[Federal Register Volume 84, Number 159 (Friday, August 16, 2019)]
[Rules and Regulations]
[Pages 42044-42701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16762]



[[Page 42043]]

Vol. 84

Friday,

No. 159

August 16, 2019

Part II

Book 2 of 2

Pages 42043-42798





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 Policy Changes and Fiscal Year 2020 Rates; Quality 
Reporting Requirements for Specific Providers; Medicare and Medicaid 
Promoting Interoperability Programs Requirements for Eligible Hospitals 
and Critical Access Hospitals; Final Rule

Federal Register / Vol. 84 , No. 159 / Friday, August 16, 2019 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, and 495

[CMS-1716-F]
RIN 0938-AT73


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

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

ACTION: Final rule.

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SUMMARY: We are revising the Medicare hospital inpatient prospective 
payment systems (IPPS) for operating and capital-related costs of acute 
care hospitals to implement changes arising from our continuing 
experience with these systems for FY 2020 and to implement certain 
recent legislation. We also are making changes relating to Medicare 
graduate medical education (GME) for teaching hospitals and payments to 
critical access hospital (CAHs). In addition, we are providing the 
market basket update that will apply to the rate-of-increase limits for 
certain hospitals excluded from the IPPS that are paid on a reasonable 
cost basis, subject to these limits for FY 2020. We are updating the 
payment policies and the annual payment rates for the Medicare 
prospective payment system (PPS) for inpatient hospital services 
provided by long-term care hospitals (LTCHs) for FY 2020. In this FY 
2020 IPPS/LTCH PPS final rule, we are addressing wage index disparities 
impacting low wage index hospitals; providing for an alternative IPPS 
new technology add-on payment pathway for certain transformative new 
devices and qualified infectious disease products; and revising the 
calculation of the IPPS new technology add-on payment. In addition, we 
are revising and clarifying our policies related to the substantial 
clinical improvement criterion used for evaluating applications for the 
new technology add-on payment under the IPPS.
    We are establishing new requirements or revising existing 
requirements for quality reporting by specific Medicare providers 
(acute care hospitals, PPS-exempt cancer hospitals, and LTCHs). We also 
are establishing new requirements and revising existing requirements 
for eligible hospitals and critical access hospitals (CAHs) 
participating in the Medicare and Medicaid Promoting Interoperability 
Programs. We are updating policies for the Hospital Value-Based 
Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, 
and the Hospital-Acquired Condition (HAC) Reduction Program.

DATES: This final rule is effective October 1, 2019.

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

SUPPLEMENTARY INFORMATION: 

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 final rule are 
available through the internet on the CMS website at: https://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 Final Rule Home Page'' or ``Acute 
Inpatient--Files for Download.'' The LTCH PPS tables for this FY 2020 
final 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-F. For further details on the contents of the tables 
referenced in this final rule, we refer readers to section VI. of the 
Addendum to this FY 2020 IPPS/LTCH PPS final rule.
    Readers who experience any problems accessing any of the tables 
that are posted on the CMS websites, as previously identified, 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 Final Rule
    D. Issuance of Notice of Proposed Rulemaking

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    E. Advancing Health Information Exchange
II. 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. FY 2020 MS-DRG Documentation and Coding Adjustment
    E. Refinement of the MS-DRG Relative Weight Calculation
    F. Changes to Specific MS-DRG Classifications
    G. Recalibration of the FY 2020 MS-DRG Relative Weights
    H. Add-On Payments for New Services and Technologies for FY 2020
III. Changes to the Hospital Wage Index for Acute Care Hospitals
    A. Background
    B. Worksheet S-3 Wage Data for the FY 2020 Wage Index
    C. Verification of Worksheet S-3 Wage Data
    D. Method for Computing the FY 2020 Unadjusted Wage Index
    E. Occupational Mix Adjustment to the FY 2020 Wage Index
    F. Analysis and Implementation of the Occupational Mix 
Adjustment and the Final FY 2020 Occupational Mix Adjusted Wage 
Index
    G. Application of the Rural Floor, Expired Imputed Floor Policy, 
and Application of the State Frontier Floor
    H. FY 2020 Wage Index Tables
    I. Revisions to the Wage Index Based on Hospital Redesignations 
and Reclassifications
    J. 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. Labor-Related Share for the FY 2020 Wage Index
    N. Final Policies To Address Wage Index Disparities Between High 
and Low Wage Index Hospitals
IV. Other Decisions and Changes to the IPPS for Operating Costs
    A. Changes to MS-DRGs Subject to Postacute Care Transfer and MS-
DRG Special Payment Policies
    B. Changes in the Inpatient Hospital Updates for FY 2020 (Sec.  
412.64(d))
    C. Rural Referral Centers (RRCs) Annual Updates to Case-Mix 
Index and Discharge Criteria (Sec.  412.96)
    D. Payment Adjustment for Low-Volume Hospitals (Sec.  412.101)
    E. Indirect Medical Education (IME) Payment Adjustment (Sec.  
412.105)
    F. Payment Adjustment for Medicare Disproportionate Share 
Hospitals (DSHs) for FY 2020 (Sec.  412.106)
    G. Hospital Readmissions Reduction Program: Updates and Changes 
(Sec. Sec.  412.150 Through 412.154)
    H. Hospital Value-Based Purchasing (VBP) Program: 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. Changes to the IPPS for Capital-Related Costs
    A. Overview
    B. Additional Provisions
    C. Annual Update for FY 2020
VI. Changes for Hospitals Excluded From the IPPS
    A. Rate-of-Increase in Payments to Excluded Hospitals for FY 
2020
    B. Methodologies and Requirements for TEFRA Adjustments to Rate-
of-Increase Ceiling
    C. Critical Access Hospitals (CAHs)
VII. Changes to the Long-Term Care Hospital Prospective Payment 
System (LTCH PPS) for FY 2020
    A. Background of the LTCH PPS
    B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2020
    C. Payment Adjustment for LTCH Discharges That Do Not Meet the 
Applicable Discharge Payment Percentage
    D. Changes to the LTCH PPS Payment Rates and Other Changes to 
the LTCH PPS for FY 2020
VIII. Quality Data Reporting Requirements for Specific Providers and 
Suppliers
    A. Hospital Inpatient Quality Reporting (IQR) Program
    B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
    C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
    D. 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
XI. Provider Reimbursement Review Board (PRRB) Appeals

Regulation Text

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

I. Summary and Background
II. Changes to the Prospective Payment Rates for Hospital Inpatient 
Operating Costs for Acute Care Hospitals for FY 2020
    A. Calculation of the Adjusted Standardized Amount
    B. Adjustments for Area Wage Levels and Cost-of-Living
    C. Calculation of the Prospective Payment Rates
III. Changes to Payment Rates for Acute Care Hospital Inpatient 
Capital-Related Costs for FY 2020
    A. Determination of Federal Hospital Inpatient Capital-Related 
Prospective Payment Rate Update
    B. Calculation of the Inpatient Capital-Related Prospective 
Payments for FY 2020
    C. Capital Input Price Index
IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-
Increase Percentages for FY 2020
V. Updates to the Payment Rates for the LTCH PPS for FY 2020
    A. LTCH PPS Standard Federal Payment Rate for FY 2020
    B. Adjustment for Area Wage Levels Under the LTCH PPS for FY 
2020
    C. LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located 
in Alaska and Hawaii
    D. Adjustment for LTCH PPS High-Cost Outlier (HCO) Cases
    E. Update to the IPPS Comparable/Equivalent Amounts To Reflect 
the Statutory Changes to the IPPS DSH Payment Adjustment Methodology
    F. Computing the Adjusted LTCH PPS Federal Prospective Payments 
for FY 2020
VI. Tables Referenced in This FY 2020 IPPS/LTCH PPS Final 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 Policy Changes Under the IPPS for 
Operating Costs
    H. Effects of Other Policy Changes
    I. Effects of Changes in the Capital IPPS
    J. Effects of Payment Rate Changes and Policy Changes Under the 
LTCH PPS
    K. Effects of Requirements for Hospital Inpatient Quality 
Reporting (IQR) Program
    L. Effects of Requirements for the PPS-Exempt Cancer Hospital 
Quality Reporting (PCHQR) Program
    M. Effects of Requirements for the Long-Term Care Hospital 
Quality Reporting Program (LTCH QRP)
    N. Effects of 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

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

I. Background
II. Inpatient Hospital Update for FY 2020
    A. FY 2020 Inpatient Hospital Update
    B. Update for SCHs and MDHs for FY 2020
    C. FY 2020 Puerto Rico Hospital Update
    D. Update for Hospitals Excluded From the IPPS
    E. 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 FY 2020 IPPS/LTCH PPS final rule makes payment and policy 
changes under the Medicare inpatient prospective payment systems (IPPS) 
for operating and capital-related costs of acute care hospitals as well 
as for certain hospitals and hospital units excluded from the IPPS. In 
addition, it makes payment and policy changes for inpatient hospital 
services provided by long-term care hospitals (LTCHs) under the long-
term care hospital prospective payment system (LTCH PPS). This final 
rule also makes policy changes to programs associated with Medicare 
IPPS hospitals, IPPS-excluded hospitals, and LTCHs. In this final rule, 
we are addressing wage index disparities impacting low wage index 
hospitals; providing for an alternative IPPS new technology add-on 
payment pathway for certain transformative new devices and qualified 
infectious disease products; revising the calculation of the IPPS new 
technology add-on payment; and making revisions and clarifications 
related to the substantial clinical improvement criterion under the 
IPPS.
    We are establishing new requirements and revising existing 
requirements for quality reporting by specific providers (acute care 
hospitals, PPS-exempt cancer hospitals, and LTCHs) that are 
participating in Medicare. We also are establishing new requirements 
and revising existing requirements for eligible hospitals and CAHs 
participating in the Medicare and Medicaid Promoting Interoperability 
Programs. We are updating policies for the Hospital Value-Based 
Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, 
and the Hospital-Acquired Condition (HAC) Reduction Program.
    Under various statutory authorities, we are making changes to the 
Medicare IPPS, to the LTCH PPS, and to other related payment 
methodologies and programs for FY 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.
     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 provides for the 
establishment of 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.

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     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 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
    In this final rule, we provide a summary of the major provisions in 
this FY 2020 IPPS/LTCH PPS final rule. In general, these major 
provisions are part of the annual update to the payment policies and 
payment rates, consistent with the applicable statutory provisions. A 
general summary of the proposed changes that were included in the FY 
2020 IPPS/LTCH PPS proposed rule is presented in section I.D. of the 
preamble of this final rule.
a. MS-DRG Documentation and Coding Adjustment
    Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. 
L. 112-240) amended section 7(b)(1)(B) of Public Law 110-90 to require 
the Secretary to make a recoupment adjustment to the standardized 
amount of Medicare payments to acute care hospitals to account for 
changes in MS-DRG documentation and coding that do not reflect real 
changes in case-mix, totaling $11 billion over a 4-year period of FYs 
2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments 
represented the amount of the increase in aggregate payments as a 
result of not completing the prospective adjustment authorized under 
section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the 
ATRA, this amount could not have been recovered under Public Law 110-
90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment 
we intended to make in FY 2018 with a 0.5 percent positive adjustment 
to the standardized amount of Medicare payments to acute care hospitals 
for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently 
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures 
Act.) Therefore, for FY 2020, we are making an adjustment of +0.5 
percent to the standardized amount.
b. Revisions and Clarifications to the New Technology Add-On Payment 
Policy Substantial Clinical Improvement Criterion Under the IPPS
    In the proposed rule, in addition to a 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 solicited 
public comments on specific changes or clarifications to the IPPS and 
Outpatient Prospective Payment System (OPPS) substantial clinical 
improvement criterion used to evaluate applications for new technology 
add-on payments under the IPPS and the transitional pass-through 
payment for additional costs of innovative devices under the OPPS that 
CMS might consider making in this 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.
    In this final rule, after consideration of public comments, we are 
revising and clarifying certain aspects of our evaluation of the 
substantial clinical improvement criterion under the IPPS in 42 CFR 
412.87.
c. Alternative Inpatient New Technology Add-On Payment Pathway for 
Transformative New Devices and Antimicrobial Resistant Products
    As discussed in section III.H.8. of the preamble of this final 
rule, after consideration of public comments, given 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 are adopting an alternative pathway for 
the inpatient new technology add-on payment for certain transformative 
medical devices. In situations where a new medical device 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) and is the subject of the FDA's Breakthrough 
Devices Program, we are finalizing our proposal to create an 
alternative inpatient new technology add-on payment pathway to 
facilitate access to this technology for Medicare beneficiaries. In 
addition, after consideration of public comments and concerns related 
to antimicrobial resistance and its serious impact on Medicare 
beneficiaries and public health overall, we are finalizing an 
alternative inpatient new technology add-for Qualified Infectious 
Disease Products (QIDPs).
    Specifically, we are establishing that, for applications received 
for IPPS new technology add-on payments for FY 2021 and subsequent 
fiscal years, if a medical device is the subject of the FDA's 
Breakthrough Devices Program or if a medical product technology 
receives the FDA's QIDP designation and received FDA marketing 
authorization, such a device or product will be considered new and not 
substantially similar to an existing technology for purposes of new 
technology add-on payment under the IPPS. We are also establishing that 
the medical device or product will 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. 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.
    As discussed in section III.H.9. of the preamble of this final 
rule, after consideration of the concerns raised by

[[Page 42048]]

commenters and other stakeholders, we agree that capping the add-on 
payment amount at 50 percent could, in some cases, not adequately 
reflect the costs of new technology or sufficiently support healthcare 
innovations.
    After consideration of public comments, we are finalizing the 
proposed modification to the current payment amount to increase the 
maximum add-on payment amount to 65 percent of the costs of the new 
technology or medical service (except with respect to a medical product 
designated by the FDA as a QIDP). Therefore, we are establishing that, 
beginning with discharges occurring on or after October 1, 2019, for a 
new technology other than a medical product designated as a QIDP by the 
FDA, 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 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. In addition, 
after consideration of public comments and concerns related to 
antimicrobial resistance and its serious impact on Medicare 
beneficiaries and public health overall, we are establishing that, 
beginning with discharges occurring on or after October 1, 2019, for a 
new technology that is a medical product designated as a QIDP by the 
FDA, 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 will make an add-on 
payment equal to the lesser of: (1) 75 percent of the costs of the new 
medical service or technology; or (2) 75 percent of the amount by which 
the costs of the case exceed the standard DRG payment.
e. Finalized Policies To Address Wage Index Disparities
    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, in this final rule, we are 
reducing the disparity between high and low wage index hospitals by 
increasing the wage index values for certain hospitals with low wage 
index values and doing so in a budget neutral manner through an 
adjustment applied to the standardized amounts for all hospitals, as 
well as changing the calculation of the rural floor. We also are 
providing for a transition for hospitals experiencing significant 
decreases in their wage index values as compared to their final FY 2019 
wage index. We are making these changes in a budget neutral manner.
    In this final rule, we are increasing 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, this policy will 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. 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 applying a uniform budget 
neutrality factor to the standardized amount.
    In addition, we are removing urban to rural reclassifications from 
the calculation of the rural floor, such that, beginning in FY 2020, 
the rural floor is 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 removing 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 placing 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 applying a budget neutrality adjustment to the 
standardized amount so that our transition for hospitals that could be 
negatively impacted is implemented in a budget neutral manner.
f. 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 final rule, we have updated our 
estimates of the three factors used to determine uncompensated care 
payments for FY 2020. We 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 using 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 continuing to use only data regarding low-
income insured days (Medicaid days for FY 2013 and FY 2017 SSI days) to 
determine the amount of uncompensated care payments for Puerto Rico 
hospitals, and Indian Health Service and Tribal hospitals. We did not 
adopt specific Factor 3 polices for all-inclusive rate providers for FY 
2020. In this final rule, we also are continuing 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;

[[Page 42049]]

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. Changes to the LTCH PPS
    In this FY 2020 IPPS/LTCH PPS final rule, we set forth changes to 
the LTCH PPS Federal payment rates, factors, and other payment rate 
policies under the LTCH PPS for FY 2020. We also are establishing the 
payment adjustment for LTCH discharges when the LTCH does not meet the 
applicable discharge payment percentage and a reinstatement process, as 
required by section 1886(m)(6)(C) of the Act. An LTCH will 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. We are adopting a probationary cure period as part of the 
reinstatement process.
h. Reduction of Hospital Payments for Excess Readmissions
    We are making 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 FY 2020 IPPS/LTCH PPS final rule, we are establishing 
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 
policies we are finalizing in this final rule 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 FY 2020 IPPS/LTCH PPS final rule, we are establishing that the 
Hospital VBP 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, which is 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: (1) Adopting a 
measure removal policy that aligns with the removal factor policies 
previously adopted in other quality reporting and quality payment 
programs; (2) clarifying administrative policies for validation of the 
CDC NHSN HAI measures; (3) adopting the data collection periods for the 
FY 2022 program year; and (4) updating 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 FY 2020 IPPS/LTCH PPS final rule, we are making several 
changes. We are: (1) Adopting the Safe Use of Opioids--Concurrent 
Prescribing eCQM beginning with the CY 2021 reporting period/FY 2023 
payment determination with a clarification and update; (2) adopting the 
Hybrid Hospital-Wide All-Cause Readmission (Hybrid HWR) measure (NQF 
#2879) in a stepwise fashion, beginning with two voluntary reporting 
periods which will 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 will run from July 1, 2023 
through June 30, 2024, impacting the FY 2026 payment determination and 
for subsequent years; and (3) removing the Claims-Based Hospital-Wide 
All-Cause Unplanned Readmission Measure (NQF #1789) (HWR claims-only 
measure), beginning with the FY 2026 payment determination. We are not 
finalizing our proposal to adopt the Hospital Harm--Opioid-Related 
Adverse Events eCQM. We also are establishing reporting and submission 
requirements for eCQMs, including policies 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 the eCQM reporting and 
submission requirements for the CY 2022 reporting period/FY 2024 
payment determination, such that hospitals will be required to report 
one, self-selected calendar quarter of data for three self-selected 
eCQMs and the 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 eCQM reporting and submission policies are 
in alignment with policies under the Promoting Interoperability 
Program. We also are establishing reporting and submission requirements

[[Page 42050]]

for the Hybrid HWR measure. In addition, we are summarizing public 
comments we received on three measures we are considering for potential 
future inclusion in the Hospital IQR Program.
l. 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 finalizing several changes to the Promoting 
Interoperability Program. Specifically, we are: (1) Eliminating 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 the October 1, 
2019 deadline; (2) establishing 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) requiring 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) revising the Query of PDMP measure to make it an 
optional measure worth 5 bonus points in CY 2020, removing the 
exclusions associated with this measure in CY 2020, requiring a yes/no 
response instead of a numerator and denominator for CY 2019 and CY 
2020, and clearly stating our intended policy that the measure is worth 
a full 5 bonus points in CY 2019 and CY 2020; (5) changing the maximum 
points available for the e-Prescribing measure from 5 points to 10 
points beginning in CY 2020; (6) removing the Verify Opioid Treatment 
Agreement measure beginning in CY 2020 and clearly stating our intended 
policy that this measure is worth a full 5 bonus points in CY 2019; and 
(7) revising the Support Electronic Referral Loops by Receiving and 
Incorporating Health Information measure to more clearly capture the 
previously established policy regarding CEHRT use. We also are amending 
our regulations to incorporate several of these finalized policies.
    For CQM reporting under the Medicare and Medicaid Promoting 
Interoperability Programs, we are generally aligning our requirements 
with requirements under the Hospital IQR Program. Specifically, we are: 
(1) Adopting one opioid-related CQM (Safe Use of Opioids--Concurrent 
Prescribing CQM beginning with the reporting period in CY 2021 (we are 
not finalizing our proposal to add the Hospital Harm--Opioid-Related 
Adverse Events CQM); (2) extending current CQM reporting and submission 
requirements for the reporting periods in CY 2020 and CY 2021; and (3) 
establishing CQM reporting and submission requirements for the 
reporting period in CY 2022, which will require all eligible hospitals 
and CAHs to report on the Safe Use of Opioids--Concurrent Prescribing 
eCQM beginning with the reporting period in CY 2022.
    We sought 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 adopted under the Hospital IQR Program, 
and we sought information on a variety of issues regarding the future 
direction of the Medicare and Medicaid Promoting Interoperability 
Programs. We may use the input we received to inform further 
rulemaking.
3. Summary of Costs and Benefits
     Adjustment for MS-DRG Documentation and Coding Changes. 
Section 414 of the MACRA replaced the single positive adjustment we 
intended to make in FY 2018 once the recoupment required by section 631 
of the ATRA was complete with a 0.5 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 making an adjustment 
of +0.5 percentage point to the standardized amount consistent with the 
MACRA.
     Alternative Inpatient New Technology Add-On Payment 
Pathway for Transformative New Devices: In this FY 2020 IPPS/LTCH PPS 
final rule, we are establishing an alternative inpatient new technology 
add-on payment pathway for a new medical device that is subject to the 
FDA Breakthrough Devices Program and has received FDA authorization 
(that is, received PMA approval, 510(k) clearance, or the granting of 
De Novo classification request). We are also establishing that, if a 
medical product is designated by the FDA as a Qualified Infectious 
Disease Product (QIDP) and received FDA market authorization. Under 
these alternative inpatient new technology add-on payment pathways, 
such a medical device or product will be considered new and not 
substantially similar to an existing technology for purposes of new 
technology add-on payment under the IPPS, and such a medical product or 
device will 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 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. If all of the 
future new medical devices that were part of the Breakthrough Devices 
Program and QIDPs that would have applied for new technology add-on 
payments would have been approved under the existing criteria, this 
policy has no impact. To the extent that there are future medical 
devices that were part of the Breakthrough Devices Program or QIDPs 
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 policy is a cost, 
but that cost is not estimable. Therefore, it is not possible to 
quantify the impact of this policy.
     Revisions 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.
    As discussed in section II.H.9. of the preamble of this final rule, 
we have modified the current payment mechanism to increase the amount 
of the maximum add-on payment amount to 65 percent (and 75 percent for 
QIDPs). Specifically, for technologies other than QIDPs, 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

[[Page 42051]]

will make an add-on payment equal to the lesser of: (1) 65 percent (or 
75 percent for QIDPs) of the costs of the new medical service or 
technology; or (2) 65 percent (75 percent for QIDPs) of the amount by 
which the costs of the case exceed the standard DRG payment.
    We estimate that for the nine technologies for which we are 
continuing to make new technology add on payments in FY 2020 and for 
the nine FY 2020 new technology add-on payment applications that we are 
approving for new technology add-on payments for FY 2020, these changes 
to the calculation of the new technology add-on payment will increase 
IPPS spending by approximately $94 million in FY 2020.
     Technologies Approved for FY 2020 New Technology 
Add-On Payments: In section II.H.5. of the preamble to this final rule, 
we discuss 13 technologies for which we received applications for add-
on payments for new medical services and technologies for FY 2020. We 
also discuss the status of the new technologies that were approved to 
receive new technology add-on payments in FY 2019 in section II.H.4. of 
the preamble to this final rule. As explained in the preamble to this 
final 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. Based on those technologies approved for new technology add-on 
payments for FY 2020, new technology add-on payment are projected to 
increase approximately $162 million as compared to FY 2019 (which also 
reflects the estimated changes to the calculation of the inpatient new 
technology add-on payment described above).
     Changes To Address Wage Index Disparities. As discussed in 
section III.N. of the preamble of this final 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 reducing the disparity between high and low wage 
index hospitals by increasing the wage index values for certain 
hospitals with low wage index values (that is, hospitals with wage 
index values below the 25th percentile wage index value across all 
hospitals), as well as changing the calculation of the rural floor. In 
order to offset the estimated increase in IPPS payments to hospitals 
with wage index values below the 25th percentile wage index value, we 
have applied a uniform budget neutrality adjustment to the standardized 
amount. We also are establishing a transition for FY 2020 for hospitals 
experiencing significant decreases in their wage index values, and we 
are implementing this in a budget neutral manner by applying a budget 
neutrality adjustment to the standardized amount.
     Medicare DSH Payment Adjustment and Additional Payment for 
Uncompensated Care. For FY 2020, we are updating our estimates of the 
three factors used to determine uncompensated care payments. We are 
continuing to use uninsured estimates produced by OACT, as part of the 
development of the NHEA in the calculation of Factor 2. We also are 
using a single year of data on uncompensated care costs from Worksheet 
S-10 for FY 2015 to determine 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 continuing to use only data regarding low-income insured days 
(Medicaid days for FY 2013 and FY 2017 SSI days).
    We project that the amount available to distribute as payments for 
uncompensated care for FY 2020 will increase by approximately $78 
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.
     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 changes to the payment rates and 
factors that we presented in the preamble of and Addendum to this FY 
2020 IPPS/LTCH PPS final rule, which reflect the end of the transition 
of the statutory application of the site neutral payment rate and the 
update to the LTCH PPS standard Federal payment rate for FY 2020, will 
result in an estimated increase in payments in FY 2020 of approximately 
$43 million.
     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 FY 2020 IPPS/LTCH PPS 
final rule, we estimate that 2,583 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 will save approximately 
$563 million in FY 2020.
     Value-Based Incentive Payments Under the Hospital VBP 
Program. We estimate that there will be no net financial impact to 
participating hospitals under 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.
     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 are implementing our equal measure weights 
scoring methodology. Any significant impact due to the HAC Reduction 
Program changes for FY 2020, including which hospitals will receive the 
adjustment, will depend on the actual experience of hospitals in the 
Program. We also are updating the hourly wage rate associated with 
burden for CDC NHSN HAI validation under the HAC Reduction Program.
     Changes to the Hospital Inpatient Quality Reporting (IQR) 
Program. Across 3,300 IPPS hospitals, we estimate that our changes for 
the Hospital IQR Program in this FY 2020 IPPS/LTCH PPS final rule would 
result in changes to the information collection burden compared to 
previously adopted requirements. The only policy that will affect the 
information collection burden for the Hospital IQR Program is the 
policy 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 will 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 will 
run from July 1, 2023 through

[[Page 42052]]

June 30, 2024, impacting the FY 2026 payment determination and for 
subsequent years. We estimate that the impact of this 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.
     Changes to the Medicare and Medicaid Promoting 
Interoperability Programs. We believe that, overall, the revised 
policies in this FY 2020 IPPS/LTCH PPS final rule will reduce burden, 
as described in detail in section X.B.9. of the preamble and Appendix 
A, section I.N. of this final 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) 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

[[Page 42053]]

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

C. Summary of Provisions of Recent Legislation That Are Implemented in 
This Final 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 
FY 2020 IPPS/LTCH PPS final rule, we are continuing to update certain 
policies that implemented provisions under section 1206 of the Pathway 
for SGR Reform Act.
2. Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) (Pub. L. 113-185)
    The Improving Medicare Post-Acute Care Transformation Act of 2014 
(IMPACT Act) (Pub. L. 113-185), enacted on October 6, 2014, made a 
number of changes that affect the Long-Term Care Hospital Quality 
Reporting Program (LTCH QRP). In this final rule, we are continuing to 
implement portions of section 1899B of the Act, as added by section 
2(a) of the IMPACT Act, which, in part, requires LTCHs, among other 
post-acute care providers, to report standardized patient assessment 
data, data on quality measures, and data on resource use and other 
measures.
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 continuing to 
implement in this final 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 FY 2020 IPPS/LTCH 
PPS final rule, we are continuing to implement changes to the payment 
adjustment factor to assess penalties, based on a hospital's 
performance, relative to other hospitals

[[Page 42054]]

treating a similar proportion of dual-eligible patients.

D. Issuance of Notice of Proposed Rulemaking

    In the FY 2020 IPPS/LTCH PPS proposed rule appearing in the Federal 
Register on May 3, 2019 (84 FR 19158), 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.
    In this final rule is a general summary of the changes that we 
proposed to make.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of 
Relative Weights
    In section II. of the preamble of the proposed rule, we included--
     Proposed changes to MS-DRG classifications based on our 
yearly review for FY 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 
were 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 the proposed rule we proposed to 
make revisions to the wage index for acute care hospitals and the 
annual update of the wage data. Specific issues addressed included, but 
were 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 the proposed rule, we discussed 
proposed changes or clarifications of a number of the provisions of the 
regulations in 42 CFR parts 412 and 413, including the following:
     Proposed changes to MS-DRGs subject to the postacute care 
transfer policy and special payment policy.
     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 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 the proposed rule, we discussed 
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 the proposed rule, we discussed--
     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 the is 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 the proposed rule, we 
addressed--
     Proposed requirements for the Hospital Inpatient Quality 
Reporting (IQR) Program.
     Proposed changes to the requirements for the quality 
reporting

[[Page 42055]]

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 the proposed rule, we discussed 
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 the 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 
proposed 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 
the proposed rule, we addressed 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 the 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 proposed to establish the adjustments for wage levels, the 
labor-related share, the cost-of-living adjustment, and high-cost 
outliers, including the applicable fixed-loss amounts and the LTCH 
cost-to-charge ratios (CCRs) for both payment rates.
11. Impact Analysis
    In Appendix A of the proposed rule, we set forth an analysis of the 
impact the proposed changes would have on affected acute care 
hospitals, CAHs, LTCHs, and PCHs.
12. Recommendation of Update Factors for Operating Cost Rates of 
Payment for Hospital Inpatient Services
    In Appendix B of the proposed rule, as required by sections 
1886(e)(4) and (e)(5) of the Act, we provided our recommendations of 
the appropriate percentage changes for FY 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 recommendations in Appendix B of this FY 2020 IPPS/
LTCH PPS final 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. 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 extended their comment period by 30 days and closed on June 3, 
2019. The proposed rules can be found at: www.regulations.gov.
    In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19158), we 
invited providers to learn more about these important developments and 
how they are likely to affect hospitals paid under the IPPS and the 
LTCH PPS.

[[Page 42056]]

II. 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. 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 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

[[Page 42057]]

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. Adjustment for FY 2020
    In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19170 through 
19171) consistent with the requirements of section 414 of the MACRA, we 
proposed to implement a 0.5 percentage point positive adjustment to the 
standardized amount for FY 2020. We indicated that this would 
constitute a permanent adjustment to payment rates. We stated in the 
proposed rule that we plan to propose future adjustments required under 
section 414 of the MACRA for FYs 2021 through 2023 in future 
rulemaking.
    Comment: Several commenters stated that in order to comply with 
ATRA requirements, CMS anticipated that a cumulative -3.2 percentage 
point adjustment to the standardized amount would achieve the mandated 
$11 billion recoupment. Commenters stated that CMS misinterpreted the 
relevant statutory authority, which they asserted explicitly assumes 
that recoupment under section 631 of the ATRA would result in an 
estimated -3.2 percentage point cumulative adjustment by FY 2017. 
Commenters asserted that the additional -0.7 percentage point 
adjustment made in FY 2017 has been improperly continued in FY 2018 and 
FY 2019, and failure to restore the additional 0.7 percentage point 
adjustment will make this reduction in hospital payments a permanent 
part of the baseline calculation of the IPPS rates, which, they 
contend, was not Congress's legislative intent in implementing the 
series of adjustments required under section 414 of the MACRA. 
Commenters urged CMS to use its exceptions and adjustments authority 
under section 1886(d)(5)(I) to restore an additional 0.7 percentage 
point payment adjustment in FY2020 to restore payment equity to 
hospitals and comply with what they asserted was Congressional intent. 
Other commenters suggested CMS implement an approximate positive 
adjustment of 1.0 percentage point by FY 2024 to fully and permanently 
restore the entire -3.9 percentage point recoupment adjustment to IPPS 
rates. A commenter requested that CMS provide its rationale for failing 
to do so. Finally, some of the commenters, while acknowledging that CMS 
may be bound by law, expressed opposition to the permanent reductions 
and requested that CMS refrain from making any additional coding 
adjustments in the future.
    Response: As we discussed in the FY 2020 IPPS/LTCH PPS proposed 
rule (84 FR 19170 through 19171), and in response to similar comments 
in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41157), we believe 
section 414 of the MACRA and section 15005 of the 21st Century Cures 
Act set forth the levels of positive adjustments for FYs 2018 through 
2023. We are not convinced that the adjustments prescribed by MACRA 
were predicated on a specific adjustment level estimated or implemented 
by CMS in previous rulemaking. While we had anticipated making a 
positive adjustment in FY 2018 to offset the reductions required to 
recoup the $11 billion under section 631 of the ATRA, section 414 of 
the MACRA required that we implement a 0.5 percentage point positive 
adjustment for each of FYs 2018 through 2023, and not the single 
positive adjustment we intended to make in FY 2018. As discussed in the 
FY 2017 IPPS/LTCH PPS final rule, by phasing in a total positive 
adjustment of only 3.0 percentage points, section 414 of the MACRA 
would not fully restore even the 3.2 percentage point adjustment 
originally estimated by CMS in the FY 2014 IPPS/LTCH PPS final rule (78 
FR 50515). Moreover, as discussed in the FY 2018 IPPS/LTCH PPS final 
rule, Public Law 114-255, which further reduced the positive adjustment 
required for FY 2018 from 0.5 percentage point to 0.4588 percentage 
point, was enacted on December 13, 2016, after CMS had proposed and 
finalized the final negative -1.5 percentage point adjustment required 
under section 631 of the ATRA. We see no evidence that Congress enacted 
these adjustments with the intent that CMS would make an additional 
+0.7 percentage point adjustment in FY 2018 to compensate for the 
higher than expected final ATRA adjustment made in FY 2017, nor are we 
persuaded that it would be appropriate to use the Secretary's 
exceptions and adjustments authority under section 1886(d)(5)(I) of the 
Act to adjust payments in FY 2020 to restore any additional amount of 
the original 3.9 percentage point reduction, given Congress' 
prescriptive adjustment levels under section 414 of the MACRA and 
section 15005 of the 21st Century Cures Act.
    After consideration of the public comments we received, we are 
finalizing our proposal to implement a 0.5 percentage point adjustment 
to the standardized amount for FY 2020.

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 calculated the final 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 adjusted the charges from the claims to costs by applying 
the 19 national average CCRs developed from the cost reports. The 
description of the calculation of the 19 CCRs and the MS-DRG relative 
weights for FY 2020 is included in section II.G. of the preamble to 
this FY 2020 IPPS/LTCH PPS final rule. As we did with the FY 2019 IPPS/
LTCH PPS final rule, for this FY 2020 final rule, we are providing the 
version of the HCRIS from which we calculated these 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 Final Rule Home Page'' or 
``Acute Inpatient Files for Download.''

[[Page 42058]]

    Comment: A commenter recommended that CMS work with stakeholders to 
update cost reporting instructions and improve the accuracy and 
validity of the national average CCRs. The commenter expressed concern 
that the differences between hospitals' use of nonstandard cost center 
codes and CMS' procedures for mapping and rolling up nonstandard codes 
to the standard cost centers will continue to result in invalid CCRs 
and inaccurate payments. The commenter stressed the need for 
flexibility in cost reporting, to accommodate any new or unique 
services that certain hospitals may provide, which may not be easily 
captured through the cost reporting software. Finally, the commenter 
again recommended, as it had done in response to prior IPPS rules, that 
CMS pay particular attention to data used for CT scan and MRI cost 
centers; the commenter believed that the hospital payment rates 
established by CMS from the CT scan and MRI CCRs simply do not 
correlate with resources used for these capital-intensive services.
    Response: We have addressed similar public comments in prior 
rulemaking and refer readers to the FY 2017 IPPS/LTCH PPS final rule 
(81 FR 56787) for our response to these issues. We note that we will 
continue to explore ways in which we can improve the accuracy of the 
cost report data and calculated CCRs used in the cost estimation 
process.

F. Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for 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 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 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 final rule. As discussed in the proposed rule and 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 proposed to the MS-DRGs for FY 
2020 in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19171 through 
19257). We invited public comments on each of the MS-DRG classification 
proposed changes, as well as our proposals to maintain certain existing 
MS-DRG classifications discussed in the proposed rule. In some cases, 
we proposed changes to the MS-DRG classifications based on our analysis 
of claims data and consultation with our clinical advisors. In other 
cases, we proposed to maintain the existing MS-DRG classifications 
based on our analysis of claims data and consultation with our clinical 
advisors. For the FY 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 referred to our analysis of claims data from the 
``September 2018 update of the FY 2018 MedPAR file.''
    In this FY 2020 IPPS/LTCH PPS final rule, we summarize the public 
comments we received on our proposals, present our responses, and state 
our final policies. For this FY 2020 final rule, we generally did not 
perform any further MS-DRG analysis of claims data. Therefore, our MS-
DRG analysis is 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, except as otherwise noted.
    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

[[Page 42059]]

(MCC) subgroup within a base MS-DRG is warranted:
     A reduction in variance of costs of at least 3 percent;
     At least 5 percent of the patients in the MS-DRG fall 
within the CC or MCC subgroup;
     At least 500 cases are in the CC or MCC subgroup;
     There is at least a 20-percent difference in average costs 
between subgroups; and
     There is a $2,000 difference in average costs between 
subgroups.
    In order to warrant creation of a CC or MCC subgroup within a base 
MS-DRG, the subgroup must meet all five of the criteria.
    We are making the FY 2020 ICD-10 MS-DRG GROUPER and Medicare Code 
Editor (MCE) Software Version 37, the ICD-10 MS-DRG Definitions Manual 
files Version 37 and the Definitions of Medicare Code Edits Manual 
Version 37 available to the public on our CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
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.
    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.

[[Page 42060]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.001

    As noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19173), 
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

[[Page 42061]]

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.
    We stated in the proposed rule that 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 noted 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 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. For FY 2020, as discussed in 
the FY 2020 IPPS/LTCH PPS proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.002

    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 9 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 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.
    In the proposed rule, we stated that 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. We also stated that 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. Further, we noted that 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

[[Page 42062]]

secondary diagnosis MCC and secondary diagnosis CC conditions that were 
reported within the claims data with procedure code 5A15223.
[GRAPHIC] [TIFF OMITTED] TR16AU19.003

BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR16AU19.004


[[Page 42063]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.005

BILLING CODE 4120-01-C
    We stated in the proposed rule that 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), we stated that 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, we stated in the proposed rule that 
our clinical advisors agreed 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, we stated that 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 in the proposed 
rule and 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 (84 FR 
19175). 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. We also stated in the proposed rule 
that, 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

[[Page 42064]]

noted 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 
noted in the proposed rule that a request and proposal to create ICD-
10-PCS codes to differentiate between peripheral vessel percutaneous 
and peripheral vessel open cutdown 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 noted 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, in the FY 2020 
IPPS/LTCH PPS proposed rule, we stated that our clinical advisors 
supported 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 proposed 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. We stated 
in the proposed rule that, 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 also noted in the 
proposed rule that this proposal included maintaining the designation 
of these peripheral ECMO procedures as non-O.R. Therefore, we stated in 
the proposed rule that, if finalized, the procedures would be defined 
as non-O.R. affecting the MS-DRG assignment for Pre-MDC MS-DRG 003.
BILLING CODE 4120-01-P

[[Page 42065]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.006

BILLING CODE 4120-01-C
    Comment: Several commenters expressed support for the proposal to 
reassign procedure codes 5A1522G and 5A1522H describing peripheral ECMO 
procedures from their current MS-DRG assignments to Pre-MDC MS-DRG 003 
and to revise the titles for MS-DRGs 207, 291, 296 and 870 as shown in 
the table above. The commenters stated that this reassignment more 
appropriately reflects the resource utilization of patients requiring 
this treatment. A commenter also stated their appreciation of CMS' 
research for the proposal which they believe was needed to maintain the 
financial viability of ECMO programs. Another commenter stated they 
agreed with the non-O.R. designation of peripheral ECMO procedures 
noting these procedures are typically performed at the bedside or in

[[Page 42066]]

an ICU setting due to the emergent condition of the patient. This 
commenter also stated that the delivery of ECMO support in a non-O.R. 
setting does not diminish the resource intensive nature of the 
treatment however, and therefore agreed with the designation of non-
O.R. affecting Pre-MDC MS-DRG 003.
    Response: We thank the commenters for their support.
    Comment: A few commenters recommended that ICD-10-PCS procedure 
codes 5A1522G and 5A1522H be assigned to MS-DRG 215 (Other Heart Assist 
System Implant) as opposed to Pre-MDC MS-DRG 003. The commenters stated 
that MS-DRG 215 is the primary MS-DRG for peripheral heart assist pumps 
with similar patient conditions and clinical coherence. A commenter 
stated that assigning percutaneous (peripheral) ECMO into a different 
category for payment than percutaneous VAD (Ventricular Assist Device) 
creates a system of winners and losers by device.
    Response: We thank the commenters for their recommendation. We note 
that as stated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41168), 
in cases where a percutaneous external heart assist device is utilized, 
in combination with a percutaneous ECMO procedure, effective October 1, 
2018, the ICD-10 MS-DRG GROUPER logic results in a case assignment to 
MS-DRG 215 because the percutaneous external heart assist device 
procedure is designated as an O.R. procedure and assigned to MS-DRG 
215. We also note that under the ICD-10-PCS classification, ECMO is not 
defined as a device. The procedure codes in Table 5A0, specifically any 
procedure code for ECMO, do not contain a device value for the sixth 
character, rather they contain a function value for the sixth character 
to identify oxygenation.
    Comment: A commenter expressed concern with the proposal to 
continue designating peripheral ECMO procedures as non-O.R. procedures, 
however, the commenter acknowledged that these procedures may be 
performed in non-O.R. locations such as the ER or ICU. The commenter 
noted that the determining factor for the location where ECMO is 
initiated is typically dictated by the patient's situation. According 
to the commenter, for critically ill patients who require life-saving 
ECMO, cannulation and initiation of the ECMO circuit is usually done in 
an emergent manner. The commenter also noted that these patients are 
often at risk of imminent death and cannot safely be moved to another 
location for cannulation and ECMO initiation. The commenter requested 
that CMS review the designation of the ECMO codes and consider the 
unique nature of these procedures during the comprehensive review of 
the ICD-10-PCS procedure codes.
    Response: We appreciate the commenter's feedback. As noted in the 
proposed rule and in section II.F.13.a. of the preamble of this final 
rule, we plan to conduct a comprehensive, systematic review of the ICD-
10-PCS procedure codes, including the ECMO procedure codes, and as part 
of that comprehensive procedure code review, we will also review the 
process for determining when a procedure is considered an operating 
room procedure.
    Comment: A commenter noted that the FY 2020 ICD-10-PCS codes were 
made publicly available in June 2019 and that new procedure codes 
describing intraoperative ECMO were created. The commenter requested 
that CMS provide guidance on the correct reporting of these procedure 
codes when performed in the cardiac catheterization lab, the 
electrophysiology lab or other inpatient places of service, including 
the O.R., since the designation of these new procedure codes is non-
O.R.
    Response: The commenter is correct that the FY 2020 ICD-10-PCS 
procedure code files were made publicly available in June 2019 (which 
are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/2020-ICD-10-PCS.html) and that new 
procedure codes describing intraoperative ECMO have been created. As 
shown in Table 6B.--New Procedure Codes, associated with this final 
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), procedure codes 5A15A2F (Extracorporeal 
oxygenation, membrane, central, intraoperative), 5A15A2G 
(Extracorporeal oxygenation, membrane, peripheral veno-arterial, 
intraoperative) and 5A15A2H (Extracorporeal oxygenation, membrane, 
peripheral veno-venous, intraoperative) are effective with discharges 
on and after October 1, 2019 and are designated as non-O.R. procedures. 
We note that, historically, we have not provided coding advice in 
rulemaking with respect to policy. We collaborate with the American 
Hospital Association (AHA) through the Coding Clinic for ICD-10-CM and 
ICD-10-PCS to promote proper coding (81 FR 56841).
    Comment: Some commenters suggested that CMS should assign the new 
procedure codes describing intraoperative peripheral ECMO procedures 
(as discussed above) to Pre-MDC MS-DRG 003 until claims data is 
available to analyze their impact on resource utilization.
    Response: We appreciate the commenters' suggestion, however, as 
discussed at the ICD-10 Coordination and Maintenance Committee meeting 
held on March 5-6, 2019, the request (and subsequent finalization) for 
new procedure codes describing the intraoperative use of ECMO was 
specifically to address those situations in which the use of the ECMO 
was in support of a surgical (O.R.) procedure and the ECMO was 
discontinued at the conclusion of the procedure. For example, a patient 
who undergoes a lung transplant and receives ECMO support during the 
transplant procedure and the ECMO is discontinued at the conclusion of 
the lung transplant procedure. In this scenario, it is the lung 
transplant that is the surgical (O.R.) procedure and case assignment to 
MS-DRG 007 (Lung Transplant) by the GROUPER logic is what is 
appropriately reflected in the MedPAR claims data. As stated in the 
proposed rule and in this final rule, 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 involves review of the predecessor 
procedure code assignment. However, this process does not automatically 
result in the new procedure code being assigned to the same MS-DRG as 
the predecessor code. Consistent with our annual process of reviewing 
the MS-DRGs, we will continue to monitor cases to determine if any 
additional adjustments are warranted to account for changes in resource 
consumption.
    Comment: A few commenters requested that CMS consider reprocessing 
claims for cases reporting procedure code 5A1522G or 5A1522H in MS-DRGs 
207, 291, 296 or 870 in FY 2019 as a result of the financial impact it 
has had on providers and their belief that the codes were 
inappropriately classified. Specifically, commenters questioned if CMS 
would permit acute care hospitals to re-bill all FY 2019 ECMO cases 
under MS-DRG 003 to recoup lost revenues.
    Response: As previously discussed, consistent with our annual 
process of assigning new procedure codes to MDCs and MS-DRGs, we 
reviewed the predecessor procedure code assignments, as well as other 
factors relevant to the MS-DRG assignment. As

[[Page 42067]]

discussed in the proposed rule, after further consideration of these 
factors and review of these cases, including the data analysis 
described previously, CMS proposed to change the assignment of these 
cases beginning in FY 2020. As such, and consistent with our general 
approach to changes in MS-DRG assignment, the finalized policy we are 
adopting with regard to the assignment of cases reporting peripheral 
ECMO procedures is prospective, effective with discharges beginning in 
FY 2020 and is not applicable to discharges in FY 2019. We also note 
that section 1886(d)(5)(A) of the Act provides for Medicare payments to 
Medicare-participating hospitals in addition to the basic prospective 
payments for cases incurring extraordinarily high costs. To qualify for 
outlier payments, a case must have costs above a fixed-loss cost 
threshold amount (a dollar amount by which the costs of a case must 
exceed payments in order to qualify for outliers).
    Comment: A commenter stated that Tables 7A and 7B associated with 
the proposed rule show a decline of the case counts in Pre-MDC MS-DRG 
003 from Version 36 to Version 37 of the ICD-10 MS-DRG GROUPER (15,749 
vs. 15,164). The commenter stated that under the current proposal to 
reassign cases reporting peripheral ECMO procedures, they would expect 
to see a shift in cases to Pre-MDC MS-DRG 003 from MS-DRGs 207, 291, 
296, and 870 for the cases reporting procedures for peripheral ECMO. 
The commenter requested that CMS revisit these tables to provide 
insight and clarification concerning a potential issue with the 
surgical hierarchy given that the peripheral ECMO procedure codes are 
not recognized as O.R. procedures and the Version 36 volume of cases is 
higher than the Version 37 volume of cases based on the data within 
these tables.
    Response: We reviewed the cases assigned to Pre-MDC MS-DRG 003 and 
found that the majority of the reduction in the case counts between 
Version 36 and Version 37 of the GROUPER was attributable to the 
proposed change in the designation of the ICD-10-PCS procedure codes 
describing bronchoalveolar lavage from O.R. to non-O.R. status, which 
is discussed in section II.F.13.b.1. of the preamble of this final 
rule. Since these procedures were the only operating room procedure 
reported for these cases, the proposed change in the O.R. status of 
these codes resulted in the reassignment or ``shift'' of these cases 
reporting these procedures from Pre-MDC MS-DRG 003 to Pre-MDC MS-DRG 
004. As discussed in section II.F.13.b.1, we are finalizing this 
proposed change in designation for these procedure codes, and therefore 
Tables 7A and 7B associated with this final rule reflect similar 
``shifts'' in the volume of cases reported to MS-DRG 003 between 
Version 36 and Version 37 of the GROUPER.
    After consideration of the public comments we received, we are 
finalizing our proposal to reassign the procedure codes describing 
peripheral ECMO procedures from their current MS-DRG assignments to 
Pre-MDC MS-DRG 003 and maintain the designation of the peripheral ECMO 
procedures as non-O.R. We are also finalizing our proposal to make 
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 under the ICD-10 MS-DRGs Version 37, 
effective October 1, 2019.
b. Allogeneic Bone Marrow Transplant
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19176), 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 
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.
    As noted in the proposed rule, 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.

BILLING CODE 4120-01-P

[[Page 42068]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.007

    As noted in the FY 2020 IPPS/LTCH PPS proposed rule, 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 42069]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.245

BILLING CODE 4120-01-C
    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.
    We stated in the proposed rule that 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 noted 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, we stated that, 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. We stated that 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 noted 
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/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html for the committee meeting materials and 
discussion regarding this proposal.
    In the proposed rule, 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, we stated that our clinical advisors supported 
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 in the proposed rule 
and 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, in the proposed rule, we stated that we are 
further reviewing the Medicare Claims Processing Manual to identify 
potential revisions to address this duplication. However, we also noted 
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 noted 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, in the proposed rule, we stated that 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, in the 
proposed rule we noted 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 final 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, in the FY 2020 IPPS/LTCH PPS 
proposed

[[Page 42070]]

rule, we did not propose to change the current structure of MS-DRG 014. 
In addition, we did not propose 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 procedure codes for allogeneic HCT procedures that are assigned 
to MS-DRG 014, in the proposed rule, we noted that 8 procedure codes 
for autologous HCT procedures are currently included in MS-DRG 014, as 
shown in the following table. We stated that these codes are not 
properly assigned because MS-DRG 014 is defined by cases reporting 
allogenic HCT procedures.
    In the proposed rule, we stated that 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 noted that, of these 8 
procedure codes, there are 4 procedure codes that describe a 
transfusion via arterial access. As noted in the proposed rule and 
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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.009

    We stated in the proposed rule that, while we believe, as 
indicated, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.010

    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 stay of 11 days and average costs of $33,540.
    As indicated in the FY 2020 IPPS/LTCH PPS proposed rule, the 
results of our analysis indicate that the frequency with which these 
autologous HCT procedure codes were reported in MS-

[[Page 42071]]

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. 
We further stated in the proposed rule that 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, in the 
FY 2020 IPPS/LTCH PPS proposed rule, we proposed 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.011

    As discussed in the proposed rule and 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.
    We stated in the proposed rule that 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 the 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.
    As discussed in the proposed rule, 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 the proposed rule. Our 
clinical advisors agreed that because a transfusion procedure always 
uses venous access rather than arterial access, these codes are 
considered invalid. We stated in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.012

    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, in the FY 2020 IPPS/LTCH PPS proposed rule, we 
proposed 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 listed 
in Table 6P.1a associated with the proposed rule. As discussed 
previously, we did not propose 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.
    Comment: Commenters supported the proposal to maintain the current 
structure of MS-DRG 014. Commenters also supported the proposals 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. A commenter 
specifically expressed their appreciation with CMS' diligence in 
ensuring the clinical appropriateness of the ICD-10 codes. This 
commenter also requested that CMS create an edit (similar to what was 
implemented in the CY 2017 Hospital Outpatient Prospective Payment 
System final rule, which states outpatient claims assigned to C-APC 
5224 with CPT code 38240 must be

[[Page 42072]]

reported with revenue code 0815, and if that code is missing, the claim 
is returned by an edit to the provider) for inpatient claims utilizing 
ICD-10-PCS codes and revenue code 0815. According to the commenter, 
this would better inform CMS future ratesetting and reimbursement, as 
well as provide access to the more robust data in revenue code 0815 
which the commenter asserted would allow CMS to do a meaningful 
analysis on the differences between search and procurement costs for 
related versus unrelated transplants. The commenter also recommended 
that CMS look at bone marrow and stem cell transplant services 
holistically and consider the process that providers must follow in 
order to correctly code and submit a claim.
    Response: We appreciate the commenters' support. With regard to the 
recommendation that we create a new code edit for ICD-10-PCS codes 
reported with revenue code 0815 on the claim, as we noted in the 
proposed rule, 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 final rule, it is a software program that detects and 
reports errors in the coding of Medicare claims data. In response to 
the commenter's recommendation that we consider the process that 
providers must follow in order to correctly code and submit a claim, we 
note that, as stated in the proposed rule, and above, 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. As 
indicated, we are considering additional revisions as needed to conform 
the instructions for reporting these codes in the Medicare Claims 
Processing Manual.
    After consideration of the public comments we received, we are 
finalizing our proposal 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 and 
listed in Table 6P.1a associated with the proposed rule and this final 
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) under the ICD-10 MS-DRGs Version 37, 
effective October 1, 2019.
c. Chimeric Antigen Receptor (CAR) T-Cell Therapies
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19180), 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 the development of 
unique CAR T-cell therapy revenue and cost centers for billing and cost 
reporting purposes. In the proposed rule, we stated that we will 
consider these technical and operational suggestions in the development 
of future billing and cost reporting guidelines and instructions.
    In the FY 2020 IPPS/LTCH PPS proposed rule, we noted that, 
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 in the proposed rule and 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. We 
stated in the FY 2020 IPPS/LTCH PPS proposed rule that, 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 stated that we do 
not have the comprehensive clinical and cost data that we generally 
believe are needed to do so. Furthermore, we stated in the proposed 
rule that 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 the proposed rule and this final 
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 did not propose to modify the current MS-DRG 
assignment for cases reporting CAR T-cell therapies for FY 2020. We 
noted that 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. We stated that 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.
    Comment: Several commenters supported our proposal not to modify 
the current MS-DRG assignment for cases reporting CAR T-cell therapies 
for FY 2020, stating that CMS should wait until more clinical and cost 
data are available. Commenters indicated that CMS should wait until 
claims are coded and billed in a uniform manner so that consistent and 
accurate claims data is available for rate-setting. MedPAC also stated 
that incorporating new technologies into the Medicare program by using 
an existing MS-DRG in conjunction with new technology add-on payments 
and outlier payments has created incentives for efficiency and risk-
sharing between providers and the Medicare program.

[[Page 42073]]

    Response: We appreciate the commenters' support for our proposal 
and agree that incorporating new technologies into the Medicare program 
by using an existing MS-DRG in conjunction with new technology add-on 
payments, and outlier payments if applicable, is consistent with our 
policies regarding how new technologies are incorporated into the IPPS.
    Comment: Several other commenters encouraged CMS to develop a new 
MS-DRG for cases reporting CAR T-cell therapies for FY 2020 in order to 
adequately cover the costs of treatment and so as not to dis-
incentivize hospitals from providing CAR T-cell therapies due to 
inadequate reimbursement. Most of these commenters recommended 
alternative payment approaches for the CAR T-cell product if a new MS-
DRG were created.
    A commenter stated that claims analyses from the FY 2019 IPPS/LTCH 
PPS proposed rule for the KYMRIAHTM and 
YESCARTATM new technology add-on payment applications found 
a significant number of patients who may be eligible for use of these 
therapies, which may be reflective of the potential growth of these 
therapies in the future. The commenter also stated that according to 
the FY 2018 MEDPAR update, other pre-MDC MS-DRGs contain fewer cases 
than the 386 CAR T-cell discharges that CMS estimated would qualify for 
new technology add-on payments. The commenter stated that this suggests 
that there are enough cases for CAR T-cell therapies to be considered 
for their own MS-DRG assignment. Another commenter stated that in the 
FY 2019 IPPS/LTCH PPS proposed rule, CMS expressed concern about the 
potential redistributive effects away from core hospital services over 
time toward specialized hospitals and how that may affect payment for 
core services if a new MS-DRG is created. The commenter stated they 
shared these concerns; however, believed they are mitigated to the 
extent that CMS creates a new MS-DRG during a time when the volume of 
CAR T-cell cases is very low. They also noted the technology will 
likely become less expensive, not more expensive over time, as commonly 
occurs with expensive new technologies. The commenter urged CMS to 
create a new MS-DRG specific to CAR T-cell cases for use in FY 2020. 
The commenter expressed concern that if CMS waits to make an MS-DRG 
change at a time when volume is higher, but before the CAR T-cell cases 
have become less expensive, the CAR T-cell cases will draw a higher 
amount of additional payments at the expense of all other cases.
    Response: As discussed in the proposed rule, we continue to believe 
that we do not have the comprehensive clinical and cost data that we 
generally believe is needed to create a new MS-DRG. As stated earlier, 
we also continue to believe that incorporating new technologies into 
the Medicare program by using an existing MS-DRG in conjunction with 
new technology add-on payments, and outlier payments if applicable, is 
consistent with our policies regarding how new technologies are 
incorporated into the IPPS. We note that we address additional comments 
relating to the creation of a separate MS-DRG, including potential 
payment approaches, in the discussion of alternative payment for CAR T-
cell therapy cases that follows.
    With respect to the number of cases, we note that the new 
technology add-on payment estimate is a projection of future cases. Our 
standard practice in determining whether to create a new MS-DRG is to 
examine the number of cases, and the clinical and cost characteristics 
of those cases in the historical claims data. We do not have the 
clinical and cost data about these projected future FY 2020 cases 
available at this time.
    With respect to the commenter who expressed concern that waiting to 
create a new MS-DRG would draw a higher amount of additional payments 
at the expense of all other cases, we are unclear as to the specific 
concern being raised by the commenter. Each year, we calculate the 
relative weights by dividing the average cost for cases within each MS-
DRG by the average cost for cases across all MS-DRGs. Since the 
relative weight is recalculated each year, the implications for the 
payments for other cases do not differ based on when a new MS-DRG is 
created.
    Therefore, after consideration of the comments we received, and for 
the reasons discussed, we are finalizing our proposal not to modify the 
MS-DRG assignment for cases reporting CAR-T cell therapies for FY 2020. 
As noted previously, we address additional comments we received 
relating to the creation of any potential new MS-DRG, including payment 
under any such MS-DRG, in the discussion that follows.
    As part of our solicitation of public comment on the potential 
creation of a new MS-DRG for CAR-T cell therapy procedures, in the 
proposed rule we also invited comment on the most appropriate way to 
develop the relative weight if we were to finalize the creation of a 
new MS-DRG in future rulemaking. We stated that, 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 invited 
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. We stated in the 
proposed rule that, 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. We also stated 
that 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. We stated that 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 
requested public comments on these approaches or other approaches for 
setting the relative weight if we were to finalize a new MS-DRG. We 
noted 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.
    Comment: We received many comments on the most appropriate way to 
develop the relative weight and modify rate setting trims if we were to 
finalize the creation of a new MS-DRG, including different ways to 
determine the cost of the CAR T-cell therapy product, such as the use 
of Average Sales Price data or acquisition cost data, and technical 
comments on claims inclusion and exclusion criteria related to clinical 
trials.
    Response: As discussed previously in this section, we are 
finalizing our proposal not to modify the MS-DRG assignment for cases 
reporting CAR-T cell therapies for FY 2020. We will

[[Page 42074]]

consider these comments in connection with any future rulemaking 
relating to the MS-DRG assignment for the CAR-T cell therapy cases.
    As discussed further in section II.G.7. of the preamble to the 
proposed rule, we also requested public comment on payment alternatives 
for CAR T-cell 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. We also requested public comments on 
whether 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 invited public comments on how payment alternatives for CAR T-
cell therapy would affect access to care, as well as how they would 
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) and the FY 2020 IPPS/LTCH 
PPS proposed rule (84 FR 19279), we are considering approaches and 
authorities to encourage value-based care and lower drug prices. We 
solicited 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.
    Comment: Some commenters indicated that CMS should pay for CAR T-
cell therapy products based on the Average Sales Price. Some commenters 
noted that CMS pays for hemophilia blood clotting factors in this 
manner. A commenter recognized that payment for blood clotting factors 
in this manner was established by statute, but suggested that CMS may 
have the statutory authority to pay using this approach, or CMS could 
seek statutory authority from Congress. Another commenter urged CMS to 
pay for CAR T-cell therapies at Wholesale Acquisition Cost (WAC) plus 
six percent. Some commenters suggested that CMS require hospitals to 
submit on the claim the particular CAR T-cell product's NDC code. Other 
commenters stated given the similarity of CAR T-cell therapies to solid 
organ transplants, in that they are high-cost, low-volume services, CMS 
should pay for CAR T-cell therapies on a reasonable cost basis. Some 
commenters indicated that CMS should require providers to report value 
code 86, the actual invoice/acquisition cost, on their claims and 
include the actual product acquisition cost on the claim for payment 
purposes.
    Several commenters suggested that CMS adopt a CCR of 1.0 for CAR T-
cell products for all payment purposes, including new technology add-on 
payments, outlier payments, and payments to IPPS-excluded cancer 
hospitals. These commenters stated that utilizing a CCR of 1.0 will 
ensure uniformity among providers, many of whom are currently marking 
up the CAR-T charge, which impacts CMS' ability to analyze claims data 
that are critical for rate setting. These commenters also stated that 
they believe the use of a CCR of 1.0 would ensure consistent billing 
practices and payment that would be mutually beneficial for CMS and 
providers, including eliminating the need for providers to mark-up the 
CAR T-cell product cost. MedPAC expressed concern about using a CCR of 
1.0, which would presume the hospitals charged their actual costs 
despite what it stated was the clear financial incentive to increase 
charges. MedPAC also expressed concern that this could set a precedent 
for other items going forward, and instead recommended the use of a 
lagged ASP based payment. Another commenter stated that using a CCR of 
1.0 is a radical departure from previous payment methods and CMS should 
carefully consider possible issues that may result.
    Many commenters requested structural changes in new technology add-
on payments for the drug therapy, including the use of a uniform add-on 
payment. Many commenters also requested a higher new technology add-on 
payment percentage for CAR T-cell therapy products, up to 100 percent, 
rather than our proposed 65 percent for all new technologies, 
indicating that the proposed 65 percent would result in inadequate 
payment.
    Some commenters suggested that CMS develop and release for comment 
an outcomes-based payment model for CAR T-cell therapy payments in the 
future and encouraged CMS to consider a payment alternative for CAR T-
cell therapy under which CMS would test a new payment model through the 
Innovation Center and would pay for these technologies based on outcome 
and value rather than service.
    Response: After a review of the comments received, we continue to 
believe, similar to last year, that given the relative newness of CAR 
T-cell therapy, and our continued consideration of approaches and 
authorities to encourage value-based care and lower drug prices, it 
would be premature to adopt structural changes to our existing payment 
mechanisms, either under the IPPS or for IPPS-excluded cancer 
hospitals, specifically for CAR T-cell therapy. For these reasons, we 
disagree with the commenters' requested changes to our current payment 
mechanisms for FY 2020, including, but not limited to, the creation of 
a pass-through payment; structural changes in new technology add-on 
payments and/or a differentially higher new technology add-on payment 
percentage specifically for CAR T-cell products, and changes in the 
usual cost-to-charge ratios (CCRs) used in ratesetting and payment, 
including those used in determining new technology add-on payments, 
outlier payments, and payments to IPPS excluded cancer hospitals. 
However, as discussed elsewhere in this final rule, we are finalizing a 
maximum new technology add-on payment percentage of 65 percent of the 
costs of the new technology for FY 2020, a 30 percent ((0.65/0.50)-1) 
increase from the current 50 percent. This increase to 65 percent will 
apply to all approved new technologies (except products designated by 
the FDA as a Qualified Infectious Disease Products, for which the 
maximum add-on amount will be 75 percent of the costs of the new 
technology), including CAR T-cell therapy products.
    We stated in the proposed rule that 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, in the proposed 
rule we invited public comments on whether we

[[Page 42075]]

should not geographically adjust the payment for cases assigned to any 
potential new MS-DRG for CAR-T cell therapy procedures. We also invited 
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 noted 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 as those of CAR T-cell therapies, nor would 
they represent as significant a percentage of the average costs for the 
case. We invited 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.
    Comment: Some commenters stated that CMS should include adjustments 
for the wage index in a potential future MS-DRG for CAR T-cell 
therapies, including commenters that expressed concern that not 
applying the wage index would increase provider losses on these 
services. Some commenters stated that they did not believe CMS had the 
statutory flexibility to selectively apply the wage index. Many other 
commenters stated that CMS should not apply the wage index to the cost 
of the drug, as the cost does not vary by location, and hospitals with 
a wage index greater than 1 would be overpaid for the drug, while 
hospitals with a wage index less than 1 would be underpaid.
    Response: We appreciate the commenters' input on the application of 
the wage index to a potential future MS-DRG for CAR T-cell therapies. 
We will consider these comments should we develop a proposed MS-DRG for 
CAR T-cell therapies in the future.
    As discussed in the proposed rule, 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.
    In the proposed rule we stated that, 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 invited 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 invited 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 invited 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.
    Comment: Several commenters stated that CMS should include 
adjustments for DSH and IME in a potential future MS-DRG for CAR T-cell 
therapies (as described below); some commenters stated that they did 
not believe CMS had the statutory flexibility to selectively apply 
these adjustments. Commenters also expressed concern that not applying 
these adjustments would increases provider losses on these services. 
Several commenters stated that the IME adjustment is not based on a 
requirement that the costs for each service at a teaching hospital are 
greater than at a non-teaching hospital, but is instead due to the 
recognition that overall the costs are greater. A commenter stated that 
teaching hospitals are under considerable financial strain, that they 
will disproportionately shoulder the burdens of new, higher cost 
services, and that CMS should consider these costs and burdens before 
determining that the IME adjustment to CAR T-cell therapy cases would 
result in a payment that is too high. This commenter also stated that 
hospitals that receive DSH payments are less profitable than hospitals 
serving better-insured populations. Therefore, in order for these 
hospitals to access expensive new technologies, they need to receive a 
level of reimbursement that can support these services.
    Many commenters stated that CMS should not apply the DSH and IME 
adjustments to the entire MS-DRG payment for CAR T-cell therapy cases, 
as this would result in a higher than appropriate payment. Several of 
these commenters also suggested that CMS consider ``carving out'' 
payment for CAR T-cell therapy cases to avoid this problem.
    Response: We appreciate the commenters' input on the application of 
the DSH and IME adjustments to a potential future MS-DRG for CAR T-cell 
therapies. We will consider these comments should we develop a proposed 
MS-DRG for CAR T-cell therapies in the future.
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''. In the FY 2020 IPPS/LTCH PPS proposed rule, 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

[[Page 42076]]

artery; and 14 codes describing dilation of a vein (jugular, vertebral 
and face), as shown in the following table.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR16AU19.013

BILLING CODE 4120-01-C
    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.

[[Page 42077]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.014

    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 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.
    In the proposed rule, we noted that 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 proposed 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.
    We also indicated in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.015

    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.
    In the proposed rule, we stated that 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

[[Page 42078]]

describe a carotid artery stent procedure to MS-DRGs 037, 038, and 039. 
Therefore, we proposed 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. In the 
proposed rule, we stated that 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 the 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 proposed to remove from MS-DRGs 037, 038, and 039.
    We also noted that, as discussed in the proposed rule and section 
II.F.14.f. of the preamble of this final 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 noted in the proposed rule that, of the 96 procedure codes that we 
proposed to remove from the logic for MS-DRGs 037, 038, and 039, there 
are 48 procedure codes that include the qualifier term ``bifurcation''. 
Therefore, we stated in the proposed rule that these 48 procedure codes 
will be deleted effective October 1, 2019. We stated that the 48 
remaining valid procedure codes that do not include the term 
``bifurcation'' that we proposed to remove from MS-DRGs 037, 038, and 
039 will continue to be assigned to MS-DRGs 034, 035, and 036.
    Lastly, we stated in the proposed rule that, 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 definition of these 
MS-DRGs based on the discussion and proposals described above.
    Comment: Several commenters supported this proposal stating that 
only procedures involving dilation of a carotid artery using 
intraluminal devices should be included in MS-DRGs 034-036 and that 
procedures that do not involve both a carotid artery and an 
intraluminal device should be removed from MS-DRGs 034-036. Several 
commenters also supported our proposal to remove 96 ICD-10 PCS codes 
describing dilation of a carotid artery with intraluminal device from 
MS-DRGs 037, 038 and 039 and to delete the 48 procedure codes from MS-
DRGs 037, 038, and 039 that include the qualifier term ``bifurcation.
    Response: We appreciate the commenters' support.
    Comment: A commenter expressed concern and disagreed with the 
proposal to delete the procedure codes that include the qualifier term 
``bifurcation''. The commenter stated that in vascular surgery, use of 
the term bifurcation may be used to document when a procedure occurs in 
a branch vessel.
    Response: We appreciate the commenter's suggestion, however, as 
discussed at the ICD-10 Coordination and Maintenance Committee meeting 
held on September 11-12, 2018, the qualifier value Bifurcation was 
proposed (and subsequently finalized) to be deleted from the following 
ICD-10-PCS tables--037 Dilation of Upper Arteries, 03C Extirpation of 
Upper Arteries, 047 Dilation of Lower Arteries, 04C Extirpation of 
Lower Arteries and 04V Restriction of Lower Arteries. The original 
proposal for the qualifier Bifurcation was intended to capture data 
specifically regarding procedures on coronary arteries. The term 
bifurcation describes diagnosis related information, and generally, 
under ICD-10 PCS we do not include diagnosis related information in the 
procedure classification.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove the procedure codes listed previously 
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. We are also finalizing our proposal to remove 96 ICD-10 PCS 
codes describing dilation of a carotid artery with intraluminal device 
from MS-DRGs 037, 038 and 039 and are finalizing our proposal to 
reassign the 6 procedure codes discussed above 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 final 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 removed from MS-DRGs 037, 038, and 039. 
Additionally, we are finalizing our proposal to delete the 48 procedure 
codes from MS-DRGs 037, 038, and 039 that include the qualifier term 
``bifurcation''. Finally, we are finalizing our proposal to 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 definition 
of these MS-DRGs.
4. MDC 4 (Diseases and Disorders of the Respiratory System): Pulmonary 
Embolism
    In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19185), we 
discussed that 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.

[[Page 42079]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.016

    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.
    As indicated in the FY 2020 IPPS/LTCH PPS proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.017

    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). We stated in the proposed rule 
that our clinical advisors also agreed 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, in the proposed rule, we 
proposed 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.
    Comment: Commenters supported our proposed reassignment of 
diagnosis codes I26.01, I26.02, and I26.09 to the higher severity level 
MS-DRG 175 and revision of the title for MS-DRG 175 to ``Pulmonary 
Embolism with MCC or Acute Cor Pulmonale'' to more accurately reflect 
the diagnoses.
    Response: We thank the commenters for their support. After 
consideration of the public comments we received, we are finalizing our 
proposal 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''.

[[Page 42080]]

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, as discussed in the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19185 through 19193), 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 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).
    As we discussed in the proposed rule, 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).
    As noted in the proposed rule, the ICD-10-PCS procedure codes 
describing a transcatheter cardiac valve repair procedure with an 
implant are listed in the following table.
BILLING CODE 4120-01-P

[[Page 42081]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.018

    As also noted in the proposed rule, the ICD-10-PCS procedure codes 
describing a transcatheter cardiac valve replacement procedure are 
listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.019


[[Page 42082]]


BILLING CODE 4120-01-C
    We noted in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.020

    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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.021

    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 in the proposed rule and 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

[[Page 42083]]

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.
    As indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.022

    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 and in the proposed rule, 
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.
    As also indicated in the proposed rule, 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.

[[Page 42084]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.023

    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 and in the proposed rule, 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 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).
    In the proposed rule, we stated that our clinical advisors continue 
to believe that transcatheter cardiac valve repair procedures are not 
the same as a transcatheter (endovascular) cardiac valve replacement. 
However, we stated that they agreed 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, we 
stated that our clinical advisors agreed 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 also 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.024

    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. As indicated in the proposed rule, 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.
    As stated in the proposed rule, 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.

[[Page 42085]]

    We analyzed the following ICD-10-PCS procedure codes that are 
currently assigned to MS-DRGs 216, 217, 218, 219, 220, and 221.
[GRAPHIC] [TIFF OMITTED] TR16AU19.025

    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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.026

    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 noted in the proposed rule 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).

[[Page 42086]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.027

[GRAPHIC] [TIFF OMITTED] TR16AU19.028

    In the proposed rule, we stated 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 
noted 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.
    We stated in the proposed rule that 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, to 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.

[[Page 42087]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.029

    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. As stated in the proposed rule, 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.
    For FY 2020, we proposed 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 also proposed 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. In addition, we proposed 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 
proposed to reassign the procedure codes from their current MS-DRGs to 
the proposed new MS-DRGs.
    Comment: Several commenters agreed with the proposal to reassign 
the procedure codes describing a transcatheter cardiac valve repair 
(supplement) procedure from their current MS-DRG assignments as 
displayed and discussed above, to proposed revised MS-DRGs 266 and 267. 
Commenters also agreed with our proposal to revise the titles for MS-
DRGs 266 and 267 to reflect the proposed restructuring. Commenters 
noted the procedural technique, skills, staff, equipment and average 
costs of the transcatheter cardiac valve repair (supplement) procedures 
closely correspond with other transcatheter valve procedures that are 
currently classified within MS-DRGs 266 and 267. Commenters stated the 
proposal ensures that the new MS-DRG assignments accurately capture the 
resource utilization and clinical coherence for these transcatheter 
cardiac valve procedures. Commenters stated that the procedure for 
transcatheter mitral valve repair (TMVR) with implant (e.g., 
Mitraclip[supreg]), identified by ICD-10-PCS procedure code 02UG3JZ 
(Supplement mitral valve with synthetic substitute, percutaneous 
approach) has demonstrated evidence-based clinical benefits and the 
proposal would allow effective treatment options for high risk patients 
where open heart surgery is not an option. Other commenters commended 
CMS for reviewing the MS-DRG assignment for transcatheter cardiac valve 
procedures and proposing to reassign the supplement procedures to MS-
DRGs 266 and 267 since, according to the commenters, these MS-DRGs were 
specifically created to classify these kinds of patients. Commenters 
also stated that the proposal ensures more appropriate payment to 
providers for these procedures. A commenter who expressed support for 
the proposal encouraged CMS to continue to monitor these MS-DRGs as 
therapies continue to evolve and future modifications may be warranted.
    Response: We appreciate the commenters' support. We agree the 
proposal would accurately capture the resource utilization and clinical 
coherence for these transcatheter cardiac valve procedures. Consistent 
with our annual process of reviewing the MS-DRGs, we will continue to 
monitor cases to determine if any additional adjustments are warranted.
    Comment: Some commenters also agreed with the proposal to create 
new MS-DRGs 319 and 320 for the other transcatheter (non-supplement) 
cardiac valve procedures and stated this would better reflect the 
resource consumption for these patients. A commenter who supported the 
proposal requested that CMS clarify that the procedures can be 
performed by both interventional cardiologists, as well as 
cardiothoracic surgeons. This commenter agreed that, regardless of the 
provider performing the procedure, additional training and skills are 
required. The commenter also recommended that CMS continue to monitor 
the claims data for the affected procedure codes to ensure that 
unintended consequences do not occur and patient access is not at risk.
    A few commenters recommended that CMS delay the proposed 
reassignment of non-supplement transcatheter cardiac valve procedures 
to proposed new MS-DRGs 319 and 320 until more data informing resource 
use for non-supplement percutaneous cardiac valve procedures becomes 
available and further consideration is given to clinical coherence. A 
commenter believed that reassignment of these procedures at this time 
is premature and that a decision by CMS to delay the implementation of 
this proposed policy specific to non-

[[Page 42088]]

supplement valve procedures by percutaneous approach would have minimal 
impact on the adoption and implementation of the proposed separate 
policy related to the reassignment of transcatheter cardiac valve 
repair (supplement) procedures to MS-DRGs 266 and 267. Another 
commenter expressed concern that not all the procedure codes describing 
non-supplement transcatheter cardiac valve procedures included in the 
proposed reassignment to proposed new MS-DRGs 319 and 320 appear to be 
consistent with the rationale presented in the proposed rule nor did 
the analysis identify all the potentially impacted cases and therefore, 
according to the commenter, the analysis does not sufficiently estimate 
the impact on providers for FY 2020.
    Response: We thank the commenters for their support and feedback. 
We wish to clarify that the transcatheter (non-supplement) cardiac 
valve procedures can be performed by both interventional cardiologists, 
as well as cardiothoracic surgeons. Our clinical advisors agree with 
the commenter that regardless of the provider performing the procedure, 
additional training and skills are required.
    We disagree with delaying the proposed reassignment of non-
supplement transcatheter cardiac valve procedures to proposed new MS-
DRGs 319 and 320 and that reassignment of these procedures at this time 
is premature. We also disagree with the commenter who expressed concern 
that not all the procedure codes describing non-supplement 
transcatheter cardiac valve procedures included in the proposed 
reassignment to proposed new MS-DRGs 319 and 320 appear to be 
consistent with the rationale presented in the proposed rule. As 
discussed in the proposed rule and previously in this section, our 
clinical advisors, as well as several other commenters, supported 
grouping these other cardiac valve procedures 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 special 
additional training and skills, and often require additional ancillary 
procedures and equipment. With regard to the commenter's concern that 
the analysis did not identify all the potentially impacted cases and 
therefore does not sufficiently estimate the impact on providers for FY 
2020, we note that the analysis we provided was based on the MS-DRGs 
that were discussed under the proposal for cases that reported any of 
the non-supplement transcatheter cardiac valve procedures. (If no cases 
were found to report one of the listed procedure codes describing a 
non-supplement transcatheter cardiac valve procedure then that 
procedure code was not reflected in the data analysis table). As stated 
in the proposed rule, we presented the impact of grouping the 
transcatheter (non-supplement) cardiac valve procedures with a 2-way 
severity level split. The analysis was based on the September 2018 
update of the FY 2018 MedPAR data and included the proposed changes to 
the CC/MCC severity level designations. While, as previously noted, we 
do not generally perform any further MS-DRG analysis of claims data for 
purposes of the final rule, in response to the commenter's concern 
regarding whether the analysis identified all potentially impacted 
cases, we further examined the proposed 2-way severity level split 
using the March 2019 update of the FY 2018 MedPAR data.
[GRAPHIC] [TIFF OMITTED] TR16AU19.030

    As shown in the table, there were 1,700 cases for the other 
endovascular cardiac valve procedures with MCC group, with an average 
length of stay of 10.1 days and average costs of $29,181. There was a 
total of 624 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 $16,706. Similar to our process discussed in the 
proposed rule, we again applied the criteria to create subgroups for 
the two way severity level split for the proposed MS-DRGs and found 
that all five criteria were met. We note that, as discussed in section 
II.F.14.c.1. of the preamble of this final rule, we are generally not 
finalizing the proposed changes to the CC/MCC severity level 
designations that were considered under the comprehensive CC/MCC 
analysis. Therefore, the above updated analysis reflects the finalized 
policy.
    For the reasons noted previously, we continue to believe it is 
appropriate to group all the non-supplement transcatheter cardiac valve 
procedures together, and the updated data analysis also continues to 
support the two way severity level split. In response to the 
commenter's recommendation that we monitor the claims data for the 
affected procedure codes to ensure that unintended consequences do not 
occur and patient access is not put at risk, consistent with our annual 
process of reviewing the MS-DRGs, we will continue to monitor cases to 
determine if any additional modifications are warranted. For the 
reasons described above and after consideration of the public comments 
we received, we are finalizing our proposal 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 MS-DRG 266 from ``Endovascular Cardiac 
Valve Replacement with MCC'' to ``Endovascular Cardiac Valve 
Replacement and Supplement Procedures with MCC'' and to revise the 
title of MS-DRG 267 from ``Endovascular Cardiac Valve Replacement 
without MCC'' to ``Endovascular Cardiac Valve Replacement and 
Supplement Procedures without MCC''. In addition, we are finalizing our 
proposal to create new MS-DRG 319 (Other Endovascular Cardiac Valve 
Procedures with MCC) and new MS-DRG 320 (Other Endovascular Cardiac 
Valve Procedures without MCC) and reassigning the non-

[[Page 42089]]

supplement transcatheter cardiac valve procedure codes displayed and 
discussed earlier in this section from their current MS-DRGs to these 
new MS-DRGs, under the ICD-10 MS-DRGs Version 37, effective October 1, 
2019.
b. Revision of Pacemaker Lead
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19193), 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). In the FY 2020 IPPS/LTCH PPS proposed rule, we proposed 
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. We stated in the proposed rule 
that, if the proposal is finalized, we would make conforming changes to 
the ICD-10 MS-DRG Definitions Manual Version 37.
    Comment: Commenters agreed with the proposal 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.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal 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 under the ICD-10 MS-DRGs 
Version 37, effective October 1, 2019, and will 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
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19193 through 19199), 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 M00.9 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.
    We noted in the proposed rule that, 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.
    As indicated in the proposed rule, 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.

[[Page 42090]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.031

    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. As we stated in the proposed rule, 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 noted 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, we stated in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.032

    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

[[Page 42091]]

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 in the proposed rule 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 in the proposed rule and 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. As we stated in the proposed rule, 
because these diagnosis codes are not specific to the knee in the code 
description, we 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] TR16AU19.033

    We stated in the proposed rule that 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). We stated in the proposed rule that, 
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. We also noted 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 noted 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

[[Page 42092]]

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 proposed to add ICD-10-CM diagnosis code M00.9 to the list of 
principal diagnosis codes for MS-DRGs 485, 486, and 487.
    Comment: Commenters agreed with CMS' proposal to add ICD-10-CM 
diagnosis code M00.9 to the list of principal diagnosis codes for 
assignment to MS-DRGs 485, 486 and 487. The commenters stated that the 
proposal was reasonable, given the ICD-10-CM diagnosis code and the 
information provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-CM diagnosis code M00.9 to the 
list of principal diagnosis codes for assignment to MS-DRGs 485, 486 
and 487 in the ICD-10 MS-DRGs Version 37, effective October 1, 2019.
    In the proposed rule, we stated that 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 did not propose to add 
ICD-10-CM diagnosis code A54.42 to the list of principal diagnosis 
codes for these MS-DRGs.
    Comment: Commenters did not support CMS' proposal to not add ICD-
10-CM diagnosis code A54.42 to the list of codes for these MS-DRGs. 
Commenters noted that although A54.42 is not specific to the knee, the 
code is intended to be used for any joint, similar to code M00.9. 
Commenters also noted that the GROUPER logic for MS-DRGs 485, 486 and 
487 that requires the combination of a principal diagnosis code and an 
ICD-10-PCS procedure code for a knee procedure will ensure that cases 
that report a principal diagnosis code of A54.42 and a knee procedure 
are clinically similar to other cases in MS-DRGs 485, 486 and 487.
    Response: We agree with commenters that diagnosis code A54.42 would 
be the appropriate code for a diagnosis of gonococcal arthritis of the 
knee although the Index entry is not specific. Our clinical advisors 
reviewed this issue and the ICD-10-CM Alphabetic index and noted that 
there are no other diagnosis codes in the subcategory A54.- series 
(Gonococcal infection) that are more specific to the knee. Our clinical 
advisors noted that although there was only one case reporting 
gonococcal arthritis as the principal diagnosis with a knee procedure 
performed in the September 2018 update of the FY 2018 MedPAR file, they 
agreed that based on the result of further review, including 
consideration of the commenters' concerns, there is merit in adding 
A54.42 to MS-DRGs 485, 486 and 487 because diagnosis code A54.42 would 
be the appropriate code to report a diagnosis of gonococcal arthritis 
of the knee. We agree with commenters that this reassignment is 
consistent with the reassignment of ICD-10-CM diagnosis code M00.9 
because, although the Index entries do not specifically include the 
knee or any infection of the knee, diagnosis code A54.42 would also be 
used to report an infection of the knee. Therefore, after consideration 
of the public comments that we received and for the reasons described, 
we are finalizing the assignment of ICD-10-CM diagnosis code A54.42 to 
the list of principal diagnosis codes for assignment to MS-DRGs 485, 
486, and 487 (Knee Procedure with Principal Diagnosis of Infection with 
MCC, with CC, and without CC/MCC, respectively) in the ICD-10 MS-DRGs 
Version 37, effective October 1, 2019.
    In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.034

    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, in the proposed rule, we stated that 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.

[[Page 42093]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.035

    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, in the proposed rule we noted 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 noted 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.
    We stated in the proposed rule that our clinical advisors supported 
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.
    As indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.036

    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.
    We stated in the proposed rule that, 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.
    We stated in the proposed rule that 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

[[Page 42094]]

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 and in the proposed rule, 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, in the FY 2020 IPPS/LTCH PPS proposed rule, we 
proposed 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 did not 
propose to change the current assignment of these diagnosis codes in 
MS-DRGs 559, 560, and 561.
    Comment: Many commenters agreed with the proposal to remove the 
eight diagnosis codes that do not describe an infection specific to the 
knee from the list of principal diagnosis codes for MS-DRGs 485, 486, 
and 487, and to maintain their current assignment in MS-DRGs 559, 560, 
and 561. A commenter did not support the proposal and believed the 
diagnosis of osteomyelitis should continue to be included in MS-DRGs 
485, 486 and 487 because osteomyelitis describes an infection of the 
knee which includes cartilage, ligaments, tendons and bones.
    Response: We appreciate the commenters' support. We agree that 
osteomyelitis as a diagnostic term describes an infection which can 
include cartilage, ligaments, tendons and bones. However, as discussed 
in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19196), the diagnosis 
codes that are the subject of this proposal, including diagnosis code 
M86.9 (Osteomyelitis, unspecified) are not specific to the knee. There 
are other diagnosis codes in the subcategory M86.-series 
(Osteomyelitis) that are specific to the knee and will continue to be 
included in MS-DRGs 485, 486 and 487.
    Therefore, after consideration of the comments we received, we are 
finalizing our proposal to remove ICD-10-CM diagnosis codes M86.9, 
T84.50XA, T84.51XA, T84.52XA, T84.59XA, T84.60XA, T84.63XA, and 
T84.69XA from the list of principal diagnosis codes for MS-DRGs 485, 
486, and 487, and maintain their current assignment in MS-DRGs 559, 
560, and 561 in the ICD-10 MS-DRGs Version 37, effective October 1, 
2019.
    In addition, we stated in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.037

    As indicated in the proposed rule, 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, in the proposed rule 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 42095]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.038


[[Page 42096]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.039

BILLING CODE 4120-01-C
    We noted 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.040


[[Page 42097]]


    We stated that 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 proposed 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.
    Comment: Commenters agreed with CMS' proposal to add 10 additional 
ICD-10-CM diagnosis codes that are specific to the knee and describe an 
infection to the list of principal diagnosis codes for assignment to 
MS-DRGs 485, 486 and 487. The commenters stated that the proposal was 
reasonable, given the ICD-10-CM diagnosis codes and the information 
provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-CM diagnosis codes A18.02, 
M01.X61, M01.X62, M01.X69, M71.061, M71.062, M71.069, M71.161, M71.162, 
and M71.169 to the list of principal diagnosis codes for assignment to 
MS-DRGs 485, 486 and 487 in the ICD-10 MS-DRGs Version 37, effective 
October 1, 2019.
b. Neuromuscular Scoliosis
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19201 through 19202), 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). As we 
stated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.041

    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. We stated in the proposed rule 
that, 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.
    As indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.042

    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

[[Page 42098]]

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. We stated in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.043

    As we noted in the proposed rule, 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.'' We stated in the proposed rule that our 
clinical advisors agreed 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 in the proposed rule and 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. We stated that our 
clinical advisors agreed 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 proposed 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.
    Comment: Commenters agreed with CMS' proposal to add ICD-10-CM 
diagnosis codes M41.40, M41.44, M41.45, M41.46, and M41.47 that 
describe neuromuscular scoliosis to the list of principal diagnosis 
codes for assignment to MS-DRGs 456, 457 and 458 (Spinal Fusion except 
Cervical with Spinal Curvature of Malignancy or Infection or Extensive 
Fusions with MCC, with CC, and without CC/MCC, respectively). The 
commenters stated that the proposal was reasonable, given the ICD-10-CM 
diagnosis codes and the information provided. A commenter specifically 
expressed appreciation for CMS' display of cost and length of stay data 
in the analysis, in addition to the clinical factors that support our 
decision making.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-CM diagnosis codes M41.40, 
M41.44, M41.45, M41.46, and M41.47 to the list of principal diagnosis 
codes for assignment to MS-DRGs 456, 457 and 458 in the ICD-10 MS-DRGs 
Version 37, effective October 1, 2019.
c. Secondary Scoliosis and Secondary Kyphosis
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19202 through 19204), 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

[[Page 42099]]

Malignancy or Infection or Extensive Fusions with MCC, with CC, and 
without CC/MCC, respectively). As we indicated in the proposed rule, 
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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.044

    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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.045

    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 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.
    As indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.046

    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.

[[Page 42100]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.047

    As we stated in the proposed rule, 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.
    We stated in the proposed rule that our clinical advisors agreed 
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 noted 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 proposed to add the following ICD-
10-CM diagnosis codes describing secondary scoliosis and 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.
    Comment: Commenters agreed with CMS' proposal to add ICD-10-CM 
diagnosis codes M40.10, M40.14, M40.15, M41.50, M41.54, M41.55, M41.56, 
and M41.57 that describe secondary scoliosis and secondary kyphosis to 
the list of principal diagnosis codes for assignment to MS-DRGs 456, 
457 and 458 (Spinal Fusion except Cervical with Spinal Curvature of 
Malignancy or Infection or Extensive Fusions with MCC, with CC, and 
without CC/MCC, respectively). The commenters stated that the proposal 
was reasonable, given the ICD-10-CM diagnosis codes and the information 
provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-CM diagnosis codes M40.10, 
M40.14, M40.15, M41.50, M41.54, M41.55, M41.56, and M41.57 that 
describe secondary scoliosis and secondary kyphosis to the list of 
principal diagnosis codes for assignment to MS-DRGs 456, 457 and 458 in 
the ICD-10 MS-DRGs Version 37, effective October 1, 2019.
    As also discussed in the proposed rule, during our review of MS-
DRGs 456, 457, and 458, we found the following diagnosis codes that 
describe conditions involving the cervical region.

[[Page 42101]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.048

    We stated that 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, in the FY 2020 IPPS/LTCH PPS proposed rule, we proposed 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.
    Comment: Commenters agreed with the proposal to remove 34 diagnosis 
codes that describe conditions involving the cervical region from the 
list of principal diagnosis codes for MS-DRGs 456, 457, and 458, to 
improve clinical homogeneity and better reflect resource costs since 
these MS-DRGs are defined by non-cervical spinal fusion procedures. The 
commenters stated that the proposal was reasonable, given the ICD-10-CM 
diagnosis codes and the information provided.
    Response: We appreciate the commenters' support. Therefore, we are 
finalizing our proposal to remove the ICD-10-CM diagnosis codes that 
describe conditions involving the cervical region as shown the table 
above from the list of principal diagnosis codes for MS-DRGs 456, 457, 
and 458 in the ICD-10 MS-DRGs Version 37, effective October 1, 2019.
7. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): 
Extracorporeal Shock Wave Lithotripsy (ESWL)
    As discussed in the FY 2020 IPPS/LTCH PPS (84 FR 19204 through 
19210), 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.
    As noted in the proposed rule, 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).
    As stated in the proposed rule, 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.

[[Page 42102]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.049

    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 in the proposed rule and 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.
    We stated in the proposed rule that, 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. We noted that 
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 agreed 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, we stated that 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 noted in the proposed rule 
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. We stated that our clinical 
advisors agreed 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 we stated that 
they do not believe that this procedure is a valid indicator of 
resource consumption for cases that involve an infection and 
obstruction. We stated that 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 did 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.
    As also indicated in the proposed rule, 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.

[[Page 42103]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.050

    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 
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.
    As we stated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.051

    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. We stated that 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

[[Page 42104]]

average length of stay for the cases reporting these conditions is 12.8 
days with average costs of $39,069, which we stated in the proposed 
rule 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.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR16AU19.052


[[Page 42105]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.053

BILLING CODE 4120-01-C
    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. We stated that 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 we stated 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 noted 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 believed contributed greatly overall to the longer length of 
stay and higher average costs for those secondary diagnosis CC 
conditions reported among the 24 cases.
    We stated that our clinical advisors agreed 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.
    As also indicated in the proposed rule, 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.

[[Page 42106]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.054

    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. We stated in the proposed 
rule that 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 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 stated in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.055

    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. We stated in the proposed rule that 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 we stated 
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.
    We stated in the proposed rule that 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.
    As indicated in the proposed rule, 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

[[Page 42107]]

data findings for all of the cases in their assigned MS-DRG.
    As discussed earlier in this section and the proposed rule, 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, as we stated in the proposed rule, 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 stated that we believe that the resource consumption is more 
likely the result of secondary diagnosis CC and/or MCC diagnosis codes.
    In the proposed rule, 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), we 
stated that 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 did not support adding ICD-10-CM diagnosis code 
T83.192A to the list of principal diagnosis codes for MS-DRGs 691 and 
692.
    As indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.056

    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. We stated that 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. We stated that 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. We stated that 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 did not propose to add ICD-10-CM 
diagnosis code T83.192A to the list of principal diagnosis codes for 
MS-DRGs 691 and 692.
    Comment: Commenters supported CMS' proposal to not add ICD-10-CM 
diagnosis codes N13.6 and T83.192A to the list of principal diagnosis 
codes for MS-DRGs 691 and 692. Commenters commended CMS for conducting 
the analysis and continuing to make further refinements to the MS-DRGs. 
The commenters stated that the proposal was reasonable, given the ICD-
10-CM diagnosis codes and the information provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to not add ICD-10-CM diagnosis codes N13.6 and 
T83.192A to the list of principal diagnosis codes for MS-DRGs 691 and 
692 in the ICD-10 MS-DRGs Version 37, effective October 1, 2019.
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule, 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.
BILLING CODE 4120-01-P

[[Page 42108]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.057

    As noted in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.058


[[Page 42109]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.059


[[Page 42110]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.060

    We stated in the proposed rule that 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 noted 
in the proposed rule 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, we stated that 
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

[[Page 42111]]

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.

[[Page 42112]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.061

BILLING CODE 4120-01-C
    As indicated in the proposed rule, the data show a steady decline 
in the number of cases reporting urinary stones with an ESWL procedure 
for the

[[Page 42113]]

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 and in the proposed rule, an ESWL 
procedure is a non-O.R. procedure which currently groups to medical MS-
DRGs 691 and 692. Therefore, we stated in the proposed rule that 
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 proposed 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.
    Comment: Commenters supported the proposal 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''. Commenters agreed that 
deleting MS-DRGs 691 and 692 and revising the titles for MS-DRGs 693 
and 694 will better reflect utilization of resources for cases 
reporting urinary stones with a EWSL procedure as well as provide for 
appropriate payment for the procedures. The commenters noted that the 
proposal was reasonable, given the data, the ICD-10-PCS procedure 
codes, and information provided.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal 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'', in the ICD-10 MS-DRGs Version 37, 
effective October 1, 2019.
8. MDC 12 (Diseases and Disorders of the Male Reproductive System): 
Diagnostic Imaging of Male Anatomy
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19210 through 10211), we received a request to review four ICD-10-CM 
diagnosis codes describing 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.062

    The requestor recommended that the four diagnosis codes shown in 
this table 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.
    As indicated in the proposed rule, 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.
    We stated in the proposed rule that 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, we stated that our clinical advisors supported reassignment 
of these codes to MDC 12. Our clinical advisors agreed 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, we stated in the 
proposed rule that our clinical advisors suggested 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 proposed 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.
    Comment: Commenters supported our proposed reassignment of ICD-10-
CM diagnosis codes R93.811, R93.812, R93.813, and R93.819 from MDC 5 to 
MDC 12.
    Response: We thank the commenters for their support. After 
consideration of the public comments we received, we are finalizing our 
proposal 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): Reassignment of 
Diagnosis Code O99.89
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19211 through 19214), 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

[[Page 42114]]

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. As we stated in the proposed rule, 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).
    As noted in the proposed rule, 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. We 
stated that, 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), we explained in the proposed rule 
that 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, we stated in the proposed rule that the MS-DRG 
assignment for the example provided by the requestor is grouping 
accurately according to the current GROUPER logic.
    As indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.063

    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. We stated in 
the proposed rule that 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 noted in the proposed rule that the description for ICD-10-CM 
diagnosis code O99.89 ``Other specified diseases and conditions 
complicating pregnancy, childbirth and the

[[Page 42115]]

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, we stated that 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. In the proposed rule, we stated that 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 in the proposed rule and 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, we 
stated in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.064

    These codes specifically identify at what stage the abnormal 
glucose was a complicating condition. We stated in the proposed rule 
that, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.065

    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

[[Page 42116]]

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 noted in the proposed rule 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 this 
table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.066

    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.
    As we stated in the proposed rule, 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).
    Further, we stated that 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

[[Page 42117]]

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
     O99.895 (Other specified diseases and conditions 
complicating the puerperium).
    We noted in the proposed rule that, 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. We 
stated, 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.)
    We stated in the proposed rule that, 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 proposed to reclassify ICD-10-CM diagnosis code O99.89 
from a postpartum condition to an antepartum condition under MDC 14. We 
stated in the proposed rule that, 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.
    Comment: Commenters supported the proposal to reclassify ICD-10-CM 
diagnosis code O99.89 from a postpartum condition to an antepartum 
condition under MDC 14. Commenters also agreed with the recommendation 
to expand diagnosis code O99.89 to create a new 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.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to reclassify ICD-10-CM diagnosis code O99.89 
from a postpartum condition to an antepartum condition. For FY 2020, 
cases reporting diagnosis code O99.89 will follow the logic as 
previously 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 (Other Antepartum Diagnoses with 
O.R. Procedure with MCC, with CC and without CC/MCC, respectively). 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 (Other Antepartum Diagnoses 
without O.R. Procedure with MCC, with CC and without CC/MCC, 
respectively).
10. MDC 22 (Burns): Skin Graft to Perineum for Burn
    As discussed in the FY 2020 IPPS/LTCH PPS (84 FR 19214 through 
19215), 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.067


[[Page 42118]]


    As indicated in the proposed rule, 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, 
we stated in the proposed rule that 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, we stated that 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, 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.
    As noted in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.068

    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 stated that we found no cases reporting a skin graft to the 
perineum procedure in MS-DRG 747, 909, 957, 958, 959, or 987. Further, 
we stated that 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.

[[Page 42119]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.069

    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 noted in the proposed 
rule 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, we stated in 
the proposed rule that 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.
    We further stated that 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. We stated that 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 
did not propose to add the seven identified procedure codes to MS-DRGs 
927, 928, and 929 in the proposed rule.
    Comment: Commenters did not support the proposal to not add ICD-10-
PCS procedure codes 0HR9X73, 0HR9X74, 0HR9XJ3, 0HR9XJ4, 0HR9XJZ, 
0HR9XK3, and 0HR9XK4 that describe a skin graft to the perineum to MS-
DRGs 927, 928 and 929. The commenters noted that in the hypothetical 
scenario in which the principal diagnoses code T21.37XA, third degree 
burn of (female) perineum, or T21.36XA, third degree burn of the (male) 
perineum, is coded as the principal diagnosis in combination with ICD-
10-PCS codes describing skin graft to the perineum, the case would 
group to MS-DRG 934 (Full Thickness Burn without Skin Graft or 
Inhalation Injury). A commenter stated that since CMS' DRG tables are 
referenced nationally by other payers, the GROUPER logic should change 
in spite of the fact that CMS's data reflects little or no volume for 
these cases.
    Response: We appreciate the commenters' feedback.
    In response to public comments, our clinical advisors reviewed the 
claims data in the September 2018 update of the FY 2018 MedPAR file and 
again noted that none of the cases reporting the seven identified 
procedure codes that grouped to MS-DRGs 746, 907, 908, 988, and 989 had 
a principal or secondary diagnosis of a burn. Therefore, our clinical 
advisors continue to 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, in the absence of 
MedPAR data indicating that these skin grafts are performed to treat 
burns. Our clinical advisors believe 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. As additional claims data becomes 
available, we can determine if future modifications to the assignment 
of these procedure codes are warranted at a later date.
    Therefore, after consideration of the public comments we received, 
we are finalizing our proposal to maintain the current structure of MS-
DRGs 927, 928 and 929 for FY 2020.
11. MDC 23 (Factors Influencing Health Status and Other Contacts With 
Health Services): Assignment of Diagnosis Code R93.89
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19216), 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.
    As indicated in the proposed rule, 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.

[[Page 42120]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.070

    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.
    We stated in the proposed rule that 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 supported 
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, we stated in the proposed 
rule that our clinical advisors suggested reassignment of diagnosis 
code R89.93 to MS-DRGs 947 and 948 (Signs and Symptoms with and without 
MCC, respectively). Therefore, we proposed 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.
    Comment: Commenters supported our proposed reassignment of ICD-10-
CM diagnosis code R93.89 from MDC 5 to MDC 23.
    Response: We thank the commenters for their support. After 
consideration of the public comments we received, we are finalizing our 
proposal 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, in the 
FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19216 through 19224), we 
proposed 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
    As discussed in the proposed rule, 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. 
[GRAPHIC] [TIFF OMITTED] TR16AU19.071


[[Page 42121]]


    We stated in the proposed rule that 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. We stated in the proposed rule that 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''.
[GRAPHIC] [TIFF OMITTED] TR16AU19.072

    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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.073

    Of the MDCs to which these gastrointestinal excision procedures are 
currently assigned, we stated that 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.

[[Page 42122]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.074

    In the proposed rule, we stated that 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. Further, we stated that 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 proposed to 
move the GIST diagnosis codes listed above from MDC 8 to MDC 6 within 
MS-DRGs 326, 327, and 328. We stated that, under our proposal, cases 
reporting a principal diagnosis of GIST would group to MS-DRGs 326, 
327, and 328.
    We note that every diagnosis code is assigned to a medical MS-DRG 
to define the logic of the MS-DRG either as a principal or secondary 
diagnosis. We also note that, as discussed in section II.F.13.a., 
certain procedure codes may affect the MS-DRG and result in a surgical 
MS-DRG assignment. We are clarifying that under this proposal, cases 
reporting a principal diagnosis of GIST would group to MS-DRGs 326, 
327, and 328 only in the presence of a surgical procedure assigned to 
MS-DRGs 326, 327, and 328; in the absence of a surgical procedure, 
cases with a principal diagnosis of GIST would group to MS-DRGs 374, 
375, and 376 (Digestive Malignancy with MCC, with CC, and without CC/
MCC, respectively), which is the medical MS-DRG that contains digestive 
malignancies, and to which they would be assigned within MDC 6. We 
refer the reader to the ICD-10 MS-DRG Version 36 Definitions Manual for 
complete documentation of the logic for case assignment to surgical MS-
DRGs 326, 327, and 328 and to medical MS-DRGs 374, 375, and 376 (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).
    Comment: Several commenters supported our proposal. A commenter 
stated that placing the ICD-10-CM diagnosis codes describing GIST in 
the proposed DRGs would better reflect the gastrointestinal nature of 
the underlying GIST disease and the resource use associated with this 
subset of cases relative to others within the same MDC/DRG groupings.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to move the GIST diagnosis codes listed above 
from MDC 8 to MDC 6, with the additional clarification that in the 
absence of a surgical procedure, these cases are assigned to the 
medical MS-DRGs 374, 375 and 376 under the ICD-10 MS-DRGs Version 37, 
effective October 1, 2019. As a result, cases reporting a principal 
diagnosis of GIST and a procedure code that is assigned to MS-DRGs 326, 
327, and 328 (such as ICD-10-PCS codes 0DB60ZZ and 0DB80ZZ) will group 
to MS-DRGs 326, 327, and 328.
(2) Peritoneal Dialysis Catheter Complications
    As discussed in the proposed rule, during our review of the cases 
currently grouping to MS-DRGs 981-983, 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.

[[Page 42123]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.075

    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).
[GRAPHIC] [TIFF OMITTED] TR16AU19.076

    As indicated in the proposed rule, 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 noted in the proposed rule that we did 
not find any such cases in MS-DRG 983.
[GRAPHIC] [TIFF OMITTED] TR16AU19.077


[[Page 42124]]


    We stated that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.078

    Further, we stated in the proposed rule that 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 
severity level in MS-DRGs 907. However, we further stated that 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 proposed 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. As indicated in the proposed rule, 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.
    Comment: Commenters supported our proposal 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.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal 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.
(3) Bone Excision With Pressure Ulcers
    As discussed in the proposed rule, 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. As noted in the 
proposed rule, the procedures describing excision of the sacrum, pelvic 
bones, and coccyx group to several MDCs, which are listed in the table 
below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.079

    We stated in the proposed rule that, 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.

[[Page 42125]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.080

    As indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.081

    We stated that 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, we stated in the 
proposed rule that 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 assigned to MDC 
9 that do not fit within the specific surgical MS-DRGs in MDC 9. 
Therefore, as indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.082

    We stated that 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. We further 
stated that the smaller number of cases that group to MS-DRG 983 have 
lower average costs than cases in MS-DRG 581. However, we stated that 
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

[[Page 42126]]

sacrum, hip, and buttocks regions. Therefore, we stated in the proposed 
rule that 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 proposed 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. As noted in the proposed 
rule, 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.
    Comment: Commenters did not support our proposal 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. Commenters stated 
that it is not appropriate for procedures performed on muscles to be 
grouped to MS-DRGs for skin and subcutaneous tissues. A commenter 
stated that once a pressure ulcer extends into the muscle or bone, it 
is no longer a disease of the skin and subcutaneous tissue, but a 
disease of the musculoskeletal tissue.
    Response: We note that all pressure ulcers, including those that 
extend to the muscle or bone, are assigned to MDC 9, so that for 
purposes of DRG assignment, the GROUPER categorizes all pressure ulcers 
as diseases of the skin and subcutaneous tissue. As noted in the 
proposed rule, our clinical advisors believe that these procedures 
would be performed to treat pressure ulcers in the sacrum, hip, and 
buttocks regions. The surgical MS-DRGs within each MDC that include 
`other' procedures are intended to encompass procedures that, while not 
directly related to the MDC, can and do occur with principal diagnoses 
in that MDC with sufficient frequency.
    Comment: A commenter stated that they recognize that CMS may have 
selected MDC 9 as it includes all pressure ulcers, but recommended that 
CMS consider MDC 8 instead. A commenter stated that if the debridement 
is performed to the level of the soft tissue, then the case should 
group to MS-DRGs 501, 502, and 503 (Soft tissue procedures with MCC, 
with CC, and without CC/MCC respectively). The commenter stated that 
they believe it should be the procedure that determines the MDC and DRG 
to which the case groups.
    Response: As explained in the proposed rule, when conducting the 
review of procedures producing assignment to MS-DRGs 981 through 983 or 
MS-DRGs 987 through 989, the objective is to 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, or to move the principal 
diagnosis codes to the MDC in which the procedure falls. During this 
analysis, we noted that procedures describing excision of the sacrum, 
pelvic bones, and coccyx group to MS-DRGs 981 through 983 when reported 
with a principal diagnosis in MDC 9. If we were to add these procedures 
to MDC 8, that would not address the matter of these procedures 
producing assignment to MS-DRGs 981 through 983. Since our clinical 
advisors believe that these procedures are clearly related to the 
principal diagnoses assigned to MDC 9, our clinical advisors believe 
that it is appropriate to add these procedures to MDC 9. We also note 
that, with the exception of the pre-MDC, assignment to MDCs is driven 
by the principal diagnosis and not by the procedure. Therefore, it is 
inconsistent with GROUPER logic to determine the MDC based on the 
procedure.
    After consideration of the public comments we received, we are 
finalizing our proposal 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.
(4) Lower Extremity Muscle and Tendon Excision
    As discussed in the proposed rule, 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. As indicated in 
the proposed rule, these ICD-10-PCS procedure codes are listed in the 
table below, and are assigned to several MS-DRGs, which are also listed 
below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.083


[[Page 42127]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.084

    As noted in the proposed rule, 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. We stated in the proposed rule that the 
combination indicates debridement procedures for more complex diabetic 
ulcers.
[GRAPHIC] [TIFF OMITTED] TR16AU19.085

    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, as 
indicated in the proposed rule, we examined claims data for the average 
length of stay and average costs for these cases. Our findings are 
shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.086

    We stated in the proposed rule that 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.

[[Page 42128]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.087

    As indicated in the proposed rule, 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 
proposed to add the procedure codes listed previously describing 
excision of lower extremity muscles and tendons to MDC 10. We stated in 
the proposed rule that, under our proposal, cases reporting these 
procedure codes with a principal diagnosis in MDC 10 would group to MS-
DRGs 622, 623, and 624.
    Comment: A commenter supported our proposal to add the procedure 
codes describing excision of lower extremity muscles and tendons to MDC 
10.
    Response: We appreciate the commenter's support.
    Comment: Other commenters did not support our proposal to add the 
procedure codes describing excision of lower extremity muscles and 
tendons to MDC 10. Commenters stated that muscle and tendon procedures 
are more resource intensive than skin procedures. A commenter stated 
that cases involving tendon excisions should group to MS-DRGs 501, 502, 
and 503 in MDC 8, and that cases involving excisions of muscle group to 
MS-DRGs 515, 516, and 517 in MDC 8. This commenter stated that the 
procedure should drive the MDC and DRGs to which the case is assigned.
    Response: Our clinical advisors believe that these procedures are 
clearly related to the principal diagnoses assigned to MDC 10 with 
which they are most frequently reported (that is, codes describing 
diabetes with complications), and are therefore appropriately assigned 
to MDC 10, and specifically to MS-DRGs 622, 623, and 624, which 
describe wound debridement. We also note that, with the exception of 
the pre-MDC, assignment to MDCs is driven by the principal diagnosis 
and not by the procedure. Therefore, it is inconsistent with the 
GROUPER logic to determine the MDC based on the procedure.
    After consideration of the public comments we received, we are 
finalizing our proposal to add the procedure codes listed previously 
describing excision of lower extremity muscles and tendons to MDC 10.
(5) Kidney Transplantation Procedures
    As discussed in the proposed rule, 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. We stated that 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. As 
indicated in the proposed rule, 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 stated in the proposed rule 
that we did not find any such cases in MS-DRG 983.
[GRAPHIC] [TIFF OMITTED] TR16AU19.088

    We further stated that 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-

[[Page 42129]]

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. As indicated in the proposed rule, we examined claims 
data to determine the average length of stay and 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 for this subset of 
cases in MS-DRG 981). We stated in the proposed rule that 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 
proposed to add ICD-10-PCS procedure codes 0TY00Z0 and 0TY10Z0 to MS-
DRG 264 in MDC 5. We stated in the proposed rule that, 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 also noted in the proposed rule that, because MDC 5 covers 
the circulatory system and kidney transplants generally group to MDC 
11, we invited public comments on whether the procedure codes should 
instead continue to group to MS-DRGs 981 through 983.
    Comment: Commenters opposed our proposal to add ICD-10-PCS 
procedure codes 0TY00Z0 and 0TY10Z0 to MS-DRG 264 in MDC 5. A commenter 
stated that the proposed relative weight for MS-DRG 652, where most 
kidney transplant procedures are grouped, is 3.384, while the proposed 
weight for MS-DRG 264 is 3.2357. Some commenters stated that this 
proposal would reduce the reimbursement for kidney transplantation of 
recipients with serious cardiac conditions by 33 percent. Commenters 
stated that cases that involve both chronic kidney disease and heart 
failure should not be paid less than cases that involve patients 
without serious comorbid conditions. Commenters suggested that CMS 
instead assign these cases to MDC 652, noting that the length of stay 
for the vast majority of kidney transplant cases involving serious 
cardiac conditions approximates the length of stay for kidney 
transplants in general. Commenters also stated that assigning all 
kidney transplant cases to the same MS-DRG simplifies collection of 
cost data, stating that when cases are split among several MS-DRG 
``families'' it complicates the analysis required to determine whether 
additional severity-based MS-DRGs would be appropriate. Commenters 
stated that if it was not possible to assign these cases to MS-DRG 652, 
then the cases should remain in MS-DRGs 981 through 983. Commenters 
disagreed with assigning these cases to a circulatory DRG because the 
procedure is performed on the urinary system.
    Response: We appreciate the comments and concerns raised on our 
proposal. Our clinical advisors generally believe that it is preferable 
to assign these cases to a discrete MS-DRG within the GROUPER rather 
than allowing them to continue to group to MS-DRGs 981 through 983, 
which do not contain a group of clinically coherent principal 
diagnoses, but instead consist of cases from various MDCs that are 
unrelated to one another. However, we believe it would be appropriate 
to take additional time to review the concerns raised by commenters 
consistent with the President's recent Executive Order on Advancing 
American Kidney Health (see https://www.whitehouse.gov/presidential-actions/executive-order-advancing-american-kidney-health/). Therefore, 
after consideration of public comments, we are not finalizing our 
proposal to add ICD-10-PCS procedure codes 0TY00Z0 and 0TY10Z0 to MS-
DRG 264 in MDC 5. Accordingly, cases reporting a principal diagnosis in 
MDC 5 with a procedure describing kidney transplantation (i.e., 
procedure code 0TY00Z0 or 0TY10Z0) will continue to group to MS-DRGs 
981 through 983 under the ICD-10 MS-DRGs Version 37, effective October 
1, 2019.
(6) Insertion of Feeding Device
    As discussed in the proposed rule, 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 stated in 
the proposed rule that 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.
    As indicated in the proposed rule, 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.

[[Page 42130]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.089

    In the proposed rule we stated that 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. We stated that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.090

[GRAPHIC] [TIFF OMITTED] TR16AU19.091


[[Page 42131]]


    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. We stated in the proposed 
rule that 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. 
We stated that 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 proposed to add ICD-10-PCS procedure 
code 0DH60UZ to MDC 1 and MDC 10. We stated in the proposed rule that, 
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.
    Comment: Commenters supported our proposal to add ICD-10-PCS 
procedure code 0DH60UZ to MDC 1 and MDC 10.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-PCS procedure code 0DH60UZ to MDC 
1 and MDC 10.
(7) Basilic Vein Reposition in Chronic Kidney Disease
    As discussed in the proposed rule, 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. We stated in the proposed rule that 
this code combination suggests a revision of an arterio-venous fistula 
in a patient on chronic hemodialysis. As indicated in the proposed 
rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.092

    We stated in the proposed rule that 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.

[[Page 42132]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.093

    As indicated in the proposed rule, 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, we stated that 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, we stated in the proposed rule that 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 
proposed to add ICD-10-PCS procedures codes 05SB0ZZ, 05SB3ZZ, 05SC0ZZ, 
and 05SC3ZZ to MDC 11. We stated that, 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.
    Comment: Commenters supported our proposal to add ICD-10-PCS 
procedures codes 05SB0ZZ, 05SB3ZZ, 05SC0ZZ, and 05SC3ZZ to MDC 11.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-PCS procedures codes 05SB0ZZ, 
05SB3ZZ, 05SC0ZZ, and 05SC3ZZ to MDC 11.
(8) Colon Resection With Fistula
    As discussed in the proposed rule, 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. We stated that the principal diagnosis most frequently 
reported with ICD-10-PCS procedure code 0DTN0ZZ in MDC 11 is ICD-10-CM 
code N32.1 (Vesicointestinal fistula). As indicated in the proposed 
rule, ICD-10-PCS procedure code 0DTN0ZZ currently groups to several 
MDCs, which are listed in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.094

    As we stated in the proposed rule, 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.

[[Page 42133]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.095

    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 N32.1). We stated in the 
proposed rule that our clinical advisors observed that procedure code 
0DTN0ZZ is the second most common procedure reported in conjunction 
with a principal diagnosis of code N32.1, 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, we stated that 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 proposed to add ICD-10-PCS procedure code 
0DTN0ZZ to MDC 11. We stated in the proposed rule that, under our 
proposal, cases reporting procedure code 0DTN0ZZ with a principal 
diagnosis of vesicointestinal fistula (diagnosis code N32.1) in MDC 11 
would group to MS-DRGs 673, 674, and 675.
    Comment: Some commenters supported our proposal to add ICD-10-PCS 
procedure code 0DTN0ZZ to MDC 11.
    Response: We appreciate the commenters' support.
    Comment: A commenter opposed our proposal to add ICD-10-PCS 
procedure code 0DTN0ZZ to MDC 11 in MS-DRGs 673, 674, and 675 because 
these MS-DRGs does not account for the organ in which the disease 
originates. This commenter stated that the disease process that causes 
the formation of a vesicointestinal fistula generally do not originate 
in the bladder. This commenter recommended that CMS instead consider 
assigning ICD-10-PCS procedure code 0DTN0ZZ to MS-DRGs 329, 330, and 
331 (Major small and large bowel procedures with MCC, with CC, and 
without CC/MCC, respectively).
    Response: As we stated in the proposed rule, ICD-10-PCS procedure 
code 0DTN0ZZ is already assigned to MDC 6 in MS-DRGs 329, 330, and 331. 
As described above, when conducting the review of procedures producing 
assignment to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, the 
objective is to 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, or to move the principal diagnosis codes to the MDC in which the 
procedure falls. During this analysis, we noted that ICD-10-PCS 
procedure code 0DTN0ZZ groups to MS-DRGs 981 through 983 when reported 
with a principal diagnosis in MDC 11. Given that the only way to 
address this grouping issue is to move or add the diagnosis code and 
procedure codes, in this case we proposed to add ICD-10-PCS procedure 
code 0DTN0ZZ to MDC 11. While the disease process that causes the 
formation of a vesicointestinal fistula may not originate in the 
bladder, our clinical advisors believe that when ICD-10-PCS procedure 
code 0DTN0ZZ is reported in conjunction with the vesicointestinal 
fistula, it is related to the diagnosis.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-PCS procedure code 0DTN0ZZ to MDC 
11.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983 and 987 
Through 989
    We also review the list of ICD-10-PCS procedures that, when in 
combination with their principal diagnosis code, result in assignment 
to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether 
any of those procedures should be reassigned from one of those two 
groups of MS-DRGs to the other group of MS-DRGs based on average costs 
and the length of stay. We look at the data for trends such as shifts 
in treatment practice or reporting practice that would make the 
resulting MS-DRG assignment illogical. If we find these shifts, we 
would propose to move cases to keep the MS-DRGs clinically similar or 
to provide payment for the cases in a similar manner. Generally, we 
move only those procedures for which we have an adequate number of 
discharges to analyze the data.
    Based on the results of our review of claims data in the September 
2018 update of the FY 2018 MedPAR file, we did not propose to change 
the current structure of MS-DRGs 981 through 983 and MS-DRGs 987 
through 989.
    We did not receive any public comments on our maintaining the 
current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 
989. Therefore, we are finalizing the

[[Page 42134]]

current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 
989 without modification.
c. Additions for Diagnosis and Procedure Codes to MDCs
    As we did in the FY 2020 IPPS/LTCH PPS proposed rule, 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.F.12.a. of the preamble of this final 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 proposed, and are 
finalizing, to add to MS-DRGs 579, 580, and 581 in MDC 5. (While the 
requestor only referred to base MS-DRG 579, in the proposed rule we 
stated that we believe it is appropriate to assign the cases to MS-DRGs 
579, 580, and 581 by severity level.) We stated that 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, in the proposed rule 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.096

    As indicated in the proposed rule and earlier, the requestor 
suggested that we move ICD-10-PCS procedure code 0KXP0ZZ to MS-DRG 579. 
However, we stated that 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, as indicated 
in the proposed rule, 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.

[[Page 42135]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.097

    We noted in the proposed rule 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 to MS-DRG 983. However, we stated in the proposed 
rule that 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, we stated 
that they believe that it is clinically appropriate for the procedures 
to group to the same MS-DRGs as the principal diagnoses. Therefore, we 
proposed to add ICD-10-PCS procedure codes 0KXP0ZZ and 0KXN0ZZ to MDC 
9. We stated in the proposed rule that, 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. We are 
clarifying that under our proposal, cases reporting ICD-10-PCS codes 
0KXP0ZZ or 0KXN0ZZ would also group to MS-DRGs 576, 577, and 578 in the 
absence of a principal diagnosis of skin ulcer or cellulitis. The 
reason for this additional assignment is that under the GROUPER logic, 
all of the procedures assigned to MS-DRGs 573, 574, and 575 are also 
assigned to MS-DRGs 576, 577, and 578; the presence or absence of a 
principal diagnosis of skin ulcer or cellulitis determines whether the 
case groups to MS-DRGs 573, 574, and 575 or to MS-DRGs 576, 577, and 
578. 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 573, 574, 575, 576, 577, and 578 (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).
    Comment: A commenter supported our proposal to add ICD-10-PCS 
procedure codes 0KXP0ZZ and 0KXN0ZZ to MDC 9.
    Response: We appreciate the commenter's support.
    Comment: Other commenters did not support our proposal to add ICD-
10-PCS procedure codes 0KXP0ZZ and 0KXN0ZZ to MDC 9. The commenters 
stated that it is not appropriate for procedures performed on muscles 
to group to MS-DRGs for skin and subcutaneous tissues. These commenters 
also stated that transfer procedures are more clinically significant 
and resource intensive than grafts to the skin and subcutaneous tissue.
    Response: Our clinical advisors agree that procedures performed on 
muscles would not generally be expected to group to MS-DRGs for skin 
and subcutaneous tissues. However, while they believe that principal 
diagnoses from MDC 9 would not be the principal diagnoses most often 
reported with ICD-10-PCS procedure codes 0KXP0ZZ and 0KXN0ZZ, the 
claims data indicate that there are cases reporting a principal 
diagnosis assigned to MDC 9, as identified by the requestor. Our 
clinical advisors continue to believe that these cases involving hip 
muscle transfer represent a distinct, recognizable clinical group, 
which is similar to those cases in MS-DRGs 573, 574, and 575, and that 
the procedures are clearly related to the principal diagnosis codes. 
With respect to the comment that transfer procedures are more 
clinically significant and resource intensive than grafts to the skin 
and subcutaneous tissue, our clinical advisors believe that the 
transfer procedures are sufficiently similar to procedures involving 
grafts to the skin and subcutaneous tissue, particularly given that a 
review of the data presented in the proposed rule and described 
previously in this section demonstrate that the average costs for MS-
DRGs 573, 574, and 575 are generally greater than those of the subset 
of cases involving hip muscle transfer with a diagnosis in MDC 9. Most 
of the cases that currently group to MS-DRGs 981 through 983 occur in 
MS-DRGs 981 and 982, which have average costs of $25,023 and $17,955 
respectively, while the MS-DRGs with the same severity level, MS-DRGs 
573 and 574, have average costs of $34,549 and $21,251, respectively. 
We also believe it is preferable to assign these cases to a discrete 
MS-DRG within the GROUPER logic rather than allowing them to continue 
to group to MS-DRGs 981 through 983, which do not contain a group of 
clinically coherent principal diagnoses. MS-DRGs 573, 574, 575, 576, 
577, and 578, which are specific to the care of conditions that 
necessitate skin grafts, represent a group of clinically coherent 
principal diagnoses to which procedures describing transfer of muscles 
are more appropriately assigned than those in MS-DRGs 981 through 983.
    After consideration of the public comments we received, we are 
finalizing our proposal to add ICD-10-PCS procedure codes 0KXP0ZZ and 
0KXN0ZZ to MDC 9.
(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.F.12.a. of 
the preamble of this final rule where we discuss our finalized policy 
to move the listed diagnosis

[[Page 42136]]

codes describing gastrointestinal stromal tumors, including ICD-10-CM 
diagnosis code C49.A2, into MDC 6. Therefore, in the proposed rule, we 
stated that 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.
    We did not receive comments on our proposal to address this 
grouping issue by moving the diagnosis codes to MDC 6 rather than 
moving the procedure codes as requested. We refer the reader to section 
II.F.12.a. of this final rule for the comments regarding our proposal 
to move the GIST diagnosis codes to MDC 6, as well as our finalization 
of this proposal.
(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). In the proposed 
rule, we stated that, 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. As we stated in the 
proposed rule, 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). We stated in the proposed rule that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.098


[[Page 42137]]


    As noted in the previous discussion and the proposed rule, 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 also noted in the proposed 
rule 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.099

    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.F.12.A.3.of the preamble 
of this final rule.
    We stated in the proposed rule that 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, we stated that 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 proposed to add the procedure 
codes describing excision and resection of phalanx listed above to MS-
DRGs 579, 580, and 581. We stated that, 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.
    Comment: A commenter supported our proposal to add the procedure 
codes describing excision and resection of phalanx listed above to MS-
DRGs 579, 580, and 581 in MDC 9.
    Response: We appreciate the commenter's support.
    Comment: Other commenters did not support our proposal to add the 
procedure codes describing excision and resection of phalanx listed 
above to MS-DRGs 579, 580, and 581 in MDC 9. Commenters stated that it 
does not appear clinically appropriate for bone procedures to be 
grouped to skin and subcutaneous tissue MS-DRGs, and that the small 
number of cases suggests that this may be a coding issue.
    Response: We note that MS-DRGs 579, 580, and 581 already contain 
many bone-related procedures, such as those beginning with 0PD, which 
describe extraction of bone. In addition, our clinical advisors believe 
that 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.
    After consideration of the public comments we received, we are 
finalizing our proposal to add procedure codes describing excision and 
resection of phalanx listed above to MS-DRGs 579, 580, and 581 in MDC 
9.
(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 in tables 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 ICD-10-PCS tables 0SH and 0RH 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.
    We stated in the proposed rule that, while we understand the 
requestor's concern about these multiple significant trauma cases, we 
believe any potential reassignment of these cases requires significant 
analysis. We further stated that, 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

[[Page 42138]]

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 stated that 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 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.100

    We stated in the proposed rule that, while we agreed 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 further stated that 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). We stated in the proposed rule that ICD-10-CM 
diagnosis codes K95.01 (Infection due to gastric band procedure) and 
K95.09

[[Page 42139]]

(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 and in the proposed rule, 
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''.
    As indicated in the proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.101

    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.F.12.a. of the preamble of this final rule. We stated in the 
proposed rule that, 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 diagnoses. In 
addition, we stated that 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 proposed to add ICD-10-PCS procedure codes 0DW64CZ 
and 0DP64CZ to MDC 6 in MS-DRGs 326, 327, and 328. We stated in the 
proposed rule that, 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.
    Comment: Commenters supported our proposal to add ICD-10-PCS 
procedure codes 0DW64CZ and 0DP64CZ to MDC 6 in MS-DRGs 326, 327, and 
328.
    Response: We appreciate the commenters' support.
    After consideration of the public comments received, we are 
finalizing our proposal to add ICD-10-PCS procedure codes 0DW64CZ and 
0DP64CZ to MDC 6 in 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 
stated in the proposed rule that 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.F.12.a. of the preamble of the 
proposed rule, we proposed, and as discussed in this final rule, are 
finalizing, to add procedures

[[Page 42140]]

describing removal, revision, and/or insertion of peritoneal dialysis 
catheters to MS-DRGs 907, 908, and 909 in MDC 21. We refer readers to 
section II.F.12.a. of the preamble of this final rule in which we 
describe our analysis of this issue as part of our broader review of 
the unrelated MS-DRGs.
(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). We stated in the proposed rule that 
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 pelvic veins on the right side, such as the ovarian 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 right 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). We note that there 
was an inadvertent error in the proposed rule in which the term ``renal 
vein'' was referenced rather than ``pelvic veins on the right side'' or 
``ovarian vein''.
    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 and in the proposed rule, 
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.''
    As indicated in the proposed rule, 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, we indicated that our clinical 
advisors reviewed this request and agreed with the requestor that when 
the embolization procedure is performed on the left ovarian 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 ovarian vein. 
Therefore, we proposed 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. We stated in the proposed rule that, 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).
    Comment: A commenter stated that this issue should be reevaluated, 
because 06L03DZ is not the correct code to report procedures done on 
the right renal vein; rather, 06L93DZ (Occlusion of right renal vein 
with intraluminal device, percutaneous approach) would be reported 
instead.
    Response: We appreciate the commenter's request for clarification. 
We wish to clarify that certain specific pelvic veins do not have their 
own body part value in the ICD-10-PCS, and the ICD-10-PCS Body Part Key 
instructs coders to assign the inferior vena cava body part for veins 
such as the right ovarian vein and the right testicular vein, and to 
assign the left renal vein body part for veins such as the left ovarian 
vein and the left testicular vein. Therefore, ICD-10-PCS codes 06L03DZ 
or 06LB3DZ indeed may be reported to describe an embolization procedure 
performed for the treatment of pelvic varices of these respective 
sites. As such, our clinical advisors believe that when the 
embolization procedure is performed on veins classified to the left 
renal vein, such as the left ovarian vein and the left testicular vein, 
it should group to the same MS-DRGs as when it is performed on veins 
classified to the inferior vena cava, such as the right ovarian vein 
and the right testicular vein.
    After consideration of the public comments we received, we are 
finalizing our proposal 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.
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 (``O.R. procedures'') or is not designated

[[Page 42141]]

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 
final 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.
    In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that, 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, as we stated in the proposed rule, 
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.
    We stated in the proposed rule that, 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 noted in the 
proposed rule, 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 the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19231 through 
19235), we addressed requests that we received regarding changing the 
designation of specific ICD-10-PCS procedure codes from non-O.R. to 
O.R. procedures, or changing the designation from O.R. procedure to 
non-O.R. procedure. 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 noted in the proposed rule 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 proposed to change the designation of 
procedure codes from non-O.R. procedures to O.R. procedures, we also 
proposed one or more MS-DRGs with which these procedures are clinically 
aligned and to which the procedure code would be assigned.
    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

[[Page 42142]]

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 determined if the procedure 
should affect the MS-DRG assignment.
    As indicated in the proposed rule, 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, as we did in the 
proposed rule, in this final rule, we detail and respond to some of 
those requests and, further, summarize and respond to the public 
comments we received in response to our proposals, if applicable. With 
regard to the remaining requests, as stated in the proposed rule, 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.
    In the proposed rule, we stated that we agreed with the requestors 
that these procedures do not typically require the resources of an 
operating room. Therefore, we proposed 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. We stated in the proposed rule that, 
under this proposal, these procedures would no longer impact MS-DRG 
assignment.
[GRAPHIC] [TIFF OMITTED] TR16AU19.102

    Comment: Some commenters supported our proposal to designate the 13 
procedure codes above as non-O.R. procedures.
    Response: We appreciate the commenters' support.
    Comment: Other commenters opposed our proposal to designate the 13 
procedure codes above as non-O.R. procedures. A commenter stated that 
due to the complexity of the procedures being performed, they should 
continue to be designated as an O.R. procedure, while another commenter 
stated that CMS should not reassign any procedures as O.R. or non-O.R. 
until it has completed its comprehensive review.
    Response: As indicated in the proposed rule, our clinical advisors 
believe that these procedures do not typically require the resources of 
an operating room. The commenter did not provide information to the 
contrary. We also do not agree with the commenter who stated that we 
should not reassign any procedures as O.R. or non-O.R; rather, while 
some requests may involve a broader review of additional ranges of ICD-
10-PCS codes, such that we believe they are more appropriately 
considered as part of our comprehensive review of procedure codes, we 
generally believe it is more accurate to address requests to change the 
designation of procedures as OR or non-OR as they arise rather than 
waiting for the comprehensive review, which is a multiyear project.
    After consideration of the public comments we received, we are 
finalizing our policy to designate the 13 codes above as non-O.R.
(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

[[Page 42143]]

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 stated in the proposed rule that we agreed with the requestor 
that these procedures do not typically require the resources of an 
operating room. Therefore, we proposed 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. We stated that, under this proposal, this 
procedure would no longer impact MS-DRG assignment.
    Comment: Commenters supported the proposal to change the 
designation of 0W9J3ZX to a non-O.R. procedure. The commenters stated 
that the proposal was reasonable, given the data and information 
provided.
    A commenter stated that CMS should not consider any requests to 
modify the designation of procedures as O.R. or non-O.R. for FY 2020. 
As stated in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19230), CMS 
plans to conduct a comprehensive systematic review of the ICD-10-PCS 
procedure codes. The commenter suggested that reassignment requests 
should be held until the review has been completed.
    Response: We appreciate the commenters' support. We do not agree 
with the commenter who stated that we should not reassign any 
procedures as O.R. or non-O.R; rather, while some requests may involve 
a broader review of additional ranges of ICD-10-PCS codes, such that we 
believe they are more appropriately considered as part of our 
comprehensive review of procedure codes, we generally believe it is 
more accurate to address requests to change the designation of 
procedures as OR or non-OR as they arise rather than waiting for the 
comprehensive review, which is a multiyear project. After consideration 
of the public comments we received, we are finalizing our proposal to 
change the designation of 0W9J3ZX from an O.R. procedure to non-O.R. 
procedure, effective October 1, 2019.
(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 stated in the proposed rule that we agreed with the requestor 
that these procedures do not typically require the resources of an 
operating room. Therefore, we proposed 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. We stated that, under this proposal, 
this procedure would no longer impact MS-DRG assignment.
    Comment: Commenters supported the proposal to change the 
designation of 0FPG30Z to a non-O.R. procedure. The commenters stated 
that the proposal was reasonable, given the data and information 
provided.
    A commenter stated that CMS should not consider any requests to 
modify the designation of procedures as O.R. or non-O.R. for FY 2020. 
As stated in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19230), CMS 
plans to conduct a comprehensive systematic review of the ICD-10-PCS 
procedure codes. The commenter suggested that reassignment requests 
should be held until the review has been completed.
    Response: We appreciate the commenters' support. We do not agree 
with the commenter who stated that we should not reassign any 
procedures as O.R. or non-O.R; rather, while some requests may involve 
a broader review of additional ranges of ICD-10-PCS codes, such that we 
believe they are more appropriately considered as part of our 
comprehensive review of procedure codes, we generally believe it is 
more accurate to address requests to change the designation of 
procedures as OR or non-OR as they arise rather than waiting for the 
comprehensive review, which is a multiyear project. After consideration 
of the public comments we received, we are finalizing our proposal to 
change the designation of 0FPG30Z from an O.R. procedure to a non-O.R. 
procedure, effective October 1, 2019.
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 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 stated in the proposed rule that we agreed with the requestor 
that ICD-10-PCS procedure code 04L23DZ typically requires the resources 
of an operating room. Therefore, we proposed 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,

[[Page 42144]]

CC, without CC/MCC, respectively) in MDC 24 (Multiple Significant 
Trauma).
    Comment: Commenters supported the proposal to change the 
designation of 04L23DZ from a non-O.R. to O.R. procedure. The 
commenters stated that the proposal was reasonable, given the data and 
information provided. A commenter noted that this change better 
reflects the resources required to perform the procedure and better 
aligns its designation with the designation of other procedures of 
similar technical difficulty.
    A commenter stated that CMS should not consider any requests to 
modify the designation of procedures as O.R. or non-O.R. for FY 2020. 
As stated in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19230), CMS 
plans to conduct a comprehensive systematic review of the ICD-10-PCS 
procedure codes. The commenter suggested that reassignment requests 
should be held until the review has been completed.
    Response: We appreciate the commenters' support. We do not agree 
with the commenter who stated that we should not reassign any 
procedures as O.R. or non-O.R; rather, while some requests may involve 
a broader review of additional ranges of ICD-10-PCS codes, such that we 
believe they are more appropriately considered as part of our 
comprehensive review of procedure codes, we generally believe it is 
more accurate to address requests to change the designation of 
procedures as OR or non-OR as they arise rather than waiting for the 
comprehensive review, which is a multiyear project. After consideration 
of the public comments we received, we are finalizing our proposal to 
change the designation of 04L23DZ from non-O.R. procedure to O.R. 
procedure, effective October 1, 2019.
(2) Endoscopic Insertion of Endobronchial Valves
    As noted in the FY 2020 IPPS/LTCH PPS proposed rule, 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.103

    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

[[Page 42145]]

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.
    As indicated in the FY 2020 IPPS/LTCH PPS proposed rule, we 
examined claims data from the September 2018 update of the FY 2018 
MedPAR file for MS-DRGs 163, 164 and 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. We 
stated that 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.104

    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). We further stated that 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

[[Page 42146]]

surgical MS-DRGs where cases reporting a respiratory diagnosis within 
MDC 4 would be assigned. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.105

    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 indicated that 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. We stated in the proposed rule that 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 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.106


[[Page 42147]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.107

    We further stated in the proposed rule that 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 agreed 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. We stated that 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 final 
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, we stated that 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. We 
stated that 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, we stated in the proposed rule that, 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 and in the proposed rule, we did 
not propose 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, we stated that because we agreed that 
endoscopic insertion of an endobronchial valve procedures are performed 
on clinically complex patients, we believe it may be

[[Page 42148]]

appropriate to consider designating these procedures as non-O.R. 
affecting specific MS-DRGs for FY 2020. Therefore, we requested 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 of an endobronchial valve 
should affect for FY 2020. As we noted in the proposed rule, 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 solicited comment on whether cases reporting the 
endoscopic insertion of an endobronchial valve should affect any of 
these MS-DRGs or other MS-DRGs.
    Comment: Several commenters disagreed with our proposal to not 
designate the eight procedure codes describing endoscopic insertion of 
an endobronchial valve procedure as an O.R. procedure until additional 
analyses can be performed as part of the comprehensive procedure code 
review. Commenters urged CMS to include the eight procedure codes 
discussed above in the GROUPER logic for MS-DRGs 163, 164, and 165 
based on the analysis that was presented in the proposed rule effective 
FY 2020. A commenter noted that the analysis showed that cases in 
surgical MS-DRGs 163, 164, 165, 166 and 167 reporting the endoscopic 
insertion of an endobronchial valve had longer length of stays and 
higher average costs than other cases in those MS-DRGs. The commenter 
stated that the analysis showed that most cases in the medical MS-DRGs 
reporting the endoscopic insertion of an endobronchial valve had costs 
significantly higher than the relative weights of the medical DRGs. 
This commenter also stated that the skill level required for placement, 
anesthesia (even if performed outside the O.R.), and the severity level 
of the patient increase costs beyond that recognized within the medical 
MS-DRGs. The commenter further stated that because CMS's data supports 
a higher severity level, higher costs, and longer length of stays for 
patients who undergo endoscopic insertion of an endobronchial valve, 
they recommended reclassifying the eight procedure codes to O.R. status 
effective FY 2020, and grouping to MS-DRGs 163, 164 and 165 within MDC 
4, to MS-DRG 853 when sepsis is principal diagnosis, and to MS-DRGs 
981, 982, and 983 when there is an unrelated principal diagnosis. The 
commenter stated their belief that further delay of a relative weight 
increase for these procedures is not warranted nor supported. Another 
commenter commended CMS for soliciting comments on whether to consider 
any of the eight procedure codes describing the endoscopic insertion of 
an endobronchial valve procedure as non-O.R. impacting the MS-DRG 
assignment. This commenter recommended assigning all eight procedure 
codes identifying the endoscopic insertion of an endobronchial valve 
without another O.R. procedure to MS-DRGs 163, 164, and 165 for 
clinical coherence. According to the commenter, there are currently no 
medical MS-DRGs with clinically similar procedures or costs, therefore, 
assignment to MS-DRGs 163, 164 and 165 would ensure adequate payment to 
providers for these procedures. This commenter also stated that the 
costs associated with the endoscopic insertion of an endobronchial 
valve are a significant contributing factor to the higher average costs 
and length of stay in comparison to clinically similar cases that do 
not involve the endoscopic insertion of an endobronchial valve.
    Response: We appreciate the commenters' feedback on the designation 
of the eight procedure codes describing the endoscopic insertion of an 
endobronchial valve. We agree with the commenter that the analysis in 
the proposed rule showed 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. As noted 
above, we stated in the proposed rule that because the data are based 
on surgical MS-DRGs 163, 164, 165, 166 and 167, there was at least one 
other O.R. procedure reported on the claim resulting in case assignment 
to one of those MS-DRGs. We also acknowledge that the analysis in the 
proposed rule showed that most cases in the medical MS-DRGs reporting 
the endoscopic insertion of an endobronchial valve demonstrated costs 
higher than the relative weights of the medical DRGs. While our 
clinical advisors continue to believe it is unclear (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, they agree, as noted 
in the proposed rule, 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. Our clinical advisors also continue 
to believe that further refinement of surgical MS-DRGs 163, 164, 165, 
166 and 167 may be warranted because there are other procedure codes 
describing the insertion of endobronchial valve procedures by various 
approaches that are currently assigned to MS-DRGs 163, 164, and 165 and 
are designated as O.R. procedures, which our clinical advisors believe 
may require further analysis with respect to utilization of resources 
and designation as O.R. versus non-O.R. There are also other procedure 
codes currently assigned to MS-DRGs 163, 164 and 165 that describe 
procedures being performed on body parts other than those related to 
the chest. For example, we found codes describing laser interstitial 
thermal therapy (LITT) of several gastrointestinal body parts that do 
not appear to be clinically coherent. With regard to MS-DRGs 166 and 
167, our clinical advisors believe that these MS-DRGs may require 
further consideration for potential restructuring in connection with 
the ongoing evaluation of severity level designations and also as a 
result of the finalized policy (as discussed in section II.F.3. of the 
preamble of this final rule) regarding the deletion of several 
procedure codes that contain the qualifier ``bifurcation'' which are 
currently assigned to MS-DRGs 166 and 167 (as well as MS-DRG 168). For 
these reasons, our clinical advisors believe additional analysis of 
these surgical MS-DRGs is needed. In response to the commenter who 
suggested that cases reporting one of the eight procedure codes 
describing the endoscopic insertion of an endobronchial procedure 
should group to MS-DRG 853 (Infectious & Parasitic Diseases with O.R. 
Procedure with MCC) when sepsis is the principal diagnosis, and to MS-
DRGs 981, 982, and 983 when there is an unrelated principal diagnosis, 
we note that, as shown in the proposed rule and above, our analysis of 
the cases reporting the endoscopic insertion of an endobronchial valve 
in a medical MS-DRG did not result in any cases being found in MS-DRG 
853 and our clinical advisors do not agree with assignment of these 
procedures to that MS-DRG in the absence of further analysis. We also 
note that, because our clinical advisors continue to believe that 
endoscopic insertion of an endobronchial valve

[[Page 42149]]

should not be designated as an O.R. procedure, they do not support the 
recommendation for assignment to MS-DRGs 981, 982, and 983 as those MS-
DRGs are defined by procedures designated as extensive O.R. procedures. 
We refer the reader to section II.F.13.a. of the preamble in this final 
rule, for detailed information on how the designation of each ICD-10-
PCS procedure code on a claim impacts the MS-DRG assignment.
    In the proposed rule we stated that we agreed that endoscopic 
insertion of an endobronchial valve procedures are performed on 
clinically complex patients and that we believed it may be appropriate 
to consider designating these procedures as non-O.R. affecting specific 
MS DRGs for FY 2020. Our clinical advisors support the commenters' 
recommendation for the assignment of cases reporting the endoscopic 
insertion of an endobronchial valve to MS-DRGs 163, 164, and 165 under 
the current structure of the ICD-10 MS-DRGs for clinical coherence with 
the other insertion of endobronchial valve procedures currently 
assigned to those MS-DRGs and based on the data analysis. Our clinical 
advisors acknowledge that the data analysis presented in the proposed 
rule demonstrated 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, however, the average costs 
and length of stay for those cases are more aligned with MS-DRGs 163, 
164 and 165 than MS- DRGs 166, 167, and 168 or any other MS-DRGs within 
MDC 4 at this time. (As noted in the proposed rule, we did not find any 
cases reporting a procedure for the insertion of an endobronchial valve 
in MS-DRG 168).
    After consideration of the public comments we received and for the 
reasons described above, we are finalizing the designation of the eight 
procedure codes listed earlier in this section that describe the 
endoscopic insertion of an endobronchial valve as non-O.R. affecting 
MS-DRGs 163, 164 and 165 (Major Chest Procedures with MCC, with CC and 
without CC/MCC, respectively) under the ICD-10 MS-DRGs Version 37, 
effective October 1, 2019.
14. 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 stated in the 
proposed rule that we believe it is necessary to conduct a 
comprehensive analysis once again. We further stated that we had 
completed this analysis and we were discussing our findings in the 
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:
[GRAPHIC] [TIFF OMITTED] TR16AU19.108


[[Page 42150]]


    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:
[GRAPHIC] [TIFF OMITTED] TR16AU19.109

    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. Changes to Severity Levels
(1) General
    As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19235 through 19246), the diagnosis codes for which we proposed a 
change in severity level designation as a result of the analysis 
described in that proposed rule were shown in Table 6P.1c. associated 
with that 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). 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 the FY 
2020 IPPS/LTCH PPS proposed rule, the proposed changes to severity 
level resulting from our comprehensive analysis moved 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. We refer readers to the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19235 through 19246) for a complete 
discussion of our proposals, including a summary of the proposed 
changes and illustrations of proposed severity level changes.
    We invited public comments on our proposed severity level 
designations for the diagnosis codes as shown in Table 6P.1c associated 
with the proposed rule. We received many comments on the proposals, 
with the majority of commenters requesting that the adoption of the 
proposed changes be delayed in order to provide additional time to 
evaluate given the broad scope of the proposed changes. As discussed in 
more detail below, after consideration of the public comments we 
received, we are generally not finalizing our proposed changes to the 
severity level designations for the ICD-10-CM diagnosis codes as shown 
in Table 6P.1c associated with the proposed rule, with the exception of 
the proposed changes to the codes related to antimicrobial resistance 
as discussed in greater detail below. Below we provide a summary of the 
comments we received and our response.
    Comment: Commenters expressed support for a limited number of the 
proposed changes in severity level, including the proposed change in 
severity level designation for diagnosis codes E83.39 (Other disorders 
of phosphorus metabolism), E83.51 (Hypocalcemia), R62.7 (Adult failure 
to thrive), R63.3 (Feeding difficulties), Z16.12 (Extended spectrum 
beta lactamase (ESBL) resistance), Z16.21 (Resistance to vancomycin), 
Z16.24 (Resistance to multiple antibiotics), and Z16.39 (Resistance to 
other specified antimicrobial drug) from a non-CC to a CC. Commenters 
stated their belief that these proposals were reasonable and reflect 
the resource utilization for these diagnoses.
    However, many commenters expressed concern with the proposed 
severity level designation changes overall and recommended CMS conduct 
further analysis prior to finalizing any proposals. Specifically, 
commenters expressed concern that the extensive changes proposed to the 
severity level designations for the ICD-10-CM diagnosis codes as shown 
in Table 6P.1c, the majority of which would be a lower severity level 
(for example, CC to a non-CC), would no longer appropriately reflect 
resource use for patient care and could have a significant unintended 
or improper adverse financial impact. In addition, some commenters 
believed there was not sufficient time to review the nearly 1,500 
diagnosis codes for which a change to the severity designation was 
proposed, noting that CMS engaged in its analysis for over a year 
before making any comprehensive proposals, and because there have been 
significant changes that have occurred to diagnosis codes since the 
transition to ICD-10-CM, in particular the exponential increase in the 
number of codes. Other general themes reflected in the comments 
included desire for more transparency and stakeholder

[[Page 42151]]

engagement, the belief that clinical severity was not consistently 
reflected in the proposed severity level designations, and concern 
regarding the impact on Medicaid and private payers, stating such 
payers often base their payment amount on Medicare.
    Some commenters stated that the information provided was not 
sufficient to adequately explain the proposed changes in severity level 
designations for certain diagnosis codes or families of codes. Other 
commenters were concerned that CMS' stated criteria were not met for 
some of the proposed changes to severity designations and specifically 
noted instances where diagnoses that appear to be clinically less 
severe (and therefore require less resources) were proposed to be 
assigned a higher severity level designation than other diagnoses that 
they believe require more resources. Another commenter recommended that 
any changes be phased in to allow time to assess the impacts such 
modifications would have on hospitals and patients.
    Response: We thank commenters for their comments on our proposed 
changes. After consideration of the public comments we received, and 
for the reasons discussed below, we agree it would be premature to 
adopt broad changes to the severity designations at this time. We agree 
with commenters that there have been significant changes to the scope 
and complexity of diagnosis codes since the transition to ICD-10-CM. We 
also believe that at this time it would be prudent to further examine 
the proposed severity designations to ensure they would appropriately 
reflect resource use based on review of the data as well as 
consideration of relevant clinical factors (for example, the clinical 
nature of each of the secondary diagnoses and the severity level of 
clinically similar diagnoses, as explained above) and improve the 
overall accuracy of the IPPS payments. Postponing the adoption of 
comprehensive changes in severity level designations will allow us to 
incorporate review of additional ICD-10 claims data as it becomes 
available and to fully consider the technical feedback provided from 
the public on the proposed rule. This would also allow further 
opportunity to provide additional background to the public on the 
methodology utilized and clinical rationale applied across diagnostic 
categories to assist the public in its review, such as making a test 
GROUPER publicly available to allow for impact testing. In addition, we 
can consider further whether it is appropriate to propose to make such 
comprehensive changes all at once or in phases, as suggested by some 
commenters.
    Furthermore, this will afford an opportunity for us to explore 
additional means of eliciting feedback on the current severity level 
designations after the final rule and prior to the November 1, 2019 
deadline for MS-DRG requests, comments and suggestions for FY 2021, 
such as holding an open door forum to solicit additional feedback. When 
providing additional feedback or comments, we encourage the public to 
provide a detailed explanation of why a specific severity level 
designation for a diagnosis code would ensure that designation 
appropriately reflects resource use. We also invite feedback regarding 
other possible ways we can approach the implementation of our proposed 
comprehensive changes to severity level designations, such as a phased-
in approach or changes by specific code categories or MDCs. In summary, 
for the reasons discussed above, we are generally not finalizing our 
proposed changes to the severity designations for the ICD-10-CM 
diagnosis codes as shown in Table 6P.1c associated with the proposed 
rule, other than the changes to the severity level designations for the 
diagnosis codes in category Z16- (Resistance to antimicrobial drugs) 
from a non-CC to a CC, as discussed in more detail below.
    Comment: As noted above, we received comments supporting our 
proposed change in severity level designation for diagnosis codes 
related to antimicrobial resistance (that is, Z16.12 (Extended spectrum 
beta lactamase (ESBL) resistance), Z16.21 (Resistance to vancomycin), 
Z16.24 (Resistance to multiple antibiotics), and Z16.39 (Resistance to 
other specified antimicrobial drug) from a non-CC to a CC. These 
commenters stated that they agree that patients with an ICD-10-CM 
secondary diagnosis code indicating that they were treated for an 
infection resistant to antibiotics should be, at a minimum, assigned a 
CC severity level designation. They asserted that the resources 
required to treat patients suffering from antimicrobial resistant 
infections should warrant a higher severity designation, and indicated 
that caring for patients with these complications is more resource 
intensive, including the need for stronger, different, or extra 
antibiotics. Commenters further indicated that the higher resources 
required to treat patients suffering from antimicrobial resistant 
infections are particularly relevant with respect to Medicare 
beneficiaries because they are vulnerable to drug-resistant infections 
due to greater exposure to resistant bacteria (e.g., via catheter 
infection or from other chronic diseases). These commenters expressed 
significant concerns related to the public health crisis represented by 
antimicrobial resistance and urged CMS to also apply the change in the 
severity level designation from non-CC to CC to the other ICD 10-CM 
diagnosis codes specifying antimicrobial drug resistance. A few of 
these commenters made recommendations for certain ICD-10-CM diagnosis 
codes that specify antimicrobial drug resistance either in addition to 
or in lieu of the codes included in our proposal. However, many of 
these commenters recommended that we also apply the change in the 
severity level designation from non-CC to CC to the other ICD-10-CM 
diagnosis codes specifying antimicrobial drug resistance (that is, the 
other diagnosis codes in category Z16-(Resistance to antimicrobial 
drugs).
    Response: We understand the concerns expressed by commenters 
related to the public health crisis that antimicrobial resistance 
represents. Addressing these concerns is consistent with the 
Administration's key priorities, and we have taken into consideration 
their statements that it clinically requires greater resources to treat 
patients suffering from antimicrobial resistant infections. For 
example, antimicrobial resistance results in a substantial number of 
additional hospital days for Medicare beneficiaries (estimated to be 
more than 600,000 additional days in the hospital each year), resulting 
in additional costs and resources to care for these patients.\1\ For 
these reasons, while we are continuing to examine the implementation of 
broader comprehensive changes to the CC/MCC designations, we believe it 
is appropriate to finalize the change in the severity level 
designations from non-CC to CC for the ICD-10-CM diagnosis codes 
specifying antimicrobial drug resistance. We also agree with the 
commenters that the change in severity level designation should also 
apply to the other ICD-10-CM diagnosis codes that specify antimicrobial 
drug resistance. We believe this would be consistent with our proposal 
because these codes, which identify the resistance and non-
responsiveness of a condition to antimicrobial drugs, are in the same 
family of codes (Z16) as the previously listed diagnosis codes related 
to antimicrobial resistance (that is, Z16.12, Z16.21, Z16.24, and 
Z16.39). Therefore, we are finalizing a change to the severity level 
designation for all of

[[Page 42152]]

the codes in category Z16- (Resistance to antimicrobial drugs), which 
are listed below, from a non-CC to a CC designation.
---------------------------------------------------------------------------

    \1\ Internal analysis from the Centers for Disease Control and 
Prevention.
[GRAPHIC] [TIFF OMITTED] TR16AU19.110

    (We refer readers to sections II.H.8. and II.H.9. of the preamble 
of this final rule for a discussion of new technology add-on payment 
policies related to antimicrobial resistance.)
d. Requested Changes to Severity Levels
    In the FY 2020 IPPS/LTCH PPS proposed rule (19246 through 19250) we 
discussed the external requests we received to make changes for the 
severity level designations of diagnosis codes in seven specific groups 
which included (1) Acute Right Heart Failure, (2) Chronic Right Heart 
Failure, (3) Ascites in Alcoholic Liver Disease and Toxic Liver 
Disease, (4) Factitious Disorder Imposed on Self, (5) Nonunion and 
Malunion of Physeal Metatarsal Fractures, (6) Other Encephalopathy, and 
(7) Obstetrics Chapter Codes. As these requests were external requests 
we discussed them separately from the comprehensive CC/MCC analysis, 
however, we utilized the same approach and methodology, consistent with 
our annual process of reviewing requested changes to severity levels. 
We note that, for the seven groups of external requests we received, we 
did not propose any changes to the severity levels of the diagnosis 
codes based on the results of our data analysis and the input of our 
clinical advisors, with the exception of group (7) Obstetrics Chapter 
Codes. We also note that we solicited comments on, but did not 
specifically propose changes for, the diagnosis codes discussed from 
group (1) Acute Right Heart Failure.
    Some commenters disagreed with our decision not to propose changes 
in the severity level designation for certain groups of codes, for 
example the acute right heart failure and ascites codes, and 
recommended that we finalize changes to the severity levels, stating 
that the resources required are similar to the existing codes. Other 
commenters specifically recommended that we postpone any decisions 
related to the obstetrics chapter codes and work with a panel of 
provider stakeholders. As we indicated in the proposed rule, given the 
limited number of cases reporting ICD-10-CM obstetrical codes in the 
Medicare claims data, we are considering 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.
    As discussed above, after consideration of the public comments 
received, we are generally not finalizing our proposed changes to the 
severity level designations for the ICD-10-CM diagnosis codes that were 
reviewed as part of the comprehensive CC/MCC analysis and shown in 
Table 6P.1c associated with the proposed rule. Similarly, we are not 
finalizing any proposed changes to the obstetric chapter diagnosis 
codes for FY 2020, to allow for further consideration of these codes as 
part of our comprehensive analysis as well as further consideration of 
the use of additional data sets for these particular codes, given the 
limited number of cases reported in the Medicare claims data. We are 
also finalizing our proposals to maintain the current severity level 
designations for the remaining six groups of diagnosis codes listed 
above for FY 2020. We will continue to consider the public comments 
received on the external requests for changes to severity level 
designations as we review and consider the public comments on our 
comprehensive CC/MCC analysis.
e. Additions and Deletions to the Diagnosis Code Severity Levels for FY 
2020
    The following tables identify the additions and deletions to the 
diagnosis code MCC severity levels list and the

[[Page 42153]]

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--Additions to the MCC List--FY 2020;
    Table 6I.2--Deletions to the MCC List--FY 2020;
    Table 6J.1--Additions to the CC List--FY 2020; and
    Table 6J.2--Deletions to the CC List--FY 2020.
f. 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.
    The ICD-10 MS-DRGs Version 36 CC Exclusion List is included as 
Appendix C in the ICD-10 MS-DRG Definitions Manual, which is available 
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html, and includes two lists identified as 
Part 1 and Part 2. Part 1 is the list of all diagnosis codes that are 
defined as a CC or MCC when reported as a secondary diagnosis. If the 
code designated as a CC or MCC is allowed with all principal diagnoses, 
the phrase ``NoExcl'' (for no exclusions) follows the CC or MCC 
designation. For example, ICD-10-CM diagnosis code A17.83 (Tuberculous 
neuritis) has this ``NoExcl'' entry. For all other diagnosis codes on 
the list, a link is provided to a collection of diagnosis codes which, 
when used as the principal diagnosis, would cause the CC or MCC 
diagnosis to be considered as a non-CC. Part 2 is the list of diagnosis 
codes designated as a MCC only for patients discharged alive; 
otherwise, they are assigned as a non-CC. After publication of the 
proposed rule, we found inconsistencies in the assignment of this 
``NoExcl'' entry to the diagnoses designated as a CC or MCC. Generally, 
each CC or MCC diagnosis excludes itself from acting as a CC or MCC 
diagnosis, however, there are approximately 229 diagnosis codes we 
identified in Appendix C that have the phrase ``NoExcl'' and should 
instead contain a link to exclude themselves from acting as a CC or 
MCC. Therefore, we have corrected the list of diagnosis codes for the 
ICD-10 MS-DRG Definitions Manual Version 37, Appendix C--Complications 
or Comorbidities Exclusion List by providing a link to a collection of 
diagnosis codes which, when used as the principal diagnosis, will cause 
the CC or MCC to be considered as only a non-CC, for each of the 229 
diagnosis codes identified. We have also removed the sentence that 
states, ``If the CC or MCC is allowed with all principal diagnoses, 
then the phrase NoExcl follows the CC/MCC indicator'' as there are no 
longer any entries for which this phrase applies. We note that these 
corrections to Appendix C do not represent a change in MS-DRG 
assignment (or IPPS payment) and are being made to conform the appendix 
and tables to current policy. We also note these corrections are 
reflected for Table 6K.--Complete List of CC Exclusions--FY 2020.
    In the FY 2020 IPPS/LTCH PPS proposed rule, for FY 2020, we 
proposed changes to the ICD-10 MS-DRGs Version 37 CC Exclusion List. 
Therefore, we 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 the 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.
    The proposed CC Exclusions for a subset of the diagnosis codes as 
set forth in Tables 6G.1, 6G.2, 6H.1 and 6H.2 associated with the FY 
2020 IPPS/LTCH PPS proposed rule reflected the proposed severity level 
designations as discussed in section II.F.14.c.1. of the preamble of 
the proposed rule which were based on our comprehensive CC/MCC 
analysis. As discussed in section II.F.14.c.1. of the preamble of this 
final rule, we are not finalizing the proposed changes to the severity 
level designations after consideration of the public comments received 
(with the exception of the specified ICD-10-CM diagnosis codes in 
category Z16-Resistance to antimicrobial drugs). Therefore, the 
finalized CC Exclusions List as displayed in Tables 6G.1, 6G.2,

[[Page 42154]]

6H.1, 6H.2. and 6K. associated with this final rule reflect the 
severity levels under Version 36 of the ICD-10 MS-DRGs for a subset of 
the diagnosis codes.
15. 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 final rule.
    These tables are not published in the Addendum to the proposed rule 
or final 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 final rule. As discussed in section II.F.18. of the 
preamble of this final rule, the code titles are adopted as part of the 
ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee 
process. Therefore, although we publish the code titles in the IPPS 
proposed and final rules, they are not subject to comment in the 
proposed or final rules.
    In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19250) we 
proposed the MDC and MS-DRG assignments for the new diagnosis codes and 
procedure codes as set forth in Table 6A.--New Diagnosis Codes and 
Table 6B.--New Procedure Codes. We also stated that the proposed 
severity level designations for the new diagnosis codes were set forth 
in Table 6A. and the proposed O.R. status for the new procedure codes 
were set forth in Table 6B.
    Comment: A commenter expressed support for the proposed MS-DRG 
assignments under MDC 5 (Diseases and Disorders of the Circulatory 
System) for new procedure codes describing the insertion, removal, and 
revision of subcutaneous defibrillator leads via open and percutaneous 
approaches as reflected in Table 6B.--New Procedure Codes, that was 
associated with the proposed rule. However, the commenter stated it was 
not clear why MS-DRGs 040 (Peripheral, Cranial Nerve and Other Nervous 
System Procedures with MCC), 041 (Peripheral, Cranial Nerve and Other 
Nervous System Procedures with CC or Peripheral Neurostimulator), and 
042 (Peripheral, Cranial Nerve and Other Nervous System Procedures 
without CC/MCC) under MDC 1 (Diseases and Disorders of the Nervous 
System) were also proposed as MS-DRG assignments for the procedures 
describing removal and revision of subcutaneous defibrillator lead. The 
commenter requested that CMS provide information in the FY 2020 IPPS/
LTCH PPS final rule regarding those proposed MS-DRG assignments, 
including the diagnosis and procedure codes that would result in 
assignment to those MS-DRGs. The commenter provided the following table 
to display the proposed MS-DRG assignments as reflected in Table 6B- 
New Procedure Codes that was associated with the proposed rule.
[GRAPHIC] [TIFF OMITTED] TR16AU19.111

    Response: We thank the commenter for their support. With regard to 
why MS-DRGs 040, 041, and 042 under MDC 1 were also proposed as MS-DRG 
assignments for the procedures describing removal and revision of 
subcutaneous defibrillator lead, we note that, as described in section 
II.F.2.a. of the preamble of this final rule, 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. The predecessor 
procedure codes for the above listed removal and revision of 
subcutaneous defibrillator lead procedure codes are procedure codes 
0JPT0PZ (Removal of cardiac rhythm related device from trunk 
subcutaneous

[[Page 42155]]

tissue and fascia, open approach), 0JPT3PZ (Removal of cardiac rhythm 
related device from trunk subcutaneous tissue and fascia, percutaneous 
approach), 0JWT0PZ (Revision of cardiac rhythm related device in trunk 
subcutaneous tissue and fascia, open approach) and 0JWT3PZ (Revision of 
cardiac rhythm related device in trunk subcutaneous tissue and fascia, 
percutaneous approach) which are currently assigned to MS-DRGs 040, 
041, and 042 under MDC 1. We also note that, in each MDC there is 
usually a medical and a surgical class referred to as ``other medical 
diseases'' and ``other surgical procedures,'' respectively. The 
``other'' medical and surgical classes are not as precisely defined 
from a clinical perspective. The other classes would include diagnoses 
or procedures which were infrequently encountered or not well defined 
clinically. The ``other'' surgical category contains surgical 
procedures which, while infrequent, could still reasonably be expected 
to be performed for a patient in the particular MDC. Within MDC 1, MS-
DRGs 040, 041, and 042 are defined as a set of the ``other'' surgical 
classes as indicated in their MS-DRG titles with the ``Other Nervous 
System Procedures'' terminology. With regard to the diagnosis codes, we 
note that the diagnoses in each MDC correspond to a single organ system 
or etiology and in general are associated with a particular medical 
specialty. As such, the diagnoses assigned to MDC 1 correspond to the 
central nervous system. While we agree that it would be rare for a 
diagnosis related to a disease or disorder of the nervous system to be 
reported with a procedure that involves the removal or revision of a 
subcutaneous defibrillator lead, we note that, as discussed and 
displayed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41184), cases 
with procedure codes that identify the insertion of a cardiac rhythm 
related device (the predecessor code for insertion of subcutaneous 
defibrillator lead procedures) were previously assigned to MS-DRGs 040, 
041, and 042 and a small number of cases were found to be reported in 
those MS-DRGs, thus indicating that the combination of a diagnosis code 
from MDC 1 and one of the procedures describing the insertion of a 
cardiac rhythm related device did occur. While we did not specifically 
conduct analysis of claims data for the procedures describing a removal 
or revision of a cardiac rhythm related device, our clinical advisors 
continue to support assignment of the new procedure codes describing 
removal and revision of subcutaneous defibrillator lead procedures to 
MS-DRGs 040, 041, and 042 as reflected in Table 6B. New Procedure 
Codes, associated with this final rule.
    Additionally, as discussed in section II.F.2.a. of the preamble of 
this final rule, in our discussion of the annual process for assigning 
new procedure codes to MS-DRGs, a similar process is also utilized for 
assigning new diagnosis codes to MS-DRGs that involves review of the 
predecessor diagnosis code's MDC and MS-DRG assignment and severity 
level designation. However, this process does not automatically result 
in the new diagnosis code being assigned (or proposed for assignment) 
to the same severity level and/or MS-DRG and MDC as the predecessor 
code. There are several factors to consider during this process that 
our clinical advisors take into account.
    The proposed severity level designations for a subset of the new 
diagnosis codes as set forth in Table 6A associated with the FY 2020 
IPPS/LTCH PPS proposed rule reflected the proposed severity level 
designations as discussed in section II.F.14.c.1. of the preamble of 
the proposed rule which were based on our comprehensive CC/MCC 
analysis. For example, new diagnosis codes in the category L89- series 
describing pressure-induced deep tissue damage of various anatomical 
sites were proposed to be designated at a CC severity level. However, 
as discussed in section II.F.14.c.1. of the preamble of this final 
rule, we are not finalizing the proposed changes to the severity level 
designations based on our comprehensive CC/MCC analysis after 
consideration of the public comments received (with the exception of 
the specified ICD-10-CM diagnosis codes in category Z16-Resistance to 
antimicrobial drugs). Therefore, consistent with our annual process for 
assigning new diagnosis codes to MDCs and MS-DRGs and designating a new 
diagnosis code as an MCC, a CC or a non-CC, we reviewed the predecessor 
code MDC and MS-DRG assignments and the severity level designations for 
for these new codes and determined the appropriate severity level 
designation for these codes is the same severity level as the 
predecessor code under Version 36 of the ICD-10 MS-DRGs. The finalized 
severity level designations for these new diagnosis codes as set forth 
in Table 6A associated with this final rule therefore reflect the same 
severity level as the predecessor code under Version 36 of the ICD-10 
MS-DRGs.
    We also note that after publication of the proposed rule we 
identified procedures identified by procedure codes beginning with the 
prefix 0D1 describing bypass procedures of the small and large 
intestines in Table 6B.--New Procedure Codes that were inadvertently 
proposed for assignment to MS-DRGs 829 and 830 (Myeloproliferative 
Disorders Or Poorly Differentiated Neoplasms with Other Procedure with 
CC/MCC and without CC/MCC, respectively). Assignment of these 
procedures to MS-DRGs 829 and 830 is not applicable because the 
procedures would not result in assignment to these MS-DRGs due to the 
logic of the surgical hierarchy. Therefore, we have removed MS-DRGs 829 
and 830 from the list of MS-DRGs to which these bypass procedures of 
the small and large intestine are assigned for FY 2020 as reflected in 
Table 6B.--New Procedure Codes associated with this final rule.
    We are finalizing 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 finalized 
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 
the following tables associated with this final 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.--Secondary Diagnosis Order Additions to the CC 
Exclusions List-FY 2020;
     Table 6G.2.--Principal Diagnosis Order Additions to the CC 
Exclusions List-FY 2020;
     Table 6H.1.--Secondary Diagnosis Order Deletions to the CC 
Exclusions List-FY 2020;
     Table 6H.2.--Principal Diagnosis Order Deletions to the CC 
Exclusions List-FY 2020;
     Table 6I.--Complete MCC List-FY 2020;
     Table 6I.1.--Additions to the MCC List-FY 2020;
     Table 6I.2.-Deletions to the MCC List-FY 2020;
     Table 6J.--Complete CC List-FY 2020;
     Table 6J.1.--Additions to the CC List-FY 2020;

[[Page 42156]]

     Table 6J.2.--Deletions to the CC List-FY 2020; and
     Table 6K.--Complete List of CC Exclusions-FY 2020
16. 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.
    In the FY 2020 IPPS/LTCH PPS proposed rule, we addressed the MCE 
requests we received by the November 1, 2018 deadline. We also 
discussed the proposals we were making based on internal review and 
analysis. In this FY 2020 IPPS/LTCH PPS final rule, we present a 
summation of the comments we received in response to the MCE requests 
and proposals presented based on internal reviews and analyses in the 
proposed rule, our responses to those comments, and our finalized 
policies.
    In addition, as a result of new and modified code updates approved 
after the annual spring ICD-10 Coordination and Maintenance Committee 
meeting, we routinely make changes to the MCE. In the past, in both the 
IPPS proposed and final rules, we have only provided the list of 
changes to the MCE that were brought to our attention after the prior 
year's final rule. We historically have not listed the changes we have 
made to the MCE as a result of the new and modified codes approved 
after the annual spring ICD-10 Coordination and Maintenance Committee 
meeting. These changes are approved too late in the rulemaking schedule 
for inclusion in the proposed rule. Furthermore, although our MCE 
policies have been described in our proposed and final rules, we have 
not provided the detail of each new or modified diagnosis and procedure 
code edit in the final rule. However, we make available the finalized 
Definitions of Medicare Code Edits (MCE) file. Therefore, we are making 
available the FY 2020 ICD-10 MCE Version 37 Manual file, along with the 
link to the mainframe and computer software for the MCE Version 37 (and 
ICD-10 MS-DRGs), on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
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 stated in the proposed rule that 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 agreed with the requestor that pregnancies can and do occur 
prior to the age of 12 and after the age of 55. We further stated in 
the proposed rule that we also agreed that the suggested range, age 9 
to age 64, is an appropriate age range. Therefore, we proposed to 
revise the maternity diagnoses category for the Age conflict edit to 
consider the new age range of 9 to 64 years inclusive.
    Comment: Commenters agreed with CMS' proposal to revise the 
maternity diagnoses category for the Age conflict edit by expanding the 
age range.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to revise the maternity diagnoses category for 
the Age conflict edit to consider the new age range of 9 to 64 years 
inclusive under the ICD-10 MCE Version 37, effective October 1, 2019.
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 final 
rule, Table 6A.--New Diagnosis Codes which is associated with this 
final 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. We stated in the proposed rule that 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 
proposed to add this diagnosis code to the Diagnoses for Females Only 
edit code list under the Sex conflict edit.
    Comment: Commenters agreed with the proposal to add diagnosis code 
N99.85 to the Diagnoses for Females Only edit code list under the Sex 
conflict edit.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add diagnosis code N99.85 (Post endometrial 
ablation syndrome) to the Diagnoses for Females Only edit code list 
under the Sex conflict edit under the ICD-10 MCE Version 37, effective 
October 1, 2019.

[[Page 42157]]

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.
    In the proposed rule we stated that 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 proposed 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 final 
rule, Table 6A.--New Diagnosis Codes associated with this final 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 codes that have 
been approved to date that will be effective with discharges occurring 
on and after October 1, 2019.
    As indicated in the proposed rule, we proposed 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.112

    Comment: Commenters agreed with our proposal to add diagnosis codes 
I46.2 and I46.8, as well as the new ICD-10-CM diagnosis codes listed in 
the table above, to the Unacceptable Principal Diagnosis Category edit 
code list.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to add diagnosis codes I46.2 and I46.8 to the 
Unacceptable Principal Diagnosis Category edit code list. We are also 
finalizing our proposal to add the new ICD-10-CM diagnosis codes 
previously listed in the table to the Unacceptable Principal Diagnosis 
Category edit code list under the ICD-10 MCE Version 37, effective 
October 1, 2019.

[[Page 42158]]

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/DeterminationProcess/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 final 
rule, Table 6D.--Invalid Procedure Codes associated with this final 
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 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.113

    In the proposed rule, we proposed 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 
the 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 proposed 
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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.114

    Comment: Commenters agreed with our proposal to remove the ICD-10-
PCS procedure codes previously listed in the tables from the Non-
Covered Procedure edit code list.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to remove the ICD-10-PCS procedure codes 
previously listed in the tables that are no longer valid from the Non-
Covered Procedure edit code list within the ICD-10 MCE Version 37 
effective October 1, 2019. We note that the proposal involving ICD-10-
PCS procedure codes describing bone marrow transplant procedures was 
finalized after the March 5-6, 2019 ICD-10 Coordination and Maintenance 
Committee meeting, as reflected in Table 6D.--Invalid Procedure Codes 
associated with this final 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).
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

[[Page 42159]]

processing. As we indicated in the FY 2019 IPPS/LTCH PPS final rule (83 
FR 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. 
As noted in the FY 2020 IPPS/LTCH PPS proposed rule, 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 FY 2021 rulemaking.
17. 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 final rule.
    This methodology may occasionally result in assignment of a case 
involving multiple procedures to the lower-weighted MS-DRG (in the 
highest, most resource-intensive surgical class) of the available 
alternatives. However, given that the logic underlying the surgical 
hierarchy provides that the GROUPER search for the procedure in the 
most resource-intensive surgical class, in 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 proposed to make in the FY 2020 IPPS/
LTCH PPS proposed rule, as discussed in section II.F.5.a. of the 
preamble of this final rule, in the proposed rule we proposed to revise 
the surgical hierarchy for MDC 5 (Diseases and Disorders of the 
Circulatory System) as follows: In MDC 5, we proposed 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 the preamble of this final 
rule, we proposed 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.115


[[Page 42160]]


    Comment: Commenters supported our proposal to sequence proposed new 
MS-DRGs 319 and 320 above MS-DRGs 222, 223, 224, 225, 226, and 227, and 
below MS- DRGs 266 and 267. However, a commenter proposed an alternate 
option upon reviewing Table 5.--List Of Medicare Severity Diagnosis-
Related Groups (MS-DRGs), Relative Weighting Factors, And Geometric And 
Arithmetic Mean Length Of Stay--FY 2020 associated with the proposed 
rule. The commenter noted that because multiple procedures may be 
performed during an encounter and MS-DRGs 215, 216, 217, 218, 219, 220, 
221, 222, 223, 224, 225, 226, 227, 228, 229, 231, 232, 233, 234, 235, 
and 236 (MS-DRG 230 was deleted effective FY 2017) are weighted higher 
than the proposed new MS-DRGs 319 and 320, sequencing proposed new MS-
DRGs 319 and 320 above MS-DRGs 239, 240, and 241 (Amputation for 
Circulatory System Disorders except Upper Limb & Toe with MCC, with CC, 
and without CC/MCC, respectively) and below MS-DRG 270, 271 and 272 
(Other Major Cardiovascular Procedures with MCC, with CC, and without 
CC/MCC, respectively) appeared more appropriate to result in the most 
resource intensive MS-DRG assignment when multiple cardiac procedures 
are performed.
    Response: We thank the commenters for their support. As discussed 
in section II.F.5.a. of the preamble of this final rule, we are 
finalizing our proposal to create new MS-DRGs 319 and 320. In response 
to the commenter's suggestion that we sequence new MS-DRGs 319 and 320 
above MS-DRGs 239, 240, and 241 and below MS-DRGs 270, 271 and 272, we 
reviewed the surgical hierarchy once again. Upon our review, we agree 
that the initial proposed sequencing did not adequately account for the 
most resource intensive MS-DRG assignment. However, our clinical 
advisors also did not completely agree with the suggested alternative 
option offered by the commenter and recommended that new MS-DRGs 319 
and 320 be sequenced above MS-DRGs 270, 271 and 272 and below MS-DRGs 
268 and 269 (Aortic and Heart Assist Procedures Except Pulsation 
Balloon with and without MCC, respectively) because they believe this 
sequencing more appropriately reflects resource utilization when 
multiple cardiac procedures are performed and will result in the most 
suitable MS-DRG assignment.
    After consideration of the public comments we received and the 
input of our clinical advisors, we are finalizing the below changes to 
the surgical hierarchy for new MS-DRGs 319 and 320 within Appendix D--
MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG 
Definitions Manual Version 37 as illustrated in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.116

    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

[[Page 42161]]

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 was 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 final rule, there are new, revised, 
and deleted ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes 
that are captured in Table 6A.--New Diagnosis Codes, Table 6B.--New 
Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--Invalid 
Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and Table 
6F.--Revised Procedure Code Titles for this final rule, which are 
available via the internet on the CMS website at: 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 the 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: [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 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

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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. We indicated in the proposed rule that 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.
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    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. Changes for FY 2020
    As discussed in the FY 2020 IPPS/LTCH proposed rule (84 FR 19255 
through 19257), for FY 2020, we proposed 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 ``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

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Replacement and Supplement Procedures without MCC''.
    We noted in the proposed rule, 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 was proposed for assignment to proposed new 
MS-DRGs 319 and 320. Therefore, we proposed 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 proposed to continue 
to include the existing MS-DRGs currently subject to the policy as also 
displayed in the table below.
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    As discussed in section II.F.5.a. of the preamble of this final 
rule, we are finalizing our proposal to add new MS-DRGs 319 and 320. We 
did not receive any public comments opposing our proposal to add MS-
DRGs 319 and 320 to the policy for replaced devices offered without 
cost or with credit, make conforming changes to the titles of MS-DRGs 
266 and 267 as reflected in the table above or to continue to include 
the existing MS-DRGs currently subject to the policy. Therefore, we are 
finalizing the list of MS-DRGs in the table included in the proposed 
rule and above that will be subject to the replaced devices offered 
without cost or with a credit policy effective October 1, 2019.
    The final list of MS-DRGs subject to the IPPS policy for replaced 
devices offered without cost or with a credit will also be issued to 
providers in the form of a Change Request (CR).
20. Out of Scope Public Comments Received
    We received public comments regarding a number of MS-DRG and 
related issues that were outside the scope of the proposals included in 
the FY 2020 IPPS/LTCH PPS proposed rule.
    Because we consider these public comments to be outside the scope 
of the proposed rule, we are not addressing them in this final rule. As 
stated in section II.F.1.b. of the preamble of this final rule, we 
encourage individuals with comments about MS-DRG classification to 
submit these comments no later than November 1 of each year so that 
they can be considered for possible inclusion in the annual proposed 
rule. We will consider these public comments for possible proposals in 
future rulemaking as part of our annual review process.

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

1. Data Sources for Developing the Relative Weights
    In developing the FY 2020 system of weights, we proposed to use two 
data sources: Claims data and cost report data. As in previous years, 
the claims data source is the MedPAR file. This file is based on fully 
coded diagnostic and procedure data for all Medicare inpatient hospital 
bills. The FY 2018 MedPAR data used in this final rule include 
discharges occurring on October 1, 2017, through September 30, 2018, 
based on bills received by CMS through March 31, 2019, 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 relative weights includes data 
for approximately 9,514,788 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 relative weights for FY 2020 
also excludes claims with claim type values not equal

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to ``60.'' The data exclude CAHs, including hospitals that subsequently 
became CAHs after the period from which the data were taken. We note 
that the FY 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 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 March 31, 
2018 update of the FY 2017 HCRIS for calculating the FY 2020 cost-based 
relative weights.
2. Methodology for Calculation of the Relative Weights
    As we explain in section II.E.2. of the preamble of this final 
rule, we calculated the FY 2020 relative weights based on 19 CCRs, as 
we did for FY 2019. The methodology we proposed 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 FY 2020 MS-DRG classifications discussed in sections II.B. 
and II.F. of the preamble of this final rule.
     The transplant cases that were used to establish the 
relative weights for heart and heart-lung, liver and/or intestinal, and 
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively) 
were limited to those Medicare-approved transplant centers that have 
cases in the FY 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 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).

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    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/. As noted in the proposed 
rule, 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 19 cost groups for each claim were 
standardized to remove the effects of differences in area wage levels, 
IME and DSH payments, and for hospitals located in Alaska and Hawaii, 
the applicable cost-of-living adjustment. Because hospital charges 
include charges for both operating and capital costs, we standardized 
total charges to remove the effects of differences in geographic 
adjustment factors, cost-of-living adjustments, and DSH payments under 
the capital IPPS as well. Charges were then summed by MS-DRG for each 
of the 19 cost groups so that each MS-DRG had 19 standardized charge 
totals. Statistical outliers were then removed. These charges were then 
adjusted to cost by applying the national average CCRs developed from 
the FY 2017 cost report data.
    The 19 cost centers that we used in the relative weight calculation 
are shown in the following table. The table shows the lines on the cost 
report and the corresponding revenue codes that we used to create the 
19 national cost center CCRs. We stated in the proposed rule that, if 
stakeholders had comments about the groupings in this table, we may 
consider those comments as we finalize our policy. However, we did not 
receive any comments on the groupings in this table, and therefore, we 
are finalizing the groupings as proposed.
    We invited public comments on our proposals related to 
recalibration of the FY 2020 relative weights and the changes in 
relative weights from FY 2019.
    Comment: Several commenters expressed concern about significant 
reductions to the relative weight for MS-DRG 215. Commenters stated 
that the reduction in the proposed relative weight was 29 percent, 
which is the largest decrease of any MS-DRG; commenters also noted that 
the cumulative decrease to the relative weight for MS-DRG 215 would be 
43% since FY 2017. Commenters stated that the proposed relative weights 
would result in significant underpayments to facilities, which would in 
turn limit access to heart assist devices.
    Some commenters specifically referenced the Impella[supreg], one of 
the heart assist devices used to provide ventricular support. 
Commenters also stated that the proposed reduction in the relative 
weight resulted from several coding changes and a new FDA indication 
for the Impella[supreg], for the treatment of cardiomyopathy with 
cardiogenic shock. The commenters stated that these changes in coding 
guidance are still not reflected in claims for the FY 2020 proposed 
rule, and that 68% of claims for procedures utilizing the 
Impella[supreg] device did not have a charge for the Impella[supreg] in 
the Other Implants revenue center. Other commenters stated that 22% of 
claims did not have a charge for the device. Some commenters stated 
that they expect the future claims data to result in an increase to the 
relative weight for MS-DRG 215 for FY 2021.
    Commenters requested that CMS maintain the relative weight at the 
FY 2018 relative weight for any MS-DRG that was held harmless last year 
and continues to face a 20% or greater reduction from its FY 2018 
relative weight. Commenters stated that a hold harmless policy is 
consistent with prior rulemaking, in which CMS provided for transition 
periods for changes that have significant payment implications.
    Response: As we indicated in the FY 2018 IPPS/LTCH final rule (82 
FR 38103), and in response to similar comments in the FY 2019 IPPS/LTCH 
PPS final rule (83 FR 41273), we do not believe it is normally 
appropriate to address relative weight fluctuations that appear to be 
driven by changes in the underlying data. Nevertheless, after reviewing 
the comments received and the data used in our ratesetting 
calculations, we acknowledge an outlier circumstance where the weight 
for an MS-DRG is seeing a significant reduction for each of the 3 years 
since CMS began using the ICD-10 data in calculating the relative 
weights. While we would ordinarily consider this weight change to be 
appropriately driven by the underlying data, given the comments 
received and the potential for these declines to be associated with the 
implementation of ICD-10, we are adopting a temporary one-time measure 
for FY 2020 for an MS-DRG where the FY 2018 relative weight declined by 
20 percent from the FY 2017 relative weight and the FY 2020 relative 
weight would have declined by 20 percent or more from the FY 2019 
relative weight, which was maintained at the FY 2018 relative weight. 
Specifically, for an MS-DRG meeting this criterion, we will continue 
the current policy of maintaining the relative weight at the FY 2018 
level. In other words, the FY 2020 relative weight will be set equal to 
the FY 2019 relative weight, which was in turn set equal to the FY 2018 
relative weight.
    We believe this policy is consistent with our general authority to 
assign and update appropriate weighting factors under sections 
1886(d)(4)(B) and (C) of the Act. We also believe that it appropriately 
addresses the situation in which the reduction to the FY 2020 relative 
weights may potentially continue to be associated with the 
implementation of ICD-10. We continue to believe that changes in 
relative weights that are not of this outlier magnitude over the 3 
years since we first incorporated the ICD-10 data in our ratesetting 
are appropriately being driven by the underlying data and not 
associated with the implementation of ICD-10.
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3. Development of National Average CCRs
    We developed the 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 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

[[Page 42179]]

standard deviation for the log of that cost center CCR. Once the cost 
report data were trimmed, we calculated a Medicare-specific CCR. The 
Medicare-specific CCR was determined by taking the Medicare charges for 
each line item from Worksheet D-3 and deriving the Medicare-specific 
costs by applying the hospital-specific departmental CCRs to the 
Medicare-specific charges for each line item from Worksheet D-3. Once 
each hospital's Medicare-specific costs were established, we summed the 
total Medicare-specific costs and divided by the sum of the total 
Medicare-specific charges to produce national average, charge-weighted 
CCRs.
    After we multiplied the total charges for each MS-DRG in each of 
the 19 cost centers by the corresponding national average CCR, we 
summed the 19 ``costs'' across each MS-DRG to produce a total 
standardized cost for the MS-DRG. The average standardized cost for 
each MS-DRG was then computed as the total standardized cost for the 
MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The 
average cost for each MS-DRG was then divided by the national average 
standardized cost per case to determine the relative weight.
    The FY 2020 cost-based relative weights were then normalized by an 
adjustment factor of 1.789031 so that the average case weight after 
recalibration was equal to the average case weight before 
recalibration. The normalization adjustment is intended to ensure that 
recalibration by itself neither increases nor decreases total payments 
under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
    The 19 national average CCRs for FY 2020 are as follows:
    [GRAPHIC] [TIFF OMITTED] TR16AU19.131
    
    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 proposed to use that same case 
threshold in recalibrating the 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 proposed to compute relative weights 
for the 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.

[[Page 42180]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.132

    After consideration of the comments we received, we are finalizing 
our proposals, with the modification for recalibrating the relative 
weights for FY 2020 for an MS-DRG where the FY 2018 relative weight 
declined by 20 percent from the FY 2017 relative weight and the FY 2020 
relative weight would have declined by 20 percent or more from the FY 
2019 relative weight, which was maintained at the FY 2018 relative 
weight.

H. 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 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. In this final rule, 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

[[Page 42181]]

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 final 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 final rule, by 
clicking on the FY 2020 IPPS Final 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 final 
rule for a discussion of our final policy regarding an alternative 
inpatient new technology add-on payment pathway for transformative new 
devices. We also refer readers to section II.H.10. of the preamble of 
this final rule for a discussion of our final policy regarding an 
alternative inpatient new technology add-on payment pathway for certain 
antimicrobials.)
    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 final rule for a discussion of our final policy 
regarding the change to the calculation of the new technology add-on 
payment beginning in FY 2020, including our finalized 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 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

[[Page 42182]]

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].
    In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19274), we noted 
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, as applicable, 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 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 being revised based on the finalized policies discussed 
in this section of the final rule and 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 the 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.
    We stated in the FY 2020 IPPS/LTCH PPS proposed rule that 
approximately 100 individuals registered to attend the town hall 
meeting in person, while additional individuals listened over an open 
telephone line. We also live-streamed the town hall meeting and posted 
the 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 the

[[Page 42183]]

development of the 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 refer 
readers to section II.H.2. of the preamble of the FY 2020 IPPS/LTCH PPS 
proposed rule (84 FR 19275) for summaries of the comments we received 
in response to the published notice and the New Technology Town Hall 
meeting and our responses.) We also noted in the FY 2020 IPPS/LTCH PPS 
proposed rule 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 did not summarize those 
written comments in the proposed rule that are unrelated to the 
substantial clinical improvement criterion. In section II.H.5. of the 
preamble of the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19284 
through 19367), we summarized comments regarding individual 
applications, or, if applicable, indicated that there were no comments 
received in response to the New Technology Town Hall meeting notice or 
New Technology Town Hall meeting, at the end of each discussion of the 
individual applications.
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.
4. 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

[[Page 42184]]

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) would occur during FY 2019, in the FY 
2020 IPPS/LTCH PPS proposed rule (84 FR 19276), we proposed to 
discontinue new technology add-on payments for this technology for FY 
2020. We invited public comments on our proposal to discontinue new 
technology add-on payments for Defitelio[supreg] for FY 2020.
    Comment: A commenter supported CMS' proposal to discontinue new 
technology add-on payments for FY 2020 for Defitelio[supreg].
    Response: We appreciate the commenter's support. After 
consideration of the public comments we received, we are finalizing 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, 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, in the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19276 through 19277), we proposed to 
discontinue new technology add-on payments for this technology for FY 
2020. We invited public comments on our proposal to discontinue new 
technology add-on payments for Stelara[supreg] for FY 2020.
    Comment: A commenter supported CMS' proposal to discontinue new 
technology add-on payments for FY 2020 for Stelara[supreg].
    Response: We appreciate the commenter's support. After 
consideration of the public comments we received, we are finalizing 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,

[[Page 42185]]

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, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19277), we 
proposed to discontinue new technology add-on payments for this 
technology for FY 2020. We invited public comments on our proposal to 
discontinue new technology add-on payments for ZINPLAVATM 
technology for FY 2020.
    Comment: A commenter supported CMS' proposal to discontinue new 
technology add-on payments for FY 2020 for ZINPLAVATM.
    Response: We appreciate the commenter's support. After 
consideration of the public comments we received, we are finalizing our 
proposal to discontinue new technology add-on payments for 
ZINPLAVATM for FY 2020.
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].

[[Page 42186]]

    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. As stated 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 for purposes 
of new technology add-on payments under the IPPS. As we noted in the FY 
2020 IPPS/LTCH PPS proposed rule, 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 for purposes of new technology add-on payments under the 
IPPS. In the proposed rule, similar to last year, we welcomed 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 previously stated, 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 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 
previously stated, 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, in 
the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19278 through 19279), we 
proposed to continue new technology add-on payments for KYMRIAH[supreg] 
and YESCARTA[supreg] for FY 2020. In addition, 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 the proposed rule (84 
FR 19373), we proposed 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, we stated 
that if we did not finalize the proposed change to the calculation of 
the new technology add-on payment amount, we were 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.
    For the reasons discussed in section II.F.2.c. of the proposed rule 
(84 FR 19180 through 19182), we proposed not to modify the current MS-
DRG assignment for cases reporting CAR T-cell therapies for FY 2020. 
Alternatively, we stated that we were seeking public comments on 
payment alternatives for CAR-T cell therapies. We also invited 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 solicited 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. In the proposed rule, we stated 
that 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 noted 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 requested 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

[[Page 42187]]

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 stated in the proposed rule that, 
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.
    We refer readers to section II.F.2.c. of this final rule for 
discussion of the comments we received in response to the proposals and 
solicitations for public comment above.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue new technology add-on payments for 
KYMRIAH[supreg] and YESCARTA[supreg]. Under the revised calculation of 
the new technology add-on payment amount discussed in section II.H.9. 
of the preamble of this final rule, the maximum new technology add-on 
payment amount for a case involving the use of KYMRIAH[supreg] and 
YESCARTA[supreg] will be $242,450 for FY 2020; that is, 65 percent of 
the average cost of the technology. (As discussed in section II.H.9. of 
the preamble of this final rule, we are revising the maximum new 
technology add-on payment to 65 percent, or 75 percent for certain 
antimicrobial products, of the average cost of the technology.)
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, 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, in 
the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19279 through 19280), we 
proposed to continue new technology add-on payments for this technology 
for FY 2020. In addition, 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 the proposed rule (84 FR 19373), we proposed 
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, we stated that if we did not finalize the proposed change to 
the calculation of the new technology add-on payment amount, we were 
proposing that the maximum new technology add-on payment for a case 
involving VYXEOSTM would remain at $36,425 for FY 2020. We 
invited public comments on our proposals to continue new technology 
add-on payments for VYXEOSTM for FY 2020.
    Comment: A commenter supported CMS' proposal to continue new 
technology add-on payments for FY 2020 for VYXEOSTM.
    Response: We appreciate the commenter's support. After 
consideration of the public comments we received, we are finalizing our 
proposal to continue new technology add-on payments for 
VYXEOSTM for FY 2020. Under the revised calculation of the 
new technology add-on payment amount discussed in section II.H.9. of 
the preamble of this final rule, the maximum new technology add-on 
payment amount for a case involving the use of VYXEOSTM will 
be $47,352.50 for FY 2020; that is, 65 percent of the average cost of 
the technology. (As discussed in section II.H.9. of the preamble of 
this final rule, we are revising the maximum new technology add-on 
payment to 65

[[Page 42188]]

percent, or 75 percent for certain antimicrobial products, of the 
average cost of the technology.)
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, 
in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19280 through 19281), 
we proposed to continue new technology add-on payments for this 
technology for FY 2020. In addition, 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 the proposed rule (84 FR 19373), we 
proposed 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, we stated that if we did not finalize the proposed change to 
the calculation of the new technology add-on payment amount, we were 
proposing that the maximum new technology add-on payment for a case 
involving VABOMERETM would remain at $5,544 for FY 2020.
    As we previously noted in this rule and in the proposed rule, 
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 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 the FY 2020 IPPS final 
rule and available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html and then clicking on the link on the left 
titled ``FY 2022 IPPS Final Rule Home Page''. Therefore, we stated in 
the proposed rule that, 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 stated in the proposed rule that we are concerned that 
limiting new technology add-on payments only to cases reporting

[[Page 42189]]

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 proposed 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 proposed 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 invited 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.
    Comment: A commenter supported CMS' proposal to continue new 
technology add-on payments for FY 2020 for VABOMERETM. This 
commenter also supported CMS' proposal to identify cases involving the 
use of VABOMERETM that are eligible for new technology add-
on payments for FY 2020 using ICD-10-PCS codes XW033N5 or XW043N5 or 
NDCs 65293-0009-01 or 70842-0120-01.
    Response: We appreciate the commenter's support. After 
consideration of the public comments we received, we are finalizing our 
proposal to continue new technology add-on payments for 
VABOMERETM for FY 2020, as well as our proposal to identify 
cases involving the use of VABOMERETM that are eligible for 
new technology add-on payments for FY 2020 using ICD-10-PCS codes 
XW033N5 or XW043N5 or NDCs 65293-0009-01 or 70842-0120-01. Under the 
revised calculation of the new technology add-on payment amount 
discussed in section II.H.9. of the preamble of this final rule, the 
maximum new technology add-on payment amount for a case involving the 
use of VABOMERETM will be $8,316 for FY 2020; that is, 75 
percent of the average cost of the technology. (As discussed in section 
II.H.9. of the preamble of this final rule, we are revising the maximum 
new technology add-on payment to 65 percent, or 75 percent for certain 
antimicrobial products, of the average cost of the technology.)
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 (CSA). 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, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19281), we proposed to continue new technology add-on payments for this 
technology for FY 2020. In addition, 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 the proposed rule (84 FR 19373), we 
proposed 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, we stated that if we did not finalize the proposed 
change to the calculation of the new technology add-on payment amount, 
we were 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 invited public comments on our proposals to continue 
new technology add-on payments for the remed[emacr][supreg] System for 
FY 2020.
    Comment: Several commenters supported CMS' proposal to continue new 
technology add-on payments for FY 2020 for the remed[emacr][supreg] 
System. A commenter, who was also the applicant, believed that the 
newness period for the remed[emacr][supreg] System should start on 
February 1, 2018 instead of the FDA approval date of October 6, 2017. 
The commenter stated that due to the required build out of operational 
and commercial capabilities, the remed[emacr][supreg] System was not 
commercially available upon FDA approval and the first case involving 
its use did not occur until February 1, 2018. The commenter asserted 
that the date of the first implant should mark the start of the newness 
period as before that the technology was not commercially available.
    Several commenters asserted that the descriptor of one of the ICD-
10-PCS procedure codes used to uniquely identify cases involving the 
use of the remed[emacr][supreg] System is incorrect. Per the 
commenters, CMS indicated in the proposed rule that 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

[[Page 42190]]

procedure 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). The commenters 
asserted that the descriptor of the code 05H03MZ was incorrectly stated 
in the proposed rule as involving the right innominate vein, whereas 
the correct body part for this code is the azygos vein.
    Furthermore, the commenters noted that the codes listed for the 
remed[emacr][supreg] System in the proposed rule do not match the 
advice that was published in the Fourth Quarter 2016 issue of Coding 
Clinic for ICD-10-CM/PCS regarding insertion of a phrenic 
neurostimulator. Per the commenters, the Coding Clinic advised 
assigning code 0JH60MZ for insertion of the stimulator generator into 
the chest subcutaneous tissue and fascia and code 05H032Z for the 
insertion of monitoring device into the azygos vein, plus the 
appropriate code for insertion of neurostimulator lead into either the 
left or right innominate vein. The commenters asserted that the device 
values for both the code for the stimulator generator and the code for 
the insertion of the lead in the azygos vein in the Coding Clinic 
advice were different than the ones indicated by CMS in the proposed 
rule. Commenters indicated that, according to Coding Clinic, for coding 
purposes, the sensing lead is designated as a monitoring device to 
differentiate between the sensing lead that monitors the respiratory 
activity and the electrode that delivers the electrical stimulation. 
The commenters requested that CMS revisit this topic and revise as 
applicable the stated codes to identify placement of the 
remed[emacr][supreg] System to be consistent with the advice published 
in Coding Clinic for ICD-10-CM/PCS. A commenter requested that CMS also 
make the appropriate retroactive payments consistent with the revised 
codes.
    Response: We appreciate the commenters' support. Regarding newness, 
we will consider the additional information the applicant provided when 
proposing whether to continue new technology add-on payments for the 
remed[emacr][supreg] System for FY 2021.
    Regarding codes, we acknowledge the error in our description of the 
ICD-10-PCS procedure code 05H03MZ in the Proposed Rule and agree with 
the commenters that the correct body part for this code is the azygos 
vein, not the innominate vein as stated in the Proposed Rule. We also 
acknowledge that the finalized codes used to identify cases involving 
the remed[emacr][supreg] System that are eligible for the add-on 
payment differ from those that were published in the Fourth Quarter 
2016 issue of Coding Clinic for ICD-10-CM/PCS regarding insertion of a 
phrenic neurostimulator. However, we believe that the finalized codes 
from the March 2018 Coordination & Maintenance Committee meeting 
supercede the Coding Clinic advice for the technology. Therefore, cases 
involving the remed[emacr][supreg] System that are eligible for the 
add-on payment will continue to be identified with the procedure codes 
0JH60DZ (Insertion of multiple array stimulator generator into chest 
subcutaneous tissue and fascia, open approach) and 05H03MZ (Insertion 
of neurostimulator lead into azygos vein, percutaneous approach) in 
combination with procedure code 05H33MZ (Insertion of neurostimulator 
lead into right innominate vein, percutaneous approach) or 05H43MZ 
(Insertion of neurostimulator lead into left innominate vein, 
percutaneous approach).
    After consideration of the public comments we received, we are 
finalizing our proposal to continue new technology add-on payments for 
the remed[emacr][supreg] System for FY 2020. Under the revised 
calculation of the new technology add-on payment amount discussed in 
section II.H.9. of the preamble of this final rule, the maximum new 
technology add-on payment amount for a case involving the use of the 
remed[emacr][supreg] System will be $22,425 for FY 2020; that is, 65 
percent of the average cost of the technology. (As discussed in section 
II.H.9. of the preamble of this final rule, we are revising the maximum 
new technology add-on payment to 65 percent, or 75 percent for certain 
antimicrobial products, of the average cost of the technology.)
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 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, in the FY 
2020 IPPS/LTCH PPS proposed rule (84 FR 19281 through 19282), we 
proposed to continue new technology add-on payments for this technology 
for FY 2020. In addition, 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 the proposed rule (84 FR 19373), we proposed 
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, we stated that if we did not finalize the proposed change to 
the calculation of the new technology add-on payment amount, we were 
proposing that the maximum new technology add-on payment for a case 
involving ZEMDRITM would remain at $2,722.50 for FY 2020.

[[Page 42191]]

We invited public comments on our proposals to continue new technology 
add-on payments for ZEMDRITM for FY 2020.
    Comment: A commenter supported CMS' proposal to continue new 
technology add-on payments for FY 2020 for ZEMDRITM.
    Response: We appreciate the commenter's support. After 
consideration of the public comments we received, we are finalizing our 
proposal to continue new technology add-on payments for 
ZEMDRITM for FY 2020. Under the revised calculation of the 
new technology add-on payment amount discussed in section II.H.9. of 
the preamble of this final rule, the maximum new technology add-on 
payment amount for a case involving the use of ZEMDRITM will 
be $4,083.75 for FY 2020; that is, 75 percent of the average cost of 
the technology. (As discussed in section II.H.9. of the preamble of 
this final rule, we are revising the maximum new technology add-on 
payment to 65 percent, or 75 percent for certain antimicrobial 
products, of the average cost of the technology.)
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, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19282), we proposed to continue new technology add-on payments for this 
technology for FY 2020. In addition, under the proposed change to the 
calculation of the new technology add-on payment discussed in section 
II.H.9. of the preamble of the proposed rule (84 FR 19373), we proposed 
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, we 
stated that if we did not finalize the proposed change to the 
calculation of the new technology add-on payment amount, we were 
proposing that the maximum new technology add-on payment for a case 
involving GIAPREZATM would remain at $1,500 for FY 2020. We 
invited public comments on our proposals to continue new technology 
add-on payments for GIAPREZATM for FY 2020.
    Comment: A commenter supported CMS' proposal to continue new 
technology add-on payments for FY 2020 for GIAPREZATM.
    Response: We appreciate the commenter's support. After 
consideration of the public comments we received, we are finalizing our 
proposal to continue new technology add-on payments for 
GIAPREZATM for FY 2020. Under the revised calculation of the 
new technology add-on payment amount discussed in section II.H.9. of 
the preamble of this final rule, the maximum new technology add-on 
payment amount for a case involving the use of GIAPREZATM 
will be $4,083.75 for FY 2020; that is, 65 percent of the average cost 
of the technology. (As discussed in section II.H.9. of the preamble of 
this final rule, we are revising the maximum new technology add-on 
payment to 65 percent, or 75 percent for certain antimicrobial 
products, of the average cost of the technology.)
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

[[Page 42192]]

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, in the 
FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19282 through 19283), we 
proposed to continue new technology add-on payments for this technology 
for FY 2020. In addition, 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 the proposed rule (84 FR 19373), we proposed 
that the maximum new technology add-on payment amount for 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, we stated that if we did not finalize the 
proposed change to the calculation of the new technology add-on payment 
amount, we were 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 invited public comments 
on our proposals to continue new technology add-on payments for the 
Sentinel[supreg] Cerebral Protection System for FY 2020.
    Comment: Several commenters supported CMS' proposal to continue new 
technology add-on payments for FY 2020 for the Sentinel[supreg] 
Cerebral Protection System.
    Response: We appreciate the commenters' support. After 
consideration of the public comments we received, we are finalizing our 
proposal to continue new technology add-on payments for the 
Sentinel[supreg] Cerebral Protection System for FY 2020. Under the 
revised calculation of the new technology add-on payment amount 
discussed in section II.H.9. of the preamble of this final rule, the 
maximum new technology add-on payment amount for a case involving the 
use of the Sentinel[supreg] Cerebral Protection System will be $1,820 
for FY 2020; that is, 65 percent of the average cost of the technology. 
(As discussed in section II.H.9. of the preamble of this final rule, we 
are revising the maximum new technology add-on payment to 65 percent, 
or 75 percent for certain antimicrobial products, of the average cost 
of the technology.)
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. The applicant stated that, 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. Per the applicant, 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 
previously 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

[[Page 42193]]

in the FY 2006 IPPS final rule (70 FR 47349)). We stated in the FY 2019 
IPPS/LTCH PPS proposed rule that consistent with this response, and as 
indicated in the FY 2019 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. We 
stated in the FY 2020 IPPS/LTCH PPS proposed rule that, as we indicated 
in the FY 2019 IPPS/LTCH PPS final rule, we welcomed 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, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19283), we 
proposed to continue new technology add-on payments for this technology 
for FY 2020. In addition, 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 the proposed rule (84 FR 19373), we proposed 
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, we 
stated that if we did not finalize the proposed change to the 
calculation of the new technology add-on payment amount, we were 
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 
invited public comments on our proposals to continue new technology 
add-on payments for the AQUABEAM System for FY 2020.
    Comment: A few commenters supported CMS' proposal to continue new 
technology add-on payments for the AQUABEAM System for FY 2020.
    Several commenters disagreed with CMS' belief that the newness 
period for the AQUABEAM System commenced on December 21, 2017, the day 
that FDA granted the De Novo request for the AQUABEAM System. These 
commenters, including the applicant, asserted that the American Medical 
Association assigned Aquablation therapy to a Category III CPT code 
prior to FDA clearance, and as a result Aquablation therapy was non-
covered by all Medicare Administrative Contractors prior to the date of 
FDA clearance through to the present day. Per the commenters, this is 
equivalent to a uniform, non-coverage policy for the entire nation. The 
commenters further stated that CMS has consistently recognized that the 
start of the newness period can occur months after FDA approval if 
there are delays in availability--including nationwide non-coverage--as 
indicated in the FY 2005 IPPS Final Rule, the FY 2006 IPPS Final Rule, 
and the CY 2016 OPPS Final Rule. The commenters asserted that based on 
longstanding rules and policy statements, the appropriate beginning of 
the newness period for the AQUABEAM System should be April 19, 2018, or 
the date of the first procedure in a commercially-insured patient.
    Response: We appreciate the commenters' support. With regard to 
newness, we note that Category III CPT codes are not recognized on 
inpatient claims. We continue to consider the beginning of the newness 
period for the AQUABEAM System to commence on December 21, 2017, or the 
date the FDA granted the applicant's De Novo request.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue new technology add-on payments for 
the AQUABEAM System for FY 2020. Under the revised calculation of the 
new technology add-on payment amount discussed in section II.H.9. of 
the preamble of this final rule, the maximum new technology add-on 
payment amount for a case involving the use of the AQUABEAM System will 
be $1,625 for FY 2020; that is, 65 percent of the average cost of the 
technology. (As discussed in section II.H.9. of the preamble of this 
final rule, we are revising the maximum new technology add-on payment 
to 65 percent, or 75 percent for certain antimicrobial products, of the 
average cost of the technology.)
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 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, in the FY 2020 
IPPS/LTCH PPS proposed rule (84 FR 19283 through 19284), we proposed to 
continue new technology add-on payments for this technology for FY 
2020. In addition, 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 the proposed rule (84 FR 19373), we proposed 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, we stated 
that if we did not finalize the proposed change to the calculation of 
the new technology add-on payment amount, we were proposing that the 
maximum new technology add-on payment for a case involving 
AndexXaTM would remain at $14,062.50 for FY 2020. We invited 
public comments on our proposals to

[[Page 42194]]

continue new technology add-on payments for AndexXaTM for FY 
2020.
    Comment: A commenter supported CMS' proposal to continue new 
technology add-on payments for FY 2020 for AndexXaTM.
    Response: We appreciate the commenter's support. After 
consideration of the public comments we received, we are finalizing our 
proposal to continue new technology add-on payments for 
AndexXaTM for FY 2020. Under the revised calculation of the 
new technology add-on payment amount discussed in section II.H.9. of 
the preamble of this final rule, the maximum new technology add-on 
payment amount for a case involving the use of AndexXaTM 
will be $18,281.25 for FY 2020; that is, 65 percent of the average cost 
of the technology. (As discussed in section II.H.9. of the preamble of 
this final rule, we are revising the maximum new technology add-on 
payment to 65 percent, or 75 percent for certain antimicrobial 
products, of the average cost of the technology.)
5. 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 the proposed rule.
    Since the issuance of the FY 2020 IPPS/LTCH PPS proposed rule, 
three applicants, AbbVie Pharmaceuticals, Inc. (the applicant for 
VENCLEXTA[supreg]), Somahlution, Inc. (the applicant for 
DURAGRAFT[supreg]), and Nabriva Therapeutics U.S., Inc. (the applicant 
for CONTEPOTM), withdrew their applications. One applicant, 
Merck & Co., Inc (the applicant for Imipenem, Cilastatin, and 
Relebactam (IMI/REL) Injection), did not meet the deadline of July 1 
for FDA approval or clearance of the technology and, therefore, the 
technology is not eligible for consideration for new technology add-on 
payments for FY 2020. A discussion of the remaining 13 applications is 
presented in this final rule.
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 (PPGL). 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 PPGLs are rare tumors with an incidence 
of approximately 2 to 8 people per million per year.2 3 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.4 5 
Approximately one-half of malignant tumors are pronounced at diagnosis, 
while other malignant tumors develop slowly within 5 years.\6\ 
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.\7\ 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.\8\ The applicant stated that 
controlling catecholamine 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.
---------------------------------------------------------------------------

    \2\ Beard, C.M., Sheps, S.G., Kurland, L.T., Carney, J.A., Lie, 
J.T., ``Occurrence of pheochromocytoma in Rochester, Minnesota'', 
pp. 1950-1979.
    \3\ 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.
    \4\ Fishbein, Lauren, ``Pheochromocytoma and Paraganglioma,'' 
Hematology/Oncology Clinics 30, no. 1, 2016, pp. 135-150.
    \5\ 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).
    \6\ Kantorovich, Vitaly, and Karel Pacak. ``Pheochromocytoma and 
paraganglioma.'' Progress in Brain Research., 2010, vol. 182, pp. 
343-373.
    \7\ Carty, S.E., 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.
    \8\ 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 \9\ 
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

[[Page 42195]]

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.\10\
---------------------------------------------------------------------------

    \9\ 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.
    \10\ Carty, S.E., 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).\11\ According to the applicant, AZEDRA[supreg] is a 
more consistent form of \131\I-MIBG compared to compounded formulations 
of \131\I-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.\12\ However, the applicant 
stated that EBRT irradiated tissues are unresponsive to subsequent 
treatment with \131\I- MIBG radionuclide.\13\ 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 \131\I-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 \131\I-MIBG therapy based on having 
MIBG uptake with diagnostic imaging. According to the applicant, 
despite uptake by tumors, studies have also found that \131\I-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.\14\ 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.\15\
---------------------------------------------------------------------------

    \11\ Ibid.
    \12\ Ibid.
    \13\ 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.
    \14\ Loh, K.C., Fitzgerald, P.A., Matthay, K.K., Yeo, P.P., 
Price, D.C., ``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.
    \15\ 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.\16\ 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.17 18 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.\19\ According to the 
applicant, use of CVD relative to other tumor burden reduction options 
is not 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.\20\ 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.
---------------------------------------------------------------------------

    \16\ Carty, S.E., 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.
    \17\ 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.
    \18\ 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.
    \19\ 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.
    \20\ Carty, S.E., 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

[[Page 42196]]

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]. In the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19286), we noted 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. The following 
ICD-10-PCS codes are now assigned for the use of AZEDRA[supreg]: 
XW033S5 (Introduction of Iobenguane I-131 Antineoplastic into 
Peripheral Vein, Percutaneous Approach, New Technology Group 5), and 
XW043S5 (Introduction of Iobenguane I-131 Antineoplastic into Central 
Vein, Percutaneous Approach, New Technology Group 5).
    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 stated in the proposed rule that we believed 
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 in this final rule, 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 invited public comments on whether AZEDRA[supreg] is 
substantially similar to other currently available therapies and/or 
technologies and meets the ``newness'' criterion.
    Comment: We received multiple comments in support of applicant's 
assertion that AZEDRA[supreg] is not substantially similar to other 
currently available therapies and/or technologies. A commenter 
described AZEDRA[supreg] as highly unique technology that is unlike any 
pre-existing treatment with a structure unlike any pre-existing 
treatment option given the use of the proprietary Ultratrace[supreg] 
technology, leading to increases in efficacy due to its unique 
``carrier-free'' structure with less non-radioactive drug to compete 
for uptake by tumors. Commenters mentioned that prior to 
AZEDRA[supreg]'s approval, there was no FDA-approved drug treatment for 
advanced pheochromocytomas and paragangliomas patients. Commenters 
asserted that compared to other off-label treatments, AZEDRA provides 
an important new option with substantial clinical improvement in terms 
of both safety and efficacy for patients with metastatic and/or 
recurrent and/or unresectable PPGL.
    Response: We thank commenters for their input. After consideration 
of the comments received, we agree that AZEDRA[supreg] utilizes a new 
mechanism of action from prior therapeutic uses of MIBG and therefore 
is not substantially

[[Page 42197]]

similar to an existing technology and meets the criteria for 
``newness.''
    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 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.
    In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19287), we stated 
that we were concerned with the limited number of cases the applicant 
analyzed. However, we acknowledged the difficulty in obtaining cost 
data for such a rare condition. We invited public comments on whether 
the AZEDRA[supreg] technology meets the cost criterion.
    Comment: The applicant submitted a comment in response to CMS's 
concern, stating that although the number of cases under each MS-DRG 
identified for its analysis included fewer than 11 total cases, the 
information provided a meaningful and workable data set based on the 
MedPAR files and is consistent with a product used to treat an ultra-
rare disease. Furthermore, the applicant stated that the cost 
information and analysis submitted with the application demonstrated 
that AZEDRA[supreg] will significantly exceed the relevant cost 
threshold for the MS-DRGs to which cases map, both in the aggregate 
(based on case-weighted threshold amounts), and for each individual MS-
DRG.
    Response: We appreciate the applicant's comment in response to our 
concerns. After consideration of the public comments we received, we 
believe that AZEDRA[supreg] 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; \21\ 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. In the proposed 
rule, we noted 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).
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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. In the proposed 
rule, we stated that we understand that the applicant used 
antihypertensive medications as a

[[Page 42198]]

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, in the proposed rule, 
we stated that 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, in the proposed 
rule we noted that the IB12 study was a dose-escalating study and did 
not compare current therapies with the use of AZEDRA[supreg]. We also 
noted 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 agreed with the study's conductor \22\ 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.\23\ 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 
stated in the proposed rule that we were unclear which patients 
benefited from treatment involving AZEDRA[supreg], especially in view 
of the finding of a Fitzgerald, et al. study cited earlier \24\ 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 stated that 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.
---------------------------------------------------------------------------

    \22\ 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.
    \23\ Ibid.
    \24\ 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.\25\ 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. In the proposed rule, we 
stated that 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 (500mCi). We also noted that, regardless of total 
administered activity (for example, greater than or less than 18.5 GBq 
(500mCi)), 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 (500mCi) had 
progressive disease. Finally, we also stated that we noticed that, for 
most tumor biomarkers, there were no dose relationship trends. We 
stated that 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 had 
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.
---------------------------------------------------------------------------

    \25\ 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 stated in the proposed rule that we noted 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 noted 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.
    The applicant provided study data results from the IB12B study 
(MIP-IB12B), an open-label, prospective 5-year follow-up, single-arm, 
multi-center,

[[Page 42199]]

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 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. 
In the proposed rule, we stated that we noted 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 >=100 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.
    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.\26\ 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.
---------------------------------------------------------------------------

    \26\ 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. In the proposed rule, we stated that we 
noted 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 
noted 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. 
In the proposed rule, we stated that we agreed with the applicant 
regarding the difficulties in comparing the results of the published 
clinical studies, and also believed 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 stated that 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, in the proposed rule, we stated we were 
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. We stated that only very limited nonpublished data from two, 
single-arm, noncomparative studies were available to evaluate the 
safety and

[[Page 42200]]

effectiveness of AZEDRA[supreg], leading to a comparison of outcomes 
with historical controls.
    We invited 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 had raised, which 
included 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 PPGL tumors, and whether the 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.
    Comment: We received multiple comments in support of 
AZEDRA[supreg]'s meeting the substantial clinical improvement 
criterion. Commenters stated that the clinical data demonstrates 
important benefits and meaningful clinical improvements for patients 
compared to other treatments that may be unavailable to patients with 
advanced PPGL. Commenters stated that certain drug treatments have been 
used that are not specifically approved by FDA, such as certain 
chemotherapy regimens or low specific-activity iobenguane I-131, are 
not effective and frequently lead to serious and harmful side effects, 
including chemical toxicity and acute hypertensive crisis. Another 
commenter encouraged CMS to consider the very rare nature of advanced 
PPGL when considering the sizes of the clinical study patient 
populations and other aspects of the information relating to 
AZEDRA[supreg]'s application, particularly when a therapy is for an 
orphan condition and/or is the first and only FDA approved treatment 
option for the relevant patient population.
    The applicant also provided comments regarding substantial clinical 
improvement. The applicant highlighted AZEDRA[supreg]'s FDA 
``Breakthrough Therapy'', ``Fast Track'', ``Priority Review'', and 
``Orphan Drug'' designations to demonstrate the meaningful efficacy and 
safety criteria that a product must meet to obtain these statuses. The 
applicant also reiterated its contention that AZEDRA[supreg] represents 
a substantial clinical improvement over currently available treatments 
because it (1) offers a treatment option for a patient population that 
is unresponsive to or ineligible for currently available treatments for 
advanced disease and (2) significantly improves clinical outcomes 
compared to existing treatments for patients who have advanced PPGL and 
require systemic anticancer treatment. The applicant also responded to 
some specific issues raised by CMS in the proposed rule. The applicant 
pointed out that at one point, CMS incorrectly described the IB12B and 
IB12 as ``retrospective'' studies, when in fact they were prospective 
in nature. The applicant clarified that, consistent with prospectively 
designed clinical trials, the protocol for IB12B included pre-specified 
endpoints that were statistically powered to demonstrate clinical 
benefit for patients with advanced PPGL. These endpoints and 
statistical analyses were used to define the study's success criteria 
prior to collecting any subject data to prevent the possibility of 
bias. As such, Study IB12B was a prospective study, specifically 
designed to demonstrate that AZEDRA[supreg] offers a treatment option 
for a patient population that is unresponsive to or ineligible for 
currently available treatments. The applicant also provided background 
to support its claim that the number of patients enrolled in IB12B was 
statistically meaningful and noteworthy for a last-line therapy study 
for an ultra-rare disease state.
    In response to CMS's concern whether safety data from the IB12 
study could provide relevant clinical improvement data, the applicant 
stated that while the IB12 study was prospectively designed to assess 
the safety, dosimetry, and preliminary efficacy for AZEDRA[supreg] in 
patients with advanced PPGL, it included several secondary efficacy 
endpoints that provide preliminary data such as overall tumor response 
(RECIST), biochemical tumor response, and survival time. The applicant 
stated that the overall tumor response endpoints were included in FDA's 
consideration of AZEDRA[supreg]'s efficacy, although it was not 
included in the final AZEDRA[supreg] prescribing information.
    The applicant stated the primary endpoint of reduction in 
antihypertension medication was selected because a more traditional 
endpoint, such as overall survival, was not practical or possible given 
the nature of PPGL. The applicant stated: ``PPGL may progress slowly, 
and overall have a variable natural history, which makes the use of a 
traditional endpoint such as overall survival difficult and time-
consuming.'' According to the applicant, the endpoint was chosen to 
evaluate a key cause of morbidity in PPGL and thereby reflect direct 
clinical benefit.
    Response: We appreciate the additional information provided by the 
applicant, and the input from all commenters. After a review of the 
public comments we received, and upon review of all information 
provided by the applicant and review of the FDA Evaluation and Review 
of AZEDRA[supreg]'s NDA/BLA 209607 (https://www.accessdata.fda.gov/drugsatfda_docs/nda/2019/021200Orig1s015MultidisciplineR.pdf), we 
believe the technology offers a treatment option for the FDA indicated 
approved population for whom no other FDA approved treatment is 
available. Additionally, we note that, per the FDA's Multidisciplinary 
Evaluation and Review, use of the technology suggested a durable 
response in the reduction of hypertension as measured by the primary 
endpoint plus the confirmed overall tumor response measures of direct 
clinical benefit in this population of patients with serious, life 
threatening and rare disease (https://www.accessdata.fda.gov/drugsatfda_docs/nda/2019/021200Orig1s015MultidisciplineR.pdf pages 12, 
20). CMS also notes FDA's adverse events of cytopenias, sialoadenitis 
and renal failure in those who received two doses of 131I-MIBG, as well 
as the most common adverse reactions of Myelosuppression and 
Gastrointestinal related adverse events. CMS notes FDA's postmarketing 
requirement (PMR) for the applicant to fully characterize the risk of 
developing secondary malignancies (i.e., development of myelodysplastic 
syndrome, acute leukemia, and other secondary malignancies) in patients 
treated with \131\I-MIBG. Risk management will also include product 
labeling and routine pharmacovigilance to ensure the safe and effective 
use of \131\I-MIBG (https://www.accessdata.fda.gov/drugsatfda_docs/nda/2019/021200Orig1s015MultidisciplineR.pdf page 21). Also, CMS will 
monitor any additional data as it becomes available.
    In summary, we have determined that AZEDRA[supreg] meets all of the 
criteria for approval of new technology add-on payments, and we are 
approving new technology add-on payments for FY 2020.
    Cases involving AZEDRA[supreg] that are eligible for new technology 
add-on payments will be identified by ICD-10-PCS code XW033S5 and 
XW043S5. In its application, the applicant stated that the price of 
AZEDRA (Wholesale Acquisition Cost) is $302.00 per millicurie (mCi) 
prescribed. Most patients (i.e., those weighing 62.5 kg or more) 
receive a therapeutic dose of 500

[[Page 42201]]

mCi. Accordingly, the applicant estimated an average cost of $302/mCi 
times 500 mCi, or approximately $151,000. Therefore, according to the 
applicant, the cost of AZEDRA[supreg] is $151,000. Under Sec.  
412.88(a)(2) (revised as discussed in this final rule), we limit new 
technology add-on payments to the lesser of 65 percent of the average 
cost of the technology, or 65 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 AZEDRA[supreg] is $98,150 
for FY 2020.
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 
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.27 28 29 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.
---------------------------------------------------------------------------

    \27\ 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.
    \28\ 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.
    \29\ 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.30 31 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.32 33 34 35 36 37 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.\38\
---------------------------------------------------------------------------

    \30\ 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.
    \31\ George, J.N., ``Corticosteroids and rituximab as adjunctive 
treatments for thrombotic thrombocytopenic Purpura,'' Am. J. 
Hematol., 2012, vol. 87 Suppl 1, pp. S88-91.
    \32\ Form for Notification of a Compassionate Use Programme to 
the Paul-Ehrlich-Institut.
    \33\ 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.
    \34\ 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.
    \35\ Rajan, S.K., ``BMJ Best Practice; Thrombotic 
thrombocyopenic purpura,'' May 27, 2016.
    \36\ 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.
    \37\ 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.
    \38\ 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

[[Page 42202]]

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 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]. In the FY 2020 IPPS/LTCH PPS 
proposed rule (84 FR 19291), we noted 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. The applicant 
was granted approval for the following procedure codes: XW013W5 
(Introduction of Caplacizumab into Subcutaneous Tissue, Percutaneous 
Approach, New Technology Group 5), XW033W5 (Introduction of 
Caplacizumab into Peripheral Vein, Percutaneous Approach, New 
Technology Group 5) and XW043W5 (Introduction of Caplacizumab into 
Central Vein, Percutaneous Approach, New Technology Group 5).
    As previously discussed, 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 in this final rule 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,39 40 but their use is based on historical evidence 
that some patients with limited symptoms might respond to 
corticosteroids alone.41 42 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),

[[Page 42203]]

and even longer to restore ADAMTS13 activity levels.43 44
---------------------------------------------------------------------------

    \39\ 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.
    \40\ George, J.N., ``Corticosteroids and rituximab as adjunctive 
treatments for thrombotic thrombocytopenic Purpura,'' Am. J. 
Hematol., 2012, vol. 87 Suppl 1, pp. S88-91.
    \41\ 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.
    \42\ 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.
    \43\ Coppo, P., ``Management of thrombotic thrombocytopenic 
purpura,'' Transfus Clin Biol., Sep 2017, vol. 24(3), pp. 148-153.
    \44\ 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 previously summarized, the 
applicant believes that CABLIVI[supreg] provides a new treatment option 
for patients who have been diagnosed with aTTP. However, we stated in 
the proposed rule that 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. We stated that 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 invited public comments on whether CABLIVI[supreg] is 
substantially similar to other technologies and whether CABLIVI[supreg] 
meets the newness criterion.
    Comment: Several commenters stated that CABLIVI[supreg] is not 
substantially similar to other technologies and meets the newness 
criterion. Commenters stated that CABLIVI[supreg] is the only FDA 
approved therapy for aTTP and is a novel technological approach to the 
disease. Other commenters stated that CABLIVI[supreg] is a unique anti-
vWF blocking nanobody and the first of its kind in treating acute TTP 
that should be used at the earliest possible time after presentation of 
patients with immune-mediated TTP. The commenters stated that they 
believe CABLIVI[supreg] to be potentially lifesaving because no other 
treatment modalities act in this specific manner. A commenter stated 
that CABLIVI[supreg] differs from the treatments currently available 
for aTTP because it immediately prevents platelets from binding to the 
abnormally large vWF molecules, a key abnormality of TTP. A commenter 
stated that CABLIVI[supreg] is a nanobody that directly and 
specifically targets the pathophysiologic interaction between vWF and 
platelets, thus rapidly halting the life-threatening process that 
causes morbidity and mortality in those with aTTP. According to this 
commenter, no other drug is capable of doing this. Finally, this 
commenter stated that CABLIVI[supreg] is a novel therapy against a rare 
but potentially fatal autoimmune disease, aTTP that has not had 
significant short-term developments in almost 30 years.
    The applicant commented that CABLIVI[supreg] has been approved for 
the treatment of aTTP in a similar patient population as currently 
available treatment options. However the applicant also stated that 
CABLIVI[supreg] is a very different technology consisting of a 
different mode of action that results in improved outcomes with respect 
to platelet count response, recurrence, and other pre-specified 
clinical outcome endpoints. The applicant stated that CABLIVI[supreg] 
is the only FDA-approved therapy for treating aTTP in conjunction with 
PE and immunosuppressive therapy.
    The applicant also re-iterated information previously submitted 
with its application, and previously summarized in this final rule, 
that CABLIVI[supreg] is the only therapeutic agent that is designed to 
rapidly and specifically reduce the microthrombi formation via 
reduction in platelet aggregation for patients with an acute aTTP 
episode. According to the applicant, CABLIVI[supreg]'s novel mechanism 
of action works by targeting the A1 domain of vWF, thus preventing the 
interaction between vWF and platelets and thereby reducing the 
subsequent microvascular thrombosis. Regarding the current SOC, the 
applicant stated that as no randomized controlled prospective clinical 
studies have been performed to evaluate the efficacy and safety of the 
immunosuppressive therapies currently used to treat aTTP, the safe and 
effective dosing regimens of these agents are not known. The applicant 
further stated that while PE can provide rapid replenishment of new 
platelets and new ADAMTS 13 to reduce large platelet string formation, 
it is suboptimal in efficacy with a remaining mortality of up to 20 
percent and substantial patient burden and side effects.
    Response: We appreciate the commenters' input and the additional 
detail regarding whether CABLIVI[supreg] is substantially similar to 
existing technologies.
    After consideration of the public comments we received and 
information submitted by the applicant in its application, we believe 
that while 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, and 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 agree with the 
applicant that CABLIVI[supreg] does not use the same or similar 
mechanism of action as other technologies used for the treatment of 
aTTP. We believe that CABLIVI[supreg]'s mechanism of action, which 
targets the A1 domain of vWF, thus preventing the interaction between 
vWF and platelets and thereby reducing the subsequent microvascular 
thrombosis, is unique and distinct from other available forms of 
treatment for aTTP and, therefore, we believe that CABLIVI[supreg] 
meets the newness criterion. We consider the beginning of the newness 
period to commence when CABLIVI[supreg] was approved by the FDA on 
February 6, 2019.
    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:

[[Page 42204]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.133

    Using the 242 identified cases that mapped to the top 5 MS-DRGs 
previously described, the applicant determined that 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). (In the FY 2020 IPPS/LTCH PPS proposed rule, we noted 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 noted 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 invited public comments on 
whether CABLIVI[supreg] meets the cost criterion.
    Comment: The applicant submitted a revised analysis using the 2-
year inflation factor of 1.08986 from the FY 2019 IPPS correction 
notice to inflate charges from FY 2017 to FY 2019. The applicant also 
added charges to reflect the current wholesale acquisition cost (WAC) 
price for CABLIVI[supreg]. According to the applicant, after changing 
the 2-year inflation factor from 8.864 percent to 8.986 percent and 
adding charges for the new technology, the inflated average case-
weighted standardized charge per case was $413,246. Based on this 
analysis, the applicant determined that the inflated average case-
weighted standardized charge per case for CABLIVI[supreg] exceeded the 
threshold amount of $49,904 and that CABLIVI[supreg] meets the cost 
criterion.
    Response: We appreciate the applicant's input and revised analysis. 
After consideration of the public comments we received, we believe that 
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.\45\ 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.
---------------------------------------------------------------------------

    \45\ 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

[[Page 42205]]

relapses occurring within 10 days of 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.\46\ 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.
---------------------------------------------------------------------------

    \46\ 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

[[Page 42206]]

count doubling after 4 days of standard 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).
    In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that although 
the applicant asserts that CABLIVI[supreg] represents a substantial 
clinical improvement compared to the use of currently available 
treatments (PE and immunosuppressants), we were 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 stated that we were 
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 noted 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 stated our 
concern in the proposed rule 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.\47\ 
Additionally, the median age for a diagnosis of aTTP is 41, with a wide 
range between 9 years old and 78 years old. In the proposed rule, we 
acknowledged the challenges of constructing robust clinical studies due 
to the extremely rare occurrence of patients who have been diagnosed 
with aTTP. However, we stated that we were nonetheless concerned that 
the study population in the Phase III HERCULES study was small, 145 
people. Additionally, we indicated that it was unclear if the response 
rate may differ in those who have a de novo diagnosis versus those with 
recurrent disease. We noted that PE treatment alone has been attributed 
to an 80 percent survival rate,\48\ and because CABLIVI[supreg] is 
given in combination with or after SOC therapies, we stated in the 
proposed rule that we were concerned that we may not have sufficient 
information to determine the extent to which the study results were 
attributable to the use of CABLIVI[supreg]. Furthermore, we stated that 
with the follow-up period for the Phase III HERCULES study being only 
28 days, we were concerned that there is a lack of long-term data. We 
further stated that, in the absence of long-term data, we were 
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.
---------------------------------------------------------------------------

    \47\ 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.
    \48\ 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, 
in the proposed rule we indicated that we were concerned these 
endpoints were not clearly defined. We also stated that we were 
concerned 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 invited public comments on whether CABLIVI[supreg] meets the 
substantial clinical improvement criterion.
    Comment: Several commenters provided comments in support of 
CABLIVI[supreg]. A commenter stated that CABLIVI[supreg] utilizes a 
monoclonal antibody that binds to vWF, causing platelets to clump and 
clog up the microcirculation of patients and thereby reducing the 
number of plasma exchanges required to bring patients back to normal 
platelet counts. The commenter stated that the clinical benefit of 
reducing the amount of plasma exchanges include lowering the amount of 
plasma required to maintain the blood bank's supply, lessening the 
chance of TRALI, reducing time spent in the intensive care unit, 
reducing time in hospitalization, replacing many hours of expensive 
plasma exchange in the inpatient and outpatient settings with a 
subcutaneous injection, and tremendous increase in patient satisfaction 
in their overall care.
    A commenter stated that CABLIVI[supreg] has the potential to save 
the lives of those individuals who do not respond to current 
conventional treatment, plasma exchange, corticosteroids, and 
rituximab. The commenter stated that without bound platelets, the 
thrombosis is prevented. Finally, the commenter stated that 
CABLIVI[supreg] blocks the tissue injury, but corticosteroids, 
rituximab, and plasma exchange are still needed to affect the cause of 
the disease.
    Another commenter stated that with the pathophysiology of aTTP 
rapidly and durably crippled as long as CABLIVI[supreg] is 
administered, immunosuppression and other therapies such as plasma 
exchange can be provided to these patients to help obtain a prolonged 
remission after cessation of CABLIVI[supreg]. The commenter stated that 
CABLIVI[supreg] is a valuable tool for the treatment of aTTP that 
provides significantly improved clinical care compared to the current 
standard of care. According to the commenter, by creating a window 
period during CABLIVI[supreg] administration in which the 
pathophysiology of aTTP is crippled in a targeted fashion, patients 
with aTTP can be treated for existing organ damage (for example, 
injuries to heart, brain, gut, RBCs) and have an earlier opportunity 
for immunosuppression to begin working against this dangerous 
autoimmune disease. The commenter stated that in two randomized 
controlled trials, CABLIVI[supreg] has demonstrated the ability to 
rapidly normalize platelet count in a sustained manner while drug is 
being administered, as well as decrease the composite endpoint of 
death, disease recurrence, and thromboembolic events.
    The applicant provided information in response to CMS' concerns 
regarding whether CABLIVI[supreg] meets the substantial clinical 
improvement criterion. The information provided by the applicant was in 
response to CMS' concerns regarding whether CABLIVI[supreg] meets the 
overall substantial clinical improvement criterion, the demographics of 
the Phase II TITAN study patient population, the need for longer-term 
studies to identify the effect of CABLIVI[supreg] on exacerbations and 
relapse, the small sample size included in the Phase III HERCULES study 
and the clinical trial design of the Phase II TITAN and Phase III 
HERCULES studies due to short follow-up period, unclear defined 
secondary endpoints and inclusion of biologically important endpoints.
    The applicant stated that the multi-discipline review of 
CABLIVI[supreg] by the

[[Page 42207]]

FDA concluded that the Phase III HERCULES study provided substantial 
evidence of CABLIVI[supreg]'s effectiveness when added to daily PE and 
immunosuppression compared to PE and immunosuppression alone. The 
applicant stated that the primary endpoint of the Phase III HERCULES 
study was time to platelet response in which the study produced a 
median time to platelet response of 2.7 days in the CABLIVI[supreg] 
treatment group compared to 2.9 days in the placebo treatment group. 
According to the applicant, other equally important clinical outcomes 
consist of the proportion of patients with aTTP-related death, 
recurrence of aTTP or at least one treatment emergent major 
thromboembolic event (a composite endpoint). The applicant stated that 
these outcomes were significantly lower in the CABLIVI[supreg] 
treatment group (9/72 (13 percent) compared to the placebo treatment 
group 36/73 (49 percent) (p<0.0001). The applicant further stated that 
the proportion of patients with a recurrence of aTTP in the overall 
study period was significantly lower in the CABLIVI[supreg] treatment 
group (9/72 (13 percent) patients) compared to the placebo treatment 
group (28/73 (38 percent) patients) (p<0.001). The applicant noted that 
in the 6 patients treated with CABLIVI[supreg] who experienced a 
recurrence of aTTP during the follow-up period (that is, a relapse 
defined as recurrent thrombocytopenia after initial recovery of 
platelet count (platelet count 2: 150,000/[mu]L) that required re-
initiation of daily plasma exchange, occurring after the 30-day post 
daily plasma exchange period), ADAMTS13 activity levels were <10 
percent at the end of the study drug treatment suggesting that the 
underlying immunological disease was still active at the time 
CABLIVI[supreg] was stopped.
    The applicant also stated that during the overall study drug 
treatment period, which included, for all patients, the period on 
double-blind treatment, as well as, for patients who had an 
exacerbation and were switched, the period on open-label 
CABLIVI[supreg]-treatment resulted in a 38 percent reduction in the 
number of PE days (average reduction 3.6 days) and a 41 percent 
reduction in the volume of plasma exchanged (average reduction 15 L). 
The applicant also stated that there was a 65 percent reduction in 
length of intensive care unit (ICU) stay (average reduction 6.3 days) 
and a 31 percent reduction in length of hospitalization (average 
reduction 4.5 days).
    In response to CMS's concerns regarding the patient population 
demographics of the Phase II TITAN trial, the applicant stated that the 
FDA assessed the substantial clinical improvement of CABLIVI[supreg] 
based on the Phase III HERCULES study, whereas the Phase II TITAN trial 
was considered supportive evidence. The applicant also noted that it is 
important to understand that both the Phase II TITAN and Phase III 
HERCULES studies included US sites (8 sites/15 patients in TITAN and 10 
sites/32 patients in HERCULES). According to the applicant the Phase 
III HERCULES study is the pivotal study for efficacy evaluation and was 
a study in which US patients represented overall 22 percent of the 
overall patient population. Also, the applicant stated that in the 
Phase III HERCULES study, 28 patients were black or African American 
(21.1 percent of the overall aTTP population and only 13.8 percent of 
the US population) and as such the applicant considers the results of 
the studies applicable to the US population. The applicant also stated 
that the FDA did not raise any concerns related to the demographics of 
the patient population during the Biologics License Application (BLA) 
review process.
    Regarding the CMS concern on the need for longer-term studies to 
identify the effect of CABLIVI[supreg] on exacerbations and relapse the 
applicant re-iterated information previously submitted with its 
application and previously summarized. The applicant stated that the 
trial results show the proportion of patients with a recurrence of aTTP 
in the overall study period was significantly lower in the 
CABLIVI[supreg] group (9/72 (13 percent) patients) compared to the 
placebo group (28/73 (38 percent) patients) (p<0.001) and that in the 6 
patients treated with CABLIVI[supreg] who experienced a recurrence of 
aTTP during the follow-up period, ADAMTS13 activity levels were <10 
percent at the end of the study drug treatment suggesting that the 
underlying immunological disease was still active at the time 
CABLIVI[supreg] was stopped.
    The applicant also acknowledged that long-term studies and clinical 
experiences are needed to better understand CABLIVI[supreg]'s 
effectiveness in preventing recurrences of aTTP episodes and as such it 
is conducting a 3 year follow-up study for those patients enrolled in 
the Phase III HERCULES study in which data will be available in the 
near future. In addition, the applicant stated they are working with 
the medical community to explore real world data generation 
opportunities, including registries.
    In response to CMS' concerns regarding the small sample size 
included in the Phase III HERCULES study, the applicant stated that as 
aTTP is an ultra-rare blood disorder with a reported incidence of 4 to 
5 cases per million in the US, enrolling a large number of patients in 
a clinical study is challenging. Furthermore, the applicant explained 
that the sample size calculation of the Phase III HERCULES study was 
assessed in the BLA review process by the FDA and described accurately 
as being based on superiority testing of CABLIVI[supreg] over placebo 
with respect to time to platelet response and satisfying the following 
criteria:
     80 percent power;
     Log-rank test at 2-sided a = 0.05;
     Accrual period lasting 2.5 years;
     Time-to-event period set at 45 days (note: for the primary 
endpoint, a patient is censored if there is no platelet response by day 
45);
     40 percent reduction in time-platelet response. Assuming a 
median time-to-response of 7 days among placebo, this is tantamount to 
a median time-to-response of 4.2 days in the CABLIVI[supreg] arm; and
     Expected dropout rate of 10 percent in the first 10 days 
after first administration of study drug.
    The applicant stated that under these criteria, 121 events are 
required resulting in a sample size of 132 patients and that the actual 
number of patients randomized in the study exceeded this threshold at 
145. Also, according to the applicant, the FDA did not have any major 
comments or concerns about the sample size of Phase III HERCULES study, 
endpoint definition or other relevant methodological questions or 
concerns during the BLA review process. The applicant also stated that 
the Phase III HERCULES study was the largest study ever conducted in 
this rare condition in which the results were recently published in the 
New England Journal of Medicine with no significant questions or 
remarks from the editors on the sample size, endpoint definition or any 
other relevant methodological questions raised by journal editors or 
reviewers.
    In response to CMS' concerns regarding the clinical trial design of 
the Phase II TITAN and Phase III HERCULES studies due to short follow-
up period, the applicant stated that the 1-month follow-up period was 
defined based on current evidence that this is the period for which 
patients are at higher risk of recurrence for the presenting episode of 
a TTP. The applicant re-iterated information previously submitted with 
its application and previously summarized in this final rule stating 
that the proportion of patients with a recurrence of aTTP in the 
overall study period was

[[Page 42208]]

significantly lower in the CABLIVI[supreg] group (9/72 (13 percent) 
patients) compared to the placebo group (28/73 (38 percent) patients) 
(p<0.001). Again, the applicant indicated that in the 6 patients 
treated with CABLIVI[supreg] who experienced a recurrence of aTTP 
during the follow-up period, ADAMTS13 activity levels were <10 percent 
at the end of the study drug treatment suggesting that the underlying 
immunological disease was still active at the time CABLIVI[supreg] was 
stopped.
    In response to CMS' concerns regarding clinical trial design of the 
Phase II TITAN and Phase III HERCULES studies due to unclear defined 
secondary endpoints and inclusion of biologically important endpoints, 
the applicant stated that the Phase III HERCULES study was designed to 
understand the potential role of CABLIVI[supreg] in the treatment of 
aTTP by comparing CABLIVI[supreg] with placebo with respect to time to 
normalization of platelet count (primary endpoint) and the risk of 
death and complications caused by thrombotic events and organ damage 
(secondary and other endpoints). According to the applicant, the trial 
also evaluated the potential of CABLIVI[supreg] to reduce the risk of 
recurrence by allowing for treatment to continue until 
immunosuppressive therapy resolved the underlying autoimmune disease. 
The applicant noted that the endpoints of this study were defined a 
priori and detailed in the clinical study protocol.
    The applicant re-iterated information previously submitted with its 
application and previously summarized in this final rule stating that 
primary outcome of the studies was the time to a response, which was 
defined as the time from the first intravenous administration of 
CABLIVI[supreg] or placebo to normalization of the platelet count (that 
is, a platelet count of at least 150,000 per cubic millimeter), with 
discontinuation of daily plasma exchange within 5 days thereafter. 
According to the applicant, the results showed a statistically 
significant shorter median time to normalization of platelet count in 
CABLIVI[supreg] group (p=0.01) comparing to placebo.
    The applicant also referenced four key secondary outcomes of the 
studies, which were hierarchically ranked on the basis of clinical 
relevance, as the following:
    1. A composite of TTP-related death, recurrence of TTP, or a major 
thromboembolic event (for example, myocardial infarction, stroke, 
bleeding episodes) during the trial treatment period. Results were 
statistically significant favoring CABLIVI[supreg] arm (p<0.001);
    2. Recurrence of TTP at any time during the trial, including the 
follow-up period. Results were statistically significant favoring 
CABLIVI[supreg] arm (p<0.001);
    3. Refractory TTP (defined by the lack of a doubling of the 
platelet count after 4 days of treatment and a lactate dehydrogenase 
level that remained above the upper limit of the normal range). Results 
were not statistically significant (p=0.06); and
    4. The time to normalization (that is, to a level below the defined 
upper limit of the normal range) of three organ-damage markers (lactate 
dehydrogenase, cardiac troponin I, and serum creatinine). Not tested 
for statistical significance as prior endpoint was not statistically 
significant.
    The applicant stated that a recurrence was defined as a new 
decrease in the platelet count that necessitated the re-initiation of 
plasma exchange after normalization of the platelet count had occurred, 
an exacerbation was defined as a recurrence that occurred within 30 
days after the last plasma exchange and a relapse was defined as a 
recurrence that occurred more than 30 days after cessation of plasma 
exchange. Furthermore, the applicant conveyed that outcomes that were 
not part of the hierarchy included the number of days of PE and the 
volume of plasma exchanged, the duration of stay in an ICU and in the 
hospital, mortality rate, pharmacodynamic and pharmacokinetic 
variables, and immunogenicity. Finally, according to the applicant, 
safety assessments were performed throughout the course of the trial 
and included evaluation of vital signs, physical examinations, clinical 
laboratory testing, and 12-lead electrocardiography.
    Response: We appreciate all the comments received related to 
CABLIVI[supreg], including the applicant's submission of additional 
information to address the concerns presented in the proposed rule.
    After consideration of the public comments we received, we believe 
that the applicant has addressed our concerns regarding whether 
CABLIVI[supreg] meets the substantial clinical improvement criterion, 
and that CABLIVI[supreg] represents a substantial clinical improvement 
over existing technologies (PE and immunosuppression alone) based on 
the results of the Phase II TITAN and Phase III HERCULES studies with 
respect to time to platelet count response, which is consistent with 
the halting of platelet consumption in microthrombi; the number of 
patients with aTTP-related death and recurrence of aTTP-related 
episodes or a major thromboembolic event, and mortality. Additionally, 
we note that CABLIVI[supreg] is the only FDA-approved therapy for 
treating aTTP in conjunction with PE and immunosuppressive therapy.
    In summary, we have determined that CABLIVI[supreg] meets all of 
the criteria for approval of new technology add-on payments. Therefore, 
we are approving new technology add-on payments for CABLIVI[supreg] for 
FY 2020. Cases involving CABLIVI[supreg] that are eligible for new 
technology add-on payments will be identified by ICD-10-PCS procedure 
codes XW013W5, XW033W5 and XW043W5. In its application and subsequent 
public comment, the applicant estimated that the average Medicare 
beneficiary would require a dosage of 11 mg/kg administered as an 
intravenous injection as a single dose and of 10 mg/kg administered as 
a subcutaneous injection as a single dose. According to the applicant, 
the WAC for one dose of 10 mg/kg is $7,300, and patients will typically 
require 1.16 vials for the course of treatment with CABLIVI[supreg] per 
day for an average duration of 6 days for an average total of 7 vials. 
Therefore, the total cost of CABLIVI[supreg] per patient is $51,100. 
Under Sec.  412.88(a)(2) (revised as discussed in this final rule), we 
limit new technology add-on payments to the lesser of 65 percent of the 
average cost of the technology, or 65 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 
CABLIVI[supreg] is $33,215 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 in all National Cancer Institute clinical trials and that 
all other available brachytherapy sources are included on

[[Page 42209]]

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, in 
the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19295), we stated that 
we believe the newness period for CivaSheet[supreg] would begin on May 
9, 2018. However, we invited 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].
    Comment: The applicant submitted public comments reiterating that 
CivaSheet 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. The 
applicant reiterated that while the CivaSheet was cleared by the Food 
and Drug Administration and approved by the Nuclear Regulatory 
Commission as a ``sealed source'' somewhat earlier, inclusion of a 
brachytherapy source on this Registry is essentially a prerequisite for 
commercial acceptance of such a source. For acceptance of a new 
brachytherapy source outside of essentially experimental contexts, 
completion of dosimetric studies is necessary. The applicant indicated 
that it is the AAPM's validation that the results of these studies 
indicate compliance with its prerequisites, rather than FDA clearance, 
that appropriately marks the readiness of a source for the market and 
the CivaSheet[supreg] was added to the registry, May 9, 2018.
    Response: We appreciate the applicant's comments. After 
consideration of the comments we received, it appears that 
CivaSheet[supreg] was not commercially distributed among IPPS hospitals 
until May 2018, after meeting the requirements for inclusion in the 
AAPM registry. As we have stated in prior rulemaking (69 FR 28237), the 
2-year to 3-year period of newness for a technology or medical service 
would ordinarily begin with FDA approval, unless there was some 
documented delay in bringing the product onto the market after that 
approval. Therefore, we believe that the newness period for the 
CivaSheet[supreg] would begin May 9, 2018. 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 permanent interstitial 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. In the proposed rule, 
we noted that the applicant had submitted a request for approval for a 
unique ICD-10-PCS procedure code to describe procedures involving the 
use of the CivaSheet[supreg] device, beginning in FY 2020. Approval was 
granted for the following procedure codes effective October 1, 2019:

[[Page 42210]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.134


[[Page 42211]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.135


[[Page 42212]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.136

    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

[[Page 42213]]

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.'' \49\ 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.
---------------------------------------------------------------------------

    \49\ 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.\50\ 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.\51\ 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.
---------------------------------------------------------------------------

    \50\ Rivard, Mark J., ``Low energy brachytherapy sources for 
pelvic sidewall treatment,'' abstract presented at the ABS 2016 
Annual Meeting.
    \51\ 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.
---------------------------------------------------------------------------

    With regard to the second criterion, whether a product is assigned 
to the same or a different MS-DRG, the applicant asserted that patients 
who may be eligible 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 listed 
below. In the proposed rule, we indicated that we believe that cases 
involving the use of existing technologies would be assigned to these 
same MS-DRGs as previously listed.

[[Page 42214]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.137

[GRAPHIC] [TIFF OMITTED] TR16AU19.246


[[Page 42215]]


    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 invited public comments on whether the CivaSheet[supreg] device 
meets the newness criterion.
    Comment: The applicant submitted public comments stating that it 
believes that the CivaSheet[supreg] meets CMS' newness criterion. The 
applicant stated that in particular, the CivaSheet[supreg] enables 
intraoperative delivery of radiation in circumstances where this was 
not previously possible, whether using brachytherapy or other forms of 
radiation, without adverse effects on neighboring, radiosensitive 
tissue. The applicant stated that the capability for one-directional 
delivery of radiation, attributable to the gold shielding on each 
source and the persisting matrix in which the sources are embedded and 
which maintains their orientation within the body as the surgical wound 
is closed and heals, is unique. The applicant further stated that the 
customizable, conformable, planar design allows positional stability, 
homogenous distribution of radiation in the surgical cavity, features 
not available in radioactive seed technology previously available. 
Response: We appreciate the applicant's comments with regard to the 
newness criterion. After consideration of the comments we received, we 
believe the mechanism of action of the CivaSheet[supreg] is unique from 
other brachytherapy technologies because of. the unidirectional 
delivery of intraoperatively applied radiation due to its shielded gold 
layer. Therefore, we believe the CivaSheet[supreg] is not substantially 
similar to existing technology and that 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 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 as 
previously described, 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 standardized 
charge per case for CivaSheet[supreg] exceeded the average case-
weighted threshold amount of $87,446 by $101,451.
    In the proposed rule, we noted 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 noted 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 invited public comments on whether the CivaSheet[supreg] 
meets the cost criterion.
    Comment: The applicant submitted public comments reiterating its 
previously submitted cost analysis. The applicant further stated that 
it believes the technology meets the cost criterion.
    Response: After consideration of the public comments we received, 
we agree that 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; \52\ (2) 
reduced rate of device-related complications; \53\ (3) reduced rate of 
radiation toxicity; \54\ (4) decreased future hospitalizations; \55\ 
(5) decreased rate of subsequent therapeutic interventions; \56\ (6) 
improvement in back pain and appetite in pancreatic cancer patients 
\57\ and (7) improved local control for pancreatic cancer patients.\58\
---------------------------------------------------------------------------

    \52\ 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.
    \53\ 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.
    \54\ 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.
    \55\ Cavanaugh, S.X., Rothley, D.J., Richman, C., ``Directional 
LDR Intraoperative Brachytherapy for Head and Neck Cancer,'' 
Presented at ABS 2017 Annual Meeting.
    \56\ On file at CivaTech.
    \57\ Ibid.
    \58\ 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

[[Page 42216]]

of a 20-month report of a patient who had been diagnosed with 
leiomyosarcoma of the pelvic sidewall.\59\ 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.
---------------------------------------------------------------------------

    \59\ 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; \60\ (2) retroperitoneal sarcoma; 61 62 63 (3) 
gastric signet ring adenocarcinoma; (4) pancreatic cancer; and (5) 
other abdominal malignancies. There were 13 patients associated with 
these 4 case series.
---------------------------------------------------------------------------

    \60\ 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.
    \61\ 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.
    \62\ 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.
    \63\ 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 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

[[Page 42217]]

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.,\64\ and Turian, et 
al.,\65\ 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.
---------------------------------------------------------------------------

    \64\ 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.
    \65\ 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.\66\ 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 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.
---------------------------------------------------------------------------

    \66\ 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.\67\ 
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

[[Page 42218]]

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.,\68\ 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.
---------------------------------------------------------------------------

    \67\ 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.
    \68\ 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 \69\ 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.70 71 72 The applicant 
also 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.73 74 75
---------------------------------------------------------------------------

    \69\ 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.
    \70\ Rivard, Mark J., ``Low energy brachytherapy sources for 
pelvic sidewall treatment,'' abstract presented at the ABS 2016 
Annual Meeting.
    \71\ 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.
    \72\ 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.
    \73\ Ibid.
    \74\ Rivard, Mark J., ``Low energy brachytherapy sources for 
pelvic sidewall treatment,'' abstract presented at the ABS 2016 
Annual Meeting.
    \75\ 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

[[Page 42219]]

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, in the proposed rule we stated that we were 
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 we stated that we 
were 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 invited public comments on whether 
CivaSheet[supreg] meets the substantial clinical improvement criterion.
    Comment: The applicant submitted public comments regarding CMS' 
concerns. With regard to our concern that the supporting data provided 
by the applicant appear to be feasibility studies, the applicant stated 
that the feasibility studies substantiate the experience with such 
uses. The applicant further stated that it believes that CMS' 
characterization fails to reflect other aspects of these studies as 
they are not limited to investigating whether intraoperative radiation 
therapy can be delivered with the CivaSheet[supreg], but also show 
positive outcomes, including providing information following patients 
for periods that range up to 24 or even 35 months. The applicant 
further stated that in the case of radiation therapy, the likely 
effects in the body of specific doses on target tumors and on healthy 
tissues are well known and can be quantified with well-developed 
treatment planning systems. The applicant stated that the major 
research questions at this stage of the product's development are not 
focused on either the safety or efficacy of the treatment (since the 
product is already cleared by the FDA) but on whether physicians in 
clinical practice can position it appropriately in the surgical field 
and on the effects of the localized, unidirectional delivery of 
intraoperatively applied radiation that CivaSheet[supreg] provides on 
outcomes of interest, including indications of toxicity and recurrence.
    With regard to CMS' concern that there do not appear to be any 
comparisons to other current treatments, or any long-term follow-up 
with comparison to currently available therapies, the applicant stated 
that it believes that the results detailed in the following categories 
for CivaSheet[supreg] patients compare favorably with the results 
presented in the clinical literature regarding the toxicity rates for 
EBRT and with historical recurrence rates for patients receiving common 
adjunctive therapies:
     Reduced radiation toxicity--None of the patients in the 
associated clinical literature whose treatments have included 
CivaSheet[supreg] have suffered nausea, vomiting, diarrhea, 
constipation or fatigue, all side effects that are common with other 
forms of radiation therapy, due to the CivaSheet[supreg] treatment. The 
applicant stated that the company keeps records of all patients 
treated, and to date has not received any reports or complaints of 
acute or chronic radiation toxicity attributable to the 
CivaSheet[supreg] in any of the 78 patients who have received the 
therapy. The applicant believes this record compares favorably with the 
rates for toxicity for EBRT.
     Fewer therapeutic interventions and hospitalizations--The 
applicant stated that for the same group of patients, the local 
recurrence rate for disease in the treatment field of the device for 
patients treated with CivaSheet[supreg] is none, regardless of site of 
the cancer treated. The applicant stated that comparison with 
information drawn from the clinical literature regarding the local 
recurrence rate by site that would be expected if the patient were 
treated by the existing standards of care following surgery, including 
the common adjunctive procedures, external beam radiation and 
chemotherapy, reveals the extent of local recurrence is more favorable 
for CivaSheet[supreg] patients. The applicant believes that because of 
the absence of local recurrence in the treatment fields, patients have 
not required additional procedures following the primary cancer 
surgery, on either outpatient or inpatient basis, related to treating 
disease recurrence in the area treated by CivaSheet[supreg]. The 
applicant further stated that in addition, patients have not

[[Page 42220]]

required further interventions or hospitalizations to treat radiation 
related side effects, as none have been recorded.
    The applicant also provided information, by indication, to studies 
involving CivaSheet[supreg] and on which they have information on file. 
These include the literature cited in their FY 2020 new technology add-
on payment application and the ongoing clinical trials. The applicant 
also provided an appendix summarizing key information for comparison 
available in the clinical literature. For each cancer type treated with 
CivaSheet, the applicant displayed the toxicity rates for EBRT, the 
most common and widely available alternative, with references cited. 
These range from 1.1 percent (gastrointestinal following prostatectomy) 
to as high as 80 percent for retroperitoneal sarcoma. According to the 
applicant, the comparative rates for CivaSheet treatments are zero in 
the published literature presented to CMS, and the company has received 
no reports of local recurrence or toxicity for patients treated outside 
of a clinical trial setting. The appendix also showed similar 
information for local recurrence rates. According to the applicant, in 
the literature, these range from 6 percent for breast cancer to as high 
as 60 percent for gynecogical cancers.
    The applicant provided a second appendix, Appendix 2, to provide 
links of the claims noted in the studies provided with its application. 
Appendix 2 presented information, by indication, to studies involving 
CivaSheet[supreg] and on which the applicant has information on file to 
include the literature cited in its application and the ongoing 
clinical trials.
    The applicant believes that the data it provided demonstrates a 
substantial clinical improvement for the treatment of Medicare patients 
with cancer.
    We also received a public comment stating that CivaSheet provides a 
targeted and high enough dose to the surgical margin to control local 
disease without inducing side effect and that CivaSheet[supreg] has 
benefits for pancreatic, sarcoma and colorectal patients. The commenter 
did not provide additional data in support of these statements.
    Response: We appreciate the public comments we received regarding 
whether the CivaSheet meets the substantial clinical improvement 
criterion, including the comments submitted by the applicant. While the 
applicant provided additional references and a summary of the clinical 
trials underway, we believe the data remains limited as most of the 
clinical trials will not complete enrollment until 2020. Further, the 
majority of the evidence submitted to date still focuses on limited 
numbers of patients who participated in feasibility studies with no 
comparator arms nor clinical outcome results. Finally, the single 
clinical trial that has been completed is not anticipated to have data 
available until third quarter 2019. For these reasons, we are unable to 
determine that the CivaSheet[supreg] represents a substantial clinical 
improvement over existing therapies. Therefore, we are not approving 
new technology add-on payments for the CivaSheet[supreg] for FY 2020.
    d. 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.\76\ 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.\77\
---------------------------------------------------------------------------

    \76\ 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.
    \77\ 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.\78\
---------------------------------------------------------------------------

    \78\ 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.

[[Page 42221]]

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 
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. In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19313), we noted 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. 
Approval was granted for the following procedure codes effective 
October 1, 2019:

[[Page 42222]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.138


[[Page 42223]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.139


[[Page 42224]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.140


[[Page 42225]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.244

    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). In the proposed 
rule, we stated that 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 this table:

[[Page 42226]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.141


[[Page 42227]]


[GRAPHIC] [TIFF OMITTED] TR16AU19.142

    The applicant asserted that the Eluvia\TM\ 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.
    In the proposed rule, we stated that we were concerned as to 
whether the polymer drug carrier system that the Eluvia\TM\ system uses 
is, in fact, a new mechanism of action as compared to stents that 
contain paclitaxel without the carrier polymer. We stated that we were 
concerned that the Eluvia\TM\ 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 invited public comments on whether the 
Eluvia\TM\ system is substantially similar to existing technology and 
whether it meets the newness criterion, including with respect to the 
concerns we raised.
    Comment: The applicant commented that the Eluvia\TM\ device's 
mechanism of action is different from that of the paclitaxel-coated 
Zilver PTX (Zilver[supreg] Drug-Eluting Peripheral Stent) because the 
Eluvia\TM\ device's polymer matrix layer allows for targeted, 
localized, sustained, low-dose amorphous paclitaxel delivery to 
peripheral artery lesions over the course of the peripheral restenotic 
cascade with minimal systemic distribution or particulate loss. The 
applicant provided a comparison of the polymer matrix stent vs. the 
paclitaxel-coated stent. According to the applicant, the polymer matrix 
stent is encased in a polymer matrix, the paclitaxel-coated stent is 
not. The dose density of paclitaxel for the polymer matrix vs the 
paclitaxel coated stent is 0.167ug/mm\2\ vs 3ug/mm\2\. Paclitaxel is 
delivered to the lesion via a diffusion gradient with the polymer 
matrix stent whereas the paclitaxel-coated stent has no diffusion 
gradient. Paclitaxel is released directly to the target lesion with the 
polymer matrix stent. Paclitaxel release is non-specific to the target 
lesion with paclitaxel-coated stent. Paclitaxel is released over 
approximately 12-15 months with the polymer matrix stent. Paclitaxel 
release is complete at two months with paclitaxel coated stents.
    Response: We appreciate the applicant's comments and comparison of 
the polymer matrix Eluvia\TM\ vs the paclitaxel-coated Zilver PTX with 
regard to the mechanism of action. After consideration of the 
applicant's comments, we believe that the Eluvia\TM\ device uses a 
unique mechanism of action to achieve a therapeutic outcome when 
compared to existing technologies such as the paclitaxel-coated stent. 
Therefore the Eluvia\TM\ 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.
    As noted in the proposed rule and 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

[[Page 42228]]

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). (In the proposed rule, we noted 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 noted 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, as previously described, 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 
invited public comments on whether EluviaTM meets the cost 
criterion.
    Comment: The applicant submitted public comments reiterating the 
various cost analyses results. The applicant maintained that the 
technology meets the cost criterion.
    Response: We appreciate the applicant's comments concerning the 
cost criterion. After consideration of the public comments we received, 
we agree that the EluviaTM device 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 
\79\ 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 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.
---------------------------------------------------------------------------

    \79\ 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 
\80\ 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.
---------------------------------------------------------------------------

    \80\ 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

[[Page 42229]]

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.\81\ 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.
---------------------------------------------------------------------------

    \81\ 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[middot]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.
    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.\82\ Secondary endpoints improved after stent implantation and 
were generally similar between the groups. At 12 months, of the 
patients

[[Page 42230]]

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[middot]0 (SD 0[middot]2) in both groups at 12 
months (baseline mean ankle-brachial index 0[middot]7 [SD 0[middot]2] 
for EluviaTM; 0[middot]8 [0[middot]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:
---------------------------------------------------------------------------

    \82\ 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).
    In the proposed rule, we stated that we were 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 noted 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,\83\ although the 
EluviaTM system was not included in the meta-analysis. We 
invited 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.
---------------------------------------------------------------------------

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

    Comment: The applicant submitted public comments regarding CMS' 
concerns. With regard to our concern that the IMPERIAL study was 
designed for non-inferiority and not superiority, the applicant stated 
that superiority testing was performed after the 12-month follow-up 
window for all enrolled subjects had closed. The applicant also stated 
that from a statistical perspective, the pre-specified success criteria 
for superiority used the same logic as the pre-specified success 
criteria for non-inferiority: ``ELUVIA will be concluded to be superior 
to Zilver PTX for device effectiveness if the one-sided lower 95 
percent confidence bound on the difference between treatment groups in 
12-month primary patency is greater than zero.'' The applicant stated 
that a more stringent one-sided lower 97.5 percent confidence bound 
(shown as two-sided 95 percent confidence interval) on the difference 
between treatment groups was observed to be greater than zero and the 
corresponding p-value was 0.0144.
    In addition to the internal analysis performed by the applicant, 
the applicant stated that the data were published in The Lancet \84\ 
following its rigorous peer-review process. The applicant quoted the 
following from The Lancet: ``The superiority analysis of primary 
patency in the full-analysis cohort was a pre-specified post-hoc 
analysis'' and ``In this head-to-head randomized trial, the primary 
non-inferiority endpoints for efficacy and safety at 12 months were 
met, and post-hoc analysis of the 12-month patency rate showed 
superiority for Eluvia over Zilver PTX.''
---------------------------------------------------------------------------

    \84\ Gray W.A., Keirse K., Soga Y., Benko A., Babaev A., Yokoi 
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 randomised 
non-inferiority trial. Lancet. 2018;392:1541-1551.
---------------------------------------------------------------------------

    According to the applicant, clinical trial guidelines support 
performing a pre-specified post-hoc superiority analysis in this 
situation, provided ``(1) the trial has been properly designed and 
carried out in accordance with the strict requirements of a non-
inferiority trial. (2) actual p-values for superiority are presented to 
allow independent assessment of the strength of the evidence and (3) 
analysis according to the intention-to-treat (ITT) principle is given 
greatest emphasis.''\85\ The applicant contends that the IMPERIAL trial 
met all those requirements.
---------------------------------------------------------------------------

    \85\ Committee for Proprietary Medicinal Products. Points to 
consider on switching between superiority and non-inferiority. Br J 
Clin Pharmacol. 2001 Sep;52(3):223-8.
---------------------------------------------------------------------------

    With respect to the results of the 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, in its public comment, the 
applicant maintained that the EluviaTM device is different 
from the devices evaluated in the meta-analysis. The applicant also 
noted that the EluviaTM device was not addressed in the 
meta-analysis and that the EluviaTM device delivers 
paclitaxel in much lower doses than the products discussed in the meta-
analysis. The applicant contends that the EluviaTM device is 
the only peripheral device to deliver paclitaxel through a sustained-
release mechanism of action where delivery of paclitaxel is controlled 
and focused on the target lesion. The applicant believes that the 
suggestion in the meta-analysis of a late-term mortality risk 
associated with paclitaxel coated devices is not directly applicable to 
the EluviaTM device. The applicant further stated that they 
submitted information (available at https://www.fda.gov/media/127704/download) to the FDA on paclitaxel relative to the EluviaTM 
device in advance of FDA's June 19-20 Circulatory System Devices Panel 
of the Medical Devices Advisory Committee Meeting. Consequently, the 
applicant does not believe that the findings of limited 
generalizability suggested in the meta-analysis should inhibit CMS from 
determining that the EluviaTM satisfies the substantial 
clinical improvement criterion.
    In addition to the applicant's public comments, we also received 
several public comments supporting the EluviaTM Drug-Eluting 
Stent System's application for New Technology Add-on Payment in FY2020. 
Commenters expressed that it is important for PAD patients to have 
access to this technology.
    We also received a comment expressing safety concerns with 
paclitaxel devices used to treat PAD. The commenter stated they were 
aware of an FDA alert concerning paclitaxel

[[Page 42231]]

devices. The commenter stated the applicant and other manufacturers of 
devices using paclitaxel should consider an alternative to paclitaxel.
    Response: We appreciate the applicant's and other public comments. 
We are aware of the FDA's March 15, 2019 Letter to healthcare providers 
regarding the ``Treatment of Peripheral Arterial Disease with 
Paclitaxel-Coated Balloons and Paclitaxel-Eluting Stents Potentially 
Associated with Increased Mortality'' and that on June 19-20, 2019, the 
FDA convened a public meeting of the Circulatory System Devices Panel 
of the Medical Devices Advisory Committee to share information and 
perspectives from all interested parties on a potential late mortality 
signal associated with the use of paclitaxel-coated balloons and 
paclitaxel-eluting stents in patients with peripheral arterial disease.
    In March 2019, the FDA conducted a preliminary analysis of long-
term follow-up data (up to five years in some studies) of the pivotal 
premarket randomized trials for paclitaxel-coated products indicated 
for PAD. While the analyses are ongoing, according to the FDA, the 
preliminary review of the data has identified a potentially concerning 
signal of increased long-term mortality in study subjects treated with 
paclitaxel-coated products compared to patients treated with uncoated 
devices.\86\ Of the three trials with 5-year follow-up data, each 
showed higher mortality in subjects treated with paclitaxel-coated 
products than subjects treated with uncoated devices. In total, among 
the 975 subjects in these 3 trials, there was an approximately 50 
percent increased risk of mortality in subjects treated with 
paclitaxel-coated devices versus those treated with control devices 
(20.1 percent versus 13.4 percent crude risk of death at 5 years).
---------------------------------------------------------------------------

    \86\ https://www.fda.gov/medical-devices/letters-health-care-providers/update-treatment-peripheral-arterial-disease-paclitaxel-coated-balloons-and-paclitaxel-eluting.
---------------------------------------------------------------------------

    The FDA stated that the data should be interpreted with caution for 
several reasons. First, there is large variability in the risk estimate 
of mortality due to the limited amount of long-term data. Second, the 
studies were not originally designed to be pooled, introducing greater 
uncertainty in the results. Third, the specific cause and mechanism of 
the increased mortality is unknown.
    Based on the preliminary review of available data, the FDA made the 
following recommendations regarding the use of paclitaxel-coated 
balloons and paclitaxel-eluting stents: That health care providers 
consider the following until further information is available; continue 
diligent monitoring of patients who have been treated with paclitaxel-
coated balloons and paclitaxel-eluting stents; when making treatment 
recommendations and as part of the informed consent process, consider 
that there may be an increased rate of long-term mortality in patients 
treated with paclitaxel-coated balloons and paclitaxel-eluting stents; 
discuss the risks and benefits of all available PAD treatment options 
with your patients; for most patients, alternative treatment options to 
paclitaxel-coated balloons and paclitaxel-eluting stents should 
generally be used until additional analysis of the safety signal has 
been performed; for some individual patients at particularly high risk 
for restenosis, clinicians may determine that the benefits of using a 
paclitaxel-coated product may outweigh the risks; ensure patients 
receive optimal medical therapy for PAD and other cardiovascular risk 
factors as well as guidance on healthy lifestyles including weight 
control, smoking cessation, and exercise.
    The FDA further stated that paclitaxel-coated balloons and stents 
are known to improve blood flow to the legs and decrease the likelihood 
of repeat procedures to reopen blocked blood vessels. However, because 
of this concerning safety signal, the FDA stated that it believes 
alternative treatment options should generally be used for most 
patients while the FDA continues to further evaluate the increased 
long-term mortality signal and its impact on the overall benefit-risk 
profile of these devices. The FDA stated it intends to conduct 
additional analyses to determine whether the benefits continue to 
outweigh the risks for approved paclitaxel-coated balloons and 
paclitaxel-eluting stents when used in accordance with their 
indications for use. The FDA stated it will also evaluate whether these 
analyses impact the safety of patients treated with these devices for 
other indications, such as treatment of arteriovenous access stenosis 
or critical limb ischemia.
    Because of concerns regarding this issue, the FDA convened an 
Advisory Committee meeting of the Circulatory System Devices Panel on 
June 19-20, 2019 to: Facilitate a public, transparent, and unbiased 
discussion on the presence and magnitude of a long-term mortality 
signal; discuss plausible reasons, including any potential biological 
mechanisms, for a long-term mortality signal; re-examine the benefit-
risk profile of this group of devices; consider modifications to 
ongoing and future US clinical trials evaluating devices containing 
paclitaxel, including added surveillance, updated informed consent, and 
enhanced adjudication for drug-related adverse events and deaths; and 
guide other regulatory actions, as needed. The June 19-20, 2019 
Advisory Committee meeting of the Circulatory System Devices Panel 
concluded that analyses of available data from FDA-approved devices 
show an increase in late mortality (between two and five years) 
associated with paclitaxel-coated devices intended to treat 
femoropopliteal disease. However, causality for the late mortality rate 
increase could not be determined. Additional data may be needed to 
further assess the magnitude of the late mortality signal, determine 
any potential causes, identify patient sub-groups that may be at 
greater risk, and to update benefit-risk considerations of this device 
class.\87\
---------------------------------------------------------------------------

    \87\ https://www.fda.gov/advisory-committees/advisory-committee-calendar/june-19-20-2019-circulatory-system-devices-panel-medical-devices-advisory-committee-meeting#event-materials.
---------------------------------------------------------------------------

    The FDA continues to recommend that health care providers report 
any adverse events or suspected adverse events experienced with the use 
of paclitaxel-coated balloons and paclitaxel-eluting stents. The FDA 
stated that it will keep the public informed as any new information or 
recommendations become available.
    After consideration of the public comments we received and the 
latest available information from the FDA advisory panel, we note the 
FDA panel's preliminary review of the data that has identified a 
potentially concerning signal of increased long-term mortality in study 
subjects treated with paclitaxel-coated products compared to patients 
treated with uncoated devices. Additionally, since the FDA has stated 
that it believes alternative treatment options should generally be used 
for most patients while the FDA continues to further evaluate the 
increased long-term mortality signal and its impact on the overall 
benefit-risk profile of these devices, we remain concerned that we do 
not have enough information to determine that the EluviaTM 
device represents a substantial clinical improvement over existing 
technologies. Therefore, we are not approving the EluviaTM 
device for FY 2020 new technology add-on payments. We will monitor any 
new information or recommendations as they become available.
e. ELZONRISTM (tagraxofusp, SL-401)
    Stemline Therapeutics submitted an application for new technology 
add-on

[[Page 42232]]

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 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. The applicant submitted a request for 
approval for a unique ICD-10-PCS code for the administration of 
ELZONRISTM beginning in FY 2020 and was granted approval for 
the following procedure codes effective October 1, 2019: XW033Q5 
(Introduction of Tagraxofusp-erzs Antineoplastic into peripheral vein, 
percutaneous approach, new technology, group 5) and XW043Q5 
(Introduction of Tagraxofusp-erzs Antineoplastic into central vein, 
percutaneous approach, new technology group 5).
    As previously discussed, 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

[[Page 42233]]

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. In the proposed rule, we noted that, as 
explained 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 previously stated.
    As presented in the proposed rule and previously summarized, 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 invited public comments on 
whether ELZONRISTM is substantially similar to any existing 
technologies and whether ELZONRISTM meets the newness 
criterion.
    Comment: The applicant submitted a comment reiterating that 
ELZONRISTM is the first approved treatment for patients with 
BPDCN and the first approved CD123-targeted therapy.
    Response: Based on the applicant's comment and information 
submitted by the applicant as part of its FY 2020 new technology add-on 
payment application for ELZONRISTM, as discussed in the 
proposed rule (84 FR 19319) and previously summarized, we believe that 
ELZONRISTM has a unique mechanism of action and the use of 
the technology would treat a new patient population. Therefore, we 
believe ELZONRISTM is not substantially similar to existing 
treatment options and meets the newness criterion. We consider the 
beginning of the newness period to commence when ELZONRISTM 
was approved by the FDA on December 21, 2018.
    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 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. In the proposed rule, 
we noted 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

[[Page 42234]]

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 further noted 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 ELZONRIS\TM\ in both 
scenarios. To determine the charges for ELZONRIS\TM\, the applicant 
calculated the average per discharge cost of ELZONRIS\TM\ 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 ELZONRIS\TM\ 
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 this table:
[GRAPHIC] [TIFF OMITTED] TR16AU19.143

    In the proposed rule, we noted that the applicant used the proposed 
rule values to inflate the standardized charges. However, we further 
noted 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 invited public comments on whether 
ELZONRIS\TM\ meets the cost criterion.
    We did not receive any public comments on whether ELZONRIS\TM\ 
meets the cost criterion. Based on the information submitted by the 
applicant as part of its FY 2020 new technology add-on payment 
application for ELZONRIS\TM\, as discussed in the proposed rule (84 FR 
19319 through 19320) and previously summarized, the average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount. Therefore, ELZONRIS\TM\ meets the cost 
criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant stated that it believes ELZONRIS\TM\ represents a substantial 
clinical improvement because: (1) ELZONRIS\TM\ 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) 
ELZONRIS\TM\ offers a treatment option for a patient population 
ineligible for aggressive chemotherapy regimens used to treat BPDCN; 
(3) ELZONRIS\TM\ exhibits high complete remission rates, potentially 
superior to other regimens used to treat a diagnosis of BPDCN; (4) 
ELZONRIS\TM\ significantly improves overall survival (OS) in the 
treatment of patients diagnosed with BPDCN as compared to currently 
available treatment regimens; (5) ELZONRIS\TM\ 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) 
ELZONRIS\TM\ 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) ELZONRIS\TM\ 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 ELZONRIS\TM\ 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.\88\
---------------------------------------------------------------------------

    \88\ 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 ELZONRIS\TM\ 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; 
\89\ however, the applicant noted

[[Page 42235]]

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.\90\
---------------------------------------------------------------------------

    \89\ 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.
    \90\ 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.
---------------------------------------------------------------------------

    Third, the applicant maintained that ELZONRIS\TM\ 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.\91\ The applicant reported prospective clinical 
trial data from ELZONRIS\TM\'s pivotal trial (ELZONRIS\TM\ 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).\92\
---------------------------------------------------------------------------

    \91\ 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.
    \92\ 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 ELZONRIS\TM\ 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.\93\ The applicant reported 
prospective clinical trial data from ELZONRIS\TM\'s pivotal trial 
(ELZONRIS\TM\ 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].\94\
---------------------------------------------------------------------------

    \93\ 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.
    \94\ 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.\95\ 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.\96\ 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.\97\ The applicant 
submitted a 2010 retrospective study of BPDCN cases in which only 10 
out of 47 patients (21 percent) received SCT.\98\ 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.\99\ 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-naive patients treated with ELZONRISTM 
(12 [mu]g/kg/day) were bridged to SCT in remission.\100\
---------------------------------------------------------------------------

    \95\ 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.
    \96\ 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.
    \97\ 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.
    \98\ 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.
    \99\ 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.
    \100\ 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 [mu]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.\101\
---------------------------------------------------------------------------

    \101\ 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

[[Page 42236]]

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.\102\
---------------------------------------------------------------------------

    \102\ 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.
---------------------------------------------------------------------------

    After reviewing the information submitted by the applicant as part 
of its FY 2020 new technology add-on payment application for 
ELZONRISTM, in the FY 2020 IPPS/LTCH PPS proposed rule, we 
stated we were 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 stated that we 
were unsure if the study populations in the 2013 retrospective study 
that the applicant used to compare remission rates are composed of 
treatment-naive, 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 ELZONRISTM 
demonstrated high response rates in BPDCN, including: 90 percent 
overall response in treatment naive patients (26/29) and 69 percent 
overall response in relapse/refractory patients (9/13); 72 percent 
complete response plus complete clinical response in treatment naive 
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).\103\ However, we stated that we were 
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 noted that because 
the clinical trial is ongoing and the final outcomes are not available, 
we stated we were concerned that there may not be enough information on 
the efficacy to determine substantial clinical improvement at this 
time. We also noted that the applicant's December 2018 New Technology 
Town Hall meeting presentation included information that differs 
slightly from the application materials, and we were not clear whether 
the study results submitted with the application reflect the most 
current information available. We invited public comments on whether 
ELZONRISTM meets the substantial clinical improvement 
criterion, including with respect to the concerns we have raised.
---------------------------------------------------------------------------

    \103\ 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.
---------------------------------------------------------------------------

    Comment: The applicant submitted comments in response to CMS's 
concerns in the proposed rule regarding whether ELZONRISTM 
meets the substantial clinical improvement criterion.
    With respect to the concern that some of the evidence submitted by 
the applicant to demonstrate substantial clinical improvement over 
existing technologies is based on preclinical studies, the applicant 
stated that at the time of the new technology add-on payment 
application submission (December 2018), the peer reviewed publications 
of ELZONRISTM (tagraxofusp-erzs) included preclinical 
studies by Angelot-Delettre (2015) and Delettre (2013) and initial 
prospective evidence of the clinical activity of ELZONRISTM 
in patients with BPDCN (Frankel 2014). The applicant stated that since 
the new technology add-on payment application submission, 
ELZONRISTM was approved by the FDA for the treatment of 
BPDCN in adults and pediatric patients two years and older on December 
21, 2018, and the efficacy and safety data from the pivotal study of 
ELZONRISTM that formed the basis for the FDA approval was 
published in the April 25th issue of the New England Journal of 
Medicine (NEJM). The applicant stated that Study STML-401-0114 
(ELZONRISTM BPDCN Clinical Trial), the subject of the NEJM 
article, was a multicenter, multistage study of ELZONRISTM 
in patients with BPDCN and the largest prospective clinical trial 
designed to evaluate outcomes in patients with BPDCN. The applicant 
submitted the 2019 study as part of its comment, which reported that 
among the 29 previously untreated patients receiving 
ELZONRISTM at a dose of 12 [micro]g/kg/day, the overall 
response rate was 90 percent, 72 percent (21/29) achieved a complete 
response plus a complete clinical response, and 45 percent (13/29) 
bridged to SCT. Survival rates at 18 and 24 months were 59 percent and 
52 percent, respectively. Among the 15 previously-treated patients, the 
overall response rate was 67 percent, and the median overall survival 
was 8.5 months. The study concluded that in adult patients with 
untreated or relapsed BPDCN, the use of ELZONRISTM led to 
clinical responses, though serious adverse events were common.\104\
---------------------------------------------------------------------------

    \104\ Pemmaraju, N., et al., ``Tagraxofusp in Blastic 
Plasmacytoid Dendritic-Cell Neoplasm.'' N Engl J Med. 2019, doi: 
10.1056/NEJMoa1815105.
---------------------------------------------------------------------------

    With respect to the concern that we were 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, the applicant stated that the 
2013 Pagano et al. study was a multi-center retrospective study that 
evaluated 43 treatment-na[iuml]ve BPDCN patients from 2005-2011 who 
received traditional chemotherapy. The applicant noted that the results 
included 41 percent of patients achieving a CR; a median overall 
survival of 8.7 months, and 14 percent of patients bridged to receive a 
SCT.\105\ In contrast, the ELZONRISTM clinical trial 
consisted of a mix of patients (N=47), of which 32 were receiving 
ELZONRISTM as first-line treatment. The applicant stated 
that among the 29 treatment-naive patients who received ELZONRIS at a 
dose of 12 mcg/kg, 72 percent of patients (21/29) achieved a CR; 
survival rates at 18 and 24 months were 59 percent and 52 percent, 
respectively; and 45 percent of patients (13/29) bridged to receive a 
SCT.\106\
---------------------------------------------------------------------------

    \105\ 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.
    \106\ Pemmaraju, N., et al., ``Tagraxofusp in Blastic 
Plasmacytoid Dendritic-Cell Neoplasm.'' N Engl J Med. 2019, doi: 
10.1056/NEJMoa1815105.
---------------------------------------------------------------------------

    With respect to the concern that the small number of patients in 
the clinical trial 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, the applicant stated that BPDCN is a very rare and highly 
aggressive hematologic malignancy, with an estimated incidence of 0.41/
1,000,000 patients age-adjusted to the 2000 US standard population, 
corresponding to less than 100 new cases per year. The applicant stated 
that the ELZONRISTM BPDCN Clinical Trial was the first study 
prospectively designed to assess the safety and efficacy of a therapy 
in patients with BPDCN, including a pre-defined cohort for confirmation 
of

[[Page 42237]]

efficacy. The applicant stated that to date, it is considered the 
largest prospective study of patients with BPDCN ever conducted (N=47); 
a cohort that is sizeable and adequately represents the `real-world' 
population in terms of demographics and baseline characteristics. The 
applicant stated that as such, this study, for the first time, provided 
prospectively acquired data for any therapy in this patient population 
and are therefore considered to be more robust and reliable than 
previously reported retrospective data. The applicant stated further 
that in the absence of available therapies for patients with BPDCN, 
empirical chemotherapies have been employed in the past for both 
treatment-na[iuml]ve and previously treated BPDCN, and the published 
literature regarding BPDCN treatment consists primarily of case reports 
and retrospective data reviews with limited published data from 
prospective clinical studies. The applicant stated that the accuracy 
and ability to interpret the response rates reported in the literature 
is limited, given the general lack of well-defined response criteria, 
especially related to measurement of the extent of cutaneous disease 
and other extramedullary sites of disease. As such, the applicant 
stated that published response rates should be viewed with caution and 
may represent artificially high response rates in some instances.
    With respect to the concern that there may not be enough 
information on the efficacy of ELZONRISTM to determine 
substantial clinical improvement at this time given that the clinical 
trial is ongoing and the final outcomes are not available, the 
applicant stated that FDA approval was based on the efficacy and safety 
results from the ELZONRISTM BPDCN Clinical Trial in patients 
with treatment-naive or previously treated BPDCN. The applicant 
explained that the clinical trial was a multi-stage study, with each 
study stage featuring its own objectives and design elements. The 
applicant stated that Stage 1 (dose escalation), Stage 2 (expansion), 
and Stage 3 (pivotal, confirmatory for efficacy) are complete and the 
results were published in the NEJM on April 25th, 2019. The applicant 
stated that patients were also enrolled in an additional cohort (Stage 
4) to enable ongoing access to ELZONRISTM in a clinical 
study.
    With respect to the concern that the applicant's December 2018 New 
Technology Town Hall meeting presentation included information that 
differs slightly from the application materials, and we were not clear 
whether the study results submitted with the application reflect the 
most current information available, the applicant stated that the most 
current ELZONRISTM data was reported by Pemmaraju and 
colleagues and published in the April 25th, 2019 issue of the 
NEJM,\107\ and the applicant submitted a copy of the article as part of 
its comment.
---------------------------------------------------------------------------

    \107\ Ibid.
---------------------------------------------------------------------------

    Response: We appreciate the additional information and analysis 
provided by the applicant and the applicant's input in response to our 
concerns regarding substantial clinical improvement. After reviewing 
the information submitted by the applicant addressing our concerns 
raised in the proposed rule, we agree with the applicant that 
ELZONRISTM represents a substantial clinical improvement 
over existing technologies because, based on the information provided 
by the applicant, the technology offers a treatment option for a 
patient population unresponsive to, or ineligible for, currently 
available treatments and substantially improves response rates and 
clinical outcomes for patients with BPDCN.
    After consideration of the public comments we received, we have 
determined that ELZONRISTM meets all of the criteria for 
approval for new technology add-on payments. Therefore, we are 
approving new technology add-on payments for ELZONRISTM for 
FY 2020. Cases involving the use of ELZONRISTM that are 
eligible for new technology add-on payments will be identified by ICD-
10-PCS procedure codes XW033Q5 and XW043Q5.
    In its application, the applicant stated that ELZONRISTM 
is supplied as a non-preserved, sterile, single-use liquid dosage in 2 
mL glass vials containing 1 mL of solution at a concentration of 1 mg/
mL (1 mg/vial). It is administered by intravenous infusion at 
12[micro]g/kg/day over 15 minutes once daily on days 1-5 of a 21 day 
cycle. The dosing period may be extended for dose delays up to day 10 
of the cycle. The applicant stated that the first administration cycle 
should occur in the inpatient setting; subsequent cycles may be 
administered in the inpatient or appropriate outpatient setting. The 
applicant stated that in clinical studies, roughly 70 percent of 
treatment-naive patients received 2 vials per dose (the remaining 
patients received 1 vial per dose). Relapsed/refractory patients were 
more likely to have 1 vial per dose (70 percent vs. 30 percent). In 
all, about 70 percent of patients are treatment naive, and 30 percent 
are relapsed/refractory. Using this information, the applicant 
calculated that the average inpatient hospitalization would require 7.9 
vials. According to the applicant, the WAC per vial is $24,430. 
Therefore, the average total cost of ELZONRISTM per patient 
is $192,997. Under Sec.  412.88(a)(2) (revised as discussed in this 
final rule), we limit new technology add-on payments to the lesser of 
65 percent of the costs of the new medical service or technology, or 65 
percent of the amount by which the costs of the case exceed the MS-DRG 
payment. As a result, the maximum new technology add-on payment for a 
case involving the use of ELZONRISTM is $125,448.05 for FY 
2020. (As discussed in section II.H.9. of the preamble of this final 
rule, we are revising the maximum new technology add-on payment to 65 
percent, or 75 percent for certain antimicrobial products, of the 
average cost of the technology.)
f. BalversaTM (Erdafitinib)
    Johnson & Johnson Health Care Systems, Inc. (on behalf of Janssen 
Oncology, Inc.) submitted an application for new technology add-on 
payments for BalversaTM for FY 2020. BalversaTM 
is indicated for 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, BalversaTM 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. 
BalversaTM is a pan-fibroblast FGFR inhibitor with potential 
antineoplastic activity. Upon oral administration, 
BalversaTM 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,

[[Page 42238]]

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).\108\ 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.
---------------------------------------------------------------------------

    \108\ 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 believed to have immunologically ``cold tumors'' that are less 
likely to benefit from PD-1 blockade therapy.
    The applicant noted that BalversaTM 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. 
BalversaTM received accelerated FDA approval on April 12, 
2019. In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19322), we 
noted that the applicant 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 BalversaTM. BalversaTM was 
granted approval for the ICD-10-PCS procedure code XW0DXL5 
(Introduction of Erdafitinib Antineoplastic into Mouth and Pharynx, 
External Approach, New Technology Group 5), with an effective date of 
October 1, 2019.
    As previously discussed, 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 BalversaTM is not substantially 
similar to any existing treatment options because its inhibitory 
mechanism of action is novel. Specifically, the applicant stated that 
BalversaTM is a pan-fibroblast FGFR inhibitor with potential 
antineoplastic activity. Upon oral administration, 
BalversaTM 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 
BalversaTM 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, BalversaTM 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 
BalversaTM are likely to be assigned to a wide variety of 
MS-DRGs because patients who may receive treatment involving 
BalversaTM 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 BalversaTM 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 BalversaTM 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 
BalversaTM is specific to a subset of patients with certain 
FGFR-genetic alterations. Therefore, the applicant believes that 
BalversaTM treats a different patient population than 
currently available treatments.
    We invited public comments on whether BalversaTM is 
substantially similar to any existing technology and whether it meets 
the newness criterion.
    Comment: The applicant noted that CMS did not object to the 
assertion that BalversaTM meets the newness criterion 
because BalversaTM is not substantially similar to existing 
technologies and because it is the first drug with its mechanism of 
action approved by the FDA.
    Response: We agree with the applicant that BalversaTM 
meets the newness criterion. We agree that BalversaTM is not 
substantially similar to existing treatment options because it has a 
unique mechanism of action. We consider April 12, 2019 as the beginning 
of the newness period for BalversaTM.
    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 
BalversaTM. 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 BalversaTM, it is 
unlikely that the administration of BalversaTM would be 
initiated during an inpatient hospitalization. In addition, the 
applicant assumed that most hospitals would not utilize 
BalversaTM 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 
BalversaTM and calculated the drug's costs on a case-by-case 
basis, multiplying the length-of-stay times the cost of the drug.

[[Page 42239]]

    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 this 
table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.144

    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 this table to identify a combination of applicable 
codes.
[GRAPHIC] [TIFF OMITTED] TR16AU19.145

    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 this table.

[[Page 42240]]

[GRAPHIC] [TIFF OMITTED] TR16AU19.146

[GRAPHIC] [TIFF OMITTED] TR16AU19.147

    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 Balversa\TM\ 
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). (In the proposed rule, we noted 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 further noted 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 Balversa\TM\ would 
exceed the average case-weighted threshold amount.) The applicant then 
added the charges for the cost of Balversa\TM\. To determine the 
charges for the cost of Balversa\TM\, 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 Balversa\TM\ meets the cost criterion because the 
final inflated average case-weighted standardized charge per case 
exceeds the average case-weighted threshold amount. We invited public 
comments on whether Balversa\TM\ meets the cost criterion.
    Comment: The applicant submitted a comment stating that CMS did not 
object to its assertion that BalversaTM meets the cost 
criterion. The applicant also submitted an updated analysis. The 
applicant stated that in the analysis presented to CMS for the proposed 
rule, the average case-weighted threshold amount was $62,435 and the 
final inflated average case-weighted standardized charge per case was 
$111,713. After BalversaTM received FDA approval, the 
analysis was updated with charges added to reflect the wholesale 
acquisition cost for BalversaTM, resulting in a final 
inflated average case-weighted standardized charge per case $109,211. 
The applicant noted that this remains above the case-weighted threshold 
amount of $62,435 and that BalversaTM therefore continues to 
meet the cost criterion.
    Response: We appreciate the additional information provided by the 
applicant regarding whether BalversaTM meets the cost 
criterion. We agree that BalversaTM meets the cost 
criterion.
    The applicant asserted that BalversaTM represents a 
substantial clinical improvement over existing technologies because it 
offers a

[[Page 42241]]

treatment option for a patient population unresponsive to or ineligible 
for currently available treatments. The applicant stated that 
BalversaTM 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 BalversaTM 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 
BalversaTM 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 BalversaTM in the target patient population for 
which the applicant asserts BalversaTM 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 BalversaTM ranging from 0.5 mg to 
12 mg, administered continuously daily, or oral doses of 
BalversaTM 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 
BalversaTM 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 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.109 110
---------------------------------------------------------------------------

    \109\ 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.
    \110\ 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.
    In the proposed rule, we stated that we have the following concerns 
with regard to whether the technology meets the substantial clinical 
improvement criterion. First, we stated that the applicant did not 
provide substantial data comparing BalversaTM 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 stated we have concerns that we may not have enough 
information to determine if BalversaTM represents a 
substantial clinical improvement over existing technologies.
    We invited public comments on whether BalversaTM meets 
the substantial clinical improvement criterion.
    Comment: The applicant submitted a comment in response to CMS' 
concerns about the limited nature of available data. The applicant 
referenced the Phase II study (n=87) previously detailed in the 
proposed rule. The applicant stated that an objective response rate 
(ORR) of 32.2 percent (95 percent confidence interval [CI]: 22.4-42.0) 
was observed. The applicant also noted that among the majority of 
patients (n=64) enrolled with FGFR 3 point mutations, the ORR was 40.6 
percent (95 percent CI: 28.6-52.7).
    In response to CMS' concern about the lack of comparison of 
BalversaTM to existing therapies, the applicant stated that 
in the absence of head-to-head data, effectiveness comparisons can be 
made based on approved therapies in metastatic urothelial carcinoma for 
which BalversaTM is approved. Per the applicant, FDA-
approved systemic therapies for locally advanced or mUC following 
platinum-based chemotherapy include KEYTRUDA[supreg] (pembrolizumab), 
TECENTRIQ[supreg] (atezolizumab), BAVENCIO[supreg] (avelumab), 
IMFINZI[supreg] (durvalumab), and OPDIVO[supreg] (nivolumab). The 
applicant noted that of the five approved checkpoint inhibitors, 
pembrolizumab observed the highest ORR of 21 percent in their 
registration trial.\111\ Furthermore, the applicant noted that in the 
United States, docetaxel is an acceptable systemic chemotherapy 
following progression after platinum-based chemotherapy. The applicant 
stated that although docetaxel is not approved for the treatment of mUC 
in the US, a Phase 2 study conducted in 30 patients demonstrated a 
partial response in 4 (13.3 percent) patients.\112\
---------------------------------------------------------------------------

    \111\ KEYTRUDA[supreg] (pembrolizumab injection) [package 
insert]. Whitehouse Station, NJ: Merck Sharp & Dohme Corp.; April 
2019.
    \112\ McCaffrey JA, Hilton S, Mazumdar M, et al. Phase 2 trial 
of docetaxel in patients with advanced or metastatic transitional-
cell carcinoma. J Clin Oncol. 1997;15(5):1853-1857.
---------------------------------------------------------------------------

    Response: We appreciate the additional information and analysis 
provided by the applicant in response to our concerns regarding 
substantial clinical improvement, including the additional information 
on data trends supporting an improved ORR for BalversaTM 
when compared to other FDA approved medications. We note that in the 
cited study regarding the ORR for pembrolizumab, ORRs of 33 percent and 
21 percent were achieved in two separate efficacy randomized trials 
with sample sizes of 834 and 540 respectively.\113\ These are 
independent

[[Page 42242]]

studies with varying sample and study characteristics and lacking 
unifying statistical testing. However, in light of the severity of the 
disease and patient population with limited treatment options, and the 
results provided by the applicant from its Phase II study, which 
featured an objective response rate of 40.4 percent, a disease control 
of 79.8 percent, and a median progression-free survival of 5.5 months, 
we agree with the applicant that Balversa\TM\ meets the substantial 
clinical improvement criterion.
---------------------------------------------------------------------------

    \113\ KEYTRUDA[supreg] (pembrolizumab injection) [package 
insert]. Whitehouse Station, NJ: Merck Sharp & Dohme Corp.; April 
2019.
---------------------------------------------------------------------------

    After consideration of the public comment we received, we have 
determined that BalversaTM meets all of the criteria for 
approval of new technology add-on payments. Therefore, we are approving 
new technology add-on payments for BalversaTM for FY 2020. 
Cases involving BalversaTM that are eligible for new 
technology add-on payments will be identified by ICD-10-PCS procedure 
code XW0DXL5. In its application, the applicant stated that 
BalversaTM will be supplied as 3 mg, 4 mg and 5 mg tablets 
with a recommended starting dose of 8 mg daily. According to the 
applicant, the WAC for one dose of BalversaTM is $613.20 per 
day for an average duration of 8.9 days. Therefore, the total cost of 
BalversaTM per patient is $5,481.89. Under Sec.  
412.88(a)(2) (revised as discussed in this final rule), we limit new 
technology add-on payments to the lesser of 65 percent of the costs of 
the new medical service or technology, or 65 percent of the amount by 
which the costs of the case exceed the MS-DRG payment. As a result, the 
maximum new technology add-on payment for a case involving the use of 
BalversaTM is $3,563.23 for FY 2020.
g. 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.\114\ 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.\115\ 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).\116\ The U.S. 
incidence of nmCRPC is estimated to be 50,000 to 60,000 cases per 
year.\117\
---------------------------------------------------------------------------

    \114\ American Cancer Society. https://www.cancer.org/research/cancer-facts-statistics/all-cancer-facts-figures/cancer-facts-figures-2019.html
    \115\ Dai, C., Heemers, H., Sharifi, N., ``Androgen signaling in 
prostate cancer,'' Cold Spring Harb Perspect Med, 2017, vol. 7(9), 
pp. a030452.
    \116\ 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.
    \117\ 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. In the FY 2020 
IPPS/LTCH PPS proposed rule (84 FR 19325), we noted that the applicant 
submitted a request for approval for a unique ICD-10-PCS code for the 
administration of ERLEADATM beginning in FY 2020. Approval 
was granted for the following procedure code effective October 1, 2019: 
XW0DXJ5 (Introduction of Apalutamide Antineoplastic into Mouth and 
Pharynx, External Approach, New Technology Group 5).
    As previously discussed, 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.\118\ 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.
---------------------------------------------------------------------------

    \118\ 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 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

[[Page 42243]]

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.119 120 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.
---------------------------------------------------------------------------

    \119\ 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.
    \120\ 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 noted in the proposed rule and previously summarized, 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 invited public comments on whether 
ERLEADATM meets the newness criterion.
    Comment: The applicant commented that CMS did not express concern 
about the newness criterion, and reiterated that ERLEADATM 
is not substantially similar to existing technologies and qualifies as 
new because it was the first drug with its mechanism of action approved 
by the FDA to treat patients with nmCRPC.
    Response: We agree that ERLEADATM is not substantially 
similar to existing technologies and that it meets the newness 
criterion because it was the first drug with its mechanism of action 
approved by the FDA to treat patients with nmCRPC. We consider February 
14, 2018 as the beginning of the newness period for 
ERLEADATM.
    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 meoplasm 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 these two code combinations. 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. In the proposed rule, we 
noted 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).
    In the proposed rule, we noted that the applicant used the proposed 
rule values to inflate the previously discussed standardized charges. 
However, we further noted 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

[[Page 42244]]

invited public comments on whether ERLEADATM meets the cost 
criterion.
    Comment: The applicant commented that the average case-weighted 
standardized charge per case was above the average case-weighted 
threshold amount in both the initial and second analysis.
    Response: We agree that 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 randomized Phase III 
SPARTAN trial,\121\ including significant improvement in metastasis-
free survival (MFS).
---------------------------------------------------------------------------

    \121\ 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 \122\ 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.
---------------------------------------------------------------------------

    \122\ 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,

[[Page 42245]]

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 initiation of the 
use of ERLEADATM.\123\ 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.
---------------------------------------------------------------------------

    \123\ 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.
    In the proposed rule, we stated that we had the following concerns 
regarding the applicant's assertions of substantial clinical 
improvement:
     Regarding the SPARTAN trial design, we stated we were 
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,\124\ 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 stated that we were 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.\125\ Additionally, we noted 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.
---------------------------------------------------------------------------

    \124\ 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), Available at: www.cdc.gov/cancer/dataviz, June 2018.
    \125\ 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. In the proposed rule, we 
welcomed 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 noted 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. In the proposed rule, we stated that 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 stated in the proposed rule that we had 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 noted 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.\126\ 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

[[Page 42246]]

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.\127\ 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)).
---------------------------------------------------------------------------

    \126\ 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
    \127\ 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 invited public comments on whether ERLEADATM meets 
the substantial clinical improvement criterion for patients who have 
been diagnosed with nmCRPC.
    Comment: The applicant submitted comments in response to concerns 
about the applicability of the data from the SPARTAN study to the US 
population, including African-American patients. The applicant stated 
that ERLEADATM treatment benefit was evaluated by region 
(North America, Europe, Asia-Pacific), and the treatment effect showing 
benefit from ERLEADATM in each region was consistent with 
the overall population. Also, the applicant pointed to the additional 
data summarized in the proposed rule (84 FR 19328) supplied in response 
to this concern, and reiterated that analyses by race also indicate 
that the SPARTAN study results are generalizable to the US patient 
population with nmCRPC, including African-Americans.
    The applicant also responded to our request for additional 
explanation of how those that withdrew were considered in the analysis 
and the potential impact of withdrawals on the study results. According 
to the applicant, the small proportion of subjects who withdrew consent 
for the study are not expected to affect the analysis' conclusions; all 
subjects randomized to treatment were included in the Intention-to-
Treat analysis for efficacy, including subjects who withdrew consent. 
The applicant stated that only 1.7 percent (n = 14) of subjects in the 
ERLEADATM group and 2.7 percent (n = 11) of subjects in the 
placebo group were censored due to withdrawal of consent, and that 
small proportion is not expected to impact the conclusion of the MFS 
analysis.
    Finally, in response to our concern about the SPARTAN study primary 
endpoint, MFS, the applicant submitted information to demonstrate that 
MFS is accepted as a study endpoint by the FDA and the oncologic 
community. The applicant described draft guidance from the FDA \128\ as 
stating that the prolonged disease course and assessment period for 
patients with nmCRPC may make the use of overall survival (OS) 
impractical as a primary endpoint to support approval of treatments, 
and that endpoints that can be measured earlier in the course of 
disease, including MFS, are useful and clinically relevant assessments.
---------------------------------------------------------------------------

    \128\ Center for Drug Evaluation and Research (CDER) & Center 
for Biologics Evaluation and Research (CBER). Nonmetastatic, 
Castration-Resistant Prostate Cancer: Considerations for Metastasis-
Free Survival Endpoint in Clinical Trials Guidance for Industry 
DRAFT GUIDANCE; 2018. https://www.fda.gov/regulatory-information/search-fda-guidancedocuments/nonmetastatic-castration-resistant-prostate-cancer-considerations-metastasis-free-survival-endpoint. 
Accessed June 1, 2019.
---------------------------------------------------------------------------

    Additionally, the applicant commented further on the clinical 
relevance of MFS and the correlation of metastasis with morbidity and 
the need for additional medical interventions. The applicant discussed 
the International Clinical Endpoints for Cancer of the Prostate 
(ICECaP) Working Group's review of 19 randomized controlled trials 
evaluating 21 study units in 12,712 patients with localized prostate 
cancer, in which 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]. At the trial level, R 2 was 0.83 (95 percent CI: 0.71-0.88) from 
weighted linear regression of 8-year OS rates vs 5-year MFS rates. The 
applicant asserted that the treatment effect (measured by log HR) for 
MFS and OS was well correlated (R2, 0.92 [95 percent CI: 0.81-
0.95]).\129\ The applicant also referred to the study of an electronic 
health record database in patients with nmCRPC in which MFS 
independently predicted mortality risk: 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.\130\ The applicant also stated 
that the correlational analysis between MFS and OS in patients with 
nmCRPC included in the SPARTAN study showed that patients who developed 
metastases at 6, 9, and 12 months had significantly shorter median OS 
compared with those patients without metastasis. Finally, the applicant 
commented that the clinical benefit of MFS was further supported by an 
analysis of the SPARTAN study performed after one year of additional 
follow up, which assessed the time from randomization to the start of 
the next subsequent therapy after discontinuation of the study 
medication, known as second progression free survival (PFS2). According 
to the applicant, that analysis supported treating patients with nmCRPC 
with ERLEADATM provides a significantly longer response than 
ADT alone followed by a second therapy and support treatment of these 
patients with ERLEADATM.
---------------------------------------------------------------------------

    \129\ Xie W., Regan M.M., Buyse M., et al. Metastasis-free 
survival is a strong surrogate of overall survival in localized 
prostate cancer. J Clin Oncol. 2017;35(27):3097-3104.
    \130\ Li S., Ding Z., Lin J.H., et al. Association of prostate-
specific antigen (PSA) trajectories with risk for metastasis and 
mortality in non- metastatic castration-resistant prostate cancer 
(nmCRPC). Abstract presented at: 2018 Genitorurinary Cancers 
Symposium; February 8-10, 2018; San Francisco, CA.
---------------------------------------------------------------------------

    Response: We appreciate the additional information and analysis 
provided by the applicant in response to our concerns regarding 
substantial clinical improvement. After reviewing the information 
submitted by the applicant addressing our concerns raised in the 
proposed rule, we agree that ERLEADATM represents a 
substantial clinical improvement because it significantly delays 
metastasis in patients with nmCRPC.
    After consideration of the public comment we received, we have 
determined that ERLEADATM meets all of the criteria for 
approval for new technology add-on payments. Therefore, we are 
approving new technology add-on payments for ERLEADATM for 
FY 2020. Cases involving the use of ERLEADATM that are 
eligible for new technology add-on payments will be identified by ICD-
10-PCS procedure code XW0DXJ5. In its application, the applicant 
estimated that the average Medicare beneficiary would require a dosage 
of 4 tablets per day. The applicant explained that the WAC is $10,920 
for a thirty day supply, or $91.00 per tablet. Typical dosage for 
ERLEADATM is 4 tablets per day, resulting in a daily cost of 
$364. Because the drug is administered daily, the cost to the hospital 
would depend on the patient's length of stay. The applicant's MedPAR 
analysis determined an average length of stay of approximately 7.854 
days. Multiplying the length of stay of 7.854 by the daily cost of $364 
resulted in an average cost per patient of $2,858.84. Under Sec.  
412.88(a)(2) (revised as discussed in this final rule), we limit new 
technology add-on payments to the lesser of 65 percent of the costs of 
the new medical service or technology, or 65 percent of

[[Page 42247]]

the amount by which the costs of the case exceed the MS-DRG payment. As 
a result, the maximum new technology add-on payment for a case 
involving the use of ERLEADATM is $1,858.25 for FY 2020.
h. 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.\131\ Although currently available anti-
depressants are effective for many of these patients, approximately 
one-third do not respond to treatment.\132\ 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.133 134 135
---------------------------------------------------------------------------

    \131\ World Health Organization. (2018, March). Depression. 
Available at: http://www.who.int/mediacentre/factsheets/fs369/en/.
    \132\ 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.
    \133\ 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.
    \134\ 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.
    \135\ 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.\136\
---------------------------------------------------------------------------

    \136\ 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 
the patient's self-administration of SPRAVATO under healthcare 
supervision 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 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 Nasal Spray was 
approved by the FDA with an effective date of March 5, 2019. In the FY 
2020 IPPS/LTCH PPS proposed rule (84 FR 19329), we noted that the 
applicant had submitted a request to the ICD-10 Coordination and 
Maintenance Committee for approval for a unique ICD-10-PCS procedure 
code to specifically identify cases involving the use of SPRAVATO, 
beginning in FY 2020. As of the time of the development of this final 
rule, a unique ICD-10-PCS procedure code to specifically identify cases 
involving the use of SPRAVATO has not yet been finalized in response to 
the applicant's request. Therefore, cases reporting SPRAVATO will be 
identified by ICD-10-PCS procedure code 3E097GC (Introduction of Other 
Therapeutic Substance into Nose, Via Natural or Artificial Opening) for 
FY 2020.
    As previously discussed, 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 is the 
first new approach in 30 years for the treatment of major depressive 
disorder, including treatment-resistant depression.137 138 
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.\139\
---------------------------------------------------------------------------

    \137\ 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.
    \138\ Dubovsky, S., ``What Is New about New Anti-depressants?,'' 
Psychotherapy and Psychosomatics, 2018, vol. 87(3), pp. 129-139, 
doi:10.1159/000488945.
    \139\ 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 Nasal Spray would 
be assigned to the same MS-DRGs as patients who receive treatment 
involving currently available anti-depressants (AD).

[[Page 42248]]

    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 address 
the application of this criterion to SPRAVATO.
    We invited public comments on whether SPRAVATO is substantially 
similar to any existing technologies and whether it meets the newness 
criterion.
    Comment: The applicant submitted a public comment in response to 
the proposed rule. The applicant stated that SPRAVATO is not 
substantially similar to existing technologies and qualifies as new 
because it is the first new antidepressant mechanism of action in 
decades to treat Treatment Resistant Depression 
(TRD).140 141 The applicant stated that unlike existing 
pharmacotherapies for depression, the primary antidepressant activity 
of SPRAVATO is not believed to directly involve inhibition of 
serotonin, norepinephrine, or dopamine reuptake.142 143 144
---------------------------------------------------------------------------

    \140\ Duman R.S. Ketamine and rapid-acting antidepressants: A 
new era in the battle against depression and suicide. F1000Research. 
2018;7:F1000 Faculty Rev-659. doi:10.12688/f1000research.14344.1.
    \141\ Dubovsky S.L. What Is New about New Antidepressants? 
Psychotherapy and Psychosomatics. 2018;87(3):129-139. doi:10.1159/
000488945.
    \142\ Duman R.S., Li N., Liu R.J., et al. Signaling pathways 
underlying the rapid antidepressant actions of ketamine. 
Neuropharmacology. 2012;62(1):35-41.
    \143\ Duman R.S., Aghajanian G.K., Sanacora G., et al. Synaptic 
plasticity and depression: New insights from stress and rapid-acting 
antidepressants. Nat Med. 2016;22(3):238-249.
    \144\ Sanacora G., Zarate C.A., Krystal J.H., et al. Targeting 
the glutaminergic system to develop novel, improved therapeutics for 
mood disorders. Nat Rev Drug Discov. 2008;7(5):426-437.
---------------------------------------------------------------------------

    With regard to SPRAVATO treating the same or a similar disease or 
the same or similar patient population as existing technologies, the 
applicant reiterated that SPRAVATO treats, in conjunction with an oral 
antidepressant, TRD. According to the applicant, even with currently 
available antidepressant treatments, an estimated one-third of people 
in the U.S. who suffer with MDD fail to respond to treatment.\145\ The 
applicant stated that TRD has no universally accepted definition; 
however, one definition consists of those patients with major 
depressive disorder (MDD) who have not responded to at least two 
different antidepressants of adequate dose and duration in the current 
depressive episode.\146\
---------------------------------------------------------------------------

    \145\ Rush A.J., Trivedi M.H., Wisniewski S.R., et al. Acute and 
longer-term outcomes in depressed outpatients requiring one or 
several treatment steps: A STAR*D report. Am J Psychiatry. 
2006;163(11):1905-1917.
    \146\ AHRQ 2018
---------------------------------------------------------------------------

    Response: We appreciate the additional information provided by the 
applicant regarding whether SPRAVATO meets the newness criterion. After 
consideration of the public comments we received and information 
submitted by the applicant in its application, we believe that SPRAVATO 
uses a unique mechanism of action to achieve a therapeutic outcome 
because it works differently than currently available therapies, 
through glutamate receptor modulation rather than the inhibition of 
serotonin, norepinephrine, or dopamine reuptake. Therefore, we believe 
SPRAVATO is not substantially similar to existing treatment options and 
meets the newness criterion. We consider the beginning of the newness 
period to commence when SPRAVATO was approved by the FDA on March 5, 
2019.
    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. The applicant also 
assumed that hospitals would not allow administration of SPRAVATO 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 as previously 
described, 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 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.\147 148\
---------------------------------------------------------------------------

    \147\ 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.
    \148\ 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 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

[[Page 42249]]

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 previous analysis, in the FY 2020 IPPS/LTCH PPS 
proposed rule we stated that we were 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, we stated 
that it is unclear which cases representing patients should be removed. 
We further stated that 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. We noted in the proposed rule that, 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 invited public comments on this issue and whether the 
SPRAVATO Nasal Spray meets the cost criterion.
    Comment: The applicant submitted a comment in regard to our 
concerns on the cost criterion. The applicant reiterated that there are 
no ICD-10 codes with which to identify patients with TRD and about \1/
3\ of people with MDD have TRD. The applicant then stated that in its 
original cost analysis they found cases with diagnosis codes signifying 
MDD and randomly selected \1/3\ of those cases for the cost analysis. 
In response to CMS' concerns, the applicant updated the analysis 
selecting the \1/3\ of cases with the highest charges. This choice was 
made in response to a study comparing Medicare beneficiaries with TRD 
and Medicare beneficiaries without TRD which found that the cost of the 
inpatient hospitalizations for the TRD cohort were clearly higher 
(average $9,947 vs. $5,426).\149\ With this new sample selection the 
applicant performed the cost analysis using the inverse of the FY 2019 
pharmacy national average CCR of 0.191 to determine the charges for 
SPRAVATO, and a 2-year inflation factor of 1.08986 from the FY 2019 
IPPS final rule correction notice to inflate the charges from FY 2017 
to FY 2019. The applicant stated that with the new selection 
methodology, SPRAVATO meets the cost criterion, with an inflated 
average case-weighted standardized charge per case of $165,669 that 
exceeds the average case-weighted threshold amount of $74,682.
---------------------------------------------------------------------------

    \149\ Benson, C, Szukis, H. An Evaluation of Increased Clinical 
and Economic Burden Among Elderly Medicare-covered Beneficiaries 
With Treatment-Resistant Depression. Poster Presented at the Academy 
of Managed Care Pharmacy (AMCP) Annual Meeting; April 23-26, 2018; 
Boston, Massachusetts.
---------------------------------------------------------------------------

    Response: We appreciate the comment and additional information 
provided by the applicant. After consideration of the public comment we 
received, we agree that SPRAVATO meets the cost criterion.
    With respect to the substantial clinical improvement criterion, the 
applicant asserted that SPRAVATO 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.\150\ According to the 
applicant, in addition to SPRAVATO, 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.\151\ In 
support of its assertions of substantial clinical improvement, the 
applicant provided several studies regarding SPRAVATO.
---------------------------------------------------------------------------

    \150\ 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.
    \151\ 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.\152\ 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 
28 mg, 56 mg, or 84 mg twice weekly, respectively. During the second 
treatment period, 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 28 mg, 56 mg, or 84 mg twice weekly groups, 
respectively.
---------------------------------------------------------------------------

    \152\ 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, 11 patients receiving 56 mg of 
SPRAVATO, and 12 patients receiving 84 mg of SPRAVATO 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, 9 patients received 56 
mg of SPRAVATO, and 5 patients received 84 mg SPRAVATO 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.\153\
---------------------------------------------------------------------------

    \153\ 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.

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[[Page 42250]]

    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 treatment groups was -5.0 (2.99) for 
28 mg of SPRAVATO in dosage, -7.6 (2.91) for 56 mg of SPRAVATO in 
dosage, and -10.5 (2.79) for 84 mg of SPRAVATO 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 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-treated 
groups was -3.1 (2.99) from the placebo for 28 mg of SPRAVATO in 
dosage, -4.4 (3.06) from the placebo for 56 mg of SPRAVATO in dosage, 
and -6.9 (3.41) from the placebo for 84 mg of SPRAVATO in dosage. Only 
the 84 mg of SPRAVATO dosage difference from the mean was statistically 
significant (p<0.05). 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 treatment groups were 
superior to the placebo.
    When considering the safety profile of the use of SPRAVATO, 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.\154\
---------------------------------------------------------------------------

    \154\ 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.\155\ 
Patients were randomized (1:1:1) to receive SPRAVATO 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.
---------------------------------------------------------------------------

    \155\ 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 dosage group along with 114 to the 84 mg of SPRAVATO 
dosage group and 113 to the placebo group. The withdrawal rate was 3-
fold higher in the 84 mg of SPRAVATO dosage group (16.4 percent) than 
the 56 mg of SPRAVATO dosage group (5.1 percent) and the placebo group 
(5.3 percent). Eleven of the 19 84 mg of SPRAVATO dosage withdrawals 
withdrew after only receiving the first 56 mg SPRAVATO dose; the 
withdrawal rate was not a dose-related safety finding. Baseline 
statistics show few differences between groups: The 56 mg of SPRAVATO 
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 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 dosage group (202.8) and 84 mg of SPRAVATO 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 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 dosage group and -2.2 for the 84 mg of SPRAVATO 
dosage group), the 8th day (-3.0 for the 56 mg of SPRAVATO dosage group 
and -2.7 for the 84 mg of SPRAVATO dosage group), the 15th day (-3.8 
for the 56 mg of SPRAVATO dosage group and -3.6 for the 84 mg of 
SPRAVATO dosage group), the 22nd day (-5.0 for the 56 mg of SPRAVATO 
dosage group and -3.7 for the 84 mg of SPRAVATO dosage group), and the 
28th day (-4.0 for the 56 mg of SPRAVATO dosage group and -3.6 for the 
84 mg of SPRAVATO dosage group). In a graph provided by the applicant, 
the lines plus standard errors plotted for the 56 mg and 84 mg of 
SPRAVATO 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