospitals Reclassified                    278              9,767             10,100                3.4
     Full Year......................
    Rural Non-reclassified Hospitals                441              9,158              9,519                  4
     Full Year......................
    All Section 401 Reclassified                    335             14,090             14,579                3.5
     Hospitals:.....................
    Other Reclassified Hospitals                     47              9,292              9,606                3.4
     (Section 1886(d)(8)(B))........
----------------------------------------------------------------------------------------------------------------

H. Effects of Other Proposed Policy Changes

    In addition to those proposed policy changes discussed 
previously that we are able to model using our IPPS payment 
simulation model, we are proposing to make various other changes in 
this proposed rule. As noted in section I.G. of this regulatory 
impact analysis, our payment simulation model uses the most recent 
available claims data to estimate the impacts on payments per case 
of certain proposed changes in this proposed rule. Generally, we 
have limited or no specific data available with which to estimate 
the impacts of these proposed changes using that payment simulation 
model. For those proposed changes, we have attempted to predict the 
payment impacts based upon our experience and other more limited 
data. Our estimates of the likely impacts associated with these 
other proposed changes are discussed in this section.

1. Effects of Proposed Policies Relating to New Medical Service and 
Technology Add-On Payments

a. Proposed FY 2020 Status of Technologies Approved for FY 2019 New 
Technology Add-On Payments

    In section II.H. of the preamble to this proposed rule, we 
discuss 17 technologies for which we received applications for add-
on payments for new medical services and technologies for FY 2020, 
as well as the status of the new technologies that were approved to 
receive new technology add-on payments in FY 2019. We note that one 
applicant withdrew its application prior to the issuance of this 
proposed rule. As explained in the preamble to this proposed rule, 
add-on payments for new medical services and technologies under 
section 1886(d)(5)(K) of the Act are not required to be budget 
neutral. As discussed in section II.H.5. of the preamble of this 
proposed rule, we have not yet determined whether any of the 17 
technologies discussed in that section will meet the specified 
criteria for new technology add-on payments for FY 2020. 
Consequently, it is premature to estimate the potential payment 
impact of these 17 technologies for any potential new technology 
add-on payments for FY 2020. We note that if any of the 17 
technologies are found to be eligible for new technology add-on 
payments for FY 2020, in the FY 2020 IPPS/LTCH PPS final rule, we 
would discuss the estimated payment impact for FY 2020.
    In section II.H.4. of the preamble of this proposed rule, we are 
proposing to discontinue new technology add-on payments for 
Defitelio[supreg] (Defibrotide), Ustekinumab (Stelara[supreg]) and 
Bezlotoxumab (ZinplavaTM) for FY 2020 because these 
technologies will have been on the U.S. market for 3 years. We also 
are proposing to continue to make new technology add-on payments for 
AndexXaTM, the AQUABEAM System (Aquablation), 
GIAPREZATM, KYMRIAH[supreg] and YESCARTA[supreg], the 
remed[emacr][supreg] System, the Sentinel[supreg] Cerebral 
Protection System, VABOMERETM, VYXEOSTM, and 
ZEMDRITM in FY 2020 because these technologies would 
still be considered new for purposes of new technology add-on 
payments. Under our proposed change to the calculation of the new 
technology add-on payments, the new technology add-on payment for 
each case would be limited to the lesser of: (1) 65 Percent of the 
costs of the new technology; or (2) 65 percent of the amount by 
which the costs of the case exceed the standard MS-DRG payment for 
the case. Because it is difficult to predict the actual new 
technology add-on payment for each case, our estimates below are 
based on the increase in new technology add-on payments for FY 2020 
as if every claim that would qualify for a new technology add-on 
payment would receive the maximum add-on payment. The following are 
estimates for FY 2020 for the 9 technologies for which we are 
proposing to continue to make new technology add-on payments in FY 
2020:
     Based on the applicant's estimate from FY 2019, we 
currently estimate that new technology add-on payments for 
AndexXaTM would increase overall FY 2020 payments by 
$98,755,313 (maximum add-on payment of $18,281.25 * 5,402 patients).
     Based on the applicant's estimate from FY 2019, we 
currently estimate that new technology add-on payments for the 
AQUABEAM System (Aquablation) would increase overall FY 2020 
payments by $677,625 (maximum add-on payment of $1,625 * 417 
patients).
     Based on the applicant's estimate for FY 2019, we 
currently estimate that new

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technology add-on payments for GIAPREZATM would increase 
overall FY 2020 payments by $11,173,500 (maximum add-on payment of 
$1,950 * 5,730 patients).
     Based on both applicants' estimates of the average cost 
for an administered dose for FY 2019, we currently estimate that new 
technology add-on payments for KYMRIAH[supreg] and YESCARTA[supreg] 
would increase overall FY 2020 payments by $93,585,700 (maximum add-
on payment of $242,450 * 386 patients).
     Based on the applicant's estimate for FY 2019, we 
currently estimate that new technology add-on payments for 
Sentinel[supreg] Cerebral Protection System would increase overall 
FY 2020 payments by $11,830,000 (maximum add-on payment of $1,820 * 
6,500 patients).
     Based on the applicant's estimate for FY 2019, we 
currently estimate that new technology add-on payments for the 
remed[emacr][supreg] System would increase overall FY 2020 payments 
by $1,794,000 (maximum add-on payment of $22,425 * 80 patients).
     Based on the applicant's estimate for FY 2019, we 
currently estimate that new technology add-on payments for 
VABOMERETM would increase overall FY 2020 payments by 
$19,084,666 (maximum add-on payment of $7,207.20 * 2,648 patients).
     Based on the applicant's estimate for FY 2019, we 
currently estimate that new technology add-on payments for 
VYXEOSTM would increase overall FY 2020 payments by 
$45,458,400 (maximum add-on payment of $47,352.50 * 960 patients).
     Based on the applicant's estimate for FY 2019, we 
currently estimate that new technology add-on payments for 
ZEMDRITM would increase overall FY 2020 payments by 
$8,848,125 (maximum add-on payment of $3,539.25 * 2,500 patients).

b. Proposed Alternative Inpatient New Technology Add-On Payment Pathway 
for Transformative New Devices

    In section II.H.8. of the preamble of this proposed rule, we 
discuss our proposed alternative inpatient new technology add-on 
payment pathway for certain new technologies. Specifically, we are 
proposing that, for applications received for IPPS new technology 
add-on payments for FY 2021 and subsequent fiscal years, if a 
medical device is part of the FDA's Breakthrough Devices Program and 
received FDA market authorization, such a device would be considered 
new and not substantially similar to an existing technology for 
purposes of new technology add-on payment under the IPPS. We also 
are proposing that the medical device would not need to meet the 
requirement under Sec.  412.87(b)(1) that it represent an advance 
that substantially improves, relative to technologies previously 
available, the diagnosis or treatment of Medicare beneficiaries.
    Given the relatively recent introduction of the Breakthrough 
Devices Program, there have not been any medical devices that were 
part of the Breakthrough Devices Program and received FDA market 
authorization, and that applied for a new technology add-on payment 
under the IPPS and were not approved. If all of the future new 
transformative medical devices that would have applied for new 
technology add-on payments would have been approved under the 
existing criteria, this proposal has no impact. To the extent that 
there are future medical devices that are the subject of 
applications for new technology add-on payments, and those 
applications would have been denied under the current new technology 
add-on payment criteria, this proposal is a cost, but that cost is 
not estimable. We also note that as this proposal, if finalized, 
would be effective beginning with new technology add-on payment 
applications for FY 2021, there would be no impact of this proposal 
in FY 2020.

c. Proposed Changes to the Calculation of the Inpatient New Technology 
Add-On Payment

    In section II.H.9. of the preamble of this proposed rule, we 
discuss our proposal to modify the current new technology add-on 
payment mechanism to increase the amount of the maximum add-on 
payment amount to 65 percent. Specifically, we are proposing that if 
the costs of a discharge (determined by applying CCRs as described 
in Sec.  412.84(h)) exceed the full DRG payment (including payments 
for IME and DSH, but excluding outlier payments), Medicare would 
make an add-on payment equal to the lesser of: (1) 65 percent of the 
costs of the new medical service or technology; or (2) 65 percent of 
the amount by which the costs of the case exceed the standard DRG 
payment. Unless the discharge qualifies for an outlier payment, the 
additional Medicare payment would be limited to the full MS-DRG 
payment plus 65 percent of the estimated costs of the new technology 
or medical service.
    As discussed above, it is premature to estimate the potential 
payment impact for any potential new technology add-on payments for 
FY 2020 of the 17 technologies discussed in section II.H.5. of the 
preamble of this proposed rule because we have not yet determined 
whether any of these technologies will meet the specified criteria 
for new technology add-on payments for FY 2020. However, for 
purposes of estimating the impact of our proposed changes to the 
calculation of the inpatient new technology add-on payment, we are 
including the estimated increase in FY 2020 new technology add-on 
payments if we determine that all 17 of the technologies discussed 
in that section meet the specified criteria for new technology add-
on payments for FY 2020. We estimate that if we finalize our 
proposals for the 9 technologies for which we are proposing to 
continue to make new technology add-on payments in FY 2020 and if we 
determine that all 17 of the FY 2020 new technology add-on payment 
applications meet the specified criteria for new technology add-on 
payments for FY 2020, proposed changes to the calculation of the 
inpatient new technology add-on payment, if finalized, would 
increase IPPS spending by approximately $110 million in FY 2020.

2. Effects of Proposed Changes to MS-DRGs Subject to the Postacute Care 
Transfer Policy and the MS-DRG Special Payment Policy

    In section IV.A. of the preamble of this proposed rule, we 
discuss our proposed changes to the list of MS-DRGs subject to the 
postacute care transfer policy and the MS-DRG special payment policy 
for FY 2020. As reflected in Table 5 listed in section VI. of the 
Addendum to this proposed rule (which is available via the internet 
on the CMS website), using criteria set forth in regulations at 42 
CFR 412.4, we evaluated MS-DRG charge, discharge, and transfer data 
to determine which proposed new or revised MS-DRGs would qualify for 
the postacute care transfer and MS-DRG special payment policies. As 
a result of our proposals to revise the MS-DRG classifications for 
FY 2020, which are discussed in section II.F. of the preamble of 
this proposed rule, we are proposing to remove two MS-DRGs from the 
list of MS-DRGs that would be subject to the postacute care transfer 
policy and the MS-DRG special payment policy. Column 2 of Table I in 
this Appendix A shows the effects of the proposed changes to the MS-
DRGs and the proposed relative payment weights and the application 
of the proposed recalibration budget neutrality factor to the 
standardized amounts. Section 1886(d)(4)(C)(i) of the Act requires 
us annually to make appropriate DRG classification changes in order 
to reflect changes in treatment patterns, technology, and any other 
factors that may change the relative use of hospital resources. The 
analysis and methods for determining the changes due to the MS-DRGs 
and relative payment weights account for and include changes as a 
result of the proposed changes to the MS-DRGs subject to the MS-DRG 
postacute care transfer and MS-DRG special payment policies. We 
refer readers to section I.G. of this Appendix A for a detailed 
discussion of payment impacts due to the proposed MS-DRG 
reclassification policies for FY 2020.

3. Effects of Low-Volume Hospital Payment Adjustment Policy

    In section IV.D. of the preamble of this proposed rule, we 
discuss the low-volume hospital payment policy for FY 2020. 
Specifically, to qualify for the low-volume hospital payment 
adjustment, a hospital must be located more than 15 road miles from 
another subsection (d) hospital and have less than 3,800 total 
discharges during the fiscal year based on the hospital's most 
recently submitted cost report. The low-volume hospital payment 
adjustment is a per-discharge payment adjustment calculated as 
follows:
     25 percent for low-volume hospitals with 500 or fewer 
total discharges;
     (95/330)-(number of total discharges/13,200) for low-
volume hospitals with fewer than 3,800 discharges but more than 500 
discharges.
    Based upon the best available data at this time, we estimate 
payments made under the low-volume hospital payment adjustment 
policy would increase Medicare payments by $25 million in FY 2020 as 
compared to FY 2019. More specifically, in FY 2020, we estimate that 
588 providers would receive approximately $439 million compared to 
our estimate of 588 providers receiving approximately $414 million 
in FY 2019. These payment estimates were determined by identifying 
providers that, based on the best available data, qualify in FY 2019 
(that is, are located at least 15 miles from the nearest

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subsection (d) hospital and have less than 3,800 total discharges).

4. Effects of the Proposed Changes to Medicare DSH and Uncompensated 
Care Payments for FY 2020

    As discussed in section IV.F. of the preamble of this proposed 
rule, under section 3133 of the Affordable Care Act, hospitals that 
are eligible to receive Medicare DSH payments will receive 25 
percent of the amount they previously would have received under the 
statutory formula for Medicare DSH payments under section 
1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 
percent of what formerly would have been paid as Medicare DSH 
payments (Factor 1), reduced to reflect changes in the percentage of 
uninsured individuals and any additional statutory adjustment 
(Factor 2), is available to make additional payments to each 
hospital that qualifies for Medicare DSH payments and that has 
uncompensated care. Each hospital eligible for Medicare DSH payments 
will receive an additional payment based on its estimated share of 
the total amount of uncompensated care for all hospitals eligible 
for Medicare DSH payments. The uncompensated care payment 
methodology has redistributive effects based on the proportion of a 
hospital's amount of uncompensated care relative to the aggregate 
amount of uncompensated care of all hospitals eligible for Medicare 
DSH payments (Factor 3). The change to Medicare DSH payments under 
section 3133 of the Affordable Care Act is not budget neutral.
    In this proposed rule, we are proposing to establish the amount 
to be distributed as uncompensated care payments to DSH eligible 
hospitals, which for FY 2020 is $8,488,517,726.22. This figure 
represents 75 percent of the amount that otherwise would have been 
paid for Medicare DSH payment adjustments adjusted by a proposed 
Factor 2 of 67.14 percent. For FY 2019, the amount available to be 
distributed for uncompensated care was $8,272,872,447.22, or 75 
percent of the amount that otherwise would have been paid for 
Medicare DSH payment adjustments adjusted by a Factor 2 of 67.51 
percent. To calculate Factor 3 for FY 2020, we are proposing to use 
hospitals' FY 2015 cost reports from the HCRIS database, as updated 
through February 15, 2019, Medicaid days from hospitals' FY 2013 
cost reports from the same extract of HCRIS, and SSI days from the 
FY 2017 SSI ratios. For each eligible hospital, with the exception 
of Puerto Rico hospitals and Indian Health Service and Tribal 
hospitals, we calculated a Factor 3 using information on 
uncompensated care costs from cost reports for FY 2015. To calculate 
Factor 3 for Puerto Rico hospitals and Indian Health Service and 
Tribal hospitals, we used data regarding low-income insured days for 
FY 2013. For a complete discussion of the proposed methodology for 
calculating Factor 3, we refer readers to section IV.F.4. of the 
preamble of this proposed rule.
    To estimate the impact of the combined effect of proposed 
changes in Factors 1 and 2, as well as the changes to the data used 
in determining Factor 3, on the calculation of Medicare 
uncompensated care payments, we compared total uncompensated care 
payments estimated in the FY 2019 IPPS/LTCH PPS final rule to total 
uncompensated care payments estimated in this FY 2020 IPPS/LTCH PPS 
proposed rule. For FY 2019, we calculated 75 percent of the 
estimated amount that would be paid as Medicare DSH payments absent 
section 3133 of the Affordable Care Act, adjusted by a Factor 2 of 
67.51 percent and multiplied by a Factor 3 calculated using the 
methodology described in the FY 2019 IPPS/LTCH PPS final rule. For 
FY 2020, we calculated 75 percent of the estimated amount that would 
be paid as Medicare DSH payments absent section 3133 of the 
Affordable Care Act, adjusted by a proposed Factor 2 of 67.14 
percent and multiplied by a Factor 3 calculated using the proposed 
methodology described previously.
    Our analysis included 2,430 hospitals that are projected to be 
eligible for DSH in FY 2020. It did not include hospitals that 
terminated their participation from the Medicare program as of 
January 1, 2019, Maryland hospitals, new hospitals, MDHs, and SCHs 
that are expected to be paid based on their hospital-specific rates. 
The 29 hospitals participating in the Rural Community Hospital 
Demonstration Program were excluded from this analysis, as 
participating hospitals are not eligible to receive empirically 
justified Medicare DSH payments and uncompensated care payments. In 
addition, the data from merged or acquired hospitals were combined 
under the surviving hospital's CMS certification number (CCN), and 
the nonsurviving CCN was excluded from the analysis. The estimated 
impact of the proposed changes in Factors 1, 2, and 3 on 
uncompensated care payments across all hospitals projected to be 
eligible for DSH payments in FY 2020, by hospital characteristic, is 
presented in the following table.
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    Proposed changes in projected FY 2020 uncompensated care 
payments from payments in FY 2019 are driven by a proposed increase 
in Factor 1 and a proposed decrease in Factor 2, as well as by a 
decrease in the number of hospitals projected to be eligible to 
receive DSH in FY 2020 relative to FY 2019. Proposed Factor 1 has 
increased from $12.254 billion to $12.643 billion, and the proposed 
percent change in the percent of individuals who are uninsured 
(Factor 2) has decreased from 67.51 percent to 67.14 percent. Based 
on the proposed changes in these two factors, the impact analysis 
found that, across all projected DSH eligible hospitals, proposed FY 
2020 uncompensated care payments are estimated at approximately 
$8.489 billion, or a proposed increase of approximately 2.61 percent 
from FY 2019 uncompensated care payments (approximately $8.273 
billion). While these proposed changes would result in a net 
increase in the amount available to be distributed in uncompensated 
care payments, the projected payment increases vary by hospital 
type. This redistribution of uncompensated care payments is caused 
by proposed changes in Factor 3. As seen in the above table, percent 
increases smaller than 2.61 percent indicate that hospitals within 
the specified category are projected to experience a smaller 
increase in uncompensated care payments, on average, compared to the 
universe of projected FY 2020 DSH hospitals. Conversely, percent 
increases that are greater than 2.61 percent indicate a hospital 
type is projected to have a larger increase than the overall 
average. The variation in the distribution of payments by hospital 
characteristic is largely dependent on a given hospital's 
uncompensated care costs as reported in the Worksheet S-10, or 
number of Medicaid days and SSI days for Puerto Rico hospitals and 
Indian Health Service and Tribal hospitals, used in the Factor 3 
computation.
    Rural hospitals, in general, are projected to experience 
significantly larger increases in uncompensated care payments than 
their urban counterparts. Overall, rural hospitals are projected to 
receive a 22.90 percent increase in uncompensated care payments, 
while urban hospitals are projected to receive a 1.39 percent 
increase in uncompensated care payments.
    By bed size, smaller hospitals are projected to receive larger 
increases in uncompensated care payments than larger hospitals, in 
both rural and urban settings. Rural hospitals with 0-99 beds are 
projected to receive a 31.08 percent payment increase, rural 
hospitals with 100-249 beds are projected to receive a 15.35 percent 
increase, and larger rural hospitals with 250+ beds are projected to 
receive a 13.52 percent payment increase. These increases for rural 
hospitals are all greater than the overall hospital average. This 
trend is also generally true for urban hospitals, with the smallest 
urban hospitals (0-99 beds) projected to receive an increase in 
uncompensated care payments of 25.79 percent, and urban hospitals 
with 100-249 beds projected to receive an increase of 7.15 percent, 
both of which are greater than the overall average. Larger urban 
hospitals with 250+ beds are projected to receive a 1.65 percent 
decrease in uncompensated care payments.
    By region, rural hospitals are expected to receive a wide range 
of payment increases, except for those in New England, which are 
projected to receive a decrease in uncompensated care payments. 
Rural hospitals in the South Atlantic Region are expected to receive 
a larger than average increase in uncompensated care payments, as 
are rural hospitals in the West South Central, West North Central, 
East South Central, East North Central, Mountain, and Pacific 
Regions. Rural hospitals in the Middle Atlantic Region are projected 
to receive smaller than average payment increases. Regionally, urban 
hospitals are projected to receive a more varied range of payment 
changes. Urban hospitals in the New England, East North Central, 
West North Central, Mountain and Pacific Regions are projected to 
receive decreases in uncompensated care payments. Smaller than 
average increases in uncompensated care payments are projected in 
the East South Central Region, while hospitals in the Middle 
Atlantic, South Atlantic, and West South Central Regions and in 
Puerto Rico are

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projected to receive larger than average increases in uncompensated 
care payments.
    Nonteaching hospitals are projected to receive a larger than 
average payment increase of 7.37 percent. Teaching hospitals with 
fewer than 100 residents are projected to receive a payment decrease 
of 1.52 percent, while those teaching hospitals with 100+ residents 
have a projected payment increase of 2.48 percent, slightly lower 
than the overall average. Government hospitals are projected to 
receive a larger than average increase of 20.26 percent, while 
proprietary hospitals are projected to receive a payment increase 
slightly above the average at 3.12 percent. Voluntary hospitals are 
expected to receive a payment decrease of 5.11 percent. Hospitals 
with 0 to 25 percent Medicare utilization, or above 50 percent 
Medicare utilization, are projected to receive increases in 
uncompensated care payments. Hospitals with 25-50 percent Medicare 
utilization are projected to receive a slight decrease in 
uncompensated care payments.
    As discussed in section IV.F. of the preamble of this proposed 
rule, an alternative methodology that we are considering for FY 2020 
would be to use FY 2017 Worksheet S-10 data instead of FY 2015 
Worksheet S-10 data to determine Factor 3. Our analysis for this 
alternative methodology included 2,433 hospitals that would be 
projected to be eligible for DSH in FY 2020 under this approach. We 
note that the 3 hospital difference compared to the proposed 
methodology is due to a difference in the new hospital definition 
under the alternative methodology. (CCN established on or after 
October 1, 2017, would be considered new.) The estimated impact of 
the proposed changes in Factors 1 and 2 and the alternative 
methodology for determining Factor 3 on uncompensated care payments 
across all hospitals projected to be eligible for DSH payments in FY 
2020 is presented in the following table.
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    As seen in the above table for the alternative methodology under 
consideration, rural hospitals, in general, are projected to 
experience larger increases in uncompensated care payments than 
their urban counterparts. Overall, rural hospitals are projected to 
receive a 12.04 percent increase in uncompensated care payments, 
while urban hospitals are projected to receive a 2.04 percent 
increase in uncompensated care payments.
    By bed size, smaller hospitals in urban areas are projected to 
receive significantly larger increases in uncompensated care 
payments than their larger counterparts. The smallest urban 
hospitals (0-99 beds) are projected to receive an increase of 28.14 
percent in uncompensated care payments, while urban hospitals with 
100-249 beds are projected to see an increase of 2.78 percent, and 
those with 250+ beds are projected to receive a slight increase of 
0.61 percent, which is smaller than the overall average 
uncompensated care payment increase. Conversely, among rural 
hospitals, the largest rural hospitals (250+ beds) are projected to 
receive the largest increase in uncompensated care payments at 20.76 
percent. Rural hospitals with 100-249 beds are projected to receive 
an increase of 5.54 percent, and the smallest rural hospitals (0-99 
beds) are projected receive an increase of 15.95 percent.
    By region, urban hospitals in the New England, Middle Atlantic, 
East North Central, Mountain and Pacific Regions are projected to 
receive decreases in uncompensated care payments. Urban hospitals in 
the South Atlantic, East South Central, West North Central, and West 
South Central Regions and in Puerto Rico are expected to receive 
above average uncompensated care payment increases ranging from 3.56 
percent to 18.56 percent. Among rural hospitals, those in the New 
England, Middle Atlantic and Mountain Regions are expected to 
receive decreases in uncompensated care payments. Rural hospitals in 
the South Atlantic, East North Central, East South Central, West 
North Central, West South Central, and Pacific Regions are projected 
receive varied uncompensated care payment increases, ranging from 
2.79 percent to 62.92 percent.
    Nonteaching hospitals are projected to receive a larger than 
average payment increase of 5.03 percent. Teaching hospitals with 
fewer than 100 residents are projected to receive a payment increase 
of 2.22 percent, while those teaching hospitals with 100+ residents 
have a projected payment increase of 0.91 percent, both of which are 
lower than the overall average. Government hospitals are projected 
to receive a larger than average increase of 16.65 percent, while 
proprietary hospitals are projected to receive a payment increase 
below the average at 0.23 percent. Voluntary hospitals are expected 
to receive a payment decrease of 2.81 percent. Hospitals with 0 to 
25 percent Medicare utilization, or above 50 percent Medicare 
utilization, are projected to receive higher than average increases 
in uncompensated care payments. Hospitals with 25 to 50 percent 
Medicare utilization are projected to receive a lower than average 
increase in uncompensated care payments of 0.64 percent.

5. Effects of Proposed Reductions Under the Hospital Readmissions 
Reduction Program for FY 2020

    In section IV.G. of the preamble of this proposed rule, we 
discuss our proposed policies for the FY 2020 Hospital Readmissions 
Reduction Program. This program requires a reduction to a hospital's 
base operating DRG payment to account for excess readmissions of 
selected applicable conditions. The table and analysis below 
illustrate the estimated financial impact of

[[Page 19649]]

the Hospital Readmissions Reduction Program payment adjustment 
methodology by hospital characteristic. As outlined in section IV.G. 
of the preamble of this proposed rule, hospitals are stratified into 
quintiles based on the proportion of dual-eligible stays among 
Medicare fee-for-service (FFS) and managed care stays between July 
1, 2014 and June 30, 2017 (that is, the FY 2019 Hospital 
Readmissions Reduction Program's performance period). Hospitals' 
excess readmission ratios (ERRs) are assessed relative to their peer 
group median and a neutrality modifier is applied in the payment 
adjustment factor calculation to maintain budget neutrality. To 
analyze the results by hospital characteristic, we used the FY 2019 
Hospital IPPS Proposed Rule Impact File.
    These analyses include 3,062 non-Maryland hospitals eligible to 
receive a penalty during the performance period. Hospitals are 
eligible to receive a penalty if they have 25 or more eligible 
discharges for at least one measure between July 1, 2014 and June 
30, 2017. The second column in the table indicates the total number 
of non-Maryland hospitals with available data for each 
characteristic that have an estimated payment adjustment factor less 
than 1 (that is, penalized hospitals).
    The third column in the table indicates the percentage of 
penalized hospitals among those eligible to receive a penalty by 
hospital characteristic. For example, 82.26 percent of eligible 
hospitals characterized as non-teaching hospitals are expected to be 
penalized. Among teaching hospitals, 88.60 percent of eligible 
hospitals with fewer than 100 residents and 93.95 percent of 
eligible hospitals with 100 or more residents are expected to be 
penalized.
    The fourth column in the table estimates the financial impact on 
hospitals by hospital characteristics. The table shows the share of 
penalties as a percentage of all base operating DRG payments for 
hospitals with each characteristic. This is calculated as the sum of 
penalties for all hospitals with that characteristic over the sum of 
all base operating DRG payments for those hospitals between October 
1, 2016 and September 30, 2017 (FY 2017). For example, the penalty 
as a share of payments for urban hospitals is 0.67 percent. This 
means that total penalties for all urban hospitals are 0.67 percent 
of total payments for urban hospitals. Measuring the financial 
impact on hospitals as a percentage of total base operating DRG 
payments accounts for differences in the amount of base operating 
DRG payments for hospitals within the characteristic when comparing 
the financial impact of the program on different groups of 
hospitals.
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6. Effects of Proposed Changes Under the FY 2020 Hospital Value-Based 
Purchasing (VBP) Program

    In section IV.H. of the preamble of this proposed rule, we 
discuss the Hospital VBP Program under which the Secretary makes 
value-based incentive payments to hospitals based on their 
performance on measures during the performance period with respect 
to a fiscal year. These incentive payments will be funded for FY 
2020 through a reduction to the FY 2020 base operating DRG payment 
amount for the discharge for the hospital for such fiscal year, as 
required by section 1886(o)(7)(B) of the Act. The applicable 
percentage for FY 2020 and subsequent years is 2 percent. The total 
amount available for value-based incentive payments must be equal to 
the total amount of reduced payments for all hospitals for the 
fiscal year, as estimated by the Secretary.
    In section IV.H.1.b. of the preamble of this proposed rule, we 
estimate the available pool of funds for value-based incentive 
payments in the FY 2020 program year, which, in accordance with 
section 1886(o)(7)(C)(v) of the Act, would be 2.00 percent of base 
operating DRG payments, or a total of approximately $1.9 billion. 
This estimated available pool for FY 2020 is based on the historical 
pool of hospitals that were eligible to participate in the FY 2019 
program year and the payment information from the December 2018 
update to the FY 2018 MedPAR file.
    The proposed estimated impacts of the FY 2020 program year by 
hospital characteristic, found in the table below, are based on 
historical TPSs. We used the FY 2019 program year's TPSs to 
calculate the proxy adjustment factors used for this impact 
analysis. These are the most recently available scores that 
hospitals were given an opportunity to review and correct. The proxy 
adjustment factors use estimated annual base operating DRG payment 
amounts derived from the December 2018 update to the FY 2018 MedPAR 
file. The proxy adjustment factors can be found in Table 16 
associated with this proposed rule (available via the internet on 
the CMS website).
    The impact analysis shows that, for the FY 2020 program year, 
the number of hospitals that would receive an increase in their base 
operating DRG payment amount is higher than the number of hospitals 
that would receive a decrease. On average, urban hospitals in the 
West North Central region and rural hospitals in the Mountain region 
would have the highest positive percent change in base operating 
DRG. Urban Middle Atlantic, Urban East South Central, and Urban West 
South Central regions would experience an average decrease in base 
operating DRG. All other regions, both urban and rural, would 
experience an average increase in base operating DRG.
    As DSH patient percentage increases, the average percent change 
in base operating DRG would tend to decrease. With respect to 
hospitals' Medicare utilization as a percent of inpatient days 
(MCR), as the MCR percent increases, the average percent change in 
base operating DRG would increase. On average, teaching hospitals 
would have a decrease in base operating DRG while non-teaching 
hospitals would have an increase in base operating DRG.
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    Actual FY 2020 program year's TPSs will not be reviewed and 
corrected by hospitals until after the FY 2020 IPPS/LTCH PPS final 
rule has been published. Therefore, the same historical universe of 
eligible hospitals and corresponding TPSs from the FY 2019 program 
year will be used for the updated impact analysis in the final rule.

7. Effects of Proposed Requirements Under the HAC Reduction Program for 
FY 2020

    In section IV.I. of the preamble of this proposed rule, we 
discuss proposed requirements for the HAC Reduction Program for FY 
2020. In this proposed rule, we are not proposing to remove measures 
or to adopt any new measures into the HAC Reduction Program.

a. Burden Associated With Validation

    We note the burden associated with collecting and submitting 
data via the NHSN system is captured under a separate OMB control 
number, 0920-0666, and therefore will not impact our burden 
estimates.
    We discuss the burden hours associated with NHSN HAI validation 
(43,200 hours over 600 hospitals) in section X.B.7. of the preamble 
of this proposed rule, and note the burden associated with these 
requirements is captured in an information collection request 
currently available for review and comment, OMB control number 0938-
1352. We are proposing to update our cost burden to hospitals using 
a wage plus benefit rate of $37.66 per hour to account for an 
increase in wage rate used in the last year's PRA package from 
$18.29 to $18.83. We believe that doubling the hourly wage rate 
($18.83 x 2 = $37.66) to estimate total cost is a reasonably 
accurate estimation method. Accordingly, we calculate cost burden to 
hospitals using a wage plus benefits estimate of $37.66 per hour.

b. The Cumulative Effect of Program Measures and the Scoring 
Methodology

    We are presenting the estimated impact of the FY 2020 HAC 
Reduction Program on hospitals by hospital characteristic. These FY 
2020 HAC Reduction Program results were calculated using the Equal 
Measure Weights approach finalized in the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41486 through 41489). Each hospital's Total HAC 
Score was calculated as the equally weighted average of the 
hospital's measure scores. The table below presents the estimated 
proportion of hospitals in the worst-performing quartile of the 
Total HAC Scores by hospital characteristic.
    Hospitals' CMS PSI 90 Composite measure results are based on 
Medicare FFS discharges from July 1, 2016 through June 30, 2018 and 
the recalibrated version 9.0 of the CMS PSI software. Hospitals' 
measure results for the CLABSI, CAUTI, Colon and Abdominal 
Hysterectomy SSI, MRSA Bacteremia, and CDI measures are derived from 
standardized

[[Page 19655]]

infection ratios (SIRs) calculated with hospital surveillance data 
reported to the NHSN for infections occurring between January 1, 
2016 and December 31, 2017.\842\
---------------------------------------------------------------------------

    \842\ Updated FY 2020 data for the CDC NHSN measures (1/1/2017 
through 12/31/2018) was not available at the time of publication.
---------------------------------------------------------------------------

    To analyze the results by hospital characteristic, we used the 
FY 2019 Hospital IPPS Final Rule Impact File. This table includes 
3,184 non-Maryland hospitals with a FY 2020 Total HAC Score--
Maryland hospitals and hospitals without a Total HAC Score are 
excluded from the table. Of these 3,184 hospitals, 3,170 hospitals 
had information for geographic location with bed size, safety-net 
status, DSH patient percentages, and teaching status; 3,182 
hospitals had information on region; 3,142 hospitals had information 
for ownership; and 3,155 hospitals had information for MCR percent. 
The first column presents a breakdown of each characteristic.
    The second column in the table indicates the total number of 
non-Maryland hospitals with an FY 2020 Total HAC Score and available 
data for each characteristic. For example, with regard to teaching 
status, 2,092 hospitals are characterized as non-teaching hospitals, 
831 hospitals are characterized as teaching hospitals with fewer 
than 100 residents, and 247 hospitals are characterized as teaching 
hospitals with at least 100 residents. This only represents a total 
of 3,170 hospitals because the other 14 hospitals are missing from 
the FY 2019 Hospital IPPS Final Rule Impact File.
    The third column in the table indicates the number of hospitals 
for each characteristic that would be in the worst-performing 
quartile of Total HAC Scores. These hospitals would receive a 
payment reduction under the FY 2020 HAC Reduction Program. For 
example, with regard to teaching status, 458 hospitals out of 2,092 
hospitals characterized as non-teaching hospitals would be subject 
to a payment reduction. Among teaching hospitals, 208 out of 831 
hospitals with fewer than 100 residents, and 120 out of 247 
hospitals with 100 or more residents would be subject to a payment 
reduction.
    The fourth column in the table indicates the proportion of 
hospitals for each characteristic that would be in the worst-
performing quartile of Total HAC Scores and thus receive a payment 
reduction under the FY 2020 HAC Reduction Program. For example, 21.9 
percent of the 2,092 hospitals characterized as non-teaching 
hospitals, 25.0 percent of the 831 teaching hospitals with fewer 
than 100 residents, and 48.6 percent of the 247 teaching hospitals 
with 100 or more residents would be subject to a payment reduction.
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8. Effects of Proposed Changes Relating to Critical Access Hospitals 
(CAHs) as Nonproviders for Direct GME and IME Payment Purposes

    In section IV.J.2. of the preamble of this proposed rule, we 
discuss our proposal to consider CAHs as nonprovider settings for 
purposes of direct GME and IME payments such that, effective with 
portions of cost reporting periods beginning October 1, 2019, a 
hospital may include full-time equivalent (FTE) residents training 
at a CAH in its FTE count as long as it meets the nonprovider

[[Page 19658]]

setting requirements currently included at 42 CFR 413.78(g). We note 
that we are not proposing to change our policy with respect to CAHs 
incurring the costs of training residents. That is, a CAH may 
continue to incur the costs of training residents in an approved 
residency training program(s) and be paid based on 101 percent of 
the reasonable costs for these training costs.
    We anticipate any impact associated with this proposed change to 
be negligible. Because IPPS teaching hospitals have caps in place 
for the number of FTE residents they may claim for direct GME and 
IME payment purposes, these hospitals could only receive direct GME 
and IME payments for the FTE residents for which they incur the 
training costs at CAHs within their existing FTE caps. Allowing IPPS 
hospitals to claim FTE residents training at CAHs would not mean the 
hospitals would be able to claim additional FTE residents above 
their FTE caps. Thus, because no additional funded slots would be 
created for IPPS hospitals by this proposal, and because CAHs would 
no longer be claiming and receiving payment for the salary costs of 
the residents in situations where the CAHs are being treated as 
nonprovider sites, we believe there is minimal to no impact.

9. Effects of Implementation of the Rural Community Hospital 
Demonstration Program in FY 2020

    In section IV.K. of the preamble of this proposed rule for FY 
2020, we discussed our implementation and budget neutrality 
methodology for section 410A of Public Law 108-173, as amended by 
sections 3123 and 10313 of Public Law 111-148, and more recently, by 
section 15003 of Public Law 114-255, which requires the Secretary to 
conduct a demonstration that would modify payments for inpatient 
services for up to 30 rural hospitals.
    Section 15003 of Public Law 114-255 requires the Secretary to 
conduct the Rural Community Hospital Demonstration for a 10-year 
extension period (in place of the 5-year extension period required 
by the Affordable Care Act), beginning on the date immediately 
following the last day of the initial 5-year period under section 
410A(a)(5) of Public Law 108-173. Specifically, section 15003 of 
Public Law 114-255 amended section 410A(g)(4) of Public Law 108-173 
to require that, for hospitals participating in the demonstration as 
of the last day of the initial 5-year period, the Secretary shall 
provide for continued participation of such rural community 
hospitals in the demonstration during the 10-year extension period, 
unless the hospital makes an election to discontinue participation. 
Furthermore, section 15003 of Public Law 114-255 requires that, 
during the second 5 years of the 10-year extension period, the 
Secretary shall provide for participation under the demonstration 
during the second 5 years of the 10-year extension period for 
hospitals that are not described in subsection 410A(g)(4).
    Section 15003 of Public Law 114-255 also requires that no later 
than 120 days after the enactment of Public Law 114-255 that the 
Secretary issue a solicitation for applications to select additional 
hospitals to participate in the demonstration program for the second 
5 years of the 10-year extension period so long as the maximum 
number of 30 hospitals stipulated by Public Law 111-148 is not 
exceeded. Section 410A(c)(2) requires that in conducting the 
demonstration program under this section, the Secretary shall ensure 
that the aggregate payments made by the Secretary do not exceed the 
amount which the Secretary would have paid if the demonstration 
program under this section was not implemented (budget neutrality).
    In the preamble to this FY 2020 IPPS/LTCH PPS proposed rule, we 
described the terms of participation for the extension period 
authorized by Public Law 114-255. In the FY 2018 IPPS/LTCH PPS final 
rule, we finalized our policy with regard to the effective date for 
the application of the reasonable cost-based payment methodology 
under the demonstration for those among the hospitals that had 
previously participated and were choosing to participate in the 
second 5-year extension period. According to our finalized policy, 
each of these previously participating hospitals began the second 5 
years of the 10-year extension period on the date immediately after 
the date the period of performance under the 5-year extension period 
ended. Seventeen of the 21 hospitals that completed their periods of 
participation under the extension period authorized by Public Law 
111-148 elected to continue in the second 5-year extension period, 
while 13 additional hospitals were selected to participate. One of 
the hospitals selected from the solicitation in 2017 withdrew from 
the demonstration program prior to beginning participation on July 
1, 2018. Each of the remaining newly participating hospitals began 
its 5-year period of participation effective with the start of the 
first cost reporting period on or after October 1, 2017. Thus, 29 
hospitals participated in FYs 2018 and 2019, and are scheduled to 
participate in FY 2020.
    In the FY 2018 IPPS/LTCH PPS final rule, we finalized the budget 
neutrality methodology in accordance with our policies for 
implementing the demonstration, adopting the general methodology 
used in previous years, whereby we estimated the additional payments 
made by the program for each of the participating hospitals as a 
result of the demonstration. In order to achieve budget neutrality, 
we adjusted the national IPPS rates by an amount sufficient to 
account for the added costs of this demonstration. In other words, 
we have applied budget neutrality across the payment system as a 
whole rather than across the participants of this demonstration. The 
language of the statutory budget neutrality requirement permits the 
agency to implement the budget neutrality provision in this manner. 
The statutory language requires that aggregate payments made by the 
Secretary do not exceed the amount which the Secretary would have 
paid if the demonstration was not implemented, but does not identify 
the range across which aggregate payments must be held equal.
    For this proposed rule, the resulting amount applicable to FY 
2020 is $61,970,567, which we are proposing to include in the budget 
neutrality offset adjustment for FY 2020. This estimated amount is 
based on the specific assumptions regarding the data sources used, 
that is, recently available ``as submitted'' cost reports and 
historical and proposed update factors for cost and payment. If 
updated data become available prior to the FY 2020 IPPS/LTCH PPS 
final rule, we will use them to the extent appropriate to estimate 
the costs of the demonstration program.
    In previous years, we have incorporated a second component into 
the budget neutrality offset amounts identified in the final IPPS 
rules. As finalized cost reports became available, we determined the 
amount by which the actual costs of the demonstration for an 
earlier, given year differed from the estimated costs for the 
demonstration set forth in the final IPPS rule for the corresponding 
fiscal year, and we incorporated that amount into the budget 
neutrality offset amount for the upcoming fiscal year. We have 
calculated this difference for FYs 2005 through 2013 between the 
actual costs of the demonstration as determined from finalized cost 
reports once available, and estimated costs of the demonstration as 
identified in the applicable IPPS final rules for these years.
    With the extension of the demonstration for another 5-year 
period, as authorized by section 15003 of Public Law 114-255, we 
will continue this general procedure. Currently, finalized cost 
reports are now available for the 22 hospitals that completed a cost 
reporting period beginning in FY 2014 according to the demonstration 
cost-based payment methodology. The actual costs of the 
demonstration for this fiscal year as determined from the finalized 
cost reports fell short of the estimated amount that was finalized 
in the FY 2014 IPPS/LTCH PPS final rule by $14,932,060.
    We note that, for this proposed rule, the amounts identified for 
the actual costs of the demonstration for FY 2014 (determined from 
finalized cost reports) is less than the amount that was identified 
in the final rule for this fiscal year. Therefore, in keeping with 
previous policy finalized in similar situations when the costs of 
the demonstration fell short of the amount estimated in the 
corresponding year's final rule, we will be including this component 
as a negative adjustment to the budget neutrality offset amount for 
the current fiscal year.
    Therefore, for FY 2020, the total amount that we are proposing 
to apply to the national IPPS rates is $47,038,507. If updated data 
become available prior to the FY 2020 IPPS/LTCH PPS final rule, we 
would use them to the extent appropriate to determine the budget 
neutrality offset amount for FY 2020. Furthermore, if the needed 
cost reports are available in time for the FY 2020 IPPS/LTCH PPS 
final rule, we will also identify the difference between the total 
cost of the demonstration based on finalized FY 2015 cost reports 
and the estimate of the costs of the demonstration for that year, 
and incorporate that amount into the final budget neutrality offset 
amount for FY 2020.

10. Effects of Proposed Change Relating to CAH Payment for Ambulance 
Services

    In section VI.C.2. of the preamble of this proposed rule, we 
discuss our proposal to revise the regulations at Sec.  413.70(b)(5) 
by

[[Page 19659]]

adding a new paragraph (D) to state that, effective for cost 
reporting periods beginning on or after October 1, 2019, payment for 
ambulance services furnished by a CAH or by an entity that is owned 
and operated by a CAH is 101 percent of the reasonable costs of the 
CAH or the entity in furnishing those services, but only if the CAH 
or the entity is the only provider or supplier of ambulance services 
located within a 35-mile drive of the CAH, excluding ambulance 
providers or suppliers that are not legally authorized to furnish 
ambulance services to transport individuals either to or from the 
CAH. Consistent with the existing policy under Sec.  
413.70(b)(5)(i)(C), if there is no provider or supplier of ambulance 
services located within a 35-mile drive of the CAH and there is an 
entity that is owned and operated by a CAH that is more than a 35-
mile drive from the CAH, payment for ambulance services furnished by 
that entity is 101 percent of the reasonable costs of the entity in 
furnishing those services, but only if the entity is the closest 
provider or supplier of ambulance services to the CAH.
    Based on the best data available, assuming no significant change 
in the volume of CAH ambulance trips and that approximately 5 CAHs 
may be affected by the specific situation described in our proposal, 
we estimate Medicare payments will increase by $2 million in FY 2020 
as compared to FY 2019.

11. Effects of Continued Implementation of the Frontier Community 
Health Integration Project (FCHIP) Demonstration

    In section VI.C.3. of the preamble of this proposed rule, we 
discuss the implementation of the FCHIP demonstration, which allows 
eligible entities to develop and test new models for the delivery of 
health care services in eligible counties in order to improve access 
to and better integrate the delivery of acute care, extended care, 
and other health care services to Medicare beneficiaries in no more 
than four States. Budget neutrality estimates for the demonstration 
will be based on the demonstration period of August 1, 2016 through 
July 31, 2019. The demonstration includes three intervention prongs, 
under which specific waivers of Medicare payment rules will allow 
for enhanced payment: Telehealth, skilled nursing facility/nursing 
facility services, and ambulance services. These waivers are being 
implemented with the goal of increasing access to care with no net 
increase in costs. (We initially addressed this demonstration in the 
FY 2017 IPPS/LTCH PPS final rule (81 FR 57064 through 57065), FY 
2018 IPPS/LTCH PPS final rule (82 FR 38294 through 38296) and FY 
2019 IPPS/LTCH PPS final rule (83 FR 41516 through 41517).)
    We specified the payment enhancements for the demonstration and 
selected CAHs for participation with the goal of maintaining the 
budget neutrality of the demonstration on its own terms (that is, 
the demonstration will produce savings from reduced transfers and 
admissions to other health care providers, thus offsetting any 
increase in payments resulting from the demonstration). However, 
because of the small size of this demonstration program and 
uncertainty associated with projected Medicare utilization and 
costs, in the FY 2019 IPPS/LTCH PPS final rule we adopted a 
contingency plan (83 FR 41516 through 41517) to ensure that the 
budget neutrality requirement in section 123 of Public Law 110-275 
is met. Accordingly, if analysis of claims data for the Medicare 
beneficiaries receiving services at each of the participating CAHs, 
as well as of other data sources, including cost reports, shows that 
increases in Medicare payments under the demonstration during the 3-
year period are not sufficiently offset by reductions elsewhere, we 
will recoup the additional expenditures attributable to the 
demonstration through a reduction in payments to all CAHs 
nationwide. The demonstration is projected to impact payments to 
participating CAHs under both Medicare Part A and Part B. Thus, in 
the event that we determine that aggregate payments under the 
demonstration exceed the payments that would otherwise have been 
made, CMS will recoup payments through reductions of Medicare 
payments to all CAHs under both Medicare Part A and Part B. Because 
of the small scale of the demonstration, it would not be feasible to 
implement budget neutrality by reducing payments only to the 
participating CAHs. Therefore, we will make the reduction to 
payments to all CAHs, not just those participating in the 
demonstration, because the FCHIP demonstration is specifically 
designed to test innovations that affect delivery of services by 
this provider category. As we explained in the FY 2019 IPPS/LTCH PPS 
final rule (83 FR 41516 through 41517), we believe that the language 
of the statutory budget neutrality requirement at section 
123(g)(1)(B) of the Act permits the agency to implement the budget 
neutrality provision in this manner. The statutory language merely 
refers to ensuring that aggregate payments made by the Secretary do 
not exceed the amount which the Secretary estimates would have been 
paid if the demonstration project was not implemented, and does not 
identify the range across which aggregate payments must be held 
equal.
    Given the 3-year period of performance of the FCHIP 
demonstration and the time needed to conduct the budget neutrality 
analysis, in the event the demonstration is found not to have been 
budget neutral, we plan to recoup any excess costs over a period of 
three cost report periods, beginning in CY 2020. Therefore, based on 
currently available data, this policy will likely have no impact for 
any national payment system for FY 2020.

I. Effects of Proposed Changes in the Capital IPPS

1. General Considerations

    For the impact analysis presented below, we used data from the 
December 2018 update of the FY 2018 MedPAR file and the December 
2018 update of the Provider-Specific File (PSF) that was used for 
payment purposes. Although the analyses of the proposed changes to 
the capital prospective payment system do not incorporate cost data, 
we used the December 2018 update of the most recently available 
hospital cost report data (FYs 2016 and 2017) to categorize 
hospitals. Our analysis has several qualifications. We use the best 
data available and make assumptions about case-mix and beneficiary 
enrollment, as described later in this section.
    Due to the interdependent nature of the IPPS, it is very 
difficult to precisely quantify the impact associated with each 
proposed change. In addition, we draw upon various sources for the 
data used to categorize hospitals in the tables. In some cases (for 
instance, the number of beds), there is a fair degree of variation 
in the data from different sources. We have attempted to construct 
these variables with the best available sources overall. However, it 
is possible that some individual hospitals are placed in the wrong 
category.
    Using cases from the December 2018 update of the FY 2018 MedPAR 
file, we simulated payments under the capital IPPS for FY 2019 and 
the proposed payments for FY 2020 for a comparison of total payments 
per case. Short-term, acute care hospitals not paid under the 
general IPPS (for example, hospitals in Maryland) are excluded from 
the simulations.
    The methodology for determining a capital IPPS payment is set 
forth at Sec.  412.312. The basic methodology for calculating the 
proposed capital IPPS payments in FY 2020 is as follows:
    (Standard Federal rate) x (DRG weight) x (GAF) x (COLA for 
hospitals located in Alaska and Hawaii) x (1 + DSH adjustment factor 
+ IME adjustment factor, if applicable).
    In addition to the other adjustments, hospitals may receive 
outlier payments for those cases that qualify under the threshold 
established for each fiscal year. We modeled payments for each 
hospital by multiplying the capital Federal rate by the GAF and the 
hospital's case-mix. We then added estimated payments for indirect 
medical education, disproportionate share, and outliers, if 
applicable. For purposes of this impact analysis, the model includes 
the following assumptions:
     An estimated increase in the Medicare case-mix index of 
0.5 percent in FY 2019 and 0.5 percent in FY 2020 based on 
preliminary FY 2019 data.
     We estimate that Medicare discharges would be 
approximately 10.8 million in both FYs 2019 and 2020.
     The capital Federal rate was updated, beginning in FY 
1996, by an analytical framework that considers changes in the 
prices associated with capital-related costs and adjustments to 
account for forecast error, changes in the case-mix index, allowable 
changes in intensity, and other factors. As discussed in section 
III.A.1.a. of the Addendum to this proposed rule, the proposed 
update to the capital Federal rate is 1.5 percent for FY 2020.
     In addition to the proposed FY 2020 update factor, the 
proposed FY 2020 capital Federal rate was calculated based on a 
proposed GAF/DRG budget neutrality adjustment factor of 0.9976 and a 
proposed outlier adjustment factor of 0.9466.

2. Results

    We used the actuarial model previously described in section I.I. 
of Appendix A of this proposed rule to estimate the potential

[[Page 19660]]

impact of the proposed changes for FY 2020 on total capital payments 
per case, using a universe of 3,242 hospitals. As previously 
described, the individual hospital payment parameters are taken from 
the best available data, including the December 2018 update of the 
FY 2018 MedPAR file, the December 2018 update to the PSF, and the 
most recent cost report data from the December 2018 update of HCRIS. 
In Table III, we present a comparison of estimated proposed total 
payments per case for FY 2019 and estimated total payments per case 
for FY 2020 based on the proposed FY 2020 payment policies. Column 2 
shows estimates of payments per case under our model for FY 2019. 
Column 3 shows estimates of proposed payments per case under our 
model for FY 2020. Column 4 shows the proposed total percentage 
change in payments from FY 2019 to FY 2020. The change represented 
in Column 4 includes the proposed 1.5 percent update to the capital 
Federal rate and other proposed changes in the adjustments to the 
capital Federal rate. The comparisons are provided by: (1) 
Geographic location; (2) region; and (3) payment classification.
    The simulation results show that, on average, capital payments 
per case in FY 2020 are expected to increase as compared to capital 
payments per case in FY 2019. This expected increase overall is 
largely due to the proposed 1.5 percent update to the capital 
Federal rate for FY 2020. Hospitals within both rural and urban 
regions may experience an increase or a decrease in capital payments 
per case due to changes in the GAFs. These regional effects of the 
proposed changes to the GAFs on capital payments are consistent with 
the projected changes in payments due to proposed changes in the 
wage index (and proposed policies affecting the wage index), as 
shown in Table I in section I.G. of this Appendix A.
    The net impact of these proposed changes is an estimated 1.9 
percent change in capital payments per case from FY 2019 to FY 2020 
for all hospitals (as shown in Table III).
    The geographic comparison shows that, on average, hospitals in 
both urban and rural classifications would experience an increase in 
capital IPPS payments per case in FY 2020 as compared to FY 2019. 
Capital IPPS payments per case would increase by an estimated 1.7 
percent for hospitals in large urban areas and by 1.8 percent for 
hospitals in other urban areas, while payments to hospitals in rural 
areas would increase by 3.1 percent in FY 2019 to FY 2020.
    The comparisons by region show that the estimated changes in 
capital payments per case from FY 2019 to FY 2020 in urban areas 
range from a 0.4 percent decrease for the New England region to a 
3.1 percent increase for the East South Central region. For rural 
regions, the Pacific rural region is projected to experience an 
increase in capital IPPS payments per case of 4.1 percent, while the 
New England rural region is projected to experience an increase in 
capital IPPS payments per case of 0.6 percent.
    Hospitals of all types of ownership (that is, voluntary 
hospitals, government hospitals, and proprietary hospitals) are 
expected to experience an increase in capital payments per case from 
FY 2019 to FY 2020. The projected increase in capital payments for 
voluntary hospitals is estimated to be 1.8 percent. Proprietary 
hospitals and government hospitals are expected to experience an 
increase in capital IPPS payments of 2.2 percent.
    Section 1886(d)(10) of the Act established the MGCRB. Hospitals 
may apply for reclassification for purposes of the wage index for FY 
2020. Reclassification for wage index purposes also affects the GAFs 
because that factor is constructed from the hospital wage index. To 
present the effects of the hospitals being reclassified as of the 
publication of this proposed rule for FY 2020, we show the proposed 
average capital payments per case for reclassified hospitals for FY 
2020. Urban reclassified hospitals are expected to experience an 
increase in capital payments of 1.4 percent; urban nonreclassified 
hospitals are expected to experience an increase in capital payments 
of 2.1 percent. The estimated percentage increase for rural 
reclassified hospitals is 2.6 percent, and for rural nonreclassified 
hospitals, the estimated percentage increase in capital payments is 
3.9 percent.
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J. Effects of Proposed Payment Rate Changes and Proposed Policy 
Changes Under the LTCH PPS

1. Introduction and General Considerations

    In section VII. of the preamble of this proposed rule and 
section V. of the Addendum to this proposed rule, we set forth the 
proposed annual update to the payment rates for the LTCH PPS for FY 
2020. In the preamble of this proposed rule, we specify the 
statutory authority for the provisions that are presented, identify 
the proposed policies, and present rationales for our decisions as

[[Page 19663]]

well as alternatives that were considered. In this section of 
Appendix A to this proposed rule, we discuss the impact of the 
proposed changes to the payment rate, factors, and other payment 
rate policies related to the LTCH PPS that are presented in the 
preamble of this proposed rule in terms of their estimated fiscal 
impact on the Medicare budget and on LTCHs.
    There are 384 LTCHs included in this impact analysis. We note 
that, although there are currently approximately 394 LTCHs, for 
purposes of this impact analysis, we excluded the data of all-
inclusive rate providers consistent with the development of the 
proposed FY 2020 MS-LTC-DRG relative weights (discussed in section 
VII.B.3.c. of the preamble of this proposed rule. Moreover, in the 
claims data used for this proposed rule, 2 of these 384 LTCHs only 
have claims for site neutral payment rate cases and, therefore, do 
not affect our impact analysis for LTCH PPS standard Federal payment 
rate cases.) In the impact analysis, we used the proposed payment 
rate, factors, and policies presented in this proposed rule, the 
proposed 1.027 percent annual update to the LTCH PPS standard 
Federal payment rate, the one-time budget neutrality adjustment 
factor for the estimated cost of eliminating the 25-percent 
threshold policy in FY 2020 as discussed in section VII.D. of the 
preamble of this proposed rule, the proposed update to the MS-LTC-
DRG classifications and relative weights, the proposed update to the 
wage index values and labor-related share, and the best available 
claims and CCR data to estimate the proposed change in payments for 
FY 2020.
    Under the dual rate LTCH PPS payment structure, payment for LTCH 
discharges that meet the criteria for exclusion from the site 
neutral payment rate (that is, LTCH PPS standard Federal payment 
rate cases) is based on the LTCH PPS standard Federal payment rate. 
Consistent with the statute, the site neutral payment rate is the 
lower of the IPPS comparable per diem amount as determined under 
Sec.  412.529(d)(4), including any applicable outlier payments as 
specified in Sec.  412.525(a), reduced by 4.6 percent for FYs 2018 
through 2026; or 100 percent of the estimated cost of the case as 
determined under existing Sec.  412.529(d)(2). In addition, there 
are two separate high cost outlier targets--one for LTCH PPS 
standard Federal payment rate cases and one for site neutral payment 
rate cases. The statute also establishes a transitional payment 
method for cases that are paid the site neutral payment rate for 
LTCH discharges occurring in cost reporting periods beginning during 
FY 2016 through FY 2019. The transitional payment amount for site 
neutral payment rate cases is a blended payment rate, which is 
calculated as 50 percent of the applicable site neutral payment rate 
amount for the discharge as determined under Sec.  412.522(c)(1) and 
50 percent of the applicable LTCH PPS standard Federal payment rate 
for the discharge determined under Sec.  412.523. For FY 2019, the 
applicability of this transitional payment method for site neutral 
payment rate cases is dependent upon both the discharge date of the 
case and the start date of the LTCH's FY 2019 cost reporting period. 
Specifically, the transitional payment method only applies to those 
site neutral payment rate cases whose discharges occur during a 
LTCH's cost reporting period that begins before October 1, 2019. 
While the transitional payment amount for site neutral payment rate 
cases is a blended payment rate, which is calculated as 50 percent 
of the applicable site neutral payment rate amount for the discharge 
as determined under Sec.  412.522(c)(1) and 50 percent of the 
applicable LTCH PPS standard Federal payment rate for the discharge 
determined under Sec.  412.523, site neutral payment rate cases 
whose discharges from an LTCH occur during the LTCH's cost reporting 
period that begins on or after October 1, 2019 are paid the site 
neutral payment rate amount determined under Sec.  412.522(c)(1).
    Based on the best available data for the 384 LTCHs in our 
database that were considered in the analyses used for this proposed 
rule, we estimate that overall LTCH PPS payments in FY 2020 will 
increase by approximately 0.9 percent (or approximately $37 million) 
based on the proposed rates and factors presented in section VII. of 
the preamble and section V. of the Addendum to this proposed rule.
    The statutory transitional payment method for cases that are 
paid the site neutral payment rate for LTCH discharges occurring in 
cost reporting periods beginning during FY 2018 or FY 2019 uses a 
blended payment rate, which is determined as 50 percent of the site 
neutral payment rate amount for the discharge and 50 percent of the 
LTCH PPS standard Federal prospective payment rate amount for the 
discharge (Sec.  412.522(c)(3)). Therefore, when estimating FY 2019 
LTCH PPS payments for site neutral payment rate cases for this 
impact analysis, the transitional blended payment rate was applied 
to all such cases because all discharges in FY 2019 are either in 
the LTCH's cost reporting period that began during FY 2018 or in the 
LTCH's cost reporting period that will begin during FY 2019. 
However, when estimating FY 2020 LTCH PPS payments for site neutral 
payment rate cases for this impact analysis, because the statute 
specifies that the site neutral payment rate effective date for a 
given LTCH is based on the date that the LTCH's cost reporting 
period begins during FY 2020, we included an adjustment to account 
for this rolling effective date, consistent with the general 
approach used for the LTCH PPS impact analysis presented in the FY 
2016 IPPS/LTCH PPS final rule (80 FR 49831). This approach accounts 
for the fact that site neutral payment rate cases in FY 2019 that 
are in an LTCH's cost reporting period that begins before October 1, 
2019 continue to be paid under the transitional payment method until 
the start of the LTCH's first cost reporting period beginning on or 
after October 1, 2019. Site neutral payment rate cases whose 
discharges from LTCHs occurring during an LTCH's cost reporting 
period that begins on or after October 1, 2019 will no longer be 
paid under the transitional payment method and will instead be paid 
the site neutral payment rate amount as determined under Sec.  
412.522(c)(1).
    For purposes of this impact analysis, to estimate proposed total 
FY 2020 LTCH PPS payments for site neutral payment rate cases, we 
used the same general approach as was used in the FY 2016 IPPS/LTCH 
PPS final rule with modifications to account for the rolling end 
date to the transitional blended payment rate in FY 2020 instead of 
the rolling effective date for implementation of the transitional 
site neutral payment rate in FY 2016. In summary, under this 
approach, we grouped LTCHs based on the quarter their cost reporting 
periods would begin during FY 2020. For example, LTCHs with cost 
reporting periods that begin during October through December 2019 
would be grouped to site neutral payment rate cases whose discharges 
would occur during the first quarter of FY 2020. For LTCHs grouped 
in each quarter of FY 2020, we modeled those LTCHs' estimated FY 
2020 site neutral payment rate payments under the transitional 
blended payment rate based on the quarter in which the LTCHs in each 
group would continue to be paid the transitional payment method for 
the site neutral payment rate cases.
    For purposes of this estimate, then, we assume the cost 
reporting period is the same for all LTCHs in each of the quarterly 
groups and that this cost reporting period begins on the first day 
of that quarter. (For example, our first group consists of 37 LTCHs 
whose cost reporting period will begin in the first quarter of FY 
2020 so that, for purposes of this estimate, we assume all 37 LTCHs 
will begin their FY 2020 cost reporting period on October 1, 2019.) 
Second, we estimated the proportion of FY 2020 site neutral payment 
rate cases in each of the quarterly groups, and we then assume this 
proportion is applicable for all four quarters of FY 2020. (For 
example, as discussed in more detail below, we estimate the first 
quarter group will discharge 7.1 percent of all FY 2020 site neutral 
payment rate cases and, therefore, we estimate that group of LTCHs 
will discharge 7.1 percent of all FY 2018 site neutral payment rate 
cases in each quarter of FY 2020.) Then, we modeled estimated FY 
2020 payments on a quarterly basis under the LTCH PPS standard 
Federal payment rate based on the assumptions described above. We 
continue to believe that this approach is a reasonable means of 
taking the rolling effective date into account when estimating FY 
2020 payments.
    Based on the fiscal year begin date information in the December 
2018 update of the PSF and the LTCH claims from the December 2018 
update of the FY 2018 MedPAR files for the 384 LTCHs in our database 
used for this proposed rule, we found the following: 7.1 percent of 
site neutral payment rate cases are from 37 LTCHs whose cost 
reporting periods will begin during the first quarter of FY 2020; 
23.4 percent of site neutral payment rate cases are from 94 LTCHs 
whose cost reporting periods will begin in the second quarter of FY 
2020; 9.3 percent of site neutral payment rate cases are from 52 
LTCHs whose cost reporting periods will begin in the third quarter 
of FY 2020; and 60.3 percent of site neutral payment rate cases are 
from 201 LTCHs whose cost reporting periods will begin in the fourth 
quarter of FY 2020. Therefore, the following percentages apply in 
the approach described above:

[[Page 19664]]

     First Quarter FY 2020: 7.1 percent of site neutral 
payment rate cases (that is, the percentage of discharges from LTCHs 
whose FY 2018 cost reporting period will begin in the first quarter 
of FY 2020) are no longer eligible for the transitional blended 
payment method, while the remaining 92.9 percent of site neutral 
payment rate discharges are eligible to be paid under the 
transitional payment method.
     Second Quarter FY 2020: 30.4 percent of site neutral 
payment rate second quarter discharges (that is, the percentage of 
discharges from LTCHs whose FY 2020 cost reporting period will begin 
in the first or second quarter of FY 2020) are no longer eligible 
for the transitional blended payment method, while the remaining 
69.6 percent of site neutral payment rate second quarter discharges 
are eligible to be paid under the transitional payment method.
     Third Quarter FY 2020: 39.7 percent of site neutral 
payment rate third quarter discharges (that is, the percentage of 
discharges from LTCHs whose FY 2020 cost reporting period will begin 
in the first, second, or third quarter of FY 2020) are no longer 
eligible for the transitional blended payment method while the 
remaining 60.3 percent of site neutral payment rate third quarter 
discharges are eligible to be paid under the transitional payment 
method.
     Fourth Quarter FY 2020: 100.0 percent of site neutral 
payment rate fourth quarter discharges (that is, the percentage of 
discharges from LTCHs whose FY 2020 cost reporting period will begin 
in the first, second, third, or fourth quarter of FY 2020) are no 
longer eligible for the transitional blended payment method.
    Based on the FY 2018 LTCH cases that were used for the analysis 
in this proposed rule, approximately 29 percent of those cases were 
classified as site neutral payment rate cases (that is, 29 percent 
of LTCH cases did not meet the patient-level criteria for exclusion 
from the site neutral payment rate). Our Office of the Actuary 
currently estimates that the percent of LTCH PPS cases that will be 
paid at the site neutral payment rate in FY 2020 will not change 
significantly from the most recent historical data. Taking into 
account the transitional blended payment rate and other changes that 
will apply to the site neutral payment rate cases in FY 2020, we 
estimate that aggregate LTCH PPS payments for these site neutral 
payment rate cases will decrease by approximately 4.9 percent (or 
approximately $41 million).
    Approximately 71 percent of LTCH cases are expected to meet the 
patient-level criteria for exclusion from the site neutral payment 
rate in FY 2020, and will be paid based on the LTCH PPS standard 
Federal payment rate for the full year. We estimate that total LTCH 
PPS payments for these LTCH PPS standard Federal payment rate cases 
in FY 2020 will increase approximately 2.3 percent (or approximately 
$79 million). This estimated increase in LTCH PPS payments for LTCH 
PPS standard Federal payment rate cases in FY 2020 is primarily due 
to the proposed 2.7 percent annual update to the LTCH PPS standard 
Federal payment rate for FY 2020 and the estimated 0.3 percent 
decrease in high cost outlier payments discussed in section 
V.D.3.b.(3). of the Addendum to this proposed rule.
    Based on the 384 LTCHs that were represented in the FY 2018 LTCH 
cases that were used for the analyses in this proposed rule 
presented in this Appendix, we estimate that aggregate FY 2019 LTCH 
PPS payments will be approximately $4.274 billion, as compared to 
estimated aggregate FY 2020 LTCH PPS payments of approximately 
$4.311 billion, resulting in an estimated overall increase in LTCH 
PPS payments of approximately $37 million. We note that the 
estimated $37 million increase in LTCH PPS payments in FY 2020 does 
not reflect changes in LTCH admissions or case-mix intensity, which 
will also affect the overall payment effects of the proposed 
policies in this proposed rule.
    The LTCH PPS standard Federal payment rate for FY 2019 is 
$41,558.68. For FY 2020, we are proposing to establish an LTCH PPS 
standard Federal payment rate of $42,950.91 which reflects the 
proposed 2.7 percent annual update to the LTCH PPS standard Federal 
payment rate, the proposed one-time budget neutrality adjustment 
factor of 0.999856 for eliminating the 25-percent threshold policy 
in FY 2020 as discussed in section VII.D. of the preamble of this 
proposed rule, and the proposed area wage budget neutrality factor 
of 1.0064747 to ensure that the changes in the wage indexes and 
labor-related share do not influence aggregate payments. For LTCHs 
that fail to submit data for the LTCH QRP, in accordance with 
section 1886(m)(5)(C) of the Act, we are proposing to establish an 
LTCH PPS standard Federal payment rate of $42,114.47. This proposed 
LTCH PPS standard Federal payment rate reflects the proposed updates 
and factors previously described, as well as the required 2.0 
percentage point reduction to the annual update for failure to 
submit data under the LTCH QRP. We note that the factors previously 
described to determine the proposed FY 2020 LTCH PPS standard 
Federal payment rate are applied to the FY 2019 LTCH PPS standard 
Federal rate set forth under Sec.  412.523(c)(3)(xiv) (that is, 
$41,558.68).
    Table IV shows the estimated impact for LTCH PPS standard 
Federal payment rate cases. The estimated change attributable solely 
to the proposed annual update of 2.7 percent to the LTCH PPS 
standard Federal payment rate is projected to result in an increase 
of 2.6 percent in payments per discharge for LTCH PPS standard 
Federal payment rate cases from FY 2019 to FY 2020, on average, for 
all LTCHs (Column 6). In addition to the proposed annual update to 
the LTCH PPS standard Federal payment rate for FY 2020, the 
estimated increase of 2.6 percent shown in Column 6 of Table IV also 
includes estimated payments for SSO cases, a portion of which are 
not affected by the annual update to the LTCH PPS standard Federal 
payment rate, as well as the reduction that is applied to the annual 
update for LTCHs that do not submit the required LTCH QRP data. 
Therefore, for all hospital categories, the projected increase in 
payments based on the proposed LTCH PPS standard Federal payment 
rate to LTCH PPS standard Federal payment rate cases is somewhat 
less than the proposed 2.7 percent annual update for FY 2020.
    For FY 2020, we are proposing to update the wage index values 
based on the most recent available data, and we are proposing to 
continue to use labor market areas based on the CBSA delineations 
(as discussed in section V.B. of the Addendum to this proposed 
rule). In addition, we are proposing the labor-related share would 
remain at 66.0 percent under the LTCH PPS for FY 2020, based on the 
most recent available data on the relative importance of the labor-
related share of operating and capital costs of the 2013-based LTCH 
market basket. We also are proposing to apply a proposed area wage 
level budget neutrality factor of 1.0064747 to ensure that the 
changes to the wage data and labor-related share do not result in 
any change in estimated aggregate LTCH PPS payments to LTCH PPS 
standard Federal payment rate cases.
    We currently estimate total high cost outlier payments for LTCH 
PPS standard Federal payment rate cases would decrease from FY 2019 
to FY 2020. Based on the FY 2018 LTCH cases that were used for the 
analyses in this proposed rule, we estimate that the FY 2019 high 
cost outlier threshold of $27,121 (as established in the FY 2019 
IPPS/LTCH PPS final rule correction notice) would result in 
estimated high cost outlier payments for LTCH PPS standard Federal 
payment rate cases in FY 2019 that are projected to exceed the 7.975 
percent target. Specifically, we currently estimate that high cost 
outlier payments for LTCH PPS standard Federal payment rate cases 
would be approximately 8.24 percent of the estimated total LTCH PPS 
standard Federal payment rate payments in FY 2019. Combined with our 
estimate that FY 2020 high cost outlier payments for LTCH PPS 
standard Federal payment rate cases would be 7.975 percent of 
estimated total LTCH PPS standard Federal payment rate payments in 
FY 2020, this would result in an estimated decrease in high cost 
outlier payments of approximately 0.3 percent between FY 2019 and FY 
2020. We note that, consistent with past practice, in calculating 
these estimated high cost outlier payments, we increased estimated 
costs by an inflation factor of 6.0 percent (determined by the 
Office of the Actuary) to update the FY 2018 costs of each case to 
FY 2020.
    Table IV shows the estimated impact of the proposed payment rate 
and proposed policy changes on LTCH PPS payments for LTCH PPS 
standard Federal payment rate cases for FY 2020 by comparing 
estimated FY 2019 LTCH PPS payments to estimated FY 2020 LTCH PPS 
payments. (As noted earlier, our analysis does not reflect changes 
in LTCH admissions or case-mix intensity.) We note that these 
impacts do not include LTCH PPS site neutral payment rate cases for 
the reasons discussed in section I.J.4. of this Appendix.
    As we discuss in detail throughout this proposed rule, based on 
the most recent available data, we believe that the provisions of 
this proposed rule relating to the LTCH PPS, which are projected to 
result in an overall increase in estimated aggregate LTCH PPS 
payments, and the resulting LTCH PPS

[[Page 19665]]

payment amounts would result in appropriate Medicare payments that 
are consistent with the statute.

2. Impact on Rural Hospitals

    For purposes of section 1102(b) of the Act, we define a small 
rural hospital as a hospital that is located outside of an urban 
area and has fewer than 100 beds. As shown in Table IV, we are 
projecting a 2.2 percent increase in estimated payments for LTCH PPS 
standard Federal payment rate cases for LTCHs located in a rural 
area. This estimated impact is based on the FY 2018 data for the 19 
rural LTCHs (out of 384 LTCHs) that were used for the impact 
analyses shown in Table IV.

3. Effect of Proposed Payment Adjustment for LTCH Discharges That Do 
Not Meet the Applicable Discharge Payment Percentage

    In section VII.C. of the preamble of this proposed rule, we 
discuss our proposal to implement the requirements of section 
1886(m)(6)(C)(ii) of the Act, which specifies for cost reporting 
periods beginning on or after October 1, 2019, any LTCH with a 
discharge payment percentage for the period that is not at least 50 
percent will be informed of such a fact, and all of the LTCH's 
discharges in each successive cost reporting period will be paid the 
payment amount that would apply under subsection (d) for the 
discharge if the hospital were a subsection (d) hospital, subject to 
the process for reinstatement provided for by section 
1886(m)(6)(C)(iii) of the Act. Specifically, we are proposing to 
continue to use our existing policy to calculate the discharge 
payment percentage and to inform LTCHs when their discharge payment 
percentage for the period is not at least 50 percent. We also are 
proposing that an LTCH would become subject to this payment 
adjustment for each cost reporting period after its calculated 
discharge payment percentage that is not at least 50 percent.
    To establish a reinstatement process as required by the statute, 
we are proposing that the payment adjustment for an LTCH would be 
discontinued beginning with the discharges occurring in the cost 
reporting period after the LTCH's discharge payment percentage is 
calculated to be at least 50 percent. Furthermore, we are proposing 
a probationary-cure period that would allow an LTCH the opportunity 
to have the payment adjustment suspended for a cost reporting period 
if, for the period of at least 5 consecutive months of the 
immediately preceding 6-month period, the discharge payment 
percentage is at least 50 percent. Under the proposed probationary-
cure period, an LTCH would have an opportunity to delay the 
application of the payment adjustment until the end of the cost 
reporting period, and waive the payment adjustment for that cost 
reporting period if the discharge payment percentage for that cost 
reporting period is ultimately found to be at least 50 percent.
    As noted above, under our proposal, an LTCH would be first 
subject to a potential payment adjustment based on the hospital's 
discharge payment percentage for its FY 2020 cost reporting period. 
Hospitals would be notified of that percentage in FY 2021, with the 
payment adjustment taking effect in FY 2022. Therefore, we do not 
estimate any effect on LTCH PPS payments until FY 2022. Based on the 
most recent information available at the time of development of this 
proposed rule, we estimate that, for FY 2022, our proposal would 
reduce Medicare spending under the LTCH PPS by approximately $60 
million. While we expect that there would be less than the maximum 
estimated savings due to the proposed inclusion of a provisional-
cure period, at this time we do not have a reliable estimate of the 
effect of that policy on the estimated savings.
    Based on the FY 2017 claims data (the most recent set of full 
claims available), on average, each discharge from an LTCH that 
fails to meet the 50-percent patient discharge threshold would 
result in a payment decrease of approximately $20,200 for LTCH PPS 
standard Federal payment rate discharges and an estimated payment 
increase of approximately $1,700 for site neutral payment rate 
discharges. To estimate the number of discharges, we assumed that 
LTCHs that fail to meet the 50-percent patient discharge threshold 
are those whose discharge payment percentage is below 40 percent 
based on FY 2017 claims data. We expect that an LTCH whose discharge 
payment percentage is at least 40 percent based on FY 2017 claims 
data will adjust its admission/discharge practices, such that it 
would no longer be below the 50-percent patient discharge threshold. 
Applying our actuary's assumption of a 74-percent to 26-percent 
split between LTCH PPS standard Federal payment rate discharges and 
site neutral payment rate discharges in FY 2022, we estimate there 
would be 3,475 LTCH PPS standard Federal payment rate discharges and 
8,670 site neutral payment rate discharges. The FY 2017 estimate is 
inflated to FY 2022, resulting in estimated savings of $60 million 
(comprised of approximately $80 million in savings from LTCH PPS 
standard Federal payment rate discharges and approximately $20 
million in costs from site neutral payment rate discharges).

4. Anticipated Effects of Proposed LTCH PPS Payment Rate Changes and 
Policy Changes

a. Budgetary Impact

    Section 123(a)(1) of the BBRA requires that the PPS developed 
for LTCHs ``maintain budget neutrality.'' We believe that the 
statute's mandate for budget neutrality applies only to the first 
year of the implementation of the LTCH PPS (that is, FY 2003). 
Therefore, in calculating the FY 2003 standard Federal payment rate 
under Sec.  412.523(d)(2), we set total estimated payments for FY 
2003 under the LTCH PPS so that estimated aggregate payments under 
the LTCH PPS were estimated to equal the amount that would have been 
paid if the LTCH PPS had not been implemented.
    Section 1886(m)(6)(A) of the Act establishes a dual rate LTCH 
PPS payment structure with two distinct payment rates for LTCH 
discharges beginning in FY 2016. Under this statutory change, LTCH 
discharges that meet the patient-level criteria for exclusion from 
the site neutral payment rate (that is, LTCH PPS standard Federal 
payment rate cases) are paid based on the LTCH PPS standard Federal 
payment rate. LTCH discharges paid at the site neutral payment rate 
are generally paid the lower of the IPPS comparable per diem amount, 
reduced by 4.6 percent for FYs 2018 through 2026, including any 
applicable HCO payments, or 100 percent of the estimated cost of the 
case, reduced by 4.6 percent. The statute also establishes a 
transitional payment method for cases that are paid at the site 
neutral payment rate for LTCH discharges occurring in cost reporting 
periods beginning during FY 2016 through FY 2019, under which the 
site neutral payment rate cases are paid based on a blended payment 
rate calculated as 50 percent of the applicable site neutral payment 
rate amount for the discharge and 50 percent of the applicable LTCH 
PPS standard Federal payment rate for the discharge.
    As discussed in section I.J. of this Appendix, we project an 
increase in aggregate LTCH PPS payments in FY 2020 of approximately 
$37 million. This estimated increase in payments reflects the 
projected increase in payments to LTCH PPS standard Federal payment 
rate cases of approximately $79 million and the projected decrease 
in payments to site neutral payment rate cases of approximately $41 
million under the dual rate LTCH PPS payment rate structure required 
by the statute beginning in FY 2016.
    As discussed in section V.D. of the Addendum to this proposed 
rule, our actuaries project cost and resource changes for site 
neutral payment rate cases due to the site neutral payment rates 
required under the statute. Specifically, our actuaries project that 
the costs and resource use for cases paid at the site neutral 
payment rate will likely be lower, on average, than the costs and 
resource use for cases paid at the LTCH PPS standard Federal payment 
rate, and will likely mirror the costs and resource use for IPPS 
cases assigned to the same MS-DRG. While we are able to incorporate 
this projection at an aggregate level into our payment modeling, 
because the historical claims data that we are using in this 
proposed rule to project estimated FY 2020 LTCH PPS payments (that 
is, FY 2018 LTCH claims data) do not reflect this actuarial 
projection, we are unable to model the impact of the proposed change 
in LTCH PPS payments for site neutral payment rate cases at the same 
level of detail with which we are able to model the impacts of the 
proposed changes to LTCH PPS payments for LTCH PPS standard Federal 
payment rate cases. Therefore, Table IV only reflects proposed 
changes in LTCH PPS payments for LTCH PPS standard Federal payment 
rate cases and, unless otherwise noted, the remaining discussion in 
section I.J.4. of this Appendix refers only to the impact on 
proposed LTCH PPS payments for LTCH PPS standard Federal payment 
rate cases. In the following section, we present our provider impact 
analysis for the proposed changes that affect LTCH PPS payments for 
LTCH PPS standard Federal payment rate cases.

b. Impact on Providers

    The basic methodology for determining a per discharge payment 
for LTCH PPS standard Federal payment rate cases is

[[Page 19666]]

currently set forth under Sec. Sec.  412.515 through 412.533 and 
412.535. In addition to adjusting the LTCH PPS standard Federal 
payment rate by the MS-LTC-DRG relative weight, we make adjustments 
to account for area wage levels and SSOs. LTCHs located in Alaska 
and Hawaii also have their payments adjusted by a COLA. Under our 
application of the dual rate LTCH PPS payment structure, the LTCH 
PPS standard Federal payment rate is generally only used to 
determine payments for LTCH PPS standard Federal payment rate cases 
(that is, those LTCH PPS cases that meet the statutory criteria to 
be excluded from the site neutral payment rate). LTCH discharges 
that do not meet the patient-level criteria for exclusion are paid 
the site neutral payment rate, which we are calculating as the lower 
of the IPPS comparable per diem amount as determined under Sec.  
412.529(d)(4), reduced by 4.6 percent for FYs 2018 through 2026, 
including any applicable outlier payments, or 100 percent of the 
estimated cost of the case as determined under existing Sec.  
412.529(d)(2). In addition, when certain thresholds are met, LTCHs 
also receive HCO payments for both LTCH PPS standard Federal payment 
rate cases and site neutral payment rate cases that are paid at the 
IPPS comparable per diem amount.
    To understand the impact of the proposed changes to the LTCH PPS 
payments for LTCH PPS standard Federal payment rate cases presented 
in this proposed rule on different categories of LTCHs for FY 2020, 
it is necessary to estimate payments per discharge for FY 2019 using 
the rates, factors, and the policies established in the FY 2019 
IPPS/LTCH PPS final rule and estimate payments per discharge for FY 
2020 using the proposed rates, factors, and the policies in this FY 
2020 IPPS/LTCH PPS proposed rule (as discussed in section VII. of 
the preamble of this proposed rule and section V. of the Addendum to 
this proposed rule). As discussed elsewhere in this proposed rule, 
these estimates are based on the best available LTCH claims data and 
other factors, such as the application of inflation factors to 
estimate costs for HCO cases in each year. The resulting analyses 
can then be used to compare how our policies applicable to LTCH PPS 
standard Federal payment rate cases affect different groups of 
LTCHs.
    For the following analysis, we group hospitals based on 
characteristics provided in the OSCAR data, cost report data in 
HCRIS, and PSF data. Hospital groups included the following:
     Location: Large urban/other urban/rural.
     Participation date.
     Ownership control.
     Census region.
     Bed size.

c. Calculation of Proposed LTCH PPS Payments for LTCH PPS Standard 
Federal Payment Rate Cases

    For purposes of this impact analysis, to estimate the per 
discharge payment effects of our proposed policies on proposed 
payments for LTCH PPS standard Federal payment rate cases, we 
simulated FY 2019 and proposed FY 2020 payments on a case-by-case 
basis using historical LTCH claims from the FY 2018 MedPAR files 
that met or would have met the criteria to be paid at the LTCH PPS 
standard Federal payment rate if the statutory patient-level 
criteria had been in effect at the time of discharge for all cases 
in the FY 2018 MedPAR files. For modeling FY 2019 LTCH PPS payments, 
we used the FY 2019 standard Federal payment rate of $41,558.68 (or 
$40,738.57 for LTCHs that failed to submit quality data as required 
under the requirements of the LTCH QRP). Similarly, for modeling 
payments based on the proposed FY 2020 LTCH PPS standard Federal 
payment rate, we used the proposed FY 2020 standard Federal payment 
rate of $42,950.91 (or $42,114.47 for LTCHs that failed to submit 
quality data as required under the requirements of the LTCH QRP). In 
each case, we applied the applicable adjustments for area wage 
levels and the COLA for LTCHs located in Alaska and Hawaii. 
Specifically, for modeling FY 2019 LTCH PPS payments, we used the 
current FY 2019 labor-related share (66.0 percent), the wage index 
values established in the Tables 12A and 12B listed in the Addendum 
to the FY 2019 IPPS/LTCH PPS final rule (which are available via the 
internet on the CMS website), the FY 2019 HCO fixed-loss amount for 
LTCH PPS standard Federal payment rate cases of $27,121 (as 
reflected in the FY 2019 IPPS/LTCH PPS correction notice to the 
final rule), and the FY 2019 COLA factors (shown in the table in 
section V.C. of the Addendum to that final rule) to adjust the FY 
2019 nonlabor-related share (34.0 percent) for LTCHs located in 
Alaska and Hawaii. Similarly, for modeling proposed FY 2020 LTCH PPS 
payments, we used the proposed FY 2020 LTCH PPS labor-related share 
(66.0 percent), the proposed FY 2020 wage index values from Tables 
12A and 12B listed in section VI. of the Addendum to this proposed 
rule (which are available via the internet on the CMS website), the 
proposed FY 2020 fixed-loss amount for LTCH PPS standard Federal 
payment rate cases of $29,997 (as discussed in section V.D.3. of the 
Addendum to this proposed rule), and the proposed FY 2020 COLA 
factors (shown in the table in section V.C. of the Addendum to this 
proposed rule) to adjust the FY 2020 nonlabor-related share (34.0 
percent) for LTCHs located in Alaska and Hawaii. We note that in 
modeling payments for HCO cases for LTCH PPS standard Federal 
payment rate cases, we applied an inflation factor of 2.7 percent 
(determined by the Office of the Actuary) to update the FY 2018 
costs of each case to FY 2019, and an inflation factor of 6.0 
percent (determined by the Office of the Actuary) to update the FY 
2018 costs of each case to FY 2020.
    The impacts that follow reflect the estimated ``losses'' or 
``gains'' among the various classifications of LTCHs from FY 2019 to 
FY 2020 based on the proposed payment rates and proposed policy 
changes applicable to LTCH PPS standard Federal payment rate cases 
presented in this proposed rule. Table IV illustrates the estimated 
aggregate impact of the proposed change in LTCH PPS payments for 
LTCH PPS standard Federal payment rate cases among various 
classifications of LTCHs. (As discussed previously, these impacts do 
not include LTCH PPS site neutral payment rate cases.)
     The first column, LTCH Classification, identifies the 
type of LTCH.
     The second column lists the number of LTCHs of each 
classification type.
     The third column identifies the number of LTCH cases 
expected to meet the LTCH PPS standard Federal payment rate 
criteria.
     The fourth column shows the estimated FY 2019 payment 
per discharge for LTCH cases expected to meet the LTCH PPS standard 
Federal payment rate criteria (as described previously).
     The fifth column shows the estimated FY 2020 payment 
per discharge for LTCH cases expected to meet the LTCH PPS standard 
Federal payment rate criteria (as described previously).
     The sixth column shows the percentage change in 
estimated payments per discharge for LTCH cases expected to meet the 
LTCH PPS standard Federal payment rate criteria from FY 2019 to FY 
2020 due to the proposed annual update to the standard Federal rate 
(as discussed in section V.A.2. of the Addendum to this proposed 
rule).
     The seventh column shows the percentage change in 
estimated payments per discharge for LTCH PPS standard Federal 
payment rate cases from FY 2019 to FY 2020 for proposed changes to 
the area wage level adjustment (that is, the wage indexes and the 
labor-related share), including the application of the proposed area 
wage level budget neutrality factor (as discussed in section V.B. of 
the Addendum to this proposed rule).
     The eighth column shows the percentage change in 
estimated payments per discharge for LTCH PPS standard Federal 
payment rate cases from FY 2019 (Column 4) to FY 2020 (Column 5) for 
all proposed changes.
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d. Results

    Based on the FY 2018 LTCH cases (from 384 LTCHs) that were used 
for the analyses in this proposed rule, we have prepared the 
following summary of the impact (as shown in Table IV) of the 
proposed LTCH PPS payment rate and proposed policy changes for LTCH 
PPS standard Federal payment rate cases presented in this proposed 
rule. The impact analysis in Table IV shows that estimated payments 
per discharge for LTCH PPS standard Federal payment rate cases are 
projected to increase 2.3 percent, on average, for all LTCHs from FY 
2019 to FY 2020 as a result of the proposed payment rate and 
proposed policy changes applicable to LTCH PPS standard Federal 
payment rate cases presented in this proposed rule. This estimated 
2.3 percent increase in LTCH PPS

[[Page 19670]]

payments per discharge was determined by comparing estimated FY 2020 
LTCH PPS payments (using the proposed payment rates and factors 
discussed in this proposed rule) to estimated FY 2019 LTCH PPS 
payments for LTCH discharges which would be LTCH PPS standard 
Federal payment rate cases if the dual rate LTCH PPS payment 
structure was or had been in effect at the time of the discharge (as 
described in section I.J.4. of this Appendix).
    As stated previously, we are proposing to update the LTCH PPS 
standard Federal payment rate for FY 2020 by 2.7 percent. For LTCHs 
that fail to submit quality data under the requirements of the LTCH 
QRP, as required by section 1886(m)(5)(C) of the Act, a 2.0 
percentage point reduction is applied to the annual update to the 
LTCH PPS standard Federal payment rate. In addition, we are 
proposing to apply the one-time budget neutrality adjustment factor 
of 0.999856 for the cost of eliminating the 25-percent threshold 
policy in FY 2020 as discussed in section VII.D. of the preamble of 
this proposed rule. Consistent with Sec.  412.523(d)(4), we also are 
proposing to apply an area wage level budget neutrality factor to 
the proposed FY 2020 LTCH PPS standard Federal payment rate of 
1.0064747, based on the best available data at this time, to ensure 
that any proposed changes to the area wage level adjustment (that 
is, the proposed annual update of the wage index values and labor-
related share) will not result in any change (increase or decrease) 
in estimated aggregate LTCH PPS standard Federal payment rate 
payments. As we also explained earlier in this section, for most 
categories of LTCHs (as shown in Table IV, Column 6), the estimated 
payment increase due to the proposed 2.7 percent annual update to 
the LTCH PPS standard Federal payment rate is projected to result in 
approximately a 2.6 percent increase in estimated payments per 
discharge for LTCH PPS standard Federal payment rate cases for all 
LTCHs from FY 2019 to FY 2020. This is because our estimate of the 
proposed changes in payments due to the proposed update to the LTCH 
PPS standard Federal payment rate also reflects estimated payments 
for SSO cases that are paid using a methodology that is not entirely 
affected by the update to the LTCH PPS standard Federal payment 
rate. Consequently, for certain hospital categories, we estimate 
that payments to LTCH PPS standard Federal payment rate cases may 
increase by less than 2.7 percent due to the proposed annual update 
to the LTCH PPS standard Federal payment rate for FY 2020.

(1) Location

    Based on the most recent available data, the vast majority of 
LTCHs are located in urban areas. Only approximately 5 percent of 
the LTCHs are identified as being located in a rural area, and 
approximately 4 percent of all LTCH PPS standard Federal payment 
rate cases are expected to be treated in these rural hospitals. The 
impact analysis presented in Table IV shows that the proposed 
overall average percent increase in estimated payments per discharge 
for LTCH PPS standard Federal payment rate cases from FY 2019 to FY 
2020 for all hospitals is 2.3 percent. For rural LTCHs, estimated 
payments for LTCH PPS standard Federal payment rate cases are 
expected to increase 2.2 percent. For urban LTCHs, we estimate an 
increase of 2.3 percent from FY 2019 to FY 2020. Among the urban 
LTCHs, large urban LTCHs are projected to experience an increase of 
2.2 percent in estimated payments per discharge for LTCH PPS 
standard Federal payment rate cases from FY 2019 to FY 2020, and 
such payments for the remaining urban LTCHs are projected to 
increase 2.4 percent, as shown in Table IV.

(2) Participation Date

    LTCHs are grouped by participation date into four categories: 
(1) Before October 1983; (2) between October 1983 and September 
1993; (3) between October 1993 and September 2002; and (4) October 
2002 and after. Based on the most recent available data, the 
categories of LTCHs with the largest expected percentage of LTCH PPS 
standard Federal payment rate cases (approximately 47 percent) are 
in LTCHs that began participating in the Medicare program between 
October 1993 and September 2002, and they are projected to 
experience a 2.4 percent increase in estimated payments per 
discharge for LTCH PPS standard Federal payment rate cases from FY 
2019 to FY 2020, as shown in Table IV.
    Approximately 11 percent of LTCHs began participating in the 
Medicare program before October 1983, and these LTCHs are projected 
to experience an average percent increase of 2.0 percent in 
estimated payments per discharge for LTCH PPS standard Federal 
payment rate cases from FY 2019 to FY 2020. Approximately 3 percent 
of LTCHs began participating in the Medicare program between October 
1983 and September 1993, and these LTCHs are projected to experience 
an increase of 2.6 percent in estimated payments for LTCH PPS 
standard Federal payment rate cases from FY 2019 to FY 2020. LTCHs 
that began participating in the Medicare program after October 1, 
2002, which treat approximately 37 percent of all LTCH PPS standard 
Federal payment rate cases, are projected to experience a 2.2 
percent increase in estimated payments from FY 2019 to FY 2020.

(3) Ownership Control

    LTCHs are grouped into three categories based on ownership 
control type: voluntary, proprietary, and government. Based on the 
most recent available data, approximately 20 percent of LTCHs are 
identified as voluntary (Table IV). The majority (approximately 77 
percent) of LTCHs are identified as proprietary, while government 
owned and operated LTCHs represent approximately 4 percent of LTCHs. 
Based on ownership type, voluntary LTCHs are expected to experience 
a 2.5 percent increase in payments to LTCH PPS standard Federal 
payment rate cases, while proprietary LTCHs are expected to 
experience an average increase of 2.3 percent in payments to LTCH 
PPS standard Federal payment rate cases. Government owned and 
operated LTCHs, meanwhile, are expected to experience a 2.5 percent 
increase in payments to LTCH PPS standard Federal payment rate cases 
from FY 2019 to FY 2020.

(4) Census Region

    Estimated payments per discharge for LTCH PPS standard Federal 
payment rate cases for FY 2020 are projected to increase across all 
census regions. LTCHs located in the South Atlantic are projected to 
experience the largest increase at 2.5 percent followed by the East 
North Central at 2.4 percent. The remaining regions are projected to 
increase by either 2.2 or 2.3 percent. These regional variations are 
largely due to proposed updates in the wage index.

(5) Bed Size

    LTCHs are grouped into six categories based on bed size: 0-24 
beds; 25-49 beds; 50-74 beds; 75-124 beds; 125-199 beds; and greater 
than 200 beds. We project that LTCHs with 0-24 beds will experience 
the largest increase in payments for LTCH PPS standard Federal 
payment rate cases of 2.9 percent. LTCHs with 25-49 beds and 50-74 
beds are both projected to experience an increase of 2.2 percent. 
LTCHs with 75-124 beds and LTCHs with 200+ beds are both projected 
to experience an increase of 2.5 percent. LTCHs with 125-199 beds 
are projected to experience an increase in payments of 2.3 percent.

5. Effect on the Medicare Program

    As stated previously, we project that the provisions of this 
proposed rule would result in an increase in estimated aggregate 
LTCH PPS payments to LTCH PPS standard Federal payment rate cases in 
FY 2020 relative to FY 2019 of approximately $79 million (or 
approximately 2.3 percent) for the 384 LTCHs in our database. 
Although, as stated previously, the hospital-level impacts do not 
include LTCH PPS site neutral payment rate cases, we estimate that 
the provisions of this proposed rule would result in a decrease in 
estimated aggregate LTCH PPS payments to site neutral payment rate 
cases in FY 2020 relative to FY 2019 of approximately $41 million 
(or approximately -4.9 percent) for the 384 LTCHs in our database. 
Therefore, we project that the provisions of this proposed rule 
would result in an increase in estimated aggregate LTCH PPS payments 
for all LTCH cases in FY 2020 relative to FY 2019 of approximately 
$37 million (or approximately 0.9 percent) for the 384 LTCHs in our 
database.

6. Effect on Medicare Beneficiaries

    Under the LTCH PPS, hospitals receive payment based on the 
average resources consumed by patients for each diagnosis. We do not 
expect any changes in the quality of care or access to services for 
Medicare beneficiaries as a result of this proposed rule, but we 
continue to expect that paying prospectively for LTCH services will 
enhance the efficiency of the Medicare program. As discussed above, 
we do not expect the continued implementation of the site neutral 
payment system to have a negative impact on access to or quality of 
care, as demonstrated in areas where there is little or no LTCH 
presence, general short-term acute care hospitals are effectively 
providing treatment for the same types of patients that are treated 
in LTCHs.

[[Page 19671]]

K. Effects of Proposed Requirements for the Hospital Inpatient 
Quality Reporting (IQR) Program

    In section VIII.A. of the preamble of this proposed rule, we 
discuss our current and proposed requirements for hospitals to 
report quality data under the Hospital IQR Program in order to 
receive the full annual percentage increase for the FY 2021 payment 
determination and subsequent years.
    In this proposed rule, we are proposing to: (1) Adopt two new 
opioid-related eCQMs, Safe Use of Opioids--Concurrent Prescribing 
eCQM (NQF #3316e) and Hospital Harm--Opioid-Related Adverse Events 
eCQM, beginning with the CY 2021 reporting period/FY 2023 payment 
determination; (2) adopt the Hybrid Hospital-Wide Readmission 
Measure with Claims and Electronic Health Record Data (Hybrid HWR 
measure) (NQF #2879) in a stepwise manner, beginning with two years 
of voluntary reporting periods which would run from July 1, 2021 
through June 30, 2022, and from July 1, 2022 through June 30, 2023, 
before requiring reporting of the measure for the reporting period 
that would run from July 1, 2023 through June 30, 2024, impacting 
the FY 2026 payment determination and subsequent years; (3) remove 
the Claims-Based Hospital-Wide All-Cause Unplanned Readmission 
Measure (NQF #1789) (HWR claims-only measure) beginning with the FY 
2026 payment determination; (4) extend the current eCQM reporting 
and submission requirements for the CY 2020 reporting period/FY 2022 
payment determination and CY 2021 reporting period/FY 2023 payment 
determination; (5) change the eCQM reporting and submission 
requirements for the CY 2022 reporting period/FY 2024 payment 
determination, such that hospitals would be required to report one, 
self-selected calendar quarter of data for: (a) Three self-selected 
eCQMs, and (b) the proposed Safe Use of Opioids--Concurrent 
Prescribing eCQM (NQF #3316e), for a total of four eCQMs; (6) 
continue requiring that EHRs be certified to all available eCQMs 
used in the Hospital IQR Program for the CY 2020 reporting period/FY 
2022 payment determination and subsequent years; and (7) establish 
reporting and submission requirements for the Hybrid HWR measure.
    We estimate a total information collection burden increase of 
2,211 hours (associated with our proposal to adopt the Hybrid HWR 
measure) and a total cost increase related to information collection 
of approximately $83,266 (due to this proposal and our updated 
hourly wage plus benefits estimate), beginning with the first 
voluntary reporting period, which runs from July 1, 2021 through 
June 30, 2022. We refer readers to section X.B.3. of the preamble of 
this proposed rule (information collection requirements) for a 
detailed discussion of the calculations estimating the changes to 
the burden for submitting data to the Hospital IQR Program.
    With regard to our proposals to add two new opioid-related eCQMs 
to the eCQM measure set, while we expect no change to the 
information collection burden for the Hospital IQR Program as 
discussed in section X.B.3.b. of the preamble of this proposed rule 
because we are also propos eCQM reporting requirements such that the 
total number of eCQMs that would be reported and the total quarters 
of data would remain unchanged from previously finalized 
requirements, we expect some investment in EHR system updates. We 
are also proposing that hospitals use certified electronic heath 
record technology (CEHRT) that are certified to report all available 
eCQMs. We expect no change to the information collection burden for 
the Hospital IQR Program as discussed in section X.B.3.e.(3) of the 
preamble of this proposed rule because this policy does not require 
hospitals to submit new data to CMS and we do not require CEHRT to 
be recertified each time it is updated to a more recent version of 
the eCQM electronic specifications. However, for certifying new 
eCQMs in the eCQM measure set, we expect some costs for hospitals 
and EHR vendors in certifying the two new proposed eCQMs so that 
hospitals have the option to report the new eCQMs if they are 
finalized. For all of these proposals, due to the differences in the 
build of respective CEHRT deployed in hospitals, the mapping 
required to capture required data for measure calculation, and the 
range of hospital participation in the development, implementation, 
and testing of new CEHRT functionality, an estimated cost impact of 
the proposals is not quantifiable as it will vary by CEHRT and 
hospital.
    Historically, 100 hospitals, on average, that participate in the 
Hospital IQR Program do not receive the full annual percentage 
increase in any fiscal year due to the failure to meet all 
requirements of this Program. We anticipate that the number of 
hospitals not receiving the full annual percentage increase will be 
approximately the same as in past years.

L. Effects of Proposed Requirements for the PPS-Exempt Cancer 
Hospital Quality Reporting (PCHQR) Program

    In section VIII.B. of the preamble of this proposed rule, we 
discuss our proposed policies for the quality data reporting program 
for PPS-exempt cancer hospitals (PCHs), which we refer to as the 
PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program. The 
PCHQR Program is authorized under section 1866(k) of the Act, which 
was added by section 3005 of the Affordable Care Act. There is no 
financial impact to PCH Medicare reimbursement if a PCH does not 
submit data.
    In section VIII.B.3.b. of the preamble of this proposed rule, we 
are proposing to remove one web-based, structural measure beginning 
with the FY 2022 program year: External Beam Radiotherapy (EBRT) for 
Bone Metastases (formerly NQF #1822). In addition, in section 
VIII.B.4. of the preamble of this proposed rule, we are proposing to 
adopt a claims-based measure for the FY 2022 program year and 
subsequent years: Surgical Treatment Complications for Localized 
Prostate Cancer.
    As explained in section X.B.4. of the preamble of this proposed 
rule, we anticipate that the proposed removal of the External Beam 
Radiotherapy (EBRT) for Bone Metastases (formerly NQF #1822) measure 
will reduce the overall burden on participating PCHs by 15-mins per 
PCH. We estimate a total annual reduction of approximately 3 hours 
for all 11 PCHs (15 minutes x 11 PCHs/60 minutes per hour), due to 
the proposed removal of this measure.
    We do not anticipate any change in burden on the PCHs associated 
with our proposed adoption of the Surgical Treatment Complications 
for Localized Prostate Cancer measure into the PCHQR Program 
beginning with the FY 2022 program year. This measure is claims-
based and does not require PCHs to report any additional data beyond 
that already submitted on Medicare administrative claims for payment 
purposes. Therefore, we do not believe that there would be any 
associated change in burden resulting from this proposal.

M. Effects of Proposed Requirements for the Long-Term Care Hospital 
Quality Reporting Program (LTCH QRP)

    Under the LTCH QRP, the Secretary must reduce 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 has not 
complied with the LTCH QRP requirements specified for that fiscal 
year. Information is not available to determine the precise number 
of LTCHs that will not meet the requirements to receive the full 
annual update for the FY 2020 payment determination.
    We believe that the burden and costs associated with the LTCH 
QRP is the time and effort associated with complying with the 
requirements of the LTCH QRP. We intend to closely monitor the 
effects of this quality reporting program on LTCHs to help 
facilitate successful reporting outcomes through ongoing stakeholder 
education, national trainings, and help desk support.
    We refer readers to section X.B.6. of the preamble of this 
proposed rule (information collection requirements) for a detailed 
discussion of the burden associated with the proposed new 
requirements for the LTCH QRP.

N. Effects of Proposed Requirements Regarding the Promoting 
Interoperability Program

    In section VIII.D. of the preamble of this proposed rule, we 
discuss our current and proposed requirements for eligible hospitals 
and CAHs participating in the Medicare and Medicaid Promoting 
Interoperability Programs.
    In this proposed rule, we are proposing the following changes to 
the Medicare Promoting Interoperability Program: (1) Eliminate the 
requirement that, for the FY 2020 payment adjustment year, for an 
eligible hospital that has not successfully demonstrated it is a 
meaningful EHR user in a prior year, the EHR reporting period in CY 
2019 must end before and the eligible hospital must successfully 
register for and attest to meaningful use no later than October 1, 
2019; (2) establish an EHR reporting period of a minimum of any 
continuous 90-day period in CY 2021 for new and returning 
participants (eligible hospitals and CAHs) in the Medicare Promoting 
Interoperability Program attesting to CMS; (3) require that the 
Medicare Promoting Interoperability Program measure actions must 
occur within the EHR reporting period

[[Page 19672]]

beginning with the EHR reporting period in CY 2020; (4) revise the 
Query of PDMP measure to change the reporting requirement from 
numerator and denominator to a ``yes/no'' response beginning with CY 
2019 for eligible hospitals and CAHs that attest to CMS under the 
Medicare Promoting Interoperability Program, make it an optional 
measure worth five bonus points in CY 2020, remove the exclusions 
associated with this measure in CY 2020, and clearly state our 
intended policy that the measure is worth a full 5 bonus points in 
CY 2019 and CY 2020; (5) change the maximum points available for the 
e-Prescribing measure to 10 points beginning in CY 2020, in the 
event we finalize the proposed changes to the Query of PDMP measure; 
(6) remove the Verify Opioid Treatment Agreement measure beginning 
in CY 2020 and clearly state our intended policy that the measure is 
worth a full 5 bonus points in CY 2019; and (7) revise the Support 
Electronic Referral Loops by Receiving and Incorporating Health 
Information measure to more clearly capture the previously 
established policy regarding CHERT use. We are also proposing to 
amend our regulations to incorporate several of these proposals.
    For CQM reporting under the Medicare and Medicaid Promoting 
Interoperability Programs, in section VIII.D.6. of the preamble of 
this proposed rule, we are making a number of proposals with respect 
to the reporting of CQM data, including proposing to add two opioid-
related measures beginning with the reporting period in CY 2021 and 
proposing the reporting period, reporting criteria, submission 
period, and form and method requirements for CQM reporting in CY 
2020. However, for the reporting period in CY 2020, these proposals 
are continuations of current policies and therefore we do not 
believe that there would be a change in burden for CY 2020.
    As explained in section X.B.9. of the preamble of this proposed 
rule, we estimate for CY 2020 a total information collection burden 
decrease of 2,200 hours, associated with our proposal to revise the 
Query of PDMP measure to change the reporting requirement from 
numerator and denominator to a ``yes/no'' response beginning with CY 
2019 for eligible hospitals and CAHs that attest to CMS under the 
Medicare Promoting Interoperability Program, and a total cost 
decrease of $130,102.50 related to information collection burden 
cost estimates due to this proposal and our updated hourly wage plus 
benefits estimate.

O. Alternatives Considered

    This proposed rule contains a range of policies. It also 
provides descriptions of the statutory provisions that are 
addressed, identifies the proposed policies, and presents rationales 
for our decisions and, where relevant, alternatives that were 
considered.

1. Wage Index

    We considered a number of alternatives to our proposed policies 
discussed in section III.N.3. of the preamble of this proposed rule 
to address wage index disparities. As described more fully in 
section III.N.3.b. of the preamble of this proposed rule, we are 
proposing to maintain budget neutrality for our proposal to increase 
the wage index for hospitals with wage index values below the 25th 
percentile wage index value (that is, low wage index hospitals) by 
reducing the wage index of hospitals with wage index values above 
the 75th percentile wage index value (that is, high wage index 
hospitals). Specifically, as described in section III.N.3.b. of this 
proposed rule, we are proposing to implement budget neutrality by 
reducing the distance between the otherwise applicable wage index 
for high wage index hospitals and the 75th percentile wage index 
across all hospitals. As an alternative to this proposed budget 
neutrality approach, we considered applying a budget neutrality 
factor to the standardized amount rather than focusing the 
adjustment on the wage index of high wage index hospitals. This 
alternative approach would have been similar to the budget 
neutrality approach proposed for the transition, as described more 
fully in section III.N.3.d. of the preamble of this proposed rule.
    As another alternative to addressing wage index disparities, we 
also considered mirroring our proposed approach of raising the wage 
index for low wage index hospitals in reducing the wage index values 
for high wage index hospitals. As described more fully in section 
III.N.3.a. of the preamble of this proposed rule, we are proposing 
to increase the wage index for hospitals with a wage index below the 
25th percentile wage index. The proposed increase in the wage index 
for these hospitals would be equal to half the difference between 
the otherwise applicable final wage index value for these hospitals 
and the 25th percentile wage index value. Under the alternative 
considered, we also would decrease the wage index for hospitals with 
a wage index above the 75th percentile wage index by half the 
difference between the otherwise applicable final wage index value 
for these hospitals and the 75th percentile wage index value. We 
would make the estimated net effect on payments of (1) the increase 
in the wage index for hospitals below the 25th percentile and (2) 
the decrease in the wage index for hospitals above the 75th 
percentile budget neutral through an adjustment to the standardized 
amount.
    A third alternative we considered to address wage index 
disparities was the creation of a national rural wage index area. We 
considered whether there currently exists a national rural labor 
market for hospital labor and, if not, whether we should facilitate 
the creation of such a national rural labor market through the 
establishment of this national rural wage index area. Currently, we 
use statewide rural wage index areas based on the non-MSA area of 
each State. Under the alternative we considered, we would create a 
single national rural wage index area. A single national rural wage 
index area and rural wage index value would arguably partially 
address wage index disparities because the current rural area in 
each State with a wage index value below the national rural wage 
index value would rise to the national rural wage index value. A 
national rural labor market area would also act to mitigate the 
incentives to manipulate the rural floor because the effect of such 
manipulations on the rural average hourly wage would be spread 
across the national rural wage index area rather than targeted in a 
single State. However, it should also be noted that the 
establishment of a national rural wage index area would have a 
negative impact on hospitals in the rural areas in States with 
current rural wage index values above the national rural wage index 
value because these current wage index values would decline to the 
national rural wage index value.
    In order to facilitate public consideration of these 
alternatives considered for addressing wage index disparities, we 
have created a file at the hospital level of the different wage 
index values for each hospital under each of these alternatives 
considered. This file is available on the FY 2020 proposed rule web 
page on the CMS website as part of the FY 2020 Proposed Rule Data 
Files.

2. New Technology Add-On Payments

    As discussed in section II.H.8. of the preamble of this proposed 
rule, in situations where a new medical device is part of the 
Breakthrough Devices Program and has received FDA marketing 
authorization, we are proposing an alternative inpatient new 
technology add-on payment pathway to facilitate access to this 
technology for Medicare beneficiaries. We also considered whether it 
would be appropriate to apply this alternative inpatient new 
technology add-on payment pathway in situations where a new drug is 
part of an FDA expedited program for drugs and has received FDA 
marketing authorization. However, in reviewing this issue, we noted 
that the current drug-pricing system provides generous incentives 
for innovation, but too often fails to deliver important medications 
at an affordable cost. Making this policy applicable to drugs would 
further incentive innovation but without decreasing cost, a key 
priority of this Administration. In May 2018, President Donald Trump 
and HHS Secretary Alex Azar released the American Patients First 
blueprint, a comprehensive plan to lower drug prices and out-of-
pocket costs. Since the launch of the blueprint, we have been taking 
action to turn the President's vision into action, and improve the 
health and well-being of every American. While we continue to work 
on these initiatives for drug affordability, we believe that it is 
appropriate to distinguish between drugs and devices in our 
consideration of a proposed policy change for transformative new 
technologies.

3. Uncompensated Care Payments

    Another policy area where an alternative was considered was in 
the calculation of the FY 2020 Medicare uncompensated care payments 
to hospitals, as discussed in greater detail in section IV.F.4.c. of 
the preamble of this proposed rule. We are proposing to use 
Worksheet S-10 data from the FY 2015 cost reports in the calculation 
of Factor 3 for FY 2020. Although we are proposing to use Worksheet 
S-10 data from the FY 2015 cost reports, we acknowledge that some 
hospitals have raised concerns regarding the cost reporting 
instructions in effect for FY 2015, especially compared to the 
reporting

[[Page 19673]]

instructions that were effective for cost reporting periods 
beginning on or after October 1, 2016. Therefore, as discussed in 
section IV.F.4.c. of the preamble of this proposed rule, we also are 
seeking public comments on whether, due to the changes in the cost 
reporting instructions, we should use a single year of uncompensated 
care data from the FY 2017 reports, instead of the FY 2015 reports, 
to calculate Factor 3 for FY 2020.

4. LTCHs

    Another policy area where an alternative was considered was in 
the reinstatement process for LTCHs that do not meet the applicable 
discharge payment percentage, as discussed in greater detail in 
section VII.C. of the preamble of this proposed rule. We are 
proposing to implement a special probationary reinstatement process. 
Although we are proposing to use a special probationary 
reinstatement process, we believe the normal reinstatement process 
discussed in more detail in section VII.C. of the preamble of this 
proposed rule would satisfy the statutory requirement without 
further modification. Additionally, as discussed in more detail in 
section VII.C. of the preamble of this proposed rule, in developing 
our proposals for the a special probationary reinstatement process, 
we are concerned that hospitals may be able to manipulate discharges 
or delay billing in such a way as to artificially inflate their 
discharge payment percentage for purposes of a special reinstatement 
process if the special reinstatement process were not probationary. 
We are soliciting public comments on whether to have a special 
reinstatement process and, if so, whether it should be probationary.

5. eCQM

    As discussed in section VIII.A.9.d.(4) of the preamble of this 
proposed rule, in the context of proposing eCQM reporting and 
submission requirements under the Hospital IQR Program for the CY 
2022 reporting period/FY 2024 payment determination, hospitals would 
be required to report one, self-selected calendar quarter of data 
for three self-selected eCQMs and for all hospitals to report the 
proposed Safe Use of Opioids--Concurrent Prescribing eCQM (NQF 
#3316e) as their fourth eCQM. We also considered an alternative 
whereby hospitals would have the option to select one of the two 
proposed opioids-related eCQMs, the Safe Use of Opioids eCQM or 
Opioid-Related Adverse Events eCQM, as their fourth required eCQM. 
However, such an approach would add additional complexity to the 
eCQM reporting requirements, and we believe that the Safe Use of 
Opioids eCQM is more closely related to combating the current opioid 
epidemic, as discussed in sections VIII.A.5.a. and VIII.A.9.d.(4) of 
the preamble of this proposed rule, than the Opioid-Related Adverse 
Events eCQM, which is focused on improved monitoring of patients who 
receive opioids during hospitalization. Because the alternative 
considered would not impact the collection of information for 
hospitals, we do not expect these alternatives to affect the 
reporting burden on hospitals. We considered this alternative and 
are seeking public comment on it.

P. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, titled Reducing Regulation and 
Controlling Regulatory Costs, was issued on January 30, 2017. This 
proposed rule, if finalized, is considered an E.O. 13771 regulatory 
action. We estimate that this rule generates approximately $2.4 
million in annualized costs, discounted at 7 percent relative to 
fiscal year 2016, over a perpetual time horizon.
    We discuss the estimated burden and costs for the Hospital IQR 
Program in section X.B.3. of the preamble of this proposed rule, and 
estimate that the impact of these proposed changes is an increase in 
costs of approximately $25 per hospital annually or approximately 
$83,266 for all hospitals annually.
    We discuss the estimated burden and cost reductions for the 
PCHQR Program in section X.B.4. of the preamble of this proposed 
rule, and estimate that the impact of these proposed changes is a 
reduction in costs of approximately $10 per PCH annually or 
approximately $113 for all participating PCHs annually.
    We discuss the estimated burden for the LTCH QRP in section 
X.B.6. of the preamble of this proposed rule, and estimate that the 
impact of these proposed changes is an increase in costs of 
approximately $5,499.63 per LTCH annually or approximately 
$2,282,346 for all LTCHs annually.
    We do not anticipate an increase or decrease in burden and costs 
for the Hospital Readmissions Reduction Program, the HAC Reduction 
Program, or the Hospital Value-Based Purchasing Program based on the 
proposed policies in this proposed rule.
    Also, as noted in section I.R. of this Appendix, the regulatory 
review cost for this proposed rule is $1,905,475.

------------------------------------------------------------------------
                                                             Amount of
  Section of the proposed rule         Description           costs or
                                                              savings
------------------------------------------------------------------------
Section X.B.3. of the preamble.  ICRs for the Hospital           $83,266
                                  IQR Program.
Section X.B.4. of the preamble.  ICRs for the PCHQR               ($113)
                                  Program.
Section X.B.6. of the preamble.  ICRs for the LTCH QRP..       2,282,346
                                                         ---------------
    Total......................  .......................       2,365,499
------------------------------------------------------------------------

Q. Overall Conclusion

1. Acute Care Hospitals

    Acute care hospitals are estimated to experience an increase of 
approximately $4.67 billion in FY 2020, taking into account 
operating, capital, new technology, and low volume hospital payments 
as modeled for this proposed rule. Approximately $4.4 billion of 
this estimated increase is due to the proposed changes in operating 
payments, including $0.2 billion in uncompensated care payments 
(discussed in sections I.G. and I.H. of this Appendix), 
approximately $174 million is due to the change in capital payments 
(discussed in section I.I. of this Appendix), approximately $110 
million is due to the change in new technology add-on payments 
(discussed in section I.H. of this Appendix), and approximately $25 
million is due to the change in low-volume hospital payments 
(discussed in section I.H. of this Appendix). Total differs from the 
sum of the components due to rounding.
    Table I. of section I.G. of this Appendix also demonstrates the 
estimated redistributional impacts of the IPPS budget neutrality 
requirements for the proposed MS-DRG and wage index changes, and for 
the wage index reclassifications under the MGCRB.
    We estimate that hospitals would experience a 1.9 percent 
increase in capital payments per case, as shown in Table III. of 
section I.I. of this Appendix. We project that there would be a $174 
million increase in capital payments in FY 2020 compared to FY 2019.
    The discussions presented in the previous pages, in combination 
with the remainder of this proposed rule, constitute a regulatory 
impact analysis.

2. LTCHs

    Overall, LTCHs are projected to experience an increase in 
estimated payments per discharge in FY 2020. In the impact analysis, 
we are using the proposed rates, factors, and policies presented in 
this proposed rule based on the best available claims and CCR data 
to estimate the change in payments under the LTCH PPS for FY 2020. 
Accordingly, based on the best available data for the 384 LTCHs in 
our database, we estimate that overall FY 2020 LTCH PPS payments 
will increase approximately $37 million relative to FY 2019 as a 
result of the proposed payment rates and factors presented in this 
proposed rule.

R. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret a rule, we should 
estimate the cost associated with regulatory

[[Page 19674]]

review. Due to the uncertainty involved with accurately quantifying 
the number of entities that would review the proposed rule, we 
assumed that the total number of timely pieces of correspondence on 
last year's proposed rule would be the number of reviewers of the 
proposed rule. We acknowledge that this assumption may understate or 
overstate the costs of reviewing the rule. It is possible that not 
all commenters reviewed last year's rule in detail, and it is also 
possible that some reviewers chose not to comment on the proposed 
rule. For those reasons, and consistent with our approach in 
previous rulemakings (82 FR 38585; 83 FR 41777), we believe that the 
number of past commenters would be a fair estimate of the number of 
reviewers of the proposed rule. We welcome any public comments on 
the approach in estimating the number of entities that will review 
this proposed rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of the proposed rule. 
Therefore, for the purposes of our estimate, and consistent with our 
approach in previous rulemaking (82 FR 38585; 83 FR 41777), we 
assume that each reviewer read approximately 50 percent of the 
proposed rule. We welcome public comments on this assumption.
    We have used the number of timely pieces of correspondence on 
the FY 2019 proposed rule as our estimate for the number of 
reviewers of this proposed rule. We continue to acknowledge the 
uncertainty involved with using this number, but we believe it is a 
fair estimate due to the variety of entities affected and the 
likelihood that some of them choose to rely (in full or in part) on 
press releases, newsletters, fact sheets, or other sources rather 
than the comprehensive review of preamble and regulatory text. Using 
the wage information from the BLS for medical and health service 
managers (Code 11-9111), we estimate that the cost of reviewing the 
proposed rule is $107.38 per hour, including overhead and fringe 
benefits (https://www.bls.gov/oes/current/oes_nat.htm). Assuming an 
average reading speed, we estimate that it would take approximately 
21 hours for the staff to review half of this proposed rule. For 
each IPPS hospital or LTCH that reviews this proposed rule, the 
estimated cost is $2,255 (21 hours x $107.38). Therefore, we 
estimate that the total cost of reviewing this proposed rule is 
$1,905,475 ($2,255 x 845 reviewers).

II. Accounting Statements and Tables

A. Acute Care Hospitals

    As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a-004_a-4/ and https://georgewbush-whitehouse.archives.gov/omb/circulars/a004/a-4.html), in 
the following Table V., we have prepared an accounting statement 
showing the classification of the expenditures associated with the 
provisions of this proposed rule as they relate to acute care 
hospitals. This table provides our best estimate of the change in 
Medicare payments to providers as a result of the proposed changes 
to the IPPS presented in this proposed rule. All expenditures are 
classified as transfers to Medicare providers.
    As shown below in Table V., the net costs to the Federal 
Government associated with the proposed policies in this proposed 
rule are estimated at $4.67 billion.

 Table V--Accounting Statement: Classification of Estimated Expenditures
                 Under the IPPS From FY 2019 to FY 2020
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $4.67 billion.
From Whom to Whom......................  Federal Government to IPPS
                                          Medicare Providers.
------------------------------------------------------------------------

B. LTCHs

    As discussed in section I.J. of this Appendix, the impact 
analysis of the proposed payment rates and factors presented in this 
proposed rule under the LTCH PPS is projected to result in an 
increase in estimated aggregate LTCH PPS payments in FY 2020 
relative to FY 2019 of approximately $37 million based on the data 
for 384 LTCHs in our database that are subject to payment under the 
LTCH PPS. Therefore, as required by OMB Circular A-4 (available at: 
https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ and 
https://georgewbush-whitehouse.archives.gov/omb/circulars/a004/a-4.html), in Table VI., we have prepared an accounting statement 
showing the classification of the expenditures associated with the 
provisions of this proposed rule as they relate to the changes to 
the LTCH PPS. Table VI. provides our best estimate of the estimated 
change in Medicare payments under the LTCH PPS as a result of the 
proposed payment rates and factors and other provisions presented in 
this proposed rule based on the data for the 384 LTCHs in our 
database. All expenditures are classified as transfers to Medicare 
providers (that is, LTCHs).
    As shown in Table VI. below, the net cost to the Federal 
Government associated with the proposed policies for LTCHs in this 
proposed rule are estimated at $37 million.

Table VI--Accounting Statement: Classification of Estimated Expenditures
            From the FY 2019 LTCH PPS to the FY 2020 LTCH PPS
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $37 million.
From Whom to Whom......................  Federal Government to LTCH
                                          Medicare Providers.
------------------------------------------------------------------------

III. Regulatory Flexibility Act (RFA) Analysis

    The RFA requires agencies to analyze options for regulatory 
relief of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
government jurisdictions. We estimate that most hospitals and most 
other providers and suppliers are small entities as that term is 
used in the RFA. The great majority of hospitals and most other 
health care providers and suppliers are small entities, either by 
being nonprofit organizations or by meeting the SBA definition of a 
small business (having revenues of less than $7.5 million to $38.5 
million in any 1 year). (For details on the latest standards for 
health care providers, we refer readers to page 36 of the Table of 
Small Business Size Standards for NAIC 622 found on the SBA website 
at: http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.)
    For purposes of the RFA, all hospitals and other providers and 
suppliers are considered to be small entities. Individuals and 
States are not included in the definition of a small entity. We 
believe that the provisions of this proposed rule relating to acute 
care hospitals will have a significant impact on small entities as 
explained in this Appendix. For example, because all hospitals are 
considered to be small entities for purposes of the RFA, the 
hospital impacts described in this proposed rule are impacts on 
small entities. For example, we refer readers to ``Table I.--Impact 
Analysis of Proposed Changes to the IPPS for Operating Costs for FY 
2020.'' Because we lack data on individual hospital receipts, we 
cannot determine the number of small proprietary LTCHs. Therefore, 
we are assuming that all LTCHs are considered small entities for the 
purpose of the analysis in section I.J. of this Appendix. MACs are 
not

[[Page 19675]]

considered to be small entities because they do not meet the SBA 
definition of a small business. Because we acknowledge that many of 
the affected entities are small entities, the analysis discussed 
throughout the preamble of this proposed rule constitutes our 
regulatory flexibility analysis. This proposed rule contains a range 
of proposed policies. It provides descriptions of the statutory 
provisions that are addressed, identifies the proposed policies, and 
presents rationales for our decisions and, where relevant, 
alternatives that were considered.
    For purposes of the RFA, as stated above, all hospitals and 
other providers and suppliers are considered to be small entities. 
We estimate the provisions of this proposed rule would result in an 
estimated $4.67 billion increase in FY 2020 payments to IPPS 
hospitals, primarily driven by the proposed applicable percentage 
increase to the IPPS rates in conjunction with other proposed 
payment changes including uncompensated care payments, capital 
payments, new technology add-on payments, and low-volume hospital 
payments, as discussed in section I.B. of this Appendix. As 
discussed in section I.J. of this Appendix, the impact analysis of 
the proposed payment rates and factors presented in this proposed 
rule under the LTCH PPS is projected to result in an increase in 
estimated aggregate LTCH PPS payments in FY 2020 relative to FY 2019 
of approximately $37 million. We are soliciting public comments on 
our estimates and analysis of the impact of our proposals on those 
small entities. Any public comments that we received and our 
responses will be presented throughout the final rule.

IV. Impact on Small Rural Hospitals

    Section 1102(b) of the Social Security Act requires us to 
prepare a regulatory impact analysis for any proposed or final rule 
that may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must 
conform to the provisions of section 604 of the RFA. With the 
exception of hospitals located in certain New England counties, for 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of an urban area and 
has fewer than 100 beds. Section 601(g) of the Social Security 
Amendments of 1983 (Pub. L. 98-21) designated hospitals in certain 
New England counties as belonging to the adjacent urban area. Thus, 
for purposes of the IPPS and the LTCH PPS, we continue to classify 
these hospitals as urban hospitals. (As shown in Table I. in section 
I.G. of this Appendix, rural IPPS hospitals with 0-49 beds and 50-99 
beds are expected to experience an increase in payments from FY 2019 
to FY 2020 of 4.9 percent and 3.5 percent, respectively. We refer 
readers to Table I. in section I.G. of this Appendix for additional 
information on the quantitative effects of the proposed policy 
changes under the IPPS for operating costs.)

V. Unfunded Mandates Reform Act Analysis

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4) also requires that agencies assess anticipated costs and 
benefits before issuing any rule whose mandates require spending in 
any 1 year of $100 million in 1995 dollars, updated annually for 
inflation. In 2020, that threshold level is approximately $154 
million. This proposed rule would not mandate any requirements for 
State, local, or tribal governments, nor would it affect private 
sector costs.

VI. Executive Order 13175

    Executive Order 13175 requires that, to the extent practicable 
and permitted by law, no agency shall promulgate any regulation that 
has tribal implications, that imposes substantial direct compliance 
costs on Indian tribal governments, and that is not required by 
statute, unless: (1) Funds necessary to pay the direct costs 
incurred by the Indian tribal government or the tribe in complying 
with the regulation are provided by the Federal Government; or (2) 
the agency, prior to the formal promulgation of the regulation, (A) 
consulted with tribal officials early in the process of developing 
the proposed regulation; (B) in a separately identified portion of 
the preamble to the regulation as it is to be issued in the Federal 
Register, provides to the Director of the Office of Management and 
Budget (OMB) a tribal summary impact statement, which consists of a 
description of the extent of the agency's prior consultation with 
tribal officials, a summary of the nature of their concerns and the 
agency's position supporting the need to issue the regulation, and a 
statement of the extent to which the concerns of tribal officials 
have been met; and (C) makes available to the Director of OMB any 
written communications submitted to the agency by tribal officials.
    Section 1880(a) of the Act states that a hospital of the Indian 
Health Service, whether operated by such Service or by an Indian 
tribe or tribal organization, is eligible for payments under title 
XVIII of the Act, so long as it meets all of the conditions and 
requirements for such payments which are applicable generally to 
hospitals under title XVIII of the Act.
    This proposed rule would not mandate any requirement for Indian 
tribal governments, and it would not impose substantial direct 
compliance costs on Indian tribal governments.

VII. Executive Order 12866

    In accordance with the provisions of Executive Order 12866, the 
Executive Office of Management and Budget reviewed this proposed 
rule.

Appendix B: Recommendation of Update Factors for Operating Cost Rates 
of Payment for Inpatient Hospital Services

I. Background

    Section 1886(e)(4)(A) of the Act requires that the Secretary, 
taking into consideration the recommendations of MedPAC, recommend 
update factors for inpatient hospital services for each fiscal year 
that take into account the amounts necessary for the efficient and 
effective delivery of medically appropriate and necessary care of 
high quality. Under section 1886(e)(5) of the Act, we are required 
to publish update factors recommended by the Secretary in the 
proposed and final IPPS rules. Accordingly, this Appendix provides 
the recommendations for the update factors for the IPPS national 
standardized amount, the hospital-specific rate for SCHs and MDHs, 
and the rate-of-increase limits for certain hospitals excluded from 
the IPPS, as well as LTCHs. In prior years, we made a recommendation 
in the IPPS proposed rule and final rule for the update factors for 
the payment rates for IRFs and IPFs. However, for FY 2020, 
consistent with our approach for FY 2019, we are including the 
Secretary's recommendation for the update factors for IRFs and IPFs 
in separate Federal Register documents at the time that we announce 
the annual updates for IRFs and IPFs. We also discuss our response 
to MedPAC's recommended update factors for inpatient hospital 
services.

II. Inpatient Hospital Update for FY 2020

A. Proposed FY 2020 Inpatient Hospital Update

    As discussed in section IV.B. of the preamble to this proposed 
rule, for FY 2020, 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. Specifically, 
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 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 and 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 
electronic health record (EHR) users in accordance with section 
1886(b)(3)(B)(ix) of the Act, and then subject to an adjustment 
based on changes in economy-wide productivity (the multifactor 
productivity (MFP) adjustment). Section 1886(b)(3)(B)(xi) of the 
Act, as added by section 3401(a) of the Affordable Care Act, states 
that application of the MFP adjustment may result in the applicable 
percentage increase being less than zero. (We note that section 
1886(b)(3)(B)(xii) of the Act required an additional reduction each 
year only for FYs 2010 through 2019.)
    In compliance with section 404 of the MMA, in the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38587), we replaced the FY 2010-based 
IPPS operating and capital market baskets with the rebased and 
revised 2014-based IPPS operating and capital market baskets, 
effective beginning in FY 2018.
    In this FY 2020 IPPS/LTCH PPS proposed rule, in accordance with 
section 1886(b)(3)(B) of the Act, we are proposing to base the 
proposed FY 2020 market basket update used to determine the 
applicable percentage

[[Page 19676]]

increase for the IPPS on IGI's fourth quarter 2018 forecast of the 
2014-based IPPS market basket rate-of-increase with historical data 
through third quarter 2018, which is estimated to be 3.2 percent. In 
accordance with section 1886(b)(3)(B) of the Act, as amended by 
section 3401(a) of the Affordable Care Act, in section IV.B. of the 
preamble of this FY 2020 IPPS/LTCH PPS proposed rule, based on IGI's 
fourth quarter 2018 forecast, we are proposing an MFP adjustment of 
0.5 percent for FY 2020. We also are proposing that if more recent 
data subsequently become available, we would use such data, if 
appropriate, to determine the FY 2020 market basket update and MFP 
adjustment for the final rule.
    Therefore, based on IGI's fourth quarter 2018 forecast of the 
2014-based IPPS market basket and the MFP adjustment, 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), 
we are proposing four possible applicable percentage increases that 
could be applied to the standardized amount, as shown in the table 
below.
[GRAPHIC] [TIFF OMITTED] TP03MY19.057

B. Proposed Update for SCHs and MDHs for FY 2020

    Section 1886(b)(3)(B)(iv) of the Act provides that the FY 2020 
applicable percentage increase in the hospital-specific rate 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). Under current law, 
the MDH program is effective for discharges through September 30, 
2022, as discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 
41429 through 41430).
    As previously mentioned, the update to the hospital specific 
rate for SCHs and MDHs 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. Accordingly, depending on whether a hospital submits 
quality data and is a meaningful EHR user, we are proposing the same 
four possible applicable percentage increases in the table above for 
the hospital-specific rate applicable to SCHs and MDHs.

C. Proposed FY 2020 Puerto Rico Hospital Update

    As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 
56939), 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 make 
an update to the Puerto Rico standardized amount. Hospitals in

[[Page 19677]]

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 proposed rule. Accordingly, for FY 2020, we are 
proposing to establish an applicable percentage increase of 2.7 
percent to the standardized amount for hospitals located in Puerto 
Rico.

D. Proposed Update for Hospitals Excluded From the IPPS for FY 2020

    Section 1886(b)(3)(B)(ii) of the Act is used for purposes of 
determining the percentage increase in the rate-of-increase limits 
for children's hospitals, cancer hospitals, and hospitals located 
outside the 50 States, the District of Columbia, and Puerto Rico 
(that is, short-term acute care hospitals located in the U.S. Virgin 
Islands, Guam, the Northern Mariana Islands, and America Samoa). 
Section 1886(b)(3)(B)(ii) of the Act sets the percentage increase in 
the rate-of-increase limits equal to the market basket percentage 
increase. In accordance with Sec.  403.752(a) of the regulations, 
RNHCIs are paid under the provisions of Sec.  413.40, which also use 
section 1886(b)(3)(B)(ii) of the Act to update the percentage 
increase in the rate-of-increase limits.
    Currently, children's hospitals, PPS-excluded cancer hospitals, 
RNHCIs, and short-term acute care hospitals located in the U.S. 
Virgin Islands, Guam, the Northern Mariana Islands, and American 
Samoa are among the remaining types of hospitals still paid under 
the reasonable cost methodology, subject to the rate-of-increase 
limits. In addition, in accordance with Sec.  412.526(c)(3) of the 
regulations, extended neoplastic disease care hospitals (described 
in Sec.  412.22(i) of the regulations) also are subject to the rate-
of-increase limits. As discussed in section VI. of the preamble of 
this proposed rule, in the FY 2018 IPPS/LTCH PPS final rule, we 
finalized the use of the percentage increase in the 2014-based IPPS 
operating market basket to update the target amounts for children's 
hospitals, PPS-excluded cancer hospitals, RNHCIs, and short-term 
acute care hospitals located in the U.S. Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa for FY 2018 and 
subsequent fiscal years. In addition, as discussed in section IV.B. 
of the preamble of this proposed rule, the update to the target 
amount for extended neoplastic disease care hospitals for FY 2020 
would be the percentage increase in the 2014-based IPPS operating 
market basket. Accordingly, for FY 2020, the rate-of-increase 
percentage to be applied to the target amount for these children's 
hospitals, cancer hospitals, RNHCIs, extended neoplastic disease 
care hospitals, and short-term acute care hospitals located in the 
U.S. Virgin Islands, Guam, the Northern Mariana Islands, and 
American Samoa would be the FY 2020 percentage increase in the 2014-
based IPPS operating market basket. For this proposed rule, the 
current estimate of the IPPS operating market basket percentage 
increase for FY 2020 is 3.2 percent.

E. Proposed Update for LTCHs for FY 2020

    Section 123 of Public Law 106-113, as amended by section 307(b) 
of Public Law 106-554 (and codified at section 1886(m)(1) of the 
Act), provides the statutory authority for updating payment rates 
under the LTCH PPS.
    As discussed in section V.A. of the Addendum to this proposed 
rule, we are proposing to update to the LTCH PPS standard Federal 
payment rate for FY 2020 by 2.7 percent, consistent with the 
amendments to section 1886(m)(3) of the Act which provides that any 
annual update be reduced by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act (that is, the MFP 
adjustment). Furthermore, in accordance with the LTCHQR Program 
under section 1886(m)(5) of the Act, we are proposing to reduce the 
annual update to the LTCH PPS standard Federal rate by 2.0 
percentage points for failure of a LTCH to submit the required 
quality data. Accordingly, we are proposing to establish an update 
factor of 1.027 in determining the LTCH PPS standard Federal rate 
for FY 2020. For LTCHs that fail to submit quality data for FY 2020, 
we are proposing to apply an annual update to the LTCH PPS standard 
Federal rate of 0.7 percent (that is, the proposed annual update for 
FY 2020 of 2.7 percent less 2.0 percentage points for failure to 
submit the required quality data in accordance with section 
1886(m)(5)(C) of the Act and our rules) by applying a proposed 
update factor of 1.007 in determining the LTCH PPS standard Federal 
rate for FY 2020. (We note that, as discussed in section VII.D. of 
the preamble of this proposed rule, the proposed update to the LTCH 
PPS standard Federal payment rate of 2.7 percent for FY 2020 does 
not reflect any proposed budget neutrality factors.)

III. Secretary's Recommendations

    MedPAC is recommending an inpatient hospital update in the 
amount specified in current law for FY 2020. MedPAC's rationale for 
this update recommendation is described in more detail below. As 
mentioned above, section 1886(e)(4)(A) of the Act requires that the 
Secretary, taking into consideration the recommendations of MedPAC, 
recommend update factors for inpatient hospital services for each 
fiscal year that take into account the amounts necessary for the 
efficient and effective delivery of medically appropriate and 
necessary care of high quality. Consistent with current law, 
depending on whether a hospital submits quality data and is a 
meaningful EHR user, we are recommending the four applicable 
percentage increases to the standardized amount listed in the table 
under section II. of this Appendix B. We are recommending that the 
same applicable percentage increases apply to SCHs and MDHs.
    In addition to making a recommendation for IPPS hospitals, in 
accordance with section 1886(e)(4)(A) of the Act, we are 
recommending update factors for certain other types of hospitals 
excluded from the IPPS. Consistent with our policies for these 
facilities, we are recommending an update to the target amounts for 
children's hospitals, cancer hospitals, RNHCIs, short-term acute 
care hospitals located in the U.S. Virgin Islands, Guam, the 
Northern Mariana Islands, and American Samoa and extended neoplastic 
disease care hospitals of 3.2 percent.
    For FY 2020, consistent with policy set forth in section VII. of 
the preamble of this proposed rule, for LTCHs that submit quality 
data, we are recommending an update of 2.7 percent to the LTCH PPS 
standard Federal rate. For LTCHs that fail to submit quality data 
for FY 2020, we are recommending an annual update to the LTCH PPS 
standard Federal rate of 0.7 percent.

IV. MedPAC Recommendation for Assessing Payment Adequacy and Updating 
Payments in Traditional Medicare

    In its March 2019 Report to Congress, MedPAC assessed the 
adequacy of current payments and costs, and the relationship between 
payments and an appropriate cost base. MedPAC recommended an update 
to the hospital inpatient rates by 2 percent with the difference 
between this and the update amount specified in current law to be 
used to increase payments in a new suggested Medicare quality 
program, the ``Hospital Value Incentive Program (HVIP).'' MedPAC 
stated that together, these recommendations, paired with the 
recommendation to eliminate the current hospital quality program 
incentives, would increase hospital payments by increasing the base 
payment rate and by increasing the average rewards hospitals receive 
under MedPAC's proposed Medicare HVIP.
    We refer readers to the March 2019 MedPAC report, which is 
available for download at www.medpac.gov, for a complete discussion 
on these recommendations.
    Response: With regard to MedPAC's recommendation of an update to 
the hospital inpatient rates equal to 2 percent, with the remainder 
of the 2.7 percent to be used to fund its recommended Medicare HVIP, 
section 1886(b)(3)(B) of the Act sets the requirements for the FY 
2020 applicable percentage increase. Therefore, consistent with the 
statute, we are proposing an applicable percentage increase for FY 
2020 of 2.7 percent, provided the hospital submits quality data and 
is a meaningful EHR user consistent with these statutory 
requirements.
    Furthermore, we appreciate MedPAC's recommendation concerning a 
new HVIP. We agree that continual improvement motivated by quality 
programs is an important incentive of the IPPS. However, under 
current law, the inpatient hospital quality programs include the 
Hospital Readmissions Reduction Program, the Hospital Value-Based 
Purchasing Program, and the Hospital-Acquired Condition Reduction 
Program.
    We note that, because the operating and capital prospective 
payment systems remain separate, we are continuing to use separate 
updates for operating and capital payments. The proposed update to 
the capital rate is discussed in section III. of the Addendum to 
this proposed rule.

[FR Doc. 2019-08330 Filed 4-23-19; 4:15 pm]
BILLING CODE 4120-01-P