[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Rules and Regulations]
[Pages 61142-61492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24138]



[[Page 61141]]

Vol. 84

Tuesday,

No. 218

November 12, 2019

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 405, 410, 412, et al.





Medicare Program: Changes to Hospital Outpatient Prospective Payment 
and Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs; Revisions of Organ Procurement Organizations Conditions of 
Coverage; Prior Authorization Process and Requirements for Certain 
Covered Outpatient Department Services; Potential Changes to the 
Laboratory Date of Service Policy; Changes to Grandfathered Children's 
Hospitals-Within-Hospitals; Notice of Closure of Two Teaching Hospitals 
and Opportunity To Apply for Available Slots; Final Rule

Federal Register / Vol. 84 , No. 218 / Tuesday, November 12, 2019 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 410, 412, 414, 416, 419, and 486

[CMS-1717-FC]
RIN 0938-AT74


Medicare Program: Changes to Hospital Outpatient Prospective 
Payment and Ambulatory Surgical Center Payment Systems and Quality 
Reporting Programs; Revisions of Organ Procurement Organizations 
Conditions of Coverage; Prior Authorization Process and Requirements 
for Certain Covered Outpatient Department Services; Potential Changes 
to the Laboratory Date of Service Policy; Changes to Grandfathered 
Children's Hospitals-Within-Hospitals; Notice of Closure of Two 
Teaching Hospitals and Opportunity To Apply for Available Slots

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period revises the Medicare 
hospital outpatient prospective payment system (OPPS) and the Medicare 
ambulatory surgical center (ASC) payment system for Calendar Year 2020 
based on our continuing experience with these systems. In this final 
rule with comment period, we describe the changes to the amounts and 
factors used to determine the payment rates for Medicare services paid 
under the OPPS and those paid under the ASC payment system. Also, this 
final rule with comment period updates and refines the requirements for 
the Hospital Outpatient Quality Reporting (OQR) Program and the ASC 
Quality Reporting (ASCQR) Program. In addition, this final rule with 
comment period establishes a process and requirements for prior 
authorization for certain covered outpatient department services; 
revise the conditions for coverage of organ procurement organizations; 
and revise the regulations to allow grandfathered children's hospitals-
within-hospitals to increase the number of beds without resulting in 
the loss of grandfathered status; and provides notice of the closure of 
two teaching hospitals and the opportunity to apply for available slots 
for purposes of indirect medical education (IME) and direct graduate 
medical education (DGME) payments.

DATES: 
    Effective date: This final rule is effective on January 1, 2020.
    Comment period: To be assured consideration, comments on the 
payment classifications assigned to the interim APC assignments and/or 
status indicators of new or replacement Level II HCPCS codes in this 
final rule with comment period must be received at one of the addresses 
provided in the ADDRESSES section no later than 5 p.m. EST on December 
2, 2019.

ADDRESSES: In commenting, please refer to file code CMS-1717-FC when 
commenting on the issues in this final rule with comment period. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may (and we encourage you to) submit 
electronic comments on this regulation to http://www.regulations.gov. 
Follow the instructions under the ``submit a comment'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1717-FC, P.O. Box 8013, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments via 
express or overnight mail to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-1717-FC, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, we refer readers to the 
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    2-Midnight Rule (Short Inpatient Hospital Stays), contact Lela 
Strong-Holloway via email [email protected] or at 410-786-3213.
    Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact 
the HOP Panel mailbox at [email protected].
    Ambulatory Surgical Center (ASC) Payment System, contact Scott 
Talaga via email [email protected] or at 410-786-4142 or Mitali 
Dayal via email [email protected] or at 410-786-4329.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Administration, Validation, and Reconsideration Issues, contact Anita 
Bhatia via email [email protected] or at 410-786-7236.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Measures, contact Nicole Hewitt via email [email protected] or 
at 410-786-7778.
    Blood and Blood Products, contact Josh McFeeters via email 
[email protected] or at 410-786-9732.
    Cancer Hospital Payments, contact Scott Talaga via email 
[email protected] or at 410-786-4142.
    CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck 
Braver via email [email protected] or at 410-786-6719.
    Control for Unnecessary Increases in Volume of Outpatient Services, 
contact Elise Barringer via email [email protected] or at 
410-786-9222.
    Composite APCs (Low Dose Brachytherapy and Multiple Imaging), 
contact Elise Barringer via email [email protected] or at 
410-786-9222.
    Comprehensive APCs (C-APCs), contact Lela Strong-Holloway via email 
[email protected] or at 410-786-3213, or Mitali Dayal via email 
at [email protected] or at 410-786-4329.
    CPT and Level II HCPCS Codes, contact Marjorie Baldo via email 
[email protected] or at 410-786-4617.
    Grandfathered Children's Hospitals-within-Hospitals, contact 
Michele Hudson via email [email protected] or 410-786-4487.
    Hospital Cost Reporting and Chargemaster Comment Solicitation, 
contact Dr. Terri Postma at 410-786-4169.
    Hospital Outpatient Quality Reporting (OQR) Program Administration, 
Validation, and Reconsideration Issues, contact Anita Bhatia via email 
[email protected] or at 410-786-7236.
    Hospital Outpatient Quality Reporting (OQR) Program Measures, 
contact Vinitha Meyyur via email [email protected] or at 410-
786-8819.
    Hospital Outpatient Visits (Emergency Department Visits and 
Critical Care Visits), contact Elise Barringer via email

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[email protected] or at 410-786-9222.
    Inpatient Only (IPO) Procedures List, contact Lela Strong-Holloway 
via email [email protected] or at 410-786-3213, or Au'Sha 
Washington via email at [email protected] or at 410-786-
3736.
    New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga 
via email [email protected] or at 410-786-4142.
    No Cost/Full Credit and Partial Credit Devices, contact Scott 
Talaga via email [email protected] or at 410-786-4142.
    Notice of Closure of Two Teaching Hospitals and Opportunity to 
Apply for Available Slots, contact Michele Hudson via email 
[email protected] or 410-786-4487.
    OPPS Brachytherapy, contact Scott Talaga via email 
[email protected] or at 410-786-4142.
    OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier 
Payments, and Wage Index), contact Erick Chuang via email 
[email protected] or at 410-786-1816, or Scott Talaga via email 
[email protected] or at 410-786-4142, or Josh McFeeters via 
email at [email protected] or at 410-786-9732.
    OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar 
Products, contact Josh McFeeters via email [email protected] 
or at 410-786-9732.
    OPPS New Technology Procedures/Services, contact the New Technology 
APC mailbox at [email protected].
    OPPS Packaged Items/Services, contact Lela Strong-Holloway via 
email [email protected] or at 410-786-3213, or Mitali Dayal via 
email at [email protected] or at 410-786-4329.
    OPPS Pass-Through Devices, contact the Device Pass-Through mailbox 
at [email protected].
    OPPS Status Indicators (SI) and Comment Indicators (CI), contact 
Marina Kushnirova via email [email protected] or at 410-
786-2682.
    Organ Procurement Organization (OPO) Conditions for Coverage 
(CfCs), contact Alpha-Banu Wilson via email at 
[email protected] or at 410-786-8687, or Diane Corning via 
email at [email protected] or at 410-786-8486.
    Partial Hospitalization Program (PHP) and Community Mental Health 
Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at 
[email protected].
    Prior Authorization Process and Requirements for Certain Hospital 
Outpatient Department Services, contact Thomas Kessler via email at 
[email protected] or at 410-786-1991.
    Rural Hospital Payments, contact Josh McFeeters via email at 
[email protected] or at 410-786-9732.
    Skin Substitutes, contact Josh McFeeters via email 
[email protected] or at 410-786-9732.
    Supervision of Outpatient Therapeutic Services in Hospitals and 
CAHs, contact Josh McFeeters via email [email protected] or 
at 410-786-9732.
    All Other Issues Related to Hospital Outpatient and Ambulatory 
Surgical Center Payments Not Previously Identified, contact Elise 
Barringer via email [email protected] or at 410-786-9222.

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

Addenda Available Only Through the Internet on the CMS Website

    In the past, a majority of the Addenda referred to in our OPPS/ASC 
proposed and final rules were published in the Federal Register as part 
of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC 
proposed rule, all of the Addenda no longer appear in the Federal 
Register as part of the annual OPPS/ASC proposed and final rules to 
decrease administrative burden and reduce costs associated with 
publishing lengthy tables. Instead, these Addenda are published and 
available only on the CMS website. The Addenda relating to the OPPS are 
available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating to the 
ASC payment system are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

Current Procedural Terminology (CPT) Copyright Notice

    Throughout this final rule with comment period, we use CPT codes 
and descriptions to refer to a variety of services. We note that CPT 
codes and descriptions are copyright 2018 American Medical Association. 
All Rights Reserved. CPT is a registered trademark of the American 
Medical Association (AMA). Applicable Federal Acquisition Regulations 
(FAR and Defense Federal Acquisition Regulations (DFAR) apply.

Table of Contents

I. Summary and Background
    A. Executive Summary of This Document
    B. Legislative and Regulatory Authority for the Hospital OPPS
    C. Excluded OPPS Services and Hospitals
    D. Prior Rulemaking
    E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel 
or the Panel)
    F. Public Comments Received in Response to the CY 2020 OPPS/ASC 
Proposed Rule
    G. Public Comments Received on the CY 2019 OPPS/ASC Final Rule 
With Comment Period
II. Updates Affecting OPPS Payments
    A. Recalibration of APC Relative Payment Weights
    B. Conversion Factor Update
    C. Wage Index Changes
    D. Statewide Average Default Cost-to-Charge Ratios (CCRs)
    E. Adjustment for Rural Sole Community Hospitals (SCHs) and 
Essential Access Community Hospitals (EACHs) Under Section 
1833(t)(13)(B) of the Act for CY 2020
    F. Payment Adjustment for Certain Cancer Hospitals for CY 2020
    G. Hospital Outpatient Outlier Payments
    H. Calculation of an Adjusted Medicare Payment From the National 
Unadjusted Medicare Payment
    I. Beneficiary Copayments
III. OPPS Ambulatory Payment Classification (APC) Group Policies
    A. OPPS Treatment of New and Revised HCPCS Codes
    B. OPPS Changes--Variations Within APCs
    C. New Technology APCs
    D. APC-Specific Policies
IV. OPPS Payment for Devices
    A. Pass-Through Payments for Devices
    B. Device-Intensive Procedures
V. OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. OPPS Transitional Pass-Through Payment for Additional Costs 
of Drugs, Biologicals, and Radiopharmaceuticals
    B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 
Without Pass-Through Payment Status
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, 
Biologicals, Radiopharmaceuticals, and Devices
    A. Background
    B. Estimate of Pass-Through Spending
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care 
Services

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VIII. Payment for Partial Hospitalization Services
    A. Background
    B. PHP APC Update for CY 2020
    C. Outlier Policy for CMHCs
    D. Update to PHP Allowable HCPCS Codes
IX. Procedures That Will Be Paid Only as Inpatient Procedures
    A. Background
    B. Changes to the Inpatient Only (IPO) List
X. Nonrecurring Policy Changes
    A. Changes in the Level of Supervision of Outpatient Therapeutic 
Services in Hospitals and Critical Access Hospitals (CAHs)
    B. Short Inpatient Hospital Stays
    C. Method To Control Unnecessary Increases in the Volume of 
Clinic Visit Services Furnished in Excepted Off-Campus Provider-
Based Departments (PBDs)
XI. CY 2020 OPPS Payment Status and Comment Indicators
    A. CY 2020 OPPS Payment Status Indicator Definitions
    B. CY 2020 Comment Indicator Definitions
XII. MedPAC Recommendations
    A. OPPS Payment Rates Update
    B. ASC Conversion Factor Update
    C. ASC Cost Data
XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System
    A. Background
    B. ASC Treatment of New and Revised Codes
    C. Update to the List of ASC Covered Surgical Procedures and 
Covered Ancillary Services
    D. Update and Payment for ASC Covered Surgical Procedures and 
Covered Ancillary Services
    E. New Technology Intraocular Lenses (NTIOLs)
    F. ASC Payment and Comment Indicators
    G. Calculation of the ASC Payment Rates and the ASC Conversion 
Factor
XIV. Requirements for the Hospital Outpatient Quality Reporting 
(OQR) Program
    A. Background
    B. Hospital OQR Program Quality Measures
    C. Administrative Requirements
    D. Form, Manner, and Timing of Data Submitted for the Hospital 
OQR Program
    E. Payment Reduction for Hospitals That Fail To Meet the 
Hospital OQR Program Requirements for the CY 2020 Payment 
Determination
XV. Requirements for the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    A. Background
    B. ASCQR Program Quality Measures
    C. Administrative Requirements
    D. Form, Manner, and Timing of Data Submitted for the ASCQR 
Program
    E. Payment Reduction for ASCs That Fail To Meet the ASCQR 
Program Requirements
XVI. Requirements for Hospitals To Make Public a List of Their 
Standard Charges and Request for Information (RFI): Quality 
Measurement Relating to Price Transparency for Improving Beneficiary 
Access to Provider and Supplier Charge Information
XVII. Organ Procurement Organizations (OPOs) Conditions for Coverage 
(CfCs): Revision of the Definition of ``Expected Donation Rate''
    A. Background
    B. Revision of the Definition of ``Expected Donation Rate''
    C. Request for Information Regarding Potential Changes to the 
Organ Procurement Organization and Transplant Center Regulations
XVIII. Clinical Laboratory Fee Schedule: Potential Revisions to the 
Laboratory Date of Service Policy
    A. Background on the Medicare Part B Laboratory Date of Service 
Policy
    B. Medicare DOS Policy and the ``14-Day Rule''
    C. Billing and Payment for Laboratory Services Under the OPPS
    D. ADLTs Under the New Private Payor Rate-Based CLFS
    E. Additional Laboratory DOS Policy Exception for the Hospital 
Outpatient Setting
    F. Potential Revisions to Laboratory DOS Policy and Request for 
Public Comments
XIX. Prior Authorization Process and Requirements for Certain 
Hospital Outpatient Department (OPD) Services
    A. Background
    B. Prior Authorization Process for Certain OPD Services
    C. List of Outpatient Department Services Requiring Prior 
Authorization
XX. Comments Received in Response to Comment Solicitation on Cost 
Reporting, Maintenance of Hospital Chargemasters, and Related 
Medicare Payment Issues
XXI. Changes to Requirements for Grandfathered Children's Hospitals-
Within-Hospitals (HwHs)
XXII. Notice of Closure of Two Teaching Hospitals and Opportunity To 
Apply for Available Slots
XXIII. Files Available to the Public via the Internet
XXIV. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. ICRs for the Hospital OQR Program
    C. ICRs for the ASCQR Program
    D. ICRs for Revision of the Definition of ``Expected Donation 
Rate'' for Organ Procurement Organizations
    E. ICR for Prior Authorization Process and Requirements for 
Certain Hospital Outpatient Department (OPD) Services
    F. Potential Revisions to Laboratory Date of Service (DOS) 
Policy
    G. Total Reduction in Burden Hours and in Costs
XXV. Response to Comments
XXVI. Economic Analyses
    A. Statement of Need
    B. Overall Impact for the Provisions of This Final Rule
    C. Detailed Economic Analyses
    D. Effects of Prior Authorization Process and Requirements for 
Certain Hospital Outpatient Department (OPD) Services
    E. Effects of Requirement Relating to Changes in the Definition 
of Expected Donation Rate for Organ Procurement Organizations
    F. Potential Revisions to the Laboratory Date of Service Policy
    G. Effect of Changes to Requirements for Grandfathered 
Children's Hospitals-Within-Hospitals (HwHs)
    H. Regulatory Review Costs
    I. Regulatory Flexibility Act (RFA) Analysis
    J. Unfunded Mandates Reform Act Analysis
    K. Reducing Regulation and Controlling Regulatory Costs
    L. Conclusion
XXVII. Federalism Analysis
Regulation Text

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
    In this final rule with comment period, we are updating the payment 
policies and payment rates for services furnished to Medicare 
beneficiaries in hospital outpatient departments (HOPDs) and ambulatory 
surgical centers (ASCs), beginning January 1, 2020. Section 1833(t) of 
the Social Security Act (the Act) requires us to annually review and 
update the payment rates for services payable under the Hospital 
Outpatient Prospective Payment System (OPPS). Specifically, section 
1833(t)(9)(A) of the Act requires the Secretary to review certain 
components of the OPPS not less often than annually, and to revise the 
groups, the relative payment weights, and the wage and other 
adjustments that take into account changes in medical practices, 
changes in technologies, and the addition of new services, new cost 
data, and other relevant information and factors. In addition, under 
section 1833(i) of the Act, we annually review and update the ASC 
payment rates. This final rule with comment period also includes 
additional policy changes made in accordance with our experience with 
the OPPS and the ASC payment system. We describe these and various 
other statutory authorities in the relevant sections of this final rule 
with comment period. In addition, this final rule with comment period 
updates and refines the requirements for the Hospital Outpatient 
Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) 
Program.
    In this final rule with comment period, we establish a process and 
requirements for prior authorization for certain covered outpatient 
department services; revise the conditions for coverage for organ 
procurement organizations; and revise the regulations to allow 
grandfathered children's hospitals-within-hospitals to increase

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the number of beds without resulting in the loss of grandfathered 
status.
2. Summary of the Major Provisions
     OPPS Update: For CY 2020, we are increasing the payment 
rates under the OPPS by an Outpatient Department (OPD) fee schedule 
increase factor of 2.6 percent. This increase factor is based on the 
final hospital inpatient market basket percentage increase of 3.0 
percent for inpatient services paid under the hospital inpatient 
prospective payment system (IPPS), minus the multifactor productivity 
(MFP) adjustment required by the Affordable Care Act of 0.4 percentage 
point. Based on this update, we estimate that total payments to OPPS 
providers (including beneficiary cost-sharing and estimated changes in 
enrollment, utilization, and case-mix) for calendar year (CY) 2020 will 
be approximately $79.0 billion, an increase of approximately $6.3 
billion compared to estimated CY 2019 OPPS payments.
    We are continuing to implement the statutory 2.0 percentage point 
reduction in payments for hospitals failing to meet the hospital 
outpatient quality reporting requirements, by applying a reporting 
factor of 0.981 to the OPPS payments and copayments for all applicable 
services.
     2-Midnight Rule (Short Inpatient Hospital Stays): For CY 
2020, we are establishing a 2-year exemption from Beneficiary and 
Family-Centered Care Quality Improvement Organizations (BFCC-QIOs) 
referrals to Recovery Audit Contractors (RACs) and RAC reviews for 
``patient status'' (that is, site-of-service) for procedures that are 
removed from the inpatient only (IPO) list under the OPPS beginning on 
January 1, 2020.
     Comprehensive APCs: For CY 2020, we are creating two new 
comprehensive APCs (C-APCs). These new C-APCs include the following: C-
APC 5182 (Level 2 Vascular Procedures) and C-APC 5461 (Level 1 
Neurostimulator and Related Procedures). This increases the total 
number of C-APCs to 67.
     Changes to the Inpatient Only (IPO) List: For CY 2020, we 
are removing Total Hip Arthroplasty, six spinal procedure codes, and 
five anesthesia codes from the inpatient only list.
     Method to Control Unnecessary Increases in the Volume of 
Clinic Visit Services Furnished in Excepted Off-Campus Provider-Based 
Departments (PBDs): For CY 2020, we are completing the phase-in of the 
reduction in payment for the clinic visit services described by HCPCS 
code G0463 furnished in expected off-campus provider based departments 
as a method to control unnecessary increases in the volume of this 
service. We acknowledge that the district court vacated the volume 
control policy for CY 2019 and we are working to ensure affected 2019 
claims for clinic visits are paid consistent with the court's order. We 
do not believe it is appropriate at this time to make a change to the 
second year of the two-year phase-in of the clinic visit policy. The 
government has appeal rights, and is still evaluating the rulings and 
considering, at the time of this writing, whether to appeal from the 
final judgment.
     Device Pass-Through Payment Applications: For CY 2020, we 
evaluated seven applications for device pass-through payments and based 
on public comments received, we are approving four of these 
applications for device pass-through payment status. Additionally, we 
are approving an additional application that was not discussed in the 
CY 2020 OPPS/ASC proposed rule, but has received a Breakthrough Devices 
designation from the Food and Drug Administration (FDA) and qualifies 
for the alternative pathway to the OPPS device pass-through substantial 
clinical improvement criterion.
     Changes to Substantial Clinical Improvement Criterion: For 
CY 2020, we are finalizing an alternative pathway to the substantial 
clinical improvement criterion for devices approved under the FDA 
Breakthrough Devices Program to qualify for device pass-through status 
beginning with determinations effective on or after January 1, 2020.
     Cancer Hospital Payment Adjustment: For CY 2020, we are 
continuing to provide additional payments to cancer hospitals so that a 
cancer hospital's payment-to-cost ratio (PCR) after the additional 
payments is equal to the weighted average PCR for the other OPPS 
hospitals using the most recently submitted or settled cost report 
data. However, section 16002(b) of the 21st Century Cures Act requires 
that this weighted average PCR be reduced by 1.0 percentage point. 
Based on the data and the required 1.0 percentage point reduction, we 
are providing that a target PCR of 0.89 will be used to determine the 
CY 2020 cancer hospital payment adjustment to be paid at cost report 
settlement. That is, the payment adjustments will be the additional 
payments needed to result in a PCR equal to 0.89 for each cancer 
hospital.
     Rural Adjustment: For 2020 and subsequent years, we are 
continuing the 7.1 percent adjustment to OPPS payments for certain 
rural SCHs, including essential access community hospitals (EACHs). We 
intend to continue the 7.1 percent adjustment for future years in the 
absence of data to suggest a different percentage adjustment should 
apply.
     340B-Acquired Drugs: We are continuing to pay ASP-22.5 
percent for 340B-acquired drugs including when furnished in nonexcepted 
off-campus PBDs paid under the PFS. In light of ongoing litigation, we 
also summarized comments received on a potential remedy for 2018 and 
2019. CMS announced in the Federal Register (84 FR 51590) its intent to 
conduct a 340B hospital survey to collect drug acquisition cost data 
for CY 2018 and 2019. Such survey data may be used in setting the 
Medicare payment amount for drugs acquired by 340B hospitals for cost 
years going forward, and also may be used to devise a remedy for prior 
years in the event of an adverse decision on appeal. In the event 340B 
hospital survey data are not used to devise a remedy, we intend to 
consider the suggestions commenters submitted in response to the 
comment solicitation in the proposed rule to propose a remedy in the CY 
2021 OPPS/ASC proposed rule.
     ASC Payment Update: For CYs 2019 through 2023, we adopted 
a policy to update the ASC payment system using the hospital market 
basket update. Using the hospital market basket methodology, for CY 
2020, we are increasing payment rates under the ASC payment system by 
2.6 percent for ASCs that meet the quality reporting requirements under 
the ASCQR Program. This increase is based on a hospital market basket 
percentage increase of 3.0 percent minus a proposed multifactor 
productivity adjustment required by the Affordable Care Act of 0.4 
percentage point. Based on this update, we estimate that total payments 
to ASCs (including beneficiary cost-sharing and estimated changes in 
enrollment, utilization, and case-mix) for CY 2020 will be 
approximately $4.96 billion, an increase of approximately $230 million 
compared to estimated CY 2019 Medicare payments.
     Changes to the List of ASC Covered Surgical Procedures: 
For CY 2020, we are adding several procedures to the ASC list of 
covered surgical procedures. Additions to the list include a total knee 
arthroplasty procedure, a mosaicplasty procedure, as well as six 
coronary intervention procedures, as well as 12 surgical procedures 
with new CPT codes for CY 2020.
     Changes to the Level of Supervision of Outpatient 
Therapeutic Services in Hospitals and Critical Access Hospitals: For CY 
2020, we are changing the

[[Page 61146]]

minimum required level of supervision from direct supervision to 
general supervision for all hospital outpatient therapeutic services 
provided by all hospitals and CAHs. This ensures a standard minimum 
level of supervision for each hospital outpatient service furnished 
incident to a physician's service.
     Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are removing OP-33: External Beam 
Radiotherapy for Bone Metastases for the CY 2022 payment determination 
and subsequent years with modification.
     Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program: For the ASCQR Program, we are adopting one new measure, ASC-
19: Facility-Level 7-Day Hospital Visits after General Surgery 
Procedures Performed at Ambulatory Surgical Centers, beginning with the 
CY 2024 payment determination and for subsequent years.
     Prior Authorization Process and Requirements for Certain 
Hospital Outpatient Department (OPD) Services: We are finalizing a 
prior authorization process using the authority at section 
1833(t)(2)(F) of the Act as a method for controlling unnecessary 
increases in the volume of the following five categories of services: 
(1) Blepharoplasty, (2) botulinum toxin injections, (3) panniculectomy, 
(4) rhinoplasty, and (5) vein ablation.
     Organ Procurement Organizations (OPOs) Conditions for 
Coverage (CfCs) Revision of the Definition of ``Expected Donation 
Rate.'' We are revising the definition of ``expected donation rate'' 
that is included in the second outcome measure to match the Scientific 
Registry of Transplant Recipients (SRTR) definition. In conjunction 
with this change, we are also temporarily suspending the requirement 
that OPOs meet two of three outcome measures for the 2022 
recertification cycle only.
     Request for Information Regarding Potential Changes to the 
Organ Procurement Organization and Transplant Center Regulations: We 
solicited public comments regarding what revisions may be appropriate 
for the current OPO CfCs and the current transplant center CoPs. In 
addition, we solicited public comments on two potential outcome 
measures for OPOs.
3. Summary of Costs and Benefits
    In sections XXVI. and XXVII. of this final rule with comment 
period, we set forth a detailed analysis of the regulatory and 
federalism impacts that the changes will have on affected entities and 
beneficiaries. Key estimated impacts are described below.
a. Impacts of All OPPS Changes
    Table 70 in section XXV.B of this final rule with comment period 
displays the distributional impact of all the OPPS changes on various 
groups of hospitals and CMHCs for CY 2020 compared to all estimated 
OPPS payments in CY 2019. We estimate that the policies in this final 
rule with comment period will result in a 1.3 percent overall increase 
in OPPS payments to providers. We estimate that total OPPS payments for 
CY 2020, including beneficiary cost-sharing, to the approximately 3,732 
facilities paid under the OPPS (including general acute care hospitals, 
children's hospitals, cancer hospitals, and CMHCs) will increase by 
approximately $1.21 billion compared to CY 2019 payments, excluding our 
estimated changes in enrollment, utilization, and case-mix.
    We estimated the isolated impact of our OPPS policies on CMHCs 
because CMHCs are only paid for partial hospitalization services under 
the OPPS. Continuing the provider-specific structure we adopted 
beginning in CY 2011, and basing payment fully on the type of provider 
furnishing the service, we estimate a 3.7 percent increase in CY 2020 
payments to CMHCs relative to their CY 2019 payments.
b. Impacts of the Updated Wage Indexes
    We estimate that our update of the wage indexes based on the FY 
2020 IPPS proposed rule wage indexes will result in no estimated 
payment change for urban hospitals under the OPPS and an estimated 
increase of 0.7 percent for rural hospitals. These wage indexes include 
the continued implementation of the OMB labor market area delineations 
based on 2010 Decennial Census data, with updates, as discussed in 
section II.C. of this final rule with comment period.
c. Impacts of the Rural Adjustment and the Cancer Hospital Payment 
Adjustment
    There are no significant impacts of our CY 2020 payment policies 
for hospitals that are eligible for the rural adjustment or for the 
cancer hospital payment adjustment. We are not making any change in 
policies for determining the rural hospital payment adjustments. While 
we are implementing the required reduction to the cancer hospital 
payment adjustment required by section 16002 of the 21st Century Cures 
Act for CY 2020, the target payment-to-cost ratio (PCR) for CY 2020 is 
0.89, compared to 0.88 for CY 2019, and therefore has a slight impact 
on budget neutrality adjustments.
d. Impacts of the OPD Fee Schedule Increase Factor
    For the CY 2020 OPPS/ASC, we are establishing an OPD fee schedule 
increase factor of 2.6 percent and applying that increase factor to the 
conversion factor for CY 2020. As a result of the OPD fee schedule 
increase factor and other budget neutrality adjustments, we estimate 
that urban hospitals will experience an increase of approximately 2.7 
percent and that rural hospitals will experience an increase of 2.8 
percent. Classifying hospitals by teaching status, we estimate 
nonteaching hospitals will experience an increase of 2.8 percent, minor 
teaching hospitals will experience an increase of 2.9 percent, and 
major teaching hospitals will experience an increase of 2.4 percent. We 
also classified hospitals by the type of ownership. We estimate that 
hospitals with voluntary ownership will experience an increase of 2.6 
percent in payments, while hospitals with government ownership will 
experience an increase of 2.8 percent in payments. We estimate that 
hospitals with proprietary ownership will experience an increase of 3.2 
percent in payments.
e. Impacts of the ASC Payment Update
    For impact purposes, the surgical procedures on the ASC list of 
covered procedures are aggregated into surgical specialty groups using 
CPT and HCPCS code range definitions. The percentage change in 
estimated total payments by specialty groups under the CY 2020 payment 
rates, compared to estimated CY 2019 payment rates, generally ranges 
between an increase of 1 and 5 percent, depending on the service, with 
some exceptions. We estimate the impact of applying the hospital market 
basket update to ASC payment rates will increase payments by $230 
million under the ASC payment system in CY 2020.
f. Impact of the Changes to the Hospital OQR Program
    Across 3,300 hospitals participating in the Hospital OQR Program, 
we estimate that our requirements will result in the following changes 
to costs and burdens related to information collection for the Hospital 
OQR Program compared to previously adopted requirements: There is a net 
reduction of one measure reported by hospitals, which results in a 
minimal net reduction in burden of $21,379.

[[Page 61147]]

g. Impacts of the Revision of the Definition of ``Expected Donation 
Rate'' for Organ Procurement Organizations
    We are finalizing our revision to the definition of ``expected 
donation rate'' used in the second outcome measure of the OPO CfCs at 
42 CFR 486.318(a) and (b) to eliminate the potential for confusion in 
the OPO community due to different definitions of the same term; 
however, due to comments received on the CY 2020 OPPS/ASC proposed rule 
we are finalizing a policy that would not require all OPOs to meet the 
standards of the second outcome measure for the 2022 recertification 
cycle only. As a result, OPOs will only have to meet one of the 
remaining outcome measures, which may provide temporary relief for a 
small number of OPOs that, absent this waiver, might have faced de-
certification and the appeal process due to only meeting one outcome 
measure.
    For subsequent recertification cycles, all 58 OPOs will once again 
be required to meet two out of three outcome measures detailed in the 
OPO CfCs. The revised definition of ``expected donation rate'' used in 
the second outcome measure will not affect data collection or reporting 
by the OPTN and SRTR, nor their statistical evaluation of OPO 
performance; therefore, it will not result in any quantifiable 
financial impact.

B. Legislative and Regulatory Authority for the Hospital OPPS

    When Title XVIII of the Act was enacted, Medicare payment for 
hospital outpatient services was based on hospital-specific costs. In 
an effort to ensure that Medicare and its beneficiaries pay 
appropriately for services and to encourage more efficient delivery of 
care, the Congress mandated replacement of the reasonable cost-based 
payment methodology with a prospective payment system (PPS). The 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 
1833(t) to the Act, authorizing implementation of a PPS for hospital 
outpatient services. The OPPS was first implemented for services 
furnished on or after August 1, 2000. Implementing regulations for the 
OPPS are located at 42 CFR parts 410 and 419.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. 
The following Acts made additional changes to the OPPS: The Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit 
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 
2006; the Medicare Improvements and Extension Act under Division B of 
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) 
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), 
enacted on December 29, 2007; the Medicare Improvements for Patients 
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on 
March 30, 2010 (these two public laws are collectively known as the 
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act 
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the 
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act 
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR 
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the 
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), 
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization 
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the 
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 
2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), 
enacted on December 18, 2015, the 21st Century Cures Act (Pub. L. 114-
255), enacted on December 13, 2016; the Consolidated Appropriations 
Act, 2018 (Pub. L. 115-141), enacted on March 23, 2018; and the 
Substance Use-Disorder Prevention that Promotes Opioid Recovery and 
Treatment for Patients and Communities Act (Pub. L. 115-271), enacted 
on October 24, 2018.
    Under the OPPS, we generally pay for hospital Part B services on a 
rate-per-service basis that varies according to the APC group to which 
the service is assigned. We use the Healthcare Common Procedure Coding 
System (HCPCS) (which includes certain Current Procedural Terminology 
(CPT) codes) to identify and group the services within each APC. The 
OPPS includes payment for most hospital outpatient services, except 
those identified in section I.C. of this final rule with comment 
period. Section 1833(t)(1)(B) of the Act provides for payment under the 
OPPS for hospital outpatient services designated by the Secretary 
(which includes partial hospitalization services furnished by CMHCs), 
and certain inpatient hospital services that are paid under Medicare 
Part B.
    The OPPS rate is an unadjusted national payment amount that 
includes the Medicare payment and the beneficiary copayment. This rate 
is divided into a labor-related amount and a nonlabor-related amount. 
The labor-related amount is adjusted for area wage differences using 
the hospital inpatient wage index value for the locality in which the 
hospital or CMHC is located.
    All services and items within an APC group are comparable 
clinically and with respect to resource use, as required by section 
1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) of 
the Act, subject to certain exceptions, items and services within an 
APC group cannot be considered comparable with respect to the use of 
resources if the highest median cost (or mean cost, if elected by the 
Secretary) for an item or service in the APC group is more than 2 times 
greater than the lowest median cost (or mean cost, if elected by the 
Secretary) for an item or service within the same APC group (referred 
to as the ``2 times rule''). In implementing this provision, we 
generally use the cost of the item or service assigned to an APC group.
    For new technology items and services, special payments under the 
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act 
provides for temporary additional payments, which we refer to as 
``transitional pass-through payments,'' for at least 2 but not more 
than 3 years for certain drugs, biological agents, brachytherapy 
devices used for the treatment of cancer, and categories of other 
medical devices. For new technology services that are not eligible for 
transitional pass-through payments, and for which we lack sufficient 
clinical information and cost data to appropriately assign them to a 
clinical APC group, we have established special APC groups based on 
costs, which we refer to as New Technology APCs. These New Technology 
APCs are designated by cost bands which allow us to provide appropriate 
and consistent payment for designated new procedures that are not yet 
reflected in our claims data. Similar to pass-through payments, an 
assignment to a New Technology APC is temporary; that is, we retain a 
service within a New Technology APC until we acquire sufficient data to 
assign it to a clinically appropriate APC group.

[[Page 61148]]

C. Excluded OPPS Services and Hospitals

    Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to 
designate the hospital outpatient services that are paid under the 
OPPS. While most hospital outpatient services are payable under the 
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for 
ambulance, physical and occupational therapy, and speech-language 
pathology services, for which payment is made under a fee schedule. It 
also excludes screening mammography, diagnostic mammography, and 
effective January 1, 2011, an annual wellness visit providing 
personalized prevention plan services. The Secretary exercises the 
authority granted under the statute to also exclude from the OPPS 
certain services that are paid under fee schedules or other payment 
systems. Such excluded services include, for example, the professional 
services of physicians and nonphysician practitioners paid under the 
Medicare Physician Fee Schedule (MPFS); certain laboratory services 
paid under the Clinical Laboratory Fee Schedule (CLFS); services for 
beneficiaries with end-stage renal disease (ESRD) that are paid under 
the ESRD prospective payment system; and services and procedures that 
require an inpatient stay that are paid under the hospital IPPS. In 
addition, section 1833(t)(1)(B)(v) of the Act does not include 
applicable items and services (as defined in subparagraph (A) of 
paragraph (21)) that are furnished on or after January 1, 2017 by an 
off-campus outpatient department of a provider (as defined in 
subparagraph (B) of paragraph (21). We set forth the services that are 
excluded from payment under the OPPS in regulations at 42 CFR 419.22.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals that are excluded from payment under the OPPS. These excluded 
hospitals include:
     Critical access hospitals (CAHs);
     Hospitals located in Maryland and paid under Maryland's 
All-Payer or Total Cost of Care Model;
     Hospitals located outside of the 50 States, the District 
of Columbia, and Puerto Rico; and
     Indian Health Service (IHS) hospitals.

D. Prior Rulemaking

    On April 7, 2000, we published in the Federal Register a final rule 
with comment period (65 FR 18434) to implement a prospective payment 
system for hospital outpatient services. The hospital OPPS was first 
implemented for services furnished on or after August 1, 2000. Section 
1833(t)(9)(A) of the Act requires the Secretary to review certain 
components of the OPPS, not less often than annually, and to revise the 
groups, relative payment weights, and the wage and other adjustments 
that take into account changes in medical practices, changes in 
technologies, and the addition of new services, new cost data, and 
other relevant information and factors.
    Since initially implementing the OPPS, we have published final 
rules in the Federal Register annually to implement statutory 
requirements and changes arising from our continuing experience with 
this system. These rules can be viewed on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the 
Panel)

1. Authority of the Panel
    Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 
106-113, requires that we consult with an external advisory panel of 
experts to annually review the clinical integrity of the payment groups 
and their weights under the OPPS. In CY 2000, based on section 
1833(t)(9)(A) of the Act, the Secretary established the Advisory Panel 
on Ambulatory Payment Classification Groups (APC Panel) to fulfill this 
requirement. In CY 2011, based on section 222 of the Public Health 
Service Act, which gives discretionary authority to the Secretary to 
convene advisory councils and committees, the Secretary expanded the 
panel's scope to include the supervision of hospital outpatient 
therapeutic services in addition to the APC groups and weights. To 
reflect this new role of the panel, the Secretary changed the panel's 
name to the Advisory Panel on Hospital Outpatient Payment (the HOP 
Panel or the Panel). The HOP Panel is not restricted to using data 
compiled by CMS, and in conducting its review, it may use data 
collected or developed by organizations outside the Department.
2. Establishment of the Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the Panel, and, at that time, named the APC Panel. This 
expert panel is composed of appropriate representatives of providers 
(currently employed full-time, not as consultants, in their respective 
areas of expertise) who review clinical data and advise CMS about the 
clinical integrity of the APC groups and their payment weights. Since 
CY 2012, the Panel also is charged with advising the Secretary on the 
appropriate level of supervision for individual hospital outpatient 
therapeutic services. The Panel is technical in nature, and it is 
governed by the provisions of the Federal Advisory Committee Act 
(FACA). The current charter specifies, among other requirements, that 
the Panel--
     May advise on the clinical integrity of Ambulatory Payment 
Classification (APC) groups and their associated weights;
     May advise on the appropriate supervision level for 
hospital outpatient services;
     Continues to be technical in nature;
     Is governed by the provisions of the FACA;
     Has a Designated Federal Official (DFO); and
     Is chaired by a Federal Official designated by the 
Secretary.
    The Panel's charter was amended on November 15, 2011, renaming the 
Panel and expanding the Panel's authority to include supervision of 
hospital outpatient therapeutic services and to add critical access 
hospital (CAH) representation to its membership. The Panel's charter 
was also amended on November 6, 2014 (80 FR 23009), and the number of 
members was revised from up to 19 to up to 15 members. The Panel's 
current charter was approved on November 19, 2018, for a 2-year period 
(84 FR 26117).
    The current Panel membership and other information pertaining to 
the Panel, including its charter, Federal Register notices, membership, 
meeting dates, agenda topics, and meeting reports, can be viewed on the 
CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
    The Panel has held many meetings, with the last meeting taking 
place on August 19, 2019. Prior to each meeting, we publish a notice in 
the Federal Register to announce the meeting and, when necessary, to 
solicit nominations for Panel membership, to announce new members, and 
to announce any other changes of which the public should be aware. 
Beginning in CY 2017, we have transitioned to one meeting per year (81

[[Page 61149]]

FR 31941). Further information on the 2019 summer meeting can be found 
in the meeting notice titled ``Medicare Program: Announcement of the 
Advisory Panel on Hospital Outpatient Payment (the Panel) Meeting on 
August 19 through 20, 2019'' (84 FR 26117).
    In addition, the Panel has established an operational structure 
that, in part, currently includes the use of three subcommittees to 
facilitate its required review process. The three current subcommittees 
include the following:
     APC Groups and Status Indicator Assignments Subcommittee, 
which advises the Panel on the appropriate status indicators to be 
assigned to HCPCS codes, including but not limited to whether a HCPCS 
code or a category of codes should be packaged or separately paid, as 
well as the appropriate APC assignment of HCPCS codes regarding 
services for which separate payment is made;
     Data Subcommittee, which is responsible for studying the 
data issues confronting the Panel and for recommending options for 
resolving them; and
     Visits and Observation Subcommittee, which reviews and 
makes recommendations to the Panel on all technical issues pertaining 
to observation services and hospital outpatient visits paid under the 
OPPS.
    Each of these subcommittees was established by a majority vote from 
the full Panel during a scheduled Panel meeting, and the Panel 
recommended at the August 19, 2019, meeting that the subcommittees 
continue. We accepted this recommendation.
    For discussions of earlier Panel meetings and recommendations, we 
refer readers to previously published OPPS/ASC proposed and final 
rules, the CMS website mentioned earlier in this section, and the FACA 
database at http://facadatabase.gov.
    Comment: One commenter supported CMS' extension of the HOP Panel 
meeting presentation submission deadline when there is a truncated 
submittal timeframe due to delayed publication of the OPPS/ASC proposed 
rule. However, to avoid the need to modify the submission deadline in 
the future, the commenter suggested that CMS revise the submission 
deadline in the Federal Register notice from a firm date to a fluid 21 
days from the proposed rule display date to avoid this deadline issue 
in the future.
    Response: We appreciate the commenter's request to modify the HOP 
Panel meeting submission deadline format. However, frequency, timing, 
and presentation deadlines are outside the scope of the proposed rule 
and are generally announced through either a separate Federal Register 
notice or subregulatory channel such as the CMS website, or both.

F. Public Comments Received in Response to the CY 2020 OPPS/ASC 
Proposed Rule

    We received over 3400 timely pieces of correspondence on the CY 
2020 OPPS/ASC proposed rule that appeared in the Federal Register on 
August 9, 2019 (84 FR 39398). We note that we received some public 
comments that were outside the scope of the CY 2020 OPPS/ASC proposed 
rule. Out-of-scope-public comments are not addressed in this CY 2020 
OPPS/ASC final rule with comment period. Summaries of those public 
comments that are within the scope of the proposed rule and our 
responses are set forth in the various sections of this final rule with 
comment period under the appropriate headings.

G. Public Comments Received on the CY 2019 OPPS/ASC Final Rule With 
Comment Period

    We received over 540 timely pieces of correspondence on the CY 2019 
OPPS/ASC final rule with comment period that appeared in the Federal 
Register on November 30, 2018 (83 FR 61567), some of which contained 
comments on the interim APC assignments and/or status indicators of new 
or replacement Level II HCPCS codes (identified with comment indicator 
``NI'' in OPPS Addendum B, ASC Addendum AA, and ASC Addendum BB to that 
final rule). Summaries of the public comments on new or replacement 
Level II HCPCS codes are set forth in the CY 2020 OPPS/ASC proposed 
rule and this final rule with comment period under the appropriate 
subject matter headings.

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
    Section 1833(t)(9)(A) of the Act requires that the Secretary review 
not less often than annually and revise the relative payment weights 
for APCs. In the April 7, 2000 OPPS final rule with comment period (65 
FR 18482), we explained in detail how we calculated the relative 
payment weights that were implemented on August 1, 2000 for each APC 
group.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39406), for CY 2020, 
we proposed to recalibrate the APC relative payment weights for 
services furnished on or after January 1, 2020, and before January 1, 
2021 (CY 2020), using the same basic methodology that we described in 
the CY 2019 OPPS/ASC final rule with comment period (83 FR 58827 
through 58828), using updated CY 2018 claims data. That is, as we 
proposed, we recalibrate the relative payment weights for each APC 
based on claims and cost report data for hospital outpatient department 
(HOPD) services, using the most recent available data to construct a 
database for calculating APC group weights.
    For the purpose of recalibrating the APC relative payment weights 
for CY 2020, we began with approximately 164 million final action 
claims (claims for which all disputes and adjustments have been 
resolved and payment has been made) for HOPD services furnished on or 
after January 1, 2018, and before January 1, 2019, before applying our 
exclusionary criteria and other methodological adjustments. After the 
application of those data processing changes, we used approximately 88 
million final action claims to develop the proposed CY 2020 OPPS 
payment weights. For exact numbers of claims used and additional 
details on the claims accounting process, we refer readers to the 
claims accounting narrative under supporting documentation for the CY 
2020 OPPS/ASC proposed rule on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Addendum N to the proposed rule (which is available via the 
internet on the CMS website) included the proposed list of bypass codes 
for CY 2020. The proposed list of bypass codes contained codes that 
were reported on claims for services in CY 2018 and, therefore, 
included codes that were in effect in CY 2018 and used for billing, but 
were deleted for CY 2019. We retained these deleted bypass codes on the 
proposed CY 2020 bypass list because these codes existed in CY 2018 and 
were covered OPD services in that period, and CY 2018 claims data were 
used to calculate CY 2020 payment rates. Keeping these deleted bypass 
codes on the bypass list potentially allows us to create more 
``pseudo'' single procedure claims for ratesetting purposes. ``Overlap 
bypass codes'' that are members of the proposed multiple imaging 
composite APCs were identified by asterisks (*) in the third column of 
Addendum N to the proposed rule. HCPCS codes that we proposed to add 
for CY 2020 were identified by asterisks (*) in the fourth column of 
Addendum N.
    Table 1 contains the list of codes that we proposed to remove from 
the CY 2020 bypass list.

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b. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    For CY 2020, in the CY 2020 OPPS/ASC proposed rule (84 FR 39407), 
we proposed to continue to use the hospital-specific overall ancillary 
and departmental cost-to-charge ratios (CCRs) to convert charges to 
estimated costs through application of a revenue code-to-cost center 
crosswalk. To calculate the APC costs on which the CY 2020 APC payment 
rates are based, we calculated hospital-specific overall ancillary CCRs 
and hospital-specific departmental CCRs for each hospital for which we 
had CY 2018 claims data by comparing these claims data to the most 
recently available hospital cost reports, which, in most cases, are 
from CY 2017. For the proposed CY 2020 OPPS payment rates, we used the 
set of claims processed during CY 2018. We applied the hospital-
specific CCR to the hospital's charges at the most detailed level 
possible, based on a revenue code-to-cost center crosswalk that 
contains a hierarchy of CCRs used to estimate costs from charges for 
each revenue code. That crosswalk is available for review and 
continuous comment on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    To ensure the completeness of the revenue code-to-cost center 
crosswalk, we reviewed changes to the list of revenue codes for CY 2018 
(the year of claims data we used to calculate the proposed CY 2020 OPPS 
payment rates) and found that the National Uniform Billing Committee 
(NUBC) did not add any new revenue codes to the NUBC 2018 Data 
Specifications Manual.
    In accordance with our longstanding policy, we calculate CCRs for 
the standard and nonstandard cost centers accepted by the electronic 
cost report database. In general, the most detailed level at which we 
calculate CCRs is the hospital-specific departmental level. For a 
discussion of the hospital-specific overall ancillary CCR calculation, 
we refer readers to the CY 2007 OPPS/ASC final rule with comment period 
(71 FR 67983 through 67985). The calculation of blood costs is a 
longstanding exception (since the CY 2005 OPPS) to this general 
methodology for calculation of CCRs used for converting charges to 
costs on each claim. This exception is discussed in detail in the CY 
2007 OPPS/ASC final rule with comment period and discussed further in 
section II.A.2.a.(1) of the proposed rule and this final rule with 
comment period.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74840 
through 74847), we finalized our policy of creating new cost centers 
and distinct CCRs for implantable devices, magnetic resonance imaging 
(MRIs), computed tomography (CT) scans, and cardiac catheterization. 
However, in response to the CY 2014 OPPS/ASC proposed rule, commenters 
reported that some hospitals used a less precise ``square feet'' 
allocation methodology for the costs of large moveable equipment like 
CT scan and MRI machines. They indicated that while CMS recommended 
using two alternative allocation methods, ``direct assignment'' or 
``dollar value,'' as a more accurate methodology for directly assigning 
equipment costs, industry analysis suggested that approximately only 
half of the reported cost centers for CT scans and MRIs rely on these 
preferred methodologies. In response to concerns from commenters, we 
finalized a policy for the CY 2014 OPPS to remove claims from providers 
that use a cost allocation method of ``square feet'' to calculate CCRs 
used to estimate costs associated with the APCs for CT and MRI (78 FR 
74847). Further, we finalized a transitional policy to estimate the 
imaging APC relative payment weights using only CT and MRI cost data 
from providers that do not use ``square feet'' as the cost allocation 
statistic. We provided that this finalized policy would sunset in 4 
years to provide a sufficient time for hospitals to transition to a 
more accurate cost allocation method and for the related data to be 
available for ratesetting purposes (78 FR 74847). Therefore, beginning 
CY 2018, with the sunset of the transition policy, we would estimate 
the imaging APC relative payment weights using cost data from all 
providers, regardless of the cost allocation statistic employed. 
However, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59228 and 59229) and in the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58831), we finalized a policy to extend the transition 
policy for 1 additional year and we continued to remove claims from 
providers that use a cost allocation method of ``square feet'' to 
calculate CT and MRI CCRs for the CY 2018 OPPS and the CY 2019 OPPS.
    As we discussed in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59228), some stakeholders have raised concerns regarding 
using claims from all providers to calculate CT and MRI CCRs, 
regardless of the cost allocations statistic employed (78 FR 74840 
through 74847). Stakeholders noted that providers continue to use the 
``square feet'' cost allocation method and that including claims from 
such providers would cause significant reductions in the imaging APC 
payment rates.
    Table 2 demonstrates the relative effect on imaging APC payments 
after removing cost data for providers that report CT and MRI standard 
cost centers using ``square feet'' as the cost allocation method by 
extracting HCRIS data on Worksheet B-1. Table 3 provides statistical 
values based on the CT and MRI standard cost center CCRs using the 
different cost allocation methods.

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[GRAPHIC] [TIFF OMITTED] TR12NO19.002

    Our analysis shows that since the CY 2014 OPPS in which we 
established the transition policy, the number of valid MRI CCRs has 
increased by 18.8 percent to 2,207 providers and the number of valid CT 
CCRs has increased by 16.0 percent to 2,291 providers. However, as 
shown in Table 2, nearly all imaging APCs would see an increase in 
payment rates for CY 2020 if claims from providers that report using 
the ``square feet'' cost allocation method were removed. This can be 
attributed to the generally lower CCR values from providers that use a 
``square feet'' cost allocation method as shown in Table 2.
    We noted in the CY 2020 OPPS/ASC proposed rule that the CT and MRI 
cost center CCRs have been available for ratesetting since the CY 2014 
OPPS in which we established the transition policy. Since the initial 
4-year transition, we have extended the transition an additional 2 
years to offer provider flexibility in applying cost allocation 
methodologies for CT and MRI cost centers other than ``square feet.'' 
We noted that we believed we had provided sufficient time for providers 
to adopt an alternative cost allocation methodology for CT and MRI cost 
centers if they intended to do so. However, many providers continue to 
use the ``square feet'' cost allocation methodology, which we believe 
indicates that these providers believe this methodology is a sufficient 
method for attributing costs to this cost center. Additionally, we 
generally believe that increasing the amount of claims data available 
for use in ratesetting improves our ratesetting process. Therefore, we 
proposed that for the CY 2020 OPPS we would use all claims with valid 
CT and MRI cost center CCRs, including those that use a ``square feet'' 
cost allocation method, to estimate costs for the APCs for CT and MRI 
identified in Table 2. We noted that we did not believe another 
extension was warranted and expected to determine the imaging APC 
relative payment weights for CY 2020 using cost data from all 
providers, regardless of the cost allocation method employed.
    Comment: One commenter noted that approximately half of all 
hospitals paid under the OPPS had CT and/or MRI cost centers that were 
reporting CCRs using the preferred methods (``dollar value'' or 
``direct assignment''). This commenter further suggested that hospitals 
not using these preferred methods are either unable or unwilling to 
make the change to using these preferred methods. This commenter stated 
that some CT and

[[Page 61152]]

MRI procedures show a significant number of CCRs that are close to 
zero, and that the commenter believed that these hospitals are likely 
unable to accurately reallocate these costs across hospital departments 
to new CT and MRI departmental cost centers. This commenter 
acknowledged that the number of valid CT and MRI CCRs has increased 
over time, but noted that incorrect cost allocation has negative 
effects on payment rates for almost all imaging APCs.
    Several commenters recommended that CMS continue to exclude 
``square feet'' cost allocation data and continue to educate hospitals 
on the importance of reporting direct CT and MRI services. Several 
commenters requested that CMS not use the CT and MRI-specific cost 
centers and instead estimate cost using the single diagnostic radiology 
cost center, believing this will solve the inaccurate reporting of 
costs for CT and MR services. They further suggested that we should 
advise hospitals through regulation and cost reporting instructions to 
no longer report costs separately for CT and MRI cost centers and make 
sure they review their diagnostic radiology cost center inclusive of CT 
and MR equipment, space, labor and over factors. This same commenter 
noted that the benefits of using a single diagnostic radiology cost 
center include consistency across hospitals, properly accounting for 
high-cost medical equipment, simplifying and standardizing cost 
reporting within the diagnostic radiology cost center, eliminating 
partial allocation of costs to CT and MRI cost centers, and reducing 
burden. One commenter requested that we work with various hospital 
organizations to help educate the hospital community on how to report 
these costs on the CT and MRI CCRs in hopes to transition to this 
policy over time.
    Other commenters requested that we extend the transition to using 
all claims for one additional year. These same commenters requested 
that if extending the transition 1 additional year is not possible, 
that we phase in the payment impacts of this transition over 2 years. 
One commenter requested that CMS extend the transition for 2 additional 
years and stated that we should study the effects of this policy even 
further to better understand its payment impacts. One commenter noted 
that we should continue the transition policy of removing provider 
claims using the ``square feet'' cost allocation method to calculate 
cost-to-charge ratios (CCRs) associated with CT and MRI procedures into 
2020 and require providers to report costs via the direct assignment or 
dollar value methodologies moving forward. Another commenter noted that 
the use of separate CT and MRI CCRs creates unintended consequences on 
the technical component of CT and MRI codes in the Medicare Physician 
Fee Schedule (MPFS). The commenter noted the resulting reductions in 
hospital payments would also affect the physician office practice 
setting. They believed that the OPPS technical payments would fall 
below the payment rates in the MPFS causing further cuts as mandated by 
the Deficit Reduction Act of 2005 (DRA), which mandates CMS pay the 
lesser of MPFS or OPPS rate.
    One commenter suggested that, because CMS has various APC groupings 
for MRI and CT, the individual MRI and CT cost centers are no longer 
needed. This commenter suggested that, at the time separate cost 
centers for these services were established, the classification of 
imaging procedures into APCs was very specific, but that CMS is now 
``intermingling'' the MRI and CT costs with other imaging services.
    Response: We appreciate the comments regarding the use of CT and 
MRI cost center CCRs. As we stated in prior rulemaking, we recognize 
the concerns with regard to the application of the CT and MRI standard 
cost center CCRs and their use in the OPPS ratesetting. We understand 
that there is greater sensitivity to the cost allocation method being 
used on the cost report forms for these relatively new standard imaging 
cost centers under the OPPS due to the limited size of the OPPS payment 
bundles and because the OPPS applies the CCRs at the departmental level 
for cost estimation purposes. However, it is important to note that 
since we initially established the transition policy in the OPPS in CY 
2014, we have continued to develop the OPPS as a prospective payment 
system. This includes greater packaging and the development of 
comprehensive APCs. As we have packaged a greater number of items and 
services with imaging payment under the OPPS, we believe imaging 
payments are somewhat less sensitive to the cost allocation method 
being used than they previously were. We also note that we still find 
value in obtaining more specific cost data and that the CT and MRI-
specific cost centers provide useful cost and charge data for 
ratesetting purposes.
    However, to address concerns in the comments about the amount of 
the decrease in imaging payment in CY 2020 due to ending of the 
transition period, we are finalizing a 2-year phased-in approach, as 
suggested by some commenters, that will apply 50 percent of the payment 
impact from ending the transition in CY 2020 and 100 percent of the 
payment impact from ending the transition in CY 2021. For CY 2020, we 
will calculate the imaging payment rates using both the transition 
methodology (excluding providers that use a ``square feet'' cost 
allocation method) and the standard methodology (including all 
providers, regardless of cost allocation method) and will assign the 
imaging APCs a payment rate that includes data representing 50 percent 
of the transition methodology payment rate and includes data 
representing 50 percent of the standard methodology payment rate. 
Beginning in CY 2021, we will set the imaging APC payment rates at 100 
percent of the payment rate using the standard payment methodology 
(including all providers, regardless of cost allocation method). Table 
4 below illustrates the estimated impact on geometric mean costs for CT 
and MRI APCs under our blended approach of utilizing 50 percent of the 
transitional payment methodology and 50 percent of the standard payment 
methodology for CY 2020.
BILLING CODE 4120-01-P

[[Page 61153]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.003

BILLING CODE 4120-01-C
    As noted earlier, the Deficit Reduction Act (DRA) of 2005 requires 
Medicare to limit Medicare payment for certain imaging services covered 
by the physician fee schedule to not exceed what Medicare pays for 
these services under the OPPS. As required by law, for certain imaging 
series paid for under the MPFS, we cap the technical component of the 
PFS payment amount for the applicable year at the OPPS payment amount 
(71 FR 69659 through 69661). As we stated in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 74845), we have noted the potential 
impact the CT and MRI CCRs may have on other payment systems. We 
understand that payment reductions for imaging services under the OPPS 
could have significant payment impacts under the Physician Fee Schedule 
(PFS) where the technical component payment for many imaging services 
is capped at the OPPS payment amount. We will continue to monitor OPPS 
imaging payments in the future and consider the potential impacts of 
payment changes on the PFS and the ASC payment system.
2. Data Development and Calculation of Costs Used for Ratesetting
    In this section of this final rule with comment period, we discuss 
the use of claims to calculate the OPPS payment rates for CY 2020. The 
Hospital OPPS page on the CMS website on which this final rule with 
comment period is posted (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an 
accounting of claims used in the development of the final payment 
rates. That accounting provides additional detail regarding the number 
of claims derived at each stage of the

[[Page 61154]]

process. In addition, below in this section, we discuss the file of 
claims that comprises the data set that is available upon payment of an 
administrative fee under a CMS data use
agreement. The CMS website http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes 
information about obtaining the ``OPPS Limited Data Set,'' which now 
includes the additional variables previously available only in the OPPS 
Identifiable Data Set, including ICD-10-CM diagnosis codes and revenue 
code payment amounts. This file is derived from the CY 2018 claims that 
were used to calculate the final payment rates for this CY 2020 OPPS/
ASC final rule with comment period.
    Previously, the OPPS established the scaled relative weights, on 
which payments are based using APC median costs, a process described in 
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). 
However, as discussed in more detail in section II.A.2.f. of the CY 
2013 OPPS/ASC final rule with comment period (77 FR 68259 through 
68271), we finalized the use of geometric mean costs to calculate the 
relative weights on which the CY 2013 OPPS payment rates were based. 
While this policy changed the cost metric on which the relative 
payments are based, the data process in general remained the same, 
under the methodologies that we used to obtain appropriate claims data 
and accurate cost information in determining estimated service cost. 
For CY 2020, in the CY 2020 OPPS/ASC proposed rule (84 FR 39409), we 
proposed to continue to use geometric mean costs to calculate the 
proposed relative weights on which the CY 2020 OPPS payment rates are 
based.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.c. of this final rule with comment period to calculate the costs 
we used to establish the relative payment weights used in calculating 
the OPPS payment rates for CY 2020 shown in Addenda A and B to this 
final rule with comment period (which are available via the internet on 
the CMS website). We refer readers to section II.A.4. of this final 
rule with comment period for a discussion of the conversion of APC 
costs to scaled payment weights.
    We note that under the OPPS, CY 2019 was the first year in which 
claims data containing lines with the modifier ``PN'' were available, 
which indicate nonexcepted items and services furnished and billed by 
off-campus provider-based departments (PBDs) of hospitals. Because 
nonexcepted services are not paid under the OPPS, in the CY 2019 OPPS/
ASC final rule with comment period (83 FR 58832), we finalized a policy 
to remove those claim lines reported with modifier ``PN'' from the 
claims data used in ratesetting for the CY 2019 OPPS and subsequent 
years. For the CY 2020 OPPS, we will continue to remove these claim 
lines with modifier ``PN'' from the ratesetting process.
    Comment: Several commenters noted a potential issue with missing 
lines with the PN modifier. Specifically, these commenters believed 
that the CY 2020 proposed rule data, based on CY 2018 claims, excluded 
approximately 400,000 lines with Healthcare Common Procedure Coding 
System (HCPCS) codes and the PN modifier. They noted that this would 
mean that there was over an 80 percent decline from the CY 2017 claims 
data, which had approximately 2.8 million lines with HCPCS and the PN 
modifier. These commenters reviewed the 2018 Outpatient Standard 
Analytic File (SAF) and noted that they found approximately 3.5 million 
lines with HCPCS codes and the PN modifier. These commenters asserted 
that the ratesetting data included substantially less PN modifiers than 
in the SAF file for the same time period. These same commenters assert 
that if the PN lines were not included in the ratesetting process then 
the OPPS payment weights are accurate. They noted that, conversely, if 
the PN lines were included in the payment weights then payments would 
be inaccurate. These commenters wanted CMS to explain what occurred in 
the proposed rule data files to ensure that the APC payment weights 
correctly reflect the exclusion of PN modifier claims in the final 
rule.
    Response: We thank the commenters for their input. First, we would 
like to note that claim lines with the PN modifier are excluded from 
the ratesetting process. Please note that the difference between the 
2019 OPPS Final Rule and the 2020 OPPS Proposed rule is the following: 
We processed the claim lines with the PN modifier differently between 
the two rules, which resulted in the decrease in the number of PN lines 
in the OPPS limited data set as noted above. Specifically, the programs 
used for the CY 2020 proposed rule were modified to not factor in those 
lines as being OPPS lines, which resulted in more lines, and 
potentially, more total claims being categorized as non-OPPS claims. 
Previously, even though those lines were excluded from OPPS for 
ratesetting purposes, they were still considered OPPS in categorizing 
the claims for the limited data set. This change in processing logic 
had no effect on ratesetting and all of the lines with modifier ``PN'' 
are excluded from the OPPS ratesetting process for both CY 2019 and CY 
2020. We are including these lines as non-OPPS claims in the CY 2020 
OPPS final rule limited data set, but as discussed, are continuing to 
exclude them for ratesetting purposes.
    For details of the claims accounting process used in this final 
rule with comment period, we refer readers to the claims accounting 
narrative under supporting documentation for this CY 2020 OPPS/ASC 
final rule with comment period on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Final Data Development and Calculation of Costs Used for Ratesetting
a. Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
(a) Methodology
    Since the implementation of the OPPS in August 2000, we have made 
separate payments for blood and blood products through APCs rather than 
packaging payment for them into payments for the procedures with which 
they are administered. Hospital payments for the costs of blood and 
blood products, as well as for the costs of collecting, processing, and 
storing blood and blood products, are made through the OPPS payments 
for specific blood product APCs.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39409), we proposed to 
continue to establish payment rates for blood and blood products using 
our blood-specific CCR methodology, which utilizes actual or simulated 
CCRs from the most recently available hospital cost reports to convert 
hospital charges for blood and blood products to costs. This 
methodology has been our standard ratesetting methodology for blood and 
blood products since CY 2005. It was developed in response to data 
analysis indicating that there was a significant difference in CCRs for 
those hospitals with and without blood-specific cost centers, and past 
public comments indicating that the former OPPS policy of defaulting to 
the overall hospital CCR for hospitals not reporting a blood-specific 
cost center often resulted in an underestimation of the true hospital 
costs for blood and blood products. Specifically, in order to address 
the differences in CCRs and to better reflect hospitals' costs, we 
proposed to continue to simulate blood CCRs for each hospital that does 
not report a

[[Page 61155]]

blood cost center by calculating the ratio of the blood-specific CCRs 
to hospitals' overall CCRs for those hospitals that do report costs and 
charges for blood cost centers. We also proposed to apply this mean 
ratio to the overall CCRs of hospitals not reporting costs and charges 
for blood cost centers on their cost reports in order to simulate 
blood-specific CCRs for those hospitals. We proposed to calculate the 
costs upon which the proposed CY 2020 payment rates for blood and blood 
products are based using the actual blood-specific CCR for hospitals 
that reported costs and charges for a blood cost center and a hospital-
specific, simulated blood-specific CCR for hospitals that did not 
report costs and charges for a blood cost center.
    We continue to believe that the hospital-specific, simulated blood-
specific, CCR methodology better responds to the absence of a blood-
specific CCR for a hospital than alternative methodologies, such as 
defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into 
account the unique charging and cost accounting structure of each 
hospital, we believe that it yields more accurate estimated costs for 
these products. We stated in the proposed rule that we continue to 
believe that this methodology in CY 2020 would result in costs for 
blood and blood products that appropriately reflect the relative 
estimated costs of these products for hospitals without blood cost 
centers and, therefore, for these blood products in general.
    We note that, as discussed in section II.A.2.b.(1). of the CY 2019 
OPPS/ASC final rule with comment period (82 FR 58837 through 58843), we 
defined a comprehensive APC (C-APC) as a classification for the 
provision of a primary service and all adjunctive services provided to 
support the delivery of the primary service. Under this policy, we 
include the costs of blood and blood products when calculating the 
overall costs of these C-APCs. In the CY 2020 OPPS/ASC proposed rule 
(84 FR 39410), we proposed to continue to apply the blood-specific CCR 
methodology described in this section when calculating the costs of the 
blood and blood products that appear on claims with services assigned 
to the C-APCs. Because the costs of blood and blood products would be 
reflected in the overall costs of the C-APCs (and, as a result, in the 
payment rates of the C-APCs), we proposed to not make separate payments 
for blood and blood products when they appear on the same claims as 
services assigned to the C-APCs (we refer readers to the CY 2015 OPPS/
ASC final rule with comment period (79 FR 66796)).
    We also referred readers to Addendum B to the CY 2020 OPPS/ASC 
proposed rule (which is available via the internet on the CMS website) 
for the proposed CY 2020 payment rates for blood and blood products 
(which are identified with status indicator ``R''). For a more detailed 
discussion of the blood-specific CCR methodology, we refer readers to 
the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full 
history of OPPS payment for blood and blood products, we refer readers 
to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807 
through 66810).
    We did not receive any comments on our proposal to establish 
payment rates for blood and blood products using our blood-specific CCR 
methodology and we are finalizing this policy as proposed.
(b) Pathogen-Reduced Platelets Payment Rate
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322 
through 70323), we reiterated that we calculate payment rates for blood 
and blood products using our blood-specific CCR methodology, which 
utilizes actual or simulated CCRs from the most recently available 
hospital cost reports to convert hospital charges for blood and blood 
products to costs. Because HCPCS code P9072 (Platelets, pheresis, 
pathogen reduced or rapid bacterial tested, each unit), the predecessor 
code to HCPCS code P9073 (Platelets, pheresis, pathogen-reduced, each 
unit), was new for CY 2016, there were no claims data available on the 
charges and costs for this blood product upon which to apply our blood-
specific CCR methodology. Therefore, we established an interim payment 
rate for HCPCS code P9072 based on a crosswalk to existing blood 
product HCPCS code P9037 (Platelets, pheresis, leukocytes reduced, 
irradiated, each unit), which we believed provided the best proxy for 
the costs of the new blood product. In addition, we stated that once we 
had claims data for HCPCS code P9072, we would calculate its payment 
rate using the claims data that should be available for the code 
beginning in CY 2018, which is our practice for other blood product 
HCPCS codes for which claims data have been available for 2 years.
    We stated in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59233) that, although our standard practice for new codes 
involves using claims data to set payment rates once claims data become 
available, we were concerned that there may have been confusion among 
the provider community about the services that HCPCS code P9072 
described. That is, as early as 2016, there were discussions about 
changing the descriptor for HCPCS code P9072 to include the phrase ``or 
rapid bacterial tested'', which is a less costly technology than 
pathogen reduction. In addition, effective January 2017, the code 
descriptor for HCPCS code P9072 was changed to describe rapid bacterial 
testing of platelets and, effective July 1, 2017, the descriptor for 
the temporary successor code (HCPCS code Q9988) for HCPCS code P9072 
was changed again back to the original descriptor for HCPCS code P9072 
that was in place for 2016.
    Based on the ongoing discussions involving changes to the original 
HCPCS code P9072 established in CY 2016, we believed that claims from 
CY 2016 for pathogen reduced platelets may have potentially reflected 
certain claims for rapid bacterial testing of platelets. Therefore, we 
decided to continue to crosswalk the payment amount for services 
described by HCPCS code P9073 (the successor code to HCPCS code P9072 
established January 1, 2018) to the payment amount for services 
described by HCPCS code P9037 for CY 2018 (82 FR 59232), to determine 
the payment rate for services described by HCPCS code P9072. In the CY 
2019 OPPS/ASC proposed rule (83 FR 37058), for CY 2019, we discussed 
that we had reviewed the CY 2017 claims data for the two predecessor 
codes to HCPCS code P9073 (HCPCS codes P9072 and Q9988), along with the 
claims data for the CY 2017 temporary code for pathogen test for 
platelets (HCPCS code Q9987), which describes rapid bacterial testing 
of platelets. We found that there were over 2,200 claims billed with 
either HCPCS code P9072 or Q9988 in the CY 2017 claims data available 
for CY 2019 rulemaking. Accordingly, we believed that there were a 
sufficient number of claims to calculate a payment rate for HCPCS code 
P9073 for CY 2019 without using a crosswalk.
    We also performed checks to estimate the share of claims that may 
have been billed for rapid bacterial testing of platelets as compared 
to the share of claims that may have been billed for pathogen-reduced, 
pheresis platelets (based on when HCPCS code P9072 was an active 
procedure code from January 1, 2017 to June 30, 2017). First, we found 
that the geometric mean cost for pathogen-reduced, pheresis platelets, 
as reported by HCPCS code Q9988 when billed separately from rapid 
bacterial testing of platelets, was $453.87, and

[[Page 61156]]

that over 1,200 claims were billed for services described by HCPCS code 
Q9988. Next, we found that the geometric mean cost for rapid bacterial 
testing of platelets, as reported by HCPCS code Q9987 on claims, was 
$33.44, and there were 59 claims reported for services described by 
HCPCS code Q9987, of which 3 were separately paid.
    These findings implied that almost all of the claims billed for 
services reported with HCPCS code P9072 were for pathogen-reduced, 
pheresis platelets. In addition, the geometric mean cost for services 
described by HCPCS code P9072, which may have contained rapid bacterial 
testing of platelets claims, was $468.11, which was higher than the 
geometric mean cost for services described by HCPCS code Q9988 of 
$453.87, which should not have contained claims for rapid bacterial 
testing of platelets. Because the geometric mean for services described 
by HCPCS code Q9987 was only $33.44, it would be expected that if a 
significant share of claims billed for services described by HCPCS code 
P9072 were for the rapid bacterial testing of platelets, the geometric 
mean cost for services described by HCPCS code P9072 would be lower 
than the geometric mean cost for services described by HCPCS code 
Q9988. Instead, we found that the geometric mean cost for services 
described by HCPCS code Q9988 was higher than the geometric mean cost 
for services described by HCPCS code P9072.
    However, we received many comments from providers and other 
stakeholders including blood product industry stakeholder groups and 
the company who developed the pathogen-reduced platelets technology 
requesting that we not implement our proposal for CY 2019, and instead 
that we should once again establish the payment rate for HCPCS code 
P9073 by performing a crosswalk from the payment amount for services 
described by HCPCS code P9073 to the payment amount for services 
described by HCPCS code P9037. The commenters were concerned that the 
payment rate for HCPCS code P9073 calculated by using claims data for 
that service was too low. Several commenters believed the claim costs 
for pathogen-reduced platelets were lower than actual costs because of 
coding errors by providers, providers who did not use pathogen-reduced 
platelets when billing the service, and confusion over whether to use 
the hospital CCR or the blood center CCR to report charges for 
pathogen-reduced platelets. We considered the comments we received and 
decided not to finalize our proposal for CY 2019 to calculate the 
payment rate for services described by HCPCS code P9073 using claims 
payment history. Instead, for CY 2019, we established the payment rate 
for services described by HCPCS code P9073 by crosswalking the payment 
rate for the services described by HCPCS code P9073 from the payment 
rate for services described by HCPCS code P9037 (83 FR 58834).
    For CY 2020 and subsequent years, we proposed to calculate the 
payment rate for services described by HCPCS code P9073 by using claims 
payment history, which is the standard methodology used under the OPPS 
to calculate payment rates for HCPCS codes with at least 2 years of 
claims history. Claims for HCPCS code P9073 and its predecessor codes 
have been billed under the OPPS for over 3 years and we believe 
providers have had sufficient time to become familiar with the services 
covered by the procedure code and the appropriate charges and CCRs used 
to report the service. Also, it has been more than a year and half 
since the issue in which payment for pathogen-reduced platelets and 
payment for rapid bacterial testing were combined under the same code 
was resolved. In our analysis of claims data from CY 2018, we found 
that approximately 4,700 claims have been billed for services described 
by HCPCS code P9073 and the estimated payment rate for services 
described by HCPCS code P9073 based on the claims data was 
approximately $585. The claims-based payment rate for services 
described by HCPCS code P9073 was approximately $60 less than the 
estimated crosswalked payment rate using HCPCS code P9037 of 
approximately $645. The claims data show that services described by 
HCPCS code P9073 have been reported regularly by providers during CY 
2018 and the payment rate is close to the payment rate of the 
crosswalked payment rate for services described by HCPCS code P9037. 
Therefore, we believe that the payment rate for services described by 
HCPCS code P9073 can be determined using claims data without a 
crosswalk from the payment rate for services described by HCPCS code 
P9037.
    We refer readers to Addendum B of the proposed rule for the 
proposed payment rate for services described by HCPCS code P9073 
reportable under the OPPS. Addendum B is available via the internet on 
the CMS website.
    Comment: We received comments that opposed the proposal to end the 
crosswalk between P9073 (Platelets, pheresis, pathogen-reduced, each 
unit) and P9037 (Platelets, pheresis, leukocytes reduced, irradiated, 
each unit) and calculate the payment rate for services described by 
HCPCS code P9073 using claims payment history. The commenters stated 
that the 2018 claims data used to establish the CY 2020 payment rate 
for pathogen-reduced platelets continue to include erroneous claims and 
is therefore inaccurate. The commenters further state, as an example of 
the inaccuracies of the 2018 claims data, that approximately 30 percent 
of the 2018 claims data for P9073 contain costs that are at least $100 
lower than the costs of P9037, which is a less expensive technology. 
The commenters requested that we continue the crosswalk between these 
two codes for both CYs 2020 and 2021 to allow hospitals time to 
continue to correct errors in their chargemasters and to prevent 
underpayment to hospitals for pathogen-reduced platelets. The 
commenters also claim that hospitals may be reluctant to adopt a 
relatively new technology, such as pathogen-reduced platelets, if the 
payment is too low.
    Response: We continue to believe that, beginning in CY 2020, it is 
appropriate to calculate the payment rate for services described by 
HCPCS code P9073 using the standard methodology (which involves using 
data from CY 2018 claims for the code). We have previously acknowledged 
(83 FR 58834) that there was confusion among the provider community 
surrounding the reporting and billing for P9073 and have made 
exceptions to our standard methodology for calculating payment rates 
for this service. At this time, we believe providers have had 
sufficient time to become familiar with the services covered by the 
procedure code and we believe the issue in which payment for pathogen-
reduced platelets and payment for rapid bacterial testing was combined 
under the same code has been resolved. Additionally, in response to 
concerns that hospitals may be reluctant to adopt the pathogen-reduced 
platelet technology based on a payment rate that is too low, in our 
analysis of claims data from CY 2018, we found that approximately 5,300 
claims have been billed for services described by HCPCS code P9073, 
which is significantly higher that the approximately 2,200 claims 
billed in 2017 for services described by the predecessor codes for 
HCPCS code P9073, HCPCS codes Q9988 and P9072. Also, the estimated CY 
2020 payment rate for services described by HCPCS code P9073 based on 
the CY 2018 claims data is approximately $600

[[Page 61157]]

which is comparable to the CY 2020 estimated crosswalked payment rate 
using HCPCS code P9037 of approximately $620. These data suggest that a 
crosswalk is no longer necessary. Further, we have now used a cross-
walk for P9073 and its predecessor codes for 4 years, which is longer 
than the typical 2-year period for which we normally cross-walk new 
HCPCS codes. We agreed with past commenters that an extended period of 
cross-walking payment for P9073 was necessary to address the coding 
confusion in 2016 that may have led to the claims data reflecting costs 
for services not described by HCPCS code P9073. However, the above-
referenced coding issues were resolved in January 2018, so we have no 
reason to believe that the data may reflect the costs for services 
other than those described by P9073.
    Accordingly, for CY 2020 and subsequent years, we are finalizing 
the policy to calculate the payment rate for services described by 
HCPCS code P9073 by using claims payment history and to end the 
crosswalk between HCPCS codes P9037 and P9073.
(2) Brachytherapy Sources
    Section 1833(t)(2)(H) of the Act mandates the creation of 
additional groups of covered OPD services that classify devices of 
brachytherapy consisting of a seed or seeds (or radioactive source) 
(``brachytherapy sources'') separately from other services or groups of 
services. The statute provides certain criteria for the additional 
groups. For the history of OPPS payment for brachytherapy sources, we 
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC 
final rule with comment period (77 FR 68240 through 68241). As we have 
stated in prior OPPS updates, we believe that adopting the general OPPS 
prospective payment methodology for brachytherapy sources is 
appropriate for a number of reasons (77 FR 68240). The general OPPS 
methodology uses costs based on claims data to set the relative payment 
weights for hospital outpatient services. This payment methodology 
results in more consistent, predictable, and equitable payment amounts 
per source across hospitals by averaging the extremely high and low 
values, in contrast to payment based on hospitals' charges adjusted to 
costs. We believe that the OPPS methodology, as opposed to payment 
based on hospitals' charges adjusted to cost, also would provide 
hospitals with incentives for efficiency in the provision of 
brachytherapy services to Medicare beneficiaries. Moreover, this 
approach is consistent with our payment methodology for the vast 
majority of items and services paid under the OPPS. We refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 
through 70325) for further discussion of the history of OPPS payment 
for brachytherapy sources.
    In the CY 2020 OPPS/ASC proposed rule, for CY 2020, we proposed to 
use the costs derived from CY 2018 claims data to set the proposed CY 
2020 payment rates for brachytherapy sources because CY 2018 is the 
year of data we proposed to use to set the proposed payment rates for 
most other items and services that would be paid under the CY 2020 
OPPS. We proposed to base the payment rates for brachytherapy sources 
on the geometric mean unit costs for each source, consistent with the 
methodology that we proposed for other items and services paid under 
the OPPS, as discussed in section II.A.2. of the proposed rule. We also 
proposed to continue the other payment policies for brachytherapy 
sources that we finalized and first implemented in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60537). We proposed to pay for 
the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS 
codes C2698 (Brachytherapy source, stranded, not otherwise specified, 
per source) and C2699 (Brachytherapy source, non-stranded, not 
otherwise specified, per source), at a rate equal to the lowest 
stranded or nonstranded prospective payment rate for such sources, 
respectively, on a per source basis (as opposed to, for example, a per 
mCi), which is based on the policy we established in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66785). We also proposed to 
continue the policy we first implemented in the CY 2010 OPPS/ASC final 
rule with comment period (74 FR 60537) regarding payment for new 
brachytherapy sources for which we have no claims data, based on the 
same reasons we discussed in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66786; which was delayed until January 1, 2010 by 
section 142 of Pub. L. 110-275). Specifically, this policy is intended 
to enable us to assign new HCPCS codes for new brachytherapy sources to 
their own APCs, with prospective payment rates set based on our 
consideration of external data and other relevant information regarding 
the expected costs of the sources to hospitals. The proposed CY 2020 
payment rates for brachytherapy sources were included in Addendum B to 
the proposed rule (which is available via the internet on the CMS 
website) and were identified with status indicator ``U''.
    For CY 2018, we assigned status indicator ``U'' (Brachytherapy 
Sources, Paid under OPPS; separate APC payment) to HCPCS code C2645 
(Brachytherapy planar source, palladium-103, per square millimeter) in 
the absence of claims data and established a payment rate using 
external data (invoice price) at $4.69 per mm\2\. For CY 2019, in the 
absence of sufficient claims data, we continued to establish a payment 
rate for C2645 at $4.69 per mm\2\. For CY 2020, we proposed to continue 
to assign status indicator ``U'' to HCPCS code C2645 (Brachytherapy 
planar source, palladium-103, per square millimeter). Our CY 2018 
claims data available for the proposed CY 2020 rule, included two 
claims with over 9,000 units of HCPCS code C2645. Therefore, we stated 
our belief that the CY 2018 claims data were adequate to establish an 
APC payment rate for HCPCS code C2645 and to discontinue our use of 
external data for this brachytherapy source. Specifically, we proposed 
to set the proposed CY 2020 payment rate at the geometric mean cost of 
HCPCS code C2645 based on CY 2018 claims data, which is $1.02 per 
mm\2\.
    Comment: One commenter stated that the reduction in the payment 
rate for HCPCS code C2645 (Brachytherapy planar source, palladium-103, 
per square millimeter) for CY 2020 will preclude outpatient use for an 
FDA-cleared, predominantly outpatient indication, for C2645. 
Additionally, the commenter argued that the two claims used to 
establish the payment rate for C2645 are not a sufficient volume for 
ratesetting and that the claims are most likely erroneous in that the 
brachytherapy source was used for procedures on the inpatient-only 
list.
    Response: Claims that include brachytherapy sources along with 
procedures on the inpatient-only list are sufficient and appropriate to 
use for our ratesetting process as brachytherapy sources are line-item 
paid. However, given the limited number of claims for HCPCS C2645 for 
both CY 2020 and previous calendar years and the new FDA-approved 
outpatient indication for HCPCS code C2645, we are persuaded that the 
proposed CY 2020 payment rate, which is significantly lower than that 
of the rate in effect in prior years, may not adequately represent the 
costs associated with C2645. Therefore, we are using our equitable 
adjustment authority under section 1833(t)(2)(E) of the Act, which 
states that the Secretary shall establish, in a budget neutral manner, 
other adjustments as

[[Page 61158]]

determined to be necessary to ensure equitable payments, to maintain 
the CY 2019 rate for this brachytherapy source, despite the lower 
geometric mean costs of $1.03 per mm\2\ available in the claims data 
used for this final rule with comment period. We believe this situation 
is unique, given the very limited number of claims for this 
brachytherapy source for both CY 2020 ratesetting purposes and previous 
calendar years.
    After consideration of the public comment we received, we are not 
finalizing the proposed rate for C2645 and are instead assigning the 
brachytherapy source described by HCPCS code C2645 a payment rate of 
$4.69 mm\2\ for CY 2020 through use of our equitable adjustment 
authority.
    Comment: Some commenters recommended that we reevaluate our 
approach to ratesetting HCPCS C2642 (Brachytherapy source, stranded, 
cesium-131, per source) and stated that our proposed CY 2020 payment 
rate of $67.29 per source for HCPCS code C2642 would be too low to 
ensure fair and adequate reimbursement. Additionally, one provider who 
billed C2642 stated there was a clerical error and that it may have 
inadvertently underreported the actual costs for C2642 incurred by the 
provider.
    Response: Based on the most current available data for the CY 2020 
OPPS/ASC final rule with comment period, the geometric mean for HCPCS 
code C2642 based on 85 claims from CY 2018 is $75.06 per source. We 
note that the CY 2019 payment rate for HCPCS Code C2642 was $79.94 per 
source. We believe that the variation in costs for HCPCS code C2642 
does not appear unusual or erroneous and that the CY 2020 geometric 
mean for HCPCS code C2642 based on CY 2018 claims data is consistent 
with historical payment rates for this brachytherapy source.
    Comment: One commenter stated that the geometric mean cost and 
payment for brachytherapy sources has fluctuated significantly since 
2013. The commenter argued that such fluctuations may put financial 
pressure on providers and create access barriers for beneficiaries to 
receive brachytherapy. The commenter requested we review and consider 
removing outliers to ensure payment stability for low-volume 
brachytherapy sources in future rulemaking.
    Response: We thank the commenter for their recommendation and will 
take it under consideration in future rulemaking. As discussed in the 
CY 2013 OPPS/ASC final rule with comment period (77 FR 68259 through 
68271), geometric mean costs better encompass the variation in costs 
that occur when providing a service because, in addition to the 
individual cost values that are reflected by medians, geometric means 
reflect the magnitude of the cost measurements, and thus are more 
sensitive to changes in the data. OPPS relative payment weights based 
on geometric mean costs would better capture the range of costs 
associated with providing services. Further, geometric means capture 
cost changes that are introduced slowly into the system on a case-by-
case or hospital-by-hospital basis. For these reasons, we believe it 
would be inappropriate to remove outliers when determining 
brachytherapy geometric mean costs and payment rates.
    We continue to invite hospitals and other parties to submit 
recommendations to us for new codes to describe new brachytherapy 
sources. Such recommendations should be directed to the Division of 
Outpatient Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid 
Services, 7500 Security Boulevard, Baltimore, MD 21244. We will 
continue to add new brachytherapy source codes and descriptors to our 
systems for payment on a quarterly basis.
b. Comprehensive APCs (C-APCs) for CY 2020
(1) Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), we finalized a comprehensive payment policy that 
packages payment for adjunctive and secondary items, services, and 
procedures into the most costly primary procedure under the OPPS at the 
claim level. The policy was finalized in CY 2014, but the effective 
date was delayed until January 1, 2015, to allow additional time for 
further analysis, opportunity for public comment, and systems 
preparation. The comprehensive APC (C-APC) policy was implemented 
effective January 1, 2015, with modifications and clarifications in 
response to public comments received regarding specific provisions of 
the C-APC policy (79 FR 66798 through 66810).
    A C-APC is defined as a classification for the provision of a 
primary service and all adjunctive services provided to support the 
delivery of the primary service. We established C-APCs as a category 
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 
(79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70332), we finalized 10 additional C-APCs to be 
paid under the existing C-APC payment policy and added 1 additional 
level to both the Orthopedic Surgery and Vascular Procedures clinical 
families, which increased the total number of C-APCs to 37 for CY 2016. 
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584 
through 79585), we finalized another 25 C-APCs for a total of 62 C-
APCs. In the CY 2018 OPPS/ASC final rule with comment period, we did 
not change the total number of C-APCs from 62. In the CY 2019 OPPS/ASC 
final rule with comment period, we created 3 new C-APCs, increasing the 
total number to 65 (83 FR 58844 through 58846).
    Under our C-APC policy, we designate a service described by a HCPCS 
code assigned to a C-APC as the primary service when the service is 
identified by OPPS status indicator ``J1''. When such a primary service 
is reported on a hospital outpatient claim, taking into consideration 
the few exceptions that are discussed below, we make payment for all 
other items and services reported on the hospital outpatient claim as 
being integral, ancillary, supportive, dependent, and adjunctive to the 
primary service (hereinafter collectively referred to as ``adjunctive 
services'') and representing components of a complete comprehensive 
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services 
are packaged into the payments for the primary services. This results 
in a single prospective payment for each of the primary, comprehensive 
services based on the costs of all reported services at the claim 
level.
    Services excluded from the C-APC policy under the OPPS include 
services that are not covered OPD services, services that cannot by 
statute be paid for under the OPPS, and services that are required by 
statute to be separately paid. This includes certain mammography and 
ambulance services that are not covered OPD services in accordance with 
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also 
are required by statute to receive separate payment under section 
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which 
also require separate payment under section 1833(t)(6) of the Act; 
self-administered drugs (SADs) that are not otherwise packaged as 
supplies because they are not covered under Medicare Part B under 
section 1861(s)(2)(B) of the Act; and certain preventive services (78 
FR 74865 and 79 FR 66800 through 66801). A list of services excluded 
from the C-APC policy is included in Addendum J to this final rule with 
comment period

[[Page 61159]]

(which is available via the internet on the CMS website).
    The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period for the C-APCs and modified and 
implemented beginning in CY 2015 is summarized as follows (78 FR 74887 
and 79 FR 66800):
    Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule 
with comment period, we define the C-APC payment policy as including 
all covered OPD services on a hospital outpatient claim reporting a 
primary service that is assigned to status indicator ``J1'', excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS. Services and procedures described by HCPCS 
codes assigned to status indicator ``J1'' are assigned to C-APCs based 
on our usual APC assignment methodology by evaluating the geometric 
mean costs of the primary service claims to establish resource 
similarity and the clinical characteristics of each procedure to 
establish clinical similarity within each APC.
    In the CY 2016 OPPS/ASC final rule with comment period, we expanded 
the C-APC payment methodology to qualifying extended assessment and 
management encounters through the ``Comprehensive Observation 
Services'' C-APC (C-APC 8011). Services within this APC are assigned 
status indicator ``J2''. Specifically, we make a payment through C-APC 
8011 for a claim that:
     Does not contain a procedure described by a HCPCS code to 
which we have assigned status indicator ``T''
     Contains 8 or more units of services described by HCPCS 
code G0378 (Hospital observation services, per hour);
     Contains services provided on the same date of service or 
1 day before the date of service for HCPCS code G0378 that are 
described by one of the following codes: HCPCS code G0379 (Direct 
admission of patient for hospital observation care) on the same date of 
service as HCPCS code G0378; CPT code 99281 (Emergency department visit 
for the evaluation and management of a patient (Level 1)); CPT code 
99282 (Emergency department visit for the evaluation and management of 
a patient (Level 2)); CPT code 99283 (Emergency department visit for 
the evaluation and management of a patient (Level 3)); CPT code 99284 
(Emergency department visit for the evaluation and management of a 
patient (Level 4)); CPT code 99285 (Emergency department visit for the 
evaluation and management of a patient (Level 5)) or HCPCS code G0380 
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B 
emergency department visit (Level 2)); HCPCS code G0382 (Type B 
emergency department visit (Level 3)); HCPCS code G0383 (Type B 
emergency department visit (Level 4)); HCPCS code G0384 (Type B 
emergency department visit (Level 5)); CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of a patient); and
     Does not contain services described by a HCPCS code to 
which we have assigned status indicator ``J1''.
    The assignment of status indicator ``J2'' to a specific combination 
of services performed in combination with each other allows for all 
other OPPS payable services and items reported on the claim (excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS) to be deemed adjunctive services representing 
components of a comprehensive service and resulting in a single 
prospective payment for the comprehensive service based on the costs of 
all reported services on the claim (80 FR 70333 through 70336).
    Services included under the C-APC payment packaging policy, that 
is, services that are typically adjunctive to the primary service and 
provided during the delivery of the comprehensive service, include 
diagnostic procedures, laboratory tests, and other diagnostic tests and 
treatments that assist in the delivery of the primary procedure; visits 
and evaluations performed in association with the procedure; uncoded 
services and supplies used during the service; durable medical 
equipment as well as prosthetic and orthotic items and supplies when 
provided as part of the outpatient service; and any other components 
reported by HCPCS codes that represent services that are provided 
during the complete comprehensive service (78 FR 74865 and 79 FR 
66800).
    In addition, payment for hospital outpatient department services 
that are similar to therapy services and delivered either by therapists 
or nontherapists is included as part of the payment for the packaged 
complete comprehensive service. These services that are provided during 
the perioperative period are adjunctive services and are deemed not to 
be therapy services as described in section 1834(k) of the Act, 
regardless of whether the services are delivered by therapists or other 
nontherapist health care workers. We have previously noted that therapy 
services are those provided by therapists under a plan of care in 
accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the 
Act and are paid for under section 1834(k) of the Act, subject to 
annual therapy caps as applicable (78 FR 74867 and 79 FR 66800). 
However, certain other services similar to therapy services are 
considered and paid for as hospital outpatient department services. 
Payment for these nontherapy outpatient department services that are 
reported with therapy codes and provided with a comprehensive service 
is included in the payment for the packaged complete comprehensive 
service. We note that these services, even though they are reported 
with therapy codes, are hospital outpatient department services and not 
therapy services. We refer readers to the July 2016 OPPS Change Request 
9658 (Transmittal 3523) for further instructions on reporting these 
services in the context of a C-APC service.
    Items included in the packaged payment provided in conjunction with 
the primary service also include all drugs, biologicals, and 
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged 
supplies (78 FR 74868 through 74869 and 74909 and 79 FR 66800). We 
refer readers to Section 50.2M, Chapter 15, of the Medicare Benefit 
Policy Manual for a description of our policy on SADs treated as 
hospital outpatient supplies, including lists of SADs that function as 
supplies and those that do not function as supplies.
    We define each hospital outpatient claim reporting a single unit of 
a single primary service assigned to status indicator ``J1'' as a 
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line 
item charges for services included on the C-APC claim are converted to 
line item costs, which are then summed to develop the estimated APC 
costs. These claims are then assigned one unit of the service with 
status indicator ``J1'' and later used to develop the geometric mean 
costs for the C-APC relative payment weights. (We note that we use the 
term ``comprehensive'' to describe the geometric mean cost of a claim 
reporting ``J1'' service(s) or the geometric mean cost of a C-APC, 
inclusive of all of the items and services included in the C-APC 
service payment bundle.) Charges for services that would otherwise be 
separately payable are added to the charges for the primary service. 
This process differs from our traditional cost accounting methodology 
only in that all such services on the claim are packaged

[[Page 61160]]

(except certain services as described above). We apply our standard 
data trims, which exclude claims with extremely high primary units or 
extreme costs.
    The comprehensive geometric mean costs are used to establish 
resource similarity and, along with clinical similarity, dictate the 
assignment of the primary services to the C-APCs. We establish a 
ranking of each primary service (single unit only) to be assigned to 
status indicator ``J1'' according to its comprehensive geometric mean 
costs. For the minority of claims reporting more than one primary 
service assigned to status indicator ``J1'' or units thereof, we 
identify one ``J1'' service as the primary service for the claim based 
on our cost-based ranking of primary services. We then assign these 
multiple ``J1'' procedure claims to the C-APC to which the service 
designated as the primary service is assigned. If the reported ``J1'' 
services on a claim map to different C-APCs, we designate the ``J1'' 
service assigned to the C-APC with the highest comprehensive geometric 
mean cost as the primary service for that claim. If the reported 
multiple ``J1'' services on a claim map to the same C-APC, we designate 
the most costly service (at the HCPCS code level) as the primary 
service for that claim. This process results in initial assignments of 
claims for the primary services assigned to status indicator ``J1'' to 
the most appropriate C-APCs based on both single and multiple procedure 
claims reporting these services and clinical and resource homogeneity.
    Complexity Adjustments. We use complexity adjustments to provide 
increased payment for certain comprehensive services. We apply a 
complexity adjustment by promoting qualifying paired ``J1'' service 
code combinations or paired code combinations of ``J1'' services and 
certain add-on codes (as described further below) from the originating 
C-APC (the C-APC to which the designated primary service is first 
assigned) to the next higher paying C-APC in the same clinical family 
of C-APCs. We apply this type of complexity adjustment when the paired 
code combination represents a complex, costly form or version of the 
primary service according to the following criteria:
     Frequency of 25 or more claims reporting the code 
combination (frequency threshold); and
     Violation of the 2 times rule, as stated in section 
1833(t)(2) of the Act and section III.B.2. of this final rule, in the 
originating C-APC (cost threshold).
    These criteria identify paired code combinations that occur 
commonly and exhibit materially greater resource requirements than the 
primary service. The CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79582) included a revision to the complexity adjustment 
eligibility criteria. Specifically, we finalized a policy to 
discontinue the requirement that a code combination (that qualifies for 
a complexity adjustment by satisfying the frequency and cost criteria 
thresholds described above) also not create a 2 times rule violation in 
the higher level or receiving APC.
    After designating a single primary service for a claim, we evaluate 
that service in combination with each of the other procedure codes 
reported on the claim assigned to status indicator ``J1'' (or certain 
add-on codes) to determine if there are paired code combinations that 
meet the complexity adjustment criteria. For a new HCPCS code, we 
determine initial C-APC assignment and qualification for a complexity 
adjustment using the best available information, crosswalking the new 
HCPCS code to a predecessor code(s) when appropriate.
    Once we have determined that a particular code combination of 
``J1'' services (or combinations of ``J1'' services reported in 
conjunction with certain add-on codes) represents a complex version of 
the primary service because it is sufficiently costly, frequent, and a 
subset of the primary comprehensive service overall according to the 
criteria described above, we promote the claim including the complex 
version of the primary service as described by the code combination to 
the next higher cost C-APC within the clinical family, unless the 
primary service is already assigned to the highest cost APC within the 
C-APC clinical family or assigned to the only C-APC in a clinical 
family. We do not create new APCs with a comprehensive geometric mean 
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity 
adjustments. Therefore, the highest payment for any claim including a 
code combination for services assigned to a C-APC would be the highest 
paying C-APC in the clinical family (79 FR 66802).
    We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify 
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70331), all add-on codes that can be 
appropriately reported in combination with a base code that describes a 
primary ``J1'' service are evaluated for a complexity adjustment.
    To determine which combinations of primary service codes reported 
in conjunction with an add-on code may qualify for a complexity 
adjustment for CY 2020, in the CY 2020 OPPS/ASC proposed rule (84 FR 
39414), we proposed to apply the frequency and cost criteria thresholds 
discussed above, testing claims reporting one unit of a single primary 
service assigned to status indicator ``J1'' and any number of units of 
a single add-on code for the primary ``J1'' service. If the frequency 
and cost criteria thresholds for a complexity adjustment are met and 
reassignment to the next higher cost APC in the clinical family is 
appropriate (based on meeting the criteria outlined above), we make a 
complexity adjustment for the code combination; that is, we reassign 
the primary service code reported in conjunction with the add-on code 
to the next higher cost C-APC within the same clinical family of C-
APCs. As previously stated, we package payment for add-on codes into 
the C-APC payment rate. If any add-on code reported in conjunction with 
the ``J1'' primary service code does not qualify for a complexity 
adjustment, payment for the add-on service continues to be packaged 
into the payment for the primary service and is not reassigned to the 
next higher cost C-APC. We listed the complexity adjustments for ``J1'' 
and add-on code combinations for CY 2020, along with all of the other 
proposed complexity adjustments, in Addendum J to the CY 2020 OPPS/ASC 
proposed rule (which is available via the internet on the CMS website).
    Addendum J to the proposed rule included the cost statistics for 
each code combination that would qualify for a complexity adjustment 
(including primary code and add-on code combinations). Addendum J to 
the proposed rule also contained summary cost statistics for each of 
the paired code combinations that describe a complex code combination 
that would qualify for a complexity adjustment and were proposed to be 
reassigned to the next higher cost C-APC within the clinical family. 
The combined statistics for all proposed reassigned complex code 
combinations were represented by an alphanumeric code with the first 4 
digits of the designated primary service followed by a letter. For 
example, the proposed geometric mean cost listed in Addendum J for the 
code combination described by complexity adjustment assignment 3320R, 
which is assigned to C-APC 5224 (Level 4 Pacemaker and

[[Page 61161]]

Similar Procedures), includes all paired code combinations that were 
proposed to be reassigned to C-APC 5224 when CPT code 33208 is the 
primary code. Providing the information contained in Addendum J to the 
proposed rule allowed stakeholders the opportunity to better assess the 
impact associated with the proposed reassignment of claims with each of 
the paired code combinations eligible for a complexity adjustment.
    Comment: Several commenters requested that CMS alter the 
established C-APC complexity adjustment eligibility criteria to allow 
additional code combinations to qualify for complexity adjustments. 
Some commenters reiterated their request to allow clusters of 
procedures, consisting of a ``J1'' code-pair and multiple other 
associated add-on codes used in combination with that ``J1'' code-pair 
to qualify for complexity adjustments. Other commenters requested that 
CMS allow procedures assigned status indicator ``S'' or ``T'' to be 
eligible for complexity adjustments, to allow a C-APC to receive 
payment at the C-APC rate two levels higher within the clinical family 
when there is a violation of the two-times rule in the receiving C-APC 
and also to account for patient characteristics such as comorbidities 
and sociodemographic factors in the complexity adjustment policy. One 
commenter recommended that HCPCS code 0546T--Radiofrequency 
spectroscopy, real time, intraoperative margin assessment, at the time 
of partial mastectomy, with report--be assigned to APC 5091--Level 1 
Breast/Lymphatic Surgery and Related Procedures and designated for 
complexity adjustment to APC 5092--Level 2 Breast/Lymphatic Surgery and 
Related Procedures for CY 2020.
    We also received a comment requesting that CMS modify its 
complexity adjustment criteria and apply the complexity adjustment to 
all blue light cystoscopy with Cysview procedures in the HOPD, 
including eliminating the claim frequency requirement to determine 
eligibility for the complexity adjustment and expanding the eligibility 
for a complexity adjustment to other APCs besides C-APCs.
    Response: We appreciate these comments. However, at this time, we 
do not believe changes to the C-APC complexity adjustment criteria are 
necessary or that we should make exceptions to the criteria to allow 
claims with the code combinations suggested by the commenters to 
receive complexity adjustments. As stated previously (81 FR 79582), we 
continue to believe that the complexity adjustment criteria, which 
require a frequency of 25 or more claims reporting a code combination 
and a violation of the 2 times rule in the originating C-APC in order 
to receive payment in the next higher cost C-APC within the clinical 
family, are adequate to determine if a combination of procedures 
represents a complex, costly subset of the primary service. If a code 
combination meets these criteria, the combination receives payment at 
the next higher cost C-APC. Code combinations that do not meet these 
criteria receive the C-APC payment rate associated with the primary 
``J1'' service. A minimum of 25 claims is already a very low threshold 
for a national payment system. Lowering the minimum of 25 claims 
further could lead to unnecessary complexity adjustments for service 
combinations that are rarely performed.
    We also do not believe that it is necessary to provide payment for 
claims including qualifying code combinations at two APC levels higher 
than the originating APC. As stated in the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 58842), we believe that payment at the next 
higher paying C-APC is adequate for code combinations that exhibit 
materially greater resource requirements than the primary service and 
that, in many cases, paying the rate assigned to two levels higher may 
lead to a significant overpayment. As mentioned previously, we do not 
create new APCs with a comprehensive geometric mean cost that is higher 
than the highest geometric mean cost C-APC in a clinical family just to 
accommodate potential complexity adjustments. The highest payment for 
any claim including a code combination for services assigned to a C-APC 
would be the highest paying C- APC in the clinical family (79 FR 
66802). Therefore, a policy to pay for claims with qualifying code 
combinations at two C-APC levels higher than the originating APC is not 
always feasible.
    Lastly, as stated in the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58843), we do not believe that it is necessary to adjust 
the complexity adjustment criteria to allow claims that include more 
than two ``J1'' procedures, procedures that are not assigned to C-APCs, 
or procedures performed at certain hospitals with patients with more 
comorbidities, to qualify for a complexity adjustment. As mentioned 
earlier, we believe the current criteria are adequate to determine if a 
combination of procedures represents a complex, costly subset of the 
primary service.
    With regard to the requests for further complexity adjustments for 
blue light cystoscopy procedures using the drug Cysview, as discussed 
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59243-
59246), we acknowledged that there are additional equipment, supplies, 
operating room time, and other resources required to perform blue light 
cystoscopy in addition to white light cystoscopy. We also acknowledged 
stakeholder concerns that the payment for blue light cystoscopy 
procedures involving Cysview[supreg] may be creating a barrier to 
beneficiaries receiving access to reasonable and necessary care for 
which there may not be a clinically comparable alternative. Based on 
these issues, in CY 2018, we created a HCPCS C-code (C9738--Adjunctive 
blue light cystoscopy with fluorescent imaging agent (list separately 
in addition to code for primary procedure)) to describe blue light 
cystoscopy with fluorescent imaging agent and allowed this code to be 
eligible for complexity adjustments when billed with procedure codes 
used to describe white light cystoscopy of the bladder, although this 
code is not a ``J1'' service or an add-on code for the primary ``J1'' 
service. For CY 2020, there are three code combinations of six total 
involving C9738 and procedure codes used to describe white light 
cystoscopy that will qualify for a complexity adjustment. At this time, 
we do not believe that further modifications to the C-APC policy are 
necessary.
    After consideration of the public comments we received on the 
proposed complexity adjustment policy, we are finalizing the C-APC 
complexity adjustment policy for CY 2020, as proposed, without 
modification.
(2) Additional C-APCs for CY 2020
    For CY 2020 and subsequent years, in the CY 2020 OPPS/ASC proposed 
rule (84 FR 39414), we proposed to continue to apply the C-APC payment 
policy methodology. We refer readers to the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79583) for a discussion of the C-APC payment 
policy methodology and revisions.
    Each year, in accordance with section 1833(t)(9)(A) of the Act, we 
review and revise the services within each APC group and the APC 
assignments under the OPPS. As a result of our annual review of the 
services and the APC assignments under the OPPS, in the proposed rule 
(84 FR 39414), we proposed to add two C-APCs under the existing C-APC 
payment policy in CY 2020: Proposed C-APC 5182 (Level 2

[[Page 61162]]

Vascular Procedures); and proposed C-APC 5461 (Level 1 Neurostimulator 
and Related Procedures). These APCs were selected to be included in 
this proposal because, similar to other C-APCs, these APCs include 
primary, comprehensive services, such as major surgical procedures, 
that are typically reported with other ancillary and adjunctive 
services. Also, similar to other APCs that have been converted to C-
APCs, there are higher APC levels within the clinical family or related 
clinical family of these APCs that have previously been assigned to a 
C-APC. Table 4 of the proposed rule listed the proposed C-APCs for CY 
2020. All C-APCs were displayed in Addendum J to the proposed rule 
(which is available via the internet on the CMS website). Addendum J to 
the proposed rule also contained all of the data related to the C-APC 
payment policy methodology, including the list of proposed complexity 
adjustments and other information.
    We also are considering developing an episode-of-care for skin 
substitutes and are interested in comments regarding a future C-APC for 
procedures using skin substitute products furnished in the hospital 
outpatient department setting. We note that this comment solicitation 
is discussed in section V.B.7. of the proposed rule and this final rule 
with comment period.
    Comment: Several commenters supported the creation of the two new 
proposed C-APCs, encouraging CMS to continue to evaluate outpatient 
charge and cost data for additions to the list of C-APCs during future 
rulemaking periods. One commenter requested that CMS closely monitor 
payments for the proposed C-APC 5461 (Level 1 Neurostimulator and 
Related Products) relative to costs of the procedure to ensure accurate 
compensation and availability in the ASC setting.
    Response: We appreciate the commenters' support and note that we 
annually review the most recent data available to determine costs 
associated with furnishing a service and update payment rates 
accordingly.
    Comment: We received comments requesting that CMS create a C-APC 
for autologous hematopoietic stem cell transplant similar to the C-APC 
established for allogeneic hematopoietic stem cell transplant. The 
commenters stated CMS' APC rate-setting process of using single and 
pseudo-single procedure claims results in an inadequately low APC 
payment rate for autologous stem cell transplant and believed that the 
creation of a C-APC for autologous hematopoietic stem cell transplant 
would improve payment rates by allowing a greater number of claims to 
be used in the rate setting process. The Advisory Panel on Hospital 
Outpatient Payment (HOP Panel) also recommended that CMS consider 
creating a comprehensive APC for autologous stem cell transplantation 
and that CMS provide a rationale if it decides not to create such an 
APC.
    Response: We thank the commenter for this comment. In order to 
determine whether it would be appropriate to create a C-APC for 
autologous hematopoietic stem cell transplant, we modeled this change 
with APC 5242--Level 2 Blood Product Exchange and Related Services, 
which includes CPT code 38241 Hematopoietic progenitor cell (hpc); 
autologous transplantation as well as APC 5243--Level 3 Blood Product 
Exchange and Related Services, in keeping with our practice of 
converting APCs to C-APCs that have higher APC levels within the 
clinical family that are assigned to a C-APC.
    After analyzing the results, we found that creating a C-APC for APC 
5242 would increase the number of single claims available for 
ratesetting for this APC by approximately 8 percent, however creating 
new C-APCs in the Stem Cell Transplant clinical family would decrease 
the geometric mean cost of C-APC 5244--Level 4 Blood Product Exchange 
and Related Services by approximately 75 percent due to complexity 
adjustments of code combinations within the clinical family, 
specifically complexity adjustments from C-APC 5243 to C-APC 5244. 
Therefore, at this time we do not believe it is appropriate to create a 
C-APC for autologous hematopoietic stem cell transplant.
    Comment: Two manufacturers of drugs used in ocular procedures 
requested that CMS discontinue the C-APC payment policy for existing C-
APCs that include procedures involving their drugs and instead provide 
separate payment for the drugs. The manufacturer commenters believed 
that the C-APC packaging policy, which packages payment for certain 
drugs that are adjunctive to the primary service, results in 
underpayment for the drugs and violates the 2 times rule.
    Response: We continue to believe that the procedures assigned to 
the proposed C-APCs, including the procedures involving the drugs used 
in ocular procedures mentioned by the commenters, are appropriately 
paid through a C-APC and the costs of drugs (as well as other items or 
services furnished with the procedures) are reflected in hospital 
billing, and therefore the rates that are established for the ocular 
procedures. As stated in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79584), procedures assigned to C-APCs are primary 
services (mostly major surgical procedures) that are typically the 
focus of the hospital outpatient stay. In addition, with regard to the 
packaging of the drugs based on the C-APC policy, as stated in previous 
rules (78 FR 74868 through 74869 and 74909 and 79 FR 66800), items 
included in the packaged payment provided with the primary ``J1'' 
service include all drugs, biologicals, and radiopharmaceuticals 
payable under the OPPS, regardless of cost, except those drugs with 
pass-through payment status. In accordance with section 1833(t)(2) of 
the Act and Sec.  419.31 of the regulations, we annually review the 
items and services within an APC group to determine if there are any 
APC violations of the 2 times rule and whether there are any revisions 
to APC assignments that may be necessary or any exceptions that should 
be made.
    Comment: Several commenters, including device manufacturer 
associations, expressed concern that the C-APC payment rates may not 
adequately reflect the costs associated with services and requested 
that CMS not establish any additional C-APCs. These comments questioned 
the broader C-APC payment methodology, ratesetting accuracy, the impact 
of C-APCs on broader agency objectives, and recommended methodological 
changes to better capture costs of providing comprehensive services 
before further expansion. Some commenters were concerned that hospital 
are not correctly charging for procedures assigned to C-APCs and urged 
CMS to invest in policies and education for hospitals regarding correct 
billing patterns. These commenters also requested that CMS provide an 
analysis of the impact of the C-APC policy on affected procedures and 
patient access to services.
    Response: We appreciate the comments. We continue to believe that 
the proposed new C-APCs for CY 2020 are appropriate to be added to the 
existing C-APC payment policy. We also note that, in the CY 2018 OPPS/
ASC final rule with comment period (82 FR 59246), we conducted an 
analysis of the effects of the C-APC policy. The analysis looked at 
data from CY 2016 OPPS/ASC final rule with comment period, the CY 2017 
OPPS/ASC final rule with comment period, and the CY 2018 OPPS/ASC 
proposed rule, which involved claims data from CY 2014 (before C-APCs 
became effective) to CY 2016. We looked at separately payable codes 
that were then assigned to C-APCs and, overall, we observed an increase 
in claim line frequency, units

[[Page 61163]]

billed, and Medicare payment for those procedures, which suggest that 
the C-APC payment policy did not adversely affect access to care or 
reduce payments to hospitals.
    Comment: One commenter requested that CMS discontinue the C-APC 
payment policy for single session stereotactic radiosurgery (SRS) 
procedures, stating concerns that the C-APC methodology does not 
account for the complexity of delivering radiation therapy and fails to 
capture appropriately coded claims. The commenters also requested that 
CMS continue to make separate payments for the 10 planning and 
preparation codes related to SRS and include the HCPCS code for IMRT 
planning (77301) on the list of planning and preparation codes, stating 
that the service has become more common in single fraction radiosurgery 
treatment planning.
    Response: At this time, we do not believe that it is necessary to 
discontinue the C-APCs that include single session SRS procedures. We 
continue to believe that the C-APC policy is appropriately applied to 
these surgical procedures for the reasons cited when this policy was 
first adopted and note that the commenters did not provide any 
empirical evidence to support their claims that the existing C-APC 
policy does not adequately pay for these procedures. Also, we will 
continue in CY 2020 to pay separately for the 10 planning and 
preparation services (HCPCS codes 70551, 70552, 70553, 77011, 77014, 
77280, 77285, 77290, 77295, and 77336) adjunctive to the delivery of 
the SRS treatment using either the Cobalt-60-based or LINAC based 
technology when furnished to a beneficiary within 1 month of the SRS 
treatment for CY 2020 (82 FR 59242 and 59243).
    Comment: Several commenters requested that CMS discontinue the C-
APC payment policy for all surgical insertion codes required for 
brachytherapy treatment. The commenters stated concerns about how the 
C-APC methodology impacts radiation oncology, particularly the delivery 
of brachytherapy for the treatment of cervical cancer. They also stated 
that they oppose C-APC payment for cancer care given the complexity of 
coding, serial billing for cancer care, and potentially different sites 
of service for the initial surgical device insertion and subsequent 
treatment delivery or other supportive services.
    Response: While we continue to believe that the C-APC policy is 
appropriately applied to these surgical procedures, we will continue to 
examine these concerns and will determine if any modifications to this 
policy are warranted in future rulemaking.
    Comment: We received requests for clarifications related to C-APC 
8011 Comprehensive Observation Services (status indicator ``J2''). One 
commenter requested that CMS clarify the distinction between status 
indicators for ``V'' and ``J2''. Another commenter questioned the 
rationale for the established criteria for payment through C-APC 8011, 
specifically the requirement that the claim does not contain a 
procedure described by a HCPCS code to which we have assigned status 
indicator ``T'' that is reported with a date of service on the same day 
or 1 day earlier than the date of service associated with services 
described by HCPCS code G0378.
    Response: The comprehensive observation services C-APC (C-APC 8011) 
was established in CY 2016 (80 FR 70333 through 70336) to provide 
payment for extended assessment and management encounters. C-APC 8011 
is paid and status indicator ``J2'' is assigned when a specific 
combination of services is performed. This combination of services was 
described in previous rulemaking (80 FR 70333 through 70336) in detail 
and is repeated for clarity below. Specifically, we make a payment 
through C-APC 8011 for a claim that:
     Does not contain a procedure described by a HCPCS code to 
which we have assigned status indicator ``T;''
     Contains 8 or more units of services described by HCPCS 
code G0378 (Hospital observation services, per hour);
     Contains services provided on the same date of service or 
1 day before the date of service for HCPCS code G0378 that are 
described by one of the following codes: HCPCS code G0379 (Direct 
admission of patient for hospital observation care) on the same date of 
service as HCPCS code G0378; CPT code 99281 (Emergency department visit 
for the evaluation and management of a patient (Level 1)); CPT code 
99282 (Emergency department visit for the evaluation and management of 
a patient (Level 2)); CPT code 99283 (Emergency department visit for 
the evaluation and management of a patient (Level 3)); CPT code 99284 
(Emergency department visit for the evaluation and management of a 
patient (Level 4)); CPT code 99285 (Emergency department visit for the 
evaluation and management of a patient (Level 5)) or HCPCS code G0380 
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B 
emergency department visit (Level 2)); HCPCS code G0382 (Type B 
emergency department visit (Level 3)); HCPCS code G0383 (Type B 
emergency department visit (Level 4)); HCPCS code G0384 (Type B 
emergency department visit (Level 5)); CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of a patient); and
     Does not contain services described by a HCPCS code to 
which we have assigned status indicator ``J1'.'
    The assignment of status indicator ``J2'' results in a single 
prospective payment for the comprehensive observation services based on 
the costs of all reported services on the claim. We make payment for 
all other items and services reported on the hospital outpatient claim 
as being adjunctive to the specific combination of observation 
services. The assignment of status indicator ``V'' describes a clinic 
or emergency department visit. It does not describe services paid 
through a comprehensive APC and it will not trigger payment through C-
APC 8011.
    With regard to the comment questioning the rationale for the 
requirement that the claim does not contain a procedure described by a 
HCPCS code to which we have assigned status indicator ``T'' that is 
reported with a date of service on the same day or 1 day earlier than 
the date of service associated with services described by HCPCS code 
G0378 in order to be paid through C-APC 8011, this criterion was 
incorrectly quoted as the final policy in the CY 2020 OPPS/ASC proposed 
rule (84 FR 39412). This language has been updated in this final rule 
with comment period. This criterion was proposed in the CY 2016 OPPS/
ASC proposed rule, however a modification of this criterion was 
finalized. We refer readers to the discussion of the establishment of 
C-APC 8011 in the CY 2016 OPPS/ASC Final Rule with comment period (80 
FR 70335-70336). In this rule, we stated in response to commenters' 
concerns regarding packaging payment for potentially high-cost surgical 
procedures into the payment for an observation C-APC, we finalized a 
policy that claims reporting procedures assigned status indicator ``T'' 
should not qualify for payment through C-APC 8011, regardless of 
whether the procedure assigned status indicator ``T'' was furnished 
before or after observation services (described by HCPCS code G0378) 
were provided. We state the final criteria for assignment for payment 
through C-APC 8011 in the CY 2016 OPPS/ASC final rule with comment 
period, including that the

[[Page 61164]]

claims must not contain a procedure described by a HCPCS code to which 
we have assigned status indicator ``T'' (80 FR 70335).
    After consideration of the public comments we received, we are 
finalizing the proposed C-APCs for CY 2020. Table 4 below lists the 
final C-APCs for CY 2020. All C-APCs are displayed in Addendum J to 
this final rule with comment period (which is available via the 
internet on the CMS website). Addendum J to this final rule with 
comment period also contains all of the data related to the C-APC 
payment policy methodology, including the list of complexity 
adjustments and other information for CY 2020.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR12NO19.004


[[Page 61165]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.005


[[Page 61166]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.006

BILLING CODE 4120-01-C
(3) Exclusion of Procedures Assigned to New Technology APCs from the C-
APC Policy
    Services that are assigned to New Technology APCs are typically new 
procedures that do not have sufficient claims history to establish an 
accurate payment for the procedures. Beginning in CY 2002, we retain 
services within New Technology APC groups until we gather sufficient 
claims data to enable us to assign the service to an appropriate 
clinical APC. This policy allows us to move a service from a New 
Technology APC in less than 2 years if sufficient data are available. 
It also allows us to retain a service in a New Technology APC for more 
than 2 years if sufficient data upon which to base a decision for 
reassignment have not been collected (82 FR 59277).
    The C-APC payment policy packages payment for adjunctive and 
secondary items, services, and procedures into the most costly primary 
procedure under the OPPS at the claim level. Prior to CY 2019 when a 
procedure assigned to a New Technology APC was included on the claim 
with a primary procedure, identified by OPPS status indicator ``J1'', 
payment for the new technology service was typically packaged into the 
payment for the primary procedure. Because the new technology service 
was not separately paid in this scenario, the overall number of single 
claims available to determine an appropriate clinical APC for the new 
service was reduced. This was contrary to the objective of the New 
Technology APC payment policy, which is to gather sufficient claims 
data to enable us to assign the service to an appropriate clinical APC.
    For example, for CY 2017, there were seven claims generated for 
HCPCS code 0100T (Placement of a subconjunctival retinal prosthesis 
receiver and pulse generator, and implantation of intraocular retinal 
electrode array, with vitrectomy), which involves the use of the 
Argus[supreg] II Retinal Prosthesis System. However, several of these 
claims were not available for ratesetting because HCPCS code 0100T was 
reported with a ``J1'' procedure and, therefore, payment was packaged 
into the associated C-APC payment. If these services had been 
separately paid under the OPPS, there would be at least two additional 
single claims available for ratesetting. As mentioned previously, the 
purpose of the new technology APC policy is to ensure that there are 
sufficient claims data for new services, which is particularly 
important for services with a low volume such as procedures described 
by HCPCS code 0100T. Another concern is the costs reported for the 
claims when payment is not packaged for a new technology procedure may 
not be representative of all of the services included on a claim that 
is generated, which may also affect our ability to assign the new 
service to the most appropriate clinical APC.
    To address this issue and help ensure that there is sufficient 
claims data for services assigned to New Technology APCs, in the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58847), we proposed 
excluded payment for any procedure that is assigned to a New Technology 
APC (APCs 1491 through 1599 and APCs 1901 through 1908) from being 
packaged when included on a claim with a ``J1'' service assigned to a 
C-APC. For CY 2020, we proposed to continue to exclude payment for any 
procedure that is assigned to a New Technology APC from being packaged 
when included on a claim with a ``J1'' service assigned to a C-APC.
    Some stakeholders have raised questions about whether the policy 
established in the CY 2019 OPPS/ASC final rule with comment period 
would also apply to comprehensive observation services assigned status 
indicator ``J2.'' We recognize that the policy described and adopted in 
the CY 2019 rulemaking may have been ambiguous with respect to this 
issue. While our intention in the CY 2019 rulemaking was only to 
exclude payment for services assigned to New Technology APCs from being 
bundled into the payment for a comprehensive ``J1'' service, we believe 
that there may also be some instances in which it would be clinically 
appropriate to provide a new technology service when providing 
comprehensive observation services. We would not generally expect

[[Page 61167]]

that to be the case, because procedures assigned to New Technology APCs 
typically are new or low-volume surgical procedures, or are specialized 
tests to diagnosis a specific condition. In addition, it is highly 
unlikely a general observation procedure would be assigned to a New 
Technology APC because there are clinical APCs already established 
under the OPPS to classify general observation procedures. As we stated 
in the CY 2016 OPPS/ASC final rule with comment period, observation 
services may not be used for post-operative recovery and, as such, 
observation services furnished with services assigned to status 
indicator ``T'' will always be packaged (80 FR 70334). Therefore, we 
proposed that payment for services assigned to a New Technology APC 
when included on a claim for a service assigned status indicator ``J2'' 
assigned to a C-APC will be packaged into the payment for the 
comprehensive service. Nonetheless, we sought public comments on 
whether it would be clinically appropriate to exclude payment for any 
New Technology APC procedures from being packaged into the payment for 
a comprehensive ``J2'' service starting in CY 2020.
    Comment: Several commenters, including device manufacturers, device 
manufacturer associations and physicians were opposed to our proposal 
to package payment for procedures assigned to a New Technology APC into 
the payment for comprehensive observation services assigned status 
indicator ``J2''. The commenters stated that there were instances where 
beneficiaries receiving observation services may require the types of 
procedures that are assigned to new technology APCs. Several commenters 
specifically mentioned the HeartFlow Analysis, and stated that it could 
be performed appropriately for a patient receiving observation 
services. The commenters also stated that providing separate payment 
for this new technology procedure will allow CMS to collect sufficient 
claims data to enable assignment of the procedure to an appropriate 
clinical APC.
    Response: We appreciate the stakeholders' comments regarding this 
proposal and agree that, although rare, there are situations in which 
it is clinically appropriate to provide a new technology service when 
providing comprehensive observation services. As discussed in the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58847), the purpose 
of the new technology APC policy is to ensure that there are sufficient 
claims data for new services to assign these procedures to an 
appropriate clinical APC and therefore, we excluded procedures assigned 
to New Technology APCs from packaging under the C-APC policy. In the CY 
2019 final rule, we specifically stated that the exclusion policy 
included circumstances when New Technology procedures were billed with 
comprehensive services assigned to status indicator ``J1'', however we 
believe this rationale is also applicable to comprehensive observation 
services that are assigned status indicator ``J2''. Therefore, we are 
modifying our policy for excluding procedures assigned to New 
Technology APCs from the C-APC policy. For CY 2020, we are finalizing 
our policy to continue to exclude payment for any procedure that is 
assigned to a New Technology APC from being packaged when included on a 
claim with a ``J1'' service assigned to a C-APC. For CY 2020, we are 
also finalizing a policy to exclude payment for any procedures that are 
assigned to a New Technology APC from being packaged into the payment 
for comprehensive observation services assigned to status indicator 
``J2'' when they are included on a claim with ``J2'' procedures.
c. Calculation of Composite APC Criteria-Based Costs
    As discussed in the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66613), we believe it is important that the OPPS enhance 
incentives for hospitals to provide necessary, high quality care as 
efficiently as possible. For CY 2008, we developed composite APCs to 
provide a single payment for groups of services that are typically 
performed together during a single clinical encounter and that result 
in the provision of a complete service. Combining payment for multiple, 
independent services into a single OPPS payment in this way enables 
hospitals to manage their resources with maximum flexibility by 
monitoring and adjusting the volume and efficiency of services 
themselves. An additional advantage to the composite APC model is that 
we can use data from correctly coded multiple procedure claims to 
calculate payment rates for the specified combinations of services, 
rather than relying upon single procedure claims which may be low in 
volume and/or incorrectly coded. Under the OPPS, we currently have 
composite policies for mental health services and multiple imaging 
services. (We note that, in the CY 2018 OPPS/ASC final rule with 
comment period, we finalized a policy to delete the composite APC 8001 
(LDR Prostate Brachytherapy Composite) for CY 2018 and subsequent 
years.) We refer readers to the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66611 through 66614 and 66650 through 66652) for 
a full discussion of the development of the composite APC methodology, 
and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) 
and the CY 2018 OPPS/ASC final rule with comment period (82 FR 59241 
through 59242 and 59246 through 52950) for more recent background.
(1) Mental Health Services Composite APC
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39398), we proposed to 
continue our longstanding policy of limiting the aggregate payment for 
specified less resource-intensive mental health services furnished on 
the same date to the payment for a day of partial hospitalization 
services provided by a hospital, which we consider to be the most 
resource-intensive of all outpatient mental health services. We refer 
readers to the April 7, 2000 OPPS final rule with comment period (65 FR 
18452 through 18455) for the initial discussion of this longstanding 
policy and the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74168) for more recent background.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79588 
through 79589), we finalized a policy to combine the existing Level 1 
and Level 2 hospital-based PHP APCs into a single hospital-based PHP 
APC, and thereby discontinue APCs 5861 (Level 1--Partial 
Hospitalization (3 services) for Hospital-Based PHPs) and 5862 (Level--
2 Partial Hospitalization (4 or more services) for Hospital-Based PHPs) 
and replace them with APC 5863 (Partial Hospitalization (3 or more 
services per day)).
    In the CY 2018 OPPS/ASC proposed rule and final rule with comment 
period (82 FR 33580 through 33581 and 59246 through 59247, 
respectively), we proposed and finalized the policy for CY 2018 and 
subsequent years that, when the aggregate payment for specified mental 
health services provided by one hospital to a single beneficiary on a 
single date of service, based on the payment rates associated with the 
APCs for the individual services, exceeds the maximum per diem payment 
rate for partial hospitalization services provided by a hospital, those 
specified mental health services will be paid through composite APC 
8010 (Mental Health Services Composite). In addition, we set the 
payment rate for composite APC 8010 for CY 2018 at the same payment 
rate that will be paid for APC 5863, which is the maximum partial 
hospitalization per diem payment rate for a hospital,

[[Page 61168]]

and finalized a policy that the hospital will continue to be paid the 
payment rate for composite APC 8010. Under this policy, the I/OCE will 
continue to determine whether to pay for these specified mental health 
services individually, or to make a single payment at the same payment 
rate established for APC 5863 for all of the specified mental health 
services furnished by the hospital on that single date of service. We 
continue to believe that the costs associated with administering a 
partial hospitalization program at a hospital represent the most 
resource intensive of all outpatient mental health services. Therefore, 
we do not believe that we should pay more for mental health services 
under the OPPS than the highest partial hospitalization per diem 
payment rate for hospitals.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39398), for CY 2020, 
we proposed that when the aggregate payment for specified mental health 
services provided by one hospital to a single beneficiary on a single 
date of service, based on the payment rates associated with the APCs 
for the individual services, exceeds the maximum per diem payment rate 
for partial hospitalization services provided by a hospital, those 
specified mental health services would be paid through composite APC 
8010 for CY 2020. In addition, we proposed to set the proposed payment 
rate for composite APC 8010 at the same payment rate that we proposed 
for APC 5863, which is the maximum partial hospitalization per diem 
payment rate for a hospital, and that the hospital continue to be paid 
the proposed payment rate for composite APC 8010.
    We did not receive any public comment on these proposals. 
Therefore, we are finalizing our proposal, without modification, that 
when the aggregate payment for specified mental health services 
provided by one hospital to a single beneficiary on a single date of 
service, based on the payment rates associated with the APCs for the 
individual services, exceeds the maximum per diem payment rate for 
partial hospitalization services provided by a hospital, those 
specified mental health services would be paid through composite APC 
8010 for CY 2020. In addition, we are finalizing our proposal to set 
the payment rate for composite APC 8010 for CY 2020 at the same payment 
rate that we set for APC 5863, which is the maximum partial 
hospitalization per diem payment rate for a hospital.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 
8008)
    Effective January 1, 2009, we provide a single payment each time a 
hospital submits a claim for more than one imaging procedure within an 
imaging family on the same date of service, in order to reflect and 
promote the efficiencies hospitals can achieve when performing multiple 
imaging procedures during a single session (73 FR 41448 through 41450). 
We utilize three imaging families based on imaging modality for 
purposes of this methodology: (1) Ultrasound; (2) computed tomography 
(CT) and computed tomographic angiography (CTA); and (3) magnetic 
resonance imaging (MRI) and magnetic resonance angiography (MRA). The 
HCPCS codes subject to the multiple imaging composite policy and their 
respective families are listed in Table 12 of the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74920 through 74924).
    While there are three imaging families, there are five multiple 
imaging composite APCs due to the statutory requirement under section 
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging 
services provided with and without contrast. While the ultrasound 
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast. 
The five multiple imaging composite APCs established in CY 2009 are:
     APC 8004 (Ultrasound Composite);
     APC 8005 (CT and CTA without Contrast Composite);
     APC 8006 (CT and CTA with Contrast Composite);
     APC 8007 (MRI and MRA without Contrast Composite); and
     APC 8008 (MRI and MRA with Contrast Composite).
    We define the single imaging session for the ``with contrast'' 
composite APCs as having at least one or more imaging procedures from 
the same family performed with contrast on the same date of service. 
For example, if the hospital performs an MRI without contrast during 
the same session as at least one other MRI with contrast, the hospital 
will receive payment based on the payment rate for APC 8008, the ``with 
contrast'' composite APC.
    We make a single payment for those imaging procedures that qualify 
for payment based on the composite APC payment rate, which includes any 
packaged services furnished on the same date of service. The standard 
(noncomposite) APC assignments continue to apply for single imaging 
procedures and multiple imaging procedures performed across families. 
For a full discussion of the development of the multiple imaging 
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68559 through 68569).
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39398), we proposed to 
continue to pay for all multiple imaging procedures within an imaging 
family performed on the same date of service using the multiple imaging 
composite APC payment methodology. We stated that we continue to 
believe that this policy would reflect and promote the efficiencies 
hospitals can achieve when performing multiple imaging procedures 
during a single session.
    The proposed CY 2020 payment rates for the five multiple imaging 
composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) were based on 
proposed geometric mean costs calculated from CY 2018 claims available 
for the CY 2020 OPPS/ASC proposed rule that qualified for composite 
payment under the current policy (that is, those claims reporting more 
than one procedure within the same family on a single date of service). 
To calculate the proposed geometric mean costs, we used the same 
methodology that we have used to calculate the geometric mean costs for 
these composite APCs since CY 2014, as described in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74918). The imaging HCPCS 
codes referred to as ``overlap bypass codes'' that we removed from the 
bypass list for purposes of calculating the proposed multiple imaging 
composite APC geometric mean costs, in accordance with our established 
methodology as stated in the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 74918), were identified by asterisks in Addendum N to the 
CY 2020 OPPS/ASC proposed rule (which is available via the internet on 
the CMS website) and were discussed in more detail in section II.A.1.b. 
of the CY 2020 OPPS/ASC proposed rule.
    For the CY 2020 OPPS/ASC proposed rule, we were able to identify 
approximately 700,000 ``single session'' claims out of an estimated 4.9 
million potential claims for payment through composite APCs from our 
ratesetting claims data, which represents approximately 14 percent of 
all eligible claims, to calculate the proposed CY 2020 geometric mean 
costs for the multiple imaging composite APCs. Table 5 of the CY 2020 
OPPS/ASC proposed rule listed the proposed

[[Page 61169]]

HCPCS codes that would be subject to the multiple imaging composite APC 
policy and their respective families and approximate composite APC 
proposed geometric mean costs for CY 2020.
    We did not receive any public comments on these proposals. 
Therefore, we are finalizing our proposal to continue the use of 
multiple imaging composite APCs to pay for services providing more than 
one imaging procedure from the same family on the same date, without 
modification. Table 6 below lists the HCPCS codes that will be subject 
to the multiple imaging composite APC policy and their respective 
families and approximate composite APC final geometric mean costs for 
CY 2020.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR12NO19.007


[[Page 61170]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.008


[[Page 61171]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.009


[[Page 61172]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.010


[[Page 61173]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.011

BILLING CODE 4120-01-C
3. Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
    Like other prospective payment systems, the OPPS relies on the 
concept of averaging to establish a payment rate for services. The 
payment may be more or less than the estimated cost of providing a 
specific service or a bundle of specific services for a particular 
beneficiary. The OPPS packages payments for multiple interrelated items 
and services into a single payment to create incentives for hospitals 
to furnish services most efficiently and to manage their resources with 
maximum flexibility. Our packaging policies support our strategic goal 
of using larger payment bundles in the OPPS to maximize hospitals' 
incentives to provide care in the most efficient manner. For example, 
where there are a variety of devices, drugs, items, and supplies that 
could be used to furnish a service, some of which are more costly than 
others, packaging encourages hospitals to use the most cost-efficient 
item that meets the patient's needs, rather than to routinely use a 
more expensive item, which may occur if separate payment is provided 
for the item.
    Packaging also encourages hospitals to effectively negotiate with 
manufacturers and suppliers to reduce the purchase price of items and 
services or to explore alternative group purchasing arrangements, 
thereby encouraging the most economical health care delivery. 
Similarly, packaging encourages hospitals to establish protocols that 
ensure that necessary services are furnished, while scrutinizing the 
services ordered by practitioners to maximize the efficient use of 
hospital resources. Packaging payments into larger payment bundles 
promotes the predictability and accuracy of payment for services over 
time. Finally, packaging may reduce the importance of refining service-
specific payment because packaged payments include costs associated 
with higher cost cases requiring many ancillary items and services and 
lower cost cases requiring fewer ancillary items and services. Because 
packaging encourages efficiency and is an essential component of a 
prospective payment system, packaging payments for items and services 
that are typically integral, ancillary, supportive, dependent, or 
adjunctive to a primary service has been a fundamental part of the OPPS 
since its implementation in August 2000. For an extensive discussion of 
the history and background of the OPPS packaging policy, we refer 
readers to the CY 2000 OPPS final rule (65 FR 18434), the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66580), the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66817), the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70343), the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79592), the CY 2018 OPPS/ASC 
final rule with comment period (82 FR 59250), and the CY 2019 OPPS/ASC 
final rule with comment period (83 FR 58854). As we continue to develop 
larger payment groups that more broadly reflect services provided in an 
encounter or episode of care, we have expanded the OPPS packaging 
policies. Most, but not necessarily all, categories of items and 
services currently packaged in the OPPS are listed in 42 CFR 419.2(b). 
Our overarching goal is to make payments for all services under the 
OPPS more consistent with those of a prospective payment system and 
less like those of a per-service fee schedule, which pays separately 
for each coded item. As a part of this effort, we have continued to 
examine the payment for items and services provided under the OPPS to 
determine which OPPS services can be packaged to further achieve the 
objective of advancing the OPPS toward a more prospective payment 
system.
    For CY 2020, we examined the items and services currently provided 
under the OPPS, reviewing categories of integral, ancillary, 
supportive, dependent, or adjunctive items and services for which we 
believe payment would be appropriately packaged into payment for the 
primary service that they support. Specifically, we examined the HCPCS 
code definitions (including CPT code descriptors) and outpatient 
hospital billing patterns to determine whether there were categories of 
codes for which packaging would be appropriate according to existing 
OPPS packaging policies or a logical expansion of those existing OPPS 
packaging policies. In the CY 2020 OPPS/ASC proposed rule (84 FR 39423 
through 39424), beginning in CY 2020, we proposed to conditionally 
package the costs of selected newly identified ancillary services into 
payment with a primary service where we believe that the packaged item 
or service is integral, ancillary, supportive, dependent, or adjunctive 
to the provision of care that was reported by the primary service HCPCS 
code. Below we discuss the proposed and finalized changes to the 
packaging policies beginning in CY 2020.
    Comment: We received several comments from patient advocates, 
physicians, drug manufacturers, and professional medical societies 
regarding payment for blue light cystoscopy procedures involving 
Cysview[supreg] (hexaminolevulinate HCl) (described by HCPCS code 
C9275). Cysview[supreg] is a drug that functions as a supply in a 
diagnostic test or procedure and therefore payment for this product is 
packaged with payment for the primary procedure in the OPPS and ASC 
settings. Commenters stated that utilization of Cysview[supreg] is low 
in the HOPD and ASC settings, which they attributed to the packaging of 
Cysview as a drug that functions as a supply in a diagnostic test or 
procedure. Commenters indicated that packaged payment does not 
adequately pay for the blue light cystoscopy procedures, particularly 
in the ASC setting where payment is generally approximately 55 percent 
of the HOPD payment. Commenters believe that providers have been 
deterred from the use of this technology, especially in the ASC, and as 
a result a significant percentage of

[[Page 61174]]

beneficiaries are not able to access the procedure.
    Commenters also stated that there has been literature published 
showing that Blue Light Cystoscopy with Cysview[supreg] is more 
effective than white light cystoscopy alone at detecting and 
eliminating nonmuscle invasive bladder cancer tumors, leading to a 
reduction in bladder cancer recurrence.
    Commenters made various recommendations for payment for blue light 
cystoscopy procedures involving Cysview[supreg], including to pay 
separately for Cysview[supreg] when it is used with blue light 
cystoscopy in the HOPD and ASC settings, to pay separately for 
Cysview[supreg] when it is used with blue light cystoscopy in the ASC 
setting, similar to the policy finalized for Exparel[supreg] in the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58860), or to 
utilize our equitable adjustment authority at section 1833(t)(2)(E) of 
the Act to provide an ``add-on'' or ``drug intensive'' payment to ASCs 
when using Cysview[supreg] in blue light cystoscopy procedures. Other 
commenters requested separate payment for all diagnostic imaging drugs 
(radiopharmaceuticals and contrast agents).
    Response: We acknowledge the concerns of the numerous stakeholders 
who commented on this issue and understand the importance of blue light 
cystoscopy procedures involving Cysview[supreg]. Cysview has been 
packaged as a drug, biological, or radiopharmaceutical that functions 
as a supply in a diagnostic test or procedure since CY 2014 (78 FR 
74930). As we stated in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59244), we recognize that blue light cystoscopy 
represents an additional elective but distinguishable service as 
compared to white light cystoscopy that, in some cases, may allow 
greater detection of bladder tumors in beneficiaries relative to white 
light cystoscopy alone. Given the additional equipment, supplies, 
operating room time, and other resources required to perform blue light 
cystoscopy in addition to white light cystoscopy, in CY 2018, we 
created a new HCPCS C-code to describe blue light cystoscopy and since 
CY 2018 have allowed for complexity adjustments to higher paying C-APCs 
for qualifying white light and blue light cystoscopy code combinations. 
At this time, we continue to believe that Cysview[supreg] is a drug 
that functions as a supply in a diagnostic test or procedure and 
payment for this drug is packaged with payment for the diagnostic 
procedure. Therefore, we do not believe it is necessary to pay 
separately for Cysview[supreg] when it is used with blue light 
cystoscopy in either the HOPD or ASC setting. We also do not believe 
that it would be appropriate to utilize our equitable adjustment 
authority at section 1833(t)(2)(E) of the Act to provide an ``add-on'' 
or ``drug intensive'' payment to ASCs when using Cysview[supreg] in 
blue light cystoscopy procedures nor do we have any evidence to show 
that separate payment for all diagnostic imaging drugs 
(radiopharmaceuticals, contrast agents) is required. However, we will 
continue to examine payment for blue light cystoscopy procedures 
involving Cysview to determine if any changes to this policy would be 
appropriate in future rulemaking.
    Comment: Some commenters requested that we eliminate the packaging 
policy for drugs that function as a supply when used in a diagnostic 
test or procedure.
    Response: In the CY 2014 OPPS/ASC final rule with comment period, 
we established a policy to package drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure. In particular, we referred to drugs, 
biologicals, and radiopharmaceuticals that function as supplies as a 
part of a larger, more encompassing service or procedure, namely, the 
diagnostic test or procedure in which the drug, biological, or 
radiopharmaceutical is employed (78 FR 74927). At this time, we do not 
believe it is necessary to eliminate this policy. As previously noted, 
the OPPS packages payments for multiple interrelated items and services 
into a single payment to create incentives for hospitals to furnish 
services most efficiently and to manage their resources with maximum 
flexibility. Our packaging policies support our strategic goal of using 
larger payment bundles in the OPPS to maximize hospitals' incentives to 
provide care in the most efficient manner.
    Comment: One commenter requested separate payment for add-on codes 
for Fractional Flow Reserve Studies (FFR/iFR) and Intravascular 
Ultrasound (IVUS). The commenter stated that they believe the packaging 
of these codes will disincentivize physicians to perform these adjunct 
procedures because of cost. The codes include:
     93571--Intravascular doppler velocity and/or pressure 
derived coronary flow reserve measurement (coronary vessel or graft) 
during coronary angiography including pharmacologically induced stress; 
initial vessel (list separately in addition to code for primary 
procedure);
     93572--Intravascular doppler velocity and/or pressure 
derived coronary flow reserve measurement (coronary vessel or graft) 
during coronary angiography including pharmacologically induced stress; 
each additional vessel (list separately in addition to code for primary 
procedure));
     92978--Endoluminal imaging of coronary vessel or graft 
using intravascular ultrasound (ivus) or optical coherence tomography 
(oct) during diagnostic evaluation and/or therapeutic intervention 
including imaging supervision, interpretation and report; initial 
vessel (list separately in addition to code for primary procedure); and
     92979--Endoluminal imaging of coronary vessel or graft 
using intravascular ultrasound (ivus) or optical coherence tomography 
(oct) during diagnostic evaluation and/or therapeutic intervention 
including imaging supervision, interpretation and report; each 
additional vessel (list separately in addition to code for primary 
procedure)).
    Response: As stated in the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66630), we continue to believe that IVUS and FFR are 
dependent services that are always provided in association with a 
primary service. Add-on codes represent services that are integral, 
ancillary, supportive, dependent, or adjunctive items and services for 
which we believe payment would be appropriately packaged into payment 
for the primary service that they support. As we have noted in past 
rules, add-on codes do not represent standalone procedures and are 
inclusive to other procedures performed at the same time (79 FR 66818). 
We continue to believe it is unnecessary to provide separate payment 
for the previously mentioned add-on codes at this time.
b. Packaging Policy for Non-Opioid Pain Management Treatments
(1) Background on OPPS/ASC Non-Opioid Pain Management Packaging 
Policies
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33588), within the 
framework of existing packaging categories, such as drugs that function 
as supplies in a surgical procedure or diagnostic test or procedure, we 
requested stakeholder feedback on common clinical scenarios involving 
currently packaged items and services described by HCPCS codes that 
stakeholders believe should not be packaged under the OPPS. We also 
expressed interest in stakeholder

[[Page 61175]]

feedback on common clinical scenarios involving separately payable 
HCPCS codes for which payment would be most appropriately packaged 
under the OPPS. Commenters who responded to the CY 2018 OPPS/ASC 
proposed rule expressed a variety of views on packaging under the OPPS. 
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59255), 
we summarized these public comments. The public comments ranged from 
requests to unpackage most items and services that are either 
conditionally or unconditionally packaged under the OPPS, including 
drugs and devices, to specific requests for separate payment for a 
specific drug or device.
    In terms of Exparel[supreg] in particular, we received several 
requests to pay separately for the drug Exparel[supreg] rather than 
packaging payment for it as a surgical supply. We had previously stated 
that we considered Exparel[supreg] to be a drug that functions as a 
surgical supply because it is indicated for the alleviation of 
postoperative pain (79 FR 66874 and 66875). We had also stated before 
that we considered all items related to the surgical outcome and 
provided during the hospital stay in which the surgery is performed, 
including postsurgical pain management drugs, to be part of the surgery 
for purposes of our drug and biological surgical supply packaging 
policy. (We note that Exparel[supreg] is a liposome injection of 
bupivacaine, an amide local anesthetic, indicated for single-dose 
infiltration into the surgical site to produce postsurgical analgesia. 
In 2011, Exparel[supreg] was approved by FDA for single-dose 
infiltration into the surgical site to provide postsurgical 
analgesia.1 2 Exparel[supreg] had pass-through payment 
status from CYs 2012 through 2014 and was separately paid under both 
the OPPS and the ASC payment system during this 3-year period. 
Beginning in CY 2015, Exparel[supreg] was packaged as a surgical supply 
under both the OPPS and the ASC payment system.)
---------------------------------------------------------------------------

    \1\ 2011 product label available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2011/022496s000lbl.pdf.
    \2\ 2011 FDA approval letter available at: https://www.accessdata.fda.gov/drugsatfda_docs/nda/2011/022496Orig1s000Approv.pdf.
---------------------------------------------------------------------------

    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 
52485, we reiterated our position with regard to payment for 
Exparel[supreg], stating that we believed that payment for this drug is 
appropriately packaged with the primary surgical procedure. We also 
stated in the CY 2018 OPPS/ASC final rule with comment period that CMS 
would continue to explore and evaluate packaging policies under the 
OPPS and consider these policies in future rulemaking.
    In addition to stakeholder feedback regarding OPPS packaging 
policies in response to the CY 2019 OPPS/ASC proposed rule, the 
President's Commission on Combating Drug Addiction and the Opioid 
Crisis (the Commission) had recommended that CMS examine payment 
policies for certain drugs that function as a supply, specifically non-
opioid pain management treatments (83 FR 37068). The Commission was 
established in 2017 to study ways to combat and treat drug abuse, 
addiction, and the opioid crisis. The Commission's report \3\ included 
a recommendation for CMS to ``. . . review and modify ratesetting 
policies that discourage the use of non-opioid treatments for pain, 
such as certain bundled payments that make alternative treatment 
options cost prohibitive for hospitals and doctors, particularly those 
options for treating immediate postsurgical pain . . . .'' \4\ With 
respect to the packaging policy, the Commission's report states that 
``. . . the current CMS payment policy for `supplies' related to 
surgical procedures creates unintended incentives to prescribe opioid 
medications to patients for postsurgical pain instead of administering 
non-opioid pain medications. Under current policies, CMS provides one 
all-inclusive bundled payment to hospitals for all `surgical supplies,' 
which includes hospital administered drug products intended to manage 
patients' postsurgical pain. This policy results in the hospitals 
receiving the same fixed fee from Medicare whether the surgeon 
administers a non-opioid medication or not.'' \5\ HHS also presented an 
Opioid Strategy in April 2017 \6\ that aims in part to support cutting-
edge research and advance the practice of pain management. On October 
26, 2017, the President declared the opioid crisis a national public 
health emergency under Federal law \7\ and this declaration was most 
recently renewed on April 19, 2019.\8\
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    \3\ President's Commission on Combating Drug Addiction and the 
Opioid Crisis, Report (2017). Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Final_Report_Draft_11-1-2017.pdf.
    \4\ Ibid, at page 57, Recommendation 19.
    \5\ Ibid.
    \6\ Available at: https://www.hhs.gov/about/leadership/secretary/speeches/2017-speeches/secretary-price-announces-hhs-strategy-for-fighting-opioid-crisis/index.html.
    \7\ Available at: https://www.hhs.gov/about/news/2017/10/26/hhs-acting-secretary-declares-public-health-emergency-address-national-opioid-crisis.html.
    \8\ Available at: https://www.phe.gov/emergency/news/healthactions/phe/Pages/default.aspx.
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    For the CY 2019 rulemaking, we reviewed available literature with 
respect to Exparel[supreg], including a briefing document \9\ submitted 
for FDA Advisory Committee Meeting held February 14-15, 2018, by the 
manufacturer of Exparel[supreg] that notes that ``. . . Bupivacaine, 
the active pharmaceutical ingredient in Exparel[supreg], is a local 
anesthetic that has been used for infiltration/field block and 
peripheral nerve block for decades'' and that ``since its approval, 
Exparel[supreg] has been used extensively, with an estimated 3.5 
million patient exposures in the US.'' \10\ On April 6, 2018, FDA 
approved Exparel[supreg]'s new indication for use as an interscalene 
brachial plexus nerve block to produce postsurgical regional 
analgesia.\11\ Therefore, we also stated in the CY 2019 OPPS/ASC 
proposed rule that, based on our review of currently available OPPS 
Medicare claims data and public information from the manufacturer of 
the drug, we did not believe that the OPPS packaging policy had 
discouraged the use of Exparel[supreg] for either of the drug's 
indications when furnished in the hospital outpatient department 
setting.
---------------------------------------------------------------------------

    \9\ Food and Drug Administration, Meeting of the Anesthetic and 
Analgesic Drug Products Advisory Committee Briefing Document (2018). 
Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/AnestheticAndAnalgesicDrugProductsAdvisoryCommittee/UCM596314.pdf.
    \10\ Ibid, page 9.
    \11\ 2018 updated product label available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2018/022496s009lbledt.pdf.
---------------------------------------------------------------------------

    In the CY 2019 OPPS/ASC proposed rule, in response to stakeholder 
comments on the CY 2018 OPPS/ASC final rule with comment period (82 FR 
52485) and in light of the recommendations regarding payment policies 
for certain drugs, we evaluated the impact of our packaging policy for 
drugs that function as a supply when used in a surgical procedure on 
the utilization of these drugs in both the hospital outpatient 
department and the ASC setting. Our packaging policy is that the costs 
associated with packaged drugs that function as a supply are included 
in the ratesetting methodology for the surgical procedures with which 
they are billed, and the payment rate for the associated procedure 
reflects the costs of the packaged drugs and other packaged items and 
services to the extent they are billed with the procedure. In our 
evaluation, we used currently available data to analyze the utilization 
patterns associated with

[[Page 61176]]

specific drugs that function as a supply over a 5-year time period to 
determine whether this packaging policy reduced the use of these drugs. 
If the packaging policy discouraged the use of drugs that function as a 
supply or impeded access to these products, we would expect to see a 
significant decline in utilization of these drugs over time, although 
we note that a decline in utilization could also reflect other factors, 
such as the availability of alternative products, or a combination 
thereof.
    The results of the evaluation of our packaging policies under the 
OPPS and the ASC payment system showed decreased utilization for 
certain drugs that function as a supply in the ASC setting, in 
comparison to the hospital outpatient department setting. In light of 
these results, as well as the Commission's recommendation to examine 
payment policies for non-opioid pain management drugs that function as 
a supply, we stated that we believe it was appropriate to pay 
separately for evidence-based non-opioid pain management drugs that 
function as a supply in a surgical procedure in the ASC setting to 
address the decreased utilization of these drugs and to encourage use 
of these types of drugs rather than prescription opioids. Therefore, in 
the CY 2019 OPPS/ASC final rule with comment period (83 FR 58855 
through 58860), we finalized the proposed policy to unpackage and pay 
separately at ASP + 6 percent for the cost of non-opioid pain 
management drugs that function as surgical supplies when they are 
furnished in the ASC setting for CY 2019. We also stated that we would 
continue to analyze the issue of access to non-opioid alternatives in 
the hospital outpatient department setting and in the ASC setting as we 
implemented section 6082 of the Substance Use-Disorder Prevention that 
Promotes Opioid Recovery and Treatment for Patients and Communities 
(SUPPORT) Act (Pub. L. 115-271) enacted on October 24, 2018 (83 FR 
58860 through 58861).
(2) Evaluation and CY 2020 Proposal for Payment for Non-Opioid 
Alternatives
    Section 1833(t)(22)(A)(i) of the Act, as added by section 6082(a) 
of the SUPPORT Act, states that the Secretary must review payments 
under the OPPS for opioids and evidence-based non-opioid alternatives 
for pain management (including drugs and devices, nerve blocks, 
surgical injections, and neuromodulation) with a goal of ensuring that 
there are not financial incentives to use opioids instead of non-opioid 
alternatives. As part of this review, under section 1833(t)(22)(A)(iii) 
of the Act, the Secretary must consider the extent to which revisions 
to such payments (such as the creation of additional groups of covered 
OPD services to separately classify those procedures that utilize 
opioids and non-opioid alternatives for pain management) would reduce 
the payment incentives for using opioids instead of non-opioid 
alternatives for pain management. In conducting this review and 
considering any revisions, the Secretary must focus on covered OPD 
services (or groups of services) assigned to C-APCs, APCs that include 
surgical services, or services determined by the Secretary that 
generally involve treatment for pain management. If the Secretary 
identifies revisions to payments pursuant to section 
1833(t)(22)(A)(iii) of the Act, section 1833(t)(22)(C) of the Act 
requires the Secretary to, as determined appropriate, begin making 
revisions for services furnished on or after January 1, 2020. Any 
revisions under this paragraph are required to be treated as 
adjustments for purposes of paragraph (9)(B), which requires any 
adjustments to be made in a budget neutral manner. Pursuant to these 
requirements, in our evaluation of whether there are payment incentives 
for using opioids instead of non-opioid alternatives, for the CY 2020 
OPPS/ASC proposed rule, we used currently available data to analyze the 
payment and utilization patterns associated with specific non-opioid 
alternatives, including drugs that function as a supply, nerve blocks, 
and neuromodulation products, to determine whether our packaging 
policies have reduced the use of non-opioid alternatives. We focused on 
covered OPD services for this review, including services assigned to C-
APCs, surgical APCs, and other pain management services. We believed 
that if the packaging policy discouraged the use of these non-opioid 
alternatives or impeded access to these products, we would expect to 
see a decline in the utilization over time, although we note that a 
decline in utilization could also reflect other factors, such as the 
availability of alternative products or a combination thereof.
    We evaluated continuous peripheral nerve blocks and neuromodulation 
alternatives to determine if the current packaging policy represented a 
barrier to access. For each product, we examined the most recently 
available Medicare claims data. All of the alternatives examined showed 
consistent or increasing utilization in recent years, with no products 
showing decreases in utilization.
    We also evaluated drugs that function as surgical supplies over a 
6-year time period (CYs 2013 through 2018). During our evaluation, we 
did not observe significant declines in the total number of units used 
in the hospital outpatient department for a majority of the drugs 
included in our analysis. In fact, under the OPPS, we observed the 
opposite effect for several drugs that function as surgical supplies, 
including Exparel[supreg] (HCPCS code C9290). This trend indicates 
appropriate packaged payments that adequately reflect the cost of the 
drug and are not prohibiting beneficiary access.
    From CYs 2013 through 2018, we found that there was an overall 
increase in the OPPS Medicare utilization of Exparel[supreg] of 
approximately 491 percent (from 2.3 million units to 13.6 million 
units) during this 6-year time period. The total number of claims 
reporting the use of Exparel[supreg] increased by 463 percent (from 
10,609 claims to 59,724 claims) over this 6-year time period. This 
increase in utilization continued, even after the expiration of the 3-
year period of pass-through payment status for this drug in 2014, 
resulting in a 109-percent overall increase in the total number of 
units used between CYs 2015 and 2018, from 6.5 million units to 13.6 
million units. The number of claims reporting the use of 
Exparel[supreg] increased by 112 percent during this time period, from 
28,166 claims to 59,724 claims.
    The results of our review and evaluation of our claims data do not 
provide evidence to indicate that the OPPS packaging policy has had the 
unintended consequence of discouraging the use of non-opioid treatments 
for postsurgical pain management in the hospital outpatient department. 
Therefore, based on this data evaluation, we stated in the proposed 
rule that we do not believe that changes are necessary under the OPPS 
for the packaged drug policy for drugs that function as a surgical 
supply, nerve blocks, surgical injections, and neuromodulation products 
when used in a surgical procedure in the OPPS setting at this time.
    For Exparel[supreg], we reviewed claims data for development of the 
CY 2020 OPPS/ASC proposed rule and, based on these data and available 
literature, we concluded that there is no clear evidence that the OPPS 
packaging policy discourages the use of Exparel[supreg] for either of 
the drug's indications in the hospital outpatient department setting 
because the use of Exparel[supreg] continues to increase in this 
setting. Accordingly, we stated in the proposed rule that we continue 
to believe it is appropriate to package payment for the use of

[[Page 61177]]

Exparel[supreg], as we do for other postsurgical pain management drugs, 
when it is furnished in a hospital outpatient department. In addition, 
our updated review of claims data for the proposed rule showed a 
continued decline in the utilization of Exparel[supreg] in the ASC 
setting, which we believed supports our proposal to continue paying 
separately for Exparel[supreg] in the ASC setting.
    Therefore, for CY 2020, we proposed to continue our policy to pay 
separately at ASP+6 percent for the cost of non-opioid pain management 
drugs that function as surgical supplies in the performance of surgical 
procedures when they are furnished in the ASC setting and to continue 
to package payment for non-opioid pain management drugs that function 
as surgical supplies in the performance of surgical procedures in the 
hospital outpatient department setting for CY 2020. However, we invited 
public comments on this proposal and asked the public to provide peer-
reviewed evidence, if any, to describe existing evidence-based non-
opioid pain management therapies used in the outpatient and ASC 
setting. We also invited the public to provide detailed claims-based 
evidence to document how specific unfavorable utilization trends are 
due to the financial incentives of the payment systems rather than 
other factors.
    Multiple stakeholders, largely manufacturers of devices and drugs, 
requested separate payments for various non-opioid pain management 
treatments, such as continuous nerve blocks (including a disposable 
elastomeric pump that delivers non-opioid local anesthetic to a 
surgical site or nerve), cooled thermal radiofrequency ablation, and 
local anesthetics designed to reduce postoperative pain for cataract 
surgery and other procedures. These stakeholders suggested various 
mechanisms through which separate payment or a higher-paying APC 
assignment for the primary service could be made. The stakeholders 
offered surveys, reports, studies, and anecdotal evidence of varying 
degrees to support why the devices, drugs, or services offer an 
alternative to or a reduction of the need for opioid prescriptions. The 
majority of these stakeholder offerings lacked adequate sample size, 
contained possible conflicts of interest such as studies conducted by 
employees of device manufacturers, have not been fully published in 
peer-reviewed literature, or have only provided anecdotal evidence as 
to how the drug or device could serve as an alternative to, or reduce 
the need for, opioid prescriptions.
    After reviewing the data from stakeholders and Medicare claims 
data, we did not find compelling evidence to suggest that revisions to 
our OPPS payment policies for non-opioid pain management alternatives 
are necessary for CY 2020. Additionally, MedPAC's March 2019 Report to 
Congress supports our conclusion; specifically, Chapter 16 of MedPAC's 
report, titled Mandated Report: Opioids and Alternatives in Hospital 
Settings--Payments, Incentives, and Medicare Data, concludes that there 
is no clear indication that Medicare's OPPS provides systematic payment 
incentives that promote the use of opioid analgesics over non-opioid 
analgesics.\12\ However, we invited public comments on whether there 
were other non-opioid pain management alternatives for which our 
payment policy should be revised to allow separate payment. We 
requested public comments that provided evidence-based support, such as 
published peer-reviewed literature, that we could use to determine 
whether these products help to deter or avoid prescription opioid use 
and addiction as well as evidence that the current packaged payment for 
such non-opioid alternatives presents a barrier to access to care and 
therefore warrants revised, including possibly separate, payment under 
the OPPS. We noted that evidence that current payment policy provides a 
payment incentive for using opioids instead of non-opioid alternatives 
should align with available Medicare claims data.
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    \12\ Available at: http://www.medpac.gov/-documents-/reports.
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    We provide a summary of the comments received and our responses to 
those comments below.
    Comment: Multiple commenters, including hospital associations, 
medical specialty societies, and drug manufacturers, requested that we 
pay separately for Exparel and other drugs that function as surgical 
supply in the hospital outpatient setting. Some of these commenters 
noted that Exparel is more frequently used in this setting and the use 
of non-opioid pain management treatments should also be encouraged in 
the hospital outpatient department. The manufacturer of Exparel, Pacira 
Pharmaceuticals, presented a 5-year OPPS claims data analysis of 
hospital trends in Exparel use and a 200 hospital survey on purchasing 
decisions for non-opioid alternatives, concluding that Medicare's 
packaging policy has led to hospitals reducing or stopping Exparel use.
    Response: As we stated in the CY 2019 OPPS/ASC final rule (83 FR 
58856), we do not believe that there is sufficient evidence that non-
opioid pain management drugs should be paid separately in the hospital 
outpatient setting at this time. The commenters did not provide 
evidence that the OPPS packaging policy for Exparel (or other non-
opioid drugs) creates a barrier to use of Exparel in the hospital 
setting. Further, while we received some public comments suggesting 
that, as a result of using Exparel in the OPPS setting, providers may 
prescribe fewer opioids for Medicare beneficiaries, we do not believe 
that the OPPS payment policy presents a barrier to use of Exparel or 
affects the likelihood that providers will prescribe fewer opioids in 
the HOPD setting. Several drugs are packaged under the OPPS and payment 
for such drugs is included in the payment for the associated primary 
procedure. We were not persuaded by the information supplied by 
commenters suggesting that some providers avoid use of non-opioid 
alternatives (including Exparel) solely because of the OPPS packaged 
payment policy. We observed increasing Exparel utilization in the HOPD 
setting with the total units increasing from 9.0 million in 2017 to 
13.6 million in 2018, despite the bundled payment in the OPPS setting. 
This upward trend has been consistent since 2015, as the data shows 
approximately 6.5 million total units in 2015 and 8.1 million total 
units in 2016. Therefore, we do not believe that the current OPPS 
payment methodology for Exparel and other non-opioid pain management 
drugs presents a widespread barrier to their use.
    In addition, higher use in the hospital outpatient setting not only 
supports the notion that the packaged payment for Exparel is not 
causing an access to care issue, but also that the payment rate for 
primary procedures in the HOPD using Exparel adequately reflects the 
cost of the drug. That is, because Exparel is commonly used and billed 
under the OPPS, the APC rates for the primary procedures reflect such 
utilization. Therefore, the higher utilization in the OPPS setting 
should mitigate the need for separate payment. We remind readers that 
the OPPS is a prospective payment system, not a cost-based system and, 
by design, is based on a system of averages under which payment for 
certain cases may exceed the costs incurred, while for others, it may 
not. As stated earlier in this section, the OPPS packages payments for 
multiple interrelated items and services into a single payment to 
create incentives for hospitals to furnish

[[Page 61178]]

services most efficiently and to manage their resources with maximum 
flexibility. Our packaging policies support our strategic goal of using 
larger payment bundles in the OPPS to maximize hospitals' incentives to 
provide care in the most efficient manner. We continue to invite 
stakeholders to share evidence, such as published peer-reviewed 
literature, on these non-opioid alternatives. We also intend to 
continue to analyze the evidence and monitor utilization of non-opioid 
alternatives in the OPD and ASC settings for potential future 
rulemaking.
    We also stated in the CY 2020 OPPS/ASC proposed rule that, although 
we found increases in utilization for Exparel when it is paid under the 
OPPS, we did notice a continued decline in Exparel utilization in the 
ASC setting. While several variables may contribute to this difference 
in utilization and claims reporting between the hospital outpatient 
department and the ASC setting, one potential explanation is that, in 
comparison to hospital outpatient departments, ASCs tend to provide 
specialized care and a more limited range of services. Also, ASCs are 
paid, in aggregate, approximately 55 percent of the OPPS rate. 
Therefore, fluctuations in payment rates for specific services may 
impact these providers more acutely than hospital outpatient 
departments, and as a result, ASCs may be less likely to choose to 
furnish non-opioid postsurgical pain management treatments, which are 
typically more expensive than opioids. Another possible contributing 
factor is that ASCs do not typically report packaged items and services 
and, accordingly, our analysis may be undercounting the number of 
Exparel units utilized in the ASC setting.
    Therefore, we are finalizing our proposal to continue to unpackage 
and pay separately for the cost of non-opioid pain management drugs 
that function as surgical supplies when they are furnished in the ASC 
setting without modification. This policy and related comments are 
addressed in section XIII.D.3. of this final rule with comment period.
    As we stated previously in the CY 2018 OPPS/ASC final rule with 
comment period (82 FR 59250), our packaging policies are designed to 
support our strategic goal of using larger payment bundles in the OPPS 
to maximize hospitals' incentives to provide clinically appropriate 
care in the most efficient manner. The packaging policies established 
under the OPPS also typically apply when services are provided in the 
ASC setting, and the policies have the same strategic goals in both 
settings. While unpackaging and paying separately for drugs that 
function as surgical supplies is a departure from our overall packaging 
policy for drugs, we believe that the proposed change will continue to 
incentivize the use of non-opioid pain management drugs and is 
responsive to the Commission's recommendation to examine payment 
policies for non-opioid pain management drugs that function as a 
supply, with the overall goal of combating the current opioid addiction 
crisis. As previously noted, a discussion of the CY 2020 proposal for 
payment of non-opioid pain management drugs in the ASC setting was 
presented in further detail in section XIII.D.3 of the CY 2020 OPPS/ASC 
proposed rule, and we refer readers to section XIII.D.3 of this CY 2020 
OPPS/ASC final rule with comment period for further discussion of the 
final policy for CY 2020. As stated above, we also requested public 
comments in the CY 2020 OPPS/ASC proposed rule that provide peer-
reviewed evidence, such as published peer-reviewed literature, that we 
could use to determine whether these products help to deter or avoid 
prescription opioid use and addiction as well as evidence that the 
current packaged payment for such non-opioid alternatives presents a 
barrier to access to care and therefore warrants revised, including 
possibly separate, payment under the OPPS. We also stated that evidence 
that current payment policy provides a payment incentive for using 
opioids instead of non-opioid alternatives should align with available 
Medicare claims data.
    Comment: Several commenters supported the assignment of status 
indicator ``K'' (Nonpass-Through Drugs and Nonimplantable Biologicals, 
Including Therapeutic Radiopharmaceuticals) and continuing to pay 
separately for the drug Prialt (HCPCS J2278, injection, ziconitide), a 
non-narcotic pain reliever administered via intrathecal injection. 
Commenters provided data indicating that Prialt potentially could lower 
opioid use, including opioids such as morphine. In addition to 
continued separate payment, several commenters recommended CMS reduce 
or eliminate the coinsurance for the drug in order to increase 
beneficiary access. Commenters stated that due to the drug's 
significant cost, the 20 percent coinsurance would put the drug out of 
reach for beneficiaries. Additionally, commenters stated that there is 
not enough financial incentive for providers to use Prialt in their 
patients compared to lower cost opioids. Commenters claim that Prialt 
is only paid at invoice cost, which they believe discourages provider 
use.
    Response: We thank commenters for their feedback and for their 
support of the continued assignment of status indicator ``K'' to HCPCS 
J2278. Prialt is paid at its average sales price plus 6 percent 
according to the ASP methodology under the OPPS. We note that under 
section 1833(t)(8) of the Act, the payment is subject to applicable 
deductible and coinsurance, and we are unaware of statutory authority 
to alter beneficiary coinsurance for payments made under the OPPS. We 
note that because the dollar value of beneficiary coinsurance is 
directly proportionate to the payment rate (which is ASP + 6 percent 
for HCPCS code J2278), a lower sales price for the drug (which would 
lead to a lower Medicare payment rate under current policy) would be 
necessary for beneficiaries to have a lower coinsurance amount.
    Comment: Many commenters requested that the drug Omidria (HCPCS 
code C9447, injection, phenylephrine ketorolac) be excluded from the 
packaging policy once its pass-through status expires on September 30, 
2020. Omidria is indicated for maintaining pupil size by preventing 
intraoperative miosis and reducing postoperative ocular pain in 
cataract or intraocular surgeries. The commenters stated that the 
available data and multiple peer-reviewed articles on Omidria meet the 
section 6082 criteria for packaging exclusion. Commenters asserted that 
the use of Omidria decreases patients' need for fentanyl during 
surgeries and another commenter stated that Omidria reduces opioid use 
after cataract surgeries. In addition, commenters asserted that the 
OPPS and ASC payment system do not address the cost of packaged 
products used by small patient populations. Therefore, the OPPS and ASC 
payment structures for packaged supplies creates an access barrier and 
patients are forced to use inferior products that have increased 
complication risk and require the continued use of opioids to manage 
pain. One commenter referenced the results of a study that showed that 
Omidria reduces the need for opioids during cataract surgery by nearly 
80 percent while decreasing pain scores by more than 50 percent.
    Response: We thank commenters for their feedback on Omidria. 
Omidria received pass-through status for a 3-year period from 2015 to 
2017. After expiration of its pass-through status, it was packaged per 
OPPS policy. Subsequently, Omidria's pass-through status was reinstated 
in October 2018

[[Page 61179]]

through September 30, 2020 as required by section 1833(t)(6)(G) of the 
Act, as added by section 1301(a)(1)(C) of the Consolidated 
Appropriations Act 2018 (Pub. L. 115-141). While our analysis supports 
the commenter's assertion that there was a decrease in the utilization 
of Omidria in 2018 following its pass-through expiration, we note that 
there could be many reasons that utilization declines after the pass-
through period ends that are unrelated to the lack of separate payment, 
including the availability of other alternatives on the market (many of 
which had been used for several years before Omidria came on the market 
and are sold for a lower price), or physician preference among others.
    Further, our clinical advisors' review of the clinical evidence 
submitted concluded that the study the commenter submitted was not 
sufficiently compelling or authoritative to overcome contrary evidence. 
Moreover, the results of a CMS study of cataract procedures performed 
on Medicare beneficiaries in the OPPS between January 2015 and July 
2019 comparing procedures performed with Omidria to procedures 
performed without Omidria did not demonstrate a significant decrease in 
fentanyl utilization during the cataract surgeries in the OPPS when 
Omidria was used. Our results also did not suggest any decrease in 
opioid utilization post-surgery for procedures involving Omidria. At 
this time, we do not have compelling evidence to exclude Omidria from 
packaging after its current pass-through expires on September 30, 2020. 
We will continue to analyze the evidence and monitor utilization of 
this drug.
    Comment: One commenter requested that MKO Melt, a non-FDA-approved, 
compounded drug comprised of midazolam/ketamine/ondansetron be excluded 
from the packaging policy under section 1833(t)(22)(A)(iii) of the Act. 
The commenter contended that MKO Melt are drugs functioning as a 
surgical supply in the ASC setting. The commenter provided a reference 
to a study titled, ``Anesthesia for opioid addict: Challenges for 
perioperative physician'' by Goyal et al., on the need for pain 
management in the opioid-dependent patient. The commenter also 
referenced a review article, ``Perioperative Management of Acute Pain 
in the Opioid-dependent Patient,'' by Mitra et al., on the special 
needs of opioid-dependent patients in surgeries and the potential 
opioid relapse in those patients who are recovering from opioid use 
disorder. Additionally, the commenter referenced a clinical trial 
registered in clinicaltrials.gov (NCT03653520) that supports sublingual 
MKO Melt for use during cataract surgeries to replace opioids. The 
study looked at 611 patients that were divided into three arms: (1) MKO 
melt arm, (2) diazepam/tramadol/ondansetron arm, (3) diazepam only arm. 
The study concluded that the MKO melt arm had the lowest incidence for 
supplemental injectable anesthesia to control pain.
    Response: We thank the commenter for the comment. Based on the 
information provided, we are not able to validate that MKO Melt reduces 
the use of opioids. We note that ketamine, one of the components of MKO 
melt, exhibits some addictive properties. Moreover, we did not identify 
any compelling evidence that MKO Melt is effective for patients with a 
prior opioid addiction nor did we receive any data demonstrating that 
the current OPPS packaging policy incentivized providers to use opioids 
over MKO Melt. In accordance with our review under section 
1833(t)(22)(A)(i) of the Act, as well as the lack of HCPCS code for the 
drug, and FDA approval, we were not able to establish any compelling 
evidence that MKO should be excluded from packaged payment.
    Comment: Several commenters, including individual physicians, 
medical associations, and device manufacturers, supported separate 
payment for continuous peripheral nerve blocks as the commenters 
believed they significantly reduce opioid use. One commenter suggested 
that CMS provide separate payment for HCPCS code A4306 (Disposable drug 
delivery system, flow rate of less than 50 ml per hour) in the hospital 
outpatient department setting and the ASC setting because packaging 
represents a cost barrier for providers. The commenter contended that 
continuous nerve block procedures have been shown in high quality 
clinical studies to reduce the use of opioids, attaching studies for 
review. The commenter stated that separate payment for A4306 will 
remove the financial disincentive for HOPDs and ASCs to use these 
items, and would encourage continuous nerve blocks as a non-opioid 
alternative for post-surgical pain management.
    Response: We appreciate the commenters' suggestion. We examined the 
data for A4306 and noted an overall trend of increasing utilization 
from CY 2014 through CY 2017. There was a slight decrease in 
utilization in CY 2018. However, we note that this slight decline may 
be an outlier, given the four year trend of consistently increasing 
utilization. Additionally, the geometric mean cost for HCPCS code A4306 
was approximately $30 each year during that 4-year period. We 
acknowledge that use of these items may help in the reduction of opioid 
use. However, we note that packaged payment of such an item does not 
prevent the use of these items, as we found with the overall increased 
utilization of this product. We do not believe that the current 
utilization trends for HCPCS code A4306 suggest that the packaged 
payment is preventing use and remind readers that payment for packaged 
items is included in the payment for the primary service. We share the 
commenter's concern about the need to reduce opioid use and will take 
the commenter's suggestion regarding the need for separate payment for 
HCPCS code A4306 into consideration for future rulemaking.
    Comment: Multiple commenters identified other non-opioid pain 
management alternatives that they believe decrease the dose, duration, 
and/or number of opioid prescriptions beneficiaries receive during and 
following an outpatient visit or procedure (especially for 
beneficiaries at high-risk for opioid addiction) and that may warrant 
separate payment for CY 2020. Commenters representing various 
stakeholders requested separate payments for various non-opioid pain 
management treatments, such as continuous nerve blocks, neuromodulation 
radiofrequency ablation, implants for lumbar stenosis, enhanced 
recovery after surgery, IV acetaminophen, IV ibuprofen, Polar ice 
devices for postoperative pain relief, THC oil, acupuncture, and dry 
needling procedures.
    For neuromodulation, several commenters noted that spinal cord 
stimulators (SCS) may lead to a reduction in the use of opioids for 
chronic pain patients. One manufacturer commented that SCS provides the 
opportunity to potentially stabilize or decrease opioid usage and that 
neuromodulation retains its efficacy over multiple years. Regarding 
barriers to access, the commenter noted that Medicare beneficiaries 
often do not have access to SCS until after they have exhausted other 
treatments, which often includes opioids. The commenter presented 
evidence from observational studies that use of SCS earlier in a 
patient's treatment could help reduce opioid use while controlling 
pain, suggesting CMS look for ways to incorporate SCS earlier in the 
treatment continuum.
    Another commenter asserted that the standard endpoints, such as a 
greater than 50 percent reduction in pain, that are used to determine 
if a neuromodulation-based non-opioid pain

[[Page 61180]]

alternative therapy is effective are well-established and validated in 
all types of clinical trials and that CMS should establish a general, 
national coverage determination for neuromodulation-based non-opioid 
pain therapy based on these endpoints, rather than taking the time to 
create and process specific national coverage determinations or local 
coverage determinations. The commenter suggested that this would be a 
much faster and streamlined process for enhancing Medicare beneficiary 
access to neuromodulation-based pain management therapies.
    One of the manufacturers of a high-frequency SCS device stated that 
additional payment was warranted for non-opioid pain management 
treatments because they provide an alternative treatment option to 
opioids for patients with chronic, leg, or back pain. The commenter 
provided supporting studies that claimed that patients treated with 
their high-frequency SCS device reported a statistically significant 
average decrease in opioid use compared to the control group. This 
commenter also submitted data that showed a decline in the mean daily 
dosage of opioid medication taken and that fewer patients were relying 
on opioids at all to manage their pain when they used the 
manufacturer's device.
    Other commenters wrote regarding their personal experiences with 
radiofrequency ablation for sacral iliac joints and knees. One 
commenter referenced several studies, one of which found a decrease in 
analgesic medications associated with radiofrequency ablation; however, 
it did not provide evidence regarding a decrease in opioid usage.
    One national hospital association commenter recommended that while 
``certainly not a solution to the opioid epidemic, unpackaging 
appropriate non-opioid therapies, like Exparel, is a low-cost tactic 
that could change long-standing practice patterns without major 
negative consequences.'' This same commenter suggested that Medicare 
consider separate payment for IV acetaminophen, IV ibuprofen, and Polar 
ice devices for postoperative pain relief after knee procedures. The 
commenter also noted that therapeutic massage, topically applied THC 
oil, acupuncture, and dry needling procedures are very effective 
therapies for relief of both postoperative pain and long-term and 
chronic pain. Several other commenters expressed support for separate 
payment for IV acetaminophen.
    Response: We appreciate the detailed responses from commenters on 
this topic. At this time, we have not found compelling evidence for 
other non-opioid pain management alternatives described above to 
warrant separate payment under the OPPS or ASC payment systems for CY 
2020. We plan to take these comments and suggestions into consideration 
for future rulemaking. We agree that providing incentives to avoid and/
or reduce opioid prescriptions may be one of several strategies for 
addressing the opioid epidemic. To the extent that the items and 
services mentioned by the commenters are effective alternatives to 
opioid prescriptions, we encourage providers to use them when medically 
necessary. We note that some of the items and services mentioned by 
commenters are not covered by Medicare, and we do not intend to 
establish payment for noncovered items and services at this time. We 
look forward to working with stakeholders as we further consider 
suggested refinements to the OPPS and the ASC payment system that will 
encourage use of medically necessary items and services that have 
demonstrated efficacy in decreasing opioid prescriptions and/or opioid 
abuse or misuse during or after an outpatient visit or procedure.
    After reviewing the non-opioid pain management alternatives 
suggested by the commenters as well as the studies and other data 
provided to support the request for separate payment, we have not 
determined that separate payment is warranted at this time for any of 
the non-opioid pain management alternatives discussed above.
    Comment: Several commenters addressed payment barriers that may 
inhibit access to non-opioid pain management treatments discussed 
throughout this section. Several commenters disagreed with CMS's 
assessment that current payment policies do not represent barriers to 
access for certain non-opioid pain management alternatives. Commenters 
encouraged CMS to provide timely insurance coverage for evidence-
informed interventional procedures early in the course of treatment 
when clinically appropriate. Several other commenters encouraged CMS to 
more broadly evaluate all of its packaging policies to help ensure 
patient access to appropriate therapies and to evaluate how packaging 
affects the utilization of a medicine.
    Response: We appreciate the various, insightful comments we 
received from stakeholders regarding barriers that may inhibit access 
to non-opioid alternatives for pain treatment and management in order 
to more effectively address the opioid epidemic. We will take these 
comments into consideration for future rulemaking. Many of these 
comments have been previously addressed throughout this section. CMS 
recognizes that medical exposure to opioids entails inherent risks, 
which may include delayed recovery, diversion, misuse, accidental 
overdose, development or re-emergence of addiction, and neonatal 
abstinence syndrome. However, there are challenges in developing a 
methodology to identify disincentives to use opioid alternatives. In 
the context of the opioid crisis, and given the central role the 
federal government plays in addressing it, these issues are of 
particular concern to CMS. Because of this, CMS intends to work with an 
interagency task force to review available data and to develop criteria 
for revisions to payment for opioid alternatives that are effective for 
pain relief or in reducing opioid use.
    After consideration of the public comments we received, we are 
finalizing the proposed policy, without modification, to unpackage and 
pay separately at ASP+6 percent for the cost of non-opioid pain 
management drugs that function as surgical supplies when they are 
furnished in the ASC setting for CY 2020. Under this policy, the only 
FDA-approved drug that meets this criteria is Exparel.
    We will continue to analyze the issue of access to non-opioid 
alternatives in the OPPS and the ASC settings for any subsequent 
reviews we conduct under section 1833(t)(22)(A)(ii). We are continuing 
to examine whether there are other non-opioid pain management 
alternatives for which our payment policy should be revised to allow 
separate payment. We will be reviewing evidence-based support, such as 
published peer-reviewed literature, that we could use to determine 
whether these products help to deter or avoid prescription opioid use 
and addiction as well as evidence that the current packaged payment for 
such non-opioid alternatives presents a barrier to access to care and 
therefore warrants revised, including possibly separate, payment under 
the OPPS. This policy is also discussed in section XII.D.3 of this 
final rule with comment period.
4. Calculation of OPPS Scaled Payment Weights
    We established a policy in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68283) of using geometric mean-based APC costs to 
calculate relative payment weights under the OPPS. In the CY 2019 OPPS/
ASC final rule with comment period (83 FR 58860 through 58861), we 
applied this policy and calculated the relative payment weights for 
each APC for CY 2019 that were shown in Addenda A

[[Page 61181]]

and B to that final rule with comment period (which were made available 
via the internet on the CMS website) using the APC costs discussed in 
sections II.A.1. and II.A.2. of that final rule with comment period. 
For CY 2020, as we did for CY 2019, we proposed to continue to apply 
the policy established in CY 2013 and calculate relative payment 
weights for each APC for CY 2020 using geometric mean-based APC costs.
    For CY 2012 and CY 2013, outpatient clinic visits were assigned to 
one of five levels of clinic visit APCs, with APC 0606 representing a 
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75036 through 75043), we finalized a policy that created 
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for 
assessment and management of a patient), representing any and all 
clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634 
(Hospital Clinic Visits). We also finalized a policy to use CY 2012 
claims data to develop the CY 2014 OPPS payment rates for HCPCS code 
G0463 based on the total geometric mean cost of the levels one through 
five CPT E/M codes for clinic visits previously recognized under the 
OPPS (CPT codes 99201 through 99205 and 99211 through 99215). In 
addition, we finalized a policy to no longer recognize a distinction 
between new and established patient clinic visits.
    For CY 2016, we deleted APC 0634 and reassigned the outpatient 
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and 
Related Services) (80 FR 70372). For CY 2020, as we did for CY 2019, we 
proposed to continue to standardize all of the relative payment weights 
to APC 5012. We believe that standardizing relative payment weights to 
the geometric mean of the APC to which HCPCS code G0463 is assigned 
maintains consistency in calculating unscaled weights that represent 
the cost of some of the most frequently provided OPPS services. For CY 
2020, as we did for CY 2019, we proposed to assign APC 5012 a relative 
payment weight of 1.00 and to divide the geometric mean cost of each 
APC by the geometric mean cost for APC 5012 to derive the unscaled 
relative payment weight for each APC. The choice of the APC on which to 
standardize the relative payment weights does not affect payments made 
under the OPPS because we scale the weights for budget neutrality.
    We did not receive any public comments on our proposal to continue 
to use the geometric mean cost of APC 5012 to standardize relative 
payment weights for CY 2020. Therefore, we are finalizing our proposal 
and assigning APC 5012 the relative payment weight of 1.00, and using 
the relative payment weight for APC 5012 to derive the unscaled 
relative payment weight for each APC for CY 2020.
    We note that in the CY 2019 OPPS/ASC final rule with comment period 
(83 FR 59004 through 59015), we discuss our policy, implemented on 
January 1, 2019, to control for unnecessary increases in the volume of 
covered outpatient department services by paying for clinic visits 
furnished at excepted off-campus provider-based department (PBD) at a 
reduced rate, and we are continuing the policy with the second year of 
the two-year transition in CY 2020. While the volume associated with 
these visits is included in the impact model, and thus used in 
calculating the weight scalar, the policy has a negligible effect on 
the scalar. Specifically, under this policy, there is no change to the 
relativity of the OPPS payment weights because the adjustment is made 
at the payment level rather than in the cost modeling. Further, under 
this policy, the savings that will result from the change in payments 
for these clinic visits will not be budget neutral. Therefore, the 
impact of this policy will generally not be reflected in the budget 
neutrality adjustments, whether the adjustment is to the OPPS relative 
weights or to the OPPS conversion factor. We refer readers to section 
X.C. of this CY 2020 OPPS/ASC final rule with comment period for 
further discussion of this final policy.
    Section 1833(t)(9)(B) of the Act requires that APC reclassification 
and recalibration changes, wage index changes, and other adjustments be 
made in a budget neutral manner. Budget neutrality ensures that the 
estimated aggregate weight under the OPPS for CY 2020 is neither 
greater than nor less than the estimated aggregate weight that would 
have been calculated without the changes. To comply with this 
requirement concerning the APC changes, we proposed to compare the 
estimated aggregate weight using the CY 2019 scaled relative payment 
weights to the estimated aggregate weight using the proposed CY 2020 
unscaled relative payment weights.
    For CY 2019, we multiplied the CY 2019 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2018 claims to calculate the total relative 
payment weight for each service. We then added together the total 
relative payment weight for each of these services in order to 
calculate an estimated aggregate weight for the year. For CY 2020, we 
proposed to apply the same process using the estimated CY 2020 unscaled 
relative payment weights rather than scaled relative payment weights. 
We proposed to calculate the weight scalar by dividing the CY 2019 
estimated aggregate weight by the unscaled CY 2020 estimated aggregate 
weight.
    For a detailed discussion of the weight scalar calculation, we 
refer readers to the OPPS claims accounting document available on the 
CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the CY 2020 OPPS 
final rule link and open the claims accounting document link at the 
bottom of the page.
    We proposed to compare the estimated unscaled relative payment 
weights in CY 2020 to the estimated total relative payment weights in 
CY 2019 using CY 2018 claims data, holding all other components of the 
payment system constant to isolate changes in total weight. Based on 
this comparison, we proposed to adjust the calculated CY 2020 unscaled 
relative payment weights for purposes of budget neutrality. We proposed 
to adjust the estimated CY 2020 unscaled relative payment weights by 
multiplying them by a proposed weight scalar of 1.4401 to ensure that 
the proposed CY 2020 relative payment weights are scaled to be budget 
neutral. The proposed CY 2020 relative payment weights listed in 
Addenda A and B to the proposed rule (which are available via the 
internet on the CMS website) were scaled and incorporated the 
recalibration adjustments discussed in sections II.A.1. and II.A.2. of 
the proposed rule.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain SCODs. Section 1833(t)(14)(H) of the Act provides that 
additional expenditures resulting from this paragraph shall not be 
taken into account in establishing the conversion factor, weighting, 
and other adjustment factors for 2004 and 2005 under paragraph (9), but 
shall be taken into account for subsequent years. Therefore, the cost 
of those SCODs (as discussed in section V.B.2. of this final rule with 
comment period) is included in the budget neutrality calculations for 
the CY 2020 OPPS.
    We did not receive any public comments on the proposed weight 
scalar calculation. Therefore, we are finalizing our proposal to use 
the calculation process described in the proposed rule, without 
modification, for CY 2020. Using updated final rule claims data, we are 
updating the

[[Page 61182]]

estimated CY 2020 unscaled relative payment weights by multiplying them 
by a weight scalar of 1.4349 to ensure that the final CY 2020 relative 
payment weights are scaled to be budget neutral. The final CY 2020 
relative payments weights listed in Addenda A and B to this final rule 
with comment period (which are available via the internet on the CMS 
website) were scaled and incorporate the recalibration adjustments 
discussed in sections II.A.1. and II.A.2. of this final rule with 
comment period.

B. Conversion Factor Update

    Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to 
update the conversion factor used to determine the payment rates under 
the OPPS on an annual basis by applying the OPD fee schedule increase 
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject 
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee 
schedule increase factor is equal to the hospital inpatient market 
basket percentage increase applicable to hospital discharges under 
section 1886(b)(3)(B)(iii) of the Act. In the FY 2020 IPPS/LTCH PPS 
proposed rule (84 FR 19401), consistent with current law, based on IHS 
Global, Inc.'s fourth quarter 2018 forecast of the FY 2020 market 
basket increase, the proposed FY 2020 IPPS market basket update was 3.2 
percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(v) of the 
Act, as added by section 3401(i) of the Patient Protection and 
Affordable Care Act of 2010 (Pub. L. 111-148) and as amended by section 
10319(g) of that law and further amended by section 1105(e) of the 
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), 
provide adjustments to the OPD fee schedule increase factor for CY 
2020.
    Specifically, section 1833(t)(3)(F)(i) of the Act requires that, 
for 2012 and subsequent years, the OPD fee schedule increase factor 
under subparagraph (C)(iv) be reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as 
equal to the 10-year moving average of changes in annual economy-wide, 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable 
fiscal year, year, cost reporting period, or other annual period) (the 
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51689 through 51692), we finalized our methodology for calculating and 
applying the MFP adjustment, and then revised this methodology, as 
discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509). 
According to the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19402), the 
proposed MFP adjustment for FY 2020 was 0.5 percentage point.
    For CY 2020, we proposed that the MFP adjustment for the CY 2020 
OPPS is 0.5 percentage point (84 FR 39428). We proposed that if more 
recent data become subsequently available after the publication of the 
proposed rule (for example, a more recent estimate of the market basket 
increase and the MFP adjustment), we would use such updated data, if 
appropriate, to determine the CY 2020 market basket update and the MFP 
adjustment, which are components in calculating the OPD fee schedule 
increase factor under sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of 
the Act, in this CY 2020 OPPS/ASC final rule with comment period.
    We note that section 1833(t)(3)(F) of the Act provides that 
application of this subparagraph may result in the OPD fee schedule 
increase factor under section 1833(t)(3)(C)(iv) of the Act being less 
than 0.0 percent for a year, and may result in OPPS payment rates being 
less than rates for the preceding year. As described in further detail 
below, we proposed for CY 2020 an OPD fee schedule increase factor of 
2.7 percent for the CY 2020 OPPS (which was 3.2 percent, the final 
estimate of the hospital inpatient market basket percentage increase, 
less the final 0.5 percentage point MFP adjustment).
    We proposed that hospitals that fail to meet the Hospital OQR 
Program reporting requirements would be subject to an additional 
reduction of 2.0 percentage points from the OPD fee schedule increase 
factor adjustment to the conversion factor that would be used to 
calculate the OPPS payment rates for their services, as required by 
section 1833(t)(17) of the Act. For further discussion of the Hospital 
OQR Program, we refer readers to section XIV. of this final rule with 
comment period.
    In the CY 2020 OPPS/ASC proposed rule, we proposed to amend 42 CFR 
419.32(b)(1)(iv)(B) by adding a new paragraph (11) to reflect the 
requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2020, 
we reduce the OPD fee schedule increase factor by the MFP adjustment as 
determined by CMS.
    To set the OPPS conversion factor for CY 2020, we proposed to 
increase the CY 2019 conversion factor of $79.490 by 2.7 percent. In 
accordance with section 1833(t)(9)(B) of the Act, we proposed further 
to adjust the conversion factor for CY 2020 to ensure that any 
revisions made to the wage index and rural adjustment were made on a 
budget neutral basis. We proposed to calculate an overall budget 
neutrality factor of 0.9993 for wage index changes. This adjustment was 
comprised of a 1.0005 proposed budget neutrality adjustment, using our 
standard calculation, of comparing proposed total estimated payments 
from our simulation model using the proposed FY 2020 IPPS wage indexes 
to those payments using the FY 2019 IPPS wage indexes, as adopted on a 
calendar year basis for the OPPS as well as a 0.9988 proposed budget 
neutrality adjustment for the proposed CY 2020 5 percent cap on wage 
index decreases to ensure that this transition wage index is 
implemented in a budget neutral manner, consistent with the proposed FY 
2020 IPPS wage index policy (84 FR 19398). We stated in the proposed 
rule that we believed it was appropriate to ensure that this proposed 
wage index transition policy (that is, the proposed CY 2020 5 percent 
cap on wage index decreases) did not increase estimated aggregate 
payments under the OPPS beyond the payments that would be made without 
this transition policy. We proposed to calculate this budget neutrality 
adjustment by comparing total estimated OPPS payments using the FY 2020 
IPPS wage index, adopted on a calendar year basis for the OPPS, where a 
5 percent cap on wage index decreases is not applied to total estimated 
OPPS payments where the 5 percent cap on wage index decreases is 
applied. We stated in the proposed rule that these two proposed wage 
index budget neutrality adjustments would maintain budget neutrality 
for the proposed CY 2020 OPPS wage index (which, as we discussed in 
section II.C of the proposed rule, would use the FY 2020 IPPS post-
reclassified wage index and any adjustments, including without 
limitation any adjustments finalized under the IPPS to address wage 
index disparities).
    We did not receive any public comments on our proposed methodology 
for calculating the wage index budget neutrality adjustments discussed 
earlier in this section. Therefore, for the reasons discussed above and 
in the CY 2020 OPPS/ASC proposed rule (84 FR 39428 through 39429), we 
are finalizing our methodology for calculating the wage index budget 
neutrality adjustments as proposed, without modification. For CY 2020, 
we are finalizing an overall budget neutrality factor of 0.9981 for 
wage index changes. This adjustment is comprised of a 0.9990 budget 
neutrality adjustment, using our standard

[[Page 61183]]

calculation of comparing total estimated payments from our simulation 
model using the final FY 2020 IPPS wage indexes to those payments using 
the FY 2019 IPPS wage indexes, as adopted on a calendar year basis for 
the OPPS as well as a 0.9991 budget neutrality adjustment for the CY 
2020 5 percent cap on wage index decreases to ensure that this 
transition wage index is implemented in a budget neutral manner. We 
note that the final wage index budget neutrality adjustment figures set 
forth above differ from the figures set forth in the proposed rule due 
to updated data for the final rule.
    For the CY 2020 OPPS, we are maintaining the current rural 
adjustment policy, as discussed in section II.E. of the proposed rule. 
Therefore, the proposed budget neutrality factor for the rural 
adjustment is 1.0000.
    For the CY 2020 OPPS/ASC proposed rule, we proposed to continue 
previously established policies for implementing the cancer hospital 
payment adjustment described in section 1833(t)(18) of the Act, as 
discussed in section II.F. of the proposed rule and this final rule 
with comment period. We proposed to calculate a CY 2020 budget 
neutrality adjustment factor for the cancer hospital payment adjustment 
by comparing estimated total CY 2020 payments under section 1833(t) of 
the Act, including the proposed CY 2020 cancer hospital payment 
adjustment, to estimated CY 2020 total payments using the CY 2019 final 
cancer hospital payment adjustment, as required under section 
1833(t)(18)(B) of the Act. The proposed CY 2020 estimated payments 
applying the proposed CY 2020 cancer hospital payment adjustment were 
the same as estimated payments applying the CY 2019 final cancer 
hospital payment adjustment. Therefore, we proposed to apply a budget 
neutrality adjustment factor of 0.9998 to the conversion factor for the 
cancer hospital payment adjustment. In accordance with section 16002(b) 
of the 21st Century Cures Act, we stated in the proposed rule that we 
are applying a budget neutrality factor calculated as if the proposed 
cancer hospital adjustment target payment-to-cost ratio was 0.90, not 
the 0.89 target payment-to-cost ratio we applied as stated in section 
II.F. of the proposed rule.
    For the CY 2020 OPPS/ASC proposed rule, we estimated that proposed 
pass-through spending for drugs, biologicals, and devices for CY 2020 
would equal approximately $268.8 million, which represented 0.34 
percent of total projected CY 2020 OPPS spending. Therefore, the 
proposed conversion factor would be adjusted by the difference between 
the 0.14 percent estimate of pass-through spending for CY 2019 and the 
0.34 percent estimate of proposed pass-through spending for CY 2020, 
resulting in a proposed decrease for CY 2020 of 0.20 percent. Proposed 
estimated payments for outliers would remain at 1.0 percent of total 
OPPS payments for CY 2020. We estimated for the proposed rule that 
outlier payments would be 1.03 percent of total OPPS payments in CY 
2019; the 1.00 percent for proposed outlier payments in CY 2020 would 
constitute a 0.03 percent increase in payment in CY 2020 relative to CY 
2019.
    For the CY 2020 OPPS/ASC proposed rule, we also proposed that 
hospitals that fail to meet the reporting requirements of the Hospital 
OQR Program would continue to be subject to a further reduction of 2.0 
percentage points to the OPD fee schedule increase factor. For 
hospitals that fail to meet the requirements of the Hospital OQR 
Program, we proposed to make all other adjustments discussed above, but 
use a reduced OPD fee schedule update factor of 0.7 percent (that is, 
the proposed OPD fee schedule increase factor of 2.7 percent further 
reduced by 2.0 percentage points). This would result in a proposed 
reduced conversion factor for CY 2020 of $79.770 for hospitals that 
fail to meet the Hospital OQR Program requirements (a difference of -
1.628 in the conversion factor relative to hospitals that met the 
requirements).
    In summary, for CY 2020, we proposed to amend Sec.  419.32 by 
adding a new paragraph (b)(1)(iv)(B)(11) to reflect the reductions to 
the OPD fee schedule increase factor that are required for CY 2020 to 
satisfy the statutory requirements of sections 1833(t)(3)(F) and 
(t)(3)(G)(v) of the Act. We proposed to use a reduced conversion factor 
of $79.770 in the calculation of payments for hospitals that fail to 
meet the Hospital OQR Program requirements (a difference of -1.628 in 
the conversion factor relative to hospitals that met the requirements).
    For CY 2020, we proposed to use a conversion factor of $81.398 in 
the calculation of the national unadjusted payment rates for those 
items and services for which payment rates are calculated using 
geometric mean costs; that is, the proposed OPD fee schedule increase 
factor of 2.7 percent for CY 2020, the required proposed wage index 
budget neutrality adjustment of approximately 0.9993, the proposed 
cancer hospital payment adjustment of 0.9998, and the proposed 
adjustment of -0.20 percentage point of projected OPPS spending for the 
difference in pass-through spending that resulted in a proposed 
conversion factor for CY 2020 of $81.398. We referred readers to 
section XXVI.B. of the proposed rule for a discussion of the estimated 
effect on the conversion factor of a policy to pay for 340B-acquired 
drugs at ASP + 3 percent, which is a policy on which we solicited 
comments for potential future rulemaking in the event of an adverse 
decision on appeal in the ongoing litigation involving our payment 
policy for 340B-acquired drugs.
    Comment: One commenter, a state hospital association, asserts its 
member hospitals receive payments from CMS that are substantially lower 
than the costs their members incur to provide services. The commenter 
believes underpayments occur because the CMS hospital market basket 
estimate of inflation of 2.7 percent substantially underestimates 
overall health care inflation which the commenter claims to be between 
5.5 percent and 7 percent. The commenter also states that hospital 
payments from CMS are reduced because of payment sequestration and the 
policy to reduce payment rates for clinic visits at off-campus hospital 
outpatient departments to 40 percent of the standard OPPS payment rate. 
The commenter suggests that CMS should help hospitals in all states 
regain this lost revenue by implementing a much larger annual increase 
in the market basket amount. The commenter advocates a 4.7 percent 
market basket adjustment in CY 2020, and even larger percentage 
increases in following years.
    Response: The percentage change in the hospital market basket 
reflects the average change in the price of goods and services 
purchased by hospitals in order to provide medical care. A general 
measure of health care inflation (such as the Consumer Price Index for 
Medical Care Services) would not be appropriate as it is not specific 
to hospital medical services and is not reflective of the input price 
changes experienced by hospitals but rather the inflation experienced 
by the consumer for their medical expenses. In addition, the OPPS 
conversion factor is not designed to redress payment reductions made in 
a non-budget neutral manner. The policies cited by the commenter are 
intended to reduce Medicare expenditures. If the conversion factor was 
to be increased to offset these payment reductions, it would defeat the 
intent of these policy initiatives.
    Comment: A commenter expressed their support for the proposed 
market basket increase of 2.7 percent.
    Response: We appreciate the support of the commenter.

[[Page 61184]]

    After reviewing the public comments we received, we are finalizing 
these proposals without modification. For CY 2020, we proposed to 
continue previously established policies for implementing the cancer 
hospital payment adjustment described in section 1833(t)(18) of the Act 
(discussed in section II.F. of this final rule with comment period). 
Based on the final rule updated data used in calculating the cancer 
hospital payment adjustment in section II.F. of this final rule with 
comment period, the target payment-to-cost ratio for the cancer 
hospital payment adjustment, which was 0.88 for CY 2019, is 0.89 for CY 
2020. As a result, we are applying a budget neutrality adjustment 
factor of 0.9999 to the conversion factor for the cancer hospital 
payment adjustment.
    As a result of these finalized policies, the OPD fee schedule 
increase factor for the CY 2020 OPPS is 2.6 percent (which reflects the 
3.0 percent final estimate of the hospital inpatient market basket 
percentage increase, less the final 0.4 percentage point MFP 
adjustment). For CY 2020, we are using a conversion factor of $80.784 
in the calculation of the national unadjusted payment rates for those 
items and services for which payment rates are calculated using 
geometric mean costs; that is, the OPD fee schedule increase factor of 
2.6 percent for CY 2020, the required wage index budget neutrality 
adjustment of approximately 0.9981, and the adjustment of 0.88 
percentage point of projected OPPS spending for the difference in pass-
through spending that results in a conversion factor for CY 2020 of 
$80.784.

C. Wage Index Changes

    Section 1833(t)(2)(D) of the Act requires the Secretary to 
determine a wage adjustment factor to adjust the portion of payment and 
coinsurance attributable to labor-related costs for relative 
differences in labor and labor-related costs across geographic regions 
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion 
of the OPPS payment rate is called the OPPS labor-related share. Budget 
neutrality is discussed in section II.B. of this final rule with 
comment period.
    The OPPS labor-related share is 60 percent of the national OPPS 
payment. This labor-related share is based on a regression analysis 
that determined that, for all hospitals, approximately 60 percent of 
the costs of services paid under the OPPS were attributable to wage 
costs. We confirmed that this labor-related share for outpatient 
services is appropriate during our regression analysis for the payment 
adjustment for rural hospitals in the CY 2006 OPPS final rule with 
comment period (70 FR 68553). In the CY 2020 OPPS/ASC proposed rule (84 
FR 39429), we proposed to continue this policy for the CY 2020 OPPS. We 
refer readers to section II.H. of this final rule with comment period 
for a description and an example of how the wage index for a particular 
hospital is used to determine payment for the hospital. We did not 
receive any public comments on this proposal. Therefore, for the 
reasons discussed above and in the CY 2020 OPPS/ASC proposed rule (84 
FR 39429), we are finalizing our proposal, without modification, to 
continue this policy as discussed above for the CY 2020 OPPS.
    As discussed in the claims accounting narrative included with the 
supporting documentation for this final rule with comment period (which 
is available via the internet on the CMS website), for estimating APC 
costs, we standardize 60 percent of estimated claims costs for 
geographic area wage variation using the same FY 2020 pre-reclassified 
wage index that that is used under the IPPS to standardize costs. This 
standardization process removes the effects of differences in area wage 
levels from the determination of a national unadjusted OPPS payment 
rate and copayment amount.
    Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the OPPS 
April 7, 2000 final rule with comment period (65 FR 18495 and 18545)), 
the OPPS adopted the final fiscal year IPPS post-reclassified wage 
index as the calendar year wage index for adjusting the OPPS standard 
payment amounts for labor market differences. Therefore, the wage index 
that applies to a particular acute care, short-stay hospital under the 
IPPS also applies to that hospital under the OPPS. As initially 
explained in the September 8, 1998 OPPS proposed rule (63 FR 47576), we 
believe that using the IPPS wage index as the source of an adjustment 
factor for the OPPS is reasonable and logical, given the inseparable, 
subordinate status of the HOPD within the hospital overall. In 
accordance with section 1886(d)(3)(E) of the Act, the IPPS wage index 
is updated annually.
    The Affordable Care Act contained several provisions affecting the 
wage index. These provisions were discussed in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74191). Section 10324 of the 
Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act, 
which defines a frontier State and amended section 1833(t) of the Act 
to add paragraph (19), which requires a frontier State wage index floor 
of 1.00 in certain cases, and states that the frontier State floor 
shall not be applied in a budget neutral manner. We codified these 
requirements at Sec.  419.43(c)(2) and (3) of our regulations. For the 
CY 2020 OPPS, we proposed to implement this provision in the same 
manner as we have since CY 2011. Under this policy, the frontier State 
hospitals would receive a wage index of 1.00 if the otherwise 
applicable wage index (including reclassification, the rural floor, and 
rural floor budget neutrality) is less than 1.00. Because the HOPD 
receives a wage index based on the geographic location of the specific 
inpatient hospital with which it is associated, we stated that the 
frontier State wage index adjustment applicable for the inpatient 
hospital also would apply for any associated HOPD. In the CY 2020 OPPS/
ASC proposed rule (84 FR 39430), we referred readers to the FY 2011 
through FY 2019 IPPS/LTCH PPS final rules for discussions regarding 
this provision, including our methodology for identifying which areas 
meet the definition of ``frontier States'' as provided for in section 
1886(d)(3)(E)(iii)(II) of the Act: For FY 2011, 75 FR 50160 through 
50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 
53369 through 53370; for FY 2014, 78 FR 50590 through 50591; for FY 
2015, 79 FR 49971; for FY 2016, 80 FR 49498; for FY 2017, 81 FR 56922; 
for FY 2018, 82 FR 38142; and for FY 2019, 83 FR 41380. We did not 
receive any public comments on this proposal. Accordingly, for the 
reasons discussed above and in the CY 2020 OPPS/ASC proposed rule (84 
FR 39430), we are finalizing our proposal, without modification, to 
continue to implement the frontier State floor under the OPPS in the 
same manner as we have since CY 2011.
    In addition to the changes required by the Affordable Care Act, we 
noted in the CY 2020 OPPS/ASC proposed rule (84 FR 39430) that the FY 
2020 IPPS wage indexes continue to reflect a number of adjustments 
implemented over the past few years, including, but not limited to, 
reclassification of hospitals to different geographic areas, the rural 
floor provisions, an adjustment for occupational mix, and an adjustment 
to the wage index based on commuting patterns of employees (the out-
migration adjustment). Also, we noted that, as discussed in the FY 2020 
IPPS/LTCH PPS proposed rule (84 FR 19393 through 19399), we proposed a 
number of policies under the IPPS to address wage index disparities 
between high and low wage index value hospitals. In particular, in the 
FY 2020 IPPS/LTCH

[[Page 61185]]

PPS proposed rule, we proposed to (1) calculate the rural floor without 
including the wage data of urban hospitals that have reclassified as 
rural under section 1886(d)(8)(E) of the Act (as implemented in Sec.  
412.103) (84 FR 19396 through 19398); (2) remove the wage data of urban 
hospitals that have reclassified as rural under Sec.  412.103 from the 
calculation of ``the wage index for rural areas in the State'' for 
purposes of applying section 1886(d)(8)(C)(iii) of the Act (84 FR 
19398); (3) increase the wage index values for hospitals with a wage 
index below the 25th percentile wage index value across all hospitals 
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, and to offset the estimated increase in 
payments to hospitals with wage index values below the 25th percentile 
by decreasing the wage index values for hospitals with wage index 
values above the 75th percentile wage index value across all hospitals 
(84 FR 19394 through 19396); and (4) apply a 5-percent cap for FY 2020 
on any decrease in a hospital's final wage index from the hospital's 
final wage index in FY 2019, as a proposed transition wage index to 
help mitigate any significant negative impacts on hospitals (84 FR 
19398). In addition, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 
19398), we proposed to apply a budget neutrality adjustment to the 
standardized amount so that our proposed transition wage index for 
hospitals that may be negatively impacted (described in item (4) above) 
would be implemented in a budget neutral manner. Furthermore, in the FY 
2020 IPPS/LTCH PPS proposed rule (84 FR 19398 through 19399), we noted 
that our proposed adjustment relating to the rural floor calculation 
also would be budget neutral. We referred readers to the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19373 through 19399) for a detailed 
discussion of all proposed changes to the FY 2020 IPPS wage indexes.
    Furthermore, as discussed in the FY 2015 IPPS/LTCH PPS final rule 
(79 FR 49951 through 49963) and in each subsequent IPPS/LTCH PPS final 
rule, including the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362), the 
Office of Management and Budget (OMB) issued revisions to the labor 
market area delineations on February 28, 2013 (based on 2010 Decennial 
Census data), that included a number of significant changes, such as 
new Core Based Statistical Areas (CBSAs), urban counties that became 
rural, rural counties that became urban, and existing CBSAs that were 
split apart (OMB Bulletin 13-01). This bulletin can be found at: 
https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49950 
through 49985), for purposes of the IPPS, we adopted the use of the OMB 
statistical area delineations contained in OMB Bulletin No. 13-01, 
effective October 1, 2014. For purposes of the OPPS, in the CY 2015 
OPPS/ASC final rule with comment period (79 FR 66826 through 66828), we 
adopted the use of the OMB statistical area delineations contained in 
OMB Bulletin No. 13-01, effective January 1, 2015, beginning with the 
CY 2015 OPPS wage indexes. In the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56913), we adopted revisions to statistical areas contained in OMB 
Bulletin No. 15-01, issued on July 15, 2015, which provided updates to 
and superseded OMB Bulletin No. 13-01 that was issued on February 28, 
2013. For purposes of the OPPS, in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79598), we adopted the revisions to the OMB 
statistical area delineations contained in OMB Bulletin No. 15-01, 
effective January 1, 2017, beginning with the CY 2017 OPPS wage 
indexes.
    On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which 
provided updates to and superseded OMB Bulletin No. 15-01 that was 
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 
provide detailed information on the update to the statistical areas 
since July 15, 2015, and are based on the application of the 2010 
Standards for Delineating Metropolitan and Micropolitan Statistical 
Areas to Census Bureau population estimates for July 1, 2014 and July 
1, 2015. In the CY 2019 OPPS/ASC final rule with comment period (83 FR 
58863 through 58865), we adopted the updates set forth in OMB Bulletin 
No. 17-01, effective January 1, 2019, beginning with the CY 2019 wage 
index. We continue to believe that it is important for the OPPS to use 
the latest labor market area delineations available as soon as is 
reasonably possible in order to maintain a more accurate and up-to-date 
payment system that reflects the reality of population shifts and labor 
market conditions. For a complete discussion of the adoption of the 
updates set forth in OMB Bulletin No. 17-01, we refer readers to the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58864 through 
58865).
    As we stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42301), 
for the FY 2020 IPPS wage indexes, we are using the OMB delineations 
that were adopted, beginning with FY 2015 (based on the revised 
delineations issued in OMB Bulletin No. 13-01) to calculate the area 
wage indexes, with updates as reflected in OMB Bulletin Nos. 15-01 and 
17-01. Similarly, in the CY 2020 OPPS/ASC proposed rule (84 FR 39431), 
for the proposed CY 2020 OPPS wage indexes, we proposed to continue to 
use the OMB delineations that were adopted under the OPPS, beginning 
with CY 2015 (based on the revised delineations issued in OMB Bulletin 
No. 13-01) to calculate the area wage indexes, with updates as 
reflected in OMB Bulletin Nos. 15-01 and 17-01. We did not receive any 
public comments on our proposal. Accordingly, for the reasons discussed 
above and in the CY 2020 OPPS/ASC proposed rule (84 FR 39430 through 
39431), we are finalizing our proposal to continue to use the OMB 
delineations that were adopted beginning with CY 2015 to calculate area 
wage indexes under the OPPS, with updates as reflected in the OMB 
Bulletin Nos. 15-01, and 17-01.
    CBSAs are made up of one or more constituent counties. Each CBSA 
and constituent county has its own unique identifying codes. The FY 
2018 IPPS/LTCH PPS final rule (82 FR 38130) discussed the two different 
lists of codes to identify counties: Social Security Administration 
(SSA) codes and Federal Information Processing Standard (FIPS) codes. 
Historically, CMS listed and used SSA and FIPS county codes to identify 
and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS 
wage indexes. However, the SSA county codes are no longer being 
maintained and updated, although the FIPS codes continue to be 
maintained by the U.S. Census Bureau. The Census Bureau's most current 
statistical area information is derived from ongoing census data 
received since 2010; the most recent data are from 2015. The Census 
Bureau maintains a complete list of changes to counties or county 
equivalent entities on the website at: https://www.census.gov/geo/reference/county-changes.html (which, as of May 6, 2019, migrated to: 
https://www.census.gov/programs-surveys/geography.html). In the FY 2018 
IPPS/LTCH PPS final rule (82 FR 38130), for purposes of crosswalking 
counties to CBSAs for the IPPS wage index, we finalized our proposal to 
discontinue the use of the SSA county codes and begin using only the 
FIPS county codes. Similarly, for the purposes of crosswalking counties 
to CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC final rule 
with

[[Page 61186]]

comment period (82 FR 59260), we finalized our proposal to discontinue 
the use of SSA county codes and begin using only the FIPS county codes. 
For CY 2020, under the OPPS, we are continuing to use only the FIPS 
county codes for purposes of crosswalking counties to CBSAs.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39431), we proposed to 
use the FY 2020 hospital IPPS post-reclassified wage index for urban 
and rural areas as the wage index for the OPPS to determine the wage 
adjustments for both the OPPS payment rate and the copayment 
standardized amount for CY 2020. Therefore, we stated in the proposed 
rule that any adjustments for the FY 2020 IPPS post-reclassified wage 
index, including, but not limited to, any policies finalized under the 
IPPS to address wage index disparities between low and high wage index 
value hospitals, would be reflected in the final CY 2020 OPPS wage 
index beginning on January 1, 2020. (We referred readers to the FY 2020 
IPPS/LTCH PPS proposed rule (84 FR 19373 through 19399) and the 
proposed FY 2020 hospital wage index files posted on the CMS website.) 
With regard to budget neutrality for the CY 2020 OPPS wage index, we 
referred readers to section II.B. of the CY 2020 OPPS/ASC proposed 
rule. We stated that we continue to believe that using the IPPS wage 
index as the source of an adjustment factor for the OPPS is reasonable 
and logical, given the inseparable, subordinate status of the HOPD 
within the hospital overall. Summarized below are the comments we 
received regarding our proposal to use the final FY 2020 hospital IPPS 
post-reclassified wage index for urban and rural areas as the wage 
index for the OPPS, including any adjustments for the final FY 2020 
IPPS post-reclassified wage index as discussed above, along with our 
responses.
    Comment: Several commenters supported CMS adopting the finalized 
post-reclassified wage index from the FY 2020 IPPS/LTCH PPS final rule 
for use under the OPPS. Many of these commenters noted that the gap in 
payment between rural and urban hospitals has contributed to 
disparities in care and noted that increasing the wage index for 
hospitals with wage index values below the 25th percentile wage index 
value will help to lessen the gap. Some of these commenters noted that 
this change will help rural areas have access to quality, affordable 
health care. One commenter supported the proposal to increase the wage 
index for hospitals with wage index values below the 25th percentile, 
but wanted CMS to consider this solution temporary until the wage index 
is more equitable between hospitals.
    Response: We appreciate the commenters' support. In response to the 
comment that CMS should consider the increase in the wage index for 
hospitals with wage index values below the 25th percentile wage index 
value (that it, low wage index hospitals) temporary until the wage 
index is more equitable between hospitals, as we stated in the FY 2020 
IPPS/LTCH PPS final rule (84 FR 42326 through 42327), the increase in 
the IPPS wage index for low wage index hospitals is not intended to be 
permanent. As we stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 
42326 through 42327), we expect that this policy will be in place for 
at least 4 years in order to allow employee compensation increases 
implemented by low wage index hospitals sufficient time to be reflected 
in the wage index calculation. We stated in the FY 2020 IPPS/LTCH PPS 
final rule (84 FR 42327) that, once there has been sufficient time for 
that increased employee compensation to be reflected in the wage data, 
there should not be a continuing need for this policy.
    Comment: Several commenters supported the proposal to increase the 
wage index for low wage index hospitals but wanted it implemented in a 
non-budget neutral manner. They believe this would mitigate disparities 
for median wage index hospitals. Several commenters opposed the 
proposal to recalculate the wage index to help the lowest wage 
hospitals. These commenters believed that applying a budget neutrality 
adjustment for all hospitals to offset the increase in payments for low 
wage index hospitals would result in a significant loss of resources 
for patient care in other hospitals. While these commenters understood 
and appreciated the goal of the proposed changes to increase the wage 
index for low wage hospitals, they did not believe that these policies 
would help rural hospitals. They believed that certain communities 
would benefit from increasing the wage index for low wage hospitals but 
believed this policy does not adequately recognize differences in 
geographic labor markets. They further claimed that the offsetting 
reductions to the wage index in some areas will hinder hospitals' 
ability to attract and recruit quality health care practitioners.
    Some commenters noted that OPPS payments to hospitals in their 
respective states would decrease by millions in CY 2020 due to the 
budget neutral implementation of the increase in the wage index for low 
wage hospitals. These commenters noted that any reduction in Medicare 
payments would force hospitals to reduce staff and/or salary and 
benefits. One commenter noted that, for many years, the disparities 
among geographic areas have continued to grow and have resulted in 
challenges recruiting staff. Some commenters recommended CMS convene a 
meeting to understand all of the challenges and issues in order to 
develop a comprehensive reform of the wage index. One commenter 
recommended that, if CMS is going to redistribute the area wage index, 
CMS offset the increased wage index for very low wage areas with a 
budget neutrality adjustment to the wage index applied evenly to all 
hospitals. However, this commenter preferred that CMS not use budget 
neutrality for the area wage index. They did not believe that the 
budget neutrality adjustment policy follows statutory requirements for 
adjusting the area wage index that require CMS to address real 
differences in labor costs. Several commenters believed CMS went beyond 
its authority in reallocating funding from hospitals in high wage 
areas, to provide funding to low wage area hospitals, without any 
relationship to actual wage-related data for the impacted areas. 
Another commenter strongly opposed decreasing payments to some or all 
hospitals to offset an increase in the area wage index for low wage 
index hospitals and did not believe the rationale in the FY 2020 IPPS 
final rule supported this change. One commenter opposed CMS making a 
budget neutrality adjustment across all hospitals as well as the 
transition wage index adjustment to ensure that no hospital's wage 
index decreases by more than 5 percent. This commenter believed that 
these adjustments negatively impact hospitals in the bottom quartile of 
wage index that would have seen a larger increase in payment without 
these additional adjustments.
    Response: As we stated in the FY 2020 IPPS/LTCH PPS final rule (84 
FR 42331), the intent of the wage index increase for hospitals with 
wage indexes below the 25th percentile wage index value across all 
hospitals (that is, low wage index hospitals) is to increase the 
accuracy of the wage index as a technical adjustment, and not to use 
the wage index as a policy tool to address non-wage issues related to 
rural hospitals, or the laudable goals of the overall financial health 
of hospitals in low wage areas or broader wage index reform. As we 
stated in the FY 2020 IPPS/LTCH PPS final rule, we believe the wage 
index increase we finalized for

[[Page 61187]]

low wage index hospitals increases the accuracy of the wage index as a 
relative measure because it allows low wage index hospitals to increase 
their employee compensation in ways that we would expect if there were 
no lag in reflecting compensation adjustments in the wage index. Thus, 
we stated in the FY 2020 IPPS/LTCH PPS final rule that we believe the 
IPPS wage index adjustment for low wage index hospitals will 
appropriately reflect the relative hospital wage level in those areas 
compared to the national average wage level. We further stated in the 
FY 2020 IPPS/LTCH PPS final rule that because this policy is based on 
the actual wages that we expect low wage index hospitals to pay, it 
falls within the scope of the authority of section 1886(d)(3)(E) of the 
Act.
    However, we note that, in the FY 2020 IPPS/LTCH PPS final rule (84 
FR 42331 through 42332), we did not finalize our budget neutrality 
proposal to decrease the wage index for hospitals with wage index 
values above the 75th percentile wage index value to offset the 
estimated increase in payments to low wage index hospitals. Instead, in 
the FY 2020 IPPS/LTCH PPS final rule, consistent with our current 
methodology for implementing wage index budget neutrality under the 
IPPS, we finalized a budget neutrality adjustment to the IPPS national 
standardized amount for all hospitals so that the increase in the IPPS 
wage index for low wage index hospitals is implemented in a budget 
neutral manner. As explained in the FY 2020 IPPS/LTCH PPS final rule 
(84 FR42331), under section 1886(d)(3)(E) of the Act, the IPPS wage 
index adjustment is required to be implemented in a budget neutral 
manner. We further noted in the FY 2020 IPPS/LTCH PPS final rule that, 
even if the wage index were not required to be budget neutral, we would 
consider it inappropriate to use the wage index to increase or decrease 
overall spending. Similarly, under section 1886(t)(2)(D) and (9)(B) of 
the Act, the OPPS wage index adjustment is required to be implemented 
in a budget neutral manner. Accordingly, consistent with the policy 
finalized in the FY 2020 IPPS/LTCH PPS final rule, in this CY 2020 
OPPS/ASC final rule with comment period, we are finalizing a budget 
neutrality adjustment to the conversion factor for all hospitals paid 
under the OPPS so that the increase in the OPPS wage index for low wage 
index hospitals is implemented in a budget neutral manner. We refer 
readers to section II.B. of this final rule with comment period for a 
discussion of budget neutrality. In addition, we refer readers to the 
FY 2020 IPPS/LTCH PPS final rule (84 FR 42328 through 42332) for 
further discussion of the final FY 2020 IPPS wage index policies 
(including the transition wage index adjustment) and detailed responses 
to similar comments.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39431), we proposed to 
use the FY 2020 IPPS post-reclassified wage index for urban and rural 
areas as the wage index under the OPPS to determine the wage 
adjustments for both the OPPS payment rate and the copayment 
standardized amount. Because we continue to believe that using the IPPS 
post-reclassified wage index as the source of the wage index adjustment 
factor under the OPPS is reasonable and logical given the inseparable, 
subordinate status of the HOPD within the hospital overall, as 
proposed, we are finalizing the use of the FY 2020 hospital IPPS post-
reclassified wage index for urban and rural areas as the wage index 
under the OPPS to determine the wage adjustments for both the OPPS 
payment rate and the copayment standardized amount for CY 2020. 
Accordingly, any adjustments for the final FY 2020 IPPS post-
reclassified wage index, including, but not limited to, any policies 
finalized in the FY 2020 IPPS/LTCH PPS final rule to address wage index 
disparities between low and high wage index value hospitals, will be 
reflected in the final CY 2020 OPPS wage index beginning on January 1, 
2020.
    Comment: Several commenters noted support for the revised rural 
floor policy finalized in the FY 2020 IPPS/LTCH final rule. Many of 
these commenters supported the proposal to exclude the wage data of 
urban hospitals that reclassify as rural in calculating the rural 
floor. These commenters suggested that including the wage data of these 
hospitals in the rural floor calculation has inflated wage index values 
in certain states and that excluding the wage data of these hospitals 
will have positive effects on OPPS payment for rural hospitals.
    Response: We thank commenters for their support.
    Comment: A few commenters opposed the change to exclude the wage 
data of urban hospitals that have been reclassified as rural in 
calculating the IPPS rural floor. One of these commenters believed that 
CMS lacks the legal authority to remove from the rural floor 
calculation the wage data of hospitals that have been reclassified from 
urban to rural as implemented in the FY 2020 IPPS/LTCH final rule. This 
commenter believed CMS misread the applicable law in Section 
1886(d)(8)(E) of the Act. One of the commenter's believed that removing 
the urban to rural reclassifications from the calculation of the rural 
floor penalizes hospitals that are allowed to reclassify under HHS 
authority.
    One commenter believed that CMS should put more structure around 
the rural floor policy and should not apply the rural floor in 
primarily urban states with only one or two rural facilities. The 
commenter believed that this would reduce the potential for gaming the 
system in determining an equitable wage adjustment.
    Response: We addressed similar comments in the FY 2020 IPPS/LTCH 
PPS final rule (84 FR 42334 through 42336). As provided in the FY 2020 
IPPS/LTCH final rule (84 FR 42334), in the absence of broader wage 
index reform from Congress, we believe it is appropriate to revise the 
rural floor calculation as part of an effort to reduce wage index 
disparities. Regarding CMS's statutory authority to exclude the wage 
data of urban hospitals reclassified as rural from the IPPS rural floor 
calculation, as we stated in the FY 2020 IPPS/LTCH PPS final rule (84 
FR 42334), we believe our calculation methodology is permissible under 
section 1886(d)(8)(E) of the Act (as implemented in Sec.  412.103) and 
the rural floor statute (section 4410 of Pub. L. 105-33). Further, as 
we discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42336), we 
do not believe this policy penalizes or adversely impacts urban 
hospitals that have reclassified as rural. We refer readers to the FY 
2020 IPPS/LTCH PPS final rule (84 FR 42332 through 42336) for further 
discussion of this policy and detailed responses to similar comments. 
We note that impact files and supporting data files available on the FY 
2020 IPPS Final Rule Home Page provide the data necessary to understand 
the impact of the finalized policies under the IPPS. Furthermore, we 
appreciate the comment that CMS should not apply the rural floor in 
primarily urban states with only one or two rural facilities; however, 
because we consider this comment to be outside the scope of the CY 2020 
OPPS wage index proposals, we are not addressing it in this final rule 
with comment period.
    As we discussed above, we continue to believe that using the IPPS 
post-reclassified wage index as the source of the wage index adjustment 
factor under the OPPS is reasonable and logical given the inseparable, 
subordinate status of the HOPD within the hospital overall. Thus, as 
proposed, we are using the FY 2020 hospital IPPS post-reclassified

[[Page 61188]]

wage index for urban and rural areas as the wage index under the OPPS 
to determine the wage adjustments for both the OPPS payment rate and 
the copayment standardized amount for CY 2020. Accordingly, as we 
proposed, any adjustments for the final FY 2020 IPPS post-reclassified 
wage index, including, but not limited to, the revised rural floor 
calculation methodology and other IPPS wage index policies finalized in 
the FY 2020 IPPS/LTCH PPS final rule to address wage index disparities, 
will be reflected in the final CY 2020 OPPS wage index beginning on 
January 1, 2020.
    After considering the public comments received, for the reasons 
discussed earlier in this section and in the CY 2020 OPPS/ASC proposed 
rule, we are finalizing without modification our proposal to use the 
final FY 2020 IPPS post-reclassified wage index for urban and rural 
areas as the wage index under the OPPS to determine the wage 
adjustments for both the OPPS payment rate and the copayment 
standardized amount for CY 2020. Accordingly, as we proposed, any 
adjustments for the final FY 2020 IPPS post-reclassified wage index (as 
set forth in the FY 2020 IPPS/LTCH PPS final rule, 84 FR 42300 through 
42339), including, but not limited to, any policies finalized in the FY 
2020 IPPS/LTCH PPS final rule to address wage index disparities between 
low and high wage index value hospitals (as set forth at 84 FR 42300 
through 42339), will be reflected in the final CY 2020 OPPS wage index 
beginning on January 1, 2020. As discussed above, we note that in the 
FY 2020 IPPS/LTCH PPS final rule (84 FR 42325 through 42332), we did 
not finalize our budget neutrality proposal to decrease the wage index 
for hospitals with wage index values above the 75th percentile wage 
index value to offset the estimated increase in payments to hospitals 
with wage index values below the 25th percentile wage index value, and 
thus this budget neutrality policy will not be applied under the OPPS. 
Instead, in the FY 2020 IPPS/LTCH PPS final rule, consistent with our 
current methodology for implementing IPPS wage index budget neutrality, 
we finalized a budget neutrality adjustment to the IPPS national 
standardized amount for all hospitals so that the increase in the IPPS 
wage index for low wage index hospitals is implemented in a budget 
neutral manner. Consistent with this IPPS policy, in this CY 2020 OPPS/
ASC final rule with comment period, we are finalizing a budget 
neutrality adjustment to the conversion factor for all hospitals paid 
under the OPPS so that the increase in the OPPS wage index for low wage 
index hospitals is implemented in a budget neutral manner. We refer 
readers to section II.B. of this final rule with comment period for a 
discussion of budget neutrality.
    Hospitals that are paid under the OPPS, but not under the IPPS, do 
not have an assigned hospital wage index under the IPPS. Therefore, for 
non-IPPS hospitals paid under the OPPS, it is our longstanding policy 
to assign the wage index that would be applicable if the hospital were 
paid under the IPPS, based on its geographic location and any 
applicable wage index adjustments. In the CY 2020 OPPS/ASC proposed 
rule (84 FR 39431), we proposed to continue this policy for CY 2020, 
and included a brief summary of the major proposed FY 2020 IPPS wage 
index policies and adjustments that we proposed to apply to these 
hospitals under the OPPS for CY 2020, which we have summarized below. 
We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42300 
through 42339) for a detailed discussion of the final changes to the FY 
2020 IPPS wage indexes.
    It has been our longstanding policy to allow non-IPPS hospitals 
paid under the OPPS to qualify for the out-migration adjustment if they 
are located in a section 505 out-migration county (section 505 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA)). Applying this adjustment is consistent with our policy of 
adopting IPPS wage index policies for hospitals paid under the OPPS. We 
note that, because non-IPPS hospitals cannot reclassify, they are 
eligible for the out-migration wage index adjustment if they are 
located in a section 505 out-migration county. This is the same out-
migration adjustment policy that applies if the hospital were paid 
under the IPPS. For CY 2020, we proposed to continue our policy of 
allowing non-IPPS hospitals paid under the OPPS to qualify for the out-
migration adjustment if they are located in a section 505 out-migration 
county (section 505 of the MMA). In addition, for non-IPPS hospitals 
paid under the OPPS, we proposed to apply any policies that are 
finalized under the IPPS relating to wage index disparities. We also 
proposed that the wage index that would apply to non-IPPS hospitals for 
CY 2020 would include the rural floor adjustment. We did not receive 
any public comments on these proposals. Accordingly, for the reasons 
discussed above and in the CY 2020 OPPS/ASC proposed rule (84 FR 
39431), we are finalizing these proposals without modifications.
    For CMHCs, for CY 2020, we proposed to continue to calculate the 
wage index by using the post-reclassification IPPS wage index based on 
the CBSA where the CMHC is located. We also proposed to apply any 
policies that are finalized under the IPPS relating to wage index 
disparities. In addition, we proposed that the wage index that would 
apply to CMHCs for CY 2020 would include the rural floor adjustment. 
Also, we proposed that the wage index that would apply to CMHCs would 
not include the out-migration adjustment because that adjustment only 
applies to hospitals. We did not receive any public comments on these 
proposals. Therefore, for the reasons discussed above and in the CY 
2020 OPPS/ASC proposed rule (84 FR 39431), we are finalizing these 
proposals without modifications.
    Table 4 associated with the FY 2020 IPPS/LTCH PPS final rule 
(available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) 
identifies counties eligible for the out-migration adjustment. Table 2 
associated with the FY 2020 IPPS/LTCH PPS final rule (available for 
download via the website above) identifies IPPS hospitals that will 
receive the out-migration adjustment for FY 2020. We are including the 
out-migration adjustment information from Table 2 associated with the 
FY 2020 IPPS/LTCH PPS final rule as Addendum L to this final rule with 
comment period with the addition of non-IPPS hospitals that will 
receive the section 505 out-migration adjustment under this CY 2020 
OPPS/ASC final rule with comment period. Addendum L is available via 
the internet on the CMS website. We refer readers to the CMS website 
for the OPPS at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will 
find a link to the final FY 2020 IPPS wage index tables and Addendum L.

D. Statewide Average Default Cost-to-Charge Ratios (CCRs)

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, CMS uses overall hospital-specific CCRs calculated 
from the hospital's most recent cost report to determine outlier 
payments, payments for pass-through devices, and monthly interim 
transitional corridor payments under the OPPS during the PPS year. For 
certain hospitals, under the regulations at 42 CFR 419.43(d)(5)(iii), 
CMS uses the statewide average default CCRs to determine the payments

[[Page 61189]]

mentioned earlier if it is unable to determine an accurate CCR for a 
hospital in certain circumstances. This includes hospitals that are 
new, hospitals that have not accepted assignment of an existing 
hospital's provider agreement, and hospitals that have not yet 
submitted a cost report. CMS also uses the statewide average default 
CCRs to determine payments for hospitals whose CCR falls outside the 
predetermined ceiling threshold for a valid CCR or for hospitals in 
which the most recent cost report reflects an all-inclusive rate status 
(Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, Section 
10.11).
    We discussed our policy for using default CCRs, including setting 
the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final 
rule with comment period (73 FR 68594 through 68599) in the context of 
our adoption of an outlier reconciliation policy for cost reports 
beginning on or after January 1, 2009. For details on our process for 
calculating the statewide average CCRs, we referred readers to the CY 
2020 OPPS proposed rule Claims Accounting Narrative that is posted on 
the CMS website. In the CY 2020 OPPS/ASC proposed rule (84 FR 39432), 
we proposed to update the default ratios for CY 2020 using the most 
recent cost report data. We indicated that we would update these ratios 
in this final rule with comment period if more recent cost report data 
are available.
    We did not receive any public comments on our proposal to use 
statewide average default CCRs if we cannot calculate a CCR for a 
hospital and to use these CCRs to adjust charges on claims to costs for 
setting the final CY 2020 OPPS payment weights. Therefore, we 
finalizing our proposal without modification.
    As we stated in the CY 2020 OPPS/ASC proposed rule (84 FR 39432), 
we are no longer publishing a table in the Federal Register containing 
the statewide average CCRs in the annual OPPS proposed rule and final 
rule. These CCRs with the upper limit will be available for download 
with each OPPS CY proposed rule and final rule on the CMS website. We 
refer readers to the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; click on the link on the left 
of the page titled ``Hospital Outpatient Regulations and Notices'' and 
then select the relevant regulation to download the statewide CCRs and 
upper limit in the downloads section of the web page.

E. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential 
Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the 
Act for CY 2020

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural sole community hospitals 
(SCHs) of 7.1 percent for all services and procedures paid under the 
OPPS, excluding drugs, biologicals, brachytherapy sources, and devices 
paid under the pass-through payment policy, in accordance with section 
1833(t)(13)(B) of the Act, as added by section 411 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
(Pub. L. 108-173). Section 1833(t)(13) of the Act provided the 
Secretary the authority to make an adjustment to OPPS payments for 
rural hospitals, effective January 1, 2006, if justified by a study of 
the difference in costs by APC between hospitals in rural areas and 
hospitals in urban areas. Our analysis showed a difference in costs for 
rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment 
adjustment for rural SCHs of 7.1 percent for all services and 
procedures paid under the OPPS, excluding separately payable drugs and 
biologicals, brachytherapy sources, items paid at charges reduced to 
costs, and devices paid under the pass-through payment policy, in 
accordance with section 1833(t)(13)(B) of the Act.
    In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 
and 68227), for purposes of receiving this rural adjustment, we revised 
our regulations at Sec.  419.43(g) to clarify that essential access 
community hospitals (EACHs) are also eligible to receive the rural SCH 
adjustment, assuming these entities otherwise meet the rural adjustment 
criteria. Currently, two hospitals are classified as EACHs, and as of 
CY 1998, under section 4201(c) of Public Law 105-33, a hospital can no 
longer become newly classified as an EACH.
    This adjustment for rural SCHs is budget neutral and applied before 
calculating outlier payments and copayments. We stated in the CY 2006 
OPPS final rule with comment period (70 FR 68560) that we would not 
reestablish the adjustment amount on an annual basis, but we may review 
the adjustment in the future and, if appropriate, would revise the 
adjustment. We provided the same 7.1 percent adjustment to rural SCHs, 
including EACHs, again in CYs 2008 through 2019. Further, in the CY 
2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated 
the regulations at Sec.  419.43(g)(4) to specify, in general terms, 
that items paid at charges adjusted to costs by application of a 
hospital-specific CCR are excluded from the 7.1 percent payment 
adjustment.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 58870 through 58871), 
for the CY 2020 OPPS, we proposed to continue the current policy of a 
7.1 percent payment adjustment that is done in a budget neutral manner 
for rural SCHs, including EACHs, for all services and procedures paid 
under the OPPS, excluding separately payable drugs and biologicals, 
brachytherapy sources, items paid at charges reduced to costs, and 
devices paid under the pass-through payment policy.
    Comment: Several commenters supported the proposal to continue the 
7.1 percent payment adjustment.
    Response: We appreciate the commenters' support.
    Comment: One commenter requested that CMS make the 7.1 percent 
rural adjustment permanent. The commenter appreciated the policy that 
CMS adopted in CY 2019 where we stated that the 7.1 percent rural 
adjustment would continue to be in place until our data support 
establishing a different rural adjustment percentage. However, the 
commenter believed that this policy still does not provide enough 
certainty for rural SCHs and EACHs to know whether they should take 
into account the rural SCH adjustment when attempting to calculate 
expected revenues for their hospital budgets.
    Response: We thank the commenter for their input. We believe that 
our currrent policy, which states that the 7.1 percent payment 
adjustment for rural SCHs and EACHs will remain in effect until our 
data show that a different percentage for the rural payment adjustment 
is necessary, provides sufficient budget predictability for rural SCHs 
and EACHs. Providers would receive notice in a proposed rule before any 
changes to the rural adjustment percentage would be implemented.
    Comment: Some commenters requested that CMS expand the payment 
adjustment for rural SCHs and EACHs to additional types of hospitals. 
One commenter requested that the payment adjustment apply to include 
urban SCHs because, according to the commenter, urban SCHs care for 
patient populations similar to rural SCHs and EACHs, face similar 
financial challenges to rural SCHs and EACHs, and act as safety net 
providers for rural areas despite their designation as urban providers. 
Another commenter requested that the payment adjustment also apply to 
Medicare-dependent hospitals (MDHs) because,

[[Page 61190]]

according to the commenter, these hospitals face similar financial 
challenges to rural SCHs and EACHs, and MDHs play a similar safety net 
role to rural SCHs and EACHs, especially for Medicare. One commenter 
requested that payment rates for OPPS services for all rural hospitals 
be increased to reduce financial vulnerability for rural hospitals 
related to the high share of Medicare and Medicaid beneficiaries they 
serve.
    Response: We thank the commenters for their comments. However, the 
analysis we did to compare costs of urban providers to those of rural 
providers did not support an add-on adjustment for providers other than 
rural SCHs and EACHs. In addition, our follow-up analyses performed in 
recent years have not shown differences in costs for all services for 
any of the additional types of providers mentioned by the commenters. 
Accordingly, we do not believe we currently have a basis to expand the 
payment adjustment to any providers other than rural SCHs and EACHs.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue the current 
policy of a 7.1 percent payment adjustment that is done in a budget 
neutral manner for rural SCHs, including EACHs, for all services and 
procedures paid under the OPPS, excluding separately payable drugs and 
biologicals, devices paid under the pass-through payment policy, and 
items paid at charges reduced to costs.

F. Payment Adjustment for Certain Cancer Hospitals for CY 2020

1. Background
    Since the inception of the OPPS, which was authorized by the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid 
the 11 hospitals that meet the criteria for cancer hospitals identified 
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered 
outpatient hospital services. These cancer hospitals are exempted from 
payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced 
Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established 
section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit 
Decline in Payment,'' to determine OPPS payments to cancer and 
children's hospitals based on their pre-BBA payment amount (often 
referred to as ``held harmless'').
    As required under section 1833(t)(7)(D)(ii) of the Act, a cancer 
hospital receives the full amount of the difference between payments 
for covered outpatient services under the OPPS and a ``pre-BBA 
amount.'' That is, cancer hospitals are permanently held harmless to 
their ``pre-BBA amount,'' and they receive transitional outpatient 
payments (TOPs) or hold harmless payments to ensure that they do not 
receive a payment that is lower in amount under the OPPS than the 
payment amount they would have received before implementation of the 
OPPS, as set forth in section 1833(t)(7)(F) of the Act. The ``pre-BBA 
amount'' is the product of the hospital's reasonable costs for covered 
outpatient services occurring in the current year and the base payment-
to-cost ratio (PCR) for the hospital defined in section 
1833(t)(7)(F)(ii) of the Act. The ``pre-BBA amount'' and the 
determination of the base PCR are defined at 42 CFR 419.70(f). TOPs are 
calculated on Worksheet E, Part B, of the Hospital Cost Report or the 
Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS-
2552-10, respectively), as applicable each year. Section 1833(t)(7)(I) 
of the Act exempts TOPs from budget neutrality calculations.
    Section 3138 of the Affordable Care Act amended section 1833(t) of 
the Act by adding a new paragraph (18), which instructs the Secretary 
to conduct a study to determine if, under the OPPS, outpatient costs 
incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of 
the Act with respect to APC groups exceed outpatient costs incurred by 
other hospitals furnishing services under section 1833(t) of the Act, 
as determined appropriate by the Secretary. Section 1833(t)(18)(A) of 
the Act requires the Secretary to take into consideration the cost of 
drugs and biologicals incurred by cancer hospitals and other hospitals. 
Section 1833(t)(18)(B) of the Act provides that, if the Secretary 
determines that cancer hospitals' costs are higher than those of other 
hospitals, the Secretary shall provide an appropriate adjustment under 
section 1833(t)(2)(E) of the Act to reflect these higher costs. In 
2011, after conducting the study required by section 1833(t)(18)(A) of 
the Act, we determined that outpatient costs incurred by the 11 
specified cancer hospitals were greater than the costs incurred by 
other OPPS hospitals. For a complete discussion regarding the cancer 
hospital cost study, we refer readers to the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74200 through 74201).
    Based on these findings, we finalized a policy to provide a payment 
adjustment to the 11 specified cancer hospitals that reflects their 
higher outpatient costs, as discussed in the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74202 through 74206). Specifically, we 
adopted a policy to provide additional payments to the cancer hospitals 
so that each cancer hospital's final PCR for services provided in a 
given calendar year is equal to the weighted average PCR (which we 
refer to as the ``target PCR'') for other hospitals paid under the 
OPPS. The target PCR is set in advance of the calendar year and is 
calculated using the most recently submitted or settled cost report 
data that are available at the time of final rulemaking for the 
calendar year. The amount of the payment adjustment is made on an 
aggregate basis at cost report settlement. We note that the changes 
made by section 1833(t)(18) of the Act do not affect the existing 
statutory provisions that provide for TOPs for cancer hospitals. The 
TOPs are assessed, as usual, after all payments, including the cancer 
hospital payment adjustment, have been made for a cost reporting 
period. For CYs 2012 and 2013, the target PCR for purposes of the 
cancer hospital payment adjustment was 0.91. For CY 2014, the target 
PCR was 0.90. For CY 2015, the target PCR was 0.90. For CY 2016, the 
target PCR was 0.92, as discussed in the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70362 through 70363). For CY 2017, the 
target PCR was 0.91, as discussed in the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79603 through 79604). For CY 2018, the 
target PCR was 0.88, as discussed in the CY 2018 OPPS/ASC final rule 
with comment period (82 FR 59265 through 59266). For CY 2019, the 
target PCR was 0.88, as discussed in the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 58871 through 58873).
2. Policy for CY 2020
    Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) 
amended section 1833(t)(18) of the Act by adding subparagraph (C), 
which requires that in applying Sec.  419.43(i) (that is, the payment 
adjustment for certain cancer hospitals) for services furnished on or 
after January 1, 2018, the target PCR adjustment be reduced by 1.0 
percentage point less than what would otherwise apply. Section 16002(b) 
also provides that, in addition to the percentage reduction, the 
Secretary may consider making an additional percentage point reduction 
to the target PCR that takes into account payment rates for applicable 
items and services described under section 1833(t)(21)(C) of the Act 
for hospitals that are not cancer hospitals described under

[[Page 61191]]

section 1886(d)(1)(B)(v) of the Act. Further, in making any budget 
neutrality adjustment under section 1833(t) of the Act, the Secretary 
shall not take into account the reduced expenditures that result from 
application of section 1833(t)(18)(C) of the Act.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39433), for CY 2020, 
we proposed to provide additional payments to the 11 specified cancer 
hospitals so that each cancer hospital's final PCR is equal to the 
weighted average PCR (or ``target PCR'') for the other OPPS hospitals, 
using the most recent submitted or settled cost report data that were 
available at the time of the development of the proposed rule, reduced 
by 1.0 percentage point, to comply with section 16002(b) of the 21st 
Century Cures Act.
    We did not propose an additional reduction beyond the 1.0 
percentage point reduction required by section 16002(b) for CY 2020. To 
calculate the proposed CY 2020 target PCR, we are using the same 
extract of cost report data from HCRIS, as discussed in section II.A. 
of the CY 2020 OPPS/ASC proposed rule and this final rule with comment 
period, used to estimate costs for the CY 2020 OPPS. Using these cost 
report data, we included data from Worksheet E, Part B, for each 
hospital, using data from each hospital's most recent cost report, 
whether as submitted or settled.
    We then limited the dataset to the hospitals with CY 2018 claims 
data that we used to model the impact of the proposed CY 2020 APC 
relative payment weights (3,770 hospitals) because it is appropriate to 
use the same set of hospitals that are being used to calibrate the 
modeled CY 2020 OPPS. The cost report data for the hospitals in this 
dataset were from cost report periods with fiscal year ends ranging 
from 2016 to 2018. We then removed the cost report data of the 49 
hospitals located in Puerto Rico from our dataset because we did not 
believe their cost structure reflected the costs of most hospitals paid 
under the OPPS, and, therefore, their inclusion may bias the 
calculation of hospital-weighted statistics. We also removed the cost 
report data of 23 hospitals because these hospitals had cost report 
data that were not complete (missing aggregate OPPS payments, missing 
aggregate cost data, or missing both), so that all cost reports in the 
study would have both the payment and cost data necessary to calculate 
a PCR for each hospital, leading to a proposed analytic file of 3,539 
hospitals with cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on average, the OPPS payments to other hospitals furnishing services 
under the OPPS were approximately 90 percent of reasonable cost 
(weighted average PCR of 0.90). Therefore, after applying the 1.0 
percentage point reduction, as required by section 16002(b) of the 21st 
Century Cures Act, we proposed that the payment amount associated with 
the cancer hospital payment adjustment to be determined at cost report 
settlement would be the additional payment needed to result in a 
proposed target PCR equal to 0.89 for each cancer hospital.
    We did not receive any public comments on our proposals. Therefore, 
we are finalizing our proposed cancer hospital payment adjustment 
methodology without modification. For this final rule with comment 
period, we are using the most recent cost report data through June 30, 
2019 to update the adjustment. This updated yields a target PCR of 
0.90. We limited the dataset to hospitals with CY 2018 claims data that 
we used to model the impact of the CY 2020 APC relative payment weights 
(3,763) because it is appropriate to use the same set of hospitals that 
we are using to calibrate the modeled CY 2020 OPPS. The cost report 
data for the hospitals in the dataset were from cost report periods 
with fiscal years ends ranging from 2010 to 2018. We then removed the 
cost report data of the 46 hospitals located in Puerto Rico from our 
dataset because we do not believe their cost structure reflects the 
cost of most hospitals paid under the OPPS and, therefore, their 
inclusion may bias the calculation of hospital-weighted statistics. We 
also removed the cost report data of 21 hospitals because these 
hospitals had cost report data that were not complete (missing 
aggregate OPPS payments, missing aggregate cost data, or missing both), 
so that all cost report in the study would have both the payment and 
cost data necessary to calculate a PCR for each hospital, leading to an 
analytic file of 3,523 hospitals with cost report data.
    Using this smaller dataset of cost report data, we estimated a 
target PCR of 0.90. Therefore, after applying the 1.0 percentage point 
reduction as required by section 1602(b) of the 21st Century Cures Act, 
we are finalizing that the payment amount associated with the cancer 
hospital adjustment to be determined at cost report settlement will be 
the additional payment needed to result in a PCR equal to 0.89 for each 
cancer hospital.
    Table 7 shows the estimated percentage increase in OPPS payments to 
each cancer hospital for CY 2020, due to the cancer hospital payment 
adjustment policy. The actual amount of the CY 2020 cancer hospital 
payment adjustment for each cancer hospital will be determined at cost 
report settlement and will depend on each hospital's CY 2020 payments 
and costs. We note that the requirements contained in section 
1833(t)(18) of the Act do not affect the existing statutory provisions 
that provide for TOPs for cancer hospitals. The TOPs will be assessed, 
as usual, after all payments, including the cancer hospital payment 
adjustment, have been made for a cost reporting period.

[[Page 61192]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.012

G. Hospital Outpatient Outlier Payments

1. Background
    The OPPS provides outlier payments to hospitals to help mitigate 
the financial risk associated with high-cost and complex procedures, 
where a very costly service could present a hospital with significant 
financial loss. As explained in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66832 through 66834), we set our projected target 
for aggregate outlier payments at 1.0 percent of the estimated 
aggregate total payments under the OPPS for the prospective year. 
Outlier payments are provided on a service-by-service basis when the 
cost of a service exceeds the APC payment amount multiplier threshold 
(the APC payment amount multiplied by a certain amount) as well as the 
APC payment amount plus a fixed-dollar amount threshold (the APC 
payment plus a certain amount of dollars). In CY 2019, the outlier 
threshold was met when the hospital's cost of furnishing a service 
exceeded 1.75 times (the multiplier threshold) the APC payment amount 
and exceeded the APC payment amount plus $4,825 (the fixed-dollar 
amount threshold) (83 FR 58874 through 58875). If the cost of a service 
exceeds both the multiplier threshold and the fixed-dollar threshold, 
the outlier payment is calculated as 50 percent of the amount by which 
the cost of furnishing the service exceeds 1.75 times the APC payment 
amount. Beginning with CY 2009 payments, outlier payments are subject 
to a reconciliation process similar to the IPPS outlier reconciliation 
process for cost reports, as discussed in the CY 2009 OPPS/ASC final 
rule with comment period (73 FR 68594 through 68599).
    It has been our policy to report the actual amount of outlier 
payments as a percent of total spending in the claims being used to 
model the OPPS. Our estimate of total outlier payments as a percent of 
total CY 2018 OPPS payments, using CY 2018 claims available for the CY 
2020 OPPS/ASC proposed rule (84 FR 39434 through 39435) was 
approximately 1.0 percent of the total aggregated OPPS payments. 
Therefore, for CY 2018, we estimated that we paid the outlier target of 
1.0 percent of total aggregated OPPS payments. Using an updated claims 
dataset for this CY 2020 OPPS final rule with comment period, we 
estimate that we paid approximately 1.00 percent of the total 
aggregated OPPS payments in outliers for CY 2018.
    For the CY 2020 OPPS/ASC proposed rule, using CY 2018 claims data 
and CY 2019 payment rates, we estimated that the aggregate outlier 
payments for CY 2019 would be approximately 1.03 percent of the total 
CY 2019 OPPS payments. We provided estimated CY 2020 outlier payments 
for hospitals and CMHCs with claims included in the claims data that we 
used to model impacts in the Hospital-Specific Impacts--Provider-
Specific Data file on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Outlier Calculation for CY 2020
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39434 through 39435), 
for CY 2020, we proposed to continue our policy of estimating outlier 
payments to be 1.0 percent of the estimated aggregate total payments 
under the OPPS. We proposed that a portion of that 1.0 percent, an 
amount equal to less than

[[Page 61193]]

0.01 percent of outlier payments (or 0.0001 percent of total OPPS 
payments), would be allocated to CMHCs for PHP outlier payments. This 
is the amount of estimated outlier payments that would result from the 
proposed CMHC outlier threshold as a proportion of total estimated OPPS 
outlier payments. As discussed in section VIII.C. of the CY 2020 OPPS/
ASC proposed rule (84 FR 39435), we proposed to continue our 
longstanding policy that if a CMHC's cost for partial hospitalization 
services, paid under APC 5853 (Partial Hospitalization for CMHCs), 
exceeds 3.40 times the payment rate for proposed APC 5853, the outlier 
payment would be calculated as 50 percent of the amount by which the 
cost exceeds 3.40 times the proposed APC 5853 payment rate.
    For further discussion of CMHC outlier payments, we refer readers 
to section VIII.C. of the CY 2020 OPPS/ASC proposed rule and this final 
rule with comment period.
    To ensure that the estimated CY 2020 aggregate outlier payments 
would equal 1.0 percent of estimated aggregate total payments under the 
OPPS, we proposed that the hospital outlier threshold be set so that 
outlier payments would be triggered when a hospital's cost of 
furnishing a service exceeds 1.75 times the APC payment amount and 
exceeds the APC payment amount plus $4,950.
    We calculated the proposed fixed-dollar threshold of $4,950 using 
the standard methodology most recently used for CY 2019 (83 FR 58874 
through 58875). For purposes of estimating outlier payments for the 
proposed rule, we used the hospital-specific overall ancillary CCRs 
available in the April 2019 update to the Outpatient Provider-Specific 
File (OPSF). The OPSF contains provider-specific data, such as the most 
current CCRs, which are maintained by the MACs and used by the OPPS 
Pricer to pay claims. The claims that we use to model each OPPS update 
lag by 2 years.
    In order to estimate the CY 2020 hospital outlier payments for the 
proposed rule, we inflated the charges on the CY 2018 claims using the 
same inflation factor of 1.11189 that we used to estimate the IPPS 
fixed-dollar outlier threshold for the FY 2020 IPPS/LTCH PPS proposed 
rule (84 FR 19596). We used an inflation factor of 1.05446 to estimate 
CY 2019 charges from the CY 2018 charges reported on CY 2018 claims. 
The methodology for determining this charge inflation factor is 
discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41717 through 
41718). As we stated in the CY 2005 OPPS final rule with comment period 
(69 FR 65845), we believe that the use of these charge inflation 
factors is appropriate for the OPPS because, with the exception of the 
inpatient routine service cost centers, hospitals use the same 
ancillary and outpatient cost centers to capture costs and charges for 
inpatient and outpatient services.
    As noted in the CY 2007 OPPS/ASC final rule with comment period (71 
FR 68011), we are concerned that we could systematically overestimate 
the OPPS hospital outlier threshold if we did not apply a CCR inflation 
adjustment factor. Therefore, we proposed to apply the same CCR 
inflation adjustment factor that we proposed to apply for the FY 2020 
IPPS outlier calculation to the CCRs used to simulate the proposed CY 
2020 OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2020, we proposed to apply an adjustment factor of 
0.97517 to the CCRs that were in the April 2019 OPSF to trend them 
forward from CY 2019 to CY 2020. The methodology for calculating the 
proposed adjustment is discussed in the FY 2020 IPPS/LTCH PPS proposed 
rule (84 FR 19597).
    To model hospital outlier payments for the proposed rule, we 
applied the overall CCRs from the April 2019 OPSF after adjustment 
(using the proposed CCR inflation adjustment factor of 0.97517 to 
approximate CY 2020 CCRs) to charges on CY 2018 claims that were 
adjusted (using the proposed charge inflation factor of 1.11189 to 
approximate CY 2020 charges). We simulated aggregated CY 2020 hospital 
outlier payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiplier threshold constant and assuming 
that outlier payments would continue to be made at 50 percent of the 
amount by which the cost of furnishing the service would exceed 1.75 
times the APC payment amount, until the total outlier payments equaled 
1.0 percent of aggregated estimated total CY 2020 OPPS payments. We 
estimated that a proposed fixed-dollar threshold of $4,950, combined 
with the proposed multiplier threshold of 1.75 times the APC payment 
rate, would allocate 1.0 percent of aggregated total OPPS payments to 
outlier payments. For CMHCs, we proposed that, if a CMHC's cost for 
partial hospitalization services, paid under APC 5853, exceeds 3.40 
times the payment rate for APC 5853, the outlier payment would be 
calculated as 50 percent of the amount by which the cost exceeds 3.40 
times the APC 5853 payment rate.
    Section 1833(t)(17)(A) of the Act, which applies to hospitals, as 
defined under section 1886(d)(1)(B) of the Act, requires that hospitals 
that fail to report data required for the quality measures selected by 
the Secretary, in the form and manner required by the Secretary under 
section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point 
reduction to their OPD fee schedule increase factor; that is, the 
annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that will apply to certain outpatient items and services 
furnished by hospitals that are required to report outpatient quality 
data and that fail to meet the Hospital OQR Program requirements. For 
hospitals that fail to meet the Hospital OQR Program requirements, as 
we proposed, we are continuing the policy that we implemented in CY 
2010 that the hospitals' costs will be compared to the reduced payments 
for purposes of outlier eligibility and payment calculation. For more 
information on the Hospital OQR Program, we referred readers to section 
XIV. of this final rule with comment period.
    We received no public comments on our proposal. Therefore, we are 
finalizing our proposal, without modification, to continue our policy 
of estimating outlier payments to be 1.0 percent of the estimated 
aggregate total payments under the OPPS and to use our established 
methodology to set the OPPS outlier fixed-dollar loss threshold for CY 
2020.
3. Final Outlier Calculation
    Consistent with historical practice, we used updated data for this 
final rule with comment period for outlier calculations. For CY 2020, 
we are applying the overall CCRs from the October 2019 OPSF file after 
adjustment (using the CCR inflation adjustment factor of 0.97615 to 
approximate CY 2020 CCRs) to charges on CY 2018 claims that were 
adjusted using a charge inflation factor of 1.11100 to approximate CY 
2020 charges. These are the same CCR adjustment and charge inflation 
factors that were used to set the IPPS fixed-dollar threshold for the 
FY 2020 IPPS/LTCH PPS final rule (84 FR 42629). We simulated aggregated 
CY 2020 hospital outlier payments using these costs for several 
different fixed-dollar thresholds, holding the 1.75 multiple-threshold 
constant and assuming that outlier payments will continue to be made at 
50 percent of the amount by which the cost of furnishing the service 
would exceed 1.75 times the APC payment amount, until the total outlier 
payment equaled 1.0 percent of aggregated estimated total CY 2020 OPPS 
payments. We estimated that a

[[Page 61194]]

fixed-dollar threshold of $5,075 combined with the multiple threshold 
of 1.75 times the APC payment rate, will allocate the 1.0 percent of 
aggregated total OPPS payments to outlier payments.
    For CMHCs, if a CMHC's cost for partial hospitalization services, 
paid under APC 5853, exceeds 3.40 times the payment rate the outlier 
payment will be calculated as 50 percent of the amount by which the 
cost exceeds 3.40 times APC 5853.

H. Calculation of an Adjusted Medicare Payment From the National 
Unadjusted Medicare Payment

    The basic methodology for determining prospective payment rates for 
HOPD services under the OPPS is set forth in existing regulations at 42 
CFR part 419, subparts C and D. For this CY 2020 OPPS/ASC final rule 
with comment period, the payment rate for most services and procedures 
for which payment is made under the OPPS is the product of the 
conversion factor calculated in accordance with section II.B. of this 
final rule with comment period and the relative payment weight 
determined under section II.A. of this final rule with comment period. 
Therefore, the proposed national unadjusted payment rate for most APCs 
contained in Addendum A to this final rule with comment period (which 
is available via the internet on the CMS website) and for most HCPCS 
codes to which separate payment under the OPPS has been assigned in 
Addendum B to this final rule with comment period (which is available 
via the internet on the CMS website) was calculated by multiplying the 
proposed CY 2020 scaled weight for the APC by the CY 2020 conversion 
factor.
    We note that section 1833(t)(17) of the Act, which applies to 
hospitals, as defined under section 1886(d)(1)(B) of the Act, requires 
that hospitals that fail to submit data required to be submitted on 
quality measures selected by the Secretary, in the form and manner and 
at a time specified by the Secretary, incur a reduction of 2.0 
percentage points to their OPD fee schedule increase factor, that is, 
the annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that apply to certain outpatient items and services provided by 
hospitals that are required to report outpatient quality data and that 
fail to meet the Hospital OQR Program (formerly referred to as the 
Hospital Outpatient Quality Data Reporting Program (HOP QDRP)) 
requirements. For further discussion of the payment reduction for 
hospitals that fail to meet the requirements of the Hospital OQR 
Program, we refer readers to section XIV of this final rule with 
comment period.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39435), we 
demonstrated the steps used to determine the APC payments that will be 
made in a CY under the OPPS to a hospital that fulfills the Hospital 
OQR Program requirements and to a hospital that fails to meet the 
Hospital OQR Program requirements for a service that has any of the 
following status indicator assignments: ``J1'', ``J2'', ``P'', ``Q1'', 
``Q2'', ``Q3'', ``Q4'', ``R'', ``S'', ``T'', ``U'', or ``V'' (as 
defined in Addendum D1 to the proposed rule, which is available via the 
internet on the CMS website), in a circumstance in which the multiple 
procedure discount does not apply, the procedure is not bilateral, and 
conditionally packaged services (status indicator of ``Q1'' and ``Q2'') 
qualify for separate payment. We noted that, although blood and blood 
products with status indicator ``R'' and brachytherapy sources with 
status indicator ``U'' are not subject to wage adjustment, they are 
subject to reduced payments when a hospital fails to meet the Hospital 
OQR Program requirements.
    We did not receive any public comments on these steps under the 
methodology that we included in the CY 2020 CY OPPS/ASC proposed rule 
to determine the APC payments for CY 2020. Therefore, we are using the 
steps in the methodology specified below, as we proposed, to 
demonstrate the calculation of the final CY 2020 OPPS payments using 
the same parameters.
    Individual providers interested in calculating the payment amount 
that they will receive for a specific service from the national 
unadjusted payment rates presented in Addenda A and B to this final 
rule with comment period (which are available via the internet on the 
CMS website) should follow the formulas presented in the following 
steps. For purposes of the payment calculations below, we refer to the 
national unadjusted payment rate for hospitals that meet the 
requirements of the Hospital OQR Program as the ``full'' national 
unadjusted payment rate. We refer to the national unadjusted payment 
rate for hospitals that fail to meet the requirements of the Hospital 
OQR Program as the ``reduced'' national unadjusted payment rate. The 
reduced national unadjusted payment rate is calculated by multiplying 
the reporting ratio of 0.980 times the ``full'' national unadjusted 
payment rate. The national unadjusted payment rate used in the 
calculations below is either the full national unadjusted payment rate 
or the reduced national unadjusted payment rate, depending on whether 
the hospital met its Hospital OQR Program requirements to receive the 
full CY 2020 OPPS fee schedule increase factor.
    Step 1. Calculate 60 percent (the labor-related portion) of the 
national unadjusted payment rate. Since the initial implementation of 
the OPPS, we have used 60 percent to represent our estimate of that 
portion of costs attributable, on average, to labor. We refer readers 
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 
through 18497) for a detailed discussion of how we derived this 
percentage. During our regression analysis for the payment adjustment 
for rural hospitals in the CY 2006 OPPS final rule with comment period 
(70 FR 68553), we confirmed that this labor-related share for hospital 
outpatient services is appropriate.
    The formula below is a mathematical representation of Step 1 and 
identifies the labor-related portion of a specific payment rate for a 
specific service.

X is the labor-related portion of the national unadjusted payment rate.
X = .60 * (national unadjusted payment rate).

    Step 2. Determine the wage index area in which the hospital is 
located and identify the wage index level that applies to the specific 
hospital. We note that, under the CY 2020 OPPS policy for continuing to 
use the OMB labor market area delineations based on the 2010 Decennial 
Census data for the wage indexes used under the IPPS, a hold harmless 
policy for the wage index may apply, as discussed in section II.C. of 
this final rule with comment period. The wage index values assigned to 
each area reflect the geographic statistical areas (which are based 
upon OMB standards) to which hospitals are assigned for FY 2020 under 
the IPPS, reclassifications through the Medicare Geographic 
Classification Review Board (MGCRB), section 1886(d)(8)(B) ``Lugar'' 
hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as 
defined in Sec.  412.103 of the regulations, and hospitals designated 
as urban under section 601(g) of Public Law 98-21. For further 
discussion of the changes to the FY 2020 IPPS wage indexes, as applied 
to the CY 2020 OPPS, we refer readers to section II.C. of this final 
rule with comment period. We are continuing to apply a wage index floor 
of 1.00 to frontier States, in accordance with section 10324 of the 
Affordable Care Act of 2010.
    Step 3. Adjust the wage index of hospitals located in certain 
qualifying

[[Page 61195]]

counties that have a relatively high percentage of hospital employees 
who reside in the county, but who work in a different county with a 
higher wage index, in accordance with section 505 of Public Law 108-
173. Addendum L to this final rule with comment period (which is 
available via the internet on the CMS website) contains the qualifying 
counties and the associated wage index increase developed for the 
proposed FY 2020 IPPS, which are listed in Table 2 associated with the 
FY 2020 IPPS/LTCH PPS proposed rule and available via the internet on 
the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. (Click on the link on the 
left side of the screen titled ``FY 2020 IPPS Proposed Rule Home Page'' 
and select ``FY 2020 Proposed Rule Tables.'') This step is to be 
followed only if the hospital is not reclassified or redesignated under 
section 1886(d)(8) or section 1886(d)(10) of the Act.
    Step 4. Multiply the applicable wage index determined under Steps 2 
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
    The formula below is a mathematical representation of Step 4 and 
adjusts the labor-related portion of the national unadjusted payment 
rate for the specific service by the wage index.

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

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

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

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

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

    We are providing examples below of the calculation of both the full 
and reduced national unadjusted payment rates that will apply to 
certain outpatient items and services performed by hospitals that meet 
and that fail to meet the Hospital OQR Program requirements, using the 
steps outlined above. For purposes of this example, we are using a 
provider that is located in Brooklyn, New York that is assigned to CBSA 
35614. This provider bills one service that is assigned to APC 5071 
(Level 1 Excision/Biopsy/Incision and Drainage). The CY 2020 full 
national unadjusted payment rate for APC 5071 is $609.94. The reduced 
national unadjusted payment rate for APC 5071 for a hospital that fails 
to meet the Hospital OQR Program requirements is $598.35. This reduced 
rate is calculated by multiplying the reporting ratio of 0.981 by the 
full unadjusted payment rate for APC 5071.
    The FY 2020 wage index for a provider located in CBSA 35614 in New 
York, which includes the proposed adoption of IPPS 2020 wage index 
policies, is 1.2866. The labor-related portion of the full national 
unadjusted payment is approximately $470.84 (.60 * $609.94 * 1.2866). 
The labor-related portion of the reduced national unadjusted payment is 
approximately $461.90 (.60 * $598.35 * 1.2866). The nonlabor-related 
portion of the full national unadjusted payment is approximately 
$243.98 (.40 * $609.94). The nonlabor-related portion of the reduced 
national unadjusted payment is approximately $239.34 (.40 * $598.35). 
The sum of the labor-related and nonlabor-related portions of the full 
national adjusted payment is approximately $714.82 ($470.84 + $243.98). 
The sum of the portions of the reduced national adjusted payment is 
approximately $701.24 ($461.90 + $239.34).

I. Beneficiary Copayments

1. Background
    Section 1833(t)(3)(B) of the Act requires the Secretary to set 
rules for determining the unadjusted copayment amounts to be paid by 
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of 
the Act specifies that the Secretary must reduce the national 
unadjusted copayment amount for a covered OPD service (or group of such 
services) furnished in a year in a manner so that the effective 
copayment rate (determined on a national unadjusted basis) for that 
service in the year does not exceed a specified percentage. As 
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective 
copayment rate for a covered OPD service paid under the OPPS in CY 
2006, and in CYs thereafter, shall not exceed 40 percent of the APC 
payment rate.
    Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered 
OPD service (or group of such services) furnished in a year, the 
national unadjusted copayment amount cannot be less than 20 percent of 
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the 
Act limits the amount of beneficiary copayment that may be collected 
for a procedure (including items such as drugs and biologicals) 
performed in a year to the amount of the inpatient hospital deductible 
for that year.
    Section 4104 of the Affordable Care Act eliminated the Medicare 
Part B coinsurance for preventive services furnished on and after 
January 1, 2011, that meet certain requirements, including flexible 
sigmoidoscopies and screening colonoscopies, and waived the Part B 
deductible for screening colonoscopies that become diagnostic during 
the procedure. Our discussion of the changes made by the Affordable 
Care Act with regard to copayments for preventive services furnished on 
and after January 1, 2011, may be found in section XII.B. of the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72013).
2. OPPS Copayment Policy
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39437), we proposed to 
determine copayment amounts for new and revised APCs using the same 
methodology that we implemented beginning in CY 2004. (We refer readers 
to the November 7, 2003 OPPS final rule with comment period (68 FR 
63458).) In addition, we proposed to use the same standard rounding 
principles that we have historically used in instances where the 
application of our standard copayment methodology would result in a 
copayment amount that is less than 20 percent and cannot be rounded, 
under standard rounding principles, to 20 percent. (We refer readers to 
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in 
which we discuss our rationale for applying these rounding principles.) 
The proposed national unadjusted copayment amounts for services payable

[[Page 61196]]

under the OPPS that would be effective January 1, 2020 are included in 
Addenda A and B to the proposed rule (which are available via the 
internet on the CMS website).
    We did not receive any public comments on the proposed copayment 
amounts for new and revised APCs using the same methodology we 
implemented beginning in CY 2004 or the standard rounding principles we 
apply to our copayment amounts. Therefore, we are finalizing our 
proposed copayment policies, without modification.
    As discussed in section XIV.E. of the CY 2020 OPPS/ASC proposed 
rule and this final rule with comment period, for CY 2020, the Medicare 
beneficiary's minimum unadjusted copayment and national unadjusted 
copayment for a service to which a reduced national unadjusted payment 
rate applies will equal the product of the reporting ratio and the 
national unadjusted copayment, or the product of the reporting ratio 
and the minimum unadjusted copayment, respectively, for the service.
    We note that OPPS copayments may increase or decrease each year 
based on changes in the calculated APC payment rates, due to updated 
cost report and claims data, and any changes to the OPPS cost modeling 
process. However, as described in the CY 2004 OPPS final rule with 
comment period, the development of the copayment methodology generally 
moves beneficiary copayments closer to 20 percent of OPPS APC payments 
(68 FR 63458 through 63459).
    In the CY 2004 OPPS final rule with comment period (68 FR 63459), 
we adopted a new methodology to calculate unadjusted copayment amounts 
in situations including reorganizing APCs, and we finalized the 
following rules to determine copayment amounts in CY 2004 and 
subsequent years.
     When an APC group consists solely of HCPCS codes that were 
not paid under the OPPS the prior year because they were packaged or 
excluded or are new codes, the unadjusted copayment amount would be 20 
percent of the APC payment rate.
     If a new APC that did not exist during the prior year is 
created and consists of HCPCS codes previously assigned to other APCs, 
the copayment amount is calculated as the product of the APC payment 
rate and the lowest coinsurance percentage of the codes comprising the 
new APC.
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
equal to or greater than the prior year's rate, the copayment amount 
remains constant (unless the resulting coinsurance percentage is less 
than 20 percent).
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
less than the prior year's rate, the copayment amount is calculated as 
the product of the new payment rate and the prior year's coinsurance 
percentage.
     If HCPCS codes are added to or deleted from an APC and, 
after recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in a decrease in the coinsurance 
percentage for the reconfigured APC, the copayment amount would not 
change (unless retaining the copayment amount would result in a 
coinsurance rate less than 20 percent).
     If HCPCS codes are added to an APC and, after 
recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in an increase in the coinsurance 
percentage for the reconfigured APC, the copayment amount would be 
calculated as the product of the payment rate of the reconfigured APC 
and the lowest coinsurance percentage of the codes being added to the 
reconfigured APC.
    We noted in the CY 2004 OPPS final rule with comment period that we 
would seek to lower the copayment percentage for a service in an APC 
from the prior year if the copayment percentage was greater than 20 
percent. We noted that this principle was consistent with section 
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the 
national unadjusted coinsurance rate so that beneficiary liability will 
eventually equal 20 percent of the OPPS payment rate for all OPPS 
services to which a copayment applies, and with section 1833(t)(3)(B) 
of the Act, which achieves a 20-percent copayment percentage when fully 
phased in and gives the Secretary the authority to set rules for 
determining copayment amounts for new services. We further noted that 
the use of this methodology would, in general, reduce the beneficiary 
coinsurance rate and copayment amount for APCs for which the payment 
rate changes as the result of the reconfiguration of APCs and/or 
recalibration of relative payment weights (68 FR 63459).
3. Calculation of an Adjusted Copayment Amount for an APC Group
    Individuals interested in calculating the national copayment 
liability for a Medicare beneficiary for a given service provided by a 
hospital that met or failed to meet its Hospital OQR Program 
requirements should follow the formulas presented in the following 
steps.
    Step 1. Calculate the beneficiary payment percentage for the APC by 
dividing the APC's national unadjusted copayment by its payment rate. 
For example, using APC 5071, $121.99 is approximately 20 percent of the 
full national unadjusted payment rate of $609.94. For APCs with only a 
minimum unadjusted copayment in Addenda A and B to this final rule with 
comment period (which are available via the internet on the CMS 
website), the beneficiary payment percentage is 20 percent.
    The formula below is a mathematical representation of Step 1 and 
calculates the national copayment as a percentage of national payment 
for a given service.

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

    Step 2. Calculate the appropriate wage-adjusted payment rate for 
the APC for the provider in question, as indicated in Steps 2 through 4 
under section II.H. of this final rule with comment period. Calculate 
the rural adjustment for eligible providers, as indicated in Step 6 
under section II.H. of this final rule with comment period.
    Step 3. Multiply the percentage calculated in Step 1 by the payment 
rate calculated in Step 2. The result is the wage-adjusted copayment 
amount for the APC.
    The formula below is a mathematical representation of Step 3 and 
applies the beneficiary payment percentage to the adjusted payment rate 
for a service calculated under section II.H. of this final rule with 
comment period, with and without the rural adjustment, to calculate the 
adjusted beneficiary copayment for a given service.
    Wage-adjusted copayment amount for the APC = Adjusted Medicare 
Payment * B.
    Wage-adjusted copayment amount for the APC (SCH or EACH) = 
(Adjusted Medicare Payment * 1.071) * B.
    Step 4. For a hospital that failed to meet its Hospital OQR Program 
requirements, multiply the copayment calculated in Step 3 by the 
reporting ratio of 0.980.
    The proposed unadjusted copayments for services payable under the 
OPPS that will be effective January 1, 2020, are shown in Addenda A and 
B to this final rule with comment period (which are available via the 
internet on the CMS website). We note that the national unadjusted 
payment rates and copayment rates shown in Addenda A

[[Page 61197]]

and B to this final rule with comment period reflect the CY 2020 OPD 
fee schedule increase factor discussed in section II.B. of this final 
rule with comment period.
    In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act 
limits the amount of beneficiary copayment that may be collected for a 
procedure performed in a year to the amount of the inpatient hospital 
deductible for that year.

III. OPPS Ambulatory Payment Classification (APC) Group Policies

A. OPPS Treatment of New and Revised HCPCS Codes

    Payment for OPPS procedures, services, and items are generally 
based on medical billing codes, specifically, HCPCS codes, that are 
reported on HOPD claims. The HCPCS is divided into two principal 
subsystems, referred to as Level I and Level II of the HCPCS. Level I 
is comprised of CPT (Current Procedural Terminology), a numeric and 
alphanumeric coding system maintained by the American Medical 
Association (AMA), and consist of Category I, II, and III CPT codes. 
Level II, which is maintained by CMS, is a standardized coding system 
that is used primarily to identify products, supplies, and services not 
included in the CPT codes. HCPCS codes are used to report surgical 
procedures, medical services, items, and supplies under the hospital 
OPPS. Specifically, CMS recognizes the following codes on OPPS claims:
     Category I CPT codes, which describe surgical procedures, 
diagnostic and therapeutic services, and vaccine codes;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
     Level II HCPCS codes (also known as alphanumeric codes), 
which are used primarily to identify drugs, devices, ambulance 
services, durable medical equipment, orthotics, prosthetics, supplies, 
temporary surgical procedures, and medical services not described by 
CPT codes.
    CPT codes are established by the American Medical Association (AMA) 
while the Level II HCPCS codes are established by the CMS HCPCS 
Workgroup. These codes are updated and changed throughout the year. CPT 
and Level II HCPCS code changes that affect the OPPS are published 
through the annual rulemaking cycle and through the OPPS quarterly 
update Change Requests (CRs). Generally, these code changes are 
effective January 1, April 1, July 1, or October 1. CPT code changes 
are released by the AMA via their website while Level II HCPCS code 
changes are released to the public via the CMS HCPCS website. CMS 
recognizes the release of new CPT and Level II HCPCS codes and makes 
the codes effective (that is, the codes can be reported on Medicare 
claims) outside of the formal rulemaking process via OPPS quarterly 
update CRs. Based on our review, we assign the new codes to interim 
status indicators (SIs) and APCs. These interim assignments are 
finalized in the OPPS/ASC final rules. This quarterly process offers 
hospitals access to codes that more accurately describe items or 
services furnished and provides payment for these items or services in 
a timelier manner than if we waited for the annual rulemaking process. 
We solicit public comments on the new CPT and Level II HCPCS codes and 
finalize our proposals through our annual rulemaking process.
    We note that, under the OPPS, the APC assignment determines the 
payment rate for an item, procedure, or service. Those items, 
procedures, or services not paid separately under the hospital OPPS are 
assigned to appropriate status indicators. Certain payment status 
indicators provide separate payment while other payment status 
indicators do not. In section XI. (CY 2020 OPPS Payment Status and 
Comment Indicators) of this final rule with comment period, we discuss 
the various status indicators used under the OPPS. We also provide a 
complete list of the status indicators and their definitions in 
Addendum D1 to this CY 2020 OPPS/ASC final rule with comment period.
1. HCPCS Codes That Were Effective April 1, 2019 for Which We Solicited 
Public Comments in the CY 2020 OPPS/ASC Proposed Rule
    For the April 2019 update, there were no new CPT codes. However, 
eight new Level II HCPCS codes were established and made effective on 
April 1, 2019. These codes and their long descriptors were displayed in 
Table 7 of the proposed rule and are now listed in Table 8 of this 
final rule with comment period. Through the April 2019 OPPS quarterly 
update CR (Transmittal 4255, Change Request 11216, dated March 15, 
2019), we recognized several new Level II HCPCS codes for separate 
payment under the OPPS. In the CY 2020 OPPS/ASC proposed rule (84 FR 
39531-39532), we solicited public comments on the proposed APC and 
status indicator assignments for these Level II HCPCS codes, which were 
listed in Table 7 of the proposed rule.
    We did not receive any public comments on the proposed OPPS APC and 
status indicator assignments for the new Level II HCPCS codes 
implemented in April 2019. Therefore, we are finalizing the proposed 
APC and status indicator assignments for these codes, as indicated in 
Table 8 below. We note that several of the HCPCS C-codes have been 
replaced with HCPCS J-codes, effective January 1, 2020. Their 
replacement codes are listed in Table 8. The final payment rates for 
these codes can be found in Addendum B to this final rule with comment 
period. In addition, the status indicator definitions can be found in 
Addendum D1 to this final rule with comment period. Both Addendum B and 
Addendum D1 are available via the internet on the CMS website.
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2. HCPCS Codes That Were Effective July 1, 2019 for Which We Solicited 
Public Comments in the CY 2020 OPPS/ASC Proposed Rule
    For the July 2019 update, 58 new codes were established and made 
effective July 1, 2019. The codes and long descriptors were listed in 
Table 8 of the proposed rule. Through the July 2019 OPPS quarterly 
update CR (Transmittal 4313, Change Request 11318, dated May 24, 2019), 
we recognized several new codes for separate payment and assigned them 
to appropriate interim OPPS status indicators and APCs. In the CY 2020 
OPPS/ASC proposed rule, we solicited public comments on the proposed 
APC and status indicator assignments for the codes implemented on July 
1, 2019, all of which were listed in Table 8 of the proposed rule.
    We received some public comments related to CPT codes 0546T, 0548T, 
0549T, 0554T, 0555T, 0556T, 0557T, and 0558T, which we address in 
section III.D. (OPPS APC-Specific Policies) of this final rule with 
comment period. With the exception of the eight codes, we did not 
receive any public comments on the proposed OPPS APC and status 
indicator assignments for the other new CPT and Level II HCPCS codes 
implemented in July 2019. Therefore, we are finalizing the proposed APC 
and status indicator assignments for the July 2019 codes, including the 
eight codes on which we received public comments, as indicated in Table 
9 below. We note that several of the HCPCS C-codes have been replaced 
with HCPCS J-codes, effective January 1, 2020. Their replacement codes 
are listed in Table 9. The final payment rates for the codes can be 
found in Addendum B to this final rule with comment period. In 
addition, the status indicator meanings can be found in Addendum D1 to 
this final rule with comment period. Both Addendum B and Addendum D1 
are available via the internet on the CMS website.
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3. October 2019 HCPCS Codes for Which We Are Soliciting Public Comments 
in This CY 2020 OPPS/ASC Final Rule With Comment Period
    As has been our practice in the past, we incorporate those new 
HCPCS codes that are effective October 1 in the final rule with comment 
period, thereby updating the OPPS for the following calendar year, as 
displayed in Table 9 of the proposed rule and reprinted as Table 10 of 
this final rule with comment period. These codes are released to the 
public through the October OPPS quarterly update CRs and via the CMS 
HCPCS website (for Level II HCPCS codes). For CY 2020, these codes are 
flagged with comment indicator ``NI'' in Addendum B to this OPPS/ASC 
final rule with comment period to indicate that we are assigning them 
an interim payment status which is subject to public comment. 
Specifically, the interim status indicator and APC assignments for 
codes flagged with comment indicator ``NI'' are open to public comment 
in this final rule with comment period, and we will respond to these 
public comments in the OPPS/ASC final rule with comment period for the 
next year's OPPS/ASC update.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39449), we proposed to 
continue this process for CY 2020. Specifically, for CY 2020, we 
proposed to include in Addendum B to the CY 2020 OPPS/ASC final rule 
with comment period the new HCPCS codes effective October 1, 2019, that 
would be incorporated in the October 2019 OPPS quarterly update CR. 
Also, as stated above, the October 1, 2019 codes are flagged with 
comment indicator ``NI'' in Addendum B to this CY 2020 OPPS/

[[Page 61207]]

ASC final rule with comment period to indicate that we have assigned 
the codes an interim OPPS payment status for CY 2020. We are inviting 
public comments on the interim status indicator and APC assignments for 
these codes, if applicable, that will be finalized in the CY 2021 OPPS/
ASC final rule with comment period.
    We note that we received a comment related to HCPCS code Q4184 
(Cellesta or Cellesta Duo, per square centimeter), which was assigned 
to comment indicator ``NI'' in Addendum B of the CY 2019 OPPS/ASC final 
rule. The comment and our response can be found in section V.B.7 (Skin 
Substitutes) of this CY 2020 OPPS/ASC final rule with comment period.
4. January 2020 HCPCS Codes
a. New Level II HCPCS Codes for Which We Are Soliciting Public Comments 
in This CY 2020 OPPS/ASC Final Rule With Comment Period
    As shown in Table 10 below, and as stated in the CY 2020 OPPS/ASC 
proposed rule (84 FR 39449), consistent with past practice, we solicit 
comments on the new Level II HCPCS codes that will be effective January 
1 in the OPPS/ASC final rule with comment period, thereby allowing us 
to finalize the status indicators and APC assignments for the codes in 
the next OPPS/ASC final rule with comment period. Unlike the CPT codes 
that are effective January 1 and are included in the OPPS/ASC proposed 
rules, most Level II HCPCS codes are not released until sometime around 
November to be effective January 1. Because these codes are not 
available until November, we are unable to include them in the OPPS/ASC 
proposed rules. Consequently, for CY 2020, we proposed to include in 
Addendum B to the CY 2020 OPPS/ASC final rule with comment period the 
new Level II HCPCS codes effective January 1, 2020, that would be 
incorporated in the January 2020 OPPS quarterly update CR. These codes 
will be released to the public through the January OPPS quarterly 
update CRs and via the CMS HCPCS website (for Level II HCPCS codes). 
For CY 2020, the Level II HCPCS codes effective January 1, 2020 codes 
are flagged with comment indicator ``NI'' in Addendum B to this CY 2020 
OPPS/ASC final rule with comment period to indicate that we have 
assigned the codes an interim OPPS payment status for CY 2020. We are 
inviting public comments on the interim status indicator and APC 
assignments for these codes, if applicable, that will be finalized in 
the CY 2021 OPPS/ASC final rule with comment period.
b. CPT Codes for Which We Solicited Public Comments in the CY 2020 
OPPS/ASC Proposed Rule
    For CY 2020, we received the CY 2020 CPT code updates that would be 
effective January 1, 2020, from AMA in time for inclusion in the CY 
2020 OPPS/ASC proposed rule. We note that in the CY 2015 OPPS/ASC final 
rule with comment period (79 FR 66841 through 66844), we finalized a 
revised process of assigning APC and status indicators for new and 
revised Category I and III CPT codes that would be effective January 1. 
Specifically, for the new/revised CPT codes that we receive in a timely 
manner from the AMA's CPT Editorial Panel, we finalized our proposal to 
include the codes that would be effective January 1 in the OPPS/ASC 
proposed rules, along with proposed APC and status indicator 
assignments for them, and to finalize the APC and status indicator 
assignments in the OPPS/ASC final rules beginning with the CY 2016 OPPS 
update. For those new/revised CPT codes that were received too late for 
inclusion in the OPPS/ASC proposed rule, we finalized our proposal to 
establish and use HCPCS G-codes that mirror the predecessor CPT codes 
and retain the current APC and status indicator assignments for a year 
until we can propose APC and status indicator assignments in the 
following year's rulemaking cycle. We note that even if we find that we 
need to create HCPCS G-codes in place of certain CPT codes for the PFS 
proposed rule, we do not anticipate that these HCPCS G-codes will 
always be necessary for OPPS purposes. We will make every effort to 
include proposed APC and status indicator assignments for all new and 
revised CPT codes that the AMA makes publicly available in time for us 
to include them in the annual proposed rule, and to avoid the resort to 
HCPCS G-codes and the resulting delay in utilization of the most 
current CPT codes. Also, we finalized our proposal to make interim APC 
and status indicator assignments for CPT codes that are not available 
in time for the proposed rule and that describe wholly new services 
(such as new technologies or new surgical procedures), solicit public 
comments, and finalize the specific APC and status indicator 
assignments for those codes in the following year's final rule.
    As stated above, for the CY 2020 OPPS update, we received the CY 
2020 CPT codes from AMA in time for inclusion in the CY 2020 OPPS/ASC 
proposed rule. The new, revised, and deleted CY 2020 Category I and III 
CPT codes were included in Addendum B to the proposed rule (which is 
available via the internet on the CMS website). We noted in the 
proposed rule that the new and revised codes are assigned to new 
comment indicator ``NP'' to indicate that the code is new for the next 
calendar year or the code is an existing code with substantial revision 
to its code descriptor in the next calendar year as compared to current 
calendar year with a proposed APC assignment, and that comments will be 
accepted on the proposed APC and status indicator assignments.
    Further, we reminded readers that the CPT code descriptors that 
appear in Addendum B are short descriptors and do not accurately 
describe the complete procedure, service, or item described by the CPT 
code. Therefore, we included the 5-digit placeholder codes and their 
long descriptors for the new and revised CY 2020 CPT codes in Addendum 
O to the proposed rule (which is available via the internet on the CMS 
website) so that the public could adequately comment on the proposed 
APCs and status indicator assignments. The 5-digit placeholder codes 
were included in Addendum O, specifically under the column labeled ``CY 
2020 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' to the 
proposed rule. We noted that the final CPT code numbers will be 
included in this CY 2020 OPPS/ASC final rule with comment period. We 
also noted that not every code listed in Addendum O is subject to 
public comment. For the new and revised Category I and III CPT codes, 
we requested public comments on only those codes that are assigned to 
comment indicator ``NP''.
    In summary, in the CY 2020 OPPS/ASC proposed rule, we solicited 
public comments on the proposed CY 2020 status indicator and APC 
assignments for the new and revised Category I and III CPT codes that 
will be effective January 1, 2020. The CPT codes were listed in 
Addendum B to the proposed rule with short descriptors only. We listed 
them again in Addendum O to the proposed rule with long descriptors. We 
also proposed to finalize the status indicator and APC assignments for 
these codes (with their final CPT code numbers) in the CY 2020 OPPS/ASC 
final rule with comment period. The proposed status indicator and APC 
assignments for these codes were included in Addendum B to the proposed 
rule (which is available via the internet on the CMS website).
    Commenters addressed several of the new CPT codes that were 
assigned to comment indicator ``NP'' in Addendum B to the CY 2020 OPPS/
ASC proposed

[[Page 61208]]

rule. We have responded to those public comments in sections III.D. 
(OPPS APC-Specific Policies), IV.B. (Device-Intensive Procedures) and 
XII. (Updates to the ASC Payment System) of this CY 2020OPPS/ASC final 
rule with comment period.
    The final status indicators, APC assignments, and payment rates for 
the new CPT codes that are effective January 1, 2020 can be found in 
Addendum B to this final rule with comment period. In addition, the 
status indicator meanings can be found in Addendum D1 (OPPS Payment 
Status Indicators for CY 2020) to this final rule with comment period. 
Both Addendum B and D1 are available via the internet on the CMS 
website.
    Finally, Table 10 below, which is a reprint of Table 9 from the CY 
2020 OPPS/ASC proposed rule, shows the comment timeframe for new and 
revised HCPCS codes. The table provides information on our current 
process for updating codes through our OPPS quarterly update CRs, 
seeking public comments, and finalizing the treatment of these codes 
under the OPPS.
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B. OPPS Changes--Variations Within APCs

1. Background
    Section 1833(t)(2)(A) of the Act requires the Secretary to develop 
a classification system for covered hospital outpatient department 
services. Section 1833(t)(2)(B) of the Act provides that the Secretary 
may establish groups of covered OPD services within this classification 
system, so that services classified within each group are comparable 
clinically and with respect to the use of resources. In accordance with 
these provisions, we developed a grouping classification system, 
referred to as Ambulatory Payment Classifications (APCs), as set forth 
in regulations at 42 CFR[thinsp]419.31. We use Level I (also known as 
CPT codes) and Level II HCPCS codes (also known as alphanumeric codes) 
to identify and group the services within each APC. The APCs are 
organized such that each group is homogeneous both clinically and in 
terms of resource use. Using this classification system, we have 
established distinct groups of similar services. We also have developed 
separate APC groups for certain medical devices, drugs, biologicals, 
therapeutic radiopharmaceuticals, and brachytherapy devices that are 
not packaged into the payment for the procedure.
    We have packaged into the payment for each procedure or service 
within an APC group the costs associated with those items and services 
that are typically ancillary and supportive to a primary diagnostic or 
therapeutic modality and, in those cases, are an integral part of the 
primary service they support. Therefore, we do not make separate 
payment for these packaged items or services. In general, packaged 
items and services include, but are not limited to, the items and 
services listed in regulations at 42 CFR 419.2(b). A further discussion 
of packaged services is included in section II.A.3. of this final rule 
with comment period.

[[Page 61209]]

    Under the OPPS, we generally pay for covered hospital outpatient 
services on a rate-per-service basis, where the service may be reported 
with one or more HCPCS codes. Payment varies according to the APC group 
to which the independent service or combination of services is 
assigned. In the CY 2020 OPPS/ASC proposed rule (84 FR 39451-39452), 
for CY 2020, we proposed that each APC relative payment weight 
represents the hospital cost of the services included in that APC, 
relative to the hospital cost of the services included in APC 5012 
(Clinic Visits and Related Services). The APC relative payment weights 
are scaled to APC 5012 because it is the hospital clinic visit APC and 
clinic visits are among the most frequently furnished services in the 
hospital outpatient setting.
2. Application of the 2 Times Rule
    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
not less often than annually, and revise the APC groups, the relative 
payment weights, and the wage and other adjustments described in 
paragraph (2) to take into account changes in medical practice, changes 
in technology, the addition of new services, new cost data, and other 
relevant information and factors. Section 1833(t)(9)(A) of the Act also 
requires the Secretary to consult with an expert outside advisory panel 
composed of an appropriate selection of representatives of providers to 
review (and advise the Secretary concerning) the clinical integrity of 
the APC groups and the relative payment weights. We note that the HOP 
Panel recommendations for specific services for the CY 2020 OPPS update 
are discussed in the relevant specific sections throughout this CY 2020 
OPPS/ASC final rule with comment period.
    In addition, section 1833(t)(2) of the Act provides that, subject 
to certain exceptions, the items and services within an APC group 
cannot be considered comparable with respect to the use of resources if 
the highest cost for an item or service in the group is more than 2 
times greater than the lowest cost for an item or service within the 
same group (referred to as the ``2 times rule''). The statute 
authorizes the Secretary to make exceptions to the 2 times rule in 
unusual cases, such as low-volume items and services (but the Secretary 
may not make such an exception in the case of a drug or biological that 
has been designated as an orphan drug under section 526 of the Federal 
Food, Drug, and Cosmetic Act). In determining the APCs with a 2 times 
rule violation, we consider only those HCPCS codes that are significant 
based on the number of claims. We note that, for purposes of 
identifying significant procedure codes for examination under the 2 
times rule, we consider procedure codes that have more than 1,000 
single major claims or procedure codes that both have more than 99 
single major claims and contribute at least 2 percent of the single 
major claims used to establish the APC cost to be significant (75 FR 
71832). This longstanding definition of when a procedure code is 
significant for purposes of the 2 times rule was selected because we 
believe that a subset of 1,000 or fewer claims is negligible within the 
set of approximately 100 million single procedure or single session 
claims we use for establishing costs. Similarly, a procedure code for 
which there are fewer than 99 single claims and that comprises less 
than 2 percent of the single major claims within an APC will have a 
negligible impact on the APC cost (75 FR 71832). In the CY 2020 OPPS/
ASC proposed rule (84 FR 39451 through 39452), for CY 2020, we proposed 
to make exceptions to this limit on the variation of costs within each 
APC group in unusual cases, such as for certain low-volume items and 
services.
    In the CY 2020 OPPS/ASC proposed rule, we identified the APCs with 
violations of the 2 times rule. Therefore, we proposed changes to the 
procedure codes assigned to these APCs in Addendum B to the proposed 
rule. We noted that Addendum B does not appear in the printed version 
of the Federal Register as part of the CY 2020 OPPS/ASC proposed rule. 
Rather, it is published and made available via the internet on the CMS 
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. To eliminate a violation of 
the 2 times rule and improve clinical and resource homogeneity, we 
proposed to reassign these procedure codes to new APCs that contain 
services that are similar with regard to both their clinical and 
resource characteristics. In many cases, the proposed procedure code 
reassignments and associated APC reconfigurations for CY 2020 included 
in the proposed rule were related to changes in costs of services that 
were observed in the CY 2018 claims data newly available for CY 2020 
ratesetting. Addendum B to the CY 2020 OPPS/ASC proposed rule 
identified with a comment indicator ``CH'' those procedure codes for 
which we proposed a change to the APC assignment or status indicator, 
or both, that were initially assigned in the July 1, 2019 OPPS Addendum 
B Update (available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html), which 
was the latest payment rate file for 2019 prior to issuance of the 
proposed rule.
3. APC Exceptions to the 2 Times Rule
    Taking into account the APC changes that we proposed to make for CY 
2020 in the CY 2020 OPPS/ASC proposed rule, we reviewed all of the APCs 
to determine which APCs would not meet the requirements of the 2 times 
rule. We used the following criteria to evaluate whether to propose 
exceptions to the 2 times rule for affected APCs:
     Resource homogeneity;
     Clinical homogeneity;
     Hospital outpatient setting utilization;
     Frequency of service (volume); and
     Opportunity for upcoding and code fragments.
    Based on the CY 2018 claims data available for the CY 2020 proposed 
rule, we found 18 APCs with violations of the 2 times rule. We applied 
the criteria as described above to identify the APCs for which we 
proposed to make exceptions under the 2 times rule for CY 2020, and 
found that all of the 18 APCs we identified met the criteria for an 
exception to the 2 times rule based on the CY 2018 claims data 
available for the proposed rule. We did not include in that 
determination those APCs where a 2 times rule violation was not a 
relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS 
codes assigned to it that have a similar geometric mean costs and do 
not create a 2 time rule violation. Therefore, we only identified those 
APCs, including those with criteria-based costs, such as device-
dependent CPT/HCPCS codes, with violations of the 2 times rule.
    We note that, for cases in which a recommendation by the HOP Panel 
appears to result in or allow a violation of the 2 times rule, we may 
accept the HOP Panel's recommendation because those recommendations are 
based on explicit consideration (that is, a review of the latest OPPS 
claims data and group discussion of the issue) of resource use, 
clinical homogeneity, site of service, and the quality of the claims 
data used to determine the APC payment rates.
    Table 10 of the proposed rule listed the 18 APCs that we proposed 
to make an exception for under the 2 times rule for CY 2020 based on 
the criteria cited above and claims data submitted between January 1, 
2018, and December 31, 2018, and processed on or before December 31, 
2018. In the proposed

[[Page 61210]]

rule, we stated that for the final rule with comment period, we intend 
to use claims data for dates of service between January 1, 2018, and 
December 31, 2018, that were processed on or before June 30, 2019, and 
updated CCRs, if available.
    Based on the updated final rule CY 2018 claims data used for this 
CY 2020 final rule with comment period, we were able to remedy two APC 
violation out of the 18 APCs that appeared in Table 10 of the CY 2020 
OPPS/ASC proposed rule. Specifically, APC 5672 (Level 2 Pathology) and 
APC 5733 (Level 3 Minor Procedures) no longer met the criteria for 
exception to the 2 times rule in this final rule with comment period. 
In addition, based on our analysis of the final rule claims data, we 
found a total of 17 APCs with violations of the 2 times rule. Of these 
17 total APCs, 16 were identified in the proposed rule and one newly 
identified APC. Specifically, we found the following 16 APCs from the 
proposed rule continued to have violations of the 2 times rule for this 
final rule with comment period:
     APC 5112 (Level 2 Musculoskeletal Procedures);
     APC 5161 (Level 1 ENT Procedures)
     APC 5181 (Level 1 Vascular Procedures)
     APC 5311 (Level 1 Lower GI Procedures)
     APC 5521 (Level 1 Imaging without Contrast);
     APC 5522 (Level 2 Imaging without Contrast);
     APC 5523 (Level 3 Imaging without Contrast);
     APC 5524 (Level 4 Imaging without Contrast);
     APC 5571 (Level 1 Imaging with Contrast)
     APC 5612 (Level 2 Therapeutic Radiation Treatment 
Preparation);
     APC 5691 (Level 1 Drug Administration);
     APC 5721 (Level 1 Diagnostic Tests and Related Services);
     APC 5731 (Level 1 Minor Procedures);
     APC 5734 (Level 4 Minor Procedures);
     APC 5822 (Level 2 Health and Behavior Services); and
     APC 5823 (Level 3 Health and Behavior Services).
    In addition, we found that APC 5593 (Level 3 Nuclear Medicine and 
Related Services) violated the 2 times rule using the final rule with 
comment period claims data.
    Although we did not receive any comments on Table 10 of the 
proposed rule, we did receive comments on APC assignments for specific 
HCPCS codes. The comments, and our responses, can be found in section 
III.D. (OPPS APC-Specific Policies) of this final rule with comment 
period.
    After considering the public comments we received on APC 
assignments and our analysis of the CY 2018 costs from hospital claims 
and cost report data available for this CY 2020 final rule with comment 
period, we are finalizing our proposals with some modifications. 
Specifically, we are finalizing our proposal to except 16 of the 18 
proposed APCs from the 2 times rule for CY 2020 and also excepting one 
additional APC (APC 5593). As noted above, we were able to remedy two 
of the proposed rule 2 time violations in this final rule with comment 
period.
    In summary, Table 11 below lists the 17 APCs that we are excepting 
from the 2 times rule for CY 2020 based on the criteria described 
earlier and a review of updated claims data for dates of service 
between January 1, 2018 and December 31, 2018, that were processed on 
or before June 30, 2019, and updated CCRs, if available. We note that, 
for cases in which a recommendation by the HOP Panel appears to result 
in or allow a violation of the 2 times rule, we generally accept the 
HOP Panel's recommendation because those recommendations are based on 
explicit consideration of resource use, clinical homogeneity, site of 
service, and the quality of the claims data used to determine the APC 
payment rates. The geometric mean costs for hospital outpatient 
services for these and all other APCs that were used in the development 
of this final rule with comment period can be found on the CMS website 
at: http://www.cms.gov.

[[Page 61211]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.023

C. New Technology APCs

1. Background
    In the CY 2002 OPPS final rule (66 FR 59903), we finalized changes 
to the time period in which a service can be eligible for payment under 
a New Technology APC. Beginning in CY 2002, we retain services within 
New Technology APC groups until we gather sufficient claims data to 
enable us to assign the service to an appropriate clinical APC. This 
policy allows us to move a service from a New Technology APC in less 
than 2 years if sufficient data are available. It also allows us to 
retain a service in a New Technology APC for more than 2 years if 
sufficient data upon which to base a decision for reassignment have not 
been collected.
    In the CY 2004 OPPS final rule with comment period (68 FR 63416), 
we restructured the New Technology APCs to make the cost intervals more 
consistent across payment levels and refined the cost bands for these 
APCs to retain two parallel sets of New Technology APCs, one set with a 
status indicator of ``S'' (Significant Procedures, Not Discounted when 
Multiple. Paid under OPPS; separate APC payment) and the other set with 
a status indicator of ``T'' (Significant Procedure, Multiple Reduction 
Applies. Paid under OPPS; separate APC payment). These current New 
Technology APC configurations allow us to price new technology services 
more appropriately and consistently.
    For CY 2019, there were 52 New Technology APC levels, ranging from 
the lowest cost band assigned to APC 1491 (New Technology-Level 1A ($0-
$10)) through the highest cost band assigned to APC 1908 (New 
Technology-Level 52 ($145,001-$160,000)). We note that the cost bands 
for the New Technology APCs, specifically, APCs 1491 through 1599 and 
1901 through 1908, vary with increments ranging from $10 to $14,999. 
These cost bands identify the APCs to which new technology procedures 
and services with estimated service costs that fall within those cost 
bands are assigned under the OPPS. Payment for each APC is made at the 
mid-point of the APC's assigned cost band. For example, payment for New 
Technology APC 1507 (New Technology-Level 7 ($501-$600)) is made at 
$550.50.
    Under the OPPS, one of our goals is to make payments that are 
appropriate for the services that are necessary for the treatment of 
Medicare beneficiaries. The OPPS, like other Medicare payment systems, 
is budget neutral and increases are limited to the annual hospital 
inpatient market basket increase adjusted for multifactor productivity. 
We believe that our payment rates generally reflect the costs that are 
associated with providing care to Medicare beneficiaries. Furthermore, 
we believe that our payment rates are adequate to ensure access to 
services (80 FR 70374).
    For many emerging technologies, there is a transitional period 
during which utilization may be low, often because providers are first 
learning about the technologies and their clinical utility. Quite 
often, parties request that Medicare make higher payment amounts under 
the New Technology APCs for new procedures in that transitional phase. 
These requests, and their accompanying estimates for expected total 
patient utilization, often reflect very low rates of patient use of 
expensive equipment, resulting in high per-use costs for which 
requesters believe Medicare should make full payment. Medicare does 
not, and we believe should not, assume responsibility for more than its 
share of the costs of procedures based on projected utilization for 
Medicare beneficiaries and does not set its payment rates based on 
initial projections of low utilization for services that require 
expensive capital equipment. For the OPPS, we rely on hospitals to make 
informed business decisions regarding the acquisition of high-cost 
capital equipment, taking into consideration their knowledge about 
their entire patient base (Medicare

[[Page 61212]]

beneficiaries included) and an understanding of Medicare's and other 
payers' payment policies. (We refer readers to the CY 2013 OPPS/ASC 
final rule with comment period (77 FR 68314) for further discussion 
regarding this payment policy.)
    We note that, in a budget neutral system, payments may not fully 
cover hospitals' costs in a particular circumstance, including those 
for the purchase and maintenance of capital equipment. We rely on 
hospitals to make their decisions regarding the acquisition of high-
cost equipment with the understanding that the Medicare program must be 
careful to establish its initial payment rates, including those made 
through New Technology APCs, for new services that lack hospital claims 
data based on realistic utilization projections for all such services 
delivered in cost-efficient hospital outpatient settings. As the OPPS 
acquires claims data regarding hospital costs associated with new 
procedures, we regularly examine the claims data and any available new 
information regarding the clinical aspects of new procedures to confirm 
that our OPPS payments remain appropriate for procedures as they 
transition into mainstream medical practice (77 FR 68314). For CY 2020, 
we included the proposed payment rates for New Technology APCs 1491 to 
1599 and 1901 through 1908 in Addendum A to the CY 2020 OPPS/ASC 
proposed rule (which is available via the internet on the CMS website). 
The final payment rates for these New Technology APCs are included in 
Addendum A to the CY 2020 OPPS/ASC final rule with comment period 
(which is available via the internet on the CMS website).
2. Establishing Payment Rates for Low-Volume New Technology Procedures
    Procedures that are assigned to New Technology APCs are typically 
new procedures that do not have sufficient claims history to establish 
an accurate payment for the procedures. One of the objectives of 
establishing New Technology APCs is to generate sufficient claims data 
for a new procedure so that it can be assigned to an appropriate 
clinical APC. Some procedures that are assigned to New Technology APCs 
have very low annual volume, which we consider to be fewer than 100 
claims. We consider procedures with fewer than 100 claims annually as 
low-volume procedures because there is a higher probability that the 
payment data for a procedure may not have a normal statistical 
distribution, which could affect the quality of our standard cost 
methodology that is used to assign services to an APC. In addition, 
services with fewer than 100 claims per year are not generally 
considered to be a significant contributor to the APC ratesetting 
calculations and, therefore, are not included in the assessment of the 
2 times rule. As we explained in the CY 2019 OPPS/ASC final rule with 
comment period (83 FR 58890), we were concerned that the methodology we 
use to estimate the cost of a procedure under the OPPS by calculating 
the geometric mean for all separately paid claims for a HCPCS procedure 
code from the most recent available year of claims data may not 
generate an accurate estimate of the actual cost of the procedure for 
these low-volume procedures.
    In accordance with section 1833(t)(2)(B) of the Act, services 
classified within each APC must be comparable clinically and with 
respect to the use of resources. As described earlier, assigning a 
procedure to a new technology APC allows us to gather claims data to 
price the procedure and assign it to the APC with services that use 
similar resources and are clinically comparable. However, where 
utilization of services assigned to a New Technology APC is low, it can 
lead to wide variation in payment rates from year to year, resulting in 
even lower utilization and potential barriers to access to new 
technologies, which ultimately limits our ability to assign the service 
to the appropriate clinical APC. To mitigate these issues, we 
determined in the CY 2019 OPPS/ASC final rule with comment period that 
it was appropriate to utilize our equitable adjustment authority at 
section 1833(t)(2)(E) of the Act to adjust how we determined the costs 
for low-volume services assigned to New Technology APCs (83 FR 58892 
through 58893). We have utilized our equitable adjustment authority at 
section 1833(t)(2)(E) of the Act, which states that the Secretary shall 
establish, in a budget neutral manner, other adjustments as determined 
to be necessary to ensure equitable payments, to estimate an 
appropriate payment amount for low-volume new technology procedures in 
the past (82 FR 59281). Although we have used this adjustment authority 
on a case-by-case basis in the past, we stated in the CY 2019 OPPS/ASC 
final rule with comment period that we believe it is appropriate to 
adopt an adjustment for low-volume services assigned to New Technology 
APCs in order to mitigate the wide payment fluctuations that have 
occurred for new technology services with fewer than 100 claims and to 
provide more predictable payment for these services.
    For purposes of this adjustment, we stated that we believe that it 
is appropriate to use up to 4 years of claims data in calculating the 
applicable payment rate for the prospective year, rather than using 
solely the most recent available year of claims data, when a service 
assigned to a New Technology APC has a low annual volume of claims, 
which, for purposes of this adjustment, we define as fewer than 100 
claims annually. We adopted a policy to consider procedures with fewer 
than 100 claims annually as low-volume procedures because there is a 
higher probability that the payment data for a procedure may not have a 
normal statistical distribution, which could affect the quality of our 
standard cost methodology that is used to assign services to an APC. We 
explained that we were concerned that the methodology we use to 
estimate the cost of a procedure under the OPPS by calculating the 
geometric mean for all separately paid claims for a HCPCS procedure 
code from the most recent available year of claims data may not 
generate an accurate estimate of the actual cost of the low-volume 
procedure. Using multiple years of claims data will potentially allow 
for more than 100 claims to be used to set the payment rate, which 
would, in turn, create a more statistically reliable payment rate.
    In addition, to better approximate the cost of a low-volume service 
within a New Technology APC, we stated that we believe using the median 
or arithmetic mean rather than the geometric mean (which ``trims'' the 
costs of certain claims out) could be more appropriate in some 
circumstances, given the extremely low volume of claims. Low claim 
volumes increase the impact of ``outlier'' claims; that is, claims with 
either a very low or very high payment rate as compared to the average 
claim, which would have a substantial impact on any statistical 
methodology used to estimate the most appropriate payment rate for a 
service. We also explained that we believe having the flexibility to 
utilize an alternative statistical methodology to calculate the payment 
rate in the case of low-volume new technology services would help to 
create a more stable payment rate. Therefore, in the CY 2019 OPPS/ASC 
final rule with comment period (83 FR 58893), we established that, in 
each of our annual rulemakings, we will seek public comments on which 
statistical methodology should be used for each low-volume service 
assigned to a New Technology APC. In the preamble of

[[Page 61213]]

each annual rulemaking, we stated that we would present the result of 
each statistical methodology and solicit public comment on which 
methodology should be used to establish the payment rate for a low-
volume new technology service. In addition, we will use our assessment 
of the resources used to perform a service and guidance from the 
developer or manufacturer of the service, as well as other 
stakeholders, to determine the most appropriate payment rate. Once we 
identify the most appropriate payment rate for a service, we will 
assign the service to the New Technology APC with the cost band that 
includes its payment rate.
    Accordingly for CY 2020, we proposed to continue the policy we 
adopted in CY 2019 under which we will utilize our equitable adjustment 
authority under section 1833(t)(2)(E) of the Act to calculate the 
geometric mean, arithmetic mean, and median using multiple years of 
claims data to select the appropriate payment rate for purposes of 
assigning services with fewer than 100 claims per year to a New 
Technology APC. Additional details on our policy is available in the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58892 through 
58893).
    Comment: One commenter expressed support for the continuation of 
our policy regarding payment rates for low-volume new technology 
procedures.
    Response: We appreciate the commenter's support.
    After considering the public comments we received, we are 
finalizing this proposal without modification.
3. Procedures Assigned to New Technology APC Groups for CY 2020
    As we explained in the CY 2002 OPPS final rule with comment period 
(66 FR 59902), we generally retain a procedure in the New Technology 
APC to which it is initially assigned until we have obtained sufficient 
claims data to justify reassignment of the procedure to a clinically 
appropriate APC.
    In addition, in cases where we find that our initial New Technology 
APC assignment was based on inaccurate or inadequate information 
(although it was the best information available at the time), where we 
obtain new information that was not available at the time of our 
initial New Technology APC assignment, or where the New Technology APCs 
are restructured, we may, based on more recent resource utilization 
information (including claims data) or the availability of refined New 
Technology APC cost bands, reassign the procedure or service to a 
different New Technology APC that more appropriately reflects its cost 
(66 FR 59903).
    Consistent with our current policy, for CY 2020, in the CY 2020 
OPPS/ASC proposed rule (84 FR 39454), we proposed to retain services 
within New Technology APC groups until we obtain sufficient claims data 
to justify reassignment of the service to a clinically appropriate APC. 
The flexibility associated with this policy allows us to reassign a 
service from a New Technology APC in less than 2 years if sufficient 
claims data are available. It also allows us to retain a service in a 
New Technology APC for more than 2 years if sufficient claims data upon 
which to base a decision for reassignment have not been obtained (66 FR 
59902).
a. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 
1575, 5114, and 5414)
    Currently, there are four CPT/HCPCS codes that describe magnetic 
resonance image-guided, high-intensity focused ultrasound (MRgFUS) 
procedures, three of which we proposed to continue to assign to 
standard APCs, and one that we proposed to continue to assign to a New 
Technology APC for CY 2020. These codes include CPT codes 0071T, 0072T, 
and 0398T, and HCPCS code C9734. CPT codes 0071T and 0072T describe 
procedures for the treatment of uterine fibroids, CPT code 0398T 
describes procedures for the treatment of essential tremor, and HCPCS 
code C9734 describes procedures for pain palliation for metastatic bone 
cancer.
    As shown in Table 11 of the CY 2020 OPPS/ASC proposed rule, and as 
listed in Addendum B to the CY 2020 OPPS/ASC proposed rule, we proposed 
to continue to assign the procedures described by CPT codes 0071T and 
0072T to APC 5414 (Level 4 Gynecologic Procedures) for CY 2020. We also 
proposed to continue to assign the APC to status indicator ``J1'' 
(Hospital Part B services paid through a comprehensive APC). In 
addition, we proposed to continue to assign the services described by 
HCPCS code C9734 (Focused ultrasound ablation/therapeutic intervention, 
other than uterine leiomyomata, with magnetic resonance (mr) guidance) 
to APC 5115 (Level 5 Musculoskeletal Procedures) for CY 2020. We also 
proposed to continue to assign HCPCS code C9734 to status indicator 
``J1''. We refer readers to Addendum B to the proposed rule for the 
proposed payment rates for CPT codes 0071T and 0072T and HCPCS code 
C9734 under the OPPS. Addendum B is available via the internet on the 
CMS website.
    For the procedure described by CPT code 0398T, we have identified 
37 paid claims from CY 2016 through CY 2018 (1 claim in CY 2016, 11 
claims in CY 2017, and 25 claims in CY 2018). We note that the 
procedure described by CPT code 0398T was first assigned to a New 
Technology APC in CY 2016. Accordingly, there are 3 years of claims 
data available for the OPPS ratesetting purposes. The payment amounts 
for the claims vary widely, with a cost of approximately $29,254 for 
the sole CY 2016 claim, a geometric mean cost of approximately $4,647 
for the 11 claims from CY 2017, and a geometric mean cost of 
approximately $11,716 for the 25 claims from CY 2018. We are concerned 
about the large fluctuation in the cost of the procedure described by 
CPT code 0398T from year to year and the relatively small number of 
claims available to establish a payment rate for the service. In 
accordance with section 1833(t)(2)(B) of the Act, we must establish 
that services classified within each APC are comparable clinically and 
with respect to the use of resources.
    Therefore, as discussed in section III.C.2. of the proposed rule, 
we proposed to apply the policy we adopted in CY 2019, under which we 
will utilize our equitable adjustment authority under section 
1833(t)(2)(E) of the Act to calculate the geometric mean, arithmetic 
mean, and median costs using multiple years of claims data to select 
the appropriate payment rate for purposes of assigning CPT code 0398T 
to a New Technology APC. We believe using this approach to assign CPT 
code 0398T to a New Technology APC is more likely to yield a payment 
rate that will be representative of the cost of the procedure described 
by CPT code 0398T, despite the fluctuating geometric mean costs for the 
procedure available in the claims data used for the proposed rule. We 
continue to believe that the situation for the procedure described by 
CPT code 0398T is unique, given the limited number of claims for the 
procedure and the high variability for the cost of the claims, which 
makes it challenging to determine a reliable payment rate.
    Our analysis found that the estimated geometric mean cost of the 37 
claims over the 3 year period for which there are claims was 
approximately $8,829, the estimated arithmetic mean cost of the claims 
was approximately $10,021, and the median cost of the claims was 
approximately $11,985. While the results of using different 
methodologies range from approximately $8,800 to nearly $12,000, two of 
the estimates fall within the cost bands of New Technology APC 1575 
(New

[[Page 61214]]

Technology--Level 38 ($10,001-$15,000)), with a proposed payment rate 
of $12,500.50. Consistent with our low volume policy for procedures 
assigned to a new technology APC, we presented the result of each 
statistical methodology in the proposed rule, and we sought public 
comments on which methodology should be used to establish payment for 
the procedures described by CPT code 0398T. We noted that we believe 
that the median cost estimate was the most appropriate representative 
cost of the procedure described by CPT code 0398T because it was 
consistent with the payment rates established for the procedure from CY 
2017 to CY 2019 and did not involve any trimming of claims. Calculating 
the payment rate using either the geometric mean cost or the arithmetic 
mean cost would involve trimming the one paid claim from CY 2016, 
because the paid amount for the claim of $29,254 is substantially 
larger than the amount for any other paid claim reported for the 
procedure described by CPT code 0398T. The median cost estimate for CPT 
code 0398T also falls within the same New Technology APC cost band that 
was used to set the payment rate for CY 2019, which is $12,500.50 for 
this procedure. Therefore, for purposes of determining the proposed CY 
2020 payment rate, we proposed to estimate the cost for the procedure 
described by CPT code 0398T by calculating the median cost of the 37 
paid claims for the procedures in CY 2016 through CY 2018, and assigned 
the procedure described by CPT code 0398T to the New Technology APC 
that includes the estimated cost. Accordingly, we proposed to maintain 
the procedure described by CPT code 0398T in APC 1575 (New Technology--
Level 38 ($10,001-$15,000)), with a proposed payment rate of $12,500.50 
for CY 2020. We refer readers to Addendum B to the proposed rule for 
the proposed payment rates for all codes reportable under the OPPS. 
Addendum B is available via the internet on the CMS website.

[[Page 61215]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.024


[[Page 61216]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.025

    Comment: Multiple commenters, including the developer of MRgFUS, 
stated that the proposed payment rate for CPT code 0398T was too low 
because they believed the claims data for CPT code 0398T continue to 
underestimate the resources used to perform the procedure even when 
using the low-volume payment policy to establish the payment rate for 
the procedure. The developer also used the example of the service 
described by HCPCS code C9734 (Focused ultrasound ablation/therapeutic 
intervention, other than uterine leiomyomata, with magnetic resonance 
(mr) guidance), where the payment rate for the service had doubled from 
$5,222 in CY 2017 to $11,675 in the CY 2020 proposed rule, to argue 
that a similar increase could occur for CPT code 0398T. Commenters 
suggested several ideas for what they believed would be a more 
appropriate rate. Commenters believed the claims cost data reported for 
CPT code 0398T does not fully reflect the resource costs for the time 
the procedure takes, the cost of single-use supplies for the procedure, 
and hours of use of a provider's MRI machine. To reflect these costs, 
several commenters supported restoring the payment rate from CY 2018 of 
$17,500.50. Other commenters simply requested a higher rate than what 
was proposed such as a payment rate of either $22,000 or $25,000.
    Response: We appreciate the commenters' concerns, but the claims 
data we currently have for CPT code 0398T do not support a higher 
payment rate even when using the low-volume payment policy. Also, while 
the payment rate for HCPCS code C9734 (Focused ultrasound ablation/
therapeutic intervention, other than uterine leiomyomata, with magnetic 
resonance (mr) guidance) doubled from CY 2017 to CY 2020, the payment 
rate increase for HCPCS code C9734 is not predictive of the changes in 
cost that may occur with CPT code 0398T (Magnetic resonance image 
guided high intensity focused ultrasound (mrgfus), stereotactic 
ablation lesion, intracranial for movement disorder including 
stereotactic navigation and frame placement when performed). Rather, 
the payment rate for each service, including that described by HCPCS 
code C9734, is generally based on the costs associated with furnishing 
the service, which, in turn, drives the APC assignment. The geometric 
mean for C9734, which represents the cost of the individual procedure, 
increased from $8,655 in CY 2017 to $9,294 in CY 2020, and was 
reassigned to a higher level APC based clinical and resource similarity 
to other services.
    Under the low-volume payment policy, we utilized our equitable 
adjustment authority under section 1833(t)(2)(E) of the Act to 
calculate the geometric mean, arithmetic mean, and median costs using 
multiple years of claims data to select the appropriate payment rate 
for purposes of assigning CPT code 0398T to a New Technology APC. We 
identified 43 claims reporting the procedure described by CPT code 
0398T for the 3-year period of CY 2016 through CY 2018. We found the 
geometric mean cost for the procedure described by CPT code 0398T is 
approximately $8,485, the arithmetic mean cost is approximately $9,672, 
and the median cost is approximately $11,182. Based on our methodology, 
we will use the median cost of CPT code 0398T to set the payment rate 
for the procedure because the median cost is the highest rate of the 
three statistical methods and may reflect some of the higher resource 
costs, as described by commenters, for the procedure. The median cost 
for CPT code 0398T falls within the same New Technology APC 1575 (New 
Technology--Level 38 ($10,001-$15,000)) with a proposed payment rate of 
$12,500.50 that was proposed as the APC assignment for CPT code 0398T 
in the proposed rule.
    Comment: Two commenters supported the assignment of CPT code 0398T 
to New Technology APC 1575 (New Technology--Level 38 ($10,001-$15,000)) 
with a proposed payment rate of $12,500.50. One of the commenters 
supported the proposed new technology APC assignment because it is 
reflective of the median cost of the service and would ensure that what 
the commenter believed would be a severe underpayment calculated from 
the geometric mean would not be used to establish the payment rate for 
CPT code 0398T, which the commenter believed could discourage providers 
from performing the service.
    Response: We appreciate the support of the commenters.
    Comment: One commenter, the developer, supported the assignment of 
HCPCS code C9734 to APC 5115 (Level 5 Musculoskeletal Procedures) for 
CY 2020.
    Response: We appreciate the support of the commenter.
    After consideration of the public comments we received, we are 
finalizing our proposal for the APC assignment of CPT code 0398T. 
Specifically, we are continuing to assign this code to New Technology 
APC 1575 (New Technology--Level 38 ($10,001-$15,000)), with a payment 
rate of $12,500.50, for CY 2020 through use of our low-volume payment 
policy for new technology procedures. In addition, we are finalizing 
our proposal, without modification, to assign HCPCS code C9734 to APC 
5115. We also are finalizing our proposal to continue to assign CPT 
codes 0071T and 0072T to APC 5414, without modification. Table 11 above 
lists the final CY 2018 status

[[Page 61217]]

indicator and APC assignments for MRgFUS procedures. We refer readers 
to Addendum B of this final rule with comment period for the final 
payment rates for all codes reportable under the OPPS. Addendum B is 
available via the internet on the CMS website.
b. Retinal Prosthesis Implant Procedure
    CPT code 0100T (Placement of a subconjunctival retinal prosthesis 
receiver and pulse generator, and implantation of intra-ocular retinal 
electrode array, with vitrectomy) describes the implantation of a 
retinal prosthesis, specifically, a procedure involving the use of the 
Argus[supreg] II Retinal Prosthesis System. This first retinal 
prosthesis was approved by the Food and Drug Administration (FDA) in 
2013 for adult patients diagnosed with severe to profound retinitis 
pigmentosa. Pass-through payment status was granted for the 
Argus[supreg] II device under HCPCS code C1841 (Retinal prosthesis, 
includes all internal and external components) beginning October 1, 
2013, and this status expired on December 31, 2015. We note that after 
pass-through payment status expires for a medical device, the payment 
for the device is packaged into the payment for the associated surgical 
procedure. Consequently, for CY 2016, the device described by HCPCS 
code C1841 was assigned to OPPS status indicator ``N'' to indicate that 
payment for the device is packaged and included in the payment rate for 
the surgical procedure described by CPT code 0100T. For CY 2016, the 
procedure described by CPT code 0100T was assigned to New Technology 
APC 1599, with a payment rate of $95,000, which was the highest paying 
New Technology APC for that year. This payment included both the 
surgical procedure (CPT code 0100T) and the use of the Argus[supreg] II 
device (HCPCS code C1841). However, stakeholders (including the device 
manufacturer and hospitals) believed that the CY 2016 payment rate for 
the procedure involving the Argus[supreg] II System was insufficient to 
cover the hospital cost of performing the procedure, which includes the 
cost of the retinal prosthesis at the retail price of approximately 
$145,000.
    For CY 2017, analysis of the CY 2015 OPPS claims data used for the 
CY 2017 OPPS/ASC final rule with comment period showed 9 single claims 
(out of 13 total claims) for the procedure described by CPT code 0100T, 
with a geometric mean cost of approximately $142,003 based on claims 
submitted between January 1, 2015, through December 31, 2015, and 
processed through June 30, 2016. Based on the CY 2015 OPPS claims data 
available for the final rule with comment period and our understanding 
of the Argus[supreg] II procedure, we reassigned the procedure 
described by CPT code 0100T from New Technology APC 1599 to New 
Technology APC 1906, with a final payment rate of $150,000.50 for CY 
2017. We noted that this payment rate included the cost of both the 
surgical procedure (CPT code 0100T) and the retinal prosthesis device 
(HCPCS code C1841).
    For CY 2018, the reported cost of the Argus[supreg] II procedure 
based on CY 2016 hospital outpatient claims data for 6 claims used for 
the CY 2018 OPPS/ASC final rule with comment period was approximately 
$94,455, which was more than $55,000 less than the payment rate for the 
procedure in CY 2017, but closer to the CY 2016 payment rate for the 
procedure. We noted that the costs of the Argus[supreg] II procedure 
are extraordinarily high compared to many other procedures paid under 
the OPPS. In addition, the number of claims submitted has been very low 
and has not exceeded 10 claims within a single year. We believed that 
it is important to mitigate significant payment differences, especially 
shifts of several tens of thousands of dollars, while also basing 
payment rates on available cost information and claims data. In CY 
2016, the payment rate for the Argus[supreg] II procedure was 
$95,000.50. The payment rate increased to $150,000.50 in CY 2017. For 
CY 2018, if we had established the payment rate based on updated final 
rule claims data, the payment rate would have decreased to $95,000.50 
for CY 2018, a decrease of $55,000 relative to CY 2017. We were 
concerned that these large fluctuations in payment could potentially 
create an access to care issue for the Argus[supreg] II procedure, and 
we wanted to establish a payment rate to mitigate the potential sharp 
decline in payment from CY 2017 to CY 2018.
    In accordance with section 1833(t)(2)(B) of the Act, we must 
establish that services classified within each APC are comparable 
clinically and with respect to the use of resources. Therefore, for CY 
2018, we used our equitable adjustment authority under section 
1833(t)(2)(E) of the Act, which states that the Secretary shall 
establish, in a budget neutral manner, other adjustments as determined 
to be necessary to ensure equitable payments, to maintain the payment 
rate for this procedure, despite the lower geometric mean costs 
available in the claims data used for the final rule with comment 
period. For CY 2018, we reassigned the Argus[supreg] II procedure to 
APC 1904 (New Technology--Level 50 ($115,001-$130,000)), which 
established a payment rate for the Argus[supreg] II procedure of 
$122,500.50, which was the arithmetic mean of the payment rates for the 
procedure for CY 2016 and CY 2017.
    For CY 2019, the reported cost of the Argus[supreg] II procedure 
based on the geometric mean cost of 12 claims from the CY 2017 hospital 
outpatient claims data was approximately $171,865, which was 
approximately $49,364 more than the payment rate for the procedure for 
CY 2018. In the CY 2019 OPPS/ASC final rule with comment period, we 
continued to note that the costs of the Argus[supreg] II procedure are 
extraordinarily high compared to many other procedures paid under the 
OPPS (83 FR 58897 through 58898). In addition, the number of claims 
submitted continued to be very low for the Argus[supreg] II procedure. 
We stated that we continued to believe that it is important to mitigate 
significant payment fluctuations for a procedure, especially shifts of 
several tens of thousands of dollars, while also basing payment rates 
on available cost information and claims data because we are concerned 
that large decreases in the payment rate could potentially create an 
access to care issue for the Argus[supreg] II procedure. In addition, 
we indicated that we wanted to establish a payment rate to mitigate the 
potential sharp increase in payment from CY 2018 to CY 2019, and 
potentially ensure a more stable payment rate in future years.
    As discussed in section III.C.2. of the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 58892 through 58893), we used our equitable 
adjustment authority under section 1833(t)(2)(E) of the Act, which 
states that the Secretary shall establish, in a budget neutral manner, 
other adjustments as determined to be necessary to ensure equitable 
payments, to establish a payment rate that is more representative of 
the likely cost of the service. We stated that we believed the likely 
cost of the Argus[supreg] II procedure is higher than the geometric 
mean cost calculated from the claims data used for the CY 2018 OPPS/ASC 
final rule with comment period but lower than the geometric mean cost 
calculated from the claims data used for the CY 2019 OPPS/ASC final 
rule with comment period.
    For CY 2019, we analyzed claims data for the Argus[supreg] II 
procedure using 3 years of available data from CY 2015 through CY 2017. 
These data included claims from the last year that the Argus[supreg] II 
received transitional device pass-through payments (CY 2015) and the 
first 2 years since device pass-through payment status for the 
Argus[supreg] II

[[Page 61218]]

expired. We found that the geometric mean cost for the procedure was 
approximately $145,808, the arithmetic mean cost was approximately 
$151,367, and the median cost was approximately $151,266. As we do each 
year, we reviewed claims data regarding hospital costs associated with 
new procedures. We regularly examine the claims data and any available 
new information regarding the clinical aspects of new procedures to 
confirm that OPPS payments remain appropriate for procedures like the 
Argus[supreg] II procedure as they transition into mainstream medical 
practice (77 FR 68314). We noted that the proposed payment rate 
included both the surgical procedure (CPT code 0100T) and the use of 
the Argus[supreg] II device (HCPCS code C1841). For CY 2019, the 
estimated costs using all three potential statistical methods for 
determining APC assignment under the New Technology low-volume payment 
policy fell within the cost band of New Technology APC 1908, which is 
between $145,001 and $160,000. Therefore, we reassigned the 
Argus[supreg] II procedure (CPT code 0100T) to APC 1908 (New 
Technology--Level 52 ($145,001-$160,000)), with a payment rate of 
$152,500.50 for CY 2019.
    For CY 2020, the number of reported claims for the Argus[supreg] II 
procedure continues to be very low with a substantial fluctuation in 
cost from year to year. The high annual variability of the cost of the 
Argus[supreg] II procedure continues to make it difficult to establish 
a consistent and stable payment rate for the procedure. As previously 
mentioned, in accordance with section 1833(t)(2)(B) of the Act, we are 
required to establish that services classified within each APC are 
comparable clinically and with respect to the use of resources. 
Therefore, for CY 2020, we proposed to apply the policy we adopted in 
CY 2019, under which we utilize our equitable adjustment authority 
under section 1833(t)(2)(E) of the Act to calculate the geometric mean, 
arithmetic mean, and median costs using multiple years of claims data 
to select the appropriate payment rate for purposes of assigning the 
Argus[supreg] II procedure (CPT code 0100T) to a New Technology APC.
    We identified 35 claims reporting the procedure described by CPT 
code 0100T for the 4-year period of CY 2015 through CY 2018. We found 
the geometric mean cost for the procedure described by CPT code 0100T 
to be approximately $146,059, the arithmetic mean cost to be 
approximately $152,123, and the median cost to be approximately 
$151,267. All of the resulting estimates from using the three 
statistical methodologies fall within the same New Technology APC cost 
band ($145,001-$160,000), where the Argus[supreg] II procedure is 
assigned for CY 2019. Consistent with our policy stated in section 
III.C.2. of the proposed rule, we presented the result of each 
statistical methodology in the proposed rule, and we sought public 
comments on which method should be used to assign procedures described 
by CPT code 0100T to a New Technology APC. All three potential 
statistical methodologies used to estimate the cost of the 
Argus[supreg] II procedure fell within the cost band for New Technology 
APC 1908, with the estimated cost being between $145,001 and $160,000. 
Accordingly, we proposed to maintain the assignment of the procedure 
described by CPT code 0100T in APC 1908 (New Technology--Level 52 
($145,001-$160,000)), with a proposed payment rate of $152,500.50 for 
CY 2020. We note that the proposed payment rate includes both the 
surgical procedure (CPT code 0100T) and the use of the Argus[supreg] II 
device (HCPCS code C1841). We refer readers to Addendum B to the 
proposed rule for the proposed payment rates for all codes reportable 
under the OPPS. Addendum B is available via the internet on the CMS 
website.
    Comment: Two commenters, including the manufacturer, supported the 
assignment of 0100T to APC 1908 (New Technology--Level 52 ($145,001-
$160,000)), with a proposed payment rate of $152,500.50 for CY 2020.
    Response: We appreciate the support of the commenters. Consistent 
with our policy for low-volume services assigned to a New Technology 
APC, for this final rule, we calculated the geometric mean, arithmetic 
mean, and median costs using multiple years of claims data to select 
the appropriate payment rate for purposes of assigning the 
Argus[supreg] II procedure (CPT code 0100T) to a New Technology APC. We 
identified 41 claims reporting the procedure described by CPT code 
0100T for the 4-year period of CY 2015 through CY 2018. We found the 
geometric mean cost for the procedure described by CPT code 0100T to be 
approximately $146,042, the arithmetic mean cost to be approximately 
$151,453, and the median cost to be approximately $151,426. All of the 
resulting estimates from using the three statistical methodologies fall 
within the same New Technology APC cost band ($145,001-$160,000), that 
was proposed as the APC assignment for CPT code 0100T in the proposed 
rule. Therefore, we are finalizing our proposal to maintain the 
assignment of the procedure described by CPT code 0100T in APC 1908 
(New Technology--Level 52 ($145,001-$160,000)), with a payment rate of 
$152,500.50 for CY 2020. We refer readers to Addendum B to the proposed 
rule for the proposed payment rates for all codes reportable under the 
OPPS. Addendum B is available via the internet on the CMS website.
    As we discussed in the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58898), the claims data from CY 2017 showed another 
payment issue with regard to the Argus[supreg] II procedure. We found 
that payment for the Argus[supreg] II procedure was sometimes bundled 
into the payment for another procedure. Therefore in CY 2019, we 
implemented a policy to exclude payment for all procedures assigned to 
New Technology APCs from being bundled into the payment for procedures 
assigned to a C-APC. For CY 2020, we proposed to continue this policy 
as described in section II.A.2.b.(3) of the proposed rule. Our proposal 
would continue to exclude payment for any procedure that is assigned to 
a New Technology APC from being packaged when included on a claim with 
a service assigned to status indicator ``J1''. While we did not propose 
to exclude payment for a procedure assigned to a New Technology APC 
from being packaged when included on a claim with a service assigned to 
status indicator ``J2'', we sought public comments on this issue.
    Comment: Several commenters, including device manufacturers, device 
manufacturer associations and physicians were opposed to our proposal 
to package payment for procedures assigned to a New Technology APC into 
the payment for comprehensive observation services assigned status 
indicator ``J2''. The commenters stated that there were instances where 
beneficiaries receiving observation services may require the types of 
procedures that are assigned to New Technology APCs. Several commenters 
specifically mentioned HeartFlow, and stated that it could be performed 
appropriately for a patient receiving observation services. The 
commenters also stated that providing separate payment for this new 
technology procedure will allow CMS to collect sufficient claims data 
to enable assignment of the procedure to an appropriate clinical APC.
    Response: We appreciate the stakeholders' comments regarding this 
proposal and agree that, although rare, there are situations in which 
it is clinically appropriate to provide a new technology service when 
providing comprehensive observation services. As discussed in the CY 
2019 OPPS/ASC

[[Page 61219]]

final rule with comment period (83 FR 58847), the purpose of the new 
technology APC policy is to ensure that there are sufficient claims 
data for new services in order to assign these procedures to a clinical 
APC and therefore, we excluded procedures assigned to New Technology 
APCs from packaging under the C-APC policy. In the CY 2019 final rule, 
we specifically stated that the exclusion policy included circumstances 
when New Technology procedures were billed with comprehensive services 
assigned to status indicator ``J1'', however we believe this rationale 
is also applicable to comprehensive observations services that are 
assigned status indicator ``J2''.
    Accordingly, for CY 2020 and subsequent years, we are modifying our 
policy for excluding procedures assigned to New Technology APCs from 
the C-APC policy. That is, we are finalizing our proposal to exclude 
payment for any procedure that is assigned to a New Technology APC from 
being packaged when included on a claim with a ``J1'' service assigned 
to a C-APC. For CY 2020 and subsequent years, we are also finalizing a 
policy to exclude payment for any procedures that are assigned to a New 
Technology APC from being packaged into the payment for comprehensive 
observation services assigned to status indicator ``J2'' when they are 
included on a claim with ``J2'' procedures. This policy is also 
described in section II.A.2.b.(3) of this final rule.
c. Bronchoscopy With Transbronchial Ablation of Lesion(s) by Microwave 
Energy
    Effective January 1, 2019, CMS established HCPCS code C9751 
(Bronchoscopy, rigid or flexible, transbronchial ablation of lesion(s) 
by microwave energy, including fluoroscopic guidance, when performed, 
with computed tomography acquisition(s) and 3-D rendering, computer-
assisted, image-guided navigation, and endobronchial ultrasound (EBUS) 
guided transtracheal and/or transbronchial sampling (eg, aspiration[s]/
biopsy[ies]) and all mediastinal and/or hilar lymph node stations or 
structures and therapeutic intervention(s)). This microwave ablation 
procedure utilizes a flexible catheter to access the lung tumor via a 
working channel and may be used as an alternative procedure to a 
percutaneous microwave approach. Based on our review of the New 
Technology APC application for this service and the service's clinical 
similarity to existing services paid under the OPPS, we estimated the 
likely cost of the procedure would be between $8,001 and $8,500. We 
have not received any claims data for this service. Therefore, we 
proposed to continue to assign the procedure described by HCPCS code 
C9751 to New Technology APC 1571 (New Technology--Level 34 ($8,001-
$8,500)), with a proposed payment rate of $8,250.50 for CY 2020. 
Details regarding HCPCS code C9751 were shown in Table 12 of the CY 
2020 OPPS/ASC proposed Rule, which is reprinted below in Table 13.
[GRAPHIC] [TIFF OMITTED] TR12NO19.026

    Comment: The developer of the procedure noted that there will be 
clinical trials for HCPCS code C9751 in CY 2020 and it is anticipated 
the procedure also will have a limited market release in CY 2020. 
Therefore, the developer is expecting claims to be reported billed with 
HCPCS code C9751 for CY 2020.
    Response: We appreciate the update on the expected utilization for 
HCPCS code C9751 for CY 2020.
    Comment: One commenter supported our proposal to assign HCPCS code 
C9751 to New Technology APC 1571 (New Technology--Level 34 ($8,001-
$8,500)), with a proposed payment rate of $8,250.50 for CY 2020.
    Response: We appreciate the support of the commenter.
    After considering the public comments, we are finalizing our 
proposal to assign HCPCS code C9751 to New Technology APC 1571 (New 
Technology--Level 34 ($8,001-$8,500)), with a payment rate of $8,250.50 
for CY 2020.
d. Pathogen Test for Platelets
    As stated in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59281), HCPCS code P9100 is used to report any test used to 
identify bacterial or other pathogen contamination in blood platelets. 
Currently, there are two rapid bacterial detection tests cleared by FDA 
that are described by HCPCS code P9100. According to their instructions 
for use, rapid bacterial detection tests should be performed on 
platelets from 72 hours after collection. Currently, certain rapid and 
culture-based tests can be used to extend the dating for platelets from 
5 days to 7 days. Blood banks and transfusion services may test and use 
6-day old to 7-day old platelets if the test results are negative for 
bacterial contamination.

[[Page 61220]]

    HCPCS code P9100 was assigned in CY 2019 to New Technology APC 1493 
(New Technology--Level 1C ($21-$30)), with a payment rate of $25.50. 
For CY 2020, based on CY 2018 claims data, there are approximately 
1,100 claims reported for this service with a geometric mean cost of 
approximately $32. This geometric mean cost would result in the 
assignment of the service described by HCPCS code P9100 to a New 
Technology APC, based on the associated cost band, with a higher 
payment rate than where the service is currently assigned. Therefore, 
for CY 2020, we proposed to reassign the service described by HCPCS 
code P9100 to New Technology APC 1494 (New Technology--Level 1D ($31-
$40)), with a proposed payment rate of $35.50.
    Comment: One commenter expressed support for the proposal.
    Response: We appreciate the support of the commenter.
    After considering the public comments, we are finalizing our 
proposal to assign HCPCS code P9100 to New Technology APC 1494 (New 
Technology--Level 1D ($31-$40)), with a payment rate of $35.50.
e. Fractional Flow Reserve Derived From Computed Tomography (FFRCT)
    Fractional Flow Reserve Derived from Computed Tomography (FFRCT), 
also known by the trade name HeartFlow, is a noninvasive diagnostic 
service that allows physicians to measure coronary artery disease in a 
patient through the use of coronary CT scans. The HeartFlow procedure 
is intended for clinically stable symptomatic patients with coronary 
artery disease, and, in many cases, may avoid the need for an invasive 
coronary angiogram procedure. HeartFlow uses a proprietary data 
analysis process performed at a central facility to develop a three-
dimensional image of a patient's coronary arteries, which allows 
physicians to identify the fractional flow reserve to assess whether or 
not patients should undergo further invasive testing (that is, a 
coronary angiogram).
    For many procedures in the OPPS, payment for analytics that are 
performed after the main diagnostic/image procedure are packaged into 
the payment for the primary procedure. However, in CY 2018, we 
determined that HeartFlow should receive a separate payment because the 
procedure is performed by a separate entity (that is, a HeartFlow 
technician who conducts computer analysis offsite) rather than the 
provider performing the CT scan. We assigned CPT code 0503T, which 
describes the analytics performed, to New Technology APC 1516 (New 
Technology--Level 16 ($1,401-$1,500)), with a payment rate of $1,450.50 
based on pricing information provided by the developer of the procedure 
that indicated the price of the procedure was approximately $1,500.
    For CY 2020, based on our analysis of the CY 2018 claims data 
available for the proposed rule, we found that over 840 claims had been 
submitted for payment for HeartFlow during CY 2018. We stated that the 
estimated geometric mean cost of HeartFlow was $788.19, or roughly $660 
lower that the payment rate for CY 2019 of $1,450.50. Therefore, for CY 
2020, we proposed to reassign the service described by CPT code 0503T 
in order to adjust the payment rate to better reflect the cost for the 
service. We proposed to reassign the service described by CPT code 
0503T to New Technology APC 1509 (New Technology--Level 9 ($701-$800)), 
with a proposed payment rate of $750.50 for CY 2020. We sought public 
comments on this proposal.
    Comment: Multiple commenters requested that we retain the CY 2019 
OPPS APC assignment of APC 1516 (New Technology--Level 16 ($1401-
$1500)) for HeartFlow with a payment rate of $1,450.50. The commenters 
were concerned that reducing the payment rate to $750.50 would 
discourage hospitals from using the service because they stated that 
the list price of the HeartFlow service is substantially higher than 
the proposed payment rate. Commenters were concerned that reduced 
utilization of HeartFlow would cause some beneficiaries to have 
unnecessary invasive coronary angiograms that are more costly than the 
HeartFlow procedure.
    Multiple commenters, including the developer of HeartFlow, provided 
additional reasons to maintain the current payment rate for the service 
of $1,450.50 despite claims data suggesting a lower payment rate for 
HeartFlow. The commenters believed that 78 single frequency claims used 
for the proposed rule solely represented a single year and that such a 
low number of claims would be an insufficient number of claims on which 
to base a payment rate reduction for the service. Two commenters 
suggested that CMS should collect another one or two years of claims 
data before making changes to the current payment rate. One of the 
commenters believed the reason the estimated cost of HeartFlow derived 
from claims data is substantially less than the current payment rate 
may be due to providers submitting claims without marked up gross 
charges for the services they provide.
    Another commenter, the developer, encouraged CMS to use our 
equitable adjustment authority under section 1833(t)(2)(E) of the Act, 
which states that the Secretary shall establish, in a budget neutral 
manner, other adjustments as determined to be necessary to ensure 
equitable payments to maintain the current payment rate for HeartFlow. 
The developer suggested that CMS should use its own assessment of the 
resources required to perform the HeartFlow service to set the payment 
rate for the service. The developer cited instances in the last four 
years where CMS used its equitable adjustment authority to mitigate 
either large fluctuations or declines in annual payment rates. These 
cases include: (1) A CY 2018 decision to use multiple years of claims 
data to pay a higher rate for CPT code 0100T (Placement of a 
subconjunctival retinal prosthesis receiver and pulse generator, and 
implantation of intraocular retinal electrode array, with vitrectomy) 
of $122,500.50 rather than the payment rate generated by the most 
recent year of claims data of $95,000.50; (2) a CY 2016 decision 
regarding the payment rate of CPT code 0308T (Insertion of ocular 
telescope prosthesis including removal of crystalline lens or 
intraocular lens prosthesis) where the median cost of $18,365 was used 
to set the payment rate instead of the geometric mean cost of $13,865 
because only 39 single frequency claims were reported for the service, 
and where we stated that ``the median cost would be a more appropriate 
measure of the central tendency for purposes of calculating the cost 
and the payment rate for the procedure;'' (3) a CY 2016 decision to 
adjust the geometric mean per diem cost for the partial hospital 
program to ensure a per diem payment for fewer services was less than a 
per diem payment for a larger number of services; and (4) a CY 2018 
decision to establish a payment rate of $17,500.50 for CPT code 0398T 
(Magnetic resonance image guided high intensity focused ultrasound 
(mrgfus), stereotactic ablation lesion, intracranial for movement 
disorder including stereotactic navigation and frame placement when 
performed) instead of proposed payment rate of $9,750.50.
    The developer believes that the proposed New Technology APC 
assignment for HeartFlow, which would result in a nearly 50 percent 
reduction in the payment rate between CY 2019 and CY 2020, is similar 
to these cases described in their comment. Therefore, the developer 
asked us to use our equitable adjustment authority to

[[Page 61221]]

maintain the CY 2019 payment rate of $1,450.50 for the service rather 
than adopt the proposed payment rate.
    Response: The proposed payment rate for CPT code 0503T was based on 
claims data from CY 2018, which is the first year the service was 
payable in the OPPS. For ratesetting for CY 2018 and CY 2019, there 
were no claims data available showing the cost of the service. Also, 
there were no services identified as comparable to CPT code 0503T, 
which meant we could not estimate the cost of CPT code 0503T by using 
the cost of a similar service. Accordingly, we previously based pricing 
for the service on pricing information provided by the developer of the 
procedure.
    We recognize that there was a low volume of claims for HeartFlow 
based on the data available for the proposed rule and, thus, we should 
have applied the low-volume policy for new technology services in the 
proposed rule.
    However, for the final rule, using the most recently available 
data, there are now 957 total claims billed with CPT code 0503T and 101 
single frequency claims. We appreciate the concerns of the commenters 
who stated that there were not enough claims billed with HeartFlow to 
use claims data to revise the rate for HeartFlow. While 101 single 
claims is above the threshold we established for low-volume services 
assigned to a new technology APC, we agree with the commenters that a 
payment reduction of nearly 50 percent is significant for a new 
technology that still has relatively low volume.
    Accordingly, given the low number of single frequency claims for 
CPT code 0503T, that number of claims for the Heartflow procedure was 
below the low-volume payment policy threshold for the proposed rule, 
and that it is only two claims above the threshold using data available 
for this final rule with comment period, we have decided to use our 
equitable adjustment authority under section 1833(t)(2)(E) of the Act 
to calculate the geometric mean, arithmetic mean, and median using the 
CY 2018 claims data to determine an appropriate payment rate for 
HeartFlow using our new technology APC low-volume payment policy. While 
the number of single frequency claims is just above our threshold to 
use the low-volume payment policy, we still have concerns about the 
normal cost distribution of the claims used to calculate the payment 
rate for Heartflow, and we decided the low-volume payment policy would 
be the best approach to address those concerns.
    Our analysis found that the geometric mean cost for CPT code 0503T 
was $768.26, the arithmetic mean cost for CPT code 0503T was $960.12 
and that the median cost for CPT code 0503T was $900.28. Of the three 
cost methods, the highest amount was for the arithmetic mean. The 
arithmetic mean falls within the cost band for New Technology APC 1511 
(New Technology--Level 11 ($901-$1000)) with a payment rate of $950.50. 
The arithmetic mean helps to account for some of the higher costs of 
CPT code 0503T identified by the commenters that may not have been 
reflected by either the median or the geometric mean. We acknowledge 
the commenters' concern and recognize that it may be theoretically 
possible that the reported cost of CPT code 0503T is higher than what 
we calculated from the claims data due to some providers reporting 
costs lower than actual costs for the service. However, we rely on 
hospitals to bill all CPT codes accurately in accordance with their 
code descriptors and CPT and CMS instructions, as applicable, and to 
report charges on claims and charges and costs on their Medicare 
hospital cost reports appropriately. In addition, we do not specify the 
methodologies that hospitals must use to set charges for this or any 
other service.
    After consideration of the public comments we received, we are 
utilizing our new technology low-volume payment policy to set the 
payment rate for the HeartFlow service CPT code 0503T based on the 
arithmetic mean for the procedure. Specifically, we are assigning CPT 
code 0503T to New Technology APC 1511 (New Technology--Level 11 ($901-
$1000)) with a payment rate of $950.50.
f. Cardiac Positron Emission Tomography (PET)/Computed Tomography (CT) 
Studies
    Effective January 1, 2020, we have assigned three CPT codes (78431, 
78432, and 78433) that describe the services associated with cardiac 
PET/CT studies to New Technology APCs. Table 13 reports code 
descriptors, status indicators, and APC assignments for these CPT 
codes. These codes were listed in Addendum B to the CY 2020 OPPS/ASC 
proposed rule as 78X32, 78X33, and 78X44. More information about CPT 
codes 78431, 78432, and 78433 can be found in section III. D. b. of 
this final rule.
    Comment: Several commenters reported that certain societies 
submitted a new technology application to CMS for CPT codes 78431, 
78432, and 78433 that details the costs associated with providing these 
services. For CPT code 78431, these same commenters disagreed with the 
proposed APC placement and recommended its reassignment from APC 5594 
(Level 4 Nuclear Medicine and Related Services) with a proposed payment 
rate of $1,466.16 to APC 1522 (New Technology--Level 23 ($2501-$3000)) 
with a proposed payment rate of $2,750.50. They reported that, based on 
the resource cost of the service described by CPT code 78431, APC 1522 
provides adequate reimbursement for the service. Similarly, for CPT 
codes 78432 and 78433, the commenters indicated that APC 5594 would not 
adequately cover the resource costs associated with these procedures, 
and recommended their reassignment to APC 1523 (New Technology--Level 
23 ($2501-$3000)) with a proposed payment rate of $ 2,750.50
    Response: Based on the information provided in the new technology 
application, and the comments received, we are revising the APC 
assignments for these codes. Specifically, we are revising the APC 
assignment for CPT code 78431 from APC 5594 to APC 1522, and 
reassigning CPT codes 78432 and 78433 from APC 5594 to APC 1523.
    In summary, after consideration of the public comments for the new 
cardiac PET/CT codes, and based on our evaluation of the new technology 
application which provided the estimated costs for the services and 
described the components and characteristics of the new codes, we are 
assigning CPT codes 78431, 78432, and 78433 to the final APCs listed in 
Table 14 below. Please refer to section III. D. b. of this final rule 
for more information on the finalized proposal to establish a payment 
rate for other new CPT codes associated with PET/CT studies. The final 
CY 2020 payment rate for the codes can be found in Addendum B to this 
final rule with comment period (which is available via the internet on 
the CMS website).

[[Page 61222]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.027


[[Page 61223]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.028

g. V-Wave Interatrial Shunt Procedure
    A randomized, double-blinded control IDE study is currently in 
progress for the V-Wave interatrial shunt procedure. All participants 
who passed initial screening for the study receive a right heart 
catherization procedure described by CPT code 93451 (Right heart 
catheterization including measurement(s) of oxygen saturation and 
cardiac output, when performed). Participants assigned to the 
experimental group also receive the V-Wave interatrial shunt procedure 
while participants assigned to the control group only receive right 
heart catheterization. The developer of V-Wave is concerned that the 
current coding of these services by Medicare would reveal to the study 
participants whether they have received the interatrial shunt because 
an additional procedure code, CPT code 93799 (Unlisted cardiovascular 
service or procedure) would be included on the claims for participants 
receiving the interatrial shunt. Therefore, we created a temporary 
HCPCS code to describe the V-wave interatrial shunt procedure for both 
the experimental group and the control group in the study. 
Specifically, we established HCPCS code C9758 (Blinded procedure for 
NYHA class III/IV heart failure; transcatheter implantation of 
interatrial shunt or placebo control, including right heart 
catheterization, trans-esophageal echocardiography (TEE)/intracardiac 
echocardiography (ICE), and all imaging with or without guidance (for 
example, ultrasound, fluoroscopy), performed in an approved 
investigational device exemption (IDE) study) to describe the service, 
and we assigned the service to New Technology APC 1589 (New 
Technology--Level 38 ($10,001-$15,000)). Details about the temporary 
HCPCS code are shown in Table 15 below. The final CY 2020 payment rate 
for V-Wave interatrial shunt procedure can be found in Addendum B to 
this final rule with comment period (which is available via the 
internet on the CMS website).

[[Page 61224]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.029

D. OPPS APC-Specific Policies

1. Barostim Neo\TM\ System (APC 5464)
    In CY 2019, CPT codes 0266T and 0268T were assigned to APC 5463 
(Level 3 Neurostimulator and Related Procedures) with a payment rate of 
$18,707.16. For CY 2020, as listed in Addendum B to the CY 2020 OPPS/
ASC proposed rule, we proposed to reassign both codes to APC 5464 
(Level 4 Neurostimulator and Related Procedures) with a proposed 
payment rate of $29,025.99. Table 16 below lists the long descriptors, 
proposed status indicator (SI), and APC assignments for these codes. We 
note that both codes are associated with the Barostim Neo\TM\ System.
    Comment: A medical device company agreed with the reassignment for 
CPT codes 0266T and 0268T to APC 5464. The commenter stated that APC 
5464 is the more appropriate assignment for these codes based on 
clinical and resource homogeneity, and encouraged CMS to finalize the 
APC assignment.
    Response: As we have stated every year since the implementation of 
the OPPS on August 1, 2000, we review, on an annual basis, the APC 
assignments for all services and items paid under the OPPS based on our 
analysis of the latest claims data.
    Based on our analysis of the proposed rule claims data as well as 
clinical review of the services described, we proposed to revise the 
APC assignment for both CPT codes 0266T and 0268T to APC 5464. In our 
analysis of CPT code 0268T (which describes implantation/replacement of 
the pulse generator), we noticed that the APC assignment for CPT code 
0266T (which describes the implantation or replacement of the complete 
system) was lower. We do not believe that the payment for the complete 
system (CPT code 0266T) should be less than the payment for the 
implantation/replacement of the pulse generator (CPT code 0268T) 
procedure. Consequently, we proposed to revise the APC assignment for 
CPT code 0266T to APC 5464. Although we had no claims data for CPT code 
0266T, we believed it was necessary to revise the APC assignment to 
appropriately reflect the device cost associated with the procedure.
    Similar to our findings for the proposed rule, based on updated 
claims data for this final rule with comment period, the geometric mean 
cost for CPT code 0268T supports its reassignment from APC 5463 to APC 
5464. Specifically, our claims data show a geometric mean cost of 
approximately $25,558 for CPT code 0268T based on 6 single claims (out 
of 6 total claims), which is consistent with the geometric mean cost of 
approximately $28,491 for APC 5464, rather than the geometric mean cost 
of approximately $18,864 for APC 5463. Furthermore, as mentioned above, 
we are also assigning CPT code 0266T to APC 5464 even though we do not 
yet have claims data because we do not believe that the service for 
implantation of the entire system (CPT code 0266T) would be less 
resource intensive than the implantation of the pulse generator alone 
(CPT code 0268T).

[[Page 61225]]

    In summary, after consideration of the public comment and analysis 
of the latest claims data, we are finalizing our proposal, without 
modification, to assign CPT codes 0266T and 0268T to APC 5464 for CY 
2020. Table 16 below list the long descriptors for the codes and the 
final SI and APC assignments. The final CY 2020 payment rate for the 
codes can be found in Addendum B to this final rule with comment 
period. In addition, we refer readers to Addendum D1 of this final rule 
with comment period for the status indicator (SI) assignments for all 
codes reported under the OPPS. Both Addendum B and D1 are available via 
the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR12NO19.030

2. Biomechanical Computed Tomography (BCT) Analysis (APCs 5521, 5523, 
and 5731)
    The CPT Editorial Panel established five new codes, specifically, 
CPT codes 0554T, 0555T, 0556T, 0557T, and 0558T, to describe the 
services associated with biomechanical computed tomography (BCT) 
analysis effective July 1, 2019. Through the July 2019 OPPS quarterly 
update CR (Transmittal 4313, Change Request 11318, dated May 24, 2019), 
we assigned these new codes to appropriate interim status indicators 
(SI) and APCs. Table 17 below lists the long descriptors and proposed 
SI and APCs of the codes.
    Comment: A commenter agreed with the SI and APC assignments and 
stated that the APC assignments for these codes are the best available 
placements. The commenter also noted that CMS did not assign the 
comprehensive code (CPT code 0554T) and the physician interpretation 
code (CPT code 0557T) to an APC because the codes represent physician 
services.
    Response: We thank the commenter for its feedback. We are 
finalizing the SIs and APC assignments for the codes. Table 17 below 
list the long descriptors and final SIs and APCs. The final CY 2020 
payment rate for the codes can be found in Addendum B to this final 
rule with comment period. In addition, we refer readers to Addendum D1 
of this final rule with comment period for the complete list of the 
OPPS payment status indicators and their definitions for CY 2020. Both 
Addendum B and Addendum D1 are available via the internet on the CMS 
website.
    As we do for all codes, we will reevaluate the APC assignments for 
CPT codes 0555T, 0556T, and 0558T once we have claims data. We remind 
hospitals that we review, on an annual basis, the APC assignments for 
all services and items paid under the OPPS based on the latest claims 
data.

[[Page 61226]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.031

3. Cardiac Magnetic Resonance (CMR) Imaging (APC 5572)
    For CY 2020, we proposed to maintain the APC assignment for CPT 
code 75561 (Cardiac magnetic resonance imaging for morphology and 
function without contrast material(s), followed by contrast material(s) 
and further sequences) to APC 5572 (Level 2 Imaging with Contrast) with 
a proposed payment rate of $373.45.
    Comment: Some commenters expressed concern with the placement of 
CPT code 75561 in APC 5572, and stated that it is grouped with services 
that are not similar clinically or with respect to resource use. As an 
example, they observed that CPT code 75561 is unlike CT of the abdomen 
or pelvis or MRI of the neck and spine, and instead, is more similar to 
those services in APC 5573 (Level 3 Imaging with Contrast), with a 
proposed payment rate of $682.96.Another commenter expressed concern 
with the payment stability for CPT code 75561. The commenter noted that 
although the code is assigned to the same APC for CY 2020, the payment 
for the service is slated for another reduction. The commenter observed 
that the payment rate for the service has decreased in the last several 
years and noted the following yearly rates:

 CY 2017 OPPS payment rate: $426.52
 CY 2018 OPPS payment rate: $456.34

[[Page 61227]]

 CY 2019 OPPS payment rate: $385.88
 CY 2020 OPPS proposed payment rate: $373.45

    This same commenter reported that the code was previously included 
in a nuclear medicine APC, which it maintained was appropriate based on 
its clinical and resource homogeneity to cardiovascular magnetic 
resonance and cardiac nuclear imaging services in the APC, and that, 
since its APC reassignment, the payment for the service has dropped. 
The commenter believed that the different cost reporting methods used 
by hospitals may contribute to the artificially low relative payment 
weights and payment amounts for CT and MR.
    Response: For CY 2020, based on claims submitted between January 1, 
2018 through December 30, 2018, that were processed on or before June 
30, 2019, our analysis of the latest claims data for this final rule 
continues to support our proposal of assigning CPT code 75561 to APC 
5572. Specifically, our claims data show a geometric mean cost of 
approximately $413 for CPT code 75561 based on 14,350 single claims 
(out of 18,118 total claims), which is comparable to the geometric mean 
cost of about $359 for APC 5572, rather than the geometric mean cost of 
approximately $660 for APC 5573. The geometric cost of approximately 
$413 for CPT code 75561 is also consistent with the costs for 
significant services in APC 5572, which range between about $269 (for 
CPT code 74174) to $515 (for CPT code 73525). Based on our analysis of 
the latest claims data, we believe that CPT code 75561 is appropriately 
assigned to APC 5572.
    With regards to the issue of payment stability, we note that 
Section 1833(t)(9)(A) of the Act requires the Secretary to review, not 
less often than annually, and to revise the groups, relative payment 
weights, and the wage and other adjustments to take into account 
changes in medical practices, changes in technology, the addition of 
new services, new cost data, and other relevant information and 
factors. Therefore, every year we review and revise the APC assignments 
based on our evaluation of these factors using the latest OPPS claims 
data. While we recognize the concerns about payment stability, we note 
that changes made to payment rates are based on our calculations of 
geometric mean costs from the most recently available Medicare claims 
and cost report data analysis, which may or may not result in payment 
increases and/or reductions based on the most recent geometric mean 
costs available. We note that the geometric mean costs reflect the 
national average resources to furnish a service in the hospital 
outpatient setting. To the extent that costs decrease, so too, would 
the payment rate.
    In addition, with regard to the issue of different hospital cost 
reporting methods, we are unable to determine whether hospitals are 
misreporting the procedure. It is generally not our policy to judge the 
accuracy of hospital charging and coding for purposes of ratesetting. 
We rely on hospitals to accurately report the use of HCPCS codes in 
accordance with their code descriptors and CPT and CMS instructions, 
and to appropriately report services on claims and charges and costs 
for the services on their Medicare hospital cost report. Also, we do 
not specify the methodologies that hospitals use to set charges for 
this or any other service. Furthermore, we state in Chapter 4 of the 
Medicare Claims Processing Manual that ``it is extremely important that 
hospitals report all HCPCS codes consistent with their descriptors; CPT 
and/or CMS instructions and correct coding principles, and all charges 
for all services they furnish, whether payment for the services is made 
separately paid or is packaged'' to enable CMS to establish future 
ratesetting for OPPS services.
    Comment: One commenter who expressed concern with the APC 
assignment for CPT code 75561 also requested that we address in the 
final rule how we determine which services are clinically similar. The 
commenter noted that CMS has constructed many APCs with a mix of 
imaging services that are dissimilar and yet preserves the clinical 
homogeneity of some APCs, such as nuclear medicine services.
    Response: Under the OPPS, each service is assigned to an APC based 
on the clinical and resource similarity to other services within the 
APC or family of APCS. The OPPS is a prospective payment system under 
which payment groupings (that is, APCs) are based on clinical and 
resource similarity rather than code-specific payment rates, which 
would result in a cost-based fee schedule. For example APCs 5111-5116, 
which are described as Levels 1 through 6 Musculoskeletal Procedures, 
all include services that involve musculoskeletal services/procedures 
and the various levels of that APC family differentiate such procedures 
based on resource homogeneity. That is, the descriptors for APCs 5111 
through 5116 are general and broadly describe a variety of 
musculoskeletal procedures, and are differentiated by the various 
levels based on the geometric mean costs for each APC. Clinically, all 
the procedures in APCs 5111 through 5116 are similar in that they 
involve some form of musculoskeletal procedure. In addition, as stated 
in section III.B.2. (Application of the 2 Times Rule) of this final 
rule with comment, section 1833(t)(2) of the Act provides that, subject 
to certain exceptions, the items and services within an APC group 
cannot be considered comparable with respect to the use of resources if 
the highest cost for an item or service in the group is more than 2 
times greater than the lowest cost for an item or service within the 
same group (referred to as the ``2 times rule''). While it may seem 
appropriate to place one code in a specific grouping, based on our 2 
times rule criteria, we must assign the code to the appropriate APC 
based on its geometric mean cost.
    In summary, after consideration of the public comments, we are 
finalizing our proposal, without modification, to assign CPT code 75561 
to APC 5572. The final CY 2020 payment rate for CPT code 75561 can be 
found in Addendum B to this final rule with comment period. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the status indicator (SI) meanings for all codes 
reported under the OPPS. Both Addendum B and D1 are available via the 
internet on the CMS website.
4. CardioFluxTM Magnetocardiography (MCG) Myocardial Imaging 
(APC 5723)
    For CY 2020, we proposed to maintain the APC assignment for CPT 
code 0541T to APC 5722 (Level 2 Diagnostic Tests and Related Services) 
with a proposed payment rate of $256.60. We also proposed to continue 
to assign CPT code 0541T, which is an add-on code, to status indicator 
``N'' to indicate that the code is packaged and payment for it is 
included in the primary procedure or service. In this case, the payment 
for 0542T is included in CPT code 0541T. We note that CPT codes 0541T 
and 0542T are associated with the CardioFlux magnetocardiography 
imaging technology. Table 18 below lists the long descriptors for the 
codes as well as the proposed SI and APC assignments.
    Comment: A commenter disagreed with the assignment to APC 5722 and 
reported that the service associated with CPT code 0541T is not 
clinically and resource comparable to the services in the APC. The 
commenter stated that the service is clinically comparable to the 
services that are assigned to APCs 5593 and 5724, specifically:

[[Page 61228]]

     APC 5593 (Level 3 Nuclear Medicine), with a proposed 
payment rate of $ 1,293.33, which includes--
    + CPT code 78451 (Myocardial perfusion imaging); and
    + CPT code 78452 (Myocardial perfusion imaging).
     APC 5724 (Level 4 Diagnostic Tests and Related Services), 
with a proposed payment rate of approximately $ 920.66, which 
includes--
    + CPT code 95965 (Magnetoencephalography (MEG)); and
    + CPT code 95966 (Magnetoencephalography (MEG)).

The commenter indicated that this new technology requires the use of 
very expensive capital equipment, and added that the CardioFlux System 
costs about $1.5 million with a useful life of seven years. The 
technology itself involves hospital site implementation and ongoing 
operation. The commenter stated that the proposed payment does not 
provide adequate payment for this novel technology. The commenter 
expressed concern that the proposed low payment rate will severely 
limit uptake of this new technology, and, consequently, urged CMS to 
reassign CPT code 0541T to either APC 5593 or APC 5724 to ensure 
patient access to this emerging technology and its potential for 
savings to the Medicare program.

    Response: Under the OPPS, one of our goals is to make payments that 
are appropriate for the services that are necessary for the treatment 
of Medicare beneficiaries. The OPPS, like other Medicare payment 
systems, is a prospective payment system. The payment rates that are 
established reflect the geometric mean costs associated with items and 
services assigned to an APC and we believe that our payment rates 
generally reflect the costs that are associated with providing care to 
Medicare beneficiaries in cost efficient settings. Moreover, we strive 
to establish rates that are adequate to ensure access to medically 
necessary services for Medicare beneficiaries.
    For many emerging technologies there is a transitional period 
during which utilization may be low, often because providers are first 
learning about the techniques and their clinical utility. Quite often, 
the requests for higher payment amounts are for new procedures in that 
transitional phase. These requests, and their accompanying estimates 
for expected Medicare beneficiary or total patient utilization, often 
reflect very low rates of patient use, resulting in high per use costs 
for which requesters believe Medicare should make full payment. 
Medicare does not, and we believe should not, assume responsibility for 
more than its share of the costs of procedures based on Medicare 
beneficiary projected utilization and does not set its payment rates 
based on initial projections of low utilization for services that 
require expensive capital equipment.
    We note that in a budget neutral environment, payments may not 
fully cover hospitals' costs, including those for the purchase and 
maintenance of capital equipment. We rely on hospitals to make their 
decisions regarding the acquisition of high cost equipment with the 
understanding that the Medicare program must be careful to establish 
its initial payment rates for new services that lack hospital claims 
data based on realistic utilization projections for all such services 
delivered in cost-efficient hospital outpatient settings. As the OPPS 
acquires claims data regarding hospital costs associated with new 
procedures, we annually review the claims data and any available new 
information regarding the clinical aspects of new procedures to confirm 
that our OPPS payments remain appropriate for procedures as they 
transition into mainstream medical practice.
    In addition, we note this new technology is currently under 
clinical trial (ClinicalTrials.gov Identifiers: NCT03968809 and 
NCT04044391) and does not appear to be a service that is typically 
performed in an HOPD facility. Further, based on our clinical 
evaluation, we do not agree that CardioFlux MCG is similar to the MEG 
procedures described by CPT codes 95965 and 95966 since MEG procedures 
involve the brain while the CardioFlux technology involves imaging of 
the heart. Also, we do not agree that CardioFlux MCG is similar to the 
myocardial perfusion scans described by CPT codes 78451 and 78452 
because these scans involve the use of radioactive tracers, specialized 
staff, and more time as the test generally takes two to four hours to 
complete. Furthermore, based on our findings, the CardioFlux MCG scan 
is unlike other cardiac imaging tests because it does not require or 
expose the patient to radiation, and takes about 90 seconds to perform 
with physician review and return of interpretation of the results in an 
estimated 5 minutes per patient.
    However, based on our review of the issue and feedback from our 
medical advisors, as well as the anticipated operating costs per case 
derived from the public comment and publicly available information 
about the service, we believe that CPT code 0541T should be assigned to 
APC 5723 (Level 3 Diagnostic Tests and Related Services) rather than to 
APC 5722 (Level 2 Diagnostic Tests and Related Services). Because we 
have neither claims data nor specific HOPD costs, including the cost to 
perform each exam (other than the cost of the capital equipment that 
was supplied to us), we believe that APC 5723 is the most appropriate 
assignment at this time.
    Therefore, after consideration of the public comment, we are 
finalizing our proposal, with modification, to assign CPT code 0541T to 
APC 5723. Table 18 list the long descriptors and final SI and APC 
assignments for both codes. The final CY 2020 payment rate for CPT code 
0541T can be found in Addendum B to this final rule with comment 
period. In addition, we refer readers to Addendum D1 of this final rule 
with comment period for the status indicator (SI) meanings for all 
codes reported under the OPPS. Both Addendum B and D1 are available via 
the internet on the CMS website.

[[Page 61229]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.032

5. Cataract Removal With Endoscopic Cyclophotocoagulation (ECP) (APC 
5492)
    For CY 2020, the CPT Editorial Panel established two new codes to 
describe cataract removal with endoscopic cyclophotocoagulation (ECP), 
specifically, CPT codes 66987 and 66988. As listed in Table 19 below 
with the long descriptors, and also in Addendum B to the CY 2020 OPPS/
ASC proposed rule, we proposed to assign CPT code 66987 and 66988 to 
APC 5491 (Level 1 Intraocular Procedures) with a proposed payment rate 
of $2,053.39. The codes were listed as 66X01 and 66X02 (the 5-digit CMS 
placeholder codes), respectively, in Addendum B with the short 
descriptors and again in Addendum O with the long descriptors. We also 
assigned the codes to comment indicator ``NP'' in Addendum B to 
indicate that they are new for CY 2020 and that public comments would 
be accepted on their proposed status indicator assignments. We note 
these codes will be effective January 1, 2020.
    Comment: A commenter disagreed with the APC assignment and, based 
on their analysis of the combined geometric mean costs for the existing 
cataract and ECP procedures (CPT codes 66982, 66984, and 66711), 
believed the new codes should be reassigned to APC 5492 (Level 2 
Intraocular Procedures) with a proposed payment rate of $3,867.16. Four 
professional ophthalmology organizations suggested that CMS should 
establish the payment rate for CPT code 66987 based on the combined 
costs of CPT codes 66711 and 66982, and, similarly, determine the 
payment rate for CPT code 66988 based on the combined costs of CPT 
codes 66711 and 66984. They expressed concern that the proposed payment 
rates for the codes do not adequately capture the resources hospitals 
will expend for each combined procedure.
    Response: APC assignment for a code is not typically based on 
combined costs of existing HCPCS codes, rather, it is based on 
similarity to other codes within an APC based clinical homogeneity and 
resource costs. As specified in 42 CFR 419.31(a)(1), CMS classifies 
outpatient services and procedures that are comparable clinically and 
in terms of resource use into APC groups. Also, as we stated in the CY 
2012 OPPS/ASC final rule (76 FR 74224), the OPPS is a prospective 
payment system that provides payment for groups of services that share 
clinical and resource use characteristics. It should be noted that, 
with all new codes, our policy has been to assign the service or 
procedure to an APC based on feedback from a variety of sources, 
including but not limited to review of the clinical similarity of the 
service to existing procedures; advice from CMS medical advisors; 
information from interested specialty societies; and review of all 
other information available to us, including information provided to us 
by the public, whether through meetings with stakeholders or additional 
information that is mailed or otherwise communicated to us.
    Based on our analysis of the public comment and input from our 
medical advisors, we believe that we should

[[Page 61230]]

revise the APC assignment for these new cataract codes. We reviewed the 
components of the procedure associated with CPT codes 66987 and 66988, 
and after our analysis, we agree with commenters that the resources 
associated with the new codes are higher than the routine cataract and 
ECP procedures when performed by themselves. Therefore, we are 
reassigning the new codes from APC 5491 to APC 5492.
    In summary, after consideration of the public comments, we are 
finalizing our proposal with modification, and revising the APC 
assignment for CPT codes 66987 and 66988 to APC 5492 for CY 2020. Table 
19 lists the final SI and APC assignments for the two codes. The final 
CY 2020 payment rate for the codes can be found in Addendum B to this 
final rule with comment period. In addition, we refer readers to 
Addendum D1 of this final rule with comment period for the status 
indicator (SI) meanings for all codes reported under the OPPS. Both 
Addendum B and D1 are available via the internet on the CMS website.
    We note that we will reevaluate the APC assignments for CPT codes 
66987 and 66988 once we have claims data. We review, on an annual 
basis, the APC assignments for all services and items paid under the 
OPPS based on the latest claims data that we have available.
BILLING CODE 4120-01-P

[[Page 61231]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.033

BILLING CODE 4120-01-C
6. Chimeric Antigen Receptor T-Cell (CAR T) Therapy (APCs 5694, 9035, 
and 9194)
    Chimeric Antigen Receptor (CAR) T-cell therapy is a cell-based gene 
therapy in which T-cells are collected and genetically engineered to 
express a chimeric antigen receptor that will bind to a certain protein 
on a patient's cancerous cells. The CAR T-cells are then administered 
to the patient to attack certain cancerous cells and the individual is 
observed for potential serious side effects that would require medical 
intervention.
    Two CAR T-cell therapies received FDA approval in 2017. 
KYMRIAH[supreg] (manufactured by Novartis Pharmaceuticals Corporation) 
was

[[Page 61232]]

approved for use in the treatment of patients up to 25 years of age 
with B-cell precursor acute lymphoblastic leukemia (ALL) that is 
refractory or in second or later relapse. In May 2018, KYMRIAH[supreg] 
received FDA approval for a second indication, treatment of adult 
patients with relapsed or refractory large B-cell lymphoma after two or 
more lines of systemic therapy, including diffuse large B-cell lymphoma 
(DLBCL), high grade B-cell lymphoma, and DLBCL arising from follicular 
lymphoma. YESCARTA[supreg] (manufactured by Kite Pharma, Inc.) was 
approved for use in the treatment of adult patients with relapsed or 
refractory large B-cell lymphoma and who have not responded to or who 
have relapsed after at least two other kinds of treatment.
    The HCPCS code to describe the use of KYMRIAH[supreg] (HCPCS code 
Q2042) has been active since January 1, 2019 for OPPS, which replaced 
HCPCS code Q2040, active January 1, 2018 through December 31, 2018, as 
discussed in the CY2019 OPPS/ASC final rule with comment period. The 
HCPCS code to describe the use of YESCARTA[supreg] (HCPCS code Q2041) 
has been active since April, 1, 2018 for OPPS. The HCPCS Q-code for the 
currently approved CAR T-cell therapies include leukapheresis and dose 
preparation procedures because these services are included in the 
manufacturing of these biologicals. Both of these CAR T-cell therapies 
were approved for transitional pass-through payment status, effective 
April 1, 2018. The HCPCS codes that describe the use of these CAR T-
cell therapies were assigned status indicator ``G'' in Addenda A and B 
to the CY2020 OPPS/ASC proposed rule.
    As discussed in section V.A.4. (Drugs, Biologicals, and 
Radiopharmaceuticals with New or Continuing Pass-Through Payment Status 
in CY 2019) of this final rule with comment period, we are finalizing 
our proposal to continue pass-through payment status for HCPCS code 
Q2042 and HCPCS code Q2041 for CY 2020. In section V.A.4. of this final 
rule with comment period, we also are finalizing our proposal to 
determine the pass-through payment rate following the standard ASP 
methodology, updating pass-through payment rates on a quarterly basis 
if applicable information indicates that adjustments to the payment 
rates are necessary.
    The AMA created four Category III CPT codes that are related to CAR 
T-cell therapy, effective January 1, 2019. As discussed in the CY 2019 
OPPS/ASC final rule with comment period, we finalized our proposal to 
assign procedures described by CPT codes, 0537T, 0538T, and 0539T to 
status indicator ``B'' (Codes that are not recognized by OPPS when 
submitted on an outpatient hospital Part B bill type (12x and 13x)) to 
indicate that the services are not paid under the OPPS. The procedures 
described by CPT codes 0537T, 0538T, and 0539T describe the various 
steps required to collect and prepare the genetically modified T-cells, 
and Medicare does not generally pay separately for each step used to 
manufacture a drug or biological. Additionally, we finalized that the 
procedures described by CPT code 0540T would be assigned status 
indicator ``S'' (Procedure or Service, Not Discounted when Multiple) 
and APC 5694 (Level IV Drug Administration) for CY 2019. Additionally, 
the National Uniform Billing Committee (NUBC) established CAR T-cell 
related revenue codes and value code to be reportable on Hospital 
Outpatient Department (HOPD) claims effective for claims received on or 
after April 1, 2019.
    As listed in Addendum B of the CY 2020 OPPS/ASC proposed rule, we 
proposed to assign procedures described by these CPT codes, 0537T, 
0538T, and 0539T, to status indicator ``B'' (Codes that are not 
recognized by OPPS when submitted on an outpatient hospital Part B bill 
type (12x and 13x)) to indicate that the services are not paid under 
the OPPS. We proposed to assign CPT code 0540T to status indicator 
``S'' (Procedure or Service, Not Discounted when Multiple) and APC 5694 
(Level IV Drug Administration).
    At the August 19, 2019 meeting, the HOP Panel recommended that CMS 
reassign the status indicator for the procedures described by the 
specific CPT codes 0537T, 0538T, and 0539T from ``B'' to ``Q1'' for 
CY2020.
    Comment: Several commenters opposed our proposal to continue to 
assign status indicator ``B'' to CPT codes 0537T, 0538T, and 0539T for 
CY2020. Commenters proposed a variety of alternative status indicators 
including status indicators ``N'', ``S'', and ``Q1.'' Commenters 
believed that CPT codes 0537T, 0538T, and 0539T did not represent the 
steps required to manufacture the CAR T product as CMS has stated. 
Generally, those advocating for status indicator ``N'' (Items and 
Services Packaged into APC Rates) stated that this assignment would 
ease the billing burden and confusion experienced by providers under 
the current status indicator assignment of ``B''. Generally, those 
advocating for status indicator ``S'' (Procedure or Service, Not 
Discounted When Multiple) believed that separate payment is warranted 
for these services as they are distinct procedures and are ordered and 
performed by clinicians. Finally, generally those advocating for status 
indicator ``Q1'', indicating conditional separate payment, supported 
the HOP Panel's recommendation to assign this status indicator based on 
codes, such as CPT code 0565T (placeholder code 05X3T) (Autologous 
cellular implant derived from adipose tissue for the treatment of 
osteoarthritis of the knees; tissue harvesting and cellular implant 
creation). CPT code 0565T has a status indicator of ``Q1'' and 
commenters believe it is similar to the procedures described by CPT 
codes 0537T, 0538T, and 0539T, since CPT code 0565T involves the 
collection and harvest of cells, in the form of tissue, for the 
treatment of osteoarthritis of the knee. Additionally, commenters 
stated that the HCPCS drug Q-codes (Q2041 and Q2042) should be revised 
to eliminate the language referencing leukapheresis and dose 
preparation procedures.
    Response: We thank the commenters for their feedback. CMS does not 
believe that separate or packaged payment under the OPPS is necessary 
for the procedures described by CPT codes 0537T, 0538T, and 0539T for 
CY2020. The existing CAR T-cell therapies on the market were approved 
as biologics and, therefore, provisions of the Medicare statute 
providing for payment for biological products apply. The procedures 
described by CPT codes 0537T, 0538T, and 0539T describe the various 
steps required to collect and prepare the genetically modified T-cells 
and Medicare does not generally pay separately for each step used to 
manufacture a drug or biological product. Additionally, we note that 
CAR T-cell therapy is a unique therapy approved as a biologic, with 
unique preparation procedures, and it cannot be directly compared to 
other therapies or existing CPT codes. We note that the current HCPCS 
coding for the currently approved CAR T-cell therapy drugs, HCPCS codes 
Q2041 and Q2042, include leukapheresis and dose preparation procedures 
as these services are including in the manufacturing of these 
biologicals. Therefore, payment for these services is incorporated into 
the drug Q-codes. We note that although there is no payment associated 
with 0537T, 0538T, and 0539T for reasons stated previously, these codes 
can still be reported to CMS for tracking purposes. Additionally, HOPDs 
can bill Medicare for reasonable and necessary services that are 
otherwise payable under the OPPS, and we believe that the comments in 
reference to payment for services in settings not payable under

[[Page 61233]]

the OPPS are outside the scope of this proposed rule.
    Accordingly, we are not revising the existing Q-codes for CAR T-
cell therapies to remove leukapheresis and dose preparation procedures, 
and we are not accepting the recommendations to revise the status 
indicators for procedures described by CPT codes 0537T, 0538T, and 
0539T. We will continue to evaluate and monitor our payment for CAR T-
cell therapies.
    Comment: We note that commenters were supportive of the decision to 
continue the assignment of status indicator ``S'' (Procedure or 
Service, Not Discounted When Multiple) to CPT code 0540T.
    Response: We thank commenters for their support and are finalizing 
our proposal to maintain status indicator ``S'' for CPT code 0540T.
    Comment: Some commenters recommended CMS evaluate modifications to 
CAR T-cell payments for future rule making years, including strategies 
such as creating a new statutory benefit category for cell and gene 
therapies and value-based payment. Specifically, commenters suggested 
value-based payments could include milestone-based payments over time, 
indication-based pricing or combination-based pricing.
    Response: We thank commenters for their feedback. Currently, the 
existing CAR T-cell therapies on the market were approved as biologics 
and, therefore, provisions of the Medicare statute providing for 
payment for biologicals apply. In regards to the creation of a new 
statutory benefit category, that is out of the scope of existing CMS 
statutory authority.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal to assign status indicator ``B'' to CPT 
codes 0537T, 0538T, and 0539T for CY2020. Additionally, we are 
continuing our policy from CY2019 to assign status indicator ``S'' to 
CPT code 0540T for CY2020. Tables 20 and 21 below show the final SI and 
APC assignments for HCPCS codes Q2041, Q2042, 0537T, 0538T, 0539T, and 
0540T for CY 2020. We refer readers to Addendum B to this final rule 
with comment period for the payment rates for all codes reportable 
under the OPPS. Addendum B is available via the internet on the CMS 
website. In addition, we refer readers to Addendum D1 to this final 
rule with comment period for the complete list of the OPPS payment 
status indicators and their definitions for CY2020.
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[[Page 61234]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.035

7. Colonoscopy and Sigmoidoscopy With Endoscopic Mucosal Resection 
(EMR) (APC 5313)
    For CY 2020, we proposed to continue to assign CPT codes 45349 and 
45390 to APC 5312 (Level 2 Lower GI Procedures), with a proposed 
payment rate of $1,024.08. The long descriptors and proposed SI and APC 
assignments for both codes can be found in Table 22 below.
    Comment: A commenter believed that the two procedures are different 
from the other procedures currently assigned to APC 5312, and stated 
they are more similar to these procedures that are assigned to APC 
5313:
     46610 (Anoscopy; with removal of single tumor, polyp, or 
other lesion by hot biopsy forceps or bipolar cautery);
     46612 (Anoscopy; with removal of multiple tumors, polyps, 
or other lesions by hot biopsy forceps, bipolar cautery or snare 
technique); and
     46615 (Anoscopy; with ablation of tumor(s), polyp(s), or 
other lesion(s) not amenable to removal by hot biopsy forceps, bipolar 
cautery or snare technique) where lesions are being removed by methods 
other than just the snare wire technique.

Based on clinical and resource homogeneity, the commenter requested a 
reassignment from APC 5312 to APC 5313 (Level 3 Lower GI Procedures), 
which had a proposed payment rate of $2,512.28, for CPT code 45349 and 
45390
    Response: Upon review of data available for this final rule with 
comment period, we agree with the commenter that the most appropriate 
assignment for both codes is APC 5313. Based on the latest hospital 
outpatient claims data used for this final rule with comment period, 
our analysis supports the reassignment for the codes to APC 5313. 
Specifically, our analysis of the claims data show a geometric mean 
cost of approximately $1,941 for CPT code 45349 based on 386 single 
claims (out of 387 total claims), and a geometric mean cost of about 
$2,039 for CPT code 45390 based on 10,212 single claims (out of 
10,246). In both instances, the geometric mean cost for the codes are 
most compatible with APC 5313, whose geometric mean cost is 
approximately $2,294, compared to APC 5312, whose geometric mean cost 
is about $983. We believe that maintaining both codes in APC 5312 would 
underpay for the procedures. Therefore, we are reassigning the codes 
from APC 5312 to APC 5313 for CY 2020.
    In summary, after consideration of the public comment, we are 
finalizing our proposal with modification, and revising the APC 
assignment for 45349 and 45390 from APC 5312 to APC 5313 for CY 2020. 
Table 22 lists the final SI and APC assignments for the two codes. The 
final CY 2020 payment rate for the codes can be found in Addendum B to 
this final rule with comment period. In addition, we refer readers to 
Addendum D1 of this final rule with comment period for the status 
indicator (SI) meanings for all codes reported under the OPPS. Both 
Addendum B and D1 are available via the internet on the CMS website.
    As we do every year, we will reevaluate the APC assignment for CPT 
codes 45349 and 45390 in the next rulemaking cycle. We remind hospitals 
that we review, on an annual basis, the APC assignments for all 
services and items paid under the OPPS based on the latest claims data 
available to us.

[[Page 61235]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.036

8. Coronary Computed Tomographic Angiography (CCTA) (APC 5571)
    For CY 2020, we proposed to continue to assign CPT codes 75572, 
75573, and 75574 to APC 5571 (Level 1 Imaging with Contrast) with a 
proposed payment rate of $179.91. The long descriptors and proposed 
status indicator (SI) and APC assignments for the codes can be found in 
Table 23 below.
    Comment: Many commenters expressed concern with the decreased 
reimbursement for the codes and stated that the proposed payment rate 
underestimates the resources necessary to provide the service. They 
noted this is the third consecutive year of decreased reimbursement for 
cardiac CT. Some commenters added that the exams described by CPT codes 
75572, 75573, and 75574 require more resources than the contrast-
enhanced studies in APC 5571 because they require more time, are 
performed by highly trained technologists, involve higher risk 
patients, require administration of vasoactive medications, and require 
close supervision of patients during and after the procedure. A 
commenter urged CMS to reassign the codes to a higher paying APC that 
is more resource intensive and includes procedures that share similar 
clinical characteristics, such as APC 5572 (Level 2 Imaging with 
Contrast), which had a proposed payment rate of $373.45, or APC 5573 
(Level 3 Imaging with Contrast), which had a proposed payment rate of 
$682.96. Other commenters specifically requested a reassignment to APC 
5573 based on clinical and resource homogeneity to these services that 
are assigned to the APC: Stress cardiac magnetic resonance imaging (CPT 
code 75563), stress echocardiography (HCPCS codes C8928, C8930), and 
nuclear SPECT MPI (CPT codes 78451, 78452). One commenter recommended 
the reassignment of CPT code 75574 to APC 5191 (Level 1 Endovascular 
Procedures) with a proposed payment rate of $2,899.34 and believed the 
service is very similar to a cardiac catheterization procedure that is 
described by CPT code 93455 (Catheter placement in coronary artery(s) 
for coronary angiography, including intraprocedural injection(s) for 
coronary angiography, imaging supervision and interpretation; with 
catheter placement(s) in bypass graft(s) (internal mammary, free 
arterial, venous grafts) including intraprocedural injection(s) for 
bypass graft angiography). This same commenter suggested that the less-
intensive CPT codes 75572 and 75573 be reassigned to APC 5572.
    Response: CPT codes 75572, 75573, and 75574 were effective January 
1, 2010, and prior to that they were described by Category III CPT 
codes from January 1, 2006 through December 31, 2009; therefore, we 
have many years of claims data associated with these services. For this 
final rule with comment period, based on claims submitted between 
January 1, 2018 through December 30, 2018, that were processed on or 
before June 30, 2019, our analysis of the latest claims data for this 
final rule supports maintaining CPT codes 75572, 75573, and 75574 in 
APC 5571. Specifically, our claims data show a geometric mean cost of 
approximately $159 for CPT code 75572 based on 12,299 single claims 
(out of 23,902 total claims), $185 for CPT code 75573 based on 323 
single claims (out of 466 total claims), and $196 for CPT code 75574 
based on 25,434 single claims (out of 40,219 total claims). Because the 
geometric mean costs for the CCTA codes range are between $159 and 
$196, we believe it would be inappropriate to reassign the codes to 
these suggested APCs because their geometric mean costs are 
significantly higher:
     APC 5572 (with geometric mean cost of about $359)
     APC 5573 (with a geometric mean cost of approximately 
$660)
     APC 5191 (with a geometric mean cost of about $2,788)
    In our analysis to determine the cause of the decreased payment 
rates for the last several years, we also reviewed our claims data to 
determine whether changes in payment for certain computed tomography 
(CT) services impacted the OPPS payment rates. Specifically, section 
218(a)(1) of the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. 
L. 113-93) amended section 1834 of the Act by establishing a new 
subsection 1834(p). Effective for services furnished on or after 
January 1, 2016, section 1834(p) of the Act reduces payment for the 
technical component (TC) of applicable CT services paid under the MPFS 
and applicable CT services paid under the OPPS, with a 5-percent 
reduction required in 2016 and a 15-percent reduction required in 2017 
and subsequent years. The applicable CT services are identified by 
HCPCS codes 70450 through 70498; 71250 through 71275; 72125 through 
72133; 72191 through 72194; 73200 through 73206; 73700 through 73706; 
74150 through 74178; 74261 through 74263; and 75571 through 75574 (and 
any succeeding codes) for services furnished using equipment that does 
not meet each of the attributes of the National Electrical 
Manufacturers Association (NEMA) Standard XR-29-2013, entitled 
``Standard Attributes on CT Equipment Related to Dose Optimization and 
Management.''
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70470), we established a new ``CT'' modifier to be used on claims that 
include CT services furnished using equipment that does not meet each 
of the attributes of NEMA Standard XR-29-2013. Hospitals are required 
to report the ``CT'' modifier on claims for CT scans described by any 
of the HCPCS codes we identified (and any

[[Page 61236]]

successor codes) that are furnished on non-NEMA Standard XR-29-2013-
compliant CT scanners. The use of this modifier results in the 
applicable payment reduction for the CT service, as specified under 
section 1834(p) of the Act.
    Based on our analysis, we observed declining use of the CT modifier 
in both billing volume and the number of providers using the modifier 
over the past several years. Further, we note that the payment 
reduction required by section 1834(p), as amended by section 218(a)(1) 
of PAMA, does not directly affect the geometric mean costs under the 
OPPS, because we do not use payment rates to establish CCRs, rather we 
use the charges submitted by hospitals on claims and costs estimated 
through applying the cost report CCRs for modeling purposes. The 
application of the payment reductions associated with the CT modifier 
only occurs after the prospective OPPS payments are already calculated.
    Comment: Some commenters recommended the establishment of a new 
cost center specific to CCTA. They noted that hospitals currently do 
not submit any cost center data for cardiac CT services.
    Response: We thank the commenters for their suggestion. CMS is 
currently reviewing non-standard cost centers used frequently in the 
Medicare cost report in order to establish additional standardized 
reporting. We will consider the establishment of a new cost center 
specific to cardiac CT services in our review.
    In summary, after consideration of the public comments and after 
our analysis of the latest claims data, we are finalizing our proposal, 
without modification, to assign CPT codes 75572, 75573, and 75574 to 
APC 5571 for CY 2020. Table 23 lists the final SI and APC assignments 
for the three codes. The final CY 2020 payment rate for the codes can 
be found in Addendum B to this final rule with comment period (which is 
available via the internet on the CMS website).
    As we do every year, we will reevaluate the APC assignment for CPT 
codes 75572, 75573, and 75574 for the next rulemaking cycle. We remind 
hospitals that we review, on an annual basis, the APC assignments for 
all services and items paid under the OPPS based on the latest claims 
data.
[GRAPHIC] [TIFF OMITTED] TR12NO19.037


[[Page 61237]]


9. Deep Brain Stimulation (DBS) Programming (APC 5742)
    In CY 2018, the DBS programming codes were described by CPT code 
95978 (first 60 minutes), which was assigned to APC 5742, with a 
payment of $115.18, and CPT code 95979 (each additional 30 minutes), 
which was assigned to SI ``N'' to indicate that the code is packaged 
since it is an add-on code. For CY 2019, the CPT Editorial Panel 
deleted CPT code 95978 and replaced it with CPT code 95983 (first 15 
minutes) effective January 1, 2019. Similarly, CPT code 95979 was 
deleted and replaced with CPT code 95984 (each additional 15 minutes) 
effective January 1, 2019. As a result of this coding change, we 
assigned the 15-minute CPT code 95983 to APC 5741 (Level 1 Electronic 
Analysis of Devices) with a payment rate of $37.16, and assigned CPT 
code 95984 to ``N'' to indicate that the code is packaged because it 
describes an add-on service, which is similar to the SI for its 
predecessor code (CPT code 95979). Table 24 below list the long 
descriptors and proposed SI and APC assignments for CPT codes 95983 and 
95984.
    At the August 21, 2019 HOP Panel Meeting, a presenter requested 
that the 15-minute CPT code 95983 be reassigned to APC 5742. The 
presenter added that the cost of providing the service from 2018 to 
2019 has not changed but the reimbursement has reduced the hospital 
payment by about $100. The presenter requested an APC modification for 
CPT code 95983 from APC 5741 to APC 5742 so that hospitals receive 
adequate payment for providing the service. Based on the information 
presented at the meeting, the HOP Panel recommended a reassignment to 
APC 5742 for CPT code 95983. Specifically, the Panel recommended that 
``CMS move HCPCS code 95983, Electronic analysis of implanted 
neurostimulator pulse generator/transmitter (e.g., contact group[s], 
interleaving, amplitude, pulse width, frequency [hz], on/off cycling, 
burst, magnet mode, dose lockout, patient selectable parameters, 
responsive neurostimulation, detection algorithms, closed loop 
parameters, and passive parameters) by physician or other qualified 
health care professional; with brain neurostimulator pulse generator/
transmitter programming, first 15 minutes face-to-face time with 
physician or other qualified health care professional, to APC code 
5472, Level II Electronic Analysis of Devices, if the final data that 
are available in time for consideration of the Final Rule are 
consistent with preliminary data.''
    For CY 2020, we proposed to continue to assign CPT code 95983 to 
APC 5741 (Level 1 Electronic Analysis of Devices) with a proposed 
payment rate of $36.81. In addition, we proposed to continue to assign 
CPT code 95984 to status indicator (SI) ``N'' to indicate that the code 
is an add-on that is packaged and payment for it is included in the 
primary service. In this case, the payment for the add-on code is 
included in CPT code 95983.
    Comment: Several commenters requested the reassignment of CPT code 
95983 to APC 5742. One commenter stated that the assignment of the 
primary CPT code 95983 to the lower level APC 5741 is not appropriate 
because the overall time and resources expended by a hospital when 
furnishing this service in the HOPD setting remains the same, even if 
the units are billed differently. This same commenter indicated that, 
based on the coding descriptor for the replacement codes with the 
primary service described as the first 15-minutes and the secondary 
service as each additional 15-minutes, hospitals will continue to 
receive a single line-item payment for the service, with the payment 
for the add-on CPT code packaged into it, regardless of the number of 
units billed. Another commenter stated that reassigning the code from 
APC 5741 to APC 5742 will have no effect on the geometric mean cost of 
either APC. Another commenter requested the reassignment based on the 
geometric mean cost of approximately $109 for the predecessor code (CPT 
code 95978) and the Panel's recommendation at the August 19, 2019 HOP 
Panel Meeting.
    Response: As noted above, the predecessor CPT code 95978 described 
a 60-minute service, while the replacement code--CPT code 95983--
describes a 15-minute service. Based on the new time specified in the 
descriptor for CPT code 95983, we believed that assigning the 
replacement code to APC 5741 was appropriate. However, at the August 
21, 2019 HOP Panel meeting, the presenter indicated that the service of 
providing DBS programming during 2018 and 2019 are the same, but 
because of the coding change that packages any service after each 
additional 15 minutes, the maximum payment that a hospital would 
receive for the service is a single unit of the code. The presenter 
recommended a change in the APC assignment to APC 5742 so that 
hospitals receive adequate payment for the service based on the coding 
structure of the replacement codes.
    As recommended by the HOP Panel, we reviewed the claims data 
associated with the predecessor code (CPT code 95978). Based on the 
latest hospital outpatient claims data used for this final rule with 
comment period, our analysis reveals a geometric mean cost of 
approximately $109 for the code, which is consistent with the geometric 
mean cost of about $111 for APC 5742 compared to APC 5741 whose 
geometric mean cost is about $35. Based on the information presented at 
the HOP Panel Meeting, the Panel's recommendation, as well as the final 
rule claims data, we agree with the commenters that APC 5741 may not 
adequately reflect the resources to provide the service described by 
CPT code 95983 and are, therefore, modifying the assignment for CPT 
code 95983 to APC 5742.
    In summary, after consideration of the public comments and the 
presentation at the August 21 HOP Panel Meeting, we are finalizing our 
proposal, with modification, and revising the APC assignment for CPT 
code 95983 to APC 5742 for CY 2020. Table 24 list the final SI and APC 
assignments for CPT code 95983 and 95984. The final CY 2020 payment 
rate for CPT code 95983 can be found in Addendum B to this final rule 
with comment period. In addition, we refer readers to Addendum D1 of 
this final rule with comment period for the status indicator (SI) 
meanings for all codes reported under the OPPS. Both Addendum B and D1 
are available via the internet on the CMS website.
    As we do every year, we will reevaluate the APC assignment for CPT 
code 95983 for the next rulemaking cycle. We remind hospitals that we 
review, on an annual basis, the APC assignments for all services and 
items paid under the OPPS.
BILLING CODE 4120-01-P

[[Page 61238]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.038


[[Page 61239]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.039

BILLING CODE 4120-01-C
10. Extracorporeal Shock Wave Lithotripsy (ESWL) (APC 5374)
    For the CY 2019 OPPS/ASC final rule, we reviewed all of the 
procedures assigned to the Urology Procedures APCs, specifically, APCs 
5371 through 5377, and made some modifications to more appropriately 
reflect the resource costs and clinical characteristics of the services 
within each APC grouping. Specifically, we revised the APC assignment 
of the procedures assigned to the family of Urology APCs to more 
appropriately reflect a prospective payment system that is based on 
payment groupings and not code-specific payment rates, while 
maintaining clinical and resource homogeneity. As we stated in the CY 
2019 OPPS/ASC final rule (83 FR 58900), this modification was based on 
public comments we received in response to the CY 2019 OPPS/ASC 
proposed rule on the proposed APC assignments for certain urology 
procedures.
    We received many comments on the APC reassignment for the 
extracorporeal shock wave lithotripsy (ESWL) procedure, which is 
described by CPT code 50590 (Lithotripsy, extracorporeal shock wave), 
in the CY 2019 OPPS/ASC final rule with comment period. The commenters 
indicated there was no discussion in the preamble on the reassignment 
of the code from APC 5375 (Level 5 Urology and Related Services) to APC 
5374 (Level 4 Urology and Related Services), and they disagreed with 
the revision and believed that APC 5375 was the more appropriate 
assignment for the code. We remind the commenters that, as we have 
stated in every OPPS/ASC proposed and final rules, we review, on an 
annual basis, the APC assignments for all services and items paid under 
the OPPS based on our analysis of the latest claims data. Based on 
updated claims data for the final rule for CY 2019, we found that the 
geometric mean cost of approximately $3,265 for CPT code 50590 did not 
support its continued assignment to APC 5375, which had a geometric 
mean cost of about $4,055. We believed that we would have significantly 
overpaid for the procedure had we maintained the assignment to APC 
5375. Consequently, we revised the APC assignment for CPT code 50590 to 
APC 5374, which had a geometric mean cost of approximately $2,952 for 
CY 2019.
    We note that the SI and APC assignment for CPT code 50590 were 
subject to comment in the CY 2019 OPPS/ASC proposed rule but not in the 
CY 2019 OPPS/ASC final rule with comment period. Nevertheless, we 
received comments on this specific issue in response to the CY 2019 
OPPS/ASC final rule with comment period. Because CPT code 50590 was not 
assigned to comment indicator ``NI'' in the final rule because it was 
not a new code for CY 2019, and therefore, the comments received 
related to this code

[[Page 61240]]

were out-of-scope. Nonetheless, we discuss above to provide some 
clarity to this issue.
    For CY 2020, as listed in Addendum B to the proposed rule, we 
proposed to maintain the APC assignment for CPT code 50590 to APC 5374 
with a proposed payment rate of $3,059.21.
    Comment: Some commenters requested that we restore the code to APC 
5375 where it had been placed for several years prior to CY 2019. The 
commenters indicated that CPT code 50590 is similar to two ureteroscopy 
with lithotripsy (URSL) procedures that are assigned to APC 5375, 
specifically:
     CPT code 52353 (Cystourethroscopy, with ureteroscopy and/
or pyeloscopy; with lithotripsy (ureteral catheterization is 
included)); and
     CPT code 52356 (Cystourethroscopy, with ureteroscopy and/
or pyeloscopy; with lithotripsy including insertion of indwelling 
ureteral stent (e.g., gibbons or double-j type)).
    In addition, some commenters suggested that placing the three 
procedures in two separate APCs may create an unintended consequence of 
unplanned admissions to the hospital. Specifically, the commenters 
indicated that if the proposed assignment for CPT code 50590 is 
finalized in APC 5374, while CPT codes 52353 and 52356 are finalized in 
APC 5375, hospitals might discontinue ESWL services (described by CPT 
code 50590) which would make it less accessible to Medicare 
beneficiaries and, ultimately, encourage hospitals to perform more URSL 
procedures, which, according to the commenter, have higher complication 
rates compared to ESWL. These commenters asserted that 90 percent of 
Medicare patients require an indwelling ureteral stent after a URSL 
procedure (described by CPT codes 52353 and 52356), and that the stents 
lead to infection, visits to the ER, and unplanned admissions. Hence, 
the commenters requested an APC reassignment to APC 5375 for CPT code 
50590 to eliminate any unintended consequences.
    Further, the commenters noted that because of the capital equipment 
expense associated with purchasing ($500,000) and maintaining ($65,000 
per year) a lithotripter, hospitals rarely own their own lithotripter 
and generally contract under arrangement with suppliers to provide the 
service. Alternatively, the commenter asserted that all URSL equipment 
is owned by the hospitals furnishing the service and that the hospitals 
are therefore able to train clinicians on the equipment.
    Response: As discussed above, we revised the APC assignment for CPT 
code 50590 based on our analysis of the latest claims data for the CY 
2019 final rule. For this final rule with comment period, which is 
based on claims submitted between January 1, 2018 through December 30, 
2018, that were processed on or before June 30, 2019, our findings do 
not support a reassignment to APC 5375. Instead, our analysis supports 
retaining CPT code 50590 in APC 5374. Specifically, our data reveal a 
geometric mean cost of approximately $3,247 for CPT code 50590 based on 
40,009 single claims (out of 40,351 total claims). The geometric mean 
cost for APC 5374 is about $2,953 while APC 5375 shows a geometric mean 
cost of approximately $4,140. Based on the geometric mean cost, we 
believe that maintaining CPT code in APC 5374 is more appropriate than 
reassigning it to APC 5375, based on the geometric mean cost of CPT 
code 50590 relative to that of APCs 5374 and 5375.
    In addition, we note that the resource costs associated with the 
URSL procedures (CPT codes 52353 and 52356) are higher than that of 
ESWL (CPT code 50590). Specifically, the geometric mean cost for CPT 
code 50590 for CY 2020 is $3,247 while the geometric mean cost for CPT 
codes 52353 and 52356 are $3,740 and $4,361, respectively. The 
geometric mean cost of $3,247 for CPT code 50590 falls within APC 5374, 
whose geometric mean costs for the significant procedures range between 
$2,495 (for CPT code 52351) and $3,472 (for CPT code 52318), while the 
geometric mean costs of $3,740 and $4,361 for CPT codes 52353 and 
52356, respectively, fall within APC 5375, whose geometric mean costs 
for the significant procedures range between $3,575 (for CPT code 
52630) and $5,655 (for CPT code 55875). Although all three procedures 
are used for the treatment of kidney stones, we disagree that CPT codes 
50590, 52353, and 52356 are similar based on resource and clinical 
homogeneity. With regards to unintended consequences as a result of the 
assignment to APC 5374 for CPT code 50590, we rely on physicians to 
provide appropriate care based on the needs of their patients. While 
the payment rate for services assigned to APC 5375 is higher than that 
of APC 5374, it is based on the relative resources associated with 
furnishing the services assigned to that APC. While each of the 
lithotripsy procedures have some clinical similarity, as the commenters 
pointed out, they have clinical differences. While the commenters 
expected that these clinical differences may result in similar or 
higher resources for CPT code 50590 compared to CPT codes 52353 and 
52356, that has not been borne out in the Medicare data we have 
available. As we do every year, we will review the claims data 
associated with CPT code 50590 to determine its appropriate APC 
placement for the next rulemaking update.
    Comment: Some commenters suggested, based on their analysis of the 
OPPS Limited Data Sets (LDS) for the CY 2018 OPPS/ASC final rule, the 
CY 2019 OPPS/ASC final rule, and the CY 2020 OPPS/ASC proposed rule, 
that the methodology formula that was supplied with the LDS materials 
was flawed and, therefore, they were unable to validate CMS's 
calculation or the accuracy of the cost data upon which CMS relied to 
determine the payment rates. In addition, these same commenters 
suggested that because hospitals do not generally own lithotripters, 
they would not be surprised if the cost reports for CPT code 50590 were 
inaccurate.
    Response: It is generally not our policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting. We rely on 
hospitals to accurately report the use of HCPCS codes in accordance 
with their code descriptors and CPT and CMS instructions, and to report 
services on claims and charges and costs for the services on their 
Medicare hospital cost report appropriately. We do not specify the 
methodologies that hospitals use to set charges for this or any other 
service. In addition, we state in Chapter 4 of the Medicare Claims 
Processing Manual that ``it is extremely important that hospitals 
report all HCPCS codes consistent with their descriptors; CPT and/or 
CMS instructions and correct coding principles, and all charges for all 
services they furnish, whether payment for the services is made 
separately paid or is packaged'' to enable CMS to establish future 
ratesetting for OPPS services.
    Comment: To pay appropriately for CPT code 50590, some commenters 
suggested adding the cost of a ureteral stent in calculating the 
geometric mean cost since some procedures (less than 20 percent) 
require the device. They noted that the URSL procedure described by CPT 
code 52356 requires the insertion of a ureteral stent that costs 
$609.16.
    Response: Geometric mean costs are determined based on the costs 
reported on the claim. If the CPT code descriptor describes the 
insertion of a device, we would expect the device cost to be packaged 
into the cost of the procedure

[[Page 61241]]

since the charges associated with the device and its insertion should 
be reflected in claims submitted to Medicare. We note that the CPT code 
descriptor for the URSL procedures (CPT codes 52353 and 52356) 
describes the use of stents, consequently, the geometric mean cost for 
the procedures include the packaged cost of the devices. However, the 
CPT code descriptor for the ESWL procedure does not describe the use of 
a ureteral stent, so we disagree that device costs for a ureteral stent 
should be included in CPT code 50590. If a ureteral stent were involved 
in an ESWL procedure, HOPDs should report the CPT code that 
appropriately describes the procedure performed. Moreover, as we have 
stated previously, we rely on HOPDs to accurately report all HCPCS 
codes consistent with their descriptors; CPT and/or CMS instructions 
and correct coding principles, and all charges for all services they 
furnish, whether payment for the services is made separately paid or is 
packaged.
    In summary, after consideration of the public comments and after 
our analysis of the updated claims data for this final rule with 
comment period, we are finalizing our proposal, without modification, 
to continue to assign CPT code 50590 to APC 5374 for CY 2020. The final 
CY 2020 payment rate for the code can be found in Addendum B to this 
final rule with comment period. In addition, we refer readers to 
Addendum D1 of this final rule with comment period for the status 
indicator (SI) meanings for all codes reported under the OPPS. Both 
Addendum B and D1 are available via the internet on the CMS website.
    As always, we will reevaluate the APC assignment for CPT code 50590 
for the next rulemaking cycle. As stated above, we review, on an annual 
basis, the APC assignments for all services and items paid under the 
OPPS.
11. Extravascular Implantable Cardioverter Defibrillator (EV ICD)
    As displayed in Table 25 and in Addendum B to the CY 2020 OPPS/ASC 
proposed rule, we proposed to assign CPT codes 0571T through 0580T to 
status indicator (SI) ``E1'' to indicate that the codes are not payable 
by Medicare when submitted on outpatient claims (any outpatient bill 
type) because the services associated with these codes are either not 
covered by any Medicare outpatient benefit category, are statutorily 
excluded from Medicare payment, or are not reasonable and necessary. 
The codes were listed as 06X0T through and 07X4T (the 5-digit CMS 
placeholder codes) in Addendum B with the short descriptors, and again 
in Addendum O with the long descriptors. We also assigned the codes to 
comment indicator ``NP'' in Addendum B to indicate that they are new 
for CY 2020 and that public comments would be accepted on their 
proposed status indicator assignments. We note that these codes will be 
effective January 1, 2020.
    Comment: A commenter reported that the device associated with these 
codes is in a clinical trial and also received FDA approval with an IDE 
Category B designation. The commenter added that they are currently in 
the process of applying for Medicare national coverage for the clinical 
trial as a Category B IDE study. The commenter requested that we 
crosswalk the new codes to the SIs and APC assignments of comparable 
procedures involving ICD placement so that appropriate hospital 
outpatient payment may be made in the event the Category B IDE study is 
approved for Medicare coverage. The commenter listed the comparable 
codes with the SI and APCs assignments.
    Response: Based on our review, the clinical trial has not met 
Medicare's standards for coverage, nor does it appear on the CMS 
Approved IDE List, which can be found at this CMS website: https://www.cms.gov/Medicare/Coverage/IDE/Approved-IDE-Studies.html. Because 
the clinical trial associated with these codes has not been approved 
for Medicare coverage, we believe we should continue to assign CPT 
codes 0571T through 0580T to status indicator ``E1'' for CY 2020. If 
Medicare approves the clinical trial as a Category B IDE study, we will 
reassess the SI and APC assignments for the codes.
    Therefore, after consideration of the public comment received, we 
are finalizing our proposal without modification for CPT codes 0571T 
through 0580T. The final status indicator assignments for both codes 
are listed in Table 25 below. We refer readers to Addendum D1 of this 
final rule with comment period for the complete list of the OPPS 
payment status indicators and their definitions for CY 2020. Addendum 
D1 is available via the internet on the CMS website.
BILLING CODE 4120-01-P

[[Page 61242]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.040


[[Page 61243]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.041

BILLING CODE 4120-01-C
12. Genicular and Sacroiliac Joint Nerve Injections/Procedures (APCs 
5442 and 5431)
    For CY 2020, the CPT Editorial Panel established four new codes to 
describe genicular and sacroiliac joint nerve injections and 
procedures. As listed in Table 26 below with the long descriptors, and 
also in Addendum B to the CY 2020 OPPS/ASC proposed rule, we proposed 
to assign CPT codes 64451 and 64454 to APC 5442 (Level 2 Nerve 
Injections) with a proposed payment rate of $627.39. We note both CPT 
codes 64451 and 64454 describe therapeutic and/or diagnostic injection 
procedures. We also proposed to assign CPT code 64624 to APC 5443 
(Level 3 Nerve Injections) with a proposed payment rate of $808.58. In 
addition, we proposed to assign CPT code 64625 to APC 5431 (Level 1 
Nerve Procedures) with a proposed payment rate of $1,747.26. CPT codes 
64451, 64454, 64624, and 64625 were listed as 6XX00, 64XX0, 64XX1, and 
6XX01 (the 5-digit CMS placeholder codes), respectively, in Addendum B 
with the short descriptors, and again in Addendum O with the long 
descriptors. We also assigned these codes to comment indicator ``NP'' 
in Addendum B to indicate that the codes are new for CY 2020 and that 
public comments would be accepted on their proposed status indicator 
assignments. We note that these codes will be effective January 1, 
2020.
    Comment: Several commenters disagreed with the APC assignment for 
CPT code 64624 (shown in the proposed rule with placeholder code 64XX1) 
and suggested that it would be more appropriate, based on clinical 
homogeneity, to assign it to APC 5431, where similar radiofrequency 
ablation procedures are assigned, specifically, CPT codes 64633 
(Destruction by neurolytic agent, paravertebral facet joint nerve(s), 
with imaging guidance (fluoroscopy or ct); cervical or thoracic, single 
facet joint), 64635 (Destruction by neurolytic agent, paravertebral 
facet joint nerve(s), with imaging guidance

[[Page 61244]]

(fluoroscopy or ct); lumbar or sacral, single facet joint), and new CPT 
code 64625. Several commenters reported that, unlike CPT code 64640 
(Destruction by neurolytic agent; other peripheral nerve or branch) 
which only involves one nerve, the procedure described by CPT code 
64624 requires more expensive medical equipment and supplies and 
involves the destruction of three nerves. Most commenters agreed that 
the procedure is not a nerve injection. One commenter explained that 
the procedure describes the destruction of three nerve branches at 
three locations in the knee, and the destruction is typically done via 
radiofrequency ablation similar to those procedures described by CPT 
codes 64633 and 64635 that are assigned to APC 5431. Another commenter 
suggested that reassigning CPT code 64624 to APC 5431, similar to new 
CPT code 64625, would provide adequate reimbursement for the procedure 
and enable providers to offer patients with chronic knee pain an 
effective alternative to systemic opioids.
    Response: After consideration of the public comments, and based on 
the characteristics of the procedure, as well as input from our medical 
advisors, we believe that it would be appropriate to revise the APC 
assignment for CPT code 64624 from APC 5443 to APC 5431. We agree with 
the commenters that this new procedure shares similar characteristics 
with CPT codes 64633 and 64635 that are assigned to APC 5431.
    Comment: A commenter agreed with the proposed APC assignments for 
CPT codes 64451, 64454, and 64425.
    Response: We thank the commenter for their feedback and are 
finalizing the APC assignments for these codes.
    In summary, after consideration of the public comments, we are 
finalizing our proposal with modification. Specifically, we are 
finalizing the APC assignments for CPT codes 64451, 64454, and 64425 to 
the APCs listed in Table 26. In addition, we are revising the APC 
assignment for CPT code 64624 from APC 5443 to APC 5431. Table 26 lists 
the long descriptors for the codes, as well as the final APC and SI 
assignments for all four codes. The final CY 2020 payment rate for the 
codes can be found in Addendum B to this final rule with comment 
period. In addition, we refer readers to Addendum D1 of this final rule 
with comment period for the status indicator (SI) meanings for all 
codes reported under the OPPS. Both Addendum B and D1 are available via 
the internet on the CMS website.
    As always, we will reevaluate the APC assignment for these codes 
once we have claims data. We review, on an annual basis, the APC 
assignments for all services and items paid under the OPPS based on the 
latest claims data that we have available.

[[Page 61245]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.042

13. FemBloc[supreg] and FemChec[supreg]
    For CY 2020, the CPT Editorial Panel established two new codes to 
describe FemBloc (0567T) and FemChec (0568T). As listed in Table 27 
with the long descriptors, and in Addendum B to the CY 2020 OPPS/ASC 
proposed rule, we proposed to assign CPT code 0567T to APC 5414 (Level 
4 Gynecologic Procedures) and status indicator (SI) ``J1'' (Hospital 
Part B services paid through a comprehensive APC) with a payment rate 
of $2,564.60. In addition, we proposed to assign new CPT code 0568T to 
APC 5732 (Level 2 Minor Procedures) and status indicator ``Q1'' 
(conditionally packaged) with a payment rate of $34.33. The codes were 
listed as 05X1T and 05X2T (the 5-digit CMS placeholder codes), 
respectively, in Addendum B with the short descriptors, and again in 
Addendum O with the long descriptors. We also assigned these codes to 
comment indicator ``NP'' in Addendum B to indicate that the codes are 
new for CY 2020 and that public comments would be accepted on their 
proposed status indicator assignments. We note these codes will be 
effective January 1, 2020.
    Comment: A medical technology company disagreed with the proposed 
APC assignment for CPT code 0567T and suggested that we reassign the 
procedure code from APC 5414 to APC 5415 (Level 5 Gynecologic 
Procedures) with a proposed payment rate of $4,426.45. The commenter 
noted that the single-use, disposable device associated with the code 
contains two deployable and retractable balloon catheters and a 
biopolymer that retails for $1,800. The commenter believes the 
procedure more appropriately fits in APC 5415 based on its similarity 
to CPT code 58565 (Hysteroscopy, surgical; with bilateral fallopian 
tube cannulation to induce occlusion by placement of permanent 
implants). Specifically, the commenter explained that in both 
procedures, specifically CPT codes

[[Page 61246]]

58565 and 0567T, the entrances to the fallopian tubes are accessed and 
a device is placed that causes permanent occlusion of the tubes.
    Response: Based on our findings associated with FemBloc, the 
procedure is currently in clinical trial with an estimated study 
completion date of September 2022 (ClinicalTrials.gov Identifier: 
NCT03067272). Because the FemBloc device has not received FDA approval, 
we believe that we should reassign CPT code 0567T to status indicator 
``E1'' to indicate that the code is not payable by Medicare when 
submitted on outpatient claims (any outpatient bill type). If FDA 
approves the device, we will reassess the code and determine the 
appropriate SI and APC assignments.
    Comment: The same commenter for FemBloc also requested an APC 
modification for the code associated with FemChec. Specifically, the 
commenter requested the reassignment for CPT code 0568T from APC 5732 
(Level 2 Minor Procedures) to APC 5523 (Level 3 Imaging without 
Contrast) with a proposed payment rate of $231.28. The commenter 
reported that the code is more clinically related to one of the 
procedures assigned to APC 5523, specifically, CPT code 76831 (Saline 
infusion sonohysterography (sis), including color flow doppler, when 
performed). Both CPT codes 0568T and 76831 require ultrasound and 
saline to study the uterus.
    Response: Our findings reveal that the clinical study associated 
with FemBloc also applies to FemChec. Based on the clinical study 
(ClinicalTrials.gov Identifier: NCT03067272), FemChec will be used with 
FemBloc. Because the FemBloc device has not received FDA approval, we 
believe that we should reassign CPT code 0568T to status indicator 
``E1'' to indicate that the code is not payable by Medicare when 
submitted on outpatient claims (any outpatient bill type). If FDA 
approves FemBloc, we will reassess the code associated with FemChec and 
determine the appropriate OPPS SI and APC assignments for CPT code 
0568T.
    Therefore, after consideration of the public comments, we are 
revising the SI and APC assignments for CPT codes 0567T and 0568T. The 
final status indicator assignments for both codes are listed in Table 
27 below. We refer readers to Addendum D1 of this final rule with 
comment period for the complete list of the OPPS payment status 
indicators and their definitions for CY 2020. Addendum D1 is available 
via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR12NO19.043

14. Hemodialysis Arteriovenous Fistula (AVF) Procedures (APC 5194)
    For CY 2019, based on two new technology applications received by 
CMS for hemodialysis arteriovenous fistula creation, CMS established 
two new HCPCS codes to describe the procedures. Specifically, CMS 
established HCPCS code C9754 for the Ellipsys[supreg] System and C9755 
for the WavelinQ\TM\ System effective January 1, 2019. Both HCPCS codes 
were assigned to APC 5193 (Level 3 Endovascular Procedures) with a 
payment rate of 9,669.04 for CY 2019.
    At the August 21, 2019 HOP Panel Meeting, a presenter requested 
that we reassign the WavelinQ procedure to APC 5194. The presenter 
indicated that the APC payment associated with HCPCS code C9755 is 
inadequate to cover the cost of the procedure. According to the 
presenter, the conservative cost estimate for the procedure is over 
$12,500. The presenter also reported that their HOPD facility performed 
35 procedures between October 2018 to July 31, 2019, and the average 
payment for each procedure ranged between $3,410 and $11,247. Based on 
the information presented at the meeting, the HOP Panel made no 
recommendation to CMS on the APC assignment for the WavelinQ procedure.
    For CY 2020, as listed in Table 28 below with the long descriptors 
and proposed SI and APC assignments, we

[[Page 61247]]

proposed to continue to assign HCPCS codes C9754 and C9755 to APC 5193 
with a proposed payment rate of $10,013.25. We received several 
comments related to this proposal. Below are the comments and our 
responses.
    Comment: Several physicians stated that the current payment rate 
does not cover the cost of the procedure and requested the reassignment 
of both HCPCS code C9754 and C9755 to APC 5194 (Level 4 Endovascular 
Procedures) with a proposed payment rate of $16,049.73. A physician 
association explained that the new technologies describe innovative new 
procedures that increase options for dialysis patients to have a 
successful arteriovenous fistula for dialysis access, and that the 
procedures are important in making fistula access possible for patients 
that either refuse open surgery or where skilled surgeons are not 
readily available. However, they expressed concern that the procedures 
may not be available to patients if the costs are higher than the 
payment, and requested that CMS carefully examine the most recent 
claims to determine if they should be reclassified to APC 5194.
    Response: After consideration of the public comments received and 
based on input from our medical advisors, as well as our review of the 
latest claims data available to us, we believe that we should revise 
the APC assignment for HCPCS code C9754 and C9755 to APC 5194 for CY 
2020.
    Comment: A medical device company requested an APC reassignment 
based on data presented at the August 21, 2019 HOP Panel Meeting. They 
indicated that their analysis of the 1Q2019 Medicare Limited Data Set 
(LDS) Standard Analytic File (SAF) for HCPCS code C9755 showed a 
geometric mean cost of $12,960, and suggested reassigning the code to 
APC 5194. They also reminded CMS that the reassignment to APC 5194 is 
in line with various HHS initiatives, such as the HHS Initiative on 
``Advancing American Kidney Health'' since the payment rate for the 
procedure would improve access to the service.
    Response: As stated above, we believe that it is appropriate to 
revise the APC assignment for HCPCS code C9754 and C9755. Consequently, 
we are reassigning both codes from APC 5193 to APC 5194 for CY 2020.
    Comment: A commenter representing 13 different health systems 
suggested that CMS adopt the recommendation they made at the August 21, 
2019 HOP Panel Meeting. Specifically, they recommended the reassignment 
of HCPCS code C9755 from APC 5193 to APC 5194.
    Response: Although there was a presentation at the August 21, 2019 
meeting on HCPCS code C9755 with a request to reassign the code to APC 
5194, the HOP Panel made no recommendation to CMS. We note that the 
August 21, 2019, HOP Panel recommendations are posted online and can be 
found on this CMS website: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html. Although the 
HOP Panel made no recommendation to CMS, based on the proposed rule 
comments, and our review of the issue, we are revising the APC 
assignment for HCPCS code C9755 to APC 5194 for CY 2020.
    Comment: A commenter stated that it was brought to their attention 
that other comments related to the WavelinQ procedure may urge CMS to 
revisit the APC assignment for HCPCS code C9755. The commenter 
indicated that if CMS were to revisit the issue and reassign the APC 
assignment for the WavelinQ procedure, it should also apply the same 
consideration to the Ellipsys procedure (C9754).
    Response: We agree that the services described by HCPCS codes C9754 
and C9755 are clinically similar and, therefore, we are revising the 
APC assignment for both HCPCS code C9754 and C9755 to APC 5194 for CY 
2020. However, we note that claims data upon which we could determine 
the geometric mean costs associated with each procedure are not yet 
available for ratesetting but once such data become available, we will 
be able to determine whether the two services are similar in terms of 
resources. In addition, as has been our practice since the 
implementation of the OPPS in 2000, we review, on an annual basis, the 
APC assignments for the procedures and services paid under the OPPS. 
Consequently, we will review the cost data associated with HCPCS codes 
C9754 and C9755 for the next annual rulemaking.
    In summary, after consideration of the public comments, we are 
finalizing our proposal with modification. Specifically, we are 
reassigning HCPCS codes C9754 and C9755 from APC 5193 to APC 5194 for 
CY 2020. The final CY 2020 payment rate for the codes can be found in 
Addendum B to this final rule with comment period. In addition, we 
refer readers to Addendum D1 of this final rule with comment period for 
the status indicator (SI) meanings for all codes reported under the 
OPPS. Both Addendum B and D1 are available via the internet on the CMS 
website. Table 28 lists the final SI and APC assignments for HCPCS 
codes C9754 and C9755.

[[Page 61248]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.044

15. Hemodialysis Duplex Studies (APCs 5522 and 5523)
    For CY 2020, the CPT Editorial Panel established two new codes to 
describe hemodialysis duplex studies, specifically, CPT codes 93985 and 
93986. The new codes replace HCPCS code G0365 (Vessel mapping of 
vessels for hemodialysis access (services for preoperative vessel 
mapping prior to creation of hemodialysis access using an autogenous 
hemodialysis conduit, including arterial inflow and venous outflow)). 
HCPCS code G0365 was assigned to status indicator ``D'' in the proposed 
rule to indicate that the code would be deleted on December 31, 2019.
    As listed in Table 29 below with the long descriptors, and also in 
Addendum B to the CY 2020 OPPS/ASC proposed rule, we proposed to assign 
CPT code 93985 and 93986 to APC 5522 (Level 2 Imaging without Contrast) 
with a proposed payment rate of $111.04. The codes were listed as 93X00 
and 93X01 (the 5-digit CMS placeholder codes), respectively, in 
Addendum B with the short descriptors, and again in Addendum O with the 
long descriptors. We also assigned these codes to comment indicator 
``NP'' in Addendum B to indicate that the codes are new for CY 2020 and 
that public comments would be accepted on their proposed status 
indicator assignments. We note that these codes will be effective 
January 1, 2020.
    Comment: Several commenters recommended a reassignment of CPT code 
93985 from APC 5522 to APC 5523 (Level 3 Imaging without Contrast) with 
a proposed payment rate of $231.28. They indicated that the code 
represents a bilateral study, and as such, should be assigned to APC 
5523 with similar bilateral/complete duplex studies.
    Response: Based on the public comments that we received, our review 
of the procedure associated with CPT code 93985 and advice from our 
medical advisors, we agree that the code fits more appropriately in APC 
5523 based on its clinical homogeneity and resource use to the other 
procedures in the APC. Therefore, we are reassigning the code to APC 
5523. We received no comments on CPT code 93986. Consequently, we are 
finalizing its APC assignment to APC 5522.
    In summary, after consideration of the public comments, we are 
finalizing our proposal with modification. Specifically, we are 
finalizing our proposal for CPT code 93986 to APC 5522, and reassigning 
CPT code 93985 to APC 5523. Table 29 below lists the long descriptors 
for the three codes and the final SI and APC assignments for CY 2020. 
The final CY 2020 OPPS payment rates can be found in Addendum B of this 
final rule with comment period. In addition, we refer readers to 
Addendum D1 of this final rule with comment period for the status 
indicator meanings for all codes reported under the OPPS for CY 2020. 
Both Addendum B and Addendum D1 are available via the internet on the 
CMS website.

[[Page 61249]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.045

16. Intraocular Procedures (APCs 5491 Through 5494)
    In prior years, CPT code 0308T (Insertion of ocular telescope 
prosthesis including removal of crystalline lens or intraocular lens 
prosthesis) was assigned to the APC 5495 (Level 5 Intraocular 
Procedures) based on its estimated costs. In addition, its relative 
payment weight has been based on its median cost under our payment 
policy for low-volume device-intensive procedures because the APC 
contained a low volume of claims. The low-volume device-intensive 
procedures payment policy is discussed in more detail in section 
III.C.2. of the proposed rule.
    In the CY 2019 OPPS/ASC proposed rule, we proposed to reassign CPT 
code 0308T from APC 5495 to APC 5493 (Level 3 Intraocular Procedures), 
based on the data for two claims available for ratesetting for the 
proposed rule, and to delete APC 5495 (83 FR 37096 through 37097). 
However in the CY 2019 OPPS/ASC final rule with comment period, based 
on updated data on a single claim available for ratesetting for the 
final rule, we modified our proposal and reassigned procedure code CPT 
code 0308T to the APC 5494 (Level 4

[[Page 61250]]

Intraocular Procedures) (83 FR 58917 through 58918). We made this 
change based on the similarity of the estimated cost for the single 
claim of $12,939.75 to that of the APC ($11,427.14). However, this 
created a discrepancy in payments between the OPPS setting and the ASC 
setting in which the ASC payments would be higher than the OPPS 
payments for the same service because of the intersection of the 
estimated cost for the encounter determined under a comprehensive 
methodology within the OPPS and the estimated cost determined under the 
payment methodology for device-intensive services within the ASC 
payment system.
    In reviewing the claims data available for the proposed rule for CY 
2020 OPPS ratesetting, we found several claims reporting the procedure 
described by CPT code 0308T. Based on the claims data, the procedure 
would have a geometric mean cost of $28,122.51 and a median cost of 
$19,864.38. These cost statistics are significantly higher than the 
geometric mean cost of the other procedure assigned to APC 5494, that 
is, the procedure described by CPT code 67027 (Implant eye drug 
system), which has a geometric mean cost of $12,296.27. In addition, if 
we continued to assign the procedure described by CPT code 0308T to APC 
5494 (the Level 4 Intraocular Procedures APC), the discrepancy between 
payments within the OPPS and the ASC payment system would also continue 
to exist. As a result, we proposed to reestablish APC 5495 (Level 5 
Intraocular Procedures) because we believe that the procedure described 
by CPT code 0308T would be most appropriately placed in this APC based 
on its estimated cost. Assignment of the procedure to the Level 5 
Intraocular Procedures APC is consistent with its historical placement 
and would also address the large discrepancy in payment for the 
procedure between the OPPS and the ASC payment system. We note that, 
based on data available for the proposed rule, the proposed payment 
rate for this procedure when performed in an ASC, as discussed in more 
detail in section XIII.D.1.c. of the proposed rule, would be no higher 
than the OPPS payment rate for this procedure when performed in the 
hospital outpatient setting. We will continue to monitor the volume of 
claims data available for the procedure for ratesetting purposes.
    Therefore, for CY 2020, we proposed to reestablish APC 5495 (Level 
5 Intraocular Procedures) and reassign the procedure described by CPT 
code 0308T from APC 5494 to APC 5495. Under this proposal, the proposed 
CY 2020 OPPS payment rate for the service would be established based on 
its median cost, as discussed in section V.A.5. of the proposed rule, 
because it is a device-intensive procedure assigned to an APC with 
fewer than 100 total annual claims within the APC.
    Comment: Several commenters expressed support for our proposal to 
assign the HCPCS code 0308T to APC 5495 (Level 5 Intracoular 
Procedures).
    Response: We thank commenters for their support.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to assign HCPCS code CPT 
0308T to APC 5495 for the CY 2020 OPPS.
17. Long-Term Electroencephalogram (EEG) Monitoring Services (APCs 
5722, 5723, and 5724)
    For CY 2020, the CPT Editorial Panel deleted four existing long-
term EEG monitoring services, specifically, CPT codes 95950, 95951, 
95953, and 95956, and replaced them with 23 new CPT codes that 
consisted of 10 professional component (PC) codes and 13 technical 
component (TC) codes. As listed in Table 30 below with the long 
descriptors, and also in Addendum B to the CY 2020 OPPS/ASC proposed 
rule, we proposed to assign the 13 technical component codes, 
specifically, CPT codes 95700 through 95716, to either APC 5722 (Level 
2 Diagnostic Tests and Related Services) with a proposed payment rate 
of $256.60 or APC 5723 (Level 3 Diagnostic Tests and Related Services) 
with a proposed payment rate of $486.65. The codes were listed as 95X01 
through and 95X13 (the 5-digit CMS placeholder codes) in Addendum B 
with the short descriptors, and again in Addendum O with the long 
descriptors. In addition, we proposed to assign the 10 professional 
component codes, specifically, CPT codes 95717 through 95726, to status 
indicator ``M'' to indicate that the services are not paid under the 
OPPS since they describe physician services. These codes were listed 
were listed as 95X14 through 95X23 (the 5-digit CMS placeholder codes) 
in Addendum B with the short descriptors, and again in Addendum O with 
the long descriptors. We assigned these 23 codes to comment indicator 
``NP'' in Addendum B to indicate that the codes are new for CY 2020 and 
that public comments would be accepted on their proposed status 
indicator assignments. We note these codes will be effective January 1, 
2020.
    Comment: Many commenters expressed concern with the proposed APC 
assignments for CPT codes 95712, 95713, 95715, and 95716 and stated 
that the proposed payment rates for the codes do not provide adequate 
reimbursement. A commenter indicated that the proposed APC assignments 
for the EEG monitoring services for 2 to 12 hours does not 
appropriately reflect the resources and time required to monitor 
complex epilepsy patients. Several other commenters recommended the 
reassignment of CPT codes 95712 and 95713 to APC 5723 and stated they 
should be paid approximately half the rate of the 24-hour video EEG 
services. These same commenters stated that the reassignment of CPT 
codes 95715 and 95716 to APC 5724, which had a proposed payment rate of 
$920.66, would be appropriate since patients being tested may be 
classified as observation stays and will not be admitted to the 
hospital. The commenters added that these codes were previously 
described by predecessor CPT code 95951 (24 hour VEEG), which was 
assigned to APC 5724 (Level 4 Diagnostic Tests and Related Services).
    Response: With respect to CPT codes 95712 (2-12 hours VEEG with 
intermittent monitoring) and 95713 (2-12 hours VEEG with continuous 
monitoring), we believe that the resources and time associated with 
intermittent monitoring (CPT code 95712) are less than that of 
continuous monitoring (CPT code 95713), and therefore, believe they 
should be assigned to different APCs. Based on input from our medical 
advisors that intermittent monitoring involves checking the patient 
every two hours rather than the full 12 hours, we believe it would be 
appropriate to modify the APC assignment for the continuous monitoring 
code (CPT code 95713) to APC 5723. Applying this same concept to the 
12-24 VEEG technical component codes, we believe that the resources 
associated with the intermittent monitoring code (CPT code 95715) are 
not the same as the continuous monitoring code (CPT code 95716). 
Therefore, we are reassigning the APC assignment for CPT code 95716 to 
APC 5724. Although the commenters indicated that the predecessor code 
for 95715 and 95716 was CPT code 95951, we are uncertain whether the 
predecessor code describes continuous or intermittent monitoring since 
the code descriptor lacks this specificity.
    Comment: Some commenters urged CMS not to finalize the policies 
proposed in the PFS or OPPS proposed rules. They indicated that the 
policies would dramatically reduce reimbursement for EEG and VEEG 
services and instead, suggested that we

[[Page 61251]]

appropriately value these services so that people with epilepsy have 
access and can be diagnosed and treated in a timely manner.
    Response: We believe these commenters did not fully understand our 
APC proposal. Because the existing EEG and VEEG CPT codes will be 
deleted on December 31, 2019, if we do not finalize our proposal for 
the 13 technical codes that will be effective January 1, 2020, there 
would be no codes to report the services associated with EEG and VEEG.
    In summary, after consideration of the public comments, we are 
finalizing our proposal, with modification. Specifically, we are 
finalizing our proposal to assign CPT codes 95700 through 95712, 95714, 
and 95715 to the APCs listed in Table 30 below. In addition, we are 
modifying our proposal for CPT codes 95713 and 95716, and revising 
their APC assignments to APC 5723 and APC 5724, respectively. Further, 
we are finalizing our proposal to assign CPT codes 95717 through 95726 
to status indicator ``M''. These codes, along with the deleted codes, 
are listed in Table 30. The final CY 2020 payment rate for these codes 
can be found in Addendum B to this final rule with comment period 
(which is available via the internet on the CMS website).
    As always, we will reevaluate the APC assignment for these codes 
once we have claims data. We review, on an annual basis, the APC 
assignments for all services and items paid under the OPPS based on the 
latest claims data that we have available.
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18. Musculoskeletal Procedures (APCs 5111 Through 5116)
    Prior to the CY 2016 OPPS, payment for musculoskeletal procedures 
was primarily divided according to anatomy and the type of 
musculoskeletal procedure. As part of the CY 2016 reorganization to 
better structure the OPPS payments towards prospective payment 
packages, we consolidated those individual APCs so that they became a 
general Musculoskeletal APC series (80 FR 70397 through 70398).
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59300), we continued to apply a six-level structure for the 
Musculoskeletal APCs because doing so provided an appropriate 
distinction for resource costs at each level and provided clinical 
homogeneity. However, we indicated that we would continue to review the 
structure of these APCs to determine whether additional granularity 
would be necessary.
    In the CY 2019 OPPS proposed rule (83 FR 37096), we recognized that 
commenters had previously expressed concerns regarding the granularity 
of the current APC levels and, therefore, requested comment on the 
establishment of additional levels. Specifically, we solicited comments 
on the creation of a new APC level between the current Level 5 and 
Level 6 within the Musculoskeletal APC series. While some commenters 
provided suggested APC reconfigurations and requests for change to APC 
assignments, many commenters requested that we maintain the current 
six-level structure and continue to monitor the claims data as they 
become available. Therefore, in the CY 2019 OPPS/ASC final rule with 
comment period, we maintained the six-level APC structure for the

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Musculoskeletal Procedures APCs (83 FR 58920 through 58921).
    Based on the claims data available for the CY 2020 OPPS/ASC 
proposed rule, we continue to believe that the six-level APC structure 
for the Musculoskeletal Procedures APC series is appropriate. 
Therefore, we proposed to maintain the APC structure for the CY 2020 
OPPS update.
    We note that this is the first year for which claims data are 
available for the total knee arthroplasty procedure described by CPT 
code 27447, which was removed from the inpatient only list in the CY 
2018 OPPS/ASC final rule with comment period (82 FR 59382 through 
59385). Based on approximately 60,000 hospital outpatient claims 
reporting the procedure that were available for ratesetting in the 
proposed rule, the geometric mean cost was approximately $12,472.05, 
which is similar to the geometric mean cost for APC 5115 (Level 5 
Musculoskeletal Procedures) of $11,879.66, and within a range of the 
lowest geometric mean cost of the significant procedure costs of 
$9,969.37 and the highest geometric mean cost of the significant 
procedure costs of $12,894.18. Therefore, we believed that the 
assignment of the procedure described by CPT code 27447 in the Level 5 
Musculoskeletal Procedures APC series remains appropriate and, 
therefore, we proposed to continue to assign CPT code 27447 to APC 5115 
(Level 5 Musculoskeletal Procedures) for CY 2020.
    We also proposed to remove the procedure described by CPT code 
27130 (Total hip arthroplasty) from the CY 2020 OPPS inpatient only 
list. Based on the estimated costs derived from in the available claims 
data, as well as the 50th percentile IPPS payment for TKA/THA 
procedures without major complications or comorbidities (MS-DRG 470) of 
approximately $11,900 for FY 2020 when the procedure is performed on an 
inpatient basis, we believed that it was appropriate to assign the 
procedure described by CPT code 27130 to the Level 5 Musculoskeletal 
Procedures APC series, which had a geometric mean cost of $11,879.66. 
Therefore, for CY 2020, we also proposed to assign the procedure 
described by CPT code 27130 to APC 5115. We noted that we will monitor 
the claims data reflecting these procedures as they become available. 
For a more detailed discussion of the procedures that were proposed to 
be removed from the inpatient only (IPO) list for CY 2020 under the 
OPPS, we refer readers to section IX. of the proposed rule.
    Table 31 displays the CY 2020 Musculoskeletal Procedures APC 
series' structure and APC geometric mean costs.
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    Comment: Several commenters requested that CMS reconsider the 
proposal to assign CPT code 22869 (Insertion of interlaminar/
interspinous process stabilization/distraction device, without open 
decompression or fusion, including image guidance when performed, 
lumbar; single level) to APC 5115, and instead allow the code to remain 
in APC 5116, where it has been historically placed. They believed that 
the proposal to move the APC was based on inaccurate data, due to one 
hospital incorrectly reporting its costs and charges. They noted that 
the influence of that inaccurate data would be short term and that the 
claims would eventually support the higher placement, as the reporting 
issues were corrected. We also note that the HOP Panel made a 
recommendation that CMS examine the claims data for CPT code 22869 and 
determine an appropriate APC placement.
    Response: While we recognize the concerns that the commenters have 
described, it is generally not our policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting. We rely on 
hospitals to accurately report the use of HCPCS codes in accordance 
with their code descriptors and CPT and CMS instructions, and to report 
services on claims and charges and costs for the services on their 
Medicare hospital cost report appropriately. However, we do not specify 
the methodologies that hospitals use to set charges for this or any 
other service. In addition, we state in Chapter 4 of the Medicare 
Claims Processing Manual that ``it is extremely important that 
hospitals report all HCPCS codes consistent with their descriptors; CPT 
and/or CMS instructions and correct coding principles, and all charges 
for all services they furnish, whether payment for the services is made 
separately paid

[[Page 61254]]

or is packaged'' to enable CMS to establish future ratesetting for OPPS 
services.
    After consideration of the public comments we received, we are 
finalizing the proposed six level Musculoskeletal Procedures APC 
structure. We also are finalizing the proposed assignment of the 
procedure described by CPT codes 22869 to APC 5115. As discussed in 
section IX. of this final rule, we are also finalizing the proposal to 
remove the procedure described by CPT code 27130 from the inpatient 
only list and to assign it to APC 5115 for the CY 2020 OPPS.
19. Nuclear Medicine Services
a. Cardiac Positron Emission Tomography (PET) Studies (APCs 5593 and 
5594)
    For CY 2020, we proposed to continue to assign CPT code 78459 
(Myocardial imaging, positron emission tomography (pet), metabolic 
evaluation) to APC 5593 (Level 3 Nuclear Medicine and Related Services) 
with a proposed payment rate of $1,293.33. Similarly, we proposed to 
maintain the APC assignments for CPT codes 78491 (Myocardial imaging, 
positron emission tomography (pet), perfusion; single study at rest or 
stress) and 78492 (Myocardial imaging, positron emission tomography 
(pet), perfusion; multiple studies at rest and/or stress) to APC 5594 
(Level 4 Nuclear Medicine and Related Services) with a proposed payment 
rate of $1,466.16.
    Comment: Commenters agreed with the APC assignments for CPT codes 
78459, 78491, and 78492 and stated they are placed appropriately in 
APCs 5593 and 5594. Some commenters added that the cost associated with 
CPT code 78492, which describes a wall motion and ejection fraction, 
supports its maintenance in APC 5594.
    Response: We thank the commenters for their feedback and will 
finalize the APC assignments for CPT code 78459 to APC 5593, and for 
CPT codes 78491 and 78492 to APC 5594.
b. Cardiac Positron Emission Tomography (PET)/Computed Tomography (CT) 
Studies (APCs 1522, 1523, and 5594)
    For CY 2020, the CPT Editorial established six new codes to 
describe the services associated with cardiac PET/CT studies, 
specifically, CPT codes 78429, 78430, 78431, 78432, 78433, and 78434. 
These codes were listed in Addendum B to the CY 2020 OPPS/ASC proposed 
rule as 78X29, 78X31, 78X32, 78X33, 78X34, and 78X35 (the 5-digit CMS 
placeholder codes), respectively, in Addendum B with the short 
descriptors, and again in Addendum O with the long descriptors. We also 
assigned these codes to comment indicator ``NP'' in Addendum B to 
indicate that the codes are new for CY 2020 and that public comments 
would be accepted on their proposed status indicator assignments. We 
note that these codes will be effective January 1, 2020. Table 32 below 
list the placeholder codes, long descriptors, and proposed SI and APC 
assignments.
    Comment: Several commenters opposed the APC assignment for CPT code 
78429 (placeholder code 78X29) and recommended its reassignment from 
APC 5593 to APC 5594. They stated that APC 5593 does not recognize the 
additional cost associated with the CT scan that is included in the 
service, and requested revising the code to APC 5594.
    Response: Based on the commenters' feedback and our review of the 
components of this new service, we agree with the commenters that APC 
5594 is the more appropriate assignment for CPT code 78429. Therefore, 
we will reassign CPT code 78429 from APC 5593 to APC 5594.
    Comment: Several commenters agreed with the APC placement for CPT 
code 78430 (placeholder code 78X31) in APC 5594. They stated that APC 
5594 allows adequate payment for the CT scanner that that is a 
component of this service.
    Response: We thank the commenters for their feedback and are 
finalizing the APC assignment for CPT code 78430 to APC 5594.
    Comment: Several commenters reported that certain societies 
submitted a new technology application to CMS for CPT codes 78431 
(placeholder code 78X32), 78432 (placeholder code 78X33), and 78433 
(placeholder code 78X34) that details the costs associated with 
providing the services. For CPT code 78431, these same commenters 
disagreed with the proposed APC placement and recommended its revision 
from APC 5594 (Level 4 Nuclear Medicine and Related Services) with a 
proposed payment rate of $1,466.16 to APC 1522 (New Technology--Level 
23 ($2501-$3000)) with a proposed payment rate of $2,750.50. They 
reported that, based on the resource cost of the service described by 
CPT code 78431, APC 1522 provides adequate reimbursement for the 
service. Similarly, for CPT codes 78432 and 78433, the commenters 
indicated that APC 5594 would not adequately reimburse the resource 
costs associated with providing these services, and recommended their 
reassignment to APC 1523 (New Technology--Level 23 ($2501-$3000)) with 
a proposed payment rate of $ 2,750.50
    Response: Based on our assessment of the information provided in 
the new technology application and the public comments received, we are 
revising the APC assignments for these codes. Specifically, we are 
revising the APC assignment for CPT code 78431 from APC 5594 to APC 
1522, and reassigning CPT codes 78432 and 78433 from APC 5594 to APC 
1523.
    In summary, after consideration of the public comments for the new 
cardiac PET/CT codes, and based on our evaluation of the new technology 
application that provided the estimated costs for the services and 
described the components and characteristics of the new codes, we are 
finalizing our proposal, with modification, to assign CPT codes 78429, 
78431, 78432, and 78433 to the final APCs listed in Table 32 below. In 
addition, we are finalizing our proposal, without modification, for CPT 
codes 78430 and 78434. In Table 32 below we list the long descriptors 
and final SI and APC assignments for the codes. The final CY 2020 
payment rate for the codes can be found in Addendum B to this final 
rule with comment period (which is available via the internet on the 
CMS website).
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c. Single-Photon Emission Computed Tomography (SPECT) Studies (APCs 
5591, 5593, and 5594).
    For CY 2020, we proposed to continue to assign CPT codes 78800 and 
78801 to APC 5591 with a proposed payment rate of $372.69, CPT codes 
78802 and 78804 to APC 5593 with a proposed payment rate of $1,293.33), 
and CPT code 78803 to APC 5592 with a proposed payment rate of $482.38.
    We also proposed to assign new CPT codes 78830 and 78831 to APC 
5593, and 78832 to APC 5594 with a proposed payment rate of $1,466.16. 
In addition, we proposed to assign new CPT code 78835 to status 
indicator ``N'' because it is an add-on code that is packaged and 
payment for it is included in the primary service. Table 33 below list 
the long descriptors and their proposed SI and APC assignments for 
these codes.
    Comment: Some commenters agreed with the proposed APC assignments 
for CPT codes 78800, 78801, and 78802.
    Response: We thank the commenters for their feedback and are 
finalizing the APC assignments for these codes.
    Comment: Several commenters disagreed with the assignment for CPT 
codes 78803 and requested a modification from APC 5592 to APC 5593 
because this one code will replace seven SPECT codes that will be 
deleted on December 31, 2019. Specifically, they reported that the 
seven CPT codes listed in Figure 34 will be deleted. Several commenters 
indicated that APC 5592 would not account for the deleted SPECT codes 
and recommended using a weighted average to determine an appropriate 
geometric mean cost for 78803. Based on their calculation, the 
geometric mean cost for the code should be $784.18, which is higher 
than the approximately $462 geometric mean cost for APC 5592, and is 
more consistent with the geometric mean cost for APC 5593.
    Response: Based on our analysis of the latest claims data for this 
final rule with comment period, and as listed in the Figure 33 below, 
the range of geometric mean cost for CPT code 78803 and the seven 
deleted codes is between $433 and $1,417. We note that several of the 
deleted codes were assigned to APC 5593, and based on our review of 
these codes, we believe it would be appropriate to reassign CPT code 
78803 from APC 5592 to APC 5593.

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    Comment: Some commenters disagreed with the assignment of CPT code 
78804 to APC 5593, and stated that the APC assignment does not 
adequately capture the cost of multiple SPECTs provided. The commenters 
indicated that it would not make sense to continue to assign single and 
full sets of studies to the same APC and urged CMS to reassign the code 
to APC 5594.
    Response: For CY 2020, based on claims submitted between January 1, 
2018 and December 30, 2018 that were processed on or before June 30, 
2019, our analysis of the latest claims data for this final rule 
supports maintaining CPT code 78804 in APC 5593. Specifically, our 
claims data show a geometric mean cost of approximately $1,298 for CPT 
code 78804 based on 1,656 single claims (out of 2,961 total claims), 
which is more appropriate in APC 5593 whose geometric mean cost is 
about $1,245 compared to the geometric mean cost of approximately 
$1,412 for APC 5594.
    Comment: Some commenters agreed with the APC assignment for new CPT 
codes 78830 and 78832 to APC 5593 and APC 5594, respectively.
    Response: We appreciate the commenters' feedback and are finalizing 
the APC assignment for CPT code 78830 to APC 5593 and for CPT code 
78832 to APC 5594.
    Comment: Several commenters opposed the APC assignment for CPT code 
78831 to APC 5593. They indicated that the proposed APC assignment for 
CPT code 78831 does not adequately capture the resources required to 
perform the procedure and should be reassigned to APC 5594.
    Response: We believe that new CPT code 78831 shares similar 
characteristics and resources to existing CPT code 78804. Consequently, 
we assigned the new code to APC 5593, which is the same APC assignment 
for CPT 78804. We note that once we have claims data for CPT code 
78831, we will assess and determine whether a reassignment is 
necessary. As always, we review the APC assignments for all services 
under the OPPS based on the latest claims data.
    In summary, after consideration of the public comments and after 
evaluation of our claims data for this final rule with comment period, 
we are finalizing our proposal, without modification, for CPT codes 
78800, 78801, 78802, 78804, 78830, 78831, 78832, and 78835. However, we 
are finalizing our proposal, with modification, for CPT code 78803 and 
reassigning the code from APC 5592 to APC 5593 for CY 2020. Table 34 
below list the long descriptors for these codes and their final SI and 
APC assignments. The final CY 2020 payment rate for the codes can be 
found in Addendum B to this final rule with comment period (which is 
available via the internet on the CMS website).
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20. Radiofrequency Spectroscopy
    As displayed in Table 8 and Addendum B to the CY 2020 OPPS/ASC 
proposed rule, we proposed to assign CPT code 0546T (Radiofrequency 
spectroscopy, real time, intraoperative margin assessment, at the time 
of partial

[[Page 61262]]

mastectomy, with report) to status indicator (SI) ``N'' to indicate 
that the code is packaged and payment for it is included in the primary 
surgical procedure. Specifically, payment for the codes assigned to 
status indicator ``N'' is made through the payment for the separately 
payable, independent services with which they are billed. No separate 
payment is made for services that we have assigned to status indicator 
``N.'' We note that CPT code 0546T is associated with the MarginProbe 
procedure.
    Comment: Several commenters requested separate payment for CPT code 
0546T. One commenter stated that the code should be adequately valued 
and removed from packaging. Another commenter stated that packaging the 
code will limit the number of Medicare beneficiaries who will benefit 
from the procedure. Still another commenter suggested a modification in 
the status indicator from ``N'' to ``J1'' (comprehensive APC) but did 
not suggest any specific APC to which they believed the code should be 
assigned. Another commenter stated that assigning separate payment for 
CPT code 0546T is in line with CMS' objectives of reducing the number 
of repeat surgical excisions.
    Response: As noted in the code descriptor, CPT code 0546T describes 
an intraoperative procedure that is performed at the time of partial 
mastectomy. As specified in 42 CFR 419.2(b)(14), intraoperative items 
and services are packaged under the OPPS. By definition, a service that 
is performed intraoperatively is provided during and, therefore on the 
same date of service, as another procedure that is separately payable 
under the OPPS. Because intraoperative services support the performance 
of an independent procedure and they are provided in the same operative 
session as the independent procedure, we have packaged the payment for 
the radiofrequency spectroscopy into the OPPS payment for the primary 
surgical procedure with which it is reported. In this case, the payment 
for CPT code 0546T is included in the breast mastectomy codes that are 
reported with the procedure.
    We note that since 2008, intraoperative services have been packaged 
under the OPPS, however, packaging has always been a primary component 
of the OPPS since its implementation in 2000. As we state in section 
II.A.3. (Changes to Packaged Items and Services) of this final rule, 
because packaging encourages efficiency and is an essential component 
of a prospective payment system, packaging payment for items and 
services that are typically integral, ancillary, supportive, dependent, 
or adjunctive to a primary service has been a fundamental part of the 
OPPS since its implementation in August 2000.
    Comment: A medical device company stated that although CPT code 
0546T is a procedure provided during an operative session, it is a 
distinct procedure with a beginning, middle, and end. The commenter 
reported that the cost of the procedure is not included in the primary 
surgical procedure. The same commenter pointed out that based on the 
language below from the CY 2008 OPPS/ASC final rule (72 FR 66621), it 
believed CMS has the discretion not to package an intraoperative 
service:

    ``To the extent that a service for which New Technology APC 
status is being requested is ancillary and supportive of another 
service, for example, a new intraoperative service or a new guidance 
service, we might not consider it to be a complete service because 
its value is as part of an independent service. However, if the 
entire, complete service, including the guidance component of the 
service, for example, is `truly new,' as we explained that term at 
length . . . we would consider the new complete procedure for New 
Technology APC assignment.''

    The commenter also indicated that, at its September 2018 meeting, 
the CPT Editorial Panel determined that radiofrequency spectroscopy is 
a stand-alone service and, therefore, issued a unique code, 
specifically, CPT code 0546T to be effective July 1, 2019. The 
commenter noted that until July 1, 2019 there was no code available to 
adequately describe the service, therefore, the procedure could not be 
represented in the claims data upon which CMS has established the CY 
2020 OPPS payment determinations. Consequently, the commenter requested 
that CMS assign CPT code 0546T to New Technology APC 1518 (New 
Technology--Level 18 ($1601-$1700)) with a proposed payment rate of 
$1,650.50, and indicated that the payment would reflect the cost of the 
sterile, disposable, radiofrequency spectroscopy probe and supplies. 
The commenter asserted that assigning separate payment for the 
procedure would alleviate the barrier to access to care for the 
service.
    Response: We note that the establishment of a new CPT code does not 
indicate that a code is always a stand-alone procedure or service. The 
current CPT code set lists hundreds of add-on codes that do not 
describe stand-alone services. For the list of add-on codes, refer to 
Appendix D (Summary of CPT Add-on Codes) of the latest CPT code book. 
We note that the CPT Editorial Panel does not establish new CPT codes 
because the service or procedure is considered stand-alone, rather they 
establish new codes for procedures and services that are not described 
by any existing code and have met their application criteria.
    As stated above, CPT code 0546T is associated with the MarginProbe 
procedure. CPT code 0546T describes an intraoperative procedure that is 
performed at the time of partial mastectomy. As specified in 42 CFR 
419.2(b)(14), intraoperative items and services are packaged under the 
OPPS.
    We also disagree with the commenter's statement that CMS has the 
discretion not to package an intraoperative procedure. As noted above, 
42 CFR 419.2(b)(14) states that intraoperative items and services are 
packaged under the OPPS. We do not agree that MarginProbe, for which 
CPT code 0546T was established, is a new, standalone procedure for 
which separate payment should be made. We note that the preamble 
language the commenter quoted only applies for services that are truly 
new and a complete service and, as mentioned in the quoted language, 
with respect to an ancillary service, which may include a new 
intraoperative service or a new guidance service, we might not consider 
it to be a complete service because its value is as part of an 
independent service. MarginProbe, received Premarket Approval (PMA) 
from the FDA on December 27, 2012, and has been on the market since 
February 2013, however, FDA approval alone does not compel a 
determination under Medicare that the technology represents a separate 
standalone service that would qualify for New Technology APC 
assignment.
    Finally, because CPT code 0546T describes an intraoperative service 
that is performed during a mastectomy procedure, we are finalizing our 
proposal to assign the code to status indicator ``N''. Therefore, after 
consideration of the public comments received, we are finalizing our 
proposal without modification for CPT code 0546T. The final status 
indicator assignment for the code is listed in Addendum B to this final 
with comment period. We refer readers to Addendum D1 of this final rule 
with comment period for the complete list of the OPPS payment status 
indicators and their definitions for CY 2020. Both Addendum B and 
Addendum D1 are available via the internet on the CMS website.

[[Page 61263]]

21. Reflectance Confocal Microscopy (RCM)
    For CY 2020, we proposed to continue to assign CPT code 96932 to 
status indicator ``Q1'' (conditionally packaged) and APC 5731 (Level 1 
Minor Procedures) with a proposed payment rate of $23.57. We note that 
the CPT Editorial Panel established six (6) CPT codes to describe the 
services associated with RCM. These codes are shown in Table 35 with 
the long descriptors and proposed status indicator assignments.
    Comment: A commenter stated that the low payment rate for this 
service under the OPPS is based on misreporting of charges by a 
hospital. The commenter explained that based on their review and 
analysis of the OPPS claims, only two hospitals in the country are 
performing this imaging test, and that the proposed payment rate is 
based primarily on one hospital's charges. The same commenter stated 
that the cost of performing the imaging service is about $128, which is 
more than the proposed payment rate of $23.57. To correct the low 
payment for the test, the commenter suggested that CMS use its 
equitable adjustment authority to set an appropriate payment for 96932 
and also recommended that we do one of the following:
     Reassign the code to APC 5522 (Level 1 Imaging without 
Contrast) with a proposed payment rate of $111.04;
     Reassign the code to New Technology APC 1503 (New 
Technology--Level 3 ($101-$200) with a proposed payment rate of 
$150.50; or
     Assign an unconditionally packaged (``N'') or non-payable 
status indicator to the code, similar to the other RCM codes.
    The commenter also expressed concern that the low payment rate 
under the OPPS significantly impacts the payment for the service under 
the PFS. The commenter added that RCM is primarily performed in the 
physician office setting, however, because of the low payment rate 
established under the OPPS, the payment for the service is inadequate. 
To correct the low payment rate, the commenter suggested that CMS 
revise the status indicator of CPT code 96932 to identify the service 
as packaged or non-payable, and, therefore, not have a published OPPS 
payment rate for the code. The commenter believed that packaging the 
code or assigning it as non-payable will correct the payment rate and 
provide adequate payment for the service.
    Response: Section 5102(b) of the Deficit Reduction Act of 2005 
(DRA) amended the PFS statute to place a payment cap on the technical 
component (TC) of certain diagnostic imaging procedures and the TC 
portions of the global diagnostic imaging services at the amount paid 
under the OPPS. To implement this provision, the physician fee schedule 
(PFS) amount is compared to the OPPS payment amount and the lower 
amount is used for payment. CPT code 96932 is designated as a DRA 
imaging code whose payment under the PFS is capped at the OPPS rate 
even when performed in a physician office setting. Based on our review 
of the issue, we believe that we should revise the OPPS status 
indicator assignment for CPT code 96932 from ``Q1'' to ``N'', similar 
to the status indicator assignment for several other RCM codes. Since 
CPT code was low volume under the OPPS, it may be inappropriate to 
establish an OPPS payment rate by which the PFS rate would be capped. 
Accordingly, this change will allow there not to be an OPPS cap for the 
service.
    In summary, after consideration of the public comment, we are 
finalizing our proposal with modification and revising the status 
indicator assignment for CPT code 96930 to ``N'' for CY 2020. Table 35 
below lists the long descriptors and final status indicator assignments 
for the six (6) codes that describe the services associated with RCM. 
We refer readers to Addendum D1 of this final rule with comment period 
for the complete list of the OPPS payment status indicators and their 
definitions for CY 2020. Addendum D1 is available via the internet on 
the CMS website.

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22. remed[emacr][supreg] System--Transvenous Phrenic Nerve Stimulation 
Therapy (APCs 5461-5464, 5724, and 5742)
    For the CY 2020 update, we proposed to modify the APC assignment 
for certain CPT codes associated with the Transvenous Phrenic Nerve 
Stimulation Therapy or remed[emacr][supreg] System. Of the 13 codes, we 
received a comment on the APC assignment for three codes, specifically, 
CPT codes 0426T, 0427T, and 0431T. As shown in Table 36 below with the 
long descriptors, and also in Addendum B to the CY 2020 OPPS/ASC 
proposed rule, we proposed to reassign CPT codes 0426T and 0431T from 
APC 5463 (Level 3 Neurostimulator and Related Procedures) to APC 5464 
(Level 4 Neurostimulator and Related Procedures) with a proposed 
payment rate of $29,025.99. In addition, we proposed to continue to 
assign CPT code 0427T to APC 5463 ((Level 3 Neurostimulator and Related 
Procedures) with a proposed payment rate of $19,370.82.
    Comment: A device company suggested that we maintain the current 
assignment and not revise the APC assignment to APC 5464 for CPT code 
0426T. The commenter stated that the resources required for the 
procedure are more closely aligned with the procedures in APC 5463.
    Response: Based on our evaluation of the procedure associated with 
CPT code 0426T, we agree that the procedure described by the code 
appropriately fits in APC 5463 based on its clinical similarity to 
other procedures in the APC. CPT code 0426T describes the insertion or 
replacement of the stimulation lead associated with a neurostimulator 
system for the treatment of central sleep apnea, and APC 5463 includes 
other procedures that involve the insertion or replacement of a 
stimulation lead for a neurostimulator system. Therefore, we will 
maintain the APC assignment for CPT code 0426T to APC 5463 for CY 2020.
    Comment: The same device company that commented on CPT code 0426T 
also commented on the APC assignment for CPT code 0427T. According to 
the commenter, the procedure describes the initial insertion of the 
implantable pulse generator when the full system cannot be implanted 
for a patient, and added that the procedure does not occur frequently.
    The commenter also noted that the hospital resources associated 
with CPT code 0427T are very similar to CPT code 0431T, which is 
assigned to APC 5464, and recommended the assignment of both procedures 
to APC 5464.
    Response: Based on our review of the two procedures, we agree that 
the resources associated with inserting or replacing a pulse generator 
for a neurostimulator system that is described by CPT code 0427T are 
very similar to removing and replacing a pulse generator for a 
neurostimulator system that is described by CPT code 0431T. 
Consequently, we are modifying our

[[Page 61265]]

proposal and reassigning CPT code 0427T to APC 5464.
    Comment: The same device company that commented on CPT codes 0426T 
and 0427T also commented on CPT code 0431T. Specifically, the commenter 
concurred with the APC reassignment for the code to APC 5464.
    Response: As indicated above, based on our review of the two 
procedures, we agree that the resources associated with inserting or 
replacing a pulse generator for a neurostimulator system that is 
described by CPT code 0427T are very similar to removing and replacing 
a pulse generator for a neurostimulator system that is described by CPT 
code 0431T. Therefore, we are finalizing our proposal for CPT code 
0431T and assigning the code to APC 5464.
    In summary, after consideration of the public comment, we are 
finalizing our proposal with modification. Specifically, we are 
finalizing our APC proposal for CPT code 0431T to APC 5464, however, we 
are maintaining the APC assignment for CPT code 0426T to APC 5463, and 
reassigning CPT code 0427T to APC 5464. We note that the final CY 2020 
OPPS payment rates for all the codes associated with the Transvenous 
Phrenic Nerve Stimulation Therapy or remed[emacr][supreg] System can be 
found in Addendum B of this final rule with comment period. Table 36 
below lists the long descriptors for all 13 codes and the final APC and 
SI assignments for CY 2020. In addition, we refer readers to Addendum 
D1 of this final rule with comment period for the status indicator 
meanings for all codes reported under the OPPS for CY 2020. Both 
Addendum B and Addendum D1 are available via the internet on the CMS 
website.
BILLING CODE 4120-01-P

[[Page 61266]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.057


[[Page 61267]]


[GRAPHIC] [TIFF OMITTED] TR12NO19.058

BILLING CODE 4120-01-C
23. Surgical Pathology Tissue Exam (APC 5673)
    In CY 2019, CPT code 88307 (Level V--surgical pathology, gross and 
microscopic examination) was assigned to APC 5673 (Level 3 Pathology) 
with a payment rate of $274.22. For CY 2020, we proposed to reassign 
the code to APC 5672 (Level 2 Pathology) with a proposed payment rate 
of $148.62.
    Comment: A commenter disagreed with the proposed reassignment and 
urged CMS to continue to assign CPT code 88307 to APC 5673. This same 
commenter reported that the service includes complex Level V surgical 
pathology specimens and the proposed change represents a 46 percent 
decrease in the payment amount. The commenter added that the proposed 
reassignment creates a resource cost rank order anomaly with other 
physician services and the technical costs will not be fully recovered 
from each unit of service. In addition, the commenter believed that the 
data do not identify actual costs for specific procedures, and stated 
that the cost associated with CPT code 88307 is greater than six times 
the cost of the services assigned to APC 5672 (Level 2 Pathology) based 
on physician fee schedule technical component cost differences. The 
commenter also believed that the data leading to the APC reassignment 
must be flawed and added that charge-based cost data were neither 
designed nor intended to be an accurate estimate of service/procedure 
level costs at the CPT code level. The commenter stated that the 
hospital charge-based cost data used for OPPS rate-setting allows CMS 
to estimate costs for purposes of grouping a number of services or 
procedures (multiple distinct codes) into appropriate clinically and 
economically homogeneous APCs.
    Response: As stated in section III.B. (Final OPPS Changes--
Variations Within APCs) of this final rule with comment period, 
payments for OPPS services and procedures are based on our analysis of 
the latest claims data. For the proposed rule, the OPPS proposed 
payment rates were based on claims data that were submitted between 
January 1, 2018 through December 31, 2018, that were processed on or 
before December 31, 2018. However, for the final rule, the OPPS final 
payment rates are based on claims that were submitted between January 
1, 2018 through December 31, 2018, that were processed on or before 
June 30, 2019. Based on the latest hospital outpatient claims data used 
for this final rule with comment period, we agree with the commenter 
that the code should continue to be assigned to APC 5673 for CY 2020. 
Specifically, CPT code 88307 shows a geometric mean cost of 
approximately $219, which is more appropriate in APC 5673 whose 
geometric cost is approximately $277 compared to the geometric mean 
cost of about $140 for APC 5672. Consequently, we are revising our 
proposal and maintaining the APC assignment for CPT code 88307 to APC 
5673 for CY 2020.
    In summary, after consideration of the public comment, and after 
our analysis of the updated claims data for this final rule with 
comment period, we are finalizing our proposal with modification. 
Specifically, we are revising the APC assignment for CPT code 88307 to 
APC 5673 for CY 2020. The final CY 2020 payment rate for the code can 
be found in Addendum B to this final rule with comment period (which is 
available via the internet on the CMS website).
    As we do every year, we will reevaluate the APC assignment for CPT 
code 88307 for the next rulemaking cycle. We note that we review, on an 
annual basis, the APC assignments for all services and items paid under 
the OPPS.

[[Page 61268]]

24. Urology Procedures
a. HIFU Procedure--High-Intensity Focused Ultrasound of the Prostate 
(APC 5375)
    In 2017, CMS received a new technology application for the prostate 
HIFU procedure and established a new code, specifically, HCPCS code 
C9747 (Ablation of prostate, transrectal, high intensity focused 
ultrasound (hifu), including imaging guidance). Based on the estimated 
cost provided in the new technology application, we assigned the new 
code to APC 5376 (Level 6 Urology and Related Services) with a payment 
rate of $7,452.66 effective July 1, 2017. We announced the SI and APC 
assignment in the July 2017 OPPS quarterly update CR (Transmittal 3783, 
Change Request 10122, dated May 26, 2017).
    For the CY 2018 update, we made no change to the APC assignment and 
continued to assign HCPCS code C9747 to APC 5376 with a payment rate of 
$7,596.26. We note that the payment rates for the CY 2018 OPPS update 
were based on claims submitted between January 1, 2016 through December 
30, 2016, that were processed on or before June 30, 2017. Since HCPCS 
code C9747 was established on July 1, 2017, we had no claims data for 
the procedure for use in ratesetting for CY 2018.
    However, for the CY 2019 update, based on the latest claims data 
for the final rule, we revised the APC assignment for HCPCS code C9747 
from APC 5376 to APC 5375 with a payment rate of $4,020.54. We note 
that the payment rates for CY 2019 were based on claims submitted 
between January 1, 2017 through December 30, 2017, that were processed 
on or before June 30, 2018. Our claims data showed a geometric mean 
cost of approximately $5,000 for HCPCS code C9747 based on 64 single 
claims (out of 64 total claims), which was significantly lower than the 
geometric mean cost of about $7,717 for APC 5376. We believed that the 
geometric mean cost for HCPCS code C9747 was more comparable to the 
geometric mean cost of approximately $4,055 for APC 5375. Consequently, 
we reassigned the code from APC 5376 to APC 5375 (Level 5 Urology and 
Related Services) for CY 2019.
    For CY 2020, we proposed to continue to assign HCPCS code C9747 to 
APC 5375 with a proposed payment rate $4,286.06.
    Comment: Several commenters disagreed with the APC assignment for 
HCPCS code C9747 and recommended a reclassification to APC 5376 because 
they believed the service is clinically similar and comparable in terms 
of resources to cryoablation of the prostate, which is described by CPT 
code 55873 (Cryosurgical ablation of the prostate (includes ultrasonic 
guidance and monitoring), and placed in APC 5376 (Level 6 Urology and 
Related Services), with a proposed payment rate of $8,193.30. The 
commenters believed that the geometric mean cost, and ultimately, the 
APC determination for the prostate HIFU procedure was based on 
inaccurate hospital costs. They believed that the average cost of the 
procedure should be approximately $6,250, and requested a reassignment 
to APC 5376 to enable Medicare beneficiaries to continue to receive the 
treatment. They stated based on their projections that maintaining the 
APC assignment to APC 5375 for the procedure will decrease the number 
of Medicare beneficiaries receiving the treatment by 75 percent if the 
CY 2020 payment rate is finalized.
    Response: As we have stated every year since the implementation of 
the OPPS on August 1, 2000, we review, on an annual basis, the APC 
assignments for all services and items paid under the OPPS based on our 
analysis of the latest claims data. For CY 2020, based on claims 
submitted between January 1, 2018 through December 30, 2018, that were 
processed on or before June 30, 2019, our analysis of the latest claims 
data for this final rule supports maintaining HCPCS code C9747 in APC 
5375. Specifically, our claims data shows a geometric mean cost of 
approximately $5,850 for HCPCS code C9747 based on 264 single claims 
(out of 268 total claims), which is comparable to the geometric mean 
cost of about $4,140 for APC 5375, rather than the geometric mean cost 
of approximately $7,894 for APC 5376.
    Also, we do not agree that the resource costs associated with the 
prostate HIFU procedure are similar to those of cryoablation of the 
prostate. Our claims data for the CY 2020 update shows a geometric mean 
cost of about $8,152 based on 1,417 single claims (out of 1,429 total 
claims) for cryoablation of the prostate. The geometric mean cost for 
CPT code 55873 is reasonably consistent with APC 5376, whose geometric 
mean cost is approximately $7,894.
    With respect to the issue of inaccurate hospital cost reporting for 
HCPCS code C9747, based on our analysis of the CY 2020 hospital 
outpatient claims data used for this final rule with comment period, we 
are unable to determine whether hospitals are misreporting the 
procedure. It is generally not our policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting. We rely on 
hospitals to accurately report the use of HCPCS codes in accordance 
with their code descriptors and CPT and CMS instructions, and to report 
services on claims and charges and costs for the services on their 
Medicare hospital cost report appropriately. Also, we do not specify 
the methodologies that hospitals use to set charges for this or any 
other service. Furthermore, we state in Chapter 4 of the Medicare 
Claims Processing Manual that ``it is extremely important that 
hospitals report all HCPCS codes consistent with their descriptors; CPT 
and/or CMS instructions and correct coding principles, and all charges 
for all services they furnish, whether payment for the services is made 
separately paid or is packaged'' to enable CMS to establish future 
ratesetting for OPPS services.
    Comment: A commenter reported that the prostate HIFU procedure 
(C9747) and cryoablation of the prostate (55873) are two clinically 
similar procedures for the ablation of prostate for cancer, and are the 
only two acknowledged treatments for radiorecurrent, non-metastatic 
prostate cancer. This same commenter requested that we either create a 
new APC group specific to prostate ablation procedures or modify the 
organization of HCPCS codes within the urology family of APCs. The 
commenter specifically noted that a reorganization for APCs 5374 
through 5376 would be appropriate but added that there are other 
inconsistencies across procedures within the urology APCs. The 
commenter also mentioned that CPT codes 50555 (Renal endoscopy through 
established nephrostomy or pyelostomy, with or without irrigation, 
instillation, or ureteropyelography, exclusive of radiologic service; 
with biopsy) and 50557 (Renal endoscopy through established nephrostomy 
or pyelostomy, with or without irrigation, instillation, or 
ureteropyelography, exclusive of radiologic service; with fulguration 
and/or incision, with or without biopsy) are assigned to two different 
APCs, however, their APC assignments appear reversed. The commenter 
further suggested updating the procedures within APCs 5374, 5375, and 
5376 so that the geometric mean costs for the procedure fall into the 
following ranges:

[[Page 61269]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.059

    Response: We appreciate the commenter's suggestions and may 
consider a reorganization of the procedures in the urology APCs in 
future rulemaking. We note that each year, under the OPPS, we revise 
and make changes to the APC groupings based on the latest hospital 
outpatient claims data to appropriately place procedures and services 
in APCs based on clinical characteristics and resource similarity. For 
CY 2020, based on our analysis of the latest claims data for this final 
rule, we do not believe that establishing a new APC specific to 
prostate ablation procedures is necessary, nor do we believe that 
modifying the HCPCS codes within the urology family APCs is appropriate 
at this time.
    With respect to CPT codes 50555 and 50557, based on our review of 
the claims data for this final rule with comment period, we revised the 
APC assignment for CPT code 50555 from APC 5375 to APC 5376, and 
maintained the APC assignment for CPT code 50557 in APC 5376. 
Specifically, our claims data show a geometric about $7,327 for CPT 
code 50555 and approximately $6,224 for CPT code 50557, which are more 
comparable with the geometric cost for APC 5376 of about $7,894 unlike 
that of APC 5375 whose geometric mean cost is approximately $4,140.
    In summary, after consideration of the public comments, and after 
our analysis of the updated claims data for this final rule with 
comment period, we are finalizing our proposal, without modification, 
to continue to assign HCPCS code C9747 to APC 5375 for CY 2020. The 
final CY 2020 payment rate for the code can be found in Addendum B to 
this final rule with comment period. In addition, we refer readers to 
Addendum D1 of this final rule with comment period for the status 
indicator (SI) meanings for all codes reported under the OPPS. Both 
Addendum B and D1 are available via the internet on the CMS website.
b. ProACT Procedure--Transperineal Periurethral Adjustable Balloon 
Continence Device Procedure (APCs 5371, 5374, 5375, and 5376)
    In 2017, CMS received a new technology application for the 
transperineal periurethral adjustable balloon continence device 
procedure, which is associated with ProACT Therapy, and established a 
new code, specifically, HCPCS code C9746. Based on the estimated cost 
for the bilateral placement of the balloon continence devices, we 
assigned the code to APC 5377 (Level 7 Urology and Related Services) 
with a payment rate of $14,363.61 effective July 1, 2017. We announced 
the new code, and interim SI and APC assignments, and payment rate in 
the July 2017 quarterly update to the OPPS (Transmittal 3783, Change 
Request 10122, dated May 26, 2017).
    For the CY 2018 update, we made no change to the APC assignment and 
continued to assign HCPCS code C9746 to APC 5377 with a payment rate of 
$15,697.82. We note that OPPS payment rates for the CY 2018 update were 
based on claims submitted between January 1, 2016 through December 30, 
2016, that were processed on or before June 30, 2017. Since HCPCS code 
C9746 was established on July 1, 2017, we had no claims data for the 
procedure for use in ratesetting in CY 2018.
    For the CY 2019 update, we again had no claims data for the code so 
we made no change to the APC assignment and continued to assign HCPCS 
code C9746 to APC 5377 with a payment rate of $16,319.55. We note that 
the payment rates for CY 2019 were based on claims submitted between 
January 1, 2017 through December 30, 2017, that were processed on or 
before June 30, 2018.
    In July 2019, the CPT Editorial Panel established four new codes to 
describe the transperineal periurethral adjustable balloon continence 
device procedure, specifically, CPT codes 0548T, 0549T, 0550T, and 
0551T. In the July 2019 quarterly update to the OPPS (Transmittal 4313, 
Change Request 11318, dated May 24, 2019), we listed the temporary APC 
assignments for the new codes in the July 2019 OPPS Update CR and 
announced the deletion of HCPCS code C9746 on June 30, 2019, since it 
was replaced with CPT code 0548T effective July 1, 2019. These codes 
are listed in Table 37 along with their long descriptors and proposed 
SI and APC assignments.
    For CY 2020, we proposed to revise the APC assignment for new CPT 
code 0548T, which was previously described by HCPCS code C9746. In 
addition, we proposed to assign CPT codes 0549T, 0550T, and 0551T to 
APCs 5375, 5374, and 5371, respectively.
    Comment: A medical device company suggested that CPT code 0548T 
remain in APC 5377, consistent with the APC assignment for the 
predecessor code (HCPCS code C9746). This commenter indicated that the 
calculated geometric mean cost does not accurately reflect the actual 
cost of the procedure. The commenter noted there were only two billings 
identified in the CMS data--one billing at the correct cost of $16,250 
and one billing incorrectly recorded at $0. The commenter stated that 
the resulting calculation of the geometric mean cost of $8,125 does not 
accurately represent the actual cost of the bilateral procedure for CPT 
code 0548T. In addition, the same commenter requested a reassignment 
from APC 5375 to APC 5376 for CPT code 0549T.
    Response: As we have stated every year since the implementation of 
the OPPS on August 1, 2000, we review, on an annual basis, the APC 
assignments for all services and items paid under the OPPS based on our 
analysis of the latest claims data. For CY 2020, based on claims 
submitted between January 1, 2018 through December 30, 2018, that were 
processed on or before June 30, 2019, our analysis of the latest claims 
data for this final rule supports revising the APC assignment for CPT 
code 0548T (which was previously described by predecessor HCPCS code 
C9746) from APC 5377 to APC 5376 (Level 6 Urology and Related 
Services). Specifically, our claims data shows a geometric mean cost of 
approximately $9,504 for HCPCS code C9746 based on 7 single claims (out 
of 7 total claims), which is most comparable to the geometric mean cost 
of about $7,894 for APC 5376, rather than the geometric mean cost of 
approximately $17,195 for APC 5377. We believe that assigning CPT code 
0548T to APC 5377 would significantly overpay for the procedure.
    In addition, based on the geometric mean cost for the placement of 
the bilateral balloon continence devices (CPT code 0548T), we do not 
agree that we should revise the APC assignment for CPT code 0549T, 
which represents

[[Page 61270]]

the unilateral placement of the balloon continence device, from APC 
5375 to APC 5376. We believe that the cost associated with CPT code 
0549T should be less than that of CPT code 0548T since CPT code 0549T 
describes the use of only one device.
    Moreover, we rely on hospitals to accurately report the use of 
HCPCS codes in accordance with their code descriptors and CPT and CMS 
instructions, and to appropriately report services on claims and 
charges and costs for the services on their Medicare hospital cost 
report. However, we do not specify the methodologies that hospitals use 
to set charges for this or any other service. We also state in Chapter 
4 of the Medicare Claims Processing Manual that ``it is extremely 
important that hospitals report all HCPCS codes consistent with their 
descriptors; CPT and/or CMS instructions and correct coding principles, 
and all charges for all services they furnish, whether payment for the 
services is made separately paid or is packaged'' to enable CMS to 
establish future ratesetting for OPPS services.
    In summary, after consideration of the public comment and after our 
analysis of the updated claims data for this final rule with comment 
period, we are finalizing our proposal, without modification, to assign 
CPT codes 0548T, 0549T, 0550T, and 0551T to the APCs listed in Table 37 
below. The final CY 2020 payment rate for the codes can be found in 
Addendum B to this final rule with comment period. In addition, we 
refer readers to Addendum D1 of this final rule with comment period for 
the status indicator (SI) meanings for all codes reported under the 
OPPS. Both Addendum B and D1 are available via the internet on the CMS 
website.
[GRAPHIC] [TIFF OMITTED] TR12NO19.060

c. Rezum Procedure--Transurethral High Energy Water Vapor Thermal 
Therapy of the Prostate (APC 5373)
    In late 2017, CMS received a new technology application for the 
transurethral radiofrequency generated water vapor thermal therapy of 
the prostate, also known as the Rezum procedure, and established a new 
code, specifically, HCPCS code C9748 (Transurethral destruction of 
prostate tissue; by radiofrequency water vapor (steam) thermal therapy) 
effective January 1, 2018. Based on the estimated cost of the 
procedure, we assigned the new code to APC 5373 (Level 3 Urology and 
Related Services) with a payment rate of $1,695.68 effective January 1, 
2018. The new code appeared in both the OPPS Addendum B of the CY 2018 
OPPS/ASC final rule and the January 2018 OPPS Update CR (Transmittal 
3941, Change Request 10417, dated December 22, 2017).
    For the CY 2019 update, the CPT Editorial Panel established a new 
code to describe the Rezum procedure, specifically, CPT code 53854 
(Transurethral destruction of prostate tissue; by radiofrequency 
generated water vapor thermotherapy) effective January 1, 2019. We 
deleted HCPCS code C9748 on December 31, 2018 because it was replaced 
with CPT code 53854 and assigned the new code to APC 5373, which was 
the same APC assignment for the predecessor code, with a payment rate 
of $1,739.75. We note that payment rates for the CY 2019 update were 
based on claims submitted between January 1, 2017 and December 30, 2017 
that were processed on or before June 30, 2018.
    For the CY 2020 update, we proposed to maintain the APC assignment 
for CPT code 53854 to APC 5373 with a proposed payment rate of 
$1,797.97.
    Comment: Several commenters requested a reclassification for CPT 
code 53854 from APC 5373 to APC 5374 (Level 4 Urology and Related 
Services) with a proposed payment rate of $3,059.21. The commenters 
reported that the Rezum procedure is most clinically similar to the 
transurethral microwave therapy (TUMT), which is described by CPT code 
53850 (Transurethral destruction of prostate tissue; by microwave 
thermotherapy), and transurethral needle (radiofrequency) ablation 
(TUNA), which is described by CPT code 53852

[[Page 61271]]

(Transurethral destruction of prostate tissue; by radiofrequency 
thermotherapy). Some commenters reported that the primary difference 
between each of these codes is the energy source used to destroy or 
shrink the prostate tissue, specifically, CPT code 53850 uses microwave 
energy, 53852 uses radiofrequency energy, and 53854 uses radiofrequency 
generated water vapor thermotherapy. Apart from the energy source, the 
commenters indicated that the procedures and resources used in these 
procedures are similar. Consequently, they recommended that all three 
procedures be placed in APC 5374.
    Response: As we have stated every year since the implementation of 
the OPPS on August 1, 2000, we review, on an annual basis, the APC 
assignments for all services and items paid under the OPPS based on our 
analysis of the latest claims data. For CY 2020, based on claims 
submitted between January 1, 2018 through December 30, 2018, that were 
processed on or before June 30, 2019, our analysis of the latest claims 
data for this final rule supports maintaining the APC assignment for 
CPT code 53854 (which was previously described by predecessor HCPCS 
code C9748) to APC 5373. Our claims data show a geometric mean cost of 
approximately $1,899 for the predecessor HCPCS code C9748 based on 191 
single claims (out of 192 total claims). The geometric mean cost for 
the Rezum procedure is more in line with the geometric mean cost of 
about $1,733 for APC 5373 rather than with APC 5374 whose geometric 
mean cost is approximately $2,953.
    In addition, based on our analysis of the claims data, the resource 
costs associated with the TUMT and TUNA procedures are not similar to 
the Rezum procedure. While all three procedures treat the same 
indication and utilize the same type of technology, time, set up, and 
planning, their resource costs vary. Our claims data show a geometric 
mean cost of approximately $2,851 for the TUMT procedure (CPT code 
53850) based on 41 single claims (out of 41 total claims), and about 
$3,027 for the TUNA procedure (CPT code 53852) based on 513 single 
claims (out of 514 total claims). In both cases, the resource costs for 
the TUMT and TUNA procedures are much higher than those for the Rezum 
procedure.
    Therefore, after consideration of the public comments, and after 
our analysis of the updated claims data for this final rule with 
comment period, we are finalizing our proposal, without modification, 
and assigning CPT code 53854 to APC 5373. Table 38 below list the final 
APC assignments for CPT code 58350 (TUMT), 53852 (TUNA) and 53854 
(Rezum). In addition, the final CY 2020 payment rates for these 
procedures can be found in Addendum B to this final rule with comment 
period. Further, we refer readers to Addendum D1 of this final rule 
with comment period for the status indicator (SI) meanings for all 
codes reported under the OPPS. Both Addendum B and D1 are available via 
the internet on the CMS website.
    As always, we will reevaluate the APC assignment for CPT code 53854 
in the next rulemaking cycle. As stated above, we review, on an annual 
basis, the APC assignments for all services and items paid under the 
OPPS.
[GRAPHIC] [TIFF OMITTED] TR12NO19.061

d. VaporBlate Procedure--Transurethral Radiofrequency Generated Water 
Vapor Thermal Therapy of the Prostate
    As displayed in Addendum B to the CY 2020 OPPS/ASC proposed rule, 
we proposed to assign the procedure described by CPT code 0582T 
(Transurethral ablation of malignant prostate tissue by high-energy 
water vapor thermotherapy, including intraoperative imaging and needle 
guidance) to status indicator ``E1'' to indicate that the code is not 
payable by Medicare when submitted on outpatient claims (any outpatient 
bill type) because the services associated with these codes are either 
not covered by any Medicare outpatient benefit category, are 
statutorily excluded by Medicare, or are not reasonable and necessary. 
The code was listed as 0X76T (the 5-digit CMS placeholder code) in 
Addendum B with the short descriptor, and again in Addendum O with the 
long descriptor. We also assigned the code to comment indicator ``NP'' 
in Addendum B to indicate that the code is new for CY 2020 and that 
public comments would be accepted on the proposed status indicator 
assignment. We note that the code will be effective January 1, 2020.
    Comment: A medical device company reported that the technology 
associated with this new code received FDA approval as an IDE. 
Specifically, the VaporBlate technology was designated by the FDA as a 
Category B IDE on August 29, 2019. The commenter also

[[Page 61272]]

stated that they are in the process of applying for Medicare coverage 
of the Category B IDE clinical trial. In the event the clinical trial 
is approved by Medicare, the commenter suggested assigning the code to 
one of the following APCs:
     APC 1590 (New Technology--Level 39 ($15,001-$20,000)) with 
a proposed payment rate of $ 17,500.50; or
     APC 5377 (Level 7 Urology and Related Services) with a 
proposed payment rate of $17,465.94.
    The commenter explained that the VaporBlate procedure involves the 
transurethral ablation of malignant prostate tissue by high-energy 
water vapor thermotherapy, which is unlike that of the Rezum procedure 
that involves transurethral radiofrequency generated water vapor 
thermal therapy for benign prostatic hyperplasia (BPH). The commenter 
added that the resource costs associated with the VaporBlate procedure 
are significantly higher than those for the Rezum procedure. The Rezum 
generator (capital equipment) used in CPT code 53854 costs $32,500 and 
the Rezum supply kit (disposables) costs between $1,000 and $1,500, 
while the VaporBlate generator (capital equipment) used to perform the 
procedure described by the VaporBlate procedure costs $80,000 and the 
supply kits (disposables) cost $12,500 each. Based on the clinical and 
cost differences, the commenter stated that CPT code 0582T should not 
be assigned to the same APC as CPT code 53854 (Rezum procedure).
    Response: Based on our understanding of the procedure, we found 
that the service associated with CPT code 0582T is currently in 
clinical trial (Study Title: ``Ablation of Prostate Tissue in Patients 
With Intermediate Risk Localized Prostate Cancer''; ClinicalTrials.gov 
Identifier: NCT04087980). Further review of the clinical trial revealed 
that the clinical study has not yet met CMS' standards for coverage, 
nor does it appear on the CMS Approved IDE List, which can be found at 
this CMS website: https://www.cms.gov/Medicare/Coverage/IDE/Approved-IDE-Studies.html. Because the VaporBlate technology has not been 
approved for Medicare coverage as a Category B IDE, we believe that we 
should continue to assign CPT code 0582T to status indicator ``E1''. If 
this technology later meets CMS' standards for coverage, we will 
reassess the APC assignment for the code in a future quarterly update 
and/or rulemaking cycle.
    Therefore, after consideration of the public comment, we are 
finalizing our proposal, without modification, to assign CPT code 0582T 
to status indicator ``E1''. We refer readers to Addendum D1 of this 
final rule with comment period for the complete list of the OPPS 
payment status indicators and their definitions for CY 2020. Addendum 
D1 is available via the internet on the CMS website.

IV. OPPS Payment for Devices

A. Pass-Through Payment for Devices

1. Beginning Eligibility Date for Device Pass-Through Status and 
Quarterly Expiration of Device Pass-Through Payments
a. Background
    The intent of transitional device pass-through payment, as 
implemented at 42 CFR 419.66, is to facilitate access for beneficiaries 
to the advantages of new and truly innovative devices by allowing for 
adequate payment for these new devices while the necessary cost data is 
collected to incorporate the costs for these devices into the procedure 
APC rate (66 FR 55861). Under section 1833(t)(6)(B)(iii) of the Act, 
the period for which a device category eligible for transitional pass-
through payments under the OPPS can be in effect is at least 2 years 
but not more than 3 years. Prior to CY 2017, our regulation at 42 CFR 
419.66(g) provided that this pass-through payment eligibility period 
began on the date CMS established a particular transitional pass-
through category of devices, and we based the pass-through status 
expiration date for a device category on the date on which pass-through 
payment was effective for the category. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79654), in accordance with section 
1833(t)(6)(B)(iii)(II) of the Act, we amended Sec.  419.66(g) to 
provide that the pass-through eligibility period for a device category 
begins on the first date on which pass-through payment is made under 
the OPPS for any medical device described by such category.
    In addition, prior to CY 2017, our policy was to propose and 
finalize the dates for expiration of pass-through status for device 
categories as part of the OPPS annual update. This means that device 
pass-through status would expire at the end of a calendar year when at 
least 2 years of pass-through payments had been made, regardless of the 
quarter in which the device was approved. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79655), we changed our policy to allow 
for quarterly expiration of pass-through payment status for devices, 
beginning with pass-through devices approved in CY 2017 and subsequent 
calendar years, to afford a pass-through payment period that is as 
close to a full 3 years as possible for all pass-through payment 
devices.
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79648 through 79661) for a full discussion of the current 
device pass-through payment policy.
    We also have an established policy to package the costs of the 
devices that are no longer eligible for pass-through payments into the 
costs of the procedures with which the devices are reported in the 
claims data used to set the payment rates (67 FR 66763).
b. Expiration of Transitional Pass-Through Payments for Certain Devices
    As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires 
that, under the OPPS, a category of devices be eligible for 
transitional pass-through payments for at least 2 years, but not more 
than 3 years. There currently is one device category eligible for pass-
through payment: C1823 Generator, neurostimulator (implantable), 
nonrechargeable, with transvenous sensing and stimulation leads), which 
was established effective January 1, 2019. The pass-through payment 
status of the device category for HCPCS code C1823 will end on December 
31, 2021. HCPCS code C1823 will continue to receive pass-through status 
in CY 2020.
2. New Device Pass-Through Applications
a. Background
    Section 1833(t)(6) of the Act provides for pass-through payments 
for devices, and section 1833(t)(6)(B) of the Act requires CMS to use 
categories in determining the eligibility of devices for pass-through 
payments. As part of implementing the statute through regulations, we 
have continued to believe that it is important for hospitals to receive 
pass-through payments for devices that offer substantial clinical 
improvement in the treatment of Medicare beneficiaries to facilitate 
access by beneficiaries to the advantages of the new technology. 
Conversely, we have noted that the need for additional payments for 
devices that offer little or no clinical improvement over previously 
existing devices is less apparent. In such cases, these devices can 
still be used by hospitals, and hospitals will be paid for them through 
appropriate APC payment. Moreover, a goal is to target pass-through 
payments for those devices where cost considerations might be most 
likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 
70 FR 68629).

[[Page 61273]]

We note that, in section IV.A.4. of the CY 2020 OPPS/ASC proposed rule, 
we proposed an alternative pathway that would grant fast-track device 
pass-through payment under the OPPS for devices approved under the FDA 
Breakthrough Device Program for OPPS device pass-through payment 
applications received on or after January 1, 2020. We refer readers to 
section IV.A.4. of the CY 2020 OPPS/ASC proposed rule for a complete 
discussion on this proposal.
    As specified in regulations at 42 CFR 419.66(b)(1) through (3), to 
be eligible for transitional pass-through payment under the OPPS, a 
device must meet the following criteria:
     If required by FDA, the device must have received FDA 
approval or clearance (except for a device that has received an FDA 
investigational device exemption (IDE) and has been classified as a 
Category B device by the FDA), or meet another appropriate FDA 
exemption; and the pass-through payment application must be submitted 
within 3 years from the date of the initial FDA approval or clearance, 
if required, unless there is a documented, verifiable delay in U.S. 
market availability after FDA approval or clearance is granted, in 
which case CMS will consider the pass-through payment application if it 
is submitted within 3 years from the date of market availability;
     The device is determined to be reasonable and necessary 
for the diagnosis or treatment of an illness or injury or to improve 
the functioning of a malformed body part, as required by section 
1862(a)(1)(A) of the Act; and
     The device is an integral part of the service furnished, 
is used for one patient only, comes in contact with human tissue, and 
is surgically implanted or inserted (either permanently or 
temporarily), or applied in or on a wound or other skin lesion.
    In addition, according to Sec.  419.66(b)(4), a device is not 
eligible to be considered for device pass-through payment if it is any 
of the following: (1) Equipment, an instrument, apparatus, implement, 
or item of this type for which depreciation and financing expenses are 
recovered as depreciation assets as defined in Chapter 1 of the 
Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker).
    Separately, we use the following criteria, as set forth under Sec.  
419.66(c), to determine whether a new category of pass-through payment 
devices should be established. The device to be included in the new 
category must--
     Not be appropriately described by an existing category or 
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service 
as of December 31, 1996;
     Have an average cost that is not ``insignificant'' 
relative to the payment amount for the procedure or service with which 
the device is associated as determined under Sec.  419.66(d) by 
demonstrating: (1) The estimated average reasonable costs of devices in 
the category exceeds 25 percent of the applicable APC payment amount 
for the service related to the category of devices; (2) the estimated 
average reasonable cost of the devices in the category exceeds the cost 
of the device-related portion of the APC payment amount for the related 
service by at least 25 percent; and (3) the difference between the 
estimated average reasonable cost of the devices in the category and 
the portion of the APC payment amount for the device exceeds 10 percent 
of the APC payment amount for the related service (with the exception 
of brachytherapy and temperature-monitored cryoablation, which are 
exempt from the cost requirements as specified at Sec.  419.66(c)(3) 
and (e)); and
     Demonstrate a substantial clinical improvement, that is, 
substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment.
    Beginning in CY 2016, we changed our device pass-through evaluation 
and determination process. Device pass-through applications are still 
submitted to CMS through the quarterly subregulatory process, but the 
applications will be subject to notice-and-comment rulemaking in the 
next applicable OPPS annual rulemaking cycle. Under this process, all 
applications that are preliminarily approved upon quarterly review will 
automatically be included in the next applicable OPPS annual rulemaking 
cycle, while submitters of applications that are not approved upon 
quarterly review will have the option of being included in the next 
applicable OPPS annual rulemaking cycle or withdrawing their 
application from consideration. Under this notice-and-comment process, 
applicants may submit new evidence, such as clinical trial results 
published in a peer-reviewed journal or other materials for 
consideration during the public comment process for the proposed rule. 
This process allows those applications that we are able to determine 
meet all of the criteria for device pass-through payment under the 
quarterly review process to receive timely pass-through payment status, 
while still allowing for a transparent, public review process for all 
applications (80 FR 70417 through 70418).
    More details on the requirements for device pass-through payment 
applications are included on the CMS website in the application form 
itself at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the 
``Downloads'' section. In addition, CMS is amenable to meeting with 
applicants or potential applicants to discuss research trial design in 
advance of any device pass-through application or to discuss 
application criteria, including the substantial clinical improvement 
criterion.
b. Applications Received for Device Pass-Through Payment for CY 2020
    We received seven complete applications by the March 1, 2019 
quarterly deadline, which was the last quarterly deadline for 
applications to be received in time to be included in the CY 2020 OPPS/
ASC proposed rule. We received one of the applications in the second 
quarter of 2018, three of the applications in the fourth quarter of 
2018, and three of the applications in the first quarter of 2019. None 
of the applications were approved for device pass-through payment 
during the quarterly review process.
    Applications received for the later deadlines for the remaining 
2019 quarters (June 1, September 1, and December 1), if any, will be 
presented in the CY 2021 OPPS/ASC proposed rule. We note that the 
quarterly application process and requirements have not changed in 
light of the addition of rulemaking review. Detailed instructions on 
submission of a quarterly device pass-through payment application are 
included on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf. A 
discussion of the applications received by the March 1, 2019 deadline 
is presented below.
(1) Surefire[supreg] SparkTM Infusion System
    TriSalus Life Sciences submitted an application for a new device 
category for transitional pass-through payment status for the 
Surefire[supreg] SparkTM Infusion System. The 
Surefire[supreg] SparkTM Infusion System is described as a

[[Page 61274]]

flexible, ultra-thin microcatheter with a self-expanding, nonocclusive 
one-way microvalve at the distal end. The applicant stated that it has 
designed the Pressure Enabled Drug DeliveryTM technology of 
the Surefire[supreg] SparkTM Infusion System to overcome 
intratumoral pressure in solid tumors and improve distribution and 
penetration of therapy during Transcatheter Arterial Chemoembolization 
(TACE) procedures. TACE is a minimally invasive, image-guided procedure 
used to infuse a high dose of chemotherapy into liver tumors. According 
to the applicant, the pliable, one-way valve at the distal tip of the 
Surefire[supreg] SparkTM Infusion System creates a temporary 
local increase in pressure during infusion, opening up collapsed 
vessels in tumors, which enables perfusion and therapy delivery in 
areas inaccessible to the systemic circulation, a positive hydrostatic 
pressure gradient, and restores convective flow to enable therapy to 
penetrate deeper into the tumor. During the TACE procedure, the 
physician first gains catheter access into the arterial system of the 
hepatic arteries through a small incision in the groin or the wrist. 
The applicant stated that the physician then uses real-time 
fluoroscopic guidance to navigate the Surefire[supreg] 
SparkTM Infusion System into the blood vessels feeding the 
tumors, infusing the chemotherapy and embolic materials through the 
Surefire[supreg] SparkTM Infusion System until the tumor bed 
is completely saturated.
    With respect to the newness criterion at Sec.  419.66(b)(1), FDA 
granted 510(k) premarket clearance as of April 3, 2018. The application 
for a new device category for transitional pass-through payment status 
for the Surefire[supreg] SparkTM Infusion System was 
received on November 29, 2018, which is within 3 years of the date of 
the initial FDA approval or clearance. We invited public comments on 
whether the Surefire[supreg] SparkTM Infusion System meets 
the newness criterion.
    Comment: The manufacturer of Surefire[supreg] SparkTM 
Infusion System believed this device meets the eligibility criteria for 
device pass-through payment under the regulation at Sec.  419.66, which 
includes the newness criterion.
    Response: We appreciate the commenter's input. After consideration 
of the public comments we received and based on the fact that the 
Surefire[supreg] SparkTM Infusion System application was 
received within 3 years of FDA approval, we believe that the 
Surefire[supreg] SparkTM Infusion System meets the newness 
criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, the use of the Surefire[supreg] 
SparkTM Infusion System is integral to the service of 
providing delivery of chemotherapy into liver tumors, is used for one 
patient only, comes in contact with human skin, and is applied in or on 
a wound or other skin lesion. The applicant also claimed the 
Surefire[supreg] SparkTM Infusion System meets the device 
eligibility requirements of Sec.  419.66(b)(4) because it is not an 
instrument, apparatus, implement, or items for which depreciation and 
financing expenses are recovered, and it is not a supply or material 
furnished incident to a service. We invited public comments on whether 
the Surefire[supreg] SparkTM Infusion System meets the 
eligibility criteria at Sec.  419.66(b).
    Comment: The manufacturer of Surefire[supreg] SparkTM 
Infusion System believed that that the Surefire[supreg] 
SparkTM Infusion System met the eligibility criteria at 
Sec.  419.66(b).
    Response: We appreciate the commenter's input. Based on the 
information we have received and our review of the application, we have 
determined that Surefire[supreg] SparkTM Infusion System 
meets the eligibility criterion at Sec.  419.66(b)(3) and (b)(4).
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We 
identified several existing pass-through payment categories that may be 
applicable to the Surefire[supreg] SparkTM Infusion System. 
The Surefire[supreg] SparkTM Infusion System may be 
described by HCPCS code C1887 (Catheter, guiding (may include infusion/
perfusion capability)). The applicant describes the Surefire[supreg] 
SparkTM Infusion System as a device used in vascular 
interventional procedures to deliver diagnostic and therapeutic agents 
in the peripheral vasculatures. The CMS List of Device Category Codes 
for Present or Previous Pass-Through Payment and Related Definitions 
describes HCPCS code C1887 as intended for the introduction of 
interventional/diagnostic devices into the coronary or peripheral 
vascular systems. In the CY 2020 OPPS/ASC proposed rule, we also stated 
that the Surefire[supreg] SparkTM Infusion System may also 
be described by HCPCS code C1751 (Catheter, infusion, inserted 
peripherally, centrally or midline (other than hemodialysis)). The 
applicant describes the Surefire[supreg] SparkTM Infusion 
System as being inserted through a small incision in the groin or the 
wrist. We invited public comments on this issue.
    Comment: The manufacturer of the device does not believe there is 
an existing pass-through payment category that describes the 
Surefire[supreg] SparkTM Infusion System, commenting that 
the existing device categories that CMS identified do not adequately 
describe critical aspects of the device. The manufacturer noted that 
existing categories, such as C1887 Catheter, guiding (may include 
infusion/perfusion capability) and C1751 Catheter, infusion, inserted 
peripherally, centrally or midline (other than hemodialysis)--do not 
appropriately describe catheters with a pressure-enabled drug delivery 
(PEDD) valve, a key mechanism of action of the Surefire[supreg] 
SparkTM Infusion System. The manufacturer stated that the 
PEDD valve is closely associated with differential and improved 
outcomes as compared to catheters without PEDD valves and is not 
appropriately described by existing categories.
    Response: We appreciate the commenter's input. After consideration 
of the public comments we received, we believe there is no existing 
pass-through payment category that appropriately describes the 
Surefire[supreg] SparkTM Infusion System, due to the 
pressure-enabled drug delivery (PEDD) valve which offers a unique 
mechanism for therapy delivery. Based on this information, we believe 
that the Surefire[supreg] SparkTM Infusion System meets the 
eligibility criterion.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With respect to this criterion, the applicant 
submitted four studies to support the claim that their technology 
represents a substantial clinical improvement over existing 
technologies. The applicant asserts that the Surefire[supreg] 
SparkTM Infusion System represents a substantial clinical 
improvement over existing technologies because it offers a treatment 
option that no other catheters currently available can provide. The 
manufacturer notes that the self-expanding, nonocclusive, one-way valve 
can infuse therapy at pressure higher

[[Page 61275]]

than the baseline mean arterial pressure, and this pressurized delivery 
opens up collapsed vessels in tumors and enables perfusion and therapy 
delivery into hypoxic areas of the liver tumors. The applicant also 
believes that the Surefire[supreg] SparkTM Infusion System 
represents a substantial clinical improvement because the technology 
has shown improved tumor response rates in hepatocellular carcinoma, as 
well as a decrease in the rate of disease recurrence and the need for 
subsequent treatment.
    The first pilot study of nine patients being treated for 
hepatocellular carcinoma, who received infusions via both a 
conventional end-hole catheter and an antireflux microcatheter, 
demonstrated statistically significant reductions in downstream 
distribution of embolic particles with the antireflux catheter and 
increases in tumor deposition (p < 0.05).\13\ The second singlecenter 
retrospective study was conducted with 22 patients treated for 
hepatocellular carcinoma with the Surefire[supreg] SparkTM 
Infusion System and TACE. As assessed by MRI, there appeared to be 
overall disease response in 91 percent of patients and 85 percent of 
lesions and complete response in 32 percent of patients and 54 percent 
of lesions.\14\ In the first study for a case-control series, 19 
patients undergoing treatment using SIS-TACE had a statistically 
significant improvement in disease response rate compared to 19 
patients treated with end-hole microcatheters, 78.9 percent compared to 
36.8 percent for initial overall response rate (p = 0.008).\15\ In the 
second study, a multi-center registry of 72 patients demonstrated high 
response rate when compared to historical control at 6 months follow-
up.\16\
---------------------------------------------------------------------------

    \13\ Pasciak AS, McElmurray JH, Bourgeois AC, Heidel RE, Bradley 
YC. Impact of an antireflux catheter on target volume particulate 
distribution in liver-directed embolotherapy: a pilot study. J Vasc 
Interv Radiol. 2015 May;26(5):660-9.
    \14\ Kim AY, Frantz S, Krishnan P, DeMulder D, Caridi T, Lynskey 
GE, et al. (2017) Short-term imaging response after drug-eluting 
embolic trans- arterial chemoembolization delivered with the 
Surefire Infusion System[supreg] for the treatment of hepatocellular 
carcinoma. PloS one 12.9 (2017): e0183861.
    \15\ N Apseloff, J Keung, T Caridi, D Buckley, G Lynskey, A Kim. 
Case-control evaluation of endhole microcatheter versus Surefire 
Infusion System for use during transarterial chemoembolization for 
hepatocellular carcinoma. Conference abstract presented at 2017 
Society of Intervention Radiology Annual Congress, March 8, 2017.
    \16\ Kapoor B, Contreras F, Katz M, Arepally A, Fischman A, Rose 
S, Kim A, Ferraro J. Surefire Infusion System (SIS) hepatocellular 
carcinoma registry study interim results: A multicenter study of the 
safety, feasibility, and outcomes of the SIS expandable-tip 
microcatheter in DEB-TACE.
    Conference abstract presented at 2018 Society of Intervention 
Radiology Annual Congress, March 19, 2017.
---------------------------------------------------------------------------

    Based on the information submitted by the applicant, one concern 
was that large-scale studies with long-term follow-up were limited. 
Also, the majority of studies presented had a sample size of less than 
25 and the highest sample size presented was less than 100 patients. 
Additionally, patient follow-up occurred mostly within a 3 to 6 month 
timeframe with few studies occurring beyond this range. Another concern 
was that none of the studies presented improvements in mortality with 
the use of the Surefire[supreg] SparkTM Infusion System. 
Outcomes focused primarily on tumor response rates and lesion size, 
based upon imaging. We noted additional data on mortality endpoints 
would be helpful to fully assess substantial clinical improvement. We 
invited public comments on whether the Surefire[supreg] 
SparkTM Infusion System meets the substantial clinical 
improvement criterion.
    Comment: The manufacturer responded to several statements regarding 
Surefire[supreg] SparkTM Infusion System and substantial 
clinical improvement in the CY 2020 OPPS/ASC proposed rule, and 
asserted that SparkTM Infusion System meets the substantial 
clinical improvement criterion. The manufacturer stated that the 
population size in the studies submitted to CMS are normal for a new 
and innovative technology, noting that the studies are methodologically 
rigorous and show statistically significant differentiation from 
comparators. The manufacturer also noted that overall survival is not 
an appropriate endpoint for hepatocellular carcinoma. They cited 
National Comprehensive Cancer Network (NCCN) guidelines, noting that 
tumor necrosis and pathologic response are primary predictors of 
success in these cases and locoregional therapy should be viewed as a 
way to transition patients to transplant or resection. The manufacturer 
also suggested that CMS should consider that clinical improvements vary 
based on the therapeutic agent being delivered by the 
SparkTM Infusion System and that these agents are approved 
on a variety of endpoints.
    Response: We appreciate the response to the questions we had 
regarding SparkTM Infusion System. After reviewing the 
information provided in the public comment, we agree that while the 
opportunity for large-scale studies with long-term follow-up is limited 
for a new technology, the existing studies show statistically 
significant improvements. Additionally, with regard to our questions 
about impacts on mortality, we accept the applicant's statement that 
there are other key clinical endpoints, such as tumor necrosis and 
progression-free survival, that can be used to assess improvements from 
the SparkTM Infusion System.
    Comment: Multiple commenters supported granting SparkTM 
Infusion System transitional pass-through payment status. Many of the 
commenters mentioned that SparkTM Infusion System provides 
substantial clinical benefit over conventional therapy and urged CMS to 
approve the transitional pass-through payment to reduce cost burden and 
increase patient access.
    Response: We appreciate the additional information that the 
commenters provided on the performance and the benefits of 
SparkTM Infusion System.
    After consideration of the public comments we received, we have 
determined that SparkTM Infusion System does meet the 
substantial clinical improvement criterion.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
Surefire[supreg] SparkTM Infusion System would be reported 
with CPT code 37243, which is assigned to APC 5193 (Level 3 
Endovascular Procedures). To meet the cost criterion for device pass-
through payment status, a device must pass all three tests of the cost 
criterion for at least one APC. For our calculations, we used APC 5193, 
which has a CY 2019 payment rate of $9,669.04. Beginning in CY 2017, we 
calculated the device offset amount at the HCPCS/CPT code level instead 
of the APC level (81 FR 79657). CPT code 37243 had a device offset 
amount of $3,894.69 at the time the application was received. According 
to the applicant, the cost of the Surefire[supreg] SparkTM 
Infusion System is $7,750.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $7,750 for the Surefire[supreg] 
SparkTM Infusion System is

[[Page 61276]]

80.2 percent of the applicable APC payment amount for the service 
related to the category of devices of $9,669.04 ($7,750/$9,669.04 x 100 
= 80.2 percent). Therefore, we believe the Surefire[supreg] 
SparkTM Infusion System meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $7,750 for the 
Surefire[supreg] SparkTM Infusion System exceeds the cost of 
the device-related portion of the APC payment amount for the related 
service of $3,894.69 by 199 percent ($7,750-$3,894.69) x 100 = 198.99 
percent). Therefore, we believe that the Surefire[supreg] 
SparkTM Infusion System meets the second cost significance 
requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $7,750 for the SparkTM Infusion System 
and the portion of the APC payment amount for the device of $3,894.69 
exceeds the APC payment amount for the related service of $9,669.04 by 
40 percent (($7,750-$3,894.69)/$9,669.04) x 100 = 39.87 percent). 
Therefore, we believe that the Surefire[supreg] SparkTM 
Infusion System meets the third cost significance requirement.
    We invited public comments on whether the Surefire[supreg] 
SparkTM Infusion System meets the device pass-through 
payment criteria discussed in this section, including the cost 
criterion.
    Comment: The manufacturer of the Surefire[supreg] 
SparkTM Infusion System believed that the device meets the 
cost criterion for device pass-through payment status.
    Response: We appreciate the manufacturer's input. After 
consideration of the public comments we received, we believe that 
Surefire[supreg] SparkTM Infusion System meets the cost 
criterion for device pass-through payment status.
    After consideration of the public comments we received, we are 
approving the Surefire[supreg] SparkTM Infusion System for 
device pass-through payment status beginning in CY 2020.
(2) TracPatch
    According to the applicant, TracPatch is a wearable device that 
utilizes an accelerometer, temperature sensor and step counter to allow 
the surgeon and patient to monitor recovery and help ensure critical 
milestones are being met. The applicant states that TracPatch utilizes 
wearable monitoring technology and methods in an effort to enhance the 
rehabilitation experience for both patients and physicians. 
Accelerometers are utilized to recognize and record the results when 
patients perform standard physical therapy exercises, in addition to 
providing standard step count and high-acceleration events that may 
indicate a fall. A temperature sensor monitors the skin temperature 
near the joint.
    TracPatch is described by the applicant as a 24/7 remote monitoring 
wearable device that captures a patient's key daily activities: such as 
range of motion progress, exercise compliance, and ambulation. 
TracPatch is used for pre- and post-operative patient monitoring, 
patient engagement, data analytics and post-op cost reduction.
    According to the applicant, the wearable devices stick on the skin 
above and below the knee. The wearables are applied before total knee 
surgery to determine a patient's baseline activity levels, and then 
again after surgery to allow the patient and surgeon to monitor 
activity, pain, range of motion and physical therapy. The use of the 
Bluetooth connectivity allows the device to be paired with any 
smartphone and the TracPatch cloud allows for unlimited data collection 
and storage. The applicant states that TracPatch includes a web 
dashboard and computer application, which permit a health care provider 
to monitor a patient's recovery in real-time, allowing for immediate 
care adjustments and the ability for providers and patients to respond 
to issues that may occur during recovery from surgery.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant stated that TracPatch does not need FDA clearance because it 
is a Class I device that would be assigned to a generic category of 
devices described in 21 CFR parts 862 through 892 that is exempt from 
FDA premarket notification. However, the applicant did not identify 
which category of exempted devices that TracPatch would be assigned. 
The applicant also stated that TracPatch will be introduced into the 
market in 2019, which would be within 3 years of the device pass-
through payment application for TracPatch that was received in March 
2019. We invited public comments on whether the TracPatch is exempt 
from FDA clearance and if the TracPatch meets the newness criterion.
    Comment: One commenter, the manufacturer, stated that they had 
registered TracPatch as a Class I Exempt goniometer with FDA which was 
listed on the Global Unique Device Identification Database (GUDID) as 
of August 28, 2019.
    Response: We thank the manufacturer for clarifying that TracPatch 
is now registered with FDA as a Class I Exempt goniometer as of August 
28, 2019.
    After consideration of the public comments, we have determined that 
TracPatch meets the newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the applicant claimed that the TracPatch is an integral part of 
monitoring the range of motion for a knee prior to and after total knee 
arthroplasty, is used for one patient only, and is placed on the skin 
above and below the knee and secured by Velcro strips. The applicant 
stated that the device is not surgically implanted or inserted into the 
patient and is not applied in or on a wound or other skin lesion. We 
stated concerns in the proposed rule with TracPatch's eligibility with 
respect to the criterion at Sec.  419.66(b)(3) because to be eligible 
for pass-through payment a device must be surgically implanted or 
inserted into the patient or applied in a wound or on other skin 
lesions. In addition, the applicant stated that the TracPatch meets the 
device eligibility requirements of Sec.  419.66(b)(4) because it is not 
an instrument, apparatus, implement, or item for which depreciation and 
financing expenses are recovered. We determined that TracPatch was not 
a material or supply furnished incident to a service. We invited public 
comments on whether the TracPatch meets the eligibility criterion.
    Comment: One commenter, the manufacturer, provided more information 
on whether TracPatch meets the eligibility criterion. The manufacturer 
states that the device is adhered to a patient's skin using a medical 
adhesive patch and not Velcro strips and that the device is placed near 
a wound (which we assume is the incision for the associated knee 
surgery) in a sterile setting. The placement of the device near the 
wound allows real time monitoring of changes to the wound and 
complications and abnormalities that may arise. Also the device 
placement is important to perform measurements related to the knee's 
range of motion.

[[Page 61277]]

    Response: The commenter did not state or provide evidence either in 
its device pass-through application or in its comment on the CY 2020 
OPPS/ASC proposed rule, that the TracPatch device is surgically 
implanted or inserted into a patient or is applied in a wound or on 
other skin lesions. In fact, the description of the Class I Exempt 
goniometer on the FDA product classification web page states that the 
goniometer is not an implantable device. To be considered for device 
pass-through payment, a device must meet this part of the eligibility 
criterion.
    After consideration of all of the information we have received, we 
have determined that TracPatch is not surgically implanted or inserted 
into a patient or applied in a wound or on other skin lesions, and the 
product thus does not meet the eligibility criterion for device pass-
through payment status. Because we have determined that TracPatch does 
not meet the basic eligibility criterion for transitional pass-through 
payment status, we have not evaluated this product to determine whether 
it meets the other criteria required for transitional pass-through 
payment for devices; that is the substantial clinical improvement 
criterion, and the cost criterion.
    Comment: Multiple commenters, including physicians and patients, 
described the benefits of TracPatch and how it helped either them or 
their patients with their recoveries from knee surgery.
    Response: We appreciate the comments we received about the benefits 
of TracPatch. However, we did not evaluate substantial clinical 
improvement for TracPatch because it did not meet the eligibility 
criterion.
    After consideration of the public comments we received, we are not 
approving device pass-through payment status for TracPatch for CY 2020.
(3) Vagus Nerve Stimulation (VNS) Therapy[supreg] System for Treatment 
Resistant Depression (TRD)
    LivaNova USA Inc. submitted an application for the Vagus Nerve 
Stimulation (VNS) Therapy[supreg] System for Treatment Resistant 
Depression (TRD). According to the applicant, the VNS Therapy[supreg] 
System consists of two implantable components: A programmable 
electronic pulse generator and a bipolar electrical lead that is 
connected to the programmable electronic pulse generator. The applicant 
stated that the surgical procedure to implant the VNS Therapy[supreg] 
System involves subcutaneous implanting of the pulse generator in the 
intraclavicular region as well as insertion of the bipolar electrical 
lead which entails wrapping two spiral electrodes around the cervical 
portion of the left vagus nerve within the carotid sheath.
    According to the applicant, following implant and recovery, the 
physician programs the pulse generator to intermittently stimulate the 
vagus nerve at a level that balances efficacy and patient tolerability. 
The pulse generator delivers electrical stimulation via the bipolar 
electrical lead to the cervical portion of the left vagus nerve within 
the carotid sheath thereby relaying information to the brain stem 
modulating structures relevant to depression. Stimulation typically 
consists of a 30-second period of ``on time,'' during which the device 
stimulates at a fixed level of output current, followed by a 5-minute 
``off time'' period of no stimulation.
    The applicant states that a hand-held programmer is utilized to 
program the pulse generator stimulation parameters, including the 
current charge, pulse width, pulse frequency, and the on/off stimulus 
time, which is also known as the on/off duty cycle. Initial settings 
can be adjusted to enhance the tolerability of the device as well as 
its clinical effects on the patient. The generator runs continuously, 
but patients can temporarily turn off the device by holding a magnet 
over it. The generator can also be turned on and off by the programmer.
    The applicant states that the VNS Therapy[supreg] System provides 
indirect modulation of brain activity through the stimulation of the 
vagus nerve. The vagus nerve, the tenth cranial nerve, has 
parasympathetic outflow that regulates the autonomic (that is, 
involuntary) functions of heart rate and gastric acid secretion, and 
also includes the primary functions of sensation from the pharynx, 
muscles of the vocal cords and swallowing. It is a nerve that carries 
both sensory and motor information to and from the brain. Importantly, 
the vagus nerve has influence over widespread brain areas and it is 
believed that electrical stimulation of the vagus nerve alters various 
networks of the brain in order to treat psychiatric disease.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received FDA clearance for the VNS Therapy[supreg] System for 
TRD through the premarket approval (PMA) process on July 15, 2005, and 
the VNS Therapy[supreg] for TRD device was introduced to the market in 
September 2005. However, on May 4, 2007, a national coverage 
determination (NCD 160.18) was released prohibiting Medicare from 
covering the use of the VNS Therapy[supreg] System for TRD. This NCD 
remained in effect until February 15, 2019, when CMS determined that 
the VNS Therapy[supreg] for TRD could receive payment if the service 
was performed in CMS-approved coverage with evidence development (CED) 
studies. Although the VNS Therapy[supreg] System for TRD was introduced 
to the market in September 2005, Medicare has only covered it for 
slightly more than 1\1/2\ years. However, Sec.  419.66(b)(1) states 
that a pass-through payment application for a device must be received 
within 3 years of when the device either received FDA approval or was 
introduced to the market. The applicant stated that the VNS 
Therapy[supreg] System for TRD was introduced to the market in 
September 2005, which means the device pass-through payment application 
would have needed to have been submitted to CMS by September 2008. 
However, the pass-through application for the device was not received 
by CMS until March 2019.
    In addition, it appeared that the neurostimulator device for the 
VNS Therapy[supreg] System for TRD is the same device that has been 
used since 1997 to treat epilepsy.\17\ The applicant stated the 
following three differences between the two devices: (1) How the device 
is programmed to treat epilepsy versus TRD; (2) how the external 
magnets of the device are used for epilepsy treatment as compared to 
TRD treatment; and (3) that the battery life of the device to treat 
epilepsy is different than the battery life of the device when treating 
TRD. However, it was not clear that these differences demonstrate that 
the actual device used to treat TRD is any different than the device 
used to treat epilepsy.
---------------------------------------------------------------------------

    \17\ Current Behavioral Neuroscience Reports. 2014 Jun; 1(2): 
64-73.
---------------------------------------------------------------------------

    Based on the information presented, we invited public comments on 
whether the VNS Therapy[supreg] System for TRD meets the newness 
criterion.
    Comment: One commenter, the manufacturer, made additional arguments 
for why the VNS Therapy[supreg] System for TRD meets the newness 
criterion. The manufacturer stated that there were 22 months between 
the FDA approval of the associated procedure to treat TRD in July 2005 
and CMS' issuance of the national determination of non-coverage on May 
4, 2007. The manufacturer asserts that during those 22 months the VNS 
Therapy[supreg] System for TRD was ``realistically not available'' 
because of concerns about covering the TRD treatment procedure during 
the period between FDA approval and the national determination of non-
coverage.

[[Page 61278]]

In another part of the manufacturer's comment, they state that the 
uncertainty of coverage for the TRD treatment procedure meant that the 
treatment was not available to patients during the July 2005 to May 
2007 time period.
    The manufacturer believes the most equitable reading of the rule 
that is consistent with the intent of the criterion when it was 
established in the CY 2016 OPPS final rule (80 FR 70418 through 70420) 
is that the 3-year period for newness from when the VNS Therapy[supreg] 
System for TRD was introduced into the market in July 2015 should have 
been held in suspension from May 4, 2007 when the original national 
determination of non-coverage by CMS until the subsequent national 
determination allowing coverage of the VNS Therapy[supreg] System for 
TRD with coverage with evidence development (CED) was released on 
February 15, 2019.
    The manufacturer cites CMS statements from the CY 2016 OPPS final 
rule supporting this reading, including that device pass-through 
payment is for devices that are truly new and do not have sufficient 
claims data for CMS to analyze, and that market availability for a 
device could be considered to be after its FDA approval or clearance 
date where there is a national coverage determination of non-coverage 
of the device within the Medicare population. The manufacturer asserts 
that the reason that the newness criterion does not address the market 
availability situation faced by the VNS Therapy[supreg] System for TRD 
is that CMS simply did not envision that such a situation would occur. 
The manufacturer asserts that the VNS Therapy[supreg] System for TRD 
neurostimulator device has not been available in the market for 3 full 
years, and therefore still meets the newness criterion.
    Response: We disagree with the commenter's conclusion. The 
manufacturer did not provide evidence to establish that the 
neurostimulator device for the VNS Therapy[supreg] System for TRD was 
not similar to the neurostimulator device that has been used since 1997 
to treat epilepsy. With no evidence to the contrary, it appears the 
neurostimulator device for the VNS Therapy[supreg] System for TRD has 
been on the market continuously since 1997 and therefore fails the 
newness criterion.
    However, even if we were to assume the neurostimulator device for 
the VNS Therapy[supreg] System for TRD was a new device upon FDA 
approval for the TRD treatment procedure in July 2005, the device would 
still not meet the newness criterion. The manufacturer's comment about 
suggesting an equitable reading of the newness criterion consistent 
with what it believed was our intent in the CY 2016 OPPS final rule (80 
FR 70418 through 70420) implied that, for a device to meet the newness 
standard, it had to be available in the market for less than three 
years and that the availability period would be suspended if the device 
was unavailable in the market due to national non-coverage. This 
comment does not align with the language of Sec.  419.66(b)(1), which 
states that the application for device pass-through payment must be 
received within 3 years from the date of market availability and makes 
no exception for periods of national non-coverage. As we stated in the 
proposed rule, based on information provided in the original device 
pass-through application, the device pass-through application had to be 
submitted by September 2008 to meet the newness requirement.
    Comment: One commenter stated that it did not believe that the VNS 
Therapy[supreg] System for TRD meets the newness criterion for device 
pass-through payment. The commenter states that while there have been 
technical improvements with the VNS Therapy[supreg] System for TRD, the 
commenter believes these are typical upgrades of an existing technology 
and not evidence of a new device.
    Response: We appreciate the feedback from the commenter, including 
their concern that the differences cited by the manufacturer between 
the neurostimulator VNS device to treat epilepsy and the 
neurostimulator VNS device to treat TRD are not substantial enough to 
establish the VNS Therapy[supreg] System for TRD neurostimulator device 
as a new device that meets the newness criterion. A device also will 
fail the newness criterion if, as noted above, it is on the market more 
than three years, based either on its FDA clearance or approval date or 
the date of U.S. market availability.
    After consideration of all of the information we have received, we 
have determined that the VNS Therapy[supreg] System for TRD does not 
meet the newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the applicant claimed that the VNS Therapy[supreg] System for TRD is an 
integral part of a procedure to provide adjunctive treatment of chronic 
or recurrent depression in adult patients that have failed four or more 
antidepressant treatments. The VNS Therapy[supreg] System for TRD is 
used for one patient only, comes in contact with human tissue, and is 
surgically implanted or inserted into the patient. In addition, the 
applicant stated that the VNS Therapy[supreg] System for TRD meets the 
device eligibility requirements of Sec.  419.66(b)(4) because it is not 
an instrument, apparatus, implement, or item for which depreciation and 
financing expenses are recovered. We determined that the VNS 
Therapy[supreg] for TRD was not a material or supply furnished incident 
to a service. We invited public comments on whether the VNS 
Therapy[supreg] for TRD meets the eligibility criterion.
    Comment: One commenter, the manufacturer, claimed that the VNS 
Therapy[supreg] for TRD device meets the basic eligibility criteria for 
pass-through status. The device is an integral part of the service 
provided which is the adjunctive treatment of TRD. The device is used 
by one patient, comes in contact with human tissue and is surgically 
implanted. The manufacturer also asserts that the device is not an 
instrument, apparatus, implement, or item for which depreciation and 
financing expenses are recovered. The manufacturer states that the 
device is not a material or supply furnished incident to a service.
    Response: We appreciate the additional comments from the 
manufacturer. After consideration of all of the information we have 
received, we have determined that the VNS Therapy[supreg] System for 
TRD does meet the device eligibility criterion as described by Sec.  
419.66(b)(4).
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any existing categories or 
by any category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. With respect to the 
existence of a previous pass-through device category that describes the 
device used for the VNS Therapy[supreg] System for TRD, the applicant 
suggested a category descriptor of ``Generator, neurostimulator 
(implantable), treatment resistant depression, non-rechargeable.'' 
However, the device category represented by HCPCS code C1767 is 
described as ``Generator, neurostimulator (implantable), non-
rechargeable,'' which appears to encompass the device category 
descriptor for the VNS Therapy[supreg] System for TRD suggested by the 
applicant. The applicant asserts that the device category descriptor 
for HCPCS code C1767 is overly broad and noted the establishment of 
HCPCS code C1823 (Generator, neurostimulator (implantable), 
nonrechargeable, with transvenous sensing and stimulation

[[Page 61279]]

leads), effective January 1, 2019, as an example of where a new device 
category for a nonrechargeable neurostimulation system to treat central 
sleep apnea was carved out from the broad category described by HCPCS 
code C1767.
    The applicant believes its proposed category for the device for the 
VNS Therapy[supreg] System for TRD should similarly qualify as a new 
category. However, HCPCS code C1823 was established due to specific 
device features which distinguish that device category from HCPCS code 
C1767. The applicant for the VNS Therapy[supreg] System for TRD 
requested a new device category based on a beneficiary's diagnosis, but 
OPPS does not differentiate payment by diagnosis.
    Comment: The applicant asserts that the VNS Therapy[supreg] for TRD 
device is not described by any of the existing device categories in the 
OPPS and that the associated service was not paid as an outpatient 
service as of December 31, 1996.
    Response: We do not agree with the applicant's assertion. We 
believe the VNS Therapy[supreg] for TRD device is described by existing 
HCPCS code C1767 (Generator, neurostimulator (implantable), non-
rechargeable) and does not meet the criterion that is described by 
Sec.  419.66(c)(1) because the device is described by an existing 
device category. As stated in the proposed rule, OPPS does not 
differentiate payment by diagnosis and therefore cannot establish new 
device categories based solely on a previously described device being 
used to treat a new indication. In the original pass-through 
application, the applicant cited the example of the establishment of a 
new category code, HCPCS code C1823 (Generator, neurostimulator 
(implantable), nonrechargeable, with transvenous sensing and 
stimulation leads), for the remede system even though that device is a 
non-rechargeable neurostimulator and initially appeared to be covered 
by HCPCS code C1767, like the VNS Therapy[supreg] for TRD device. 
However, as we stated in the proposed rule, HCPCS code C1823 was 
established due to specific device features that distinguish that 
device category from HCPCS code C1767. The applicant has not identified 
any device features of the VNS Therapy[supreg] for TRD device that 
distinguish it from the category described by HCPCS code C1767.
    After consideration of all of the information we have received, we 
have determined that the VNS Therapy[supreg] System for TRD is 
described by either an existing category or by a category previously in 
effect and does not meets the requirements of Sec.  419.66(c)(1) and 
the device category eligibility criterion.
    Because we have determined that the VNS Therapy[supreg] System for 
TRD does not meet either the newness criterion or the device category 
eligibility criterion for transitional pass-through payment status, we 
have not evaluated this device to determine whether it meets the other 
criteria required for transitional pass-through payment for devices; 
namely, the substantial clinical improvement criterion and the cost 
criterion.
    Comment: A commenter supported giving pass-through status for the 
VNS Therapy[supreg] System for TRD because the commenter believes the 
clinical benefits of the VNS Therapy[supreg] System for TRD have been 
demonstrated by the studies submitted for the recent national coverage 
determination that established coverage with evidence development for 
the procedure.
    Response: We appreciate the comment in support of the clinical 
benefits of the VNS Therapy[supreg] System for TRD. However, we did not 
evaluate substantial clinical improvement for the VNS Therapy[supreg] 
System for TRD because this device does not meet the newness criterion 
or the device category eligibility criterion.
    After consideration of the public comments we received, we are not 
approving VNS Therapy[supreg] System for TRD device pass-through 
payment status for CY 2020.
(4) Optimizer[supreg] System
    Impulse Dynamics submitted an application for a new device category 
for transitional pass-through payment status for the Optimizer[supreg] 
System. According to the applicant, the Optimizer[supreg] System is an 
implantable device that delivers Cardiac Contractility Modulation (CCM) 
therapy for the treatment of patients with moderate to severe chronic 
heart failure. CCM therapy is intended to treat patients with 
persistent symptomatic heart failure despite receiving guideline 
directed medical therapy (GDMT). The applicant stated that the 
Optimizer System consists of the Optimizer Implantable Pulse Generator 
(IPG), Optimizer Mini Charger, and Omni II Programmer with Omni Smart 
Software. Lastly, the applicant stated that the Optimizer[supreg] 
System delivers CCM signals to the myocardium. CCM signals are 
nonexcitatory electrical signals applied during the cardiac absolute 
refractory period that, over time, enhance the strength of cardiac 
muscle contraction.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received a Category B-3 Investigational Device Exemption 
(IDE) from FDA on April 6, 2017. Subsequently, the applicant received 
its premarket approval (PMA) application from FDA on March 21, 2019. We 
received the application for a new device category for transitional 
pass-through payment status for the Optimizer[supreg] System on 
February 26, 2019, which is within 3 years of the date of the initial 
FDA approval or clearance. We invited public comments on whether the 
Optimizer[supreg] System meets the newness criterion.
    Comment: The manufacturer believes that the Optimizer[supreg] 
System meets the newness criterion.
    Response: We appreciate the commenter's input. After consideration 
of the public comment we received, we believe that the 
Optimizer[supreg] System meets the newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, the Optimizer[supreg] System is integral to 
the CCM therapy service provided, is used for one patient only, comes 
in contact with human skin, and is applied in or on a wound or other 
skin lesion. The applicant also stated that the Optimizer[supreg] 
System meets the device eligibility requirements of Sec.  419.66(b)(4) 
because it is not an instrument, apparatus, implement, or items for 
which depreciation and financing expenses are recovered, and it is not 
a supply or material furnished incident to a service.
    We did not receive any public comments regarding whether 
Optimizer[supreg] System meets the eligibility criterion. Based on the 
information we have received, we have determined that Optimizer[supreg] 
System meets the eligibility criterion.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. For the 
proposed rule, we had not identified an existing pass-through payment 
category that describes the Optimizer[supreg] System.
    Comment: The manufacturer of the Optimizer[supreg] System indicated 
that there is not an existing pass-through payment category that 
describes the device.
    Response: We appreciate the commenter's input. After consideration 
of the public comment we received, we believe that the 
Optimizer[supreg] System meets the device category eligibility 
criterion.

[[Page 61280]]

    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. The applicant stated that the use of CCM 
significantly improves clinical outcomes for a patient population 
compared to currently available treatments. With respect to this 
criterion, the applicant submitted studies that examined the impact of 
CCM on quality of life, exercise tolerance, hospitalizations, and 
mortality.
    The applicant noted that the use of the Optimizer[supreg] System 
significantly improves clinical outcomes for patients with moderate-to-
severe chronic heart failure, and specifically improves exercise 
tolerance, quality of life, and functional status of patients that are 
otherwise underserved. The applicant claims that the Optimizer[supreg] 
System fulfills an unmet need because there is currently no therapeutic 
medical device therapies available for the 70 percent of heart failure 
patients who have New York Heart Association (NYHA) Class III heart 
failure, normal QRS duration and reduced ejection fraction (EF). FDA 
approved the Optimizer[supreg] System for NYHA Class III heart failure 
patients who remain symptomatic despite guideline directed medical 
therapy, who are in normal sinus rhythm, are not indicated for Cardiac 
Resynchronization Therapy, and have a left ventricular ejection 
fraction ranging from 25 percent to 45 percent.\18\
---------------------------------------------------------------------------

    \18\ https://www.accessdata.fda.gov/cdrh_docs/pdf18/P180036B.pdf.
---------------------------------------------------------------------------

    The applicant presented several studies to support these claims. 
According to the applicant, the results of a randomized clinical study 
in which patients with NYHA functional Class III, ambulatory Class IV 
heart failure despite OMT, an EF from 25-45 percent, or a normal sinus 
rhythm with QRS duration <130ms (n = 160) were randomized to continued 
medical therapy (n = 86) or CCM with the Optimizer[supreg] System (n = 
74) for 24 weeks showed a statistically significant improvement in the 
primary endpoint of peak oxygen consumption (pVO2 = 0.84, 95 percent 
Bayesian credible interval 0.123 to 1.52) compared with the patients 
who were randomized to continued medical therapy.\19\ The secondary 
endpoint of quality of life, measured by Minnesota Living with Heart 
Failure Questionnaire (MLWHFQ) (p<0.001), 6-minute hall walk test (p = 
0.02), and an NYHA function class assessment (p<0.001) were better in 
the treatment group versus control group. The secondary endpoint of 
heart failure-related hospitalizations was lowered from 10.8 percent to 
2.9 percent (p = 0.048). The applicant also reported a registry study 
of 140 patients with a left ventricular ejection fraction from 25-45 
percent receiving CCM therapy with a primary endpoint of comparing 
observed survival to Seattle Heart Failure Model (SHFM) predicted 
survival over 3 years of follow-up. All patients implanted with the 
Optimizer[supreg] System at participating centers were offered 
participation and 72 percent of patients agreed to enroll in the 
registry. There were improvements in quality of life markers (MLWHFQ) 
and a 75-percent reduction in heart failure hospitalizations 
(p<0.0001). Survival at 3 years was similar between the two study arms 
with CCM at 82.8 percent [73.4 percent-89.1 percent] and SHFM at 76.7 
percent (p = 0.16). However, for patients with a left ventricular 
ejection fraction from 35-45 percent receiving CCM therapy, the 3-year 
mortality for CCM therapy was significantly better than predicted with 
88 percent for CCM compared to 74.7 percent for SHFM (p = 0.0463).\20\ 
The applicant presented a randomized, double blind, crossover study of 
CCM signals with 164 patients with EF <=35 percent and NYHA Class II 
(24 percent) or III (76 percent) symptoms who received a CCM pulse 
generator. After the 6-month treatment period, results indicated 
statistically significantly improved peak VO2 and MLWHFQ (p = 0.03 for 
each parameter), concluding that CCM signals appear to be safe for 
patients and that exercise tolerance and quality of life were 
significantly better while patients were receiving active CCM 
treatment.\21\
---------------------------------------------------------------------------

    \19\ Abraham, W. T., Kuck, K. H., Goldsmith, R. L., Lindenfeld, 
J., Reddy, V. Y., Carson, P. E., . & Wiegn, P. (2018). A randomized 
controlled trial to evaluate the safety and efficacy of cardiac 
contractility modulation. JACC: Heart Failure, 6(10), 874-883.
    \20\ Anker, S. D., Borggrefe, M., Neuser, H., Ohlow, M. A., 
R[ouml]ger, S., Goette, A., . & Rousso, B. Cardiac contractility 
modulation improves long-term survival and hospitalizations in heart 
failure with reduced ejection fraction. Eur J Heart Fail .2019 Jan 
16. doi: 10.1002/ejhf.1374. [Epub ahead of print]
    \21\ Borggrefe MM, Lawo T, Butter C, Schmidinger H, Lunati M, 
Pieske B, Misier AR, Curnis A, Bocker D, Remppis A, Kautzner J, 
Stuhlinger M, Leclerq C, Taborsky M, Frigerio M, Parides M, Burkhoff 
D and Hindricks G. Randomized, double blind study of non-excitatory, 
cardiac contractility modulation electrical impulses for symptomatic 
heart failure. Eur Heart J. 2008;29:1019-28.
---------------------------------------------------------------------------

    A study was conducted with 68 consecutive heart failure patients 
with NYHA Class II or III symptoms, QRS duration <=130 ms, and who had 
been implanted with a CCM device between May 2002 and July 2013 in 
Germany. Based upon pre-implant SHFM survival rates, 4.5 years mean 
follow-up, and an average patient age of 61 years old, the study found 
lower mortality rates for CCM therapy group with 0 percent at 1 year, 
3.5 percent at 2 years, and 14.2 percent at 5 years, compared to 6.1 
percent, 11.8 percent, and 27.7 percent predicted by SHFM, respectively 
(p = 0.007).\22\ In a study on long-term outcomes, 41 consecutive heart 
failure patients with left ventricular ejection fraction (EF) < 40 
percent receiving CCM therapy were compared to a control group of 41 
similar heart failure patients and primarily evaluated for all-cause 
mortality, as well as heart failure hospitalization, cardiovascular 
death, and a death and heart failure hospitalization composite. After 6 
years of follow-up, the results showed that all-cause mortality was 
lower for the CCM group as compared to the control group (39 percent 
versus 71 percent respectively, p = 0.001), especially among patients 
with EF >= 25-40 percent with 36 percent for the CCM group versus 80 
percent for the control group (p <0.001). Although heart failure 
hospitalization was similar between the treatment and control cohorts, 
there was a significantly lower heart failure hospitalization rate for 
CCM patients with EF >= 25-40 percent (36 percent versus 64 percent 
respectively, p = 0.005).\23\ The applicant also presented additional 
studies 24 25 that presented similar conclusions to the 
studies discussed above, noting that CCM therapy provided improvements 
in quality of life, exercise capacity, NYHA class, and mortality rates.
---------------------------------------------------------------------------

    \22\ Kloppe A, Lawo T, Mijic D, et al. Long-term survival with 
Cardiac Contractility Modulation in patients with NYHA II or III 
symptoms and normal QRS duration. Int J Cardiol. 2016 Apr 
15;209:291-5.
    \23\ Liu M, Fang F, Luo XX, Shlomo BH, Burkhoff D, Chan JY, Chan 
CP, Cheung L, Rousso B, Gutterman D, Yu CM. Improvement of long-term 
survival by cardiac contractility modulation in heart failure 
patients: A case-control study. Int J Cardiol. 2016 Mar 1;206:122-6.
    \24\ M[uuml]ller D, Remppis A, Schauerte P, et al. Clinical 
effects of long-term cardiac contractility modulation (CCM) in 
subjects with heart failure caused by left ventricular systolic 
dysfunction. Clin Res. Cardiol. 2017 Nov 1;106(11):893-904.
    \25\ Kuschyk J, Roeger S, Schneider R, et al. Efficacy and 
survival in patients with cardiac contractility modulation: Long-
term single center experience in 81 patients. Int J Cardiol. 
2015;183C:76-81.

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[[Page 61281]]

    We noted several concerns with the studies presented by the 
applicant. One concern regarding the evidence for the Optimizer[supreg] 
System involves the mixed mortality outcomes presented. Three studies 
showed significantly lower mortality rates with the use of CCM compared 
to controls or predicted mortality. Each of these studies focused on 
slightly different mortality outcomes, including all-cause mortality, a 
composite of death and heart failure hospitalization, and cardiac 
mortality rates from 1 to 5 years. Two studies show mixed results. For 
the first, 3-year survival was not significant for the overall 
population, despite a significantly higher survival rate found in a 
subpopulation. For the second, mortality rates were significant 
compared to predictions at 1 year, but not 3 years. The final study did 
not report significance in its overall survival at 2 years. Although 
the studies and trials presented show improvements in mortality when 
evaluating CCM therapy with comparators, the studies have small sample 
sizes and limited timeframes for measuring survival. Additionally, 
three studies compared observed mortality rates to statistically 
projected mortality rates. In the two studies with observed mortality 
rates, the overall improvement in mortality was not significant, 
despite some significance found in subanalyses. These issues raise 
concerns about the strength of the conclusions related to the use of 
CCM therapy improving patient outcomes.
    Another concern with the studies presented for the 
Optimizer[supreg] System is that the included study population may not 
be necessarily representative of the Medicare beneficiary population. 
Several studies had a predominantly white, male patient population, 
which could make generalization of study results to a more diverse 
Medicare population difficult. Additionally, the average age of 
patients for several studies was under 65 years old, which may also be 
a limitation in applying these study results to the Medicare 
population.
    Overall, we were concerned that there was a lack of evidence from 
large trials for the CCM therapy provided by the Optimizer[supreg] 
System. The studies presented had sample sizes fewer than 500 patients. 
Other limitations include the potential placebo effects and selection 
bias that may have impacted study results. Only two studies presented 
were randomized and only one of those two was a double-blinded study. 
For the remaining studies, no blinding occurred to minimize potential 
biases, which indicates that patients and researchers knew they were 
receiving CCM therapy. This is a limitation because observed outcomes 
may be impacted by the placebo effect. Although most studies matched 
participants for similar demographics, there could be systematic 
differences and unmeasured bias between the two groups beyond the 
similarities addressed in the study that could affect outcomes. The 
lack of randomization may have implications for the strength of the 
studies' conclusions.
    Based upon the evidence presented, we invited public comments on 
whether the Optimizer[supreg] System meets the substantial clinical 
improvement criterion.
    Comment: The manufacturer responded to several statements regarding 
Optimizer[supreg] System and substantial clinical improvement in the CY 
2020 OPPS/ASC proposed rule, and asserted that Optimizer[supreg] System 
meets the substantial clinical improvement criterion. The manufacturer 
noted that a mortality benefit cannot be claimed based on currently 
published data but that the Optimizer[supreg] System does not appear to 
have a negative impact on mortality. The manufacturer acknowledged that 
male patients and those that identify as white were prevalent in the 
Optimizer System studies but contended that for clinical trials in 
general, and for heart failure specifically, these groups are typically 
over-represented. They presented several examples of cardiac device and 
pharmaceutical clinical trials for the treatment of heart failure, 
where a similar mix of patients in terms of gender and race existed 
across unrelated trials and therapies. In response to the concern that 
the average age of patients for several studies was under 65 years old, 
limiting the application of the study results to the Medicare 
population, the manufacturer conducted additional analyses on patients 
aged 65 and older. The analysis showed that the two populations were 
not dissimilar, and the manufacturer believes the clinical trial 
results are applicable to the Medicare patient population.
    The manufacturer presented data to demonstrate that the 
Optimizer[supreg] System delivers substantial clinical improvement in 
terms of improved functional status, quality of life, and exercise 
tolerance. In response to the concern regarding clinical trials 
enrolling sample sizes fewer than 500 patients, the manufacturer noted 
that there were 638 subjects enrolled and implanted with the Optimizer 
System in the U.S. randomized trials and that trials of this size are 
common in Class III medical device trials, which are tailored for 
gathering the required evidence to support FDA approval of novel 
technology. Regarding the concern about the lack of randomization and 
blinding in studies presented, the manufacturer noted that four out of 
the six studies were randomized, and two of the four were also blinded 
with both the control and the treatment group receiving the device.
    Response: We appreciate the response to the questions we had 
regarding Optimizer[supreg] System. After reviewing the additional 
information provided during the public comment period, we agree that, 
for patients with NYHA Class III heart failure patients who remain 
symptomatic despite guideline directed medical therapy, who are in 
normal sinus rhythm, are not indicated for Cardiac Resynchronization 
Therapy, and have a left ventricular ejection fraction ranging from 25 
percent to 45 percent, Optimizer[supreg] System is a substantial 
clinical improvement over existing treatment options for this 
population. The provided studies support improvements in functional 
status, quality of life, and exercise tolerance, all of which are 
relevant outcomes in this population. While the studies describe 
improved survival in a subset of patients and substantially reduced 
hospitalizations, the numbers are small, the observation period is 
short, and the data on readmissions are not specifically highlighted. 
However, we accept the manufacturer's note that while mortality benefit 
cannot be claimed based on currently published data, the 
Optimizer[supreg] System does not appear to have a negative impact on 
mortality.
    Accordingly, we have determined that the Optimizer[supreg] System 
has demonstrated substantial clinical improvement relative to existing 
treatment options for patients diagnosed with moderate to severe 
chronic heart failure. As the Optimizer[supreg] System received a 
Breakthrough Device designation from FDA, it meets the substantial 
clinical improvement criterion under this alternative pathway as well.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
Optimizer[supreg] System would be reported with CPT codes 0408T, 0409T, 
0410T, 0411T, 0412T, 0413T, 0414T, 0415T, 0416T,

[[Page 61282]]

0417T, and 0418T. The associated APCs are APC 5231 (Level 1 ICD and 
Similar Procedures) and APC 5222 (Level 2 Pacemaker and Similar 
Procedures). To meet the cost criterion for device pass-through payment 
status, a device must pass all three tests of the cost criterion for at 
least one APC. For our calculations, we used APC 5222, which had a CY 
2019 payment rate of $7,404.11 at the time the application was 
received. Beginning in CY 2017, we calculate the device offset amount 
at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT 
code 0410T had a device offset amount of $2,295.27 at the time the 
application was received. According to the applicant, the cost of the 
Optimizer[supreg] System was $15,700.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $15,700 for the Optimizer[supreg] System 
exceeds 212 percent of the applicable APC payment amount for the 
service related to the category of devices of $7,404.11 ($15,700/
$7,404.11 x 100 = 212 percent). Therefore, we believe the 
Optimizer[supreg] System meets the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $15,700 for the 
Optimizer[supreg] System exceeds the cost of the device-related portion 
of the APC payment amount for the related service of $2,295.27 by 684 
percent ($15,700/$2,295.27) x 100 = 684 percent. Therefore, we believe 
that the Optimizer[supreg] System meets the second cost significance 
requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $15,700 for the Optimizer[supreg] System and the 
portion of the APC payment amount for the device of $2,295.27 exceeds 
the APC payment amount for the related service of $7,404.11 by 181 
percent (($15,700 - $2,295.27)/$7,404.11) x 100 = 181 percent). 
Therefore, we believe that the Optimizer[supreg] System meets the third 
cost significance requirement.
    We invited public comments on whether the Optimizer[supreg] System 
meets the device pass-through payment criteria discussed in this 
section, including the cost criterion for device pass-through payment 
status.
    Comment: The manufacturer of the Optimizer[supreg] System believed 
that the device meets the cost criterion for device pass-through 
payment status. The manufacturer noted a point of clarification 
regarding the average sales price (ASP) of the Optimizer[supreg] System 
used for these calculations. They stated that the $15,700 price in the 
application was based on discounted clinical trial pricing used during 
the FDA IDE clinical trials to cover the manufacturing and research 
costs only. After FDA approval on March 21, 2019, commercial pricing 
took effect, changing the Optimizer[supreg] System to $23,000. The 
manufacturer contended the Cost Criteria are still met with the current 
$23,000 ASP for the Optimizer Smart System.
    Response: We appreciate the manufacturer's input. After 
consideration of the public comments we received, we believe that 
Optimizer[supreg] System meets the cost criterion for device pass-
through payment status.
    After consideration of the public comments we received, we believe 
that the Optimizer[supreg] System qualifies for device pass-through 
payment status and we are approving the application for device pass-
through payment status for the Optimizer[supreg] System beginning in CY 
2020.
(5) AquaBeam[supreg] System
    PROCEPT BioRobotics Corporation submitted an application for a new 
device category for transitional pass-through payment status for the 
AquaBeam[supreg] System as a resubmission of their CY 2019 application. 
The AquaBeam[supreg] System is intended for the resection and removal 
of prostate tissue in males suffering from lower urinary tract symptoms 
(LUTS) due to benign prostatic hyperplasia (BPH). The applicant stated 
that this is a very common condition typically occurring in elderly 
men. The clinical symptoms of this condition can include diminished 
urinary stream and partial urethral obstruction.\26\ According to the 
applicant, the AquaBeam[supreg] system resects the prostate to relieve 
symptoms of urethral compression. The resection is performed 
robotically using a high velocity, nonheated sterile saline water jet 
(in a procedure called Aquablation). The applicant stated that the 
AquaBeam[supreg] System utilizes real-time intra-operative ultrasound 
guidance to allow the surgeon to precisely plan the surgical resection 
area of the prostate and then the system delivers Aquablation therapy 
to accurately resect the obstructive prostate tissue without the use of 
heat. The materials submitted by the applicant state that the 
AquaBeam[supreg] System consists of a disposable, single-use handpiece 
as well as other components that are considered capital equipment.
---------------------------------------------------------------------------

    \26\ Chungtai B. Forde JC. Thomas DDM et al. Benign Prostatic 
Hyperplasia. Nature Reviews Disease Primers 2 (2016) article 16031.
---------------------------------------------------------------------------

    With respect to the newness criterion at Sec.  419.66(b)(1), FDA 
granted a De Novo request classifying the AquaBeam[supreg] System as a 
Class II device under section 513(f)(2) of the Federal Food, Drug, and 
Cosmetic Act on December 21, 2017. The application for a new device 
category for transitional pass-through payment status for the 
AquaBeam[supreg] System was received on March 1, 2018, which is within 
3 years of the date of the initial FDA approval or clearance. We 
invited public comments on whether the AquaBeam[supreg] System meets 
the newness criterion. We did not receive any comments on the newness 
of the AquaBeam[supreg] System. We believe AquaBeam[supreg] System 
meets the transitional pass-through payment newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, the AquaBeam[supreg] System is integral to 
the service provided, is used for one patient only, comes in contact 
with human skin, and is applied in or on a wound or other skin lesion. 
The applicant also claimed the AquaBeam[supreg] System meets the device 
eligibility requirements of Sec.  419.66(b)(4) because it is not an 
instrument, apparatus, implement, or items for which depreciation and 
financing expenses are recovered, and it is not a supply or material 
furnished incident to a service. However, in the CY 2019 OPPS/ASC 
proposed and final rules, we cited the CY 2000 OPPS interim final rule 
with comment period (65 FR 67804 through 67805), where we explained how 
we interpreted Sec.  419.43(e)(4)(iv). We stated that we consider a 
device to be surgically implanted or inserted if is surgically inserted 
or implanted via a natural or surgically created orifice, or inserted 
or implanted via a surgically created incision. We also stated that we 
do not consider an item used to cut or otherwise create a surgical 
opening to be

[[Page 61283]]

a device that is surgically implanted or inserted. We consider items 
used to create incisions, such as scalpels, electrocautery units, 
biopsy apparatuses, or other commonly used operating room instruments 
to be supplies or capital equipment not eligible for transitional pass-
through payments. We stated that we believe the function of these items 
is different and distinct from that of devices that are used for 
surgical implantation or insertion. Finally, we stated that, generally, 
we would expect that surgical implantation or insertion of a device 
occurs after the surgeon uses certain primary tools, supplies, or 
instruments to create the surgical path or site for implanting the 
device. In the CY 2006 OPPS final rule with comment period (70 FR 68329 
and 68630), we adopted as final our interpretation that surgical 
insertion or implantation criteria include devices that are surgically 
inserted or implanted via a natural or surgically created orifice, as 
well as those devices that are inserted or implanted via a surgically 
created incision. We reiterated that we maintain all of the other 
criteria in Sec.  419.66 of the regulations, namely, that we do not 
consider an item used to cut or otherwise create a surgical opening to 
be a device that is surgically implanted or inserted.
    The applicant resubmitted their application with additional 
information that they believe supports their stance that the device 
should be considered eligible under the device pass-through payment 
eligibility criteria. The applicant stated that the AquaBeam[supreg] 
System's handpiece is temporarily surgically inserted into the urethra 
via the urinary meatus. The applicant indicated that the 
AquaBeam[supreg] System's handpiece does not create an incision or 
surgical opening or pathway, but instead ablates prostate tissue. The 
applicant further stated that the device only cuts the prostatic tissue 
after being inserted into the prostatic urethra and therefore it should 
be considered eligible. The applicant also stated that the prostatic 
urethra tissue is cut because it is at the center of the obstruction in 
the prostate. Additionally, the applicant explained that to relieve the 
symptoms of BPH, both the prostatic urethra and prostate tissue 
encircling the prostatic urethra must be ablated, or cut, to relieve 
the symptoms of BPH and provide some additional clearance for future 
swelling or growth of the prostate. The applicant stated that the 
prostatic urethra tissue is not cut or disturbed to access the prostate 
tissue underneath, but the removal of the prostatic urethra is a key 
aspect of treating the obstruction that causes BPH symptoms. Finally, 
the applicant believes that clinically the distinction between the 
prostatic urethra tissue and the prostate tissue are not meaningful in 
the context of a BPH surgical intervention. We invited public comments 
on whether the AquaBeam[supreg] System meets the eligibility criteria 
at Sec.  419.66(b).
    Comments: We received several comments in regards to the 
eligibility of the AquaBeam[supreg] System. While other stakeholders 
commented generally on the eligibility of the AquaBeam[supreg] System, 
the applicant provided additional detail in support of AquaBeam's 
eligibility. Stakeholders agreed that AquaBeam[supreg] System was 
eligible, and providing the following reasons: AquaBeam[supreg] System 
is not used to cut or otherwise create a surgical opening; the AquaBeam 
System handpiece is not a commonly used operation room instrument; the 
AquaBeam System handpiece is integral to the service provided; it is a 
single use item; it comes into contact with human tissue and finally, 
it is inserted into the prostatic urethra through a natural orifice.
    The applicant restated that the AquaBeam[supreg] System does not 
cut or otherwise create a surgical opening. They reiterated that the 
AquaBeam[supreg] System is inserted into the body through a natural 
orifice at the meatus of the urethra without any cutting. The applicant 
again stated that the AquaBeam[supreg] System is not used to cut or 
otherwise create a surgical opening at the meatus, or the prostatic 
urethra. The applicant further detailed that the purpose of the 
ablation procedure is to remove the tissue that is obstructing urine 
flow through the urethra as well as to remove additional tissue that 
may obstruct the urethra causing LUTS. The applicant claimed that the 
removal of the obstruction is not the creation of a surgical opening 
for inserting the device and that the device is already positioned 
inside the body.
    The applicant further argued that ablating both the prostatic 
urethra and the prostate tissue is central to the treatment of BPH 
symptoms. Additionally, they argued that clinically, the distinction 
between the prostatic urethra and the prostate tissue are not 
meaningful to treat BPH and the procedure does not create an opening at 
the urethra to access the prostate for tissue removal. The applicant 
further argued that the plain meaning of the language used to expand 
eligibility to include devices inserted through natural orifices \27\ 
means that passing the AquaBeam[supreg] System through the natural 
orifice into the body is taking the place of creating a surgical 
opening.
---------------------------------------------------------------------------

    \27\ 70 FR 68630.
---------------------------------------------------------------------------

    Response: We appreciate the comments submitted by the stakeholders 
on the eligibility of the AquaBeam[supreg] System. After consideration 
of submitted comments and after gaining additional clarity on the 
clinical details of the procedure, we have determined that the 
AquaBeam[supreg] System meets the eligibility criteria at Sec.  
419.66(b). Specifically, we believe that the AquaBeam[supreg] System is 
inserted into the urethra, a natural orifice. We recognize that after 
being inserted into the urethra, the device then ablates both the 
prostatic urethra and the prostate tissue in order to relieve and treat 
the symptoms of BPH.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. In the 
proposed rule, we had not identified an existing pass-through payment 
category that describes the AquaBeam[supreg] System. The applicant 
proposed a category descriptor for the AquaBeam[supreg] System of 
``Probe, image guided, robotic resection of prostate.'' We invited 
public comments on whether the AquaBeam[supreg] System meets this 
criterion.
    We did not receive public comments that identified an existing 
pass-through payment category that describes the AquaBeam[supreg] 
System. We believe that the AquaBeam[supreg] System meets this 
criterion.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. The applicant stated that the AquaBeam[supreg] 
System provides a substantial clinical improvement as the first 
autonomous tissue resection robot for the treatment of lower urinary 
tract symptoms due to BPH. The applicant further provided that the 
AquaBeam[supreg] System is also a substantial clinical improvement 
because the Aquablation procedure demonstrated superior

[[Page 61284]]

efficacy and safety for larger prostates (prostates sized 50-80 mL) as 
compared to transurethral resection of the prostate (TURP). The 
applicant also believes that the Aquablation procedure would provide 
better outcomes for patients with large prostates (>80 mL) who may 
undergo open prostatectomy whereas the open prostatectomy procedure 
would require a hospital inpatient admission. With respect to this 
criterion, the applicant submitted several articles that examined the 
use of a current standard treatment for BPH--transurethral 
prostatectomy TURP, including complications associated with the 
procedure and the comparison of the effectiveness of TURP to other 
modalities used to treat BPH, including holmium laser enucleation of 
the prostate (HoLEP) \28\ and photoselective vaporization (PVP).\29\
---------------------------------------------------------------------------

    \28\ Montorsi, F. et al.: Holmium Laser Enucleation Versus 
Transurethral Resection of The Prostate: Results from A 2-Center, 
Prospective, Randomized Trial In Patients With Obstructive Benign 
Prostatic Hyperplasia. J. Urol. 172, 1926-1929 (2004).
    \29\ Bachmann A, et al.: 180-W XPS GreenLight laser vaporisation 
versus transurethral resection of the prostate for the treatment of 
benign prostatic obstruction: 6-month safety and efficacy results of 
a European Multicentre Randomised Trial--the GOLIATH study. Eur 
Urol, 2014;65(5):931-42.
---------------------------------------------------------------------------

    The most recent clinical study involving the AquaBeam[supreg] 
System was an accepted manuscript describing a double-blind trial that 
compared men treated with the AquaBeam[supreg] System versus men 
treated with traditional TURP.\30\ This was a multicenter study in 4 
countries with 17 sites, 6 of which contributed 5 patients or fewer. 
Patients were randomized to receive treatment with either the 
AquaBeam[supreg] System or TURP in a two-to-one ratio. With exclusions 
and dropouts, 117 patients were treated with the AquaBeam[supreg] 
System and 67 patients with TURP. The data on efficacy supported the 
equivalence of the two procedures based upon noninferiority analysis. 
The safety data were reported as showing superiority of the 
AquaBeam[supreg] System over TURP, although the data were difficult to 
track because adverse consequences were combined into categories. The 
applicant claimed that the International Prostate Symptom Scores (IPPS) 
were significantly improved in AquaBeam[supreg] System patients as 
compared to TURP patients in men whose prostate was greater the 50 mL 
in size. The applicant also claimed that the proportion of men with a 
worsening of sexual function (as shown with a decrease in Male Sexual 
Health Questionnaire for Ejaculatory Dysfunction (MSHQ) score of at 
least 2 points or a decrease in International Index of Erectile 
Function (IIEF-5) score of at least 6 points by 6 months) was lower for 
the Aquablation procedure at 32.9 percent compared to the TURP groups 
at 52.8 percent.
---------------------------------------------------------------------------

    \30\ Gilling P. Barber M. Anderson P et al.: WATER--A Double-
Blind Randomized Controlled Trial of Aquablation vs Transurethal 
Resection of the Prostate in Benign Prostatic Hyperplasia. J Urol. 
Accepted December 29, 2017 doi 10.1016/j.juro.2017.12.065.
---------------------------------------------------------------------------

    In the CY 2020 OPPS/ASC proposed rule, we stated that we believed 
that the comparison of the AquaBeam[supreg] System with TURP does not 
recognize that there are other treatment modalities available that are 
likely to have a similar safety profile as the AquaBeam[supreg] System. 
No studies comparing other treatment modalities were cited to show that 
the AquaBeam[supreg] System is a significant improvement over other 
available procedures.
    Based on the evidence submitted with the application, we were 
concerned that there was a lack of sufficient evidence that the 
AquaBeam[supreg] System provides a substantial clinical improvement 
over other similar products, particularly in the outpatient setting 
where large prostates are less likely to be treated. We invited public 
comments on whether the AquaBeam[supreg] System meets the substantial 
clinical improvement criterion.
    Comment: We received several comments regarding the substantial 
clinical improvement that the AquaBeam[supreg] System may provide. They 
were concerned that the comparison of the AquaBeam[supreg] System with 
TURP does not recognize that there are other treatment modalities 
available that are likely to have a similar safety profile as the 
AquaBeam[supreg] System and that there were no studies provided 
comparing other treatment modalities to show that the AquaBeam[supreg] 
System is a significant improvement over other available procedures.
    The applicant commented that in the FY 2019 IPPS notice of final 
rulemaking, CMS concluded that the WATER study findings were 
statistically significant and showed Aquablation superior to TURP in 
safety, as well as that patients in the WATER study with prostates 
larger than 50 mL in volume treated with Aquablation had superior 
improvement in quantifiable symptom outcomes.
    Additionally, the applicant provided that TURP is the gold standard 
and most common treatment for LUTS due to BPH and that through a direct 
comparison to TURP, the WATER study demonstrates that the 
AquaBeam[supreg] System is a substantial clinical improvement over the 
gold standard. The applicant also provides that the direct comparison 
to TURP in the WATER study allows a comparison of Aquablation to other 
treatment modalities, including transurethral incision of the prostate, 
photoselective vaporization prostatectomy, transurethral needle 
ablation of the prostate, transurethral microwave therapy, and 
prostatic urethral lift. The applicant included several additional 
pieces of clinical literature to demonstrate that the above-mentioned 
modalties are inferior in efficacy to TURP in numerous objective and 
subjective measurers, including peak urine flow, post-void reduction, 
and BPH symptom reduction.31 32 33
---------------------------------------------------------------------------

    \31\ Christidis, D. et al. Minimally Invasive Therapies for 
Benign Prostatic Hypertrophy: The Rise in Minimally Invasive 
Surgical Therapies, Prostate International. 5, 41-46 (2017).
    \32\ Bachmann A, Tubaro A, Barber N et al: 180-W XPS GreenLight 
laser vaporisation versus transurethral resection of the prostate 
for the treatment of benign prostatic obstruction: 6-month safety 
and efficacy results of a European multicenter randomised trial--the 
GOLIATH study. Eur Urol 2014; 65: 931.
    \33\ Sonksen J et al. Prospective, Randomized, Multinational 
Study of Prostatic Urethral Lift Versus Transurethral Resection of 
the Prostate: 12-month Results from the BPH6 Study. Eur Urol 2015; 
68:643-52.
---------------------------------------------------------------------------

    Additionally, the applicant provided published data on a list of 
all surgical treatment modalities. The applicant claims that based on 
this provided data it is evident that larger prostates are a clinical 
challenge for all other transurethral surgical approaches to BPH due to 
high rates of sexual dysfunction in TURP, SP, PVP, HoLEP, and ThuLEP; 
high rates of blood transfusions in TURP and SP; longer operative time 
due to the size of prostate in PVP, HoLEP, and ThuLEP; transurethral 
resection (TUR) syndrome due to length of procedure; high rates of re-
intervention or secondary procedures in PVP; and, transient 
incontinence in HoLEP and ThuLEP. The applicant states that these 
complication have traditionally limited the treatment of larger 
prostates in the outpatient setting. The applicant further details that 
the reason for the increase in complications in large prostates is due 
to the length of the resection time required. In support of their claim 
of being appropriate for the outpatient study, the applicant restates 
findings from the WATER II study, which utilized Aquablation therapy to 
treat large prostates 80 to 150 mL in volume, with greater than 50 
percent of the cases involving large prostates in the hospital 
outpatient setting. The average Aquablation operative time was 37 
minutes, including 8 minutes of resection time and 29 minutes used for 
planning and robotic programming.
    Response: We appreciate the submission of public comments.

[[Page 61285]]

Specifically, we appreciate the additional scientific data provided 
that demonstrates the AquaBeam[supreg] System's superiority to other 
techniques, specifically for reducing operative time and complications 
in general, especially for larger prostates. We agree that the results 
of the WATER study are statistically significant with a 95 percent 
confidence interval of the difference between AquaBeam[supreg] and TURP 
and show AquaBeam[supreg] is superior to TURP in safety as evidenced by 
a lower proportion of persistent Clavien-Dindo (CD) Grade 1 adverse 
events (incontinence, ejaculatory dysfunction and erectile dysfunction) 
at 3 months. We also agree that when considering CD Grade 2 and above 
events (events requiring pharmacological treatment, blood transfusions, 
or endoscopic, surgical or radiological interventions) the WATER study 
demonstrated a superior safety rate to TURP. Additionally, patients 
enrolled in the WATER study with prostate sizes greater than 50 mL in 
volume and treated with AquaBeam[supreg] had superior BPH symptom 
reduction (IPSS) than those treated with TURP, as well as better peak 
urinary flow rates at 6 months (Qmax), improved ejaculatory function, 
and improved incontinence scores at 3 months.
    Additionally, results from the WATER II study for patients with 
large prostates demonstrate better outcomes of the AquaBeam[supreg] 
System over open prostatectomy, regarding shorter operative time, 
shorter length of stay, and decreased rates of severe hemorrhage and 
transfusions. We also agree that the minimally invasive nature of 
Aquablation offers men with large prostates (>80 mL) an outpatient 
option. In conclusion, after review of the additional data and 
literature, we agree that the AquaBeam[supreg] System provides a 
substantial clinical improvement.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
AquaBeam[supreg] System would be reported with CPT code 0421T. CPT code 
0421T is assigned to APC 5375 (Level 5 Urology and Related Services). 
To meet the cost criterion for device pass-through payment status, a 
device must pass all three tests of the cost criterion for at least one 
APC. For our calculations, we used APC 5375, which has a CY 2018 
payment rate of $3,706.03. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). CPT code 0421T had device offset amount of $0.00 
at the time the application was received. According to the applicant, 
the cost of the handpiece for the AquaBeam[supreg] System is $2,500.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $2,500 for the AquaBeam[supreg] System 
exceeds 25 percent of the applicable APC payment amount for the service 
related to the category of devices of $3,706.03 ($2,500/$3,706.03 x 100 
= 67.5 percent). Therefore, we believe the AquaBeam[supreg] System 
meets the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). Given that there are no device-related costs in the APC 
payment amount and the AquaBeam[supreg] System has an estimated average 
reasonable cost of $2,500, we believe that the AquaBeam[supreg] System 
meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $2,500 for the AquaBeam[supreg] System and the 
portion of the APC payment amount for the device of $0.00 exceeds the 
APC payment amount for the related service of $3,706.03 by 68 percent 
(($2,500 - $0.00)/$3,706.03 x 100 = 67.5 percent). Therefore, we 
believe that the AquaBeam[supreg] System meets the third cost 
significance requirement.
    We invited public comments on whether the AquaBeam[supreg] System 
meets the device pass-through payment criteria discussed in this 
section, including the cost criterion.
    Comment: The manufacturer believed that the AquaBeam[supreg] System 
meets the device pass-through payment criteria, including the cost 
criterion.
    Response: We thank the manufacturer for their input. After 
consideration of the public comments we received, we believe the 
AquaBeam[supreg] System meets the cost criterion and we are approving 
it for device pass-through payment status beginning in CY 2020.
(6) 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. 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 the 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.\34\ 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 U.S. have PAD, 
including 12 to 20

[[Page 61286]]

percent of individuals who are age 60 years old and older.\35\
---------------------------------------------------------------------------

    \34\ 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.
    \35\ Centers for Disease Control and Prevention, ``Peripheral 
Arterial Disease (PAD) Fact Sheet,'' 2018, Available at: https://www.cdc.gov/DHDSP/data_statistics/fact_sheets/fs_PAD.htm.
---------------------------------------------------------------------------

    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 the EluviaTM Drug-Eluting 
Vascular Stent System as a sustained-release drug-eluting self-
expanding, nickel titanium alloy (nitinol) mesh stent used to 
reestablish blood flow to stenotic arteries. According to the 
applicant, the EluviaTM stent is coated with the drug 
paclitaxel, which helps prevent the artery from restenosis. The 
applicant stated that EluviaTM's polymer-based drug delivery 
system is uniquely designed to sustain the release of paclitaxel beyond 
1 year to match the restenotic process in the SFA. According to the 
applicant, the EluviaTM Drug-Eluting Vascular 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).
    With respect to the newness criterion at Sec.  419.66(b)(1), 
EluviaTM received FDA premarket approval (PMA) on September 
18, 2018. The application for a new device category for transitional 
pass-through payment status for EluviaTM was received on 
November 15, 2018, which is within 3 years of the date of the initial 
FDA approval or clearance. We invited public comments on whether the 
EluviaTM Drug-Eluting Vascular Stent System meets the 
newness criterion. We did not receive public comments in regards to 
Eluvia's newness, however, since the application was received within 3 
years of the initial date of FDA approval or clearance, we believe that 
the EluviaTM Drug-Eluting Vascular Stent System meets the 
newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, the EluviaTM Drug-Eluting 
Vascular Stent System is integral to the service provided, is used for 
one patient only, comes in contact with human skin, and is applied in 
or on a wound or other skin lesion. The applicant also claimed that the 
EluviaTM Drug-Eluting Vascular Stent System meets the device 
eligibility requirements of Sec.  419.66(b)(4) because it is not an 
instrument, apparatus, implement, or items for which depreciation and 
financing expenses are recovered, and it is not a supply or material 
furnished incident to a service. We invited public comments on whether 
the EluviaTM Drug-Eluting Vascular Stent System meets the 
eligibility criterion at Sec.  419.66(b).
    We did not receive any public comments on this issue. We believe 
that EluviaTM Drug-Eluting Vascular Stent System meets the 
eligibility criterion.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes the 
EluviaTM Drug-Eluting Vascular Stent System. The applicant 
proposed a category descriptor for the EluviaTM Drug-Eluting 
Vascular Stent System of ``Stent, non-coronary, polymer matrix, minimum 
12-month sustained drug release, with delivery system.'' We invited 
public comments on this issue.
    Comment: One commenter stated that the stent platform, the drug 
coating, and the polymer coating of the EluviaTM Drug-
Eluting Vascular Stent System are not new. The commenter compared 
EluviaTM to the Zilver PTX drug-eluting stent, arguing that 
both are self-expanding nitinol stents coated with paclitaxel. The 
commenter also compared the underlying stent platform and delivery 
system of EluviaTM to Boston Scientific's Innova self-
expanding stent.\36\ Finally, the commenter believed that the polymers 
used in the EluviaTM coating are the same used in the Xience 
V and Promus Element coronary stents.\37\
---------------------------------------------------------------------------

    \36\ Gray W, 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; Published Online 
September 22, 2018; http://dx.doi.org/10.1016/S0140-6736(18)32262-1.
    \37\ Gray W, 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; Published Online 
September 22, 2018; http://dx.doi.org/10.1016/S0140-6736(18)32262-1.
---------------------------------------------------------------------------

    Comment: Another commenter, the manufacturer, restated that they 
are vastly different than the Zilver PTX drug eluting stent, as well as 
any other device. The commenter provided that Eluvia's polymer matrix 
layer is different from the paclitaxel-coated Zilver PTX, and allows 
for targeted, localized, sustained, low-dose amorphous paclitaxel 
delivery with minimal systemic distribution or particulate loss. The 
commenter also states that there is a difference in the diffusion 
gradient: Paclitaxel is delivered to the lesion via a diffusion 
gradient with poly(vinylidene fluoride)-co-hexafluoropropylene, whereas 
they state that the Zilver PTX does not have a diffusion gradient. The 
commenter stated that EluviaTM releases paclitaxel directly 
to the target lesion, while Zilver PTX release is non-specific to the 
target lesion. The commenter also stated that Eluvia releases 
paclitaxel over approximately 12 to 15 months, while Zilver PTX's 
release is complete at two months. The commenter stated that these 
significant differences in the device designs impact drug dose, drug 
release mechanism, and drug release kinetics.
    Response: We appreciate the stakeholders' comments and comparison 
of the polymer matrix EluviaTM versus the paclitaxel-coated 
Zilver PTX and several other devices. After consideration of the 
comments, we

[[Page 61287]]

believe that EluviaTM device is a new design with a unique 
mechanism of action, and therefore is not described by any current 
device category. Therefore, the EluviaTM device meets the 
device category eligibility criterion.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With respect to this criterion, the applicant 
submitted several articles that examined the use of a current standard 
treatment for 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 claims of substantial 
clinical improvement in achieving superior primary patency; reducing 
the rate of subsequent therapeutic interventions; decreasing the number 
of future hospitalizations or physician visits; reducing hospital 
readmission rates; reducing the rate of device-related complications; 
and achieving similar functional outcomes and EQ-5D index values while 
associated with half the rate of target lesion revascularizations 
(TLRs) procedures.
    The applicant submitted the results of the MAJESTIC study, a 
single-arm, first-in-human study of the EluviaTM Drug-
Eluting Vascular Stent System. The MAJESTICT \38\ 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 asserted 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 SAF or PPA. 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 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.
---------------------------------------------------------------------------

    \38\ 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 
\39\ 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 SFA or PPA, 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.
---------------------------------------------------------------------------

    \39\ 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) 
substudies were done: A nonblinded, nonrandomized pharmacokinetic sub-
study and a nonblinded, nonrandomized 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) noninferiority trial. Patients were 
randomized (2:1) to implantation of either a paclitaxel-eluting polymer 
stent (EluviaTM) or a paclitaxel-coated stent 
(Zilver[supreg] PTX) after the treating physician had successfully 
crossed the target lesion with a guide wire. The primary endpoints of 
the study are Major Adverse Events defined as all causes of death 
through 1 month, Target Limb Major Amputation through 12 months and/or 
Target Lesion Revascularization (TLR) procedure 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, 6 months, and 12 
months post-procedure. Patient demographic and characteristics were 
balanced between the 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 noninferiority primary efficacy endpoint 
was also met. The applicant provided that the superior primary patency 
results at the SFA are notable because 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

[[Page 61288]]

proliferation and matrix formation.\40\ 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.
---------------------------------------------------------------------------

    \40\ 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) substudies: A nonblinded, nonrandomized 
pharmacokinetic substudy and a nonblinded, nonrandomized 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 substudy 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 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, referred to as target lesion 
revascularization (TLR), over the 12 months following the index 
procedure. 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 stent group represents a 
substantial reduction in reintervention on the target lesion compared 
to that of the Zilver[supreg] PTX stent group (at a p = 0.067 p-value). 
The Eluvia[supreg] stent group clinically driven TLR rates through 12 
months following the index procedure were likewise lower for U.S. 
patients age 65 and older as well as for those with medically treated 
diabetes (confidential and unpublished as of the date of the device 
transitional pass-through payment application, data on file with Boston 
Scientific). In the subgroup of U.S. patients age 65 and older, the 
rates of TLR were 2.4 percent in the EluviaTM group compared 
to 3.1 percent in the Zilver[supreg] PTX group, and in the subgroup of 
medically treated diabetes patients, the rates of TLR were 3.7 percent 
compared to 13.6 percent in the Zilver[supreg] PTX group (p = 0.0269).
    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 stent 
group from the Zilver[supreg] PTX stent group. In the IMPERIAL study, 
the EluviaTM-treated patients required fewer days of re-
hospitalization. Patients in the EluviaTM group averaged 
13.9 days of rehospitalization for all adverse events compared to 17.7 
days of rehospitalization for patients in the Zilver[supreg] PTX stent 
group. Patients in the EluviaTM group were rehospitalized 
for 2.8 days for TLR/Total Vessel Revascularization (TVR) compared to 
7.1 days in the Zilver[supreg] PTX stent group. Lastly, patients in the 
EluviaTM stent group were rehospitalized for 2.7 days for 
procedure/device-related adverse events compared to 4.5 days from the 
Zilver[supreg] PTX stent group.
    Regarding reduction in hospital readmission rates, the applicant 
asserted that patients treated in the EluviaTM stent 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 stent 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 stent group compared to 14 percent of the 
patients in the Zilver[supreg] PTX stent group.
    Lastly, the applicant asserted that 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.\41\ Secondary endpoints improved after 
stent implantation and were generally similar between the groups. At 12 
months, of the patients with complete Rutherford assessment data, 241 
(86 percent) of the 281 patients in the EluviaTM group and 
120 (85 percent) of the 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 approximately 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 shown in Table 39 as follows:
---------------------------------------------------------------------------

    \41\ 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. Available at: http://dx.doi.org/10.1016/S0140-6736(18)32262-1.

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

[[Page 61289]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.062

    We noted that the IMPERIAL study, which showed significant 
differences in primary patency at 12 months, was designed for 
noninferiority and not superiority. Therefore, we wereconcerned that 
results showing primary patency at 12 months may not be valid given the 
study design. We also are concerned that 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,\42\ although 
the EluviaTM system was not included in the meta-analysis. 
We were also concerned that the findings from this study indicated that 
the data suggesting that drug-coated stents are substantially 
clinically improved are unconfirmed. We invited public comments on 
whether the EluviaTM Drug-Eluting Vascular Stent System 
meets the substantial clinical improvement criterion, including the 
implications of the meta-analysis results with respect to a finding of 
substantial clinical improvement for the EluviaTM system.
---------------------------------------------------------------------------

    \42\ 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).
---------------------------------------------------------------------------

    We further noted that the applicant for the EluviaTM 
Drug Eluting Vascular Stent System also applied for the IPPS new 
technology add-on payment (FY 2020 IPPS/LTCH PPS proposed rule; 86 FR 
19314). In the FY 2020 IPPS/LTCH PPS proposed rule, we discussed 
several publicly available comments that also raised concerns relating 
to substantial clinical improvement. We list several of those concerns 
below. While the EluviaTM IMPERIAL study does cite a reduced 
rate of ``Subsequent Therapeutic Interventions'', public comments for 
the IPPS proposed rule note that ``Subsequent Therapeutic 
Interventions'' was not further defined in the New Technology Town Hall 
presentation nor in the IMPERIAL study. The commenters stated that it 
would appear from the presentation materials, however, that this claim 
refers specifically to ``target lesion revascularizations (TLR)'', 
which does not appear statistically significant.
    With regard to the applicant's assertion that the use of the 
EluviaTM stent reduces hospital readmission rates, a 
commenter noted that during the New Technology Town Hall presentation, 
the presenter noted that the EluviaTM group had a hospital 
readmission rate at 12 months of 3.9 percent compared to the 
Zilver[supreg] PTX group's rate of 7.1 percent, and that no p-value was 
included on the slide used for the presentation to offer an assessment 
of the statistical significance of this difference. The commenter noted 
that the manufacturer of the EluviaTM stent did not discuss 
this particular hospital readmission rate data comparison in the main 
body of The Lancet paper; however, the data could be found in the 
online appendix and is shown as not statistically significant.
    With regards to longer-term data on the Zilver[supreg] PTX stent 
and the EluviaTM stent, the commenter noted that in the 
commentary in The Lancet paper accompanying the IMPERIAL study, Drs. 
Salvatore Cassese and Robert Byrne write that a follow-up duration of 
12 months is insufficient to assess late failure, which is not 
infrequently observed. According to Drs. Cassese and Byrne, the 
preclinical models of restenosis after stenting of peripheral arteries 
have shown that stents permanently overstretch the arterial wall, thus 
stimulating persistent neointimal growth, which might cause a catch-up 
phenomenon and late failure. The Lancet paper noted that, in this 
regard, data on outcomes beyond one year will be important to confirm 
the durability of the efficacy of the EluviaTM stent.\43\ 
The commenter stated that, at

[[Page 61290]]

this point in time, very limited longer-term data are available on the 
use of the EluviaTM stent and that the IMPERIAL study offers 
only 12-month data, although data out to three years have been 
published from the relatively small 57-patient single-arm MAJESTIC 
study. The commenter noted that the MAJESTIC study demonstrates a 
decrease in primary patency from 96.4 percent at one year to 83.5 
percent at 2 years; and a doubling in TLR rates from 1 year to 2 years 
(3.6 percent to 7.2 percent) and again from 2 years to 3 years (7.2 
percent to 14.7 percent). The commenter stated that this is not 
inconsistent with Drs. Cassese and Byrne's commentary regarding late 
failure, and that the relatively small, single-arm design of the study 
does not lend itself well to direct comparison to other SFA treatment 
options such as the Zilver[supreg] PTX stent.
---------------------------------------------------------------------------

    \43\ Cassese, S., & Byrne, R.E., ``Endovascular stenting in 
femoropopliteal arteries,'' The Lancet, 2018, vol. 392(10157), pp. 
1491-1493.
---------------------------------------------------------------------------

    The commenter also stated that EluviaTM's lack of long-
term data contrasts with 5-year data that is available from the 
Zilver[supreg] PTX stent's pivotal 479-patient RCT comparing the use of 
the Zilver[supreg] PTX stent to angioplasty (with a sub-randomization 
comparing provisional use of Zilver[supreg] PTX stenting to bare metal 
Zilver stenting in patients experiencing an acute failure of 
percutaneous transluminal angioplasty (PTA)). The commenter believed 
that these 5-year data demonstrate that the superiority of the use of 
the Zilver[supreg] PTX stent demonstrated at 12 and 24 months is 
maintained through 5 years compared to PTA and provisional bare metal 
stenting, and actually increases rather than decreases over time. The 
commenter also believed that, given that these stent devices are 
permanent implants and they are used to treat a chronic disease, long-
term data are important to fully understand an SFA stent's clinical 
benefits. The commenter stated that with 5-year data available to 
support the ongoing safety and effectiveness of the use of the 
Zilver[supreg] PTX stent, but no such corresponding data available for 
the use of the EluviaTM stent, it seems incongruous to 
suggest that the use of the EluviaTM stent results in a 
substantial clinical improvement compared to the Zilver[supreg] PTX 
stent.
    The commenter further stated that, in addition to the limited long-
term data available for the EluviaTM stent, there is also a 
lack of clinical data for the use of the EluviaTM stent to 
confirm the benefit of the device outside of a strictly controlled 
clinical study population. The commenter stated that, in contrast, the 
Zilver[supreg] PTX stent has demonstrated comparable outcomes across a 
broad patient population, including a 787 patient study conducted in 
Europe with 2-year follow-up and a 904-patient study of all-comers (no 
exclusion criteria) in Japan with 5-year follow-up completed. The 
commenter believed that, with no corresponding data for the use of the 
EluviaTM stent in a broad patient population, it seems 
unreasonable to suggest that the use of the EluviaTM stent 
results in a substantial clinical improvement compared to the 
Zilver[supreg] PTX stent.
    Based on the evidence submitted with the application, we were 
concerned that there was a lack of sufficient evidence that the 
EluviaTM Vascular Drug-Eluting Stent System provides a 
substantial clinical improvement over other similar products. We 
invited public comments on whether EluviaTM Vascular Drug-
Eluting Stent System meets the substantial clinical improvement 
criterion.
    Comment: One commenter, the manufacturer, stated that the IMPERIAL 
trial's design as a non-inferiority study is consistent with accepted 
research methodology and is typical of many head-to-head trials of 
medical devices. The commenter stated that they defined a pre-
specified, post-hoc superiority analysis before evaluation of the 
clinical trial results, the non-inferiority and subsequent superiority 
testing methodology and results are not subjected to bias. The 
commenter argued that the pre-specified success criteria for 
superiority used the same logic as the pre-specified success criteria 
for non-inferiority. The commenter stated: ``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 
commenter believes that the 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. The commenter also 
provided that the aforementioned data were published in The Lancet 
following its rigorous peer-review process, suggesting that the claims 
are not misleading and are supported by valid scientific evidence. The 
commenters also claimed that clinical guidelines support performing a 
pre-specified post-hoc analysis given specific requirements, that they 
believe they met.
    Comment: Two commenters mentioned the meta-analysis of paclitaxel-
coated balloons and stents \44\ that initiated an FDA panel and 
analysis. The meta-analysis and systematic review of several 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 and found that there is an increased risk of death following 
the application of paclitaxel-coated devices.
---------------------------------------------------------------------------

    \44\ Katsanos, K., Spiliopoulos, S., Kitrou, P., Krokidis, M., & 
Karnabatidis, D. (2018). Risk of Death Following Application of 
Paclitaxel[hyphen]Coated Balloons and Stents in the Femoropopliteal 
Artery of the Leg: A Systematic Review and Meta[hyphen]Analysis of 
Randomized Controlled Trials. Journal of the American Heart 
Association, 7(24). https://doi.org/10.1161/jaha.118.011245.
---------------------------------------------------------------------------

    Commenters stated that EluviaTM is different from the 
devices that were studied in the meta-analysis of paclitaxel-coated 
balloons and stents. Specifically, the commenters claim that 
EluviaTM delivers paclitaxel in lower doses than the devices 
in the meta-analysis and 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 commenters, including the applicant, believe 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.
    Additionally, the applicant stated that given the differences 
between EluviaTM's paclitaxel delivery mechanisms and other 
peripheral paclitaxel-coated devices, it would be more appropriate to 
examine safety considerations and data for Eluvia relative to products 
with similar mechanisms of action and dose levels. The applicant 
provides the TAXUS coronary stent as such an appropriate comparator, 
stating that Eluvia and TAXUS are similar in design intent and 
mechanism of action. In support, the applicant provided additional data 
showing a 5-year all-cause mortality observed between paclitaxel-
eluting and bare metal stents. The applicant also stated that coronary 
and peripheral atherosclerotic lesions have similar disease 
presentation and the same antiproliferative impact of paclitaxel on the 
lesions regardless of vessel bed. The applicant recommends that signals 
for any potential long-term systemic effects of targeted paclitaxel 
eluted from a stent polymer matrix would be apparent in patients 
treated with TAXUS. As opposed to the meta-analysis and the resulting 
FDA panel analysis, the applicant believes that data on TAXUS can be 
used to gauge potential system

[[Page 61291]]

effects of paclitaxel eluted from Eluvia. The applicant argues that the 
TAXUS stent's safety and effects has been extensively studied with more 
than 14 years of commercial experience and clinical trial data out to 
10 years 45 46 47 48 in patients with coronary implants and 
5 years for those with infrapopliteal implants. The applicant then 
recognizes that mortality rates for patients treated for peripheral 
artery disease (PAD) are not directly comparable to rates for patients 
with coronary artery or infrapopliteal disease due to appreciable 
differences in baseline risk. The applicant states that an additive 
effect due to low dose paclitaxel elution over time, if it exists, 
would have been observed in patients receiving treatment in these 
vessel beds. In regards to the meta-analysis and the risk of late 
mortality, the applicant further argues that understanding possible 
effects of paclitaxel exposure is not possible without complete 
analysis of uniformly re-adjudicated patient level data, particularly 
with treatment arm crossover and previous interventions or subsequent 
reinterventions with paclitaxel-coated devices, which occurred in the 
analyzed studies.
---------------------------------------------------------------------------

    \45\ Yamaji K, Raber L, Zanchin T, et al. Ten-year clinical 
outcomes of first-generation drug-eluting stents: The Sirolimus-
Eluting vs. Paclitaxel-Eluting Stents for Coronary Revascularization 
(SIRTAX) VERY LATE trial. Eur Heart J. 2016;37(45):3386-3395.
    \46\ Ormiston JA, Charles O, Mann T, et al. Final 5-year results 
of the TAXUS ATLAS, TAXUS ATLAS Small Vessel, and TAXUS ATLAS Long 
Lesion clinical trials of the TAXUS Liberte paclitaxel-eluting stent 
in de-novo coronary artery lesions. Coron Artery Dis. 2013;24(1):61-
68.
    \47\ Kereiakes DJ, Cannon LA, Dauber I, et al. Long-term follow-
up of the platinum chromium TAXUS Element (ION) stent: The PERSEUS 
Workhorse and Small Vessel trial five-year results. Catheter 
Cardiovasc Interv. 2015;86(6):994-1001.
    \48\ Stone GW, Ellis SG, Colombo A, et al. Long-term safety and 
efficacy of paclitaxel-eluting stents final 5-year analysis from the 
TAXUS Clinical Trial Program. JACC Cardiovasc Interv. 2011;4(5):530-
542.
---------------------------------------------------------------------------

    The applicant also provided responses to several comments that CMS 
noted in the CY 2020 OPPS/ASC proposed rule that were originally 
mentioned during and following the NTAP Town Hall meeting (84 FR 
39479). In the CY 2020 OPPS/ASC proposed rule, CMS noted a comment that 
showed concern over the EluviaTM IMPERIAL study's citation 
of a reduced rate of ``Subsequent Therapeutic Interventions''. The 
applicant states that the use of the term ``Subsequent Therapeutic 
Interventions'' was used as a lay explanation for target lesion 
revascularization. The applicant then states that it has recently 
obtained and analyzed IMPERIAL trial 2-year TLR results, which they 
also released at the FDA panel meeting on June 19, 2019. The applicant 
states that 1-year trial results, published in The Lancet, demonstrated 
a 50 percent reduction in TLRs and 2-year data demonstrated a 
statistically significantly (p-value not provided) lower rate of repeat 
re-interventions at 2 years compared to Zilver PTX. The applicant 
states that the clinical impact of fewer TLR procedures is significant 
and therefore demonstrates substantial clinical improvement.
    The applicant also addressed concerns regarding hospital 
readmissions. Specifically, the applicant stated that in the NTAP Town 
Hall Eluvia Meeting, they presented 12-month readmission rates for 
Eluvia (3.9 percent) and Zilver PTX (7.1 percent), with a self-reported 
p-value of 0.1369. The applicant argues that statistical significance 
of the 12-month readmission rates should not be expected to be 
statistically significant due to the small number of patients. They 
conclude their response by stating that the data suggests a lower 
patient and health system burden for rehospitalization of patients for 
EluviaTM versus patients for Zilver PTX.
    Additionally, the applicant responded to concerns regarding long-
term data and real-world evidence, stating that due to the nature of 
the transitional pass-through status requirements for medical devices, 
EluviaTM is new to the market and would no longer meet the 
newness criterion if the applicant were to wait until 5-year data are 
available. The applicant further stated that Medicare NTAP precedent 
suggests that one-year peer reviewed published results are sufficient 
to prove substantial clinical improvement, given that at the time of 
Zilver PTX's NTAP approval they only provided 12-month data published 
in peer-reviewed literature.\49\ The applicant further argues that 
waiting for a substantial amount of real-world evidence for the use of 
the Eluvia\TM\ drug-eluting stent would disqualify the technology for 
the transitional pass-through consideration, as the technology would no 
longer be considered new by the time the data are available.
---------------------------------------------------------------------------

    \49\ 84 FR 39479.
---------------------------------------------------------------------------

    Response: We appreciate the comments. We are aware of FDA's actions 
in regards to the meta-analysis of paclitaxel devices and the late 
mortality signal in patients treated for PAD with paclitaxel-coated 
balloons and paclitaxel-eluting stents. We agree with the applicant 
that mortality rates for patients treated for peripheral artery disease 
are not directly comparable to rates for patients with coronary artery 
or infrapopliteal. We have continued to closely follow FDA's guidance 
and recommendations for the use of paclitaxel-coated balloons and 
paclitaxel-eluting stents for PAD, with details provided below.
    On June 19-20, 2019, FDA convened a public meeting of the 
Circulatory System Devices Panel of the Medical Devices Advisory 
Committee to discuss, analyze, and make recommendations on the topic of 
a potential late mortality signal after treatment of PAD in the 
femoropopliteal artery with paclitaxel-coated balloons and paclitaxel-
eluting stents. The Panel concluded that a late mortality signal 
associated with the use of paclitaxel-coated devices to treat 
femoropopliteal PAD was present. With that, the Panel and FDA 
cautiously interpreted the magnitude of the signal due to multiple 
limitations in the available data including: Wide confidence intervals 
due to a small sample size, pooling of studies of different paclitaxel-
coated devices that were not intended to be combined, substantial 
amounts of missing study data, no clear evidence of a paclitaxel dose 
effect on mortality, and no identified pathophysiologic mechanism for 
the late deaths. The Panel and FDA further concluded that additional 
clinical study data are needed to fully evaluate the late mortality 
signal.
    As of August 7, 2019,\50\ FDA continues to actively work with the 
manufacturers and investigators on developing additional clinical 
evidence to better assess the long-term safety of paclitaxel-coated 
devices. They continue to assert that data could potentially suggest 
that paclitaxel-coated balloons and stents may improve blood flow to 
the legs and decrease the likelihood of repeat procedures to reopen 
blocked blood vessels compared to uncoated devices. However, they also 
continue to stress the importance of clinicians weighing potential 
benefits of the paclitaxel-coated devices with the potential risks, 
including late mortality.
---------------------------------------------------------------------------

    \50\ https://www.fda.gov/medical-devices/letters-health-care-providers/august-7-2019-update-treatment-peripheral-arterial-disease-paclitaxel-coated-balloons-and-paclitaxel.
---------------------------------------------------------------------------

    After consideration of public comments and the latest available 
information from FDA advisory panel, we note that FDA's panel's has 
continued to review 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. We also note that FDA determined that the analysis revealed no 
clear evidence of a

[[Page 61292]]

paclitaxel dose effect on mortality. While 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 devices. Therefore, we are not approving the 
EluviaTM device for CY 2020 device transitional payment. We 
will continue to monitor any new information and/or recommendations as 
they become available.
(7) AUGMENT[supreg] Bone Graft
    Wright Medical submitted an application for a new device category 
for transitional pass-through payment status for the AUGMENT[supreg] 
Bone Graft. The applicant describes AUGMENT[supreg] Bone Graft as a 
device/drug indicated for use as an alternative to autograft in 
arthrodesis of the ankle and/or hindfoot where the need for 
supplemental graft material is required. The applicant stated that the 
product has two components: Recombinant human platelet-derived growth 
factor-BB (rhPDGF-BB) solution (0.3 mg/mL) and Beta-tricalcium 
phosphate ([beta]-TCP) granules (1000-2000 [mu]m). The two components 
are combined at the point of use and applied to the surgical site. The 
beta-TCP provides a porous osteoconductive scaffold for new bone growth 
and the rhPDGF-BB, which act as an osteoinductive chemo-attractant and 
mitogen for cells involved in wound healing and through promotion of 
angiogenesis.
    According to the applicant, the AUGMENT[supreg] Bone Graft is 
indicated for use in arthrodesis of the ankle and/or hindfoot due to 
osteoarthritis, post-traumatic arthritis (PTA), rheumatoid arthritis, 
psoriatic arthritis, avascular necrosis, joint instability, joint 
deformity, congenital defect or joint arthropathy as an alternative to 
autograft in patients needing graft material. Osteoarthritis is the 
most common joint disease among middle aged and older individuals and 
has been shown to also have health related mental and physical 
disabilities, which can be compared to the severity as patients with 
end-stage hip arthritis.\51\ Additionally, post-traumatic arthritis 
develops after an acute direct trauma to the joint and can cause 12 
percent of all osteoarthritis cases.\52\ Common causes leading to PTOA 
include intra-articular fractures and meniscal, ligamentous and 
chondral injuries.\53\ The ankle is cited as the most affected joint, 
reportedly accounting for 54 to 78 percent of over 300,000 injuries 
occurring in the USA annually. The applicant stated that autologous 
bone graft has often been used in ankle arthrodesis. Autologous bone is 
retrieved from a donor site, which may require an incision separate 
from the arthrodesis.\54\ The applicant stated that, in these 
procedures, harvested autologous bone graft is implanted to stimulate 
healing between the bones across a diseased joint. The applicant 
further stated that the procedures may require the use of synthetic 
bone substitutes to fill the bony voids or gaps or to serve as an 
alternative to the autograft where autograft is not feasible. The 
applicant stated that the AUGMENT[supreg] Bone Graft removes the need 
for autologous retrieval. The applicant noted that during the 
procedure, the surgeon prepares the joint for the graft application and 
locates any potential bony defect, then applying and packing the 
AUGMENT[supreg] Bone Graft into the joint defects intended for 
arthrodesis.
---------------------------------------------------------------------------

    \51\ Greaser M, Ellington JK. 2014. ``Ankle arthritis.'' Journal 
of Arthritis, 3:129. doi:10.4172/2167-7921.1000129.
    \52\ Punzi, Leonardo et al. 2016. ``Post-traumatic arthritis: 
overview on pathogenic mechanisms and role of inflammation.'' 
Rheumatic & Musculoskeletal Diseases. RMD open, 2(2), e000279. 
doi:10.1136/rmdopen-2016-000279.
    \53\ Ibid.
    \54\ Lareau, Craig R. et al. 2015.''Does autogenous bone graft 
work? A logistic regression analysis of data from 159 papers in the 
foot and ankle literature.'' Foot and Ankle Surgery. 21 (3):150-59.
---------------------------------------------------------------------------

    With respect to the newness criterion at Sec.  419.66(b)(1), FDA 
granted the AUGMENT[supreg] Bone Graft premarket approval on September 
1, 2015. The application for a new device category for transitional 
pass-through payment status for the AUGMENT[supreg] Bone Graft was 
received May 31, 2018, which is within 3 years of the date of the 
initial FDA approval or clearance. We invited public comments on 
whether the AUGMENT[supreg] Bone Graft meets the newness criterion.
    Comment: We received one comment from the manufacturer restating 
the date of their application and their initial FDA approval or 
clearance.
    Response: As the application was received within 3 years of the 
date of the initial FDA approval or clearance, we believe that 
AUGMENT[supreg] Bone Graft meets the newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, the use of the AUGMENT[supreg] Bone Graft 
is integral to the service provided, is used for one patient only, 
comes in contact with human skin, and is applied in or on a wound or 
other skin lesion. The applicant also claimed that the AUGMENT[supreg] 
Bone Graft meets the device eligibility requirements of Sec.  
419.66(b)(4) because it is not an instrument, apparatus, implement, or 
items for which depreciation and financing expenses are recovered, and 
it is not a supply or material furnished incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes the 
AUGMENT[supreg] Bone Graft. The applicant proposed a category 
descriptor for the AUGMENT[supreg] of ``rhPDGF-BB and [beta]-TCP as an 
alternative to autograft in arthrodesis of the ankle and/or hindfoot.''
    We did not receive any public comments on these issue. We continue 
to believe that there is no existing pass-through category that 
describes AUGMENT[supreg] Bone Graft and have determined that 
AUGMENT[supreg] Bone Graft meets this eligibility criterion.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. The applicant claims that the AUGMENT[supreg] Bone 
Graft provides a substantial clinical improvement over autograft 
procedures by reducing pain at the autograft donor site. With respect 
to this criterion, the applicant submitted data that examined the use 
of autograft arthrodesis of the ankle and/or hind foot and arthrodesis 
with the use of the AUGMENT[supreg] Bone Graft.
    In a randomized, nonblinded, placebo controlled, noninferiority 
trial of the AUGMENT[supreg] Bone Graft versus autologous bone graft, 
the AUGMENT[supreg] arm showed equivalence bone bridging as 
demonstrated by CT, pain on weight bearing, The American Orthopaedic 
Foot & Ankle Society Ankle-Hindfoot (AOFAS--AHS) score, and the Foot 
Function Index to autologous bone graft. The study noted that patients 
experienced significantly decreased (in fact no) pain due to 
elimination of the donor site procedure. In the autograft group, at 6 
months, 18/142 patients (13 percent) experienced pain >20 mm (of

[[Page 61293]]

100 mm) on the Visual Analog Scale (VAS) at the autograft donor site as 
compared to 0/272 in the AUGMENT[supreg] Bone Graft group. At 12 
months, 13/142 autograft patients (9 percent) had pain defined as >20 
mm VAS as compared to 0/272 AUGMENT[supreg] patients.\55\ The VAS has 
patients mark a visual representation of pain on a ruler based scale 
from 1 to 100. The measured distance (in mm) on the 10[hyphen]cm line 
between the ``no pain'' anchor and the patient's mark represents the 
level of pain. We were concerned that we are unable to sufficiently 
determine substantial clinical improvement using the provided data, 
given that a comparison to alternatives to autologous bone graft, such 
as the reamer-irrigator-aspirator (RIA) technique were not evaluated. 
Specifically, the RIA technique has been suggested in a number of 
studies to be a viable alternative to bone autograft, because 
autogenous bone graft can be readily obtained without the need for 
additional incisions, therefore eliminating pain from an incisional 
site.\56\ Another concern was the time period of the study because 
certain ankle arthrodesis complications such as ankle replacement and 
repeat arthrodesis can happen more than two years after the initial 
surgery.\57\ A long-term study of at least 60 months is currently 
underway in order to assess long-term safety and efficacy, looking at 
the following 4 primary outcomes: bone bridging as demonstrated by CT, 
pain on weight bearing, The American Orthopaedic Foot & Ankle Society 
Ankle-Hindfoot (AOFAS--AHS) score, and the Foot Function Index. We 
believe that this long-term study is necessary for meaningful 
information about long-term efficacy of the Augment[supreg] Bone Graft. 
Further, there was a notable difference in the infection rate, 
musculoskeletal and tissue disorders, and pain in extremity for those 
in the AUGMENT[supreg] Bone Graft group. These findings were 
unfortunately not tested for significance and also were not necessarily 
focused on relevance to the procedure. Should these be significant and 
related to the device, these findings would suggest that the adverse 
outcomes due to the Augment[supreg] Bone Graft may outweigh its 
potential benefits.
---------------------------------------------------------------------------

    \55\ DiGiovanni CW, Lin SS, Baumbauer JF, et al. 2013. 
``Recombinant Human Platelet-Derived Growth Factor-BB and Beta-
Tricalcium Phosphate (rhPDGF-BB/b-TCP): An Alternative to Autogenous 
Bone Graft.'' J Bone Joint Surg Am., 95: 1184-92.
    \56\ Herscovici, D., Scaduto, J.M. 2012. ``Use of the reamer-
irrigator-aspirator technique to obtain autograft for ankle and 
hindfoot arthrodesis.'' The Journal of Bone & Joint Surgery. 94-
B:75-9.
    \57\ Stavrakis, AL., SooHoo, NF. 2016. ``Trends in complication 
rates following ankle arthrodesis and total ankle replacement.'' The 
Journal of Bone & Joint Surgery. JBJS 1453-1458.
---------------------------------------------------------------------------

    We invited public comments on whether the AUGMENT[supreg] Bone 
Graft meets the substantial clinical improvement criterion.
    Comment: We received several comments in regards to our inquiry of 
whether or not RIA is an appropriate comparator to AUGMENT[supreg] Bone 
Graft. Specifically, the applicant asserted that the standard of care 
has been autograft, as evidenced by peer-review literature, a review of 
claims, and randomized controlled trials. The commenters further 
asserted that the RIA technique is another way to harvest autograft, 
requires a separate incision, and is not appropriate given the volume 
of graft needed for ankle and hindfoot arthrodesis. The applicant 
further argued that given that the RIA technique still requires a 
separate incision, the concerns surrounding the second procedure, 
including pain and potential complications, would still apply. Finally, 
the applicant asserted that the RIA technique has additional risks and 
complications, including: A steep learning curve for surgeons with the 
potential for technical errors creating risk of potential 
complications;\58\ select populations for whom the technique is not 
appropriate, including patients with osteoporosis and osteopenia, as 
well as elderly patients;\59\ and, risk for fractures, penetration of 
the anterior cortex, violation of the knee joint, blood loss, and 
pressure emboli. 60 61 62
---------------------------------------------------------------------------

    \58\ Haubruck P, Ober J, Heller R, Miska M, Schmidmaier G, 
Tanner MC (2018) Complications and risk management in the use of the 
reaming-irrigator-aspirator (RIA) system: RIA is a safe and reliable 
method in harvesting autologous bone graft. PLoS ONE 13(4): 
e0196051.
    \59\ Ibid.
    \60\ Dimitriou R, Mataliotakis GI, Angoules AG, et al. 
Complications following autologous bone graft harvesting from the 
iliac crest and using the RIA: a systematic review. Injury. 2011 
Sep;42 Suppl 2:S3-15.
    \61\ See Complications and risk management in the use of the 
reaming-irrigator-aspirator (RIA) system: RIA is a safe and reliable 
method in harvesting autologous bone graft, supra.
    \62\ See Use of the reamer-irrigator-aspirator technique to 
obtain autograft for ankle and hindfoot arthrodesis, supra.
---------------------------------------------------------------------------

    The applicant also commented on concerns regarding long-term 
outcomes. In the CY 2020 OPPS/ASC proposed rule, we noted a potential 
lack of data on AUGMENT[supreg] beyond 2 years after the initial 
procedure. In response, the applicant submitted information on ongoing 
longer-term post-market surveillance data for AUGMENT[supreg]. 
Specifically, the applicant describes FDA post-market approval studies 
as a post-market requirement for the FDA PMA approval order to be 
submitted in Q4 2019.
    In response to our concern about potential safety and adverse event 
rates, the applicant stated that available data demonstrates that the 
benefits of AUGMENT[supreg] outweigh the risks. Specifically, the 
applicant stated that although the reported percentage of infection 
rates outlined in the FDA's Summary of Safety and Effectiveness Data 
were higher for the AUGMENT[supreg] versus autograft, this is due to 
various infections unrelated to ankle and hindfoot arthrodesis. The 
applicant focused on infections related to the surgical support and 
commented that there was a dramatically lower infection rate, not 
significantly different between AUGMENT[supreg] versus autograft (p = 
0.447). The applicant reported that surgical site infections occurred 
in 7 percent of AUGMENT[supreg] subjects and 9.2 percent in traditional 
autograft procedure subjects. The applicant also stated that it is 
common when studying a novel therapy against an active comparator that 
is known to be safe and effective to use a non-inferiority study. The 
applicant also stated that they conducted an additional analysis of the 
IDE trial data to determine the impact of graft type (AUGMENT[supreg] 
Bone Graft versus autograft) and subject age (over 65 vs those 65 and 
younger) on fusion outcomes.\63\ The applicant believed that the data 
confirm results of prior studies that have found that autograft tissue 
quality is affected by age. The applicant suggested that while 
AUGMENT[supreg] was non-inferior to autograft overall, the elderly 
population data shows better odds of fusion success with 
AUGMENT[supreg] compared with autograft.
---------------------------------------------------------------------------

    \63\ Haddad SL, Berlet GC, Baumhauer JF, et al. Impact of 
patient age and graft type on fusion following ankle and hindfoot 
arthrodesis. Combined Australia & New Zealand Orthopaedic Foot & 
Ankle Societies Conference, Surfers Paradise, Queensland, Australia, 
2019
---------------------------------------------------------------------------

    Response: We appreciate the additional information and analysis 
provided by the applicant and other stakeholders. After reviewing the 
additional information provided by the applicant and other stakeholders 
addressing our concerns raised in the CY 2020 OPPS/ASC proposed rule, 
we agree with the applicant that AUGMENT[supreg] provides a substantial 
clinical improvement by significantly reducing, or eliminating, chronic 
pain (measured at > 20mm on VAS) associated with the autograft donor 
site with the elimination of the donor site procedure, at 6 months and 
12 months. We also note that in subjects 65+, AUGMENT[supreg] was more 
than twice as

[[Page 61294]]

likely as autograft to result in fusion.\64\ Finally, after analyzing 
the additional data provided through public comment, we believe that 
AUGMENT[supreg] will provide a substantial clinical improvement by 
reducing chronic pain and also reducing complications.
---------------------------------------------------------------------------

    \64\ Ibid.
---------------------------------------------------------------------------

    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the use of the 
AUGMENT[supreg] Bone Graft would be reported with CPT code 27870 
(Arthrodesis, ankle, open), which is assigned to APC 5115 (Level 5 
Musculoskeletal Procedures). To meet the cost criterion for device 
pass-through payment status, a device must pass all three tests of the 
cost criterion for at least one APC. For our calculations, we used APC 
5115, which has a CY 2019 payment rate of $10,122.92. Beginning in CY 
2017, we calculate the device offset amount at the HCPCS/CPT code level 
instead of the APC level (81 FR 79657). CPT code 27870 had a device 
offset amount of $4,553.29. According to the applicant, the cost of the 
AUGMENT[supreg] Bone Graft is $3,077 per device/drug combination. The 
applicant further provided a weighted average cost of the graft, 
accounting for how many procedures required one, two, or three 
AUGMENT[supreg] Bone Graft device/drug kits, equaling a weighted 
average cost of $6,020.22.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of the AUGMENT[supreg] Bone Graft is more than 
25 percent of the applicable APC payment amount \65\ for the service 
related to the category of devices of $10,122.92 (($6,020.22/
$10,122.92) x 100 = 59 percent)). Therefore, we believe that the 
AUGMENT[supreg] Bone Graft meets the first cost significance 
requirement.
---------------------------------------------------------------------------

    \65\ Due to the timing of the application, the AUGMENT[supreg] 
Bone Graft cost values were calculated using the 2018 proposed rule 
data.
---------------------------------------------------------------------------

    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $6,020.22 for 
AUGMENT[supreg] Bone Graft exceeds the cost of the device-related 
portion of the APC payment amount for the related service of $4,553.29 
by at least 25 percent (($6,020.22/$4,553.29) x 100 = 132 percent). 
Therefore, we believe AUGMENT[supreg] Bone Graft meets the second cost 
significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $6,020.22 for the AUGMENT[supreg] Bone Graft and the 
portion of the APC payment amount for the device of $4,553.29 exceeds 
the APC payment amount for the related service of $10,122.92 by more 
than 10 percent (($6,020.22 - $4,553.29)/$10,122.92 x 100 = 15 
percent). Therefore, we believe that AUGMENT[supreg] Bone Graft meets 
the third cost significance test. We invited public comments on whether 
the AUGMENT[supreg] Bone Graft meets the device pass-through payment 
criteria discussed in this section, including the cost criterion.
    Comment: The applicant submitted a comment in support of our cost 
analysis of AUGMENT[supreg] Bone Graft.
    Response: We thank the applicant for their comment in support, and 
continue to believe AUGMENT[supreg] Bone Graft meets the cost criteria.
    After consideration of the public comments we received, we are 
approving the AUGMENT[supreg] Bone Graft for device pass-through 
payment status beginning in CY 2020.
3. Request for Information and Potential Revisions to the OPPS Device 
Pass-Through Substantial Clinical Improvement Criterion in the FY 2020 
IPPS/LTCH PPS Proposed Rule
    As mentioned earlier, section 1833(t)(6) of the Act provides for 
pass-through payments for devices, and section 1833(t)(6)(B) of the Act 
requires CMS to use categories in determining the eligibility of 
devices for pass-through payments. Separately, the criteria as set 
forth under Sec.  419.66(c) are used to determine whether a new 
category of pass-through payment devices should be established. One of 
these criteria, at Sec.  419.66(c)(2), states that CMS determines that 
a device to be included in the category has demonstrated that it will 
substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment. CMS considers the totality of 
the substantial clinical improvement claims and supporting data, as 
well as public comments, when evaluating this aspect of each 
application. CMS summarizes each applicant's claim of substantial 
clinical improvement as part of its discussion of the entire 
application in the relevant proposed rule, as well as any concerns 
regarding those claims. In the relevant final rule for the OPPS, CMS 
responds to public comments and discusses its decision to approve or 
deny the application for separate transitional pass-through payments.
    Over the years, applicants and commenters have indicated that it 
would be helpful for CMS to provide greater guidance on what 
constitutes ``substantial clinical improvement.'' In the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19368 through 19371), we requested 
information on the substantial clinical improvement criterion for OPPS 
transitional pass-through payments for devices and stated that we were 
considering potential revisions to that criterion. In particular, we 
sought public comments in the FY 2020 IPPS/LTCH PPS proposed rule on 
the type of additional detail and guidance that the public and 
applicants for device pass-through transitional payment would find 
useful (84 FR 19367 to 19369). This request for public comments was 
intended to be broad in scope and provide a foundation for potential 
rulemaking in future years. We refer readers to the FY 2020 IPPS/LTCH 
proposed rule for the full text of this request for information.
    In addition to the 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 also solicited comments from the 
public in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19369 through 
19371) on specific changes or clarifications to the IPPS and OPPS 
substantial clinical improvement criterion that CMS might consider 
making in the FY 2020 IPPS/LTCH PPS final rule to provide greater 
clarity and predictability. We refer readers to the FY 2020 IPPS/LTCH 
PPS proposed rule

[[Page 61295]]

for complete details on those potential revisions. We noted that any 
responses to public comments we received on potential revisions to the 
OPPS substantial clinical improvement criterion in response to the FY 
2020 IPPS/LTCH PPS proposed rule, as well as any revisions that might 
be adopted, would be included in this final rule with comment period 
and would inform future OPPS rulemaking.
    Comment: We received one comment addressing this RFI, which 
recommended that CMS demonstrate greater flexibility in considering 
what constitutes substantial clinical improvement, including evidence 
developed through data registries and evidence from markets outside the 
U.S.
    Response: We thank the commenter for their response. We note that 
we accept a wide range of data and other evidence to help determine 
whether a device meets the substantial clinical improvement criterion.
4. Proposed Alternative Pathway to the OPPS Device Pass-Through 
Substantial Clinical Improvement Criterion for Transformative New 
Devices
    Since 2001 when we first established the substantial clinical 
improvement criterion, FDA programs for helping to expedite the 
development and review of transformative new devices that are intended 
to treat or diagnose serious diseases or conditions and address unmet 
medical needs (referred to, for purposes of this rule) as FDA's 
expedited programs) have continued to evolve in tandem with advances in 
medical innovations and technology. There is currently one FDA 
expedited program for devices, the Breakthrough Devices Program. The 
21st Century Cures Act (Cures Act) (Pub. L. 144-255) established the 
Breakthrough Devices Program to expedite the development of, and 
provide for priority review of, medical devices and device-led 
combination products that provide for more effective treatment or 
diagnosis of life-threatening or irreversibly debilitating diseases or 
conditions and which meet one of the following four criteria: (1) That 
represent breakthrough technologies; (2) for which no approved or 
cleared alternatives exist; (3) that offer significant advantages over 
existing approved or cleared alternatives, including the potential, 
compared to existing approved alternatives, to reduce or eliminate the 
need for hospitalization, improve patient quality of life, facilitate 
patients' ability to manage their own care (such as through self-
directed personal assistance), or establish long-term clinical 
efficiencies; or (4) the availability of which is in the best interest 
of patients.
    Some stakeholders over the years have requested that devices that 
receive marketing authorization and are part of an FDA expedited 
program be deemed as representing a substantial clinical improvement 
for purposes of OPPS device pass-through status. We understand this 
request would arguably create administrative efficiency because the 
commenters currently view the two sets of criteria as the same, 
overlapping, similar, or otherwise duplicative or unnecessary.
    The Administration is committed to addressing barriers to health 
care innovation and ensuring Medicare beneficiaries have access to 
critical and life-saving new cures and technologies that improve 
beneficiary health outcomes. As detailed in the President's FY 2020 
Budget (we refer readers to HHS FY 2020 Budget in Brief, Improve 
Medicare Beneficiary Access to Breakthrough Devices, pp. 84-85), HHS is 
pursuing several policies that will instill greater transparency and 
consistency around how Medicare covers and pays for innovative 
technology.
    Therefore, given the existence of the current and past FDA programs 
for helping to expedite the development and review of certain devices 
intended to treat or diagnose serious or life-threatening or 
irreversibly debilitating diseases or conditions for which there is an 
unmet medical need), we considered whether it would also be appropriate 
to similarly facilitate access to these transformative new technologies 
for Medicare beneficiaries taking into consideration that, at the time 
of marketing authorization (that is, Premarket Approval (PMA); 510(k) 
clearance; or the granting of a De Novo classification request) for a 
product that is the subject of a FDA expedited program, the evidence 
base for demonstrating substantial clinical improvement in accordance 
with CMS' current standard may not be fully developed. We also 
considered whether FDA marketing authorization of a product that is 
part of an FDA expedited program is evidence that the product is 
sufficiently different from existing products for purposes of newness.
    After consideration of these issues, and consistent with the 
Administration's commitment to addressing barriers to health care 
innovation and ensuring Medicare beneficiaries have access to critical 
and life-saving new cures and technologies that improve beneficiary 
health outcomes, we concluded that it would be appropriate to develop 
an alternative pathway for transformative medical devices. In 
situations where a new medical device is part of the Breakthrough 
Devices Program and has received FDA marketing authorization (that is, 
the device has received PMA; 510(k) clearance; or the granting of a De 
Novo classification request), we proposed an alternative outpatient 
pass-through pathway to facilitate access to this technology for 
Medicare beneficiaries beginning with applications received for pass-
through payment on or after January 1, 2020.
    We continue to believe that hospitals should receive pass-through 
payments for devices that offer clear clinical improvement and that 
cost considerations should not interfere with patient access. In light 
of the criteria designation as a Breakthrough Device, and because we 
recognize that such devices may not have a sufficient evidence base to 
demonstrate substantial clinical improvement at the time of FDA 
marketing authorization, we proposed to amend the OPPS device 
transitional pass-through payment regulations to create an alternative 
pathway to demonstrating substantial clinical improvement that would 
enable devices that receive FDA marketing authorization and are part of 
the FDA Breakthrough Devices Program to qualify for our quarterly 
approval process for device pass-through payment under the OPPS for 
pass-through payment applications received on or after January 1, 2020. 
With this proposal, OPPS device pass-through payment applicants for 
devices that have received FDA marketing authorization and are part of 
the FDA Breakthrough Devices Program would not be evaluated in terms of 
the current substantial clinical improvement criterion at Sec.  
419.66(c)(2) for the purposes of determining device pass-through 
payment status, but would continue to need to meet the other 
requirements for pass-through payment status in our regulation at Sec.  
419.66. Devices that have received FDA marketing authorization and are 
part of the Breakthrough Devices Program can be approved through the 
quarterly process and would be announced through that process (81 FR 
79655). Finally, we would include proposals regarding these devices and 
whether pass-through payment status should continue to apply in the 
next applicable OPPS rulemaking cycle.
    As such, we proposed to revise paragraph (c)(2) under Sec.  419.66. 
Under proposed revised paragraph (c)(2), we proposed to establish an 
alternative pathway where applications for device pass-through payment 
status for new

[[Page 61296]]

medical devices received on or after January 1, 2020 that are a part of 
FDA's Breakthrough Devices Program and have received FDA marketing 
authorization (that is, the device has received PMA, 510(k) clearance, 
or the granting of a De Novo classification request) will not be 
evaluated for substantial clinical improvement for the purposes of 
determining device pass-through payment status. Under this proposed 
alternative pathway, a medical device that has received FDA marketing 
authorization (that is, has been approved or cleared by, or had a De 
Novo classification request granted by, FDA) and that is part of FDA's 
Breakthrough Devices Program would still need to meet the eligibility 
criteria under Sec.  419.66(b), the other criteria for establishing 
device categories under Sec.  419.66(c), and the cost criterion under 
Sec.  419.66(d). We noted that this proposal aligns with a proposal in 
the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19371 through 19373) and 
final rule (84 FR 42292 through 42297) and will help achieve the goals 
of expedited access to innovative devices to further reduce 
administrative burden.
    Comment: MedPAC opposed our proposal and stated that participation 
in the FDA Breakthrough Device Program does not necessarily reflect 
improvements in outcomes or justify increased payment for Medicare 
beneficiaries. MedPAC expressed concern that such a policy would 
provide inappropriate incentives for providers to use new technology 
without proven safety or efficacy by allowing increased payment for the 
new technology.
    Most commenters supported the proposal for an alternative pathway 
and offered suggestions that they thought would enhance the proposal. 
Specifically, commenters requested that CMS expand the alternative 
pathway to include other FDA designations, namely the Expedited Access 
Pathway and the Regenerative Medicine Advanced Therapy (RMAT) 
Designation. A commenter requested that similar to the IPPS policy, we 
also waive the newness criterion under the alternative pathway. 
Commenters also requested that we expand the alternative pathway to New 
Technology APCs, drug pass-through payment, and non-opioid 
alternatives.
    Finally, a number of commenters encouraged us to ensure coverage 
for devices that are approved under the alternative pathway.
    Response: We appreciate the commenters' support for the alternative 
pathway proposal. After reviewing the public comments, we continue to 
believe that the benefits of providing earlier access to Breakthrough 
Devices can improve beneficiary health outcomes support establishing 
this alternative pathway. While we appreciate the commenter's concern 
regarding potential negative incentives, we continue to believe that it 
is appropriate to facilitate beneficiary access to transformative new 
medical devices by establishing an alternative pathway for devices that 
receive FDA marketing authorization through FDA's Breakthrough Devices 
Program, and not to require substantial clinical improvement as a 
requirement for pass-through status for these devices because the 
evidence base to demonstrate substantial clinical improvement may not 
be completely developed at the time of FDA marketing authorization for 
such devices, which would delay their eligibility for pass-through 
status.
    In regards to expanding the alternative pathway to include pass-
through drugs and New Technology APCs, we continue to believe that it 
is appropriate to distinguish between drugs and devices, while we 
continue to work on other initiatives for drug affordability; a 
priority for this Administration. Importantly, substantial clinical 
improvement is not a requirement to be assigned to a New Technology APC 
or for drug pass-through status, so it is not necessary to waive such a 
criterion under either of these policies. Finally, we appreciate the 
commenters' suggestion that we should apply the alternative pathway to 
other types of FDA designations and will continue to take those 
comments into consideration for future rulemaking, where appropriate.
    Comment: Several commenters suggested that we revise the effective 
date of the policy, and specifically requested that the policy be 
effective on or after January 1, 2020 for applications submitted prior 
to the September 2019 quarterly application submission deadline.
    Response: We thank the commenters for their input. We agree with 
commenters and do not believe applicants with devices that would 
qualify for the alternative pathway should be required to re-submit 
their pass-through applications after January 1, 2020 in order to be 
considered for the alternative pathway. Therefore, after considering 
the public comments we received, we are finalizing a policy that the 
alternative pathway will apply for devices that will receive pass-
through payments effective on or after January 1, 2020 and we are 
revising paragraph (c)(2) under Sec.  419.66 consistent with this final 
policy.
    Where we received a device pass-through application by the 
September 2019 quarterly application deadline for a device that 
qualifies for the alternative pathway and the device meets the other 
criteria for device pass-through status, the device can be approved for 
pass-through status beginning on January 1, 2020. Similarly, devices 
for which we received a device pass-through application prior to the 
December 2019 quarterly deadline can receive pass-through status 
beginning April 1, 2020, assuming they qualify for the alternative 
pathway and meet the other criteria for device pass-through status.
    In summary, we are finalizing our proposal with the change to the 
effective date suggested by commenters to establish an alternative 
pathway to the substantial clinical improvement criterion for devices 
that have FDA Breakthrough Devices Program designation and have 
received FDA marketing authorization (that is, the device has received 
PMA, 510(k) clearance, or the granting of a De Novo classification 
request) for devices approved for transitional pass-through status 
effective on or after January 1, 2020.

Devices Approved for Pass-Through Status Under the Breakthrough Device 
Alternative Pathway

    We received two device pass-through applications by the September 
2, 2019 quarterly application deadline that have received FDA marketing 
authorization and a Breakthrough Devices designation from FDA and that 
qualify for consideration under the alternative pathway to the OPPS 
device pass-through substantial clinical improvement criterion. These 
devices meet the other criteria for device pass-through including the 
eligibility criteria under Sec.  419.66(b), the criteria for 
establishing device categories under Sec.  419.66(c), and the cost 
criterion under Sec.  419.66(d) and are approved for pass-through 
status beginning on January 1, 2020.
    The devices include: (1) Optimizer[supreg] System which is 
discussed earlier in this section and approved under the standard 
pathway, and (2) ARTIFICIALIris[supreg] which is an iris prosthesis for 
the treatment of iris defects. The ARTIFICIALIris[supreg] application 
was received in June 2019 after the March 2019 quarterly deadline for 
applications to be received in time to be included in CY 2020 
rulemaking. We are approving ARTIFICIALIris[supreg] for transitional 
pass-through payment under the alternative pathway for CY 2020. As 
previously stated, all applications that are preliminarily

[[Page 61297]]

approved upon quarterly review will automatically be included in the 
next applicable OPPS annual rulemaking cycle, therefore a discussion of 
this application will be included in CY 2021 rulemaking.

B. Device-Intensive Procedures

1. Background
    Under the OPPS, prior to CY 2017, device-intensive status for 
procedures was determined at the APC level for APCs with a device 
offset percentage greater than 40 percent (79 FR 66795). Beginning in 
CY 2017, CMS began determining device-intensive status at the HCPCS 
code level. In assigning device-intensive status to an APC prior to CY 
2017, the device costs of all the procedures within the APC were 
calculated and the geometric mean device offset of all of the 
procedures had to exceed 40 percent. Almost all of the procedures 
assigned to device-intensive APCs utilized devices, and the device 
costs for the associated HCPCS codes exceeded the 40-percent threshold. 
The no cost/full credit and partial credit device policy (79 FR 66872 
through 66873) applies to device-intensive APCs and is discussed in 
detail in section IV.B.4. of the CY 2020 OPPS/ASC proposed rule. A 
related device policy was the requirement that certain procedures 
assigned to device-intensive APCs require the reporting of a device 
code on the claim (80 FR 70422). For further background information on 
the device-intensive APC policy, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70421 through 70426).
a. HCPCS Code-Level Device-Intensive Determination
    As stated earlier, prior to CY 2017, the device-intensive 
methodology assigned device-intensive status to all procedures 
requiring the implantation of a device that were assigned to an APC 
with a device offset greater than 40 percent and, beginning in CY 2015, 
that met the three criteria listed below. Historically, the device-
intensive designation was at the APC level and applied to the 
applicable procedures within that APC. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79658), we changed our methodology to 
assign device-intensive status at the individual HCPCS code level 
rather than at the APC level. Under this policy, a procedure could be 
assigned device-intensive status regardless of its APC assignment, and 
device-intensive APCs were no longer applied under the OPPS or the ASC 
payment system.
    We believe that a HCPCS code-level device offset is, in most cases, 
a better representation of a procedure's device cost than an APC-wide 
average device offset based on the average device offset of all of the 
procedures assigned to an APC. Unlike a device offset calculated at the 
APC level, which is a weighted average offset for all devices used in 
all of the procedures assigned to an APC, a HCPCS code-level device 
offset is calculated using only claims for a single HCPCS code. We 
believe that this methodological change results in a more accurate 
representation of the cost attributable to implantation of a high-cost 
device, which ensures consistent device-intensive designation of 
procedures with a significant device cost. Further, we believe a HCPCS 
code-level device offset removes inappropriate device-intensive status 
for procedures without a significant device cost that are granted such 
status because of APC assignment.
    Under our existing policy, procedures that meet the criteria listed 
below in section IV.B.1.b. of the CY 2020 OPPS/ASC proposed rule are 
identified as device-intensive procedures and are subject to all the 
policies applicable to procedures assigned device-intensive status 
under our established methodology, including our policies on device 
edits and no cost/full credit and partial credit devices discussed in 
sections IV.B.3. and IV.B.4. of the CY 2020 OPP/ASC proposed rule, 
respectively.
b. Use of the Three Criteria To Designate Device-Intensive Procedures
    We clarified our established policy in the CY 2018 OPPS/ASC final 
rule with comment period (82 FR 52474), where we explained that device-
intensive procedures require the implantation of a device and 
additionally are subject to the following criteria:
     All procedures must involve implantable devices that would 
be reported if device insertion procedures were performed;
     The required devices must be surgically inserted or 
implanted devices that remain in the patient's body after the 
conclusion of the procedure (at least temporarily); and
     The device offset amount must be significant, which is 
defined as exceeding 40 percent of the procedure's mean cost.
    We changed our policy to apply these three criteria to determine 
whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66926), where we stated that we 
would apply the no cost/full credit and partial credit device policy--
which includes the three criteria listed above--to all device-intensive 
procedures beginning in CY 2015. We reiterated this position in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70424), where we 
explained that we were finalizing our proposal to continue using the 
three criteria established in the CY 2007 OPPS/ASC final rule with 
comment period for determining the APCs to which the CY 2016 device 
intensive policy will apply. Under the policies we adopted in CYs 2015, 
2016, and 2017, all procedures that require the implantation of a 
device and meet the above criteria are assigned device-intensive 
status, regardless of their APC placement.
2. Device-Intensive Procedure Policy for CY 2019 and Subsequent Years
    As part of CMS' effort to better capture costs for procedures with 
significant device costs, in the CY 2019 OPPS/ASC final rule with 
comment period (83 FR 58944 through 58948), for CY 2019, we modified 
our criteria for device-intensive procedures. We had heard from 
stakeholders that the criteria excluded some procedures that 
stakeholders believed should qualify as device-intensive procedures. 
Specifically, we were persuaded by stakeholder arguments that 
procedures requiring expensive surgically inserted or implanted devices 
that are not capital equipment should qualify as device-intensive 
procedures, regardless of whether the device remains in the patient's 
body after the conclusion of the procedure. We agreed that a broader 
definition of device-intensive procedures was warranted, and made two 
modifications to the criteria for CY 2019 (83 FR 58948). First, we 
allowed procedures that involve surgically inserted or implanted 
single-use devices that meet the device offset percentage threshold to 
qualify as device-intensive procedures, regardless of whether the 
device remains in the patient's body after the conclusion of the 
procedure. We established this policy because we no longer believe that 
whether a device remains in the patient's body should affect its 
designation as a device-intensive procedure, as such devices could, 
nonetheless, comprise a large portion of the cost of the applicable 
procedure. Second, we modified our criteria to lower the device offset 
percentage threshold from 40 percent to 30 percent, to allow a greater 
number of procedures to qualify as device-intensive. We stated that we 
believe allowing these additional procedures to qualify for device-
intensive status will help ensure these procedures receive

[[Page 61298]]

more appropriate payment in the ASC setting, which will help encourage 
the provision of these services in the ASC setting. In addition, we 
stated that this change would help to ensure that more procedures 
containing relatively high-cost devices are subject to the device 
edits, which leads to more correctly coded claims and greater accuracy 
in our claims data. Specifically, for CY 2019 and subsequent years, we 
finalized that device-intensive procedures will be subject to the 
following criteria:
     All procedures must involve implantable devices assigned a 
CPT or HCPCS code;
     The required devices (including single-use devices) must 
be surgically inserted or implanted; and
     The device offset amount must be significant, which is 
defined as exceeding 30 percent of the procedure's mean cost (83 FR 
58945).
    In addition, to further align the device-intensive policy with the 
criteria used for device pass-through payment status, we finalized, for 
CY 2019 and subsequent years, that for purposes of satisfying the 
device-intensive criteria, a device-intensive procedure must involve a 
device that:
     Has received FDA marketing authorization, has received an 
FDA investigational device exemption (IDE), and has been classified as 
a Category B device by FDA in accordance with 42 CFR 405.203 through 
405.207 and 405.211 through 405.215, or meets another appropriate FDA 
exemption from premarket review;
     Is an integral part of the service furnished;
     Is used for one patient only;
     Comes in contact with human tissue;
     Is surgically implanted or inserted (either permanently or 
temporarily); and
     Is not either of the following:
    (a) Equipment, an instrument, apparatus, implement, or item of this 
type for which depreciation and financing expenses are recovered as 
depreciable assets as defined in Chapter 1 of the Medicare Provider 
Reimbursement Manual (CMS Pub. 15-1); or
    (b) A material or supply furnished incident to a service (for 
example, a suture, customized surgical kit, scalpel, or clip, other 
than a radiological site marker) (83 FR 58945).
    In addition, for new HCPCS codes describing procedures requiring 
the implantation of medical devices that do not yet have associated 
claims data, in the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79658), we finalized a policy for CY 2017 to apply device-intensive 
status with a default device offset set at 41 percent for new HCPCS 
codes describing procedures requiring the implantation or insertion of 
a medical device that did not yet have associated claims data until 
claims data are available to establish the HCPCS code-level device 
offset for the procedures. This default device offset amount of 41 
percent was not calculated from claims data; instead, it was applied as 
a default until claims data were available upon which to calculate an 
actual device offset for the new code. The purpose of applying the 41-
percent default device offset to new codes that describe procedures 
that implant or insert medical devices was to ensure ASC access for new 
procedures until claims data become available.
    As discussed in the CY 2019 OPPS/ASC proposed rule and final rule 
with comment period (83 FR 37108 through 37109 and 58945 through 58946, 
respectively), in accordance with our policy stated above to lower the 
device offset percentage threshold for procedures to qualify as device-
intensive from greater than 40 percent to greater than 30 percent, for 
CY 2019 and subsequent years, we modified this policy to apply a 31-
percent default device offset to new HCPCS codes describing procedures 
requiring the implantation of a medical device that do not yet have 
associated claims data until claims data are available to establish the 
HCPCS code-level device offset for the procedures. In conjunction with 
the policy to lower the default device offset from 41 percent to 31 
percent, we continued our current policy of, in certain rare instances 
(for example, in the case of a very expensive implantable device), 
temporarily assigning a higher offset percentage if warranted by 
additional information such as pricing data from a device manufacturer 
(81 FR 79658). Once claims data are available for a new procedure 
requiring the implantation of a medical device, device-intensive status 
is applied to the code if the HCPCS code-level device offset is greater 
than 30 percent, according to our policy of determining device-
intensive status by calculating the HCPCS code-level device offset.
    In addition, in the CY 2019 OPPS/ASC final rule with comment 
period, we clarified that since the adoption of our policy in effect as 
of CY 2018, the associated claims data used for purposes of determining 
whether or not to apply the default device offset are the associated 
claims data for either the new HCPCS code or any predecessor code, as 
described by CPT coding guidance, for the new HCPCS code. Additionally, 
for CY 2019 and subsequent years, in limited instances where a new 
HCPCS code does not have a predecessor code as defined by CPT, but 
describes a procedure that was previously described by an existing 
code, we use clinical discretion to identify HCPCS codes that are 
clinically related or similar to the new HCPCS code but are not 
officially recognized as a predecessor code by CPT, and to use the 
claims data of the clinically related or similar code(s) for purposes 
of determining whether or not to apply the default device offset to the 
new HCPCS code (83 FR 58946). Clinically related and similar procedures 
for purposes of this policy are procedures that have little or no 
clinical differences and use the same devices as the new HCPCS code. In 
addition, clinically related and similar codes for purposes of this 
policy are codes that either currently or previously describe the 
procedure described by the new HCPCS code. Under this policy, claims 
data from clinically related and similar codes are included as 
associated claims data for a new code, and where an existing HCPCS code 
is found to be clinically related or similar to a new HCPCS code, we 
apply the device offset percentage derived from the existing clinically 
related or similar HCPCS code's claims data to the new HCPCS code for 
determining the device offset percentage. We stated that we believe 
that claims data for HCPCS codes describing procedures that have minor 
differences from the procedures described by new HCPCS codes will 
provide an accurate depiction of the cost relationship between the 
procedure and the device(s) that are used, and will be appropriate to 
use to set a new code's device offset percentage, in the same way that 
predecessor codes are used. If a new HCPCS code has multiple 
predecessor codes, the claims data for the predecessor code that has 
the highest individual HCPCS-level device offset percentage is used to 
determine whether the new HCPCS code qualifies for device-intensive 
status. Similarly, in the event that a new HCPCS code does not have a 
predecessor code but has multiple clinically related or similar codes, 
the claims data for the clinically related or similar code that has the 
highest individual HCPCS level device offset percentage is used to 
determine whether the new HCPCS code qualifies for device-intensive 
status.
    As we indicated in the CY 2019 OPPS/ASC proposed rule and final 
rule with comment period, additional information for our consideration 
of an offset percentage higher than the default of 31 percent for new 
HCPCS codes describing procedures requiring the implantation (or, in 
some cases, the

[[Page 61299]]

insertion) of a medical device that do not yet have associated claims 
data, such as pricing data or invoices from a device manufacturer, 
should be directed to the Division of Outpatient Care, Mail Stop C4-01-
26, Centers for Medicare and Medicaid Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850, or electronically at 
[email protected]. Additional information can be submitted 
prior to issuance of an OPPS/ASC proposed rule or as a public comment 
in response to an issued OPPS/ASC proposed rule. Device offset 
percentages will be set in each year's final rule.
    For CY 2020, we did not propose any changes to our device-intensive 
policy.
    Comment: Some commenters noted that CPT codes 22612 and 64912 had a 
device-offset percentage greater than 30 percent and should have been 
proposed to have device-intensive status for CY 2020.
    Response: We agree with commenters that CPT codes 22612 and 64912 
were inadvertently omitted from Addendum P and were not assigned 
device-intensive status in the CY 2020 OPPS/ASC proposed rule. For the 
CY 2020 OPPS/ASC final rule with comment period, the device offset for 
both procedures exceeds the 30 percent threshold and these procedures 
are assigned device-intensive status for CY 2020.
    Comment: One commenter requested that we assign HCPCS code C9752 a 
higher device offset percentage. Additionally, one commenter requested 
that we assign HCPCS code C9754 a higher device offset percentage.
    Response: We thank the commenters for their recommendations and 
their submission of device pricing information. After reviewing the 
pricing information provided by commenters, we believe a default device 
offset percentage of 31 percent appropriately reflects the device costs 
for these procedures for CY 2020.
    Comment: One commenter requested we assign device-intensive status 
for CPT codes 36904, 36905, 50590, and HCPCS code 0275T for CY 2020.
    Response: Using the most currently available data for this CY 2020 
OPPS/ASC final rule with comment period, we have determined that the 
device offset percentages for CPT codes 36905, 50590, and HCPCS code 
0275T are not above the 30-percent threshold and, therefore, these 
procedures are not eligible to be assigned device-intensive status. 
Additionally, based on the most currently available data for this CY 
2020 OPPS/ASC final rule with comment period, we have determined that 
the device offset percentage for CPT code 36904 exceeds the 30-percent 
threshold and therefore, this procedure is assigned device-intensive 
status for CY 2020.
    Comment: One commenter stated that the device offset for CPT code 
53854 should be based on the predecessor code of HCPCS code 0275T and 
that CPT code 53854 should be assigned device-intensive status for CY 
2020.
    Response: We agree with the commenter that, in the absence of 
device cost statistics for a particular procedure, we may use the 
predecessor code (in this case HCPCS code 0275T) to make a device-
intensive determination. However, we note that the device-intensive 
percentage for HCPCS code 0275T is below the 30 percent threshold and, 
therefore, we are not assigning CPT code 53854 device-intensive status 
for CY 2020.
    The full listing of the proposed CY 2020 device-intensive 
procedures can be found in Addendum P to this CY 2020 OPPS/ASC proposed 
rule (which is available via the internet on the CMS website).
3. Device Edit Policy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795), we finalized a policy and implemented claims processing edits 
that require any of the device codes used in the previous device-to-
procedure edits to be present on the claim whenever a procedure code 
assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC 
final rule with comment period (the CY 2015 device-dependent APCs) is 
reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70422), we modified our previously existing 
policy and applied the device coding requirements exclusively to 
procedures that require the implantation of a device that are assigned 
to a device-intensive APC. In the CY 2016 OPPS/ASC final rule with 
comment period, we also finalized our policy that the claims processing 
edits are such that any device code, when reported on a claim with a 
procedure assigned to a device-intensive APC (listed in Table 42 of the 
CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)) will 
satisfy the edit.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 
through 79659), we changed our policy for CY 2017 and subsequent years 
to apply the CY 2016 device coding requirements to the newly defined 
device-intensive procedures. For CY 2017 and subsequent years, we also 
specified that any device code, when reported on a claim with a device-
intensive procedure, will satisfy the edit. In addition, we created 
HCPCS code C1889 to recognize devices furnished during a device-
intensive procedure that are not described by a specific Level II HCPCS 
Category C-code. Reporting HCPCS code C1889 with a device-intensive 
procedure will satisfy the edit requiring a device code to be reported 
on a claim with a device-intensive procedure. In the CY 2019 OPPS/ASC 
final rule with comment period, we revised the description of HCPCS 
code C1889 to remove the specific applicability to device-intensive 
procedures (83 FR 58950). For CY 2019 and subsequent years, the 
description of HCPCS code C1889 is ``Implantable/insertable device, not 
otherwise classified''.
    We did not propose any changes to this policy for CY 2020.
    Comment: Several commenters requested that CMS restore the device-
to-procedure and procedure-to-device edits. Additionally, some 
commenters requested specific device edits for total hip arthroplasty 
procedures and total knee arthroplasty procedures as well as device-
intensive ``C'' HCPCS codes.
    Response: As we stated in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66794), we continue to believe that the 
elimination of device-to-procedure edits and procedure-to-device edits 
is appropriate due to the experience hospitals now have in coding and 
reporting these claims fully. More specifically, for the most costly 
devices, we believe the C-APCs will reliably reflect the cost of the 
device if charges for the device are included anywhere on the claim. We 
note that, under our current policy, hospitals are still expected to 
adhere to the guidelines of correct coding and append the correct 
device code to the claim when applicable. We also note that, as with 
all other items and services recognized under the OPPS, we expect 
hospitals to code and report their costs appropriately, regardless of 
whether there are claims processing edits in place. Further, we also 
note that our current device edit policy requires hospitals to report a 
device for certain device-intensive procedures, which include total 
knee arthroplasty, device-intensive ``C'' HCPCS codes, as well as total 
hip arthroplasty beginning in CY 2020.
4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial 
Credit Devices
a. Background
    To ensure equitable OPPS payment when a hospital receives a device 
without cost or with full credit, in CY 2007, we implemented a policy 
to

[[Page 61300]]

reduce the payment for specified device-dependent APCs by the estimated 
portion of the APC payment attributable to device costs (that is, the 
device offset) when the hospital receives a specified device at no cost 
or with full credit (71 FR 68071 through 68077). Hospitals were 
instructed to report no cost/full credit device cases on the claim 
using the ``FB'' modifier on the line with the procedure code in which 
the no cost/full credit device is used. In cases in which the device is 
furnished without cost or with full credit, hospitals were instructed 
to report a token device charge of less than $1.01. In cases in which 
the device being inserted is an upgrade (either of the same type of 
device or to a different type of device) with a full credit for the 
device being replaced, hospitals were instructed to report as the 
device charge the difference between the hospital's usual charge for 
the device being implanted and the hospital's usual charge for the 
device for which it received full credit. In CY 2008, we expanded this 
payment adjustment policy to include cases in which hospitals receive 
partial credit of 50 percent or more of the cost of a specified device. 
Hospitals were instructed to append the ``FC'' modifier to the 
procedure code that reports the service provided to furnish the device 
when they receive a partial credit of 50 percent or more of the cost of 
the new device. We refer readers to the CY 2008 OPPS/ASC final rule 
with comment period for more background information on the ``FB'' and 
``FC'' modifiers payment adjustment policies (72 FR 66743 through 
66749).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 
through 75007), beginning in CY 2014, we modified our policy of 
reducing OPPS payment for specified APCs when a hospital furnishes a 
specified device without cost or with a full or partial credit. For CY 
2013 and prior years, our policy had been to reduce OPPS payment by 100 
percent of the device offset amount when a hospital furnishes a 
specified device without cost or with a full credit and by 50 percent 
of the device offset amount when the hospital receives partial credit 
in the amount of 50 percent or more of the cost for the specified 
device. For CY 2014, we reduced OPPS payment, for the applicable APCs, 
by the full or partial credit a hospital receives for a replaced 
device. Specifically, under this modified policy, hospitals are 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' (Credit Received from the Manufacturer 
for a Replaced Medical Device) when the hospital receives a credit for 
a replaced device that is 50 percent or greater than the cost of the 
device. For CY 2014, we also limited the OPPS payment deduction for the 
applicable APCs to the total amount of the device offset when the 
``FD'' value code appears on a claim. For CY 2015, we continued our 
policy of reducing OPPS payment for specified APCs when a hospital 
furnishes a specified device without cost or with a full or partial 
credit and to use the three criteria established in the CY 2007 OPPS/
ASC final rule with comment period (71 FR 68072 through 68077) for 
determining the APCs to which our CY 2015 policy will apply (79 FR 
66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70424), we finalized our policy to no longer specify a 
list of devices to which the OPPS payment adjustment for no cost/full 
credit and partial credit devices would apply and instead apply this 
APC payment adjustment to all replaced devices furnished in conjunction 
with a procedure assigned to a device-intensive APC when the hospital 
receives a credit for a replaced specified device that is 50 percent or 
greater than the cost of the device.
b. Policy for No Cost/Full Credit and Partial Credit Devices
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 
through 79660), for CY 2017 and subsequent years, we finalized our 
policy to reduce OPPS payment for device-intensive procedures, by the 
full or partial credit a provider receives for a replaced device, when 
a hospital furnishes a specified device without cost or with a full or 
partial credit. Under our current policy, hospitals continue to be 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' when the hospital receives a credit for a 
replaced device that is 50 percent or greater than the cost of the 
device.
    We did not propose any changes to our no cost/full credit and 
partial credit device policies in the CY 2020 OPPS/ASC proposed rule.
5. Payment Policy for Low-Volume Device-Intensive Procedures
    In CY 2016, we used our equitable adjustment authority under 
section 1833(t)(2)(E) of the Act and used the median cost (instead of 
the geometric mean cost per our standard methodology) to calculate the 
payment rate for the implantable miniature telescope procedure 
described by CPT code 0308T (Insertion of ocular telescope prosthesis 
including removal of crystalline lens or intraocular lens prosthesis), 
which is the only code assigned to APC 5494 (Level 4 Intraocular 
Procedures) (80 FR 70388). We noted that, as stated in the CY 2017 
OPPS/ASC proposed rule (81 FR 45656), we proposed to reassign the 
procedure described by CPT code 0308T to APC 5495 (Level 5 Intraocular 
Procedures) for CY 2017, but it would be the only procedure code 
assigned to APC 5495. The payment rates for a procedure described by 
CPT code 0308T (including the predecessor HCPCS code C9732) were 
$15,551 in CY 2014, $23,084 in CY 2015, and $17,551 in CY 2016. The 
procedure described by CPT code 0308T is a high-cost device-intensive 
surgical procedure that has a very low volume of claims (in part 
because most of the procedures described by CPT code 0308T are 
performed in ASCs). We believe that the median cost is a more 
appropriate measure of the central tendency for purposes of calculating 
the cost and the payment rate for this procedure because the median 
cost is impacted to a lesser degree than the geometric mean cost by 
more extreme observations. We stated that, in future rulemaking, we 
would consider proposing a general policy for the payment rate 
calculation for very low-volume device-intensive APCs (80 FR 70389).
    For CY 2017, we proposed and finalized a payment policy for low-
volume device-intensive procedures that is similar to the policy 
applied to the procedure described by CPT code 0308T in CY 2016. In the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79660 through 
79661), we established our current policy that the payment rate for any 
device-intensive procedure that is assigned to a clinical APC with 
fewer than 100 total claims for all procedures in the APC be calculated 
using the median cost instead of the geometric mean cost, for the 
reasons described above for the policy applied to the procedure 
described by CPT code 0308T in CY 2016. The CY 2018 final rule 
geometric mean cost for the procedure described by CPT code 0308T 
(based on 19 claims containing the device HCPCS C-code, in accordance 
with the device-intensive edit policy) was $21,302, and the median cost 
was $19,521. The final CY 2018 payment rate (calculated using the 
median cost) was $17,560.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 
58951), for CY 2019, we continued with our policy of establishing the 
payment rate for any device-intensive procedure that is assigned to a 
clinical APC with fewer

[[Page 61301]]

than 100 total claims for all procedures in the APC based on 
calculations using the median cost instead of the geometric mean cost. 
For more information on the specific policy for assignment of low-
volume device-intensive procedures for CY 2019, we refer readers to 
section III.D.13. of the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58917 through 58918).
    For CY 2020, we proposed to continue our current policy of 
establishing the payment rate for any device-intensive procedure that 
is assigned to a clinical APC with fewer than 100 total claims for all 
procedures in the APC using the median cost instead of the geometric 
mean cost. For CY 2020, this policy would apply to CPT code 0308T, 
which we proposed to assign to APC 5495 (Level 5 Intraocular 
Procedures) in the CY 2020 OPPS/ASC proposed rule. The CY 2020 OPPS/ASC 
proposed rule geometric mean cost for the procedure described by CPT 
code 0308T (based on 7 claims containing the device HCPCS C-code, in 
accordance with the device-intensive edit policy) was $28,237, and the 
median cost was $19,270. The proposed CY 2020 payment rate (calculated 
using the median cost) was $19,740 and can be found in Addendum B to 
the CY 2020 OPPS/ASC proposed rule (which is available via the internet 
on the CMS website).

V. OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals

A. OPPS Transitional Pass-Through Payment for Additional Costs of 
Drugs, Biologicals, and Radiopharmaceuticals

1. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments or ``transitional pass-through payments'' for certain drugs 
and biologicals. Throughout the proposed rule, the term ``biological'' 
is used because this is the term that appears in section 1861(t) of the 
Act. A ``biological'' as used in the proposed rule includes (but is not 
necessarily limited to) a ``biological product'' or a ``biologic'' as 
defined under section 351 of the Public Health Service Act. As enacted 
by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA) (Pub. L. 106-113), this pass-through payment provision 
requires the Secretary to make additional payments to hospitals for: 
Current orphan drugs for rare disease and conditions, as designated 
under section 526 of the Federal Food, Drug, and Cosmetic Act; current 
drugs and biologicals and brachytherapy sources used in cancer therapy; 
and current radiopharmaceutical drugs and biologicals. ``Current'' 
refers to those types of drugs or biologicals mentioned above that are 
hospital outpatient services under Medicare Part B for which 
transitional pass-through payment was made on the first date the 
hospital OPPS was implemented.
    Transitional pass-through payments also are provided for certain 
``new'' drugs and biologicals that were not being paid for as an HOPD 
service as of December 31, 1996 and whose cost is ``not insignificant'' 
in relation to the OPPS payments for the procedures or services 
associated with the new drug or biological. For pass-through payment 
purposes, radiopharmaceuticals are included as ``drugs.'' As required 
by statute, transitional pass-through payments for a drug or biological 
described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a 
period of at least 2 years, but not more than 3 years, after the 
payment was first made for the product as a hospital outpatient service 
under Medicare Part B. Proposed CY 2020 pass-through drugs and 
biologicals and their designated APCs are assigned status indicator 
``G'' in Addenda A and B to the proposed rule (which are available via 
the internet on the CMS website).
    Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through 
payment amount, in the case of a drug or biological, is the amount by 
which the amount determined under section 1842(o) of the Act for the 
drug or biological exceeds the portion of the otherwise applicable 
Medicare OPD fee schedule that the Secretary determines is associated 
with the drug or biological. The methodology for determining the pass-
through payment amount is set forth in regulations at 42 CFR 419.64. 
These regulations specify that the pass-through payment equals the 
amount determined under section 1842(o) of the Act minus the portion of 
the APC payment that CMS determines is associated with the drug or 
biological.
    Section 1847A of the Act establishes the average sales price (ASP) 
methodology, which is used for payment for drugs and biologicals 
described in section 1842(o)(1)(C) of the Act furnished on or after 
January 1, 2005. The ASP methodology, as applied under the OPPS, uses 
several sources of data as a basis for payment, including the ASP, the 
wholesale acquisition cost (WAC), and the average wholesale price 
(AWP). In the proposed rule, the term ``ASP methodology'' and ``ASP-
based'' are inclusive of all data sources and methodologies described 
therein. Additional information on the ASP methodology can be found on 
the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    The pass-through application and review process for drugs and 
biologicals is described on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Three-Year Transitional Pass-Through Payment Period for All Pass-
Through Drugs, Biologicals, and Radiopharmaceuticals and Quarterly 
Expiration of Pass-Through Status
    As required by statute, transitional pass-through payments for a 
drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act 
can be made for a period of at least 2 years, but not more than 3 
years, after the payment was first made for the product as a hospital 
outpatient service under Medicare Part B. Our current policy is to 
accept pass-through applications on a quarterly basis and to begin 
pass-through payments for newly approved pass-through drugs and 
biologicals on a quarterly basis through the next available OPPS 
quarterly update after the approval of a product's pass-through status. 
However, prior to CY 2017, we expired pass-through status for drugs and 
biologicals on an annual basis through notice-and-comment rulemaking 
(74 FR 60480). In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79662), we finalized a policy change, beginning with pass-
through drugs and biologicals newly approved in CY 2017 and subsequent 
calendar years, to allow for a quarterly expiration of pass-through 
payment status for drugs, biologicals, and radiopharmaceuticals to 
afford a pass-through payment period that is as close to a full 3 years 
as possible for all pass-through drugs, biologicals, and 
radiopharmaceuticals.
    This change eliminated the variability of the pass-through payment 
eligibility period, which previously varied based on when a particular 
application was initially received. We adopted this change for pass-
through approvals beginning on or after CY 2017, to allow, on a 
prospective basis, for the maximum pass-through payment period for each 
pass-through drug without exceeding the statutory limit of 3 years. 
Notice of drugs whose pass-through payment status is ending during the 
calendar year will continue to be included in the quarterly OPPS Change 
Request transmittals.

[[Page 61302]]

3. Drugs and Biologicals With Expiring Pass-Through Payment Status in 
CY 2019
    We proposed that the pass-through payment status of six drugs and 
biologicals would expire on December 31, 2019 as listed in Table 14. 
These drugs and biologicals will have received OPPS pass-through 
payment for 3 years during the period of January 1, 2017 until December 
31, 2019.
    In accordance with the policy finalized in CY 2017 and described 
earlier, pass-through payment status for drugs and biologicals newly 
approved in CY 2017 and subsequent years will expire on a quarterly 
basis, with a pass-through payment period as close to 3 years as 
possible. With the exception of those groups of drugs and biologicals 
that are always packaged when they do not have pass-through payment 
status (specifically, anesthesia drugs; drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure (including diagnostic 
radiopharmaceuticals, contrast agents, and stress agents); and drugs 
and biologicals that function as supplies when used in a surgical 
procedure), our standard methodology for providing payment for drugs 
and biologicals with expiring pass-through payment status in an 
upcoming calendar year is to determine the product's estimated per day 
cost and compare it with the OPPS drug packaging threshold for that 
calendar year (which is proposed to be $130 for CY 2020), as discussed 
further in section V.B.2. of the proposed rule. We proposed that if the 
estimated per day cost for the drug or biological is less than or equal 
to the applicable OPPS drug packaging threshold, we would package 
payment for the drug or biological into the payment for the associated 
procedure in the upcoming calendar year. If the estimated per day cost 
of the drug or biological is greater than the OPPS drug packaging 
threshold, we proposed to provide separate payment at the applicable 
relative ASP-based payment amount (which is proposed at ASP+6 percent 
for CY 2020, as discussed further in section V.B.3. of the proposed 
rule).
    The proposed packaged or separately payable status of each of these 
drugs or biologicals is listed in Addendum B to the proposed rule 
(which is available via the internet on the CMS website).
    Comment: One commenter suggested that CMS should establish a new 
policy to require equal payment for all drugs, biologicals, and 
radiopharmaceuticals included in the same CED trial to avoid affecting 
the trial by implicitly favoring one product over another through a 
higher payment rate. The commenter referenced a current CED trial for 
amyloid positron emission tomography (PET) that will be active into CY 
2020. (Information on this CED trial can be found on the CMS website at 
https://www.cms.gov/Medicare/Coverage/Coverage-withEvidence-Development/AmyloidPET.html). In the CED trial, Neuraceq\TM\ 
(florbetaben F18, HCPCS code Q9982) and Vizamyl\TM\ (flutemetamol F18, 
HCPCS code Q9983) have not had pass-through status since December 31, 
2018, while a third drug, Amyvid\TM\ (florbetapir F18, HCPCS code 
A9586) continues to have pass-through status until September 30, 2020.
    Response: We do not agree with the commenter's request that we 
establish a policy to require the equal payment of all drugs, 
biologicals, and radiopharmaceuticals in the same CED trial. The 
payment rate for each product is consistent with current OPPS statutory 
requirements. In the case of the particular products mentioned above, 
one product has drug pass-through status through September 30, 2020, as 
required by section 1833(t)(6)(G), while the pass-through period for 
the other products has already expired, meaning payment for these 
products is packaged into the payment for the primary procedure. 
Further, section 1833(t)(6) establishes the statutory authority for CMS 
to provide pass-through payment to cover the additional costs of 
innovative drugs including radiopharmaceuticals. All of these products 
receive payment that is consistent with statutory and regulatory 
requirements and payment will be packaged for all three products once 
the statutory pass-through period for Amyvid expires. We note that the 
payment rate for each product does not affect the protocol established 
under the CED trial because the protocol does not consider the cost of 
the radiopharmaceutical used for treatment. Therefore, we expect 
providers to make their own decision about which radiopharmaceutical to 
use to provide the treatment independent of the payment received for an 
individual drug.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to expire the pass-
through payment status of the 6 drugs and biologicals listed in Table 
40 below on December 31, 2019.

[[Page 61303]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.063

4. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing 
Pass-Through Payment Status in CY 2020
    We proposed to continue pass-through payment status in CY 2020 for 
61 drugs and biologicals. These drugs and biologicals, which were 
approved for pass-through payment status between April 1, 2017 and 
April 1, 2019 are listed in Table 15. The APCs and HCPCS codes for 
these drugs and biologicals approved for pass-through payment status on 
or after January 1, 2020 are assigned status indicator ``G'' in Addenda 
A and B to the proposed rule (which are available via the internet on 
the CMS website). In addition, there are four drugs and biologicals 
that have already had 3 years of pass-through payment status but for 
which pass-through payment status is required to be extended for an 
additional 2 years, effective October 1, 2018 under section 
1833(t)(6)(G) of the Act, as added by section 1301(a)(1)(C) of the 
Consolidated Appropriations Act of 2018 (Pub. L. 115-141). That means 
the last 9 months of pass-through status for these drugs will occur in 
CY 2020. Because of this requirement, these drugs and biologicals are 
also included in Table 15, which brings the total number of drugs and 
biologicals with proposed pass-through payment status in CY 2020 to 65.
    Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through 
payment for pass-through drugs and biologicals (the pass-through 
payment amount) as the difference between the amount authorized under 
section 1842(o) of the Act and the portion of the otherwise applicable 
OPD fee schedule that the Secretary determines is associated with the 
drug or biological. For CY 2020, we proposed to continue to pay for 
pass-through drugs and biologicals at ASP+6 percent, equivalent to the 
payment rate these drugs and biologicals would receive in the 
physician's office setting in CY 2020. We proposed that a $0 pass-
through payment amount would be paid for pass-through drugs and 
biologicals under the CY 2020 OPPS because the difference between the 
amount authorized under section 1842(o) of the Act, which is proposed 
at ASP+6 percent, and the portion of the otherwise applicable OPD fee 
schedule that the Secretary determines is appropriate, which is 
proposed at ASP+6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that 
function as supplies when used in a diagnostic test or procedure 
(including contrast agents, diagnostic radiopharmaceuticals, and stress 
agents); and drugs and biologicals that function as supplies when used 
in a surgical procedure), we proposed that their pass-through payment 
amount would be equal to ASP+6 percent for CY 2020 minus a payment 
offset for any predecessor drug products contributing to the pass-
through payment as described in section V.A.6. of the proposed rule. We 
are making this proposal because, if not for the pass-through payment 
status of these policy-packaged products, payment for these products 
would be packaged into the associated procedure.
    We proposed to continue to update pass-through payment rates on a 
quarterly basis on the CMS website during CY 2020 if later quarter ASP 
submissions (or more recent WAC or AWP information, as applicable) 
indicate that adjustments to the payment rates for these pass-through 
payment drugs or biologicals are necessary. For a full description of 
this policy, we refer readers to the CY 2006 OPPS/ASC final rule with 
comment period (70 FR 68632 through 68635).
    For CY 2020, consistent with our CY 2019 policy for diagnostic and 
therapeutic radiopharmaceuticals, we proposed to provide payment for 
both diagnostic and therapeutic radiopharmaceuticals that are granted 
pass-through payment status based on the ASP methodology. As stated 
earlier, for purposes of pass-through payment, we consider 
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a 
diagnostic or therapeutic radiopharmaceutical receives pass-through 
payment status during CY 2020, we proposed to follow the standard ASP 
methodology to determine the pass-through payment rate that drugs 
receive under section 1842(o) of the Act, which is proposed at ASP+6 
percent. If ASP data are not available for a radiopharmaceutical, we 
proposed to provide pass-through payment at WAC+3 percent (consistent 
with our proposed policy in section V.B.2.b. of the proposed rule), the 
equivalent payment provided to pass-through payment drugs and 
biologicals without ASP information. Additional detail and comments on 
the WAC+3 percent payment policy can be found in section

[[Page 61304]]

V.B.2.b. of the proposed rule. If WAC information also is not 
available, we proposed to provide payment for the pass-through 
radiopharmaceutical at 95 percent of its most recent AWP.
    We did not receive any public comments regarding these proposals. 
Therefore, we are finalizing these proposals for CY 2020 without 
modification. We note that public comments pertaining to our proposal 
to continue to pay WAC+3 percent for drugs and biologicals without ASP 
information are addressed elsewhere in this final rule with comment 
period. The drugs and biologicals that continue to have pass-through 
payment status for CY 2020 or have been granted pass-through payment 
status as of January 2020 are shown in Table 41 below.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
5. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through 
Status as a Result of Section 1301 of the Consolidated Appropriations 
Act of 2018 (Pub. L. 115-141)
    As mentioned earlier, section 1301(a)(1) of the Consolidated 
Appropriations Act of 2018 (Pub. L. 115-141) amended section 1833(t)(6) 
of the Act and added a new section 1833(t)(6)(G), which provides that 
for drugs or biologicals whose period of pass-through payment status 
ended on December 31, 2017 and for which payment was packaged into a 
covered hospital outpatient service furnished beginning January 1, 
2018, such pass-through payment status shall be extended for a 2-year 
period beginning on October 1, 2018 through September 30, 2020. There 
are four products whose period of drug and biological pass-through 
payment status ended on December 31, 2017 and for which payment would 
have been packaged beginning January 1, 2018. These products were 
listed in Table 39 of the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58962).
    Starting in CY 2019, the HCPCS code Q4172 (PuraPly, and PuraPly 
Antimicrobial, any type, per square centimeter) was discontinued. In 
its place, two new HCPCS codes were established--Q4195 (Puraply, per 
square centimeter) and Q4196 (Puraply am, per square centimeter). 
Because these HCPCS codes are direct successors to HCPCS code Q4172, 
the provisions of section 1833(t)(6)(G) of the Act apply to HCPCS codes 
Q4195 and Q4196, and these codes were listed in Table 16 of the 
proposed rule (84 FR 39495). For CY 2020, we proposed to continue pass-
through payment status for the drugs and biologicals listed in Table 16 
of the proposed rule (we note that these drugs and biologicals are also 
listed in Table 15 of the proposed rule) through September 30, 2020 as 
required in section 1833(t)(6)(G) of the Act, as added by section 
1301(a)(1)(C) of the Consolidated Appropriations Act of 2018. The APCs 
and HCPCS codes for these drugs and biologicals approved for pass-
through payment status are assigned status indicator ``G'' in Addenda A 
and B to the proposed rule (which are available via the internet on the 
CMS website).
    We proposed to continue to update pass-through payment rates for 
HCPCS codes Q4195 and Q4196 along with the other three drugs and 
biologicals covered by section 1833(t)(6)(G) of the Act on a quarterly 
basis on the CMS website during CY 2020 if later quarter ASP 
submissions (or more recent WAC or AWP information, as applicable) 
indicate that adjustments to the payment rates for these pass-through 
drugs or biologicals are necessary. The replacement of HCPCS code Q4172 
by HCPCS codes Q4195 and Q4196 means there are five HCPCS codes for 
drugs and biologicals covered by section 1833(t)(6)(G) of the Act. For 
a full description of this policy, we refer readers to the CY 2019 
OPPS/ASC final rule with comment period (83 FR 58960 through 58962).
    The five HCPCS codes for drugs and biologicals that we proposed 
would have pass-through payment status for CY 2020 under section 
1833(t)(6)(G) of the Act, as added by section 1301(a)(1)(C) of the 
Consolidated Appropriations Act of 2018, are shown in Table 16 of the 
CY 2020 OPPS/ASC proposed rule. Included as two of the five HCPCS codes 
for drugs and biologicals with pass-through payment status for CY 2020 
are HCPCS codes Q4195 (Puraply, per square centimeter) and Q4196 
(Puraply am, per square centimeter). PuraPly and PuraPly AM are skin 
substitute products that were approved for pass-through payment status 
on January 1, 2015 through the drug and biological pass-through payment 
process. Beginning on April 1, 2015, skin substitute products are 
evaluated for pass-through payment status through the device pass-
through payment process. However, we stated in the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66887) that skin substitutes that 
are approved for pass-through payment status as biologicals effective 
on or before January 1, 2015 would continue to be paid as pass-through 
biologicals for the duration of their pass-through payment period. 
Because PuraPly and PuraPly AM were approved for pass-through payment 
status through the drug and biological pass-through payment pathway, we 
finalized a policy to consider both PuraPly and PuraPly AM to be drugs 
or biologicals as described by section 1833(t)(6)(G) of the Act, as 
added by section 1301(a)(1)(C) of the Consolidated Appropriations Act 
of 2018, and to be eligible for extended pass-through payment under our 
proposal for CY 2020 (83 FR 58961 through 58962).
    We did not receive any comments on this policy. Therefore, we are 
finalizing this proposal without modification. Starting on October 1, 
2020, the drugs and biologicals listed in Table 42 will no longer 
receive pass-through status, and will be assigned to status indicator 
``N'', which means these drugs will once again be packaged in the OPPS.

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6. Provisions for Reducing Transitional Pass-Through Payments for 
Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To Offset 
Costs Packaged Into APC Groups
    Under the regulations at 42 CFR 419.2(b), nonpass-through drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure are packaged in the OPPS. This 
category includes diagnostic radiopharmaceuticals, contrast agents, 
stress agents, and other diagnostic drugs. Also under 42 CFR 419.2(b), 
nonpass-through drugs and biologicals that function as supplies in a 
surgical procedure are packaged in the OPPS. This category includes 
skin substitutes and other surgical-supply drugs and biologicals. As 
described earlier, section 1833(t)(6)(D)(i) of the Act specifies that 
the transitional pass-through payment amount for pass-through drugs and 
biologicals is the difference between the amount paid under section 
1842(o) of the Act and the otherwise applicable OPD fee schedule 
amount. Because a payment offset is necessary in order to provide an 
appropriate transitional pass-through payment, we deduct from the pass-
through payment for policy-packaged drugs, biologicals, and 
radiopharmaceuticals an amount reflecting the portion of the APC 
payment associated with predecessor products in order to ensure no 
duplicate payment is made. This amount reflecting the portion of the 
APC payment associated with predecessor products is called the payment 
offset.
    The payment offset policy applies to all policy packaged drugs, 
biologicals, and radiopharmaceuticals. For a full description of the 
payment offset policy as applied to diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and skin substitutes, we refer readers 
to the discussion in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70430 through 70432). For CY 2020, as we did in CY 2019, 
we proposed to continue to apply the same policy packaged offset policy 
to payment for pass-through diagnostic radiopharmaceuticals, pass-
through contrast agents, pass-through stress agents, and pass-through 
skin substitutes. The proposed APCs to which a payment offset may be 
applicable for pass-through diagnostic radiopharmaceuticals, pass-
through contrast agents, pass-through stress agents, and pass-through 
skin substitutes are identified in Table 43 below.
    We did not receive any comments on this proposal. Therefore, we are 
finalizing this proposal without modification.

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    We proposed to continue to post annually on the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.html a file that contains the 
APC offset amounts that will be used for that year for purposes of both 
evaluating cost significance for candidate pass-through payment device 
categories and drugs and biologicals and establishing any appropriate 
APC offset amounts. Specifically, the file will continue to provide the 
amounts and percentages of APC payment associated with packaged 
implantable devices, policy-packaged drugs, and threshold packaged 
drugs and biologicals for every OPPS clinical APC.

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 
Without Pass-Through Payment Status

1. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Packaging Threshold
    In accordance with section 1833(t)(16)(B) of the Act, the threshold 
for establishing separate APCs for payment of drugs and biologicals was 
set to $50 per administration during CYs 2005 and 2006. In CY 2007, we 
used the four quarter moving average Producer Price Index (PPI) levels 
for Pharmaceutical Preparations (Prescription) to trend the $50 
threshold forward from the third quarter of CY 2005 (when the Pub. L. 
108-173 mandated threshold became effective) to the third quarter of CY 
2007. We then rounded the resulting dollar amount to the nearest $5 
increment in order to determine the CY 2007 threshold amount of $55. 
Using the same methodology as that used in CY 2007 (which is discussed 
in more detail in the CY 2007 OPPS/ASC final rule with comment period 
(71 FR 68085 through 68086)), we set the packaging threshold for 
establishing separate APCs for drugs and biologicals at $125 for CY 
2019 (83 FR 58963 through 58964).
    Following the CY 2007 methodology, for this CY 2020 OPPS/ASC final 
rule, we used the most recently available four quarter moving average 
PPI levels to trend the $50 threshold forward from the third quarter of 
CY 2005 to the third quarter of CY 2020 and rounded the resulting 
dollar amount ($128.11) to the nearest $5 increment, which yielded a 
figure of $130. In performing this calculation, we used the most recent 
forecast of the quarterly index levels for the PPI for Pharmaceuticals 
for Human Use (Prescription) (Bureau of Labor Statistics series code 
WPUSI07003) from CMS' Office of the Actuary. For this CY 2019 OPPS/ASC 
final rule with comment period, based on these calculations using the 
CY 2007 OPPS methodology, we are finalizing a packaging threshold for 
CY 2020 of $130.
b. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, 
Certain Biologicals, and Therapeutic Radiopharmaceuticals Under the 
Cost Threshold (``Threshold-Packaged Drugs'')
    To determine the proposed CY 2020 packaging status for all nonpass-
through drugs and biologicals that are not policy packaged, we 
calculated, on a HCPCS code-specific basis, the per day cost of all 
drugs, biologicals, and therapeutic radiopharmaceuticals (collectively 
called ``threshold-packaged'' drugs) that had a HCPCS code in CY 2018 
and were paid (via packaged or separate payment) under the OPPS. We 
used data from CY 2018 claims processed before January 1, 2019 for this 
calculation. However, we did not perform this calculation for those 
drugs and biologicals with multiple HCPCS codes that include different 
dosages, as described in section V.B.1.d. of the proposed rule, or for 
the following policy-packaged items that we proposed to continue to 
package in CY 2020: Anesthesia drugs; drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure; and drugs and biologicals that function 
as supplies when used in a surgical procedure.
    In order to calculate the per day costs for drugs, biologicals, and 
therapeutic radiopharmaceuticals to determine their proposed packaging 
status in CY 2020, we used the methodology that was described in detail 
in the CY 2006 OPPS proposed rule (70 FR 42723 through

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42724) and finalized in the CY 2006 OPPS final rule with comment period 
(70 FR 68636 through 68638). For each drug and biological HCPCS code, 
we used an estimated payment rate of ASP+6 percent (which is the 
payment rate we proposed for separately payable drugs and biologicals 
for CY 2020, as discussed in more detail in section V.B.2.b. of the 
proposed rule) to calculate the CY 2020 proposed rule per day costs. We 
used the manufacturer-submitted ASP data from the fourth quarter of CY 
2018 (data that were used for payment purposes in the physician's 
office setting, effective April 1, 2019) to determine the proposed rule 
per day cost.
    As is our standard methodology, for CY 2020, we proposed to use 
payment rates based on the ASP data from the first quarter of CY 2019 
for budget neutrality estimates, packaging determinations, impact 
analyses, and completion of Addenda A and B to the proposed rule (which 
are available via the internet on the CMS website) because these are 
the most recent data available for use at the time of development of 
the proposed rule. These data also were the basis for drug payments in 
the physician's office setting, effective April 1, 2019. For items that 
did not have an ASP-based payment rate, such as some therapeutic 
radiopharmaceuticals, we used their mean unit cost derived from the CY 
2018 hospital claims data to determine their per day cost.
    We proposed to package items with a per day cost less than or equal 
to $130, and identify items with a per day cost greater than $130 as 
separately payable unless they are policy-packaged. Consistent with our 
past practice, we cross-walked historical OPPS claims data from the CY 
2018 HCPCS codes that were reported to the CY 2019 HCPCS codes that we 
display in Addendum B to the proposed rule (which is available via the 
internet on the CMS website) for proposed payment in CY 2020.
    Comment: Two commenters suggested that CMS create an exception to 
the drug cost threshold packaging policy in situations where a shortage 
of a drug that is packaged under the drug cost threshold packaging 
policy requires providers to use a higher-cost substitute drug that 
presumably is still packaged because of the drug cost packaging 
threshold. The commenters suggested that the substitute drug be 
separately paid even though the per day cost of the substitute drug is 
still below the drug cost packaging threshold amount.
    Response: We thank the commenter for its suggestion but disagree 
that such a policy is necessary at this time. We note that the purpose 
of the drug cost threshold is to require the packaging of relatively 
small per day drug costs into the associated outpatient hospital 
procedure. This suggestion runs contrary to our policy goal of bundling 
more services to encourage provider efficiency. However, we are 
cognizant of issues surrounding drug shortages and will consider this 
suggestion for the future.
    Comment: One commenter requested that we no longer package HCPCS 
code J2274 (Injection, Morphine Sulfate, Preservative-Free For Epidural 
Or Intrathecal Use, 10 mg) because the drug is used in an implantable 
infusion pump for intrathecal management of pain and/or spasticity, and 
another drug, HCPCS code J0475 (injection, baclofen, 10 mg) which can 
be used with the same infusion pump, currently receives separate 
payment in the OPPS.
    Response: We disagree with the commenter. Neither HCPCS code J2274 
nor HCPCS code J0475 are classified as drugs that are policy packaged. 
We refer readers to section V.B.1.c. for a description of drugs that 
are policy packaged. Also, neither of these drugs is assigned to drug 
pass-through status. Therefore, we use our drug cost threshold 
methodology as described in this section of the rule to determine 
whether the drugs are packaged into an associated procedure or if the 
drugs are separately paid. The per day cost of HCPCS code J2274 is 
below the $130 drug packaging threshold, and therefore, the drug is 
packaged in the OPPS. The per day cost of HCPCS code J0475 is above the 
drug packaging threshold, and therefore, the drug is paid separately in 
the OPPS. The drug packaging threshold is based on the per day cost of 
the specific drug administered, and the threshold is not affected by 
the means by which the drug is administered to the beneficiary (in this 
case, through a pump). In the case brought up by the commenter, the per 
day cost of HCPCS code J2274 is below the $130 drug packaging 
threshold, and is therefore packaged into the payment for its 
associated procedure.
    After consideration of the public comments we received, and 
consistent with our methodology for establishing the packaging 
threshold using the most recent PPI forecast data, we are adopting a CY 
2019 packaging threshold of $130.
    Our policy during previous cycles of the OPPS has been to use 
updated ASP and claims data to make final determinations of the 
packaging status of HCPCS codes for drugs, biologicals, and therapeutic 
radiopharmaceuticals for the OPPS/ASC final rule with comment period. 
We note that it is also our policy to make an annual packaging 
determination for a HCPCS code only when we develop the OPPS/ASC final 
rule with comment period for the update year. Only HCPCS codes that are 
identified as separately payable in the final rule with comment period 
are subject to quarterly updates. For our calculation of per day costs 
of HCPCS codes for drugs and biologicals in this CY 2020 OPPS/ASC 
proposed rule, we proposed to use ASP data from the fourth quarter of 
CY 2018, which is the basis for calculating payment rates for drugs and 
biologicals in the physician's office setting using the ASP 
methodology, effective April 1, 2019, along with updated hospital 
claims data from CY 2018. We note that we also proposed to use these 
data for budget neutrality estimates and impact analyses for this CY 
2020 OPPS/ASC proposed rule.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B for the final rule with comment 
period will be based on ASP data from the third quarter of CY 2019. 
These data will be the basis for calculating payment rates for drugs 
and biologicals in the physician's office setting using the ASP 
methodology, effective October 1, 2019. These payment rates would then 
be updated in the January 2020 OPPS update, based on the most recent 
ASP data to be used for physicians' office and OPPS payment as of 
January 1, 2020. For items that do not currently have an ASP-based 
payment rate, we proposed to recalculate their mean unit cost from all 
of the CY 2018 claims data and update cost report information available 
for the CY 2020 final rule with comment period to determine their final 
per day cost.
    Consequently, the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in the proposed rule 
may be different from the same drugs' HCPCS codes' packaging status 
determined based on the data used for the final rule with comment 
period. Under such circumstances, we proposed to continue to follow the 
established policies initially adopted for the CY 2005 OPPS (69 FR 
65780) in order to more equitably pay for those drugs whose costs 
fluctuate relative to the proposed CY 2020 OPPS drug packaging 
threshold and the drug's payment status (packaged or separately 
payable) in CY 2019. These established policies have not changed for 
many years and are the same as described in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70434). Specifically, for CY 2020,

[[Page 61314]]

consistent with our historical practice, we proposed to apply the 
following policies to these HCPCS codes for drugs, biologicals, and 
therapeutic radiopharmaceuticals whose relationship to the drug 
packaging threshold changes based on the updated drug packaging 
threshold and on the final updated data:
     HCPCS codes for drugs and biologicals that were paid 
separately in CY 2019 and that are proposed for separate payment in CY 
2020, and that then have per day costs equal to or less than the CY 
2020 final rule drug packaging threshold, based on the updated ASPs and 
hospital claims data used for the CY 2020 final rule, would continue to 
receive separate payment in CY 2020.
     HCPCS codes for drugs and biologicals that were packaged 
in CY 2019 and that are proposed for separate payment in CY 2020, and 
that then have per day costs equal to or less than the CY 2020 final 
rule drug packaging threshold, based on the updated ASPs and hospital 
claims data used for the CY 2020 final rule, would remain packaged in 
CY 2020.
     HCPCS codes for drugs and biologicals for which we 
proposed packaged payment in CY 2020 but that then have per-day costs 
greater than the CY 2020 final rule drug packaging threshold, based on 
the updated ASPs and hospital claims data used for the CY 2020 final 
rule, would receive separate payment in CY 2020.
    We did not receive any public comments on our proposal to 
recalculate the mean unit cost for items that do not currently have an 
ASP-based payment rate from all of the CY 2018 claims data and updated 
cost report information available for this CY 2020 final rule with 
comment period to determine their final per day cost. We also did not 
receive any public comments on our proposal to continue to follow the 
established policies, initially adopted for the CY 2005 OPPS (69 FR 
65780), when the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in the proposed rule 
may be different from the same drug HCPCS code's packaging status 
determined based on the data used for the final rule with comment 
period. Therefore, for CY 2020, we are finalizing these two proposals 
without modification.
c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals
    As mentioned earlier in this section, in the OPPS, we package 
several categories of drugs, biologicals, and radiopharmaceuticals, 
regardless of the cost of the products. Because the products are 
packaged according to the policies in 42 CFR 419.2(b), we refer to 
these packaged drugs, biologicals, and radiopharmaceuticals as 
``policy-packaged'' drugs, biologicals, and radiopharmaceuticals. These 
policies are either longstanding or based on longstanding principles 
and inherent to the OPPS and are as follows:
     Anesthesia, certain drugs, biologicals, and other 
pharmaceuticals; medical and surgical supplies and equipment; surgical 
dressings; and devices used for external reduction of fractures and 
dislocations (Sec.  419.2(b)(4));
     Intraoperative items and services (Sec.  419.2(b)(14));
     Drugs, biologicals, and radiopharmaceuticals that function 
as supplies when used in a diagnostic test or procedure (including, but 
not limited to, diagnostic radiopharmaceuticals, contrast agents, and 
pharmacologic stress agents) (Sec.  419.2(b)(15)); and
     Drugs and biologicals that function as supplies when used 
in a surgical procedure (including, but not limited to, skin 
substitutes and similar products that aid wound healing and implantable 
biologicals) (Sec.  419.2(b)(16)).
    The policy at Sec.  419.2(b)(16) is broader than that at Sec.  
419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with 
comment period: ``We consider all items related to the surgical outcome 
and provided during the hospital stay in which the surgery is 
performed, including postsurgical pain management drugs, to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy'' (79 FR 66875). The category described by Sec.  
419.2(b)(15) is large and includes diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and some other products. The category 
described by Sec.  419.2(b)(16) includes skin substitutes and some 
other products. We believe it is important to reiterate that cost 
consideration is not a factor when determining whether an item is a 
surgical supply (79 FR 66875).
    We did not make any proposals to revise our policy-packaged drug 
policy.
    Comment: CMS received several comments from stakeholders regarding 
the policy-packaged status of diagnostic radiopharmaceuticals. Several 
commenters recommended that CMS continue to apply the nuclear medicine 
procedure to radiolabeled product edits to ensure that all packaged 
costs are included on nuclear medicine claims in order to establish 
appropriate payment rates in the future. There was concern that many 
providers performing nuclear medicine procedures are not including the 
cost of diagnostic radiopharmaceuticals used for the procedures in 
their claims submissions. Commenters believe this lack of drug cost 
reporting could be causing the cost of nuclear medicine procedures to 
be underreported and therefore requests that the radiolabeled product 
edits be reinstated.
    Response: We appreciated the commenter's feedback; however, we do 
not agree with the commenter that we should reinstate the nuclear 
medicine procedure to radiolabeled product edits, which required a 
diagnostic radiopharmaceutical to be present on the same claim as a 
nuclear medicine procedure for payment under the OPPS to be made. As 
previously discussed in the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58965), the edits were in place between CY 2008 and CY 
2014 (78 FR 75033). We believe the period of time in which the edits 
were in place was sufficient for hospitals to gain experience reporting 
procedures involving radiolabeled products and to become accustomed to 
ensuring that they code and report charges so that their claims fully 
and appropriately reflect the costs of those radiolabeled products. As 
with all other items and services recognized under the OPPS, we expect 
hospitals to code and report their costs appropriately, regardless of 
whether there are claims processing edits in place.
    Comment: Several commenters requested that diagnostic 
radiopharmaceuticals be paid separately in all cases, not just when the 
drugs have pass-through payment status. Some commenters suggested 
payment based upon ASP, WAC, AWP, or mean unit cost data derived from 
hospital claims. Some commenters mentioned that pass-through payment 
status helps the diffusion of new diagnostic radiopharmaceuticals into 
the market, but is not enough to make up for the inadequate payment 
after pass-through expires. Several commenters recommended treating 
diagnostic radiopharmaceuticals similarly to therapeutic 
radiopharmaceuticals. Commenters opposed incorporating the cost of the 
drug into the associated APC, and provided limited evidence showing 
procedures in which diagnostic radiopharmaceuticals are considered to 
be a surgical supply that the commenter believed are often paid at a 
lower rate than the payment rate for the diagnostic radiopharmaceutical 
itself when the drug was paid separately because it had pass-through 
payment status. Additionally, commenters proposed

[[Page 61315]]

alternative payment methodologies such as subjecting diagnostic 
radiopharmaceuticals to the drug packaging threshold, creating separate 
APC payments for diagnostic radiopharmaceuticals that cost more than 
$500, or using ASP, WAC, or AWP to account for packaged 
radiopharmaceutical costs. Conversely, other commenters disagreed with 
the idea to pay separately for diagnostic radiopharmaceuticals that 
cost more than $500 because they claimed that this would incentivize 
radiopharmaceutical companies to raise their prices to exceed the 
threshold. Additionally, commenters stated that nearly 95 percent of 
radiopharmaceuticals are priced less than $500, so creating a 
diagnostic radiopharmaceutical packaging threshold of $500 would not be 
appropriate.
    Response: We thank commenters for their responses. We continue to 
believe that diagnostic radiopharmaceuticals are an integral component 
of many nuclear medicine and imaging procedures and charges associated 
with them should be reported on hospital claims to the extent they are 
used. Therefore, the payment for the radiopharmaceuticals is reflected 
within the payment for the primary procedure. In response to the 
comment regarding the proposed cost of the packaged procedure in CY 
2020 being substantially lower than the payment rate of the 
radiopharmaceutical when it was on pass-through payment status plus the 
payment rate of the procedure associated with the radiopharmaceutical, 
we note the rates are established in a manner that uses the average, 
more specifically the geometric mean, of reported costs to furnish the 
procedure based on data submitted to CMS from all hospitals paid under 
the OPPS to set the payment rate for the service. Accordingly, the 
costs that are calculated by Medicare reflect the average costs of 
items and services that are packaged into a primary procedure and will 
not necessarily equal the sum of the cost of the primary procedure and 
the average sales price of items and services because the billing 
patterns of hospitals may not reflect that a particular item or service 
is always billed with the primary procedure. Furthermore, the costs 
will be based on the reported costs submitted to Medicare by the 
hospitals and not the list price established by the manufacturer. 
Claims data that include the radiopharmaceutical packaged with the 
associated procedure reflect the combined cost of the procedure and the 
radiopharmaceutical used in the procedure. Additionally, we do not 
believe it is appropriate to create a new packaging threshold 
specifically for diagnostic radiopharmaceuticals as that does not align 
with our overall packaging policy and limited data has been submitted 
to support a specific threshold. With respect to the request that we 
create a new APC for each radiopharmaceutical product, we do not 
believe it is appropriate to create unique APCs for diagnostic 
radiopharmaceuticals. Diagnostic radiopharmaceuticals function as 
supplies during a diagnostic test or procedure and following our 
longstanding packaging policy, these items are packaged under the OPPS, 
which supports our goal of making OPPS payments consistent with those 
of a prospective payment system, which packages costs into a single 
aggregate payment for a service, encounter, or episode of care. 
Furthermore, diagnostic radiopharmaceuticals function as supplies that 
enable the provision of an independent service, and are not themselves 
the primary therapeutic modality, and therefore, we do not believe they 
warrant separate payment through creation of a unique APC at this time. 
We welcome ongoing dialogue with stakeholders regarding suggestions for 
payment changes for consideration for future rulemaking.
d. Packaging Determination for HCPCS Codes That Describe the Same Drug 
or Biological but Different Dosages
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 
through 60491), we finalized a policy to make a single packaging 
determination for a drug, rather than an individual HCPCS code, when a 
drug has multiple HCPCS codes describing different dosages because we 
believe that adopting the standard HCPCS code-specific packaging 
determinations for these codes could lead to inappropriate payment 
incentives for hospitals to report certain HCPCS codes instead of 
others. We continue to believe that making packaging determinations on 
a drug-specific basis eliminates payment incentives for hospitals to 
report certain HCPCS codes for drugs and allows hospitals flexibility 
in choosing to report all HCPCS codes for different dosages of the same 
drug or only the lowest dosage HCPCS code. Therefore, we proposed to 
continue our policy to make packaging determinations on a drug-specific 
basis, rather than a HCPCS code-specific basis, for those HCPCS codes 
that describe the same drug or biological but different dosages in CY 
2020.
    For CY 2020, in order to propose a packaging determination that is 
consistent across all HCPCS codes that describe different dosages of 
the same drug or biological, we aggregated both our CY 2018 claims data 
and our pricing information at ASP+6 percent across all of the HCPCS 
codes that describe each distinct drug or biological in order to 
determine the mean units per day of the drug or biological in terms of 
the HCPCS code with the lowest dosage descriptor. The following drugs 
did not have pricing information available for the ASP methodology for 
this CY 2020 OPPS/ASC proposed rule, and as is our current policy for 
determining the packaging status of other drugs, we used the mean unit 
cost available from the CY 2018 claims data to make the proposed 
packaging determinations for these drugs: HCPCS code J1840 (Injection, 
kanamycin sulfate, up to 500 mg); HCPCS code J1850 (Injection, 
kanamycin sulfate, up to 75 mg); HCPCS code J3472 (Injection, 
hyaluronidase, ovine, preservative free, per 1000 usp units); HCPCS 
code J7100 (Infusion, dextran 40, 500 ml); and HCPCS code J7110 
(Infusion, dextran 75, 500 ml).
    For all other drugs and biologicals that have HCPCS codes 
describing different doses, we then multiplied the proposed weighted 
average ASP+6 percent per unit payment amount across all dosage levels 
of a specific drug or biological by the estimated units per day for all 
HCPCS codes that describe each drug or biological from our claims data 
to determine the estimated per day cost of each drug or biological at 
less than or equal to the proposed CY 2020 drug packaging threshold of 
$130 (so that all HCPCS codes for the same drug or biological would be 
packaged) or greater than the proposed CY 2020 drug packaging threshold 
of $130 (so that all HCPCS codes for the same drug or biological would 
be separately payable). The proposed packaging status of each drug and 
biological HCPCS code to which this methodology would apply in CY 2020 
was displayed in Table 18 of the proposed rule (84 FR 39499).
    We did not receive any public comments on this proposal. Therefore, 
for CY 2020, we are finalizing our CY 2020 proposal, without 
modification, to continue our policy to make packaging determinations 
on a drug-specific basis, rather than a HCPCS code-specific basis, for 
those HCPCS codes that describe the same drug or biological but 
different dosages. Table 44 below displays the final packaging status 
of each drug and biological HCPCS code to which the finalized 
methodology applies for CY 2020.

[[Page 61316]]

[GRAPHIC] [TIFF OMITTED] TR12NO19.072

2. Payment for Drugs and Biologicals Without Pass-Through Status That 
Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other 
Separately Payable Drugs and Biologicals
    Section 1833(t)(14) of the Act defines certain separately payable 
radiopharmaceuticals, drugs, and biologicals and mandates specific 
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a 
``specified covered outpatient drug'' (known as a SCOD) is defined as a 
covered outpatient drug, as defined in section 1927(k)(2) of the Act, 
for which a separate APC has been established and that either is a 
radiopharmaceutical agent or is a drug or biological for which payment 
was made on a pass-through basis on or before December 31, 2002.
    Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and 
biologicals are designated as exceptions and are not included in the 
definition of SCODs. These exceptions are--
     A drug or biological for which payment is first made on or 
after January 1, 2003, under the transitional pass-through payment 
provision in section 1833(t)(6) of the Act.
     A drug or biological for which a temporary HCPCS code has 
not been assigned.
     During CYs 2004 and 2005, an orphan drug (as designated by 
the Secretary).
    Section 1833(t)(14)(A)(iii) of the Act requires that payment for 
SCODs in CY 2006 and subsequent years be equal to

[[Page 61317]]

the average acquisition cost for the drug for that year as determined 
by the Secretary, subject to any adjustment for overhead costs and 
taking into account the hospital acquisition cost survey data collected 
by the Government Accountability Office (GAO) in CYs 2004 and 2005, and 
later periodic surveys conducted by the Secretary as set forth in the 
statute. If hospital acquisition cost data are not available, the law 
requires that payment be equal to payment rates established under the 
methodology described in section 1842(o), section 1847A, or section 
1847B of the Act, as calculated and adjusted by the Secretary as 
necessary for purposes of paragraph (14). We refer to this alternative 
methodology as the ``statutory default.'' Most physician Part B drugs 
are paid at ASP+6 percent in accordance with section 1842(o) and 
section 1847A of the Act.
    Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in 
OPPS payment rates for SCODs to take into account overhead and related 
expenses, such as pharmacy services and handling costs. Section 
1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead 
and related expenses and to make recommendations to the Secretary 
regarding whether, and if so how, a payment adjustment should be made 
to compensate hospitals for overhead and related expenses. Section 
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the 
weights for ambulatory procedure classifications for SCODs to take into 
account the findings of the MedPAC study.\66\
---------------------------------------------------------------------------

    \66\ Medicare Payment Advisory Committee. June 2005 Report to 
the Congress. Chapter 6: Payment for pharmacy handling costs in 
hospital outpatient departments. Available at: http://www.medpac.gov/docs/default-source/reports/June05_ch6.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    It has been our policy since CY 2006 to apply the same treatment to 
all separately payable drugs and biologicals, which include SCODs, and 
drugs and biologicals that are not SCODs. Therefore, we apply the 
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, 
as required by statute, but we also apply it to separately payable 
drugs and biologicals that are not SCODs, which is a policy 
determination rather than a statutory requirement. In this CY 2020 
OPPS/ASC proposed rule, we proposed to apply section 
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 
biologicals, including SCODs. Although we do not distinguish SCODs in 
this discussion, we note that we are required to apply section 
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying 
this provision to other separately payable drugs and biologicals, 
consistent with our history of using the same payment methodology for 
all separately payable drugs and biologicals.
    For a detailed discussion of our OPPS drug payment policies from CY 
2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68386 through 68389), we 
first adopted the statutory default policy to pay for separately 
payable drugs and biologicals at ASP+6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act. We have continued this policy of 
paying for separately payable drugs and biologicals at the statutory 
default for CYs 2014 through 2019.
b. CY 2020 Payment Policy
    For CY 2020, we proposed to continue our payment policy that has 
been in effect since CY 2013 to pay for separately payable drugs and 
biologicals at ASP+6 percent in accordance with section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We proposed 
to continue to pay for separately payable nonpass-through drugs 
acquired with a 340B discount at a rate of ASP minus 22.5 percent, but 
we also solicited comments on alternative policies as well as the 
appropriate remedy for CYs 2018 and 2019 in the event that we do not 
prevail on appeal in the pending litigation, as discussed in greater 
detail later in this section. We refer readers to the CY 2018 OPPS/ASC 
final rule with comment period (82 FR 59353 through 59371) and the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58979 through 
58981) for more information about how the payment rate for drugs 
acquired with a 340B discount was established.
    In the case of a drug or biological during an initial sales period 
in which data on the prices for sales for the drug or biological are 
not sufficiently available from the manufacturer, section 1847A(c)(4) 
of the Act permits the Secretary to make payments that are based on 
WAC. Under section 1833(t)(14)(A)(iii)(II), the amount of payment for a 
separately payable drug equals the average price for the drug for the 
year established under, among other authorities, section 1847A of the 
Act. As explained in greater detail in the CY 2019 PFS final rule, 
under section 1847A(c)(4), although payments may be based on WAC, 
unlike section 1847A(b) of the Act (which specifies that payments using 
ASP or WAC must be made with a 6 percent add-on), section 1847A(c)(4) 
of the Act does not require that a particular add-on amount be applied 
to WAC-based pricing for this initial period when ASP data is not 
available. Consistent with section 1847A(c)(4) of the Act, in the CY 
2019 PFS final rule (83 FR 59661 to 59666), we finalized a policy that, 
effective January 1, 2019, WAC-based payments for Part B drugs made 
under section 1847A(c)(4) of the Act will utilize a 3-percent add-on in 
place of the 6-percent add-on that was being used according to our 
policy in effect as of CY 2018. For the CY 2019 OPPS, we followed the 
same policy finalized in the CY 2019 PFS final rule (83 FR 59661 to 
59666). For the CY 2020 OPPS, we proposed to continue to utilize a 3 
percent add-on instead of a 6-percent add-on for WAC-based drugs 
pursuant to our authority under section 1833(t)(14)(A)(iii)(II) of the 
Act, which provides, in part, that the amount of payment for a SCOD is 
the average price of the drug in the year established under section 
1847A of the Act. We also proposed to apply this provision to non-SCOD 
separately payable drugs. Because we proposed to establish the average 
price for a WAC-based drug under section 1847A of the Act as WAC+3 
percent instead of WAC+6 percent, we believe it is appropriate to price 
separately payable WAC-based drugs at the same amount under the OPPS. 
We proposed that, if finalized, our proposal to pay for drugs or 
biologicals at WAC+3 percent, rather than WAC+6 percent, would apply 
whenever WAC-based pricing is used for a drug or biological. For drugs 
and biologicals that would otherwise be subject to a payment reduction 
because they were acquired under the 340B Program, the 340B Program 
rate (in this case, WAC minus 22.5 percent) would continue to apply. We 
refer readers to the CY 2019 PFS final rule (83 FR 59661 to 59666) for 
additional background on this proposal.
    Comment: Several commenters opposed our proposal to utilize a 3 
percent add-on instead of a 6 percent add-on for drugs that are paid 
based on WAC under section 1847A(c)(4) of the Act. Commenters were 
concerned that paying less for new drugs may discourage the use of new 
innovative drugs and inhibit access to patients. Commenters also noted 
that the sequestration cuts further decreased payment for drugs, which 
leaves a smaller margin for providers. Additionally, some commenters 
believe that this proposal would only negatively impact providers, and 
would not address increasing drug costs. Additionally, commenters 
suggested excluding certain drugs and biologicals

[[Page 61318]]

from this policy, such as biosimilar biological products or 
radiopharmaceuticals. These commenters felt as though the policy was 
appropriate for drugs in general, but not for the previously mentioned 
products, which could potentially offer savings to the Medicare program 
if utilized in the case of biosimilars or which have a higher 
associated overhead in the case of radiopharmaceuticals. Commenters 
also discussed value-based payments as a more meaningful change than 
this proposal.
    Response: We appreciate the commenter's feedback. We continue to 
believe our policy will improve Medicare payment rates by better 
aligning payments with drug acquisition costs, which is of the utmost 
importance to CMS as Part B drug spending has grown significantly. WAC 
plus a 3 percent add-on is more comparable to an ASP plus a 6 percent 
add-on, since the WAC pricing does not reflect many of the discounts 
associated with ASP, such as rebates. This proposal to continue to 
utilize a 3 percent add-on instead of a 6 percent add-on for drugs that 
are paid based on WAC under section 1847A(c)(4) of the Act is 
consistent with MedPAC's previous analysis and recommendations in its 
June 2017 Report to the Congress. This policy is not meant to provide 
preferential treatment to any specific drug or biological, but to 
address WAC based payment under 1847A of the Act. We remind commenters 
that this proposal still results in a net payment greater than the WAC. 
In addition, this policy decreases the beneficiary cost-sharing for 
these drugs. This could help Medicare beneficiaries afford to pay for 
new drugs by reducing their out-of-pocket expenses.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to utilize a 3 percent 
add-on instead of a 6 percent add-on for drugs that are paid based on 
WAC under section 1847A(c)(4) of the Act pursuant to our authority 
under section 1833(t)(14)(A)(iii)(II) of the Act.
    We proposed that payments for separately payable drugs and 
biologicals are included in the budget neutrality adjustments, under 
the requirements in section 1833(t)(9)(B) of the Act. We also proposed 
that the budget neutral weight scalar not be applied in determining 
payments for these separately paid drugs and biologicals.
    We note that separately payable drug and biological payment rates 
listed in Addenda A and B to the proposed rule (available via the 
internet on the CMS website), which illustrate the proposed CY 2020 
payment of ASP+6 percent for separately payable nonpass-through drugs 
and biologicals and ASP+6 percent for pass-through drugs and 
biologicals, reflect either ASP information that is the basis for 
calculating payment rates for drugs and biologicals in the physician's 
office setting effective April 1, 2019, or WAC, AWP, or mean unit cost 
from CY 2018 claims data and updated cost report information available 
for the proposed rule. In general, these published payment rates are 
not the same as the actual January 2020 payment rates. This is because 
payment rates for drugs and biologicals with ASP information for 
January 2020 will be determined through the standard quarterly process 
where ASP data submitted by manufacturers for the third quarter of CY 
2019 (July 1, 2019 through September 30, 2019) will be used to set the 
payment rates that are released for the quarter beginning in January 
2020 near the end of December 2019. In addition, payment rates for 
drugs and biologicals in Addenda A and B to the proposed rule for which 
there was no ASP information available for April 2019 are based on mean 
unit cost in the available CY 2018 claims data. If ASP information 
becomes available for payment for the quarter beginning in January 
2020, we will price payment for these drugs and biologicals based on 
their newly available ASP information. Finally, there may be drugs and 
biologicals that have ASP information available for the proposed rule 
(reflecting April 2019 ASP data) that do not have ASP information 
available for the quarter beginning in January 2020. These drugs and 
biologicals would then be paid based on mean unit cost data derived 
from CY 2018 hospital claims. Therefore, the proposed payment rates 
listed in Addenda A and B to the proposed rule are not for January 2020 
payment purposes and are only illustrative of the CY 2020 OPPS payment 
methodology using the most recently available information at the time 
of issuance of the proposed rule.
c. Biosimilar Biological Products
    For CY 2016 and CY 2017, we finalized a policy to pay for 
biosimilar biological products based on the payment allowance of the 
product as determined under section 1847A of the Act and to subject 
nonpass-through biosimilar biological products to our annual threshold-
packaged policy (for CY 2016, 80 FR 70445 through 70446; and for CY 
2017, 81 FR 79674). In the CY 2018 OPPS/ASC proposed rule (82 FR 
33630), for CY 2018, we proposed to continue this same payment policy 
for biosimilar biological products.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59351), we noted that, with respect to comments we received regarding 
OPPS payment for biosimilar biological products, in the CY 2018 PFS 
final rule, CMS finalized a policy to implement separate HCPCS codes 
for biosimilar biological products. Therefore, consistent with our 
established OPPS drug, biological, and radiopharmaceutical payment 
policy, HCPCS coding for biosimilar biological products is based on the 
policy established under the CY 2018 PFS final rule.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59351), after consideration of the public comments we received, we 
finalized our proposed payment policy for biosimilar biological 
products, with the following technical correction: All biosimilar 
biological products are eligible for pass-through payment and not just 
the first biosimilar biological product for a reference product. In the 
CY 2019 OPPS/ASC proposed rule (83 FR 37123), for CY 2019, we proposed 
to continue the policy in place from CY 2018 to make all biosimilar 
biological products eligible for pass-through payment and not just the 
first biosimilar biological product for a reference product.
    In addition, in CY 2018, we adopted a policy that biosimilars 
without pass-through payment status that were acquired under the 340B 
Program would be paid the ASP of the biosimilar minus 22.5 percent of 
the reference product's ASP (82 FR 59367). We adopted this policy in 
the CY 2018 OPPS/ASC final rule with comment period because we believe 
that biosimilars without pass-through payment status acquired under the 
340B Program should be treated in the same manner as other drugs and 
biologicals acquired through the 340B Program. As noted earlier, 
biosimilars with pass-through payment status are paid their own ASP+6 
percent of the reference product's ASP. Separately payable biosimilars 
that do not have pass-through payment status and are not acquired under 
the 340B Program are also paid their own ASP+6 percent of the reference 
product's ASP. If a biosimilar does not have ASP pricing, but instead 
has WAC pricing, the WAC pricing add-on of either 3 percent or 6 
percent is calculated from the biosimilar's WAC and is not calculated 
from the WAC price of the reference product.
    As noted in the CY 2019 OPPS/ASC proposed rule (83 FR 37123), 
several stakeholders raised concerns to us that the current payment 
policy for

[[Page 61319]]

biosimilars acquired under the 340B Program could unfairly lower the 
OPPS payment for biosimilars not on pass-through payment status because 
the payment reduction would be based on the reference product's ASP, 
which would generally be expected to be priced higher than the 
biosimilar, thus resulting in a more significant reduction in payment 
than if the 22.5 percent was calculated based on the biosimilar's ASP. 
We agreed with stakeholders that the current payment policy could 
unfairly lower the price of biosimilars without pass-through payment 
status that are acquired under the 340B Program. In addition, we 
believe that these changes would better reflect the resources and 
production costs that biosimilar manufacturers incur. We also believe 
this approach is more consistent with the payment methodology for 340B-
acquired drugs and biologicals, for which the 22.5 percent reduction is 
calculated based on the drug or biological's ASP, rather than the ASP 
of another product. In addition, we believe that paying for biosimilars 
acquired under the 340B Program at ASP minus 22.5 percent of the 
biosimilar's ASP, rather than 22.5 percent of the reference product's 
ASP, will more closely approximate hospitals' acquisition costs for 
these products.
    Accordingly, in the CY 2019 OPPS/ASC proposed rule (83 FR 37123), 
for CY 2019, we proposed changes to our Medicare Part B drug payment 
methodology for biosimilars acquired under the 340B Program. 
Specifically, for CY 2019 and subsequent years, in accordance with 
section 1833(t)(14)(A)(iii)(II) of the Act, we proposed to pay nonpass-
through biosimilars acquired under the 340B Program at ASP minus 22.5 
percent of the biosimilar's ASP instead of the biosimilar's ASP minus 
22.5 percent of the reference product's ASP. This proposal was 
finalized without modification in the CY 2019 OPPS/ASC final rule with 
comment period (83 FR 58977).
    For CY 2020, we proposed to continue our policy to make all 
biosimilar biological products eligible for pass-through payment and 
not just the first biosimilar biological product for a reference 
product. We also proposed to continue our policy to pay nonpass-through 
biosimilars acquired under the 340B Program at the biosimilar's ASP 
minus 22.5 percent of the biosimilar's ASP instead of the biosimilar's 
ASP minus 22.5 percent of the reference product's ASP, in accordance 
with section 1833(t)(14)(A)(iii)(II) of the Act. In addition, as 
discussed further below, we solicited comments on the appropriate 
remedy in the event of an adverse decision on appeal in the litigation 
related to our policy for payment of 340B-acquired drugs and 
biologicals, including on whether paying for 340B-acquired biosimilars 
at ASP+3 percent of the reference product's ASP would be an appropriate 
policy in line with that discussion. Our policy for 340B-acquired drugs 
and biologicals is discussed in V.B.6. of this final rule with comment 
period.
    Comment: Many commenters supported our biosimilar proposal to 
continue our policy from CY 2018 to make biosimilar biological products 
eligible for pass-through payment and not just the first biosimilar 
biological product for a reference product. Commenters believe this 
would continue to improve access to these treatments and lower costs, 
and they stressed the importance of consistency with biosimilar 
payment. Commenters stated that there is a large disparity between 
payment for biosimilars and their reference products and that this 
proposal helps to mitigate that concern. Commenters also advocated for 
additional proposals to increase the utilization of biosimilars, such 
as extended pass-through payment.
    Response: We appreciate the commenters' support. We believe this 
proposal will continue to encourage competition, lower costs for the 
Medicare program and beneficiaries, and eliminate any financial 
incentive to utilize one product over another. We will continue to 
assess biosimilar utilization under the OPPS.
    Comment: Several commenters supported our proposal to pay nonpass-
through biosimilars acquired under the 340B Program at ASP minus 22.5 
percent of the biosimilar's ASP in accordance with section 
1833(t)(14)(A)(iii)(II) of the Act.
    Response: We appreciate the commenters' support. Please see section 
V.B.6 for a discussion of payment for biosimilars aquired under 340B.
    Comment: Some commenters did not support our proposal to continue 
our CY 2018 policy to make all biosimilar biological products eligible 
for pass-through payment and not just the first biosimilar biological 
product for a reference product. Commenters believe biosimilars are not 
new or innovative drugs or biologicals, because they believe the 
originator product is the only new and innovative product. Therefore, 
they stated biosimilars should not be considered for pass-through 
payment status. Additionally, commenters stated there should be a level 
playing field between biosimilars and their originator reference 
products in order to increase competition and reduce costs for 
beneficiaries. Commenters believe that this proposal could potentially 
lead to increased Medicare spending on biosimilars, and commenters 
articulated concerns that therapies will be interrupted by providers 
switching from innovator products to biosimilars.
    Response: As discussed in the CY 2019 OPPS/ASC final rule with 
comment period (83 FR 58977), we continue to believe that eligibility 
for pass-through payment status reflects the unique, complex nature of 
biosimilars and is important as biosimilars become established in the 
market, just as it is for all other new drugs and biologicals. 
Additionally, we are not convinced that making all biosimilar 
biological products eligible for pass-through payment status will lead 
to inappropriate treatment changes from a reference product without 
pass-through payment to a biosimilar product with pass-through payment. 
Under current policy, both originator products and their associated 
biosimilars receive the same percentage add-on amount, regardless of 
the ASP of the product; therefore, we do not believe that therapies 
will be interrupted by providers switching from innovator products to 
biosimilars. We note that Section 351(i) of the Public Health Service 
Act defines biosimilarity to mean ``that the biological product is 
highly similar to the reference product notwithstanding minor 
differences in clinically inactive components'' and that ``there are no 
clinically meaningful differences between the biological product and 
the reference product in terms of the safety, purity, and potency of 
the product.'' Therefore, concerns that therapy would be interrupted by 
a switch from an innovator product to a biosimilar are unfounded as the 
biosimilar has been determined to have no clinically meaningful 
difference from the reference product. In regards to the increased 
payment of biosimilars under this policy, overall increased competition 
due to more biosimilars on the market as a result of this policy is 
expected to drive payments down for both Medicare and for beneficiaries 
over time, even if there may be increased spending on biosimilars in 
the short term.
    For CY 2020, after consideration of the public comments we 
received, we are finalizing our proposed payment policy for biosimilar 
products, without modification, to continue the policy established in 
CY 2018 to make all biosimilar biological products eligible for pass-
through payment and not just the first biosimilar biological product

[[Page 61320]]

for a reference product. We also are finalizing our proposal to pay 
nonpass-through biosimilars acquired under the 340B Program at the 
biosimilar's ASP minus 22.5 percent of the reference product's ASP, in 
accordance with section 1833(t)(14)(A)(iii)(II) of the Act.
3. Payment Policy for Therapeutic Radiopharmaceuticals
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39502), for CY 2020, 
we proposed to continue the payment policy for therapeutic 
radiopharmaceuticals that began in CY 2010. We pay for separately 
payable therapeutic radiopharmaceuticals under the ASP methodology 
adopted for separately payable drugs and biologicals. If ASP 
information is unavailable for a therapeutic radiopharmaceutical, we 
base therapeutic radiopharmaceutical payment on mean unit cost data 
derived from hospital claims. We believe that the rationale outlined in 
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 
through 60525) for applying the principles of separately payable drug 
pricing to therapeutic radiopharmaceuticals continues to be appropriate 
for nonpass-through, separately payable therapeutic 
radiopharmaceuticals in CY 2020. Therefore, we proposed for CY 2020 to 
pay all nonpass-through, separately payable therapeutic 
radiopharmaceuticals at ASP+6 percent, based on the statutory default 
described in section 1833(t)(14)(A)(iii)(II) of the Act. For a full 
discussion of ASP-based payment for therapeutic radiopharmaceuticals, 
we refer readers to the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60520 through 60521). We also proposed to rely on CY 2018 mean 
unit cost data derived from hospital claims data for payment rates for 
therapeutic radiopharmaceuticals for which ASP data are unavailable and 
to update the payment rates for separately payable therapeutic 
radiopharmaceuticals according to our usual process for updating the 
payment rates for separately payable drugs and biologicals on a 
quarterly basis if updated ASP information is unavailable. For a 
complete history of the OPPS payment policy for therapeutic 
radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule 
with comment period (69 FR 65811), the CY 2006 OPPS final rule with 
comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60524). The proposed CY 2020 payment rates for 
nonpass-through, separately payable therapeutic radiopharmaceuticals 
were included in Addenda A and B to the proposed rule (which are 
available via the internet on the CMS website).
    Comment: Commenters supported the continuation of the policy to pay 
ASP+6 percent for radiopharmaceuticals, if available, and to base 
payment on the mean unit cost derived from hospital claims data when 
not available. Commenters also stressed the high overhead, handling, 
compounding and storage costs associated with delivering therapeutic 
radiopharmaceuticals and asked CMS to look into higher payment rates 
for radiopharmaceuticals or ways to compensate hospitals for the higher 
overhead and handling costs.
    Response: We appreciate the commenters' support. As previously 
stated, we continue to believe a single payment is appropriate for 
therapeutic radiopharmaceuticals and that the payment rate of ASP+6 
percent is appropriate because it provides payment for both the 
therapeutic radiopharmaceutical's acquisition cost and the associated 
costs such as storage and handling of the radiopharmaceuticals. Payment 
for the radiopharmaceutical and radiopharmaceutical processing services 
is made through the single ASP-based payment.
    For CY 2020, after consideration of the public comments we 
received, we are finalizing our proposal, without modification, to 
continue to pay all nonpass-through, separately payable therapeutic 
radiopharmaceuticals at ASP+6 percent. We are also finalizing our 
proposal to continue to rely on CY 2018 mean unit cost data derived 
from hospital claims data for payment rates for therapeutic 
radiopharmaceuticals for which ASP data are unavailable. The CY 2020 
final payment rates for nonpass-through separately payable therapeutic 
radiopharmaceuticals are included in Addenda A and B to this final rule 
with comment period (which are available via the internet on the CMS 
website).
4. Payment for Blood Clotting Factors
    For CY 2019, we provided payment for blood clotting factors under 
the same methodology as other nonpass-through separately payable drugs 
and biologicals under the OPPS and continued paying an updated 
furnishing fee (83 FR 58979). That is, for CY 2019, we provided payment 
for blood clotting factors under the OPPS at ASP+6 percent, plus an 
additional payment for the furnishing fee. We note that when blood 
clotting factors are provided in physicians' offices under Medicare 
Part B and in other Medicare settings, a furnishing fee is also applied 
to the payment. The CY 2019 updated furnishing fee was $0.220 per unit.
    For CY 2020, we proposed to pay for blood clotting factors at ASP+6 
percent, consistent with our proposed payment policy for other nonpass-
through, separately payable drugs and biologicals, and to continue our 
policy for payment of the furnishing fee using an updated amount. Our 
policy to pay for a furnishing fee for blood clotting factors under the 
OPPS is consistent with the methodology applied in the physician's 
office and in the inpatient hospital setting. These methodologies were 
first articulated in the CY 2006 OPPS final rule with comment period 
(70 FR 68661) and later discussed in the CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66765). The proposed furnishing fee update 
is based on the percentage increase in the Consumer Price Index (CPI) 
for medical care for the 12-month period ending with June of the 
previous year. Because the Bureau of Labor Statistics releases the 
applicable CPI data after the PFS and OPPS/ASC proposed rules are 
published, we were not able to include the actual updated furnishing 
fee in the proposed rules. Therefore, in accordance with our policy, as 
finalized in the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66765), we proposed to announce the actual figure for the percent 
change in the applicable CPI and the updated furnishing fee calculated 
based on that figure through applicable program instructions and 
posting on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    Comment: Commenters supported CMS' proposal to continue to pay for 
blood clotting factors at ASP+6 percent plus a blood clotting factor 
furnishing fee in the hospital outpatient department.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to provide payment for 
blood clotting factors under the same methodology as other separately 
payable drugs and biologicals under the OPPS and to continue payment of 
an updated furnishing fee. We will announce the actual figure of the 
percent change in the applicable CPI and the updated furnishing fee 
calculation based on that figure through the applicable program 
instructions and posting on the CMS website.

[[Page 61321]]

5. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims 
Data
    For CY 2020, we proposed to continue to use the same payment policy 
as in CY 2019 for nonpass-through drugs, biologicals, and 
radiopharmaceuticals with HCPCS codes but without OPPS hospital claims 
data, which describes how we determine the payment rate for drugs, 
biologicals, or radiopharmaceuticals without an ASP. For a detailed 
discussion of the payment policy and methodology, we refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70442 
through 70443). The proposed CY 2020 payment status of each of the 
nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS 
codes but without OPPS hospital claims data is listed in Addendum B to 
the proposed rule, which is available via the internet on the CMS 
website.
    We did not receive any comments on our proposal. Therefore, we are 
finalizing our CY 2020 proposal without modification, including our 
proposal to assign drug or biological products status indicator ``K'' 
and pay for them separately for the remainder of CY 2020 if pricing 
information becomes available. The CY 2020 payment status of each of 
the nonpass-through drugs, biologicals, and radiopharmaceuticals with 
HCPCS codes but without OPPS hospital claims data is listed in Addendum 
B to this final rule with comment period, which is available via the 
internet on the CMS website.
6. CY 2020 OPPS Payment Methodology for 340B Purchased Drugs
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33558 through 33724), 
we proposed changes to the Medicare Part B drug payment methodology for 
340B hospitals. We proposed these changes to better, and more 
accurately, reflect the resources and acquisition costs that these 
hospitals incur. We believe that such changes would allow Medicare 
beneficiaries (and the Medicare program) to pay a more appropriate 
amount when hospitals participating in the 340B Program furnish drugs 
to Medicare beneficiaries that are purchased under the 340B Program. 
Subsequently, in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59369 through 59370), we finalized our proposal and adjusted the 
payment rate for separately payable drugs and biologicals (other than 
drugs on pass-through payment status and vaccines) acquired under the 
340B Program from average sales price (ASP) plus 6 percent to ASP minus 
22.5 percent. We stated that our goal was to make Medicare payment for 
separately payable drugs more aligned with the resources expended by 
hospitals to acquire such drugs, while recognizing the intent of the 
340B Program to allow covered entities, including eligible hospitals, 
to stretch scarce resources in ways that enable hospitals to continue 
providing access to care for Medicare beneficiaries and other patients. 
Critical access hospitals are not included in this 340B policy change 
because they are paid under section 1834(g) of the Act. We also 
excepted rural sole community hospitals, children's hospitals, and PPS-
exempt cancer hospitals from the 340B payment adjustment in CY 2018. In 
addition, as stated in the CY 2018 OPPS/ASC final rule with comment 
period, this policy change does not apply to drugs on pass-through 
payment status, which are required to be paid based on the ASP 
methodology, or vaccines, which are excluded from the 340B Program.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699 
through 79706), we implemented section 603 of the Bipartisan Budget Act 
of 2015. As a general matter, applicable items and services furnished 
in certain off-campus outpatient departments of a provider on or after 
January 1, 2017 are not considered covered outpatient services for 
purposes of payment under the OPPS and are paid ``under the applicable 
payment system,'' which is generally the Physician Fee Schedule (PFS). 
However, consistent with our policy to pay separately payable, covered 
outpatient drugs and biologicals acquired under the 340B Program at ASP 
minus 22.5 percent, rather than ASP+6 percent, when billed by a 
hospital paid under the OPPS that is not excepted from the payment 
adjustment, in the CY 2019 OPPS/ASC final rule with comment period (83 
FR 59015 through 59022), we finalized a policy to pay ASP minus 22.5 
percent for 340B-acquired drugs and biologicals furnished in 
nonexcepted off-campus PBDs paid under the PFS. We adopted this payment 
policy effective for CY 2019 and for subsequent years.
    As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37125), 
another topic that was brought to our attention since we finalized the 
payment adjustment for 340B-acquired drugs in the CY 2018 OPPS/ASC 
final rule with comment period was whether drugs that do not have ASP 
pricing but instead receive WAC or AWP pricing are subject to the 340B 
payment adjustment. We did not receive public comments on this topic in 
response to the CY 2018 OPPS/ASC proposed rule. However, we later heard 
from stakeholders that there had been some confusion about this issue. 
We clarified in the CY 2019 proposed rule that the 340B payment 
adjustment applies to drugs that are priced using either WAC or AWP, 
and it has been our policy to subject 340B-acquired drugs that use 
these pricing methodologies to the 340B payment adjustment since the 
policy was first adopted. The 340B payment adjustment for WAC-priced 
drugs is WAC minus 22.5 percent and AWP-priced drugs have a payment 
rate of 69.46 percent of AWP when the 340B payment adjustment is 
applied. The 69.46 percent of AWP is calculated by first reducing the 
original 95 percent of AWP price by 6 percent to generate a value that 
is similar to ASP or WAC with no percentage markup. Then we apply the 
22.5 percent reduction to ASP/WAC-similar AWP value to obtain the 69.46 
percent of AWP, which is similar to either ASP minus 22.5 percent or 
WAC minus 22.5 percent. The number of separately payable drugs 
receiving WAC or AWP pricing that are affected by the 340B payment 
adjustment is small--consisting of less than 10 percent of all 
separately payable Medicare Part B drugs in April 2018.
    Furthermore, data limitations previously inhibited our ability to 
identify which drugs were acquired under the 340B Program in the 
Medicare OPPS claims data. This lack of information within the claims 
data has limited researchers' and our ability to precisely analyze 
differences in acquisition cost of 340B and non-340B acquired drugs 
with Medicare claims data. Accordingly, in the CY 2018 OPPS/ASC 
proposed rule (82 FR 33633), we stated our intent to establish a 
modifier, to be effective January 1, 2018, for hospitals to report with 
separately payable drugs that were not acquired under the 340B Program. 
Because a significant portion of hospitals paid under the OPPS 
participate in the 340B Program, we stated our belief that it is 
appropriate to presume that a separately payable drug reported on an 
OPPS claim was purchased under the 340B Program, unless the hospital 
identifies that the drug was not purchased under the 340B Program. We 
stated in the CY 2018 proposed rule that we intended to provide further 
details about this modifier in the CY 2018 OPPS/ASC final rule with 
comment period and/or through subregulatory guidance, including 
guidance related to billing for dually eligible beneficiaries (that is, 
beneficiaries covered under Medicare and Medicaid) for whom covered

[[Page 61322]]

entities do not receive a discount under the 340B Program. As discussed 
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369 
through 59370), to effectuate the payment adjustment for 340B-acquired 
drugs, CMS implemented modifier ``JG'', effective January 1, 2018. 
Hospitals paid under the OPPS, other than a type of hospital excluded 
from the OPPS (such as critical access hospitals or those hospitals 
paid under the Maryland waiver), or excepted from the 340B drug payment 
policy for CY 2018, are required to report modifier ``JG'' on the same 
claim line as the drug HCPCS code to identify a 340B-acquired drug. For 
CY 2018, rural sole community hospitals, children's hospitals and PPS-
exempt cancer hospitals are excepted from the 340B payment adjustment. 
These hospitals are required to report informational modifier ``TB'' 
for 340B-acquired drugs, and continue to be paid ASP+6 percent.
    We refer readers to the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59353 through 59370) for a full discussion and rationale 
for the CY 2018 policies and use of modifier ``JG''.
    In the CY 2019 OPPS/ASC proposed rule (83 FR 37125), for CY 2019, 
we proposed to continue the 340B Program policies that were implemented 
in CY 2018 with the exception of the way we calculate payment for 340B-
acquired biosimilars (that is, we proposed to pay for nonpass-through 
340B-acquired biosimilars at ASP minus 22.5 percent of the biosimilar's 
ASP, rather than of the reference product's ASP). More information on 
our revised policy for the payment of biosimilars acquired through the 
340B Program is available in section V.B.2.c. of the CY 2019 OPPS/ASC 
final rule with comment period. For CY 2019, we proposed, in accordance 
with section 1833(t)(14)(A)(iii)(II) of the Act, to pay for separately 
payable Medicare Part B drugs (assigned status indicator ``K''), other 
than vaccines and drugs on pass-through payment status, that meet the 
definition of ``covered outpatient drug'' as defined in section 1927(k) 
of the Act, that are acquired through the 340B Program at ASP minus 
22.5 percent when billed by a hospital paid under the OPPS that is not 
excepted from the payment adjustment. Medicare Part B drugs or 
biologicals excluded from the 340B payment adjustment include vaccines 
(assigned status indicator ``F'', ``L'' or ``M'') and drugs with OPPS 
transitional pass-through payment status (assigned status indicator 
``G''). As discussed in section V.B.2.c. of the CY 2019 OPPS/ASC 
proposed rule, we proposed to pay nonpass-through biosimilars acquired 
under the 340B Program at the biosimilar's ASP minus 22.5 percent of 
the biosimilar's ASP. We also proposed for CY 2019 that Medicare would 
continue to pay for drugs or biologicals that were not purchased with a 
340B discount at ASP+6 percent.
    As stated earlier, to effectuate the payment adjustment for 340B-
acquired drugs, CMS implemented modifier ``JG'', effective January 1, 
2018. For CY 2019, we proposed that hospitals paid under the OPPS, 
other than a type of hospital excluded from the OPPS, or excepted from 
the 340B drug payment policy for CY 2018, continue to be required to 
report modifier ``JG'' on the same claim line as the drug HCPCS code to 
identify a 340B-acquired drug. We also proposed for CY 2019 that rural 
sole community hospitals, children's hospitals, and PPS-exempt cancer 
hospitals would continue to be excepted from the 340B payment 
adjustment. We proposed for CY 2019 that these hospitals be required to 
report informational modifier ``TB'' for 340B-acquired drugs, and 
continue to be paid ASP+6 percent. In the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 58981), after consideration of the public 
comments we received, we finalized our proposals without modification.
    Our CY 2018 and 2019 OPPS payment policies for 340B-acquired drugs 
are the subject of ongoing litigation. On December 27, 2018, in the 
case of American Hospital Association et al. v. Azar et al., the United 
States District Court for the District of Columbia (hereinafter 
referred to as ``the district court'') concluded in the context of 
reimbursement requests for CY 2018 that the Secretary exceeded his 
statutory authority by adjusting the Medicare payment rates for drugs 
acquired under the 340B Program to ASP minus 22.5 percent for that 
year.\67\ In that same decision, the district court recognized the 
```havoc that piecemeal review of OPPS payment could bring about' in 
light of the budget neutrality requirement,'' and ordered supplemental 
briefing on the appropriate remedy.\68\ On May 6, 2019, after briefing 
on remedy, the district court issued an opinion that reiterated that 
the 2018 rate reduction exceeded the Secretary's authority, and 
declared that the rate reduction for 2019 (which had been finalized 
since the Court's initial order was entered) also exceeded his 
authority.\69\ Rather than ordering HHS to pay plaintiffs their alleged 
underpayments, however, the district court recognized that crafting a 
remedy is ``no easy task, given Medicare's complexity,'' \70\ and 
initially remanded the issue to HHS to devise an appropriate remedy 
while also retaining jurisdiction. The district court acknowledged that 
``if the Secretary were to retroactively raise the 2018 and 2019 340B 
rates, budget neutrality would require him to retroactively lower the 
2018 and 2019 rates for other Medicare Part B products and services.'' 
\71\ Id. at 19. ``And because HHS has already processed claims under 
the previous rates, the Secretary would potentially be required to 
recoup certain payments made to providers; an expensive and time-
consuming prospect.'' \72\
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    \67\ American Hosp. Ass'n, et al. v. Azar, et al., No. 1:18-cv-
2084 (D.D.C. Dec. 27, 2018).
    \68\ Id. at 35 (quoting Amgen, Inc. v. Smith, 357 F.3d 103, 112 
(D.C. Cir. 2004) (citations omitted)).
    \69\ See May 6, 2019 Memorandum Opinion, Granting in Part 
Plaintiffs' Motion for a Permanent Injunction; Remanding the 2018 
and 2019 OPPS Rules to HHS at 10-12.
    \70\ Id. at 13.
    \71\ Id. at 19.
    \72\ Id. (citing Declaration of Elizabeth Richter).
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    CMS respectfully disagreed with the district court's understanding 
of the scope of its adjustment authority. On July 10, 2019, the 
district court entered final judgment, and the agency has filed its 
appeal. Nonetheless, CMS is taking the steps necessary to craft an 
appropriate remedy in the event of an unfavorable decision on appeal. 
Notably, after the proposed rule was issued, CMS announced in the 
Federal Register (84 FR 51590) its intent to conduct a 340B hospital 
survey to collect drug acquisition cost data for CY 2018 and 2019. Such 
survey data may be used in setting the Medicare payment amount for 
drugs acquired by 340B hospitals for cost years going forward, and also 
may be used to devise a remedy for prior years if the district court's 
ruling is upheld on appeal. The district court itself acknowledged that 
CMS may base the Medicare payment amount on average acquisition cost 
when survey data are available. See 348 F. Supp. 3d at 82. No 340B 
hospital disputed in the rulemakings for CY 2018 and 2019 that the ASP 
minus 22.5 percent formula was a conservative adjustment that 
represented the minimum discount that hospitals receive for drugs 
acquired through the 340B program--a significant omission because 340B 
hospitals have their own data regarding their drug acquisition costs. 
We thus anticipate that survey data collected for CY 2018 and 2019 will 
confirm that the ASP minus 22.5 percent rate is a conservative measure 
that overcompensates 340B hospitals. A

[[Page 61323]]

remedy that relies on such survey data could avoid the remedial 
complexities discussed below and in the proposed rule.
    Recognizing Medicare's complexity in formulating an appropriate 
remedy, any changes to the OPPS must be budget neutral, and reversal of 
the policy change, which raised rates for non-drug items and services 
by an estimated $1.6 billion for 2018 alone, could have a significant 
economic impact on the approximate 3,900 facilities that are paid for 
outpatient items and services covered under the OPPS. Second, any 
remedy that increases payments to 340B hospitals is likely to 
significantly affect beneficiary cost-sharing. The items and services 
that could be affected by the remedy were provided to millions of 
Medicare beneficiaries, who, by statute, are required to pay cost-
sharing for such items and services, which is usually 20 percent of the 
total Medicare payment rate.
    CMS solicited initial public comments on how to formulate a 
solution that would account for all of the complexities the district 
court recognized in the event of an unfavorable decision on appeal. A 
summary of the public comments received on a potential remedy is 
included later in this section. In the event 340B hospital survey data 
are not used to devise a remedy, we intend to consider this public 
input to further inform the steps that are required under the 
Administrative Procedure Act to provide adequate notice and an 
opportunity for meaningful comment on our proposed policies, which 
would entail devising the specific remedy itself, presenting the 
specific budget neutrality implications of that remedy in the proposed 
rule, and potentially calculating all the different payment rates under 
the OPPS for 340B-acquired drugs, as well as all other items and 
services under the OPPS. (In essence, we would need to provide 
hospitals with sufficient notice of the impact of the remedy on their 
rates to enable them to comment meaningfully on the proposed rule.) Our 
own best practices for preparing notices of proposed rulemaking dictate 
that we begin policy development in the year before the proposed rule 
is issued, and that we begin the rule drafting process in the first 
quarter of each year.
    In the event of an unfavorable decision on appeal, if 340B hospital 
survey data are not used to devise a remedy, as we stated in the CY 
2020 OPPS/ASC proposed rule, we anticipate proposing the specific 
remedy for CYs 2018 and 2019 in the CY 2021 OPPS/ASC proposed rule in 
the event of an unfavorable decision on appeal. Those potential 
proposals for CY 2021 would be informed by the comments that CMS 
solicited in the CY 2020 proposed rule.
    Thus, for CY 2020, we proposed to continue to pay ASP minus 22.5 
percent for 340B-acquired drugs, including when furnished in 
nonexcepted off-campus PBDs paid under the PFS. We proposed to continue 
the 340B policies that were implemented in CY 2018 with the exception 
of the way we are calculating payment for 340B-acquired biosimilars, 
which is discussed in section V.B.2.c. of the CY 2019 OPPS/ASC final 
rule with comment period, as well as the policy we finalized in CY 2019 
to pay ASP minus 22.5 percent for 340B-acquired drugs and biologicals 
furnished in nonexcepted off-campus PBDs paid under the PFS.
    In the CY 2020 OPPS/ASC proposed rule (84 FR 39504), we also 
solicited public comment on the appropriate OPPS payment rate for 340B-
acquired drugs, including whether a rate of ASP+3 percent could be an 
appropriate remedial payment amount for these drugs, both for CY 2020 
and for purposes of determining the remedy for CYs 2018 and 2019. This 
amount would result in payment rates that are well above the actual 
costs hospitals incur in purchasing 340B drugs, and we proposed it 
solely because of the court decision. However, to the extent the courts 
are limiting the size of the payment reduction the agency can 
permissibly apply, the agency believes it could be appropriate to apply 
a payment reduction that is at the upper end of that limit, to the 
extent it has been or could be clearly defined, given the substantial 
discounts that hospitals receive through the 340B program. For example, 
absent further guidance from the Court of Appeals on what it believes 
is an appropriate ``adjustment'' amount, CMS could look to the district 
court's December 27, 2018 opinion, which cites to payment reductions of 
0.2 percent and 2.9 percent as ``not significant enough'' to fall 
outside of the Secretary's authority to ``adjust'' ASP.\73\ This 
payment rate would apply to 340B-acquired drugs and biologicals billed 
by a hospital paid under the OPPS that are not excepted from the 
payment adjustment and to 340B-acquired drugs and biologicals furnished 
in nonexcepted off-campus PBDs paid under the PFS. We welcomed public 
comments on payment rates other than ASP+3 percent that commenters 
believe would be appropriate for purposes of addressing CY 2020 payment 
as an alternative to our proposal above, as well as for potential 
future rulemaking related to CY 2018 and 2019.
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    \73\ 348 F. Supp. 3d 62, 81 (D.D.C. 2018) (citing to payment 
reductions of 0.2 percent and 2.9 percent that other decisions have 
recognized as being within the agency's adjustment authority for 
Medicare rates under the inpatient prospective payment system).
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Comments on the Appropriate Payment Rate for 340B-Acquired Drugs in CY 
2020
    Comment: Several commenters supported the continuation of the 340B 
Program policy of ASP minus 22.5 percent for CY 2020. One commenter 
believed the 340B program's recent growth may be contributing to the 
consolidation of community oncology practices. This commenter and 
others asserted that the growth of the 340B program has resulted in a 
shift in the site of service for chemotherapy administration from the 
physician-office setting to the more costly hospital outpatient 
setting, since hospitals are able to acquire drugs, including oncologic 
drugs, at a significant discount under the 340B program. Another 
commenter believed that the 340B program is no longer serving its 
intended purpose to help America's most vulnerable patients access the 
drugs they need. They further asserted that instead, 340B profits are 
being used for hospitals to make larger profits.
    Response: We appreciate the commenters' support. We note that 
comments related to the 340B program itself are outside the scope of 
this rule, however, we note that we adopted the 340B payment policy so 
that our payment policy would be more in line with the acquisition 
costs hospitals incur, and thereby lower drug expenditures for Medicare 
beneficiaries and the Medicare Trust Fund.
    Comment: Many commenters, the majority of which represented 
hospitals or hospital associations, opposed CMS' proposal to continue 
to pay ASP minus 22.5 percent for 340B-acquired drugs in CY 2020. Many 
of these commenters believe the proposal undermines the intent and 
goals of the 340B program and will have negative impacts on patients 
and 340B hospitals. One commenter asserted that CMS should pay 
hospitals participating in the 340B program the statutory default 
payment of ASP+6 percent. Another commenter opposed the proposal on the 
belief that it undermines the Public Health Service Act (PHSA), which 
authorized the 340B program and exceeds CMS' statutory authority. 
Furthermore, a hospital organization commented that the application of 
the reduced payment for the 340B policy has resulted in negative 
consequences for patients and providers and does not save any money for

[[Page 61324]]

Medicare because the policy is implemented in a budget-neutral manner.
    Several commenters who opposed the continuation of the 340B program 
payment policy stated that the district court's ruling showed that the 
payment reduction is illegal and exceeded the Administration's 
authority. These commenters recommended CMS refrain from ``doing more 
damage'' to impacted hospitals by continuing the ASP minus 22.5 percent 
policy and return to the payment rate of ASP+6 percent for CY 2020.
    Response: As noted in the CY 2018 OPPS/ASC final rule with comment 
period, we continue to believe that ASP minus 22.5 percent for drugs 
acquired through the 340B Program represents the average minimum 
discount that 340B enrolled hospitals receive and better represents 
acquisition costs.
    We disagree with commenters that the 340B payment policy has had a 
negative impact on Medicare patients; we are not aware of any access 
issues related to the implementation of this policy. Further, we note 
that under the current policy, Medicare patients who receive 340B drugs 
for which the Medicare program paid ASP minus 22.5 percent have much 
lower cost sharing than if these beneficiaries received 340B drugs for 
which the Medicare program paid ASP+6 percent. As a result, we continue 
to believe that ASP minus 22.5 percent is a reasonable payment rate for 
these drugs.
    In regards to the commenters' belief that CMS lacks the legal 
authority to continue paying a reduced amount for drugs and biologicals 
obtained through the 340B Program and that we should pay the statutory 
default amount of ASP+6 percent, we refer commenters to our detailed 
response regarding our statutory authority to require payment 
reductions for drugs and biologicals obtained through the 340B Program 
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59359 
through 59364), as well as our statements in the proposed rule 
regarding our appeal of the district court's decision.
    After considering these public comments and the comments summarized 
below, and in light of the fact that we are awaiting a decision on our 
appeal in the litigation, for CY 2020, we are finalizing our proposal, 
without modification, to pay ASP minus 22.5 percent for 340B-acquired 
drugs including when furnished in nonexcepted off-campus PBDs paid 
under the PFS. Our finalized proposal continues the 340B policies that 
were implemented in CY 2018 with the exception of the way we are 
calculating payment for 340B-acquired biosimilars, which is discussed 
in section V.B.2.c. of the CY 2019 OPPS/ASC final rule with comment 
period, and would continue the policy we finalized in CY 2019 to pay 
ASP minus 22.5 percent for 340B-acquired drugs and biologicals 
furnished in nonexcepted off-campus PBDs paid under the PFS.
    As noted in the proposed rule (84 FR 39504), we are appealing the 
district court's decision and are awaiting a decision from the Court of 
Appeals for the District of Columbia Circuit. Because we hope to 
prevail on appeal and have our 340B policy upheld, we believe it is 
appropriate to finalize our proposal of ASP minus 22.5 percent rather 
than an alternative payment amount of either ASP+3 percent or ASP+6 
percent, and to maintain the other payment policies we adopted for 
340B-acquired drugs in the CY 2018 and 2019 OPPS final rules with 
comment period. In the event of an adverse decision on appeal, we 
solicited public comments on the appropriate remedy for use in the CY 
2021 rulemaking. Those comments are summarized below. We note that in 
the event 340B hospital survey data are not used to devise a remedy, we 
intend to consider the following comments to develop an appropriate 
remedy to propose in next year's rulemaking.
Comments on the CY 2020 Payment Policy for 340B-Aquired Drugs to Non-
Excepted Off-Campus Provider Based Departments (PBDs)
    Comment: Many commenters disagreed with CMS' assertion that 340B 
hospitals will move drug administration services for 340B-acquired 
drugs to non-excepted off-campus PBDs if CMS does not continue to pay 
for drugs furnished in these settings at the adjusted amount, and 
recommended CMS study hospital's drug administration behavior pre- and 
post-implementation of the CY 2018 final rule to confirm this 
presumption before finalizing the proposal to continue paying ASP minus 
22.5 percent for 340B drugs furnished by non-excepted PBDs. Several 
commenters asserted that CMS should not continue with this policy for 
CY 2020 for non-excepted PBDs and stated that continuing to do so would 
be unlawful.
    Response: We appreciate the commenters' input on the proposal to 
continue to pay at ASP minus 22.5 percent under the PFS for 340B drugs 
furnished in non-excepted off-campus PBDs. As we stated in the CY 2019 
OPPS/ASC final rule with comment (83 FR 59017), because hospitals can, 
in some cases, acquire drugs and biologicals under the 340B Program for 
use in nonexcepted off-campus PBDs, we believe that not adjusting 
payment exclusively for these departments would present a significant 
incongruity between the payment amounts for these drugs depending on 
where they are furnished. This incongruity would distort the relative 
accuracy of the resource-based payment amounts under the site-specific 
PFS rates and could result in significant perverse incentives for 
hospitals to acquire drugs and biologicals under the 340B Program and 
avoid Medicare payment adjustments that account for the discount by 
providing these drugs to patients predominantly in nonexcepted off-
campus PBDs. In light of the significant payment differences between 
excepted and nonexcepted off-campus PBDs, in combination with the 
potential eligibility for discounts, which result in reduced costs 
under the 340B Program for both kinds of departments, a different 
payment policy for 340B drugs in the two settings could undermine the 
use of the OPPS payment structure in nonexcepted off-campus PBDs. In 
order to avoid such perverse incentives and the potential resulting 
distortions in drug payment, pursuant to our authority at section 
1833(t)(21)(c) of the Act we adopted a policy to identify the PFS as 
the ``applicable payment system for 340B-acquired drugs and biologicals 
and, accordingly, to pay under the PFS instead of under section 1847A/
1842(o) of the Act an amount equal to ASP minus 22.5 percent for drugs 
and biologicals acquired under the 340B Program that are furnished by 
nonexcepted off-campus PBDs. We continue to believe this payment policy 
is necessary to avoid the significant incongruity between the payment 
amounts that would exist for these drugs depending upon whether they 
are furnished by excepted off-campus PBDs or nonexcepted off-campus 
PBDs. We believe we have discretion under section 1833(t)(21)(c) of the 
Act to continue to adjust payments for nonexcepted off-campus PBDs.
Comments on Use of ASP Plus 3 Percent for CY 2020
    Comment: Many commenters opposed a payment amount of ASP+3 percent 
as a potential remedial payment for 340B-acquired drugs furnished in CY 
2018 and CY 2019 as well as for CY 2020 payments. These commenters 
believe CMS did not provide a rationale to support the proposed ASP+3 
percent adjustment and stated that CMS does not have statutory 
authority to pay one group of hospitals at ASP+3 percent and all other 
hospitals at ASP+6 percent.

[[Page 61325]]

Some commenters stated that section 1833(t)(14)(A)(iii)(II) requires 
CMS to pay hospitals for covered outpatient drugs at ASP+6 percent and 
that CMS does not have the legal authority to change that payment 
amount to ASP+3 percent. Furthermore, some commenters stated that 
although CMS has some authority to make adjustments, the agency's 
stated rationale of imposing a payment reduction at the upper end of 
the court's ``limit [on] the size of the payment reduction the agency 
can permissibly apply . . . given the substantial discounts that 
hospitals receive under the 340B program'' would be inconsistent with 
the law itself and therefore, reducing payment for 340B-acquired drugs 
to ASP+3 percent would be unlawful.
    However, a few commenters supported the proposal to pay ASP+3 
percent for 340B-acquired drugs in CY 2020, rather than to continue to 
pay ASP minus 22.5 percent. One commenter supported the approach of 
paying ASP+3 percent for 340B-acquired drugs if CMS receives an adverse 
decision on appeal.
    Response: We appreciate commenters' support of CMS' suggestion to 
pay at ASP+3 percent if we are unsuccessful in the Appeals Court. As 
explained above, we are finalizing our proposal to continue to pay for 
340B-acquired drugs at ASP minus 22.5 percent. In the event of an 
adverse decision on appeal, we will take these comments into 
consideration in crafting an appropriate remedy.
    Comment: One commenter believed a rate closer to ASP+6 percent, 
such as ASP+3 percent, would mitigate remediation efforts should the 
Agency not ultimately prevail on appeal and have to return the 
difference in payments between ASP minus 22.5 percent and ASP+6 percent 
based on a negative court decision.
    Response: We thank the commenter for its feedback. As explained 
above, we are finalizing our proposal to continue to pay for 340B-
acquired drugs at ASP minus 22.5 percent. In the event of an adverse 
decision on appeal, we will take these comments into consideration in 
crafting an appropriate remedy.
Comments on Use of Hospital Acquisition Costs
    Comment: Several commenters, including a large medical association, 
suggested that CMS gather hospitals' acquisition costs for drugs. One 
commenter stated that ``since CMS has the authority to base 
reimbursement rates on the hospitals' acquisition cost (340B price) if 
the Agency considers hospital acquisition cost survey data, we urge CMS 
to collect such data.'' Another commenter urged CMS to gather 
additional data to better understand 340B acquisition costs and the 
impact of payment reductions on 340B providers prior to making payment 
changes that the commenter believes jeopardizes access and 340B program 
participation.
    Response: We appreciate the commenters' suggestion and note that we 
announced in the Federal Register (84 FR 51590) our intent to conduct a 
340B hospital survey to collect drug acquisition cost data for CY 2018 
and 2019. We have no evidence that the current 340B policy has limited 
patient access to 340B drugs or program participation. For the reasons 
explained above, we believe it is appropriate to continue our 340B 
payment policies for CY 2020.
    Thus, for CY 2020, we are finalizing our proposal, without 
modification, to pay ASP minus 22.5 percent for 340B-acquired drugs 
including when furnished in nonexcepted off-campus PBDs paid under the 
PFS. Our finalized proposal continues the 340B Program policies that 
were implemented in CY 2018 with the exception of the way we are 
calculating payment for 340B-acquired biosimilars, which is discussed 
in section V.B.2.c. of the CY 2019 OPPS/ASC final rule with comment 
period, and continues the policy we finalized in CY 2019 to pay ASP 
minus 22.5 percent for 340B-acquired drugs and biologicals furnished in 
nonexcepted off-campus PBDs paid under the PFS.
Comments on a Potential Remedy for CYs 2018 and 2019
    In addition to comments on the appropriate payment amount for 
calculating the remedy for CYs 2018 and 2019 and for use for CY 2020, 
we sought public comment on how to structure the remedy for CYs 2018 
and 2019. This request for public comment included whether such a 
remedy should be retrospective in nature (for example, made on a claim-
by-claim basis), whether such a remedy could be prospective in nature 
(for example, an upward adjustment to 340B claims in the future to 
account for any underpayments in the past), and whether there is some 
other mechanism that could produce a result equitable to hospitals that 
do not acquire drugs through the 340B program while respecting the 
budget neutrality mandate.
    We stated in the CY 2020 OPPS/ASC proposed rule that one potential 
remedy for alleged underpayments in 2018 and 2019 would involve making 
additional payments to the parties who have demonstrated harm from the 
alleged underpayments (which could be defined as hospitals that 
submitted a claim for drug payment with the ``JG'' modifier in CYs 2018 
and 2019) outside the normal claims process. Under this approach, we 
would calculate the amount that such hospitals should have been paid 
and would utilize our Medicare contractors to make one payment to each 
affected hospital. This approach--one additional payment made to each 
affected hospital by our contractors--is a different approach than 
reprocessing each and every claim submitted by plaintiff hospitals for 
2018 and 2019. Then, depending on when a final decision is rendered, 
the Secretary would propose to budget-neutralize those additional 
expenditures for each of CYs 2018 and 2019. For example, if the Court 
of Appeals were to render a decision in February of 2020, we might 
propose those additional payments and an appropriate budget neutrality 
adjustment for each of CYs 2018, 2019, and, if necessary, 2020, in time 
for the CY 2021 rule. We noted that we would need to receive a final 
decision from the Court of Appeals sufficiently early in CY 2020 
(likely no later than March 1, 2020) to make it potentially possible 
for us to propose and finalize an appropriate remedy and budget 
neutrality adjustments in the CY 2021 rulemaking. We solicited public 
comment on this approach as well as other suggested approaches from 
commenters.
    In considering these potential future proposals, we noted that we 
would rely on our statutory authority under section 1833(t)(14) for 
determining the OPPS payment rates for drugs and biologicals as well as 
section 1833(t)(9)(A) of the Act to review certain components of the 
OPPS not less often than annually and to revise the groups, relative 
payment weights, and other adjustments. In addition, we noted that 
under section 1833(t)(14)(H) of the Act, any adjustments made by the 
Secretary to payment rates using the statutory formula outlined in 
section 1833(t)(14)(A)(iii)(II) of the Act are required to be taken 
into account under the budget neutrality requirements outlined in 
section 1833(t)(9)(B) of the Act. In the CY 2020 OPPS/ASC proposed rule 
(84 FR 39505), we solicited public comments on the best, most 
appropriate way to maintain budget neutrality, either under a 
retrospective claim-by-claim approach, with a prospective approach, or 
any other proposed remedy. We also solicited comments on whether, 
depending on the amount of those additional expenditures, we should

[[Page 61326]]

consider spreading out the relevant budget neutrality adjustment across 
multiple years. We appreciated all the public comments that we received 
on the advantages and disadvantages of such an approach.
    We also sought public comments on the best, most appropriate 
treatment of Medicare beneficiary cost-sharing responsibilities under 
any proposed remedy. We stated that the statutory budget neutrality 
requirement and beneficiary cost-sharing are extremely difficult to 
balance, and we sought stakeholder comments as we continue to review 
the viability of alternative remedies in the event of an adverse 
decision from the Court of Appeals.
    We refer readers to the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59369 through 59370) and the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 58976 through 58977 and 59015 through 59022) 
for more detail on the policies implemented in CY 2018 and CY 2019 for 
drugs acquired through the 340B Program.
    We also note that since the CY 2020 OPPS/ASC proposed rule was 
published, we announced in the Federal Register (84 FR 51590) our 
intent to conduct a 340B hospital survey to collect drug acquisition 
cost data for CY 2018 and 2019. As noted above, we may use this survey 
data to devise a remedy for prior years if the district court's ruling 
is upheld on appeal. A remedy that relies on such survey data could 
avoid the remedial complexities discussed below and in the proposed 
rule. If, however, 340B hospital survey data are not used to devise a 
remedy, we intend to consider the comments summarized below to inform a 
remedy we would propose in the CY 2021 OPPS/ASC proposed rule in the 
event of an adverse decision upon appeal.
Comments on Potential Remedy Structure
    Comment: On the issue of a remedy structure, many commenters 
supported a retrospective remedy on a claim-by-claim basis over a 
prospective adjustment of prior 340B claims. Several commenters believe 
it is CMS' responsibility to remedy the policy by requiring as little 
effort as possible on the part of affected hospitals, thus avoiding any 
additional injuries to the parties. Many commenters believe that CMS 
should repay the difference between ASP+6 percent and ASP minus 22.5 
percent plus interest for all claims for 340B-acquired drugs for CYs 
2018 and 2019. They asserted that CMS can calculate the amount owed to 
the affected 340B hospitals by using the JG modifier that identifies 
the claims for 340B drugs. One commenter suggested identifying the 
total amount paid to a hospital for drugs with the status indicator 
``K'' and multiplying by 1.3677 (that is ASP+6 percent/ASP minus 22.5 
percent = 1.06/0.775). Another commenter stated that the percentage of 
claims that each hospital was underpaid is the same in each case and 
that we can calculate the total payment for each hospital and multiply 
that number by a factor, in order to determine how much each hospital 
should have been paid. Some commenters supported a lump-sum payment. 
One commenter supported either a lump-sum payment or a prospective 
payment segmented out over multiple years. One commenter compared this 
case to those remedies that the courts and agency have adopted to 
handle past cases. This commenter believed the affected parties should 
receive a supplemental payment for those affected claims in an amount 
equal to the difference between ASP minus 22.5 percent and ASP+6 
percent. Another commenter believed that the remedy should be decided 
by a federal judge.
    Additionally, some commenters supported a prospective remedy, 
pointing out that a retrospective process would be too complex and 
administratively burdensome. Several commenters supported an aggregate 
payment for each affected 340B entity outside the normal claims process 
rather than a retrospective adjustment. One commenter suggested 
applying an increase factor of 26.89 percent that would pay the 
affected entities at an amount that would approximate ASP+6 percent. 
Another commenter supported an upward adjustment to future claims, 
which they believed would reduce administrative burden.
    Another commenter believed that CMS should publish a proposed 
methodology for conducting the look-back and issuing the payment. 
Further, they believed that providers should have opportunity for 
public comment, and that CMS should revise and issue a final 
methodology in CY 2020 outside of the normal OPPS rulemaking cycle, 
with the applicable data set and calculation instructions posted on the 
CMS web page. Other commenters believed the remedy does not necessitate 
rulemaking.
    One commenter offered three remedy suggestions. Two suggestions 
involved staggered methods of payment. Under the first suggested 
remedy, this commenter believed that CMS could pay for 340B drugs at 
the following amounts over three years, which the commenter believed 
would make affected providers whole: Beginning January 1, 2021, CMS 
would pay ASP+14.25 percent plus an additional 2 percent; beginning 
January 1, 2022 would pay ASP+14.25 percent plus an additional 1 
percent; and finally, beginning January 1, 2023, CMS would pay ASP+6 
percent going forward.
    The same commenter suggested a second approach under which CMS 
would pay affected hospitals set amounts plus interest as follows:
    The first payment would be for claims submitted between January 1, 
2018 and June 30, 2018 and would be paid out by July 1, 2020. The 
second payment would be for claims submitted between July 1, 2018 and 
December 31, 2018 and would be paid out January 1, 2021. The third 
payment would be for claims submitted between January 1, 2019 and June 
30, 2019 and would be paid out July 1, 2021. The final payment would be 
for claims submitted between July 1, 2019 and December, 31, 2019 and 
would be paid out January 1, 2022.
    Alternatively, the same commenter suggested a third method of 
making remedy payments under which CMS could recalculate the payments 
for all claims paid for CYs 2018 and 2019 and pay affected 340B 
hospitals the difference (between ASP+6 and ASP minus 22.5 percent) in 
one lump-sum payment plus interest by January 1, 2021. The commenter 
suggested that CMS would provide affected 340B hospitals notice on or 
before July 1, 2021 of the calculated payment amount owed to the 
hospital. The commenter suggested that the repayment amounts should be 
placed in a 340B-specified account to be redistributed to eligible 
hospitals and distributed in equal payments over a two-year period 
beginning January 2021 for covered entities that demonstrate 
``responsible program integrity'' as determined in collaboration with 
HRSA. The commenters suggested that funds not able to be distributed 
will be used to provide funding to CMS and HRSA to collaborate with 
industry stakeholders to identify and implement solutions for duplicate 
discount prevention.
Comments on Budget Neutrality
    On the issue of budget neutrality, many commenters asserted that 
budget neutrality is not necessary given prior court precedents 
involving underpayments: Cape Cod Hospital v. Sebelius (DC Cir. 2011), 
H. Lee Moffitt Cancer Center & Research Institute, Inc. vs. Azar, 
(D.D.C. 2018), Shands Jacksonville Medical Center v. Burwell, (D.D.C. 
2015). Other commenters asserted that neither (t)(9)(B) nor any other 
provision of the OPPS statue

[[Page 61327]]

authorizes the agency to revisit budget neutrality if its estimates of 
money owed for a prior year turn out to be incorrect. They view the 
statute as directing CMS to make estimates for the purposes of setting 
prospective payment rates only, and not authorizing the agency to 
recalibrate those estimates after the fact if its predictions turn out 
to be incorrect. These commenters believe that the Congress drafted the 
OPPS statute to prohibit the agency from revisiting its budget-
neutrality determinations after it first makes them on a prospective 
basis for a given year. They further asserted that CMS should exercise 
discretion in using its budget neutrality authority in seeking payments 
back from providers.
    Some commenters supported a prospective payment rate reduction on 
OPPS non-drug items and services to maintain budget neutrality from any 
remedy. Other commenters supported a gradual rate reduction of the 
payment amounts for OPPS non-drug items and services ranging from a 
minimum of two to six years to lessen the impact of rate reduction to 
the affected entities. Several commenters supported a modest reduction 
in future OPPS payment by reducing the conversion factor.
Comments on Beneficiary Coinsurance
    Additionally, many commenters asserted that there is no law that 
requires hospitals to adjust beneficiaries' coinsurance for 340B-
acquired drugs. They stated that neither the False Claims nor the anti-
kickback statutes would apply because beneficiaries did not receive any 
inducements to seek services. These commenters believe that 
beneficiaries already fully paid for the hospital care months or years 
ago and should not have to pay any additional payments. They requested 
that CMS clearly state in this final rule that there is no requirement 
for any beneficiary copay adjustments. One commenter offered estimates 
on what they believe are the percentage of patients who are impacted by 
any adjustment on the patient's copay citing 29 percent with Medigap, 
22 percent enrolled in Medicaid (dually eligible), and 19 percent 
without a supplemental plan, with the remaining 30 percent enrolled in 
a Medicare Advantage plan. Thus, this commenter believed that only 19 
percent of patients would be impacted directly by cost-sharing 
implications and CMS would need to calculate payment owed to Medicare 
for these beneficiaries.
    Response: We thank the commenters for their comments on the 
appropriate remedy for CYs 2018 and 2019. As noted above, we may use 
the survey data for 2018 and 2019 that we plan to collect from 340B 
hospitals to devise a remedy for prior years if the district court's 
ruling is upheld on appeal. A remedy that relies on such survey data 
could avoid the remedial complexities discussed above and in the 
proposed rule. If, however, 340B hospital survey data are not used to 
devise a remedy in the event of an adverse decision from the Court of 
Appeals, we intend to consider all of these suggestions in determining 
the appropriate remedy to propose in the CY 2021 OPPS rulemaking. To 
the extent commenters made legal arguments relating to the False Claims 
Act or anti-kickback statutes, CMS offers no opinion.
7. High Cost/Low Cost Threshold for Packaged Skin Substitutes
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74938), we unconditionally packaged skin substitute products into their 
associated surgical procedures as part of a broader policy to package 
all drugs and biologicals that function as supplies when used in a 
surgical procedure. As part of the policy to finalize the packaging of 
skin substitutes, we also finalized a methodology that divides the skin 
substitutes into a high cost group and a low cost group, in order to 
ensure adequate resource homogeneity among APC assignments for the skin 
substitute application procedures (78 FR 74933).
    Skin substitutes assigned to the high cost group are described by 
HCPCS codes 15271 through 15278. Skin substitutes assigned to the low 
cost group are described by HCPCS codes C5271 through C5278. Geometric 
mean costs for the various procedures are calculated using only claims 
for the skin substitutes that are assigned to each group. Specifically, 
claims billed with HCPCS code 15271, 15273, 15275, or 15277 are used to 
calculate the geometric mean costs for procedures assigned to the high 
cost group, and claims billed with HCPCS code C5271, C5273, C5275, or 
C5277 are used to calculate the geometric mean costs for procedures 
assigned to the low cost group (78 FR 74935).
    Each of the HCPCS codes described above are assigned to one of the 
following three skin procedure APCs according to the geometric mean 
cost for the code: APC 5053 (Level 3 Skin Procedures): HCPCS codes 
C5271, C5275, and C5277); APC 5054 (Level 4 Skin Procedures): HCPCS 
codes C5273, 15271, 15275, and 15277); or APC 5055 (Level 5 Skin 
Procedures): HCPCS code 15273). In CY 2019, the payment rate for APC 
5053 (Level 3 Skin Procedures) was $482.89, the payment rate for APC 
5054 (Level 4 Skin Procedures) was $1,548.96, and the payment rate for 
APC 5055 (Level 5 Skin Procedures) was $2,766.13. This information also 
is available in Addenda A and B of the CY 2019 OPPS/ASC final rule with 
comment period (which is available via the internet on the CMS 
website).
    We have continued the high cost/low cost categories policy since CY 
2014, and we proposed to continue it for CY 2020. Under this current 
policy, skin substitutes in the high cost category are reported with 
the skin substitute application CPT codes, and skin substitutes in the 
low cost category are reported with the analogous skin substitute HCPCS 
C-codes. For a discussion of the CY 2014 and CY 2015 methodologies for 
assigning skin substitutes to either the high cost group or the low 
cost group, we refer readers to the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74932 through 74935) and the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66882 through 66885).
    For a discussion of the high cost/low cost methodology that was 
adopted in CY 2016 and has been in effect since then, we refer readers 
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 
through 70435). For CY 2020, consistent with our policy since CY 2016, 
we proposed to continue to determine the high cost/low cost status for 
each skin substitute product based on either a product's geometric mean 
unit cost (MUC) exceeding the geometric MUC threshold or the product's 
per day cost (PDC) (the total units of a skin substitute multiplied by 
the mean unit cost and divided by the total number of days) exceeding 
the PDC threshold. For CY 2020, as we did for CY 2019, we proposed to 
assign each skin substitute that exceeds either the MUC threshold or 
the PDC threshold to the high cost group. In addition, as described in 
more detail later in this section, for CY 2020, as we did for CY 2019, 
we proposed to assign any skin substitute with a MUC or a PDC that does 
not exceed either the MUC threshold or the PDC threshold to the low 
cost group. For CY 2020, we proposed that any skin substitute product 
that was assigned to the high cost group in CY 2019 would be assigned 
to the high cost group for CY 2020, regardless of whether it exceeds or 
falls below the CY 2020 MUC or PDC threshold. This policy was 
established in the CY 2018 OPPS/ASC final rule with comment period (82 
FR 59346 through 59348).
    For this CY 2020 OPPS/ASC final rule, consistent with the 
methodology as established in the CY 2014 through CY

[[Page 61328]]

2018 final rules with comment period, we analyzed CY 2018 claims data 
to calculate the MUC threshold (a weighted average of all skin 
substitutes' MUCs) and the PDC threshold (a weighted average of all 
skin substitutes' PDCs). The final CY 2020 MUC threshold is $48 per cm 
\2\ (rounded to the nearest $1) (proposed at $49 per cm \2\) and the 
final CY 2020 PDC threshold is $790 (rounded to the nearest $1) 
(proposed at $789).
    For CY 2020, we proposed to continue to assign skin substitutes 
with pass-through payment status to the high cost category. We proposed 
to assign skin substitutes with pricing information but without claims 
data to calculate a geometric MUC or PDC to either the high cost or low 
cost category based on the product's ASP+6 percent payment rate as 
compared to the MUC threshold. If ASP is not available, we proposed to 
use WAC+3 percent to assign a product to either the high cost or low 
cost category. Finally, if neither ASP nor WAC is available, we would 
use 95 percent of AWP to assign a skin substitute to either the high 
cost or low cost category. We proposed to continue to use WAC+3 percent 
instead of WAC+6 percent to conform to our proposed policy described in 
section V.B.2.b. of the proposed rule to establish a payment rate of 
WAC+3 percent for separately payable drugs and biologicals that do not 
have ASP data available. New skin substitutes without pricing 
information would be assigned to the low cost category until pricing 
information is available to compare to the CY 2020 MUC threshold. For a 
discussion of our existing policy under which we assign skin 
substitutes without pricing information to the low cost category until 
pricing information is available, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70436).
    Some skin substitute manufacturers have raised concerns about 
significant fluctuation in both the MUC threshold and the PDC threshold 
from year to year. The fluctuation in the thresholds may result in the 
reassignment of several skin substitutes from the high cost group to 
the low cost group which, under current payment rates, can be a 
difference of approximately $1,000 in the payment amount for the same 
procedure. In addition, these stakeholders were concerned that the 
inclusion of cost data from skin substitutes with pass-through payment 
status in the MUC and PDC calculations would artificially inflate the 
thresholds. Skin substitute stakeholders requested that CMS consider 
alternatives to the current methodology used to calculate the MUC and 
PDC thresholds and also requested that CMS consider whether it might be 
appropriate to establish a new cost group in between the low cost group 
and the high cost group to allow for assignment of moderately priced 
skin substitutes to a newly created middle group.
    We share the goal of promoting payment stability for skin 
substitute products and their related procedures as price stability 
allows hospitals using such products to more easily anticipate future 
payments associated with these products. We have attempted to limit 
year-to-year shifts for skin substitute products between the high cost 
and low cost groups through multiple initiatives implemented since CY 
2014, including: Establishing separate skin substitute application 
procedure codes for low-cost skin substitutes (78 FR 74935); using a 
skin substitute's MUC calculated from outpatient hospital claims data 
instead of an average of ASP+6 percent as the primary methodology to 
assign products to the high cost or low cost group (79 FR 66883); and 
establishing the PDC threshold as an alternate methodology to assign a 
skin substitute to the high cost group (80 FR 70434 through 70435).
    To allow additional time to evaluate concerns and suggestions from 
stakeholders about the volatility of the MUC and PDC thresholds, in the 
CY 2018 OPPS/ASC proposed rule (82 FR 33627), we proposed that a skin 
substitute that was assigned to the high cost group for CY 2017 would 
be assigned to the high cost group for CY 2018, even if it does not 
exceed the CY 2018 MUC or PDC thresholds. We finalized this policy in 
the CY 2018 OPPS/ASC final rule with comment period (82 FR 59347). We 
stated in the CY 2018 OPPS/ASC proposed rule that the goal of our 
proposal to retain the same skin substitute cost group assignments in 
CY 2018 as in CY 2017 was to maintain similar levels of payment for 
skin substitute products for CY 2018 while we study our skin substitute 
payment methodology to determine whether refinement to the existing 
policies are consistent with our policy goal of providing payment 
stability for skin substitutes.
    We stated in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59347) that we would continue to study issues related to the 
payment of skin substitutes and take these comments into consideration 
for future rulemaking. We received many responses to our request for 
comments in the CY 2018 OPPS/ASC proposed rule about possible 
refinements to the existing payment methodology for skin substitutes 
that would be consistent with our policy goal of providing payment 
stability for these products. In addition, several stakeholders have 
made us aware of additional concerns and recommendations since the 
release of the CY 2018 OPPS/ASC final rule with comment period. As 
discussed in the CY 2019 OPPS/ASC final rule with comment period (83 FR 
58967 through 58968), we identified four potential methodologies that 
have been raised to us that we encouraged the public to review and 
provide comments on. We stated in the CY 2019 OPPS/ASC final rule with 
comment period that we were especially interested in any specific 
feedback on policy concerns with any of the options presented as they 
relate to skin substitutes with differing per day or per episode costs 
and sizes and other factors that may differ among the dozens of skin 
substitutes currently on the market. We also specified in the CY 2019 
OPPS/ASC final rule with comment period that we were interested in any 
new ideas that are not represented below along with an analysis of how 
different skin substitute products would fare under such ideas. 
Finally, we stated that we intend to explore the full array of public 
comments on these ideas for the CY 2020 rulemaking, and we indicated 
that we will consider the feedback received in response to our requests 
for comments in developing proposals for CY 2020.
a. Discussion of CY 2019 Comment Solicitation for Episode-Based Payment 
and Solicitation of Additional Comments for CY 2020
    The methodology that commenters discussed most in response to our 
comment solicitation in CY 2019 and that stakeholders raised in 
subsequent meetings we have had with the wound care community has been 
a lump-sum ``episode-based'' payment for a wound care episode. 
Commenters that supported an episode-based payment believe that it 
would allow health care professionals to choose the best skin 
substitute to treat a patient's wound and would give providers 
flexibility with the treatments they administer. These commenters also 
believe an episode-based payment helps to reduce incentives for 
providers to use excessive applications of skin substitute products or 
use higher cost products to generate more payment for the services they 
furnish. In addition, they believe that episode-based payment could 
help with innovations with skin substitutes by encouraging the 
development of products that require fewer applications. These 
commenters noted

[[Page 61329]]

that episode-based payment would make wound care payment more 
predictable for hospitals and provide incentives to manage the cost of 
care that they furnish. Finally, commenters for an episode-based 
payment believe that workable quality metrics can be developed to 
monitor the quality of care administered under the payment methodology 
and limit excessive applications of skin substitutes.
    However, many commenters opposed establishing an episode-based 
payment. One of the main concerns of commenters who opposed episode-
based payment was that wound care is too complex and variable to be 
covered through such a payment methodology. These commenters stated 
that every patient and every wound is different; therefore, it would be 
very challenging to establish a standard episode length for coverage. 
They noted that it would be too difficult to risk-stratify and 
specialty-adjust an episode-based payment, given the diversity of 
patients receiving wound care and their providers who administer 
treatment, as well as the variety of pathologies covered in treatment. 
Also, these commenters questioned how episodes would be defined for 
patients when they are having multiple wounds treated at one time or 
have another wound develop while the original wound was receiving 
treatment. These commenters expressed concerns that episode-based 
payment would be burdensome both operationally and administratively for 
providers. They believe that CMS will need to create a large number of 
new APCs and HCPCS codes to account for all of the patient situations 
that would be covered with an episode-based payment, which would 
increase burdens on providers. Finally, these commenters had concerns 
about the impacts of episode-based payment on the usage of higher cost 
skin substitute products. They believe that a single payment could 
discourage the use of higher-cost products because of the large 
variability in the cost of skin substitute products, which could limit 
innovations for skin substitute products.
    The wide array of views on episode-based payment for skin 
substitute products and the unforeseen issues that may arise from the 
implementation of such a policy make us reluctant to present a proposal 
for this CY 2020 proposed rule without more review of the issues 
involved with episode-based payment. Therefore, we sought further 
comments from stakeholders and other interested parties regarding skin 
substitute payment policies that could be applied in future years to 
address concerns about excessive utilization and spending on skin 
substitute products, while avoiding administrative issues such as 
establishing additional HCPCS codes to describe different treatment 
situations. One possible policy construct that we sought comments on 
was whether to establish a payment period for skin substitute 
application services (CPT codes 15271 through 15278 and HCPCS codes 
C5271 through C5278) between 4 weeks and 12 weeks. Under this option, 
we could also assign CPT codes 15271, 15273, 15275, and 15277, and 
HCPCS codes C5271, C5273, C5275, and C5277 to comprehensive APCs with 
the option for a complexity adjustment that would allow for an increase 
in the standard APC payment for more resource-intensive cases. Our 
research has found that most wound care episodes require one to three 
skin substitute applications. Those cases would likely receive the 
standard APC payment for the comprehensive procedure. Then the 
complexity adjustment could be applied for the relatively small number 
of cases that require more intensive treatments.
    Comment: Several commenters were in favor of establishing a 
comprehensive APC with either an option for a complexity adjustment or 
outlier payments to pay for higher cost skin substitute application 
procedures. The commenters supported the idea of having a traditional 
comprehensive APC payment for standard wound care cases with a 
complexity adjustment or outlier payment to handle complicated or 
costly cases. However, they also expressed concerns about how many 
payment levels would be available in the skin substitute procedures APC 
group since a complexity adjustment can only be used if there is an 
existing higher-paying APC to which the service receiving the 
complexity adjustment may be assigned. A couple of commenters wanted 
more opportunities for services to receive a complexity adjustment 
through using clusters of procedure codes that reflect the full range 
of wound care services a beneficiary receives instead of using code 
pairs to determine if a complexity adjustment should apply. A few 
commenters suggested that episodic payments be risk-adjusted to account 
for clinical conditions and co-morbidities of beneficiaries with 
outlier payments and that complexity adjustments be linked to 
beneficiaries with more co-morbidities.
    Some commenters opposed the idea of a complexity adjustment for 
skin substitute application procedures. The commenters believe there 
was not enough detail in the comment solicitation to understand how a 
complexity adjustment would work with an episodic payment arrangement. 
Commenters also expressed concerns that payment rates for comprehensive 
APCs may not be representative of the wound care services that would be 
paid within those APCs. One commenter stated that payment policy is not 
the right way to resolve issues with the over-utilization and 
inappropriate use of skin substitutes because they are concerned that 
major changes in payment methodology, such as episodic payment, could 
lead to serious issues with the care beneficiaries receive.
    Regarding the topic of episodic payment, commenters brought up some 
of the same issues they had mentioned in response to last year's 
comment solicitation. Supporters of episodic payments believe the 
policy idea would give providers more flexibility with the treatments 
they administer to their patients, and will help encourage innovation 
by encouraging the development of graft skin substitute products that 
require fewer applications.
    Some commenters supported developing an episodic payment model 
first in the CMS Innovation Center before adopting episodic payment in 
the OPPS. One commenter wrote about the need for quality measures as a 
part of episodic payment to ensure providers render appropriate care 
during a treatment episode. However, another commenter wanted to ensure 
that quality measures would not prevent providers from using a 
medically necessary product. Commenters also discussed episode length 
with a couple of commenters supporting a 12-week payment episode as 
mentioned in the comment solicitation, and another commenter suggesting 
that an episode be based not only on the length of time but the number 
of allowed skin substitute applications during that time period. 
Commenters also favored establishing a separate payment episode for 
each wound receiving treatment.
    Commenters who oppose episodic payment expressed similar concerns 
as they did in response to last year's comment solicitation. Many 
commenters believe that wound care is too complex and variable to be 
covered through episodic payment even with an option for a complexity 
adjustment. For example, one commenter noted that the care regimen for 
diabetic foot ulcers is very different than the care regimen for 
pressure wounds. A few commenters expressed concerns about the 
complexities associated with episodic payment, claiming that CMS will 
have to established several new HCPCS codes and clinical APCs to be 
able to have

[[Page 61330]]

payment rates for all of the care scenarios covered by episodic 
payment. Commenters also believe it would take several years to 
implement an episode-based payment system and such system would be 
operationally and administratively burdensome for providers. Other 
commenters were concerned about financial incentives created by 
episodic payment that may discourage providers from rendering the best 
quality of care and encourage providers to use skin substitute products 
that may not be the most clinically appropriate for their patients. 
Finally, commenters had concerns about establishing the length of a 
payment episode, stating there was no clear evidence on what the 
appropriate episode length should be. These commenters believe it also 
would be difficult to establish separate payment episodes when a 
patient was being treated for multiple wounds at the same time.
    Commenters also discussed which services should be included with an 
episodic payment. Commenters were divided over whether an episode 
should be limited to application of skin substitute products or 
encompass other related wound care treatments including hyperbaric 
oxygen and negative-pressure treatment. Some commenters were concerned 
that episodic payment may discourage the treatment of large or 
complicated wounds. There also was one commenter who wanted episodic 
payment to cover tissue repair products used in surgical procedures.
    Response: We appreciate all of the feedback we received from 
commenters, and we will use the feedback as we consider potential 
refinements to how we pay for skin substitute products and procedures 
under the OPPS.
b. Potential Revisions to the OPPS Payment Policy for Skin Substitutes: 
Comment Solicitation for CY 2020
    In addition to possible future rulemaking based on the responses to 
the comment solicitations in the preceding section, we noted that we 
were considering adopting for CY 2020 another payment methodology that 
generated significant public comments in response to the CY 2019 
comment solicitation. That option would be to eliminate the high cost 
and low cost categories for skin substitutes and have only one payment 
category and set of procedure codes for the application of all graft 
skin substitute products. Under this option, the only available 
procedure codes to bill for skin substitute graft procedures would be 
CPT codes 15271 through 15278. HCPCS codes C5271 through C5278 would be 
eliminated. Providers would bill CPT codes 15271 through 15278 without 
having to consider either the MUC or PDC of the graft skin substitute 
product used in the procedure. There would be only one APC for the 
graft skin substitute application procedures described by CPT codes 
15271 (Skin sub graft trnk/arm/leg), 15273 (Skin sub grft t/arm/lg 
child), 15275 (Skin sub graft face/nk/hf/g), and 15277 (Skn sub grft f/
n/hf/g child). The payment rate would be the geometric mean of all 
graft skin substitutes procedures for a given CPT code that are covered 
through the OPPS. For example, under the current skin substitute 
payment policy, there are two procedure codes (CPT code 15271 and HCPCS 
code C5271) that are reported for the procedure described as 
``application of skin substitute graft to trunk, arms, legs, total 
wound surface area up to 100 sq cm; first 25 sq cm or less wound 
surface area''. The geometric mean cost for CPT code 15271 was 
$1,572.17 in the CY 2020 OPPS/ASC proposed rule and the geometric mean 
cost for HCPCS code C5271 was $728.28 in the proposed rule. We stated 
in the proposed rule that if this policy option was implemented, only 
CPT code 15271 would be available in the OPPS, and the geometric mean 
cost using data from the CY 2020 proposed rule for the procedure code 
would be $1,465.18.
    Commenters that supported this option believe it would remove the 
incentives for manufacturers to develop and providers to use high cost 
skin substitute products and would lead to the use of lower-cost, 
quality products. Commenters noted that lower Medicare payments for 
graft skin substitute procedures would lead to lower copayments for 
beneficiaries. In addition, commenters believe a single payment 
category would reduce incentives to apply skin substitute products in 
excessive amounts. Commenters also believe a single payment category is 
clinically justified because they stated that many studies have shown 
that no one skin substitute product is superior to another. Finally, 
supporters of a single payment category believe it would simplify 
coding for providers and reduce administrative burden.
    There were also commenters that raised concerns that a single 
payment category would not offer providers incentives to furnish high 
quality care and would reduce the use of higher-cost skin substitute 
products (which they seemed to imply are of higher quality than lower 
cost products). They argued that eliminating the high cost and low cost 
payment categories also does not maintain homogeneity among APC 
assignments for services using skin substitutes according to opponents 
of the single payment category. Commenters stated that instead of 
having categories grouped by the relative cost of products, there would 
be only one category to cover the payment of products with a mean unit 
cost ranging from less than $1 to over $750. Commenters believe a 
single payment category would favor inexpensive products, which could 
limit innovation, and could eliminate all but the most inexpensive 
products from the market. Finally, opponents of a single payment 
category believe a single payment category would discourage the 
treatment of wounds that are difficult and costly to treat.
    The responses to the comment solicitation show the potential of a 
single payment category to reduce the cost of wound care services for 
graft skin substitute procedures for both beneficiaries and Medicare in 
general. In addition, a single payment category may help to lower 
administrative burden for providers. Conversely, we are cognizant of 
other commenters' concerns that a single payment category may hinder 
innovation of new graft skin substitute products and cause some 
products that are currently well-utilized to leave the market. 
Nonetheless, we are persuaded that a single payment category could 
potentially provide a more equitable payment for many products used 
with graft skin substitute procedures, while recognizing that 
procedures performed with expensive skin substitute products would 
likely receive substantially lower payment.
    We believe a more equitable payment rate for graft skin substitute 
procedures could substantially reduce the amount Medicare pays for 
these procedures. We welcomed suggestions or other information 
regarding the possibility of utilizing a single payment category to pay 
for skin substitute products under the OPPS, and, depending on the 
information we received in response to this request, we noted we may 
consider modifying our skin substitute payment policy in the CY 2020 
OPPS/ASC final rule with comment period.
    We believe some of the concerns commenters who oppose a single 
payment category for skin substitute products raised might be mitigated 
if stakeholders have a period of time to adjust to the changes inherent 
in establishing a single payment category. Accordingly, we solicited 
public comments that provide additional information about how 
commenters believe we should transition from the current low cost/high 
cost payment

[[Page 61331]]

methodology to a single payment category.
    Such suggestions to facilitate the payment transition from a low 
cost/high cost payment methodology to a single payment category 
methodology could include, but are not limited to--
     Delaying implementation of a single category payment for 1 
or 2 years after the payment methodology is adopted; and
     Gradually lowering the MUC and PDC thresholds over 2 or 
more years to add more graft skin substitute procedures into the 
current high cost group until all graft skin substitute procedures are 
assigned to the high cost group and it becomes a single payment 
category.
    We sought commenters' feedback on these ideas, or other approaches, 
to mitigate challenges that could impact providers, manufacturers, and 
other stakeholders if we establish a single payment category, which we 
indicated we might include as part of a final skin substitute payment 
policy that we would adopt in the CY 2020 OPPS/ASC final rule with 
comment period.
    Comment: A few commenters expressed support for a single payment 
category for the application of skin substitute products. These 
commenters supported the payment methodology because they believe it 
would remove incentives for manufacturers to develop and providers to 
use high-cost products. These commenters maintained that a single 
payment category would encourage product innovations that maintain the 
quality of care for beneficiaries while bringing down the cost of skin 
substitute products, which will help to reduce the co-payments 
beneficiaries pay for skin substitute application services. Commenters 
supported more payment homogeneity because they believe most skin 
substitute products perform in a similar manner and no product or group 
of products is clinically superior over other skin substitute products. 
One commenter noted that the device pass-through payment pathway 
continues to be available for manufacturers to receive additional 
payment if a superior skin substitute product is developed.
    Several commenters in favor of a single payment category believe it 
would simplify coding for providers and reduce administrative burden. 
They also believe a single payment category provides adequate payment 
for providers based on the case mix of smaller, easier to treat wounds 
and larger, more complex wounds. Also, a single payment category would 
promote cost stability by eliminating the large payment fluctuation for 
skin substitutes who are close to the cost-group thresholds in the 
current high-cost/low-cost payment methodology for skin substitutes.
    The vast majority of commenters were opposed to a single payment 
category for skin substitute products. Commenters stated that the large 
difference in resource costs between higher cost and lower cost skin 
substitute products would mean only the most inexpensive products would 
be used to provide care, which would hurt both product innovation and 
the quality of care beneficiaries receive. Commenters were concerned 
that a single payment category would encourage providers to choose 
financial benefit over clinical efficacy when determining which skin 
substitute products to use.
    These commenters also stated that a single payment category would 
increase incentives for providers to use cheaper products that require 
more applications to generate more revenue. A couple of commenters 
believe that overall Medicare spending on skin substitutes would be 
higher with a single payment category than under the current payment 
methodology which has separate payment for higher cost and lower cost 
skin substitutes. The reason spending would go up according to the 
commenters is the overpayment for low cost skin substitutes by Medicare 
would exceed the savings Medicare would receive on reduced payments for 
higher cost skin substitutes.
    Further, commenters stated that a single payment rate would lead to 
too much heterogeneity in the products receiving payment through the 
skin substitute application procedures. The same payment rate would 
apply to skin substitute products whether they cost less than $10 per 
cm\2\ or over $200 per cm\2\ and regardless of the type of wound they 
treat. Commenters would prefer to have multiple payment categories 
where the payment rate is more reflective of the cost of the product. 
Commenters believe that a single payment category would discourage 
providers from treating more complicated wounds.
    Some commenters stated that CMS should not implement a single 
payment category methodology in CY 2020 because it only sought comments 
and did not propose it and that CMS should formally propose the 
methodology to allow commenters a meaningful opportunity to comment on 
the precise proposal before implementing it.
    There also were comments about the idea of having a transition 
period of 1 to 2 years before the full implementation of a single 
category payment methodology. Those commenters in favor of a single 
payment category did not see a need for a transition period or wanted 
only a one-year transition period. Conversely, those commenters opposed 
to a single payment category either who did mention the idea of a 
transition period wanted it to last multiple years with one commenter 
suggesting a transition period of four years.
    Response: We appreciate the comments we received for this comment 
solicitation, and we will use the feedback to help inform our 
development of our payment methodology for skin substitute application 
procedures in future rulemaking.
c. Proposals for Packaged Skin Substitutes for CY 2020
    To allow stakeholders time to analyze and comment on the issues 
discussed above, we proposed for CY 2020 to continue our policy 
established in CY 2018 to assign skin substitutes to the low cost or 
high cost group. Specifically, we proposed to assign a skin substitute 
with a MUC or a PDC that does not exceed either the MUC threshold or 
the PDC threshold to the low cost group, unless the product was 
assigned to the high cost group in CY 2019, in which case we would 
assign the product to the high cost group for CY 2020, regardless of 
whether it exceeds the CY 2020 MUC or PDC threshold. We also proposed 
to assign to the high cost group any skin substitute product that 
exceeds the CY 2020 MUC or PDC thresholds and assign to the low cost 
group any skin substitute product that does not exceed the CY 2020 MUC 
or PDC thresholds and was not assigned to the high cost group in CY 
2019. We proposed to continue to use payment methodologies including 
ASP+6 percent and 95 percent of AWP for skin substitute products that 
have pricing information but do not have claims data to determine if 
their costs exceed the CY 2020 MUC. In addition, we proposed to use 
WAC+3 percent for skin substitute products that do not have ASP pricing 
information or have claims data to determine if those products' costs 
exceed the CY 2020 MUC. We proposed to continue our established policy 
to assign new skin substitute products without pricing information to 
the low cost group.
    Table 19 of the proposed rule displayed the proposed CY 2020 cost 
category assignment for each skin substitute product.
    Comment: Most commenters supported our proposal to continue our 
policy to assign skin substitutes to the low cost or high cost group, 
mainly

[[Page 61332]]

because they still want more information on both episode-based payment 
for skin substitutes and the possibility of creating a single payment 
category for skin substitutes. These commenters do not currently 
support either potential payment methodology and prefer to keep the 
current high-cost and low-cost payment methodology until an alternative 
methodology for skin substitutes is better developed.
    Response: We appreciate the support of the commenters of our CY 
2020 proposal for the payment of skin substitute application services.
    Comment: One commenter was opposed to our proposal. This commenter 
requested that we no longer assign to the high-cost group skin 
substitute products that do not meet either the MUC or PDC thresholds 
in CY 2020 because the skin substitute product had previous been 
assigned to the high-cost group in CY 2019. The commenter believes skin 
substitute products should be assigned to the cost group that for which 
they qualify based on current MUC and PDC thresholds because the 
commenter believes that Medicare payment should reflect to some extent 
the relative cost of a skin substitute product compared to all other 
skin substitute products.
    Response: We disagree with commenter. Requiring products to 
potentially switch annually between the high-cost and low-cost group 
leads to payment instability for skin substitute products (82 FR 59346-
59347). The payment rate for a skin substitute application procedure 
may change by several hundred dollars depending on if a skin substitute 
product is assigned to the high-cost or low-cost group, which can make 
it challenging for manufacturers to estimate the payment their products 
will generate when used by providers. The policy to continue to assign 
skin substitute products to the high-cost group once they qualify for 
the group promotes payment stability and allows manufacturers and 
providers to know over a long period of time the payment rate of the 
procedures used with each skin substitute product.
    Comment: For the CY 2019 OPPS/ASC final rule with comment period, a 
commenter, the manufacturer, requested that HCPCS code Q4184 (Cellesta, 
per square centimeter) be assigned to the high-cost skin substitute 
group because the ASP+6 percent price of HCPCS code Q4184 for Quarter 1 
of 2019 was $110.02 per cm\2\ which was substantially higher than the 
MUC threshold for CY 2019 of $49 per cm\2\.
    Response: HCPCS code Q4184 (Cellesta, per square centimeter) has 
been assigned to the high-cost group since April 1, 2019 and we 
proposed assigning the skin substitute product again to the high-cost 
group in CY 2020.
    Comment: One commenter, the manufacturer, has requested that HCPCS 
codes Q4122 (Dermacell, per square centimeter) and Q4150 (Allowrap ds 
or dry, per square centimeter) continue to be assigned to the high-cost 
skin substitute group.
    Response: HCPCS codes Q4122 (Dermacell, per square centimeter) and 
Q4150 (Allowrap ds or dry, per square centimeter) were both assigned to 
the high-cost group in CY 2019 and also were proposed to the high-cost 
group for CY 2020. Per our proposal, a skin substitute that has been 
proposed in the high-cost group in a proposed rule will remain in the 
high-cost group in the final rule. Also, any skin substitute assigned 
to the high-cost group in CY 2019 will continue to be assigned to the 
high-cost group in CY 2020 even if MUC and PDC for the skin substitute 
product is below the overall MUC and PDC thresholds for all skin 
substitute products. Accordingly, we are finalizing our proposal to 
assign HCPCS codes Q4122 and Q4150 to the high-cost group in CY 2020.
    After consideration of the public comments we received, we are 
finalizing our proposal to assign a skin substitute with a MUC or a PDC 
that does not exceed either the MUC threshold or the PDC threshold to 
the low cost group, unless the product was assigned to the high cost 
group in CY 2019, in which case we would assign the product to the high 
cost group for CY 2020, regardless of whether it exceeds the CY 2020 
MUC or PDC threshold. We also are finalizing our proposal to assign to 
the high cost group any skin substitute product that exceeds the CY 
2020 MUC or PDC thresholds and assign to the low cost group any skin 
substitute product that does not exceed the CY 2020 MUC or PDC 
thresholds and was not assigned to the high cost group in CY 2019. We 
are finalizing our proposal to continue to use payment methodologies 
including ASP+6 percent and 95 percent of AWP for skin substitute 
products that have pricing information but do not have claims data to 
determine if their costs exceed the CY 2020 MUC. In addition, we are 
finalizing our proposal to continue to use WAC+3 percent instead of 
WAC+6 percent for skin substitute products that do not have ASP pricing 
information or claims data to determine if those products' costs exceed 
the CY 2020 MUC. We also are finalizing our proposal to retain our 
established policy to assign new skin substitute products with pricing 
information to the low cost group. Table 45 below displays the final CY 
2020 cost category assignment for each skin substitute product.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C

VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, 
Biologicals, Radiopharmaceuticals, and Devices

A. Background

    Section 1833(t)(6)(E) of the Act limits the total projected amount 
of transitional pass-through payments for drugs, biologicals, 
radiopharmaceuticals, and categories of devices for a given year to an 
``applicable percentage,'' currently not to exceed 2.0 percent of total 
program payments estimated to be made for all covered services under 
the OPPS furnished for that year. If we estimate before the beginning 
of the calendar year that the total amount of pass-through payments in 
that year would exceed the applicable percentage, section 
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 
in the amount of each of the transitional pass-through payments made in 
that year to ensure that the limit is not exceeded. We estimate the 
pass-through spending to determine whether payments exceed the 
applicable percentage and the appropriate prorata reduction to the 
conversion factor for the projected level of pass-through spending in 
the following year to ensure that total estimated pass-through spending 
for the prospective payment year is budget neutral, as required by 
section 1833(t)(6)(E) of the Act.
    For devices, developing a proposed estimate of pass-through 
spending in CY 2020 entails estimating spending for two groups of 
items. The first group of items consists of device categories that are 
currently eligible for pass-through payment and that will continue to 
be eligible for pass-through payment in CY 2020. The CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66778) describes the methodology 
we have used in previous years to develop the pass-through spending 
estimate for known device categories continuing into the applicable 
update year. The second group of items consists of items that we know 
are newly eligible, or project may be newly eligible, for device pass-
through payment in the remaining quarters of CY 2019 or beginning in CY 
2020. The sum of the proposed CY 2020 pass-through spending estimates 
for these two groups of device categories equaled the proposed total CY 
2020 pass-through spending estimate for device categories with pass-
through payment status. We based the device pass-through estimated 
payments for each device category on the amount of payment as 
established in section 1833(t)(6)(D)(ii) of the Act, and as outlined in 
previous rules, including the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75034 through 75036). We note that, beginning in CY 2010, 
the pass-through evaluation process and pass-through payment 
methodology for implantable biologicals newly approved for pass-through 
payment beginning on or after January 1, 2010, that are surgically 
inserted or implanted (through a surgical incision or a natural 
orifice) use the device pass-through process and payment methodology 
(74 FR 60476). As has been our past practice (76 FR 74335), in the 
proposed rule, we proposed to include an estimate of any implantable 
biologicals eligible for pass-through payment in our estimate of pass-
through spending for devices. Similarly, we finalized a policy in CY 
2015 that applications for pass-through payment for skin substitutes 
and similar products be evaluated using the medical device pass-through 
process and payment methodology (76 FR 66885 through 66888). Therefore, 
as we did beginning in CY 2015, for CY 2020, we also proposed to 
include an estimate of any skin substitutes and similar products in our 
estimate of pass-through spending for devices.
    For drugs and biologicals eligible for pass-through payment, 
section 1833(t)(6)(D)(i) of the Act establishes the pass-through 
payment amount as the amount by which the amount authorized under 
section 1842(o) of the Act (or, if the drug or biological is covered 
under a competitive acquisition contract under section 1847B of the 
Act, an amount determined by the Secretary equal to the average price 
for the drug or biological for all competitive acquisition areas and 
year established under such section as calculated and adjusted by the 
Secretary) exceeds the portion of the otherwise applicable fee schedule 
amount that the Secretary determines is associated with the drug or 
biological. Our estimate of drug and biological pass-through payment 
for CY 2020 for this group of items is $224.1

[[Page 61336]]

million, as discussed below, because we proposed to pay for most 
nonpass-through separately payable drugs and biologicals under the CY 
2020 OPPS at ASP+6 percent with the exception of 340B-acquired 
separately payable drugs that are paid at ASP minus 22.5 percent, and 
because we proposed to pay for CY 2020 pass-through payment drugs and 
biologicals at ASP+6 percent, as we discuss in section V.A. of the CY 
2020 OPPS/ASC proposed rule. We refer readers to section V.B.6 of the 
CY 2020 OPPS/ASC proposed rule where we discuss the comments we 
solicited on an appropriate remedy in litigation involving our OPPS 
payment policy for 340B purchased drugs, which would inform CY 2021 
rulemaking in the event of an adverse decision on appeal in that 
litigation.
    Furthermore, payment for certain drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents without pass-through payment 
status, is packaged into payment for the associated procedures, and 
these products will not be separately paid. In addition, we policy-
package all nonpass-through drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure and drugs and biologicals that function as 
supplies when used in a surgical procedure, as discussed in section 
II.A.3. of the CY 2020 OPPS/ASC proposed rule and this final rule with 
comment period. In the CY 2020 OPPS/ASC proposed rule (84 FR 39511), we 
proposed that all of these policy-packaged drugs and biologicals with 
pass-through payment status would be paid at ASP+6 percent, like other 
pass-through drugs and biologicals, for CY 2020. Therefore, our 
estimate of pass-through payment for policy-packaged drugs and 
biologicals with pass-through payment status approved prior to CY 2020 
was not $0, as discussed below. In section V.A.5. of the CY 2020 OPPS/
ASC proposed rule, we discussed our policy to determine if the costs of 
certain policy-packaged drugs or biologicals are already packaged into 
the existing APC structure. If we determine that a policy-packaged drug 
or biological approved for pass-through payment resembles predecessor 
drugs or biologicals already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment, we proposed to 
offset the amount of pass-through payment for the policy-packaged drug 
or biological. For these drugs or biologicals, the APC offset amount is 
the portion of the APC payment for the specific procedure performed 
with the pass-through drug or biological, which we refer to as the 
policy-packaged drug APC offset amount. If we determine that an offset 
is appropriate for a specific policy-packaged drug or biological 
receiving pass-through payment, we proposed to reduce our estimate of 
pass-through payments for these drugs or biologicals by this amount.
    Similar to pass-through spending estimates for devices, the first 
group of drugs and biologicals requiring a pass-through payment 
estimate consists of those products that were recently made eligible 
for pass-through payment and that will continue to be eligible for 
pass-through payment in CY 2020. The second group contains drugs and 
biologicals that we know are newly eligible, or project will be newly 
eligible, in the remaining quarters of CY 2019 or beginning in CY 2020. 
The sum of the CY 2020 pass-through spending estimates for these two 
groups of drugs and biologicals equals the total CY 2020 pass-through 
spending estimate for drugs and biologicals with pass-through payment 
status.

B. Estimate of Pass-Through Spending

    In the CY 2020 OPPS/ASC proposed rule (84 FR 39511 through 39512), 
we proposed to set the applicable pass-through payment percentage limit 
at 2.0 percent of the total projected OPPS payments for CY 2020, 
consistent with section 1833(t)(6)(E)(ii)(II) of the Act and our OPPS 
policy from CY 2004 through CY 2019 (82 FR 59371 through 59373).
    For the first group, consisting of device categories that are 
currently eligible for pass-through payment and will continue to be 
eligible for pass-through payment in CY 2020, there is one active 
category for CY 2020. The active category is described by HCPCS code 
C1823 (Generator, neurostimulator (implantable), nonrechargeable, with 
transvenous sensing and stimulation leads). Based on the information 
from the device manufacturer, we estimated that 100 devices will 
receive payment in the OPPS in CY 2020 at an estimated cost of $5,655 
per device. Therefore, we proposed an estimate for the first group of 
devices of $565,500. We did not receive any public comments on the 
proposal. Therefore, we are finalizing the proposed estimate for the 
first group of devices of $565,500 for CY 2020.
    In estimating our proposed CY 2020 pass-through spending for device 
categories in the second group, we included: Device categories that we 
knew at the time of the development of the proposed rule will be newly 
eligible for pass-through payment in CY 2020; additional device 
categories that we estimated could be approved for pass-through status 
after the development of the proposed rule and before January 1, 2020; 
and contingent projections for new device categories established in the 
second through fourth quarters of CY 2020. For CY 2020, we proposed to 
use the general methodology described in the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66778), while also taking into account 
recent OPPS experience in approving new pass-through device categories. 
For the proposed rule, the proposed estimate of CY 2020 pass-through 
spending for this second group of device categories was $10 million.
    We did not receive any public comments on this proposal. As stated 
earlier in this final rule with comment period, we are approving five 
devices for pass-through payment status: Surefire[supreg] 
SparkTM Infusion System; Optimizer[supreg] System; 
AquaBeam[supreg] System; AUGMENT[supreg] Bone Graft and 
ARTIFICIALIris[supreg] . The manufacturers of these systems provided 
utilization and cost data that indicate the spending for the devices 
would be approximately $116.25 million for Surefire[supreg] 
SparkTM Infusion System, $46 million for Optimizer[supreg] 
System, $11.25 million for AquaBeam[supreg] System, $ 72.2 million for 
AUGMENT[supreg] Bone Graft, and $500,500 for ARTIFICIALIris[supreg]. 
Therefore, we are finalizing an estimate of $246.2 million for this 
second group of devices for CY 2020.
    To estimate proposed CY 2020 pass-through spending for drugs and 
biologicals in the first group, specifically those drugs and 
biologicals recently made eligible for pass-through payment and 
continuing on pass-through payment status for at least one quarter in 
CY 2020, we proposed to use the most recent Medicare hospital 
outpatient claims data regarding their utilization, information 
provided in the respective pass-through applications, historical 
hospital claims data, pharmaceutical industry information, and clinical 
information regarding those drugs or biologicals to project the CY 2020 
OPPS utilization of the products.
    For the known drugs and biologicals (excluding policy-packaged 
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, 
and radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure, and drugs and biologicals that function 
as supplies when used in a surgical procedure) that will be continuing 
on pass-through payment status in CY 2020, we estimated the pass-
through payment amount as the difference between ASP+6 percent and the 
payment rate for nonpass-through

[[Page 61337]]

drugs and biologicals that will be separately paid. Separately payable 
drugs are paid at a rate of ASP+6 percent with the exception of 340B-
acquired drugs that are paid at ASP minus 22.5 percent. Therefore, the 
payment rate difference between the pass-through payment amount and the 
nonpass-through payment amount is $224.1 million for this group of 
drugs. Because payment for policy-packaged drugs and biologicals is 
packaged if the product was not paid separately due to its pass-through 
payment status, we proposed to include in the CY 2020 pass-through 
estimate the difference between payment for the policy-packaged drug or 
biological at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if 
ASP or WAC information is not available) and the policy-packaged drug 
APC offset amount, if we determine that the policy-packaged drug or 
biological approved for pass-through payment resembles a predecessor 
drug or biological already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment, which we 
estimate for CY 2020 to be $17.0 million. For the proposed rule, using 
the proposed methodology described above, we calculated a CY 2020 
proposed spending estimate for this first group of drugs and 
biologicals that includes drugs currently on pass-through payment 
status that would otherwise be separately payable or policy-packaged of 
approximately $241.1 million. We did not receive any public comments on 
our proposal. Using our methodology for this final rule with comment 
period, we calculated a CY 2020 spending estimate for this first group 
of drugs and biologicals of approximately $399.6 million.
    To estimate proposed CY 2020 pass-through spending for drugs and 
biologicals in the second group (that is, drugs and biologicals that we 
knew at the time of development of the proposed rule were newly 
eligible for pass-through payment in CY 2020, additional drugs and 
biologicals that we estimated could be approved for pass-through status 
subsequent to the development of the proposed rule and before January 
1, 2020 and projections for new drugs and biologicals that could be 
initially eligible for pass-through payment in the second through 
fourth quarters of CY 2020), we proposed to use utilization estimates 
from pass-through applicants, pharmaceutical industry data, clinical 
information, recent trends in the per unit ASPs of hospital outpatient 
drugs, and projected annual changes in service volume and intensity as 
our basis for making the CY 2020 pass-through payment estimate. We also 
proposed to consider the most recent OPPS experience in approving new 
pass-through drugs and biologicals. Using our proposed methodology for 
estimating CY 2020 pass-through payments for this second group of 
drugs, we calculated a proposed spending estimate for this second group 
of drugs and biologicals of approximately $17.1 million.
    We did not receive any public comments on our proposal. Therefore, 
for CY 2020, we are continuing to use the general methodology described 
above. For this final rule with comment period, we calculated a CY 2020 
spending estimate for this second group of drugs and biologicals of 
approximately $26 million.
    In summary, in accordance with the methodology described earlier in 
this section, for this final rule with comment period, we estimate that 
total pass-through spending for the device categories and the drugs and 
biologicals that are continuing to receive pass-through payment in CY 
2020 and those device categories, drugs, and biologicals that first 
become eligible for pass-through payment during CY 2020 is 
approximately $698.4 million (approximately $246.8 million for device 
categories and approximately $451.6 million for drugs and biologicals) 
which represents 0.88 percent of total projected OPPS payments for CY 
2020 (approximately $79 billion). Therefore, we estimate that pass-
through spending in CY 2020 will not amount to 2.0 percent of total 
projected OPPS CY 2020 program spending.

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

    For CY 2020, we proposed to continue with our current clinic and 
emergency department (ED) hospital outpatient visits payment policies. 
For a description of the current clinic and ED hospital outpatient 
visits policies, we refer readers to the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70448). We also proposed to continue our 
payment policy for critical care services for CY 2020. For a 
description of the current payment policy for critical care services, 
we refer readers to the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70449), and for the history of the payment policy for critical 
care services, we refer readers to the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75043). In the proposed rule, we sought public 
comments on any changes to these codes that we should consider for 
future rulemaking cycles. We continue to encourage commenters to 
provide the data and analysis necessary to justify any suggested 
changes.
    Comment: We received two public comments, one from a health system 
and another from a health information management association, in 
response to our CY 2020 proposal. Commenters suggested that CMS should 
adopt the recommendation of the Medicare Payment Advisory Commission 
(MedPAC) for the development and implementation of a set of national 
guidelines for coding hospital emergency department (ED) visits under 
the OPPS. They argued that national guidelines would provide hospitals 
with a clear set of rules for coding ED visits.
    Response: We thank the commenters for their responses. We will 
consider these comments for future rulemaking.
    After consideration of the public comments received, we are 
finalizing our CY 2020 proposal to continue our current clinic and ED 
hospital outpatient visits and critical care services payment policies 
without modifications.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59004 
through 59015), we adopted a method to control unnecessary increases in 
the volume of covered outpatient department services under section 
1833(t)(2)(F) of the Act by utilizing a Medicare Physician Fee Schedule 
(PFS)-equivalent payment rate for the hospital outpatient clinic visit 
(HCPCS code G0463) when it is furnished by excepted off-campus 
provider-based departments (PBDs). As discussed in section X.D of the 
proposed rule and the CY 2019 final rule (FR 58818 through 59179), CY 
2020 will be the second year of the 2-year transition of this policy, 
and in CY 2020, these departments will be paid the site-specific PFS 
rate for the clinic visit service. For a full discussion of this 
policy, we refer readers to the CY 2020 final rule with comment period 
and section X.C of this final rule with comment period.

VIII. Payment for Partial Hospitalization Services

A. Background

    A partial hospitalization program (PHP) is an intensive outpatient 
program of psychiatric services provided as an alternative to inpatient 
psychiatric care for individuals who have an acute mental illness, 
which includes, but is not limited to, conditions such as depression, 
schizophrenia, and substance use disorders. Section 1861(ff)(1) of the 
Act defines partial hospitalization services

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as the items and services described in paragraph (2) prescribed by a 
physician and provided under a program described in paragraph (3) under 
the supervision of a physician pursuant to an individualized, written 
plan of treatment established and periodically reviewed by a physician 
(in consultation with appropriate staff participating in such program), 
which sets forth the physician's diagnosis, the type, amount, 
frequency, and duration of the items and services provided under the 
plan, and the goals for treatment under the plan. Section 1861(ff)(2) 
of the Act describes the items and services included in partial 
hospitalization services. Section 1861(ff)(3)(A) of the Act specifies 
that a PHP is a program furnished by a hospital to its outpatients or 
by a community mental health center (CMHC), as a distinct and organized 
intensive ambulatory treatment service, offering less than 24-hour-
daily care, in a location other than an individual's home or inpatient 
or residential setting. Section 1861(ff)(3)(B) of the Act defines a 
CMHC for purposes of this benefit.
    Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the 
authority to designate the outpatient department (OPD) services to be 
covered under the OPPS. The Medicare regulations that implement this 
provision specify, at 42 CFR 419.21, that payments under the OPPS will 
be made for partial hospitalization services furnished by CMHCs as well 
as Medicare Part B services furnished to hospital outpatients 
designated by the Secretary, which include partial hospitalization 
services (65 FR 18444 through 18445).
    Section 1833(t)(2)(C) of the Act requires the Secretary, in part, 
to establish relative payment weights for covered OPD services (and any 
groups of such services described in section 1833(t)(2)(B) of the Act) 
based on median (or, at the election of the Secretary, mean) hospital 
costs using data on claims from 1996 and data from the most recent 
available cost reports. In pertinent part, section 1833(t)(2)(B) of the 
Act provides that the Secretary may establish groups of covered OPD 
services, within a classification system developed by the Secretary for 
covered OPD services, so that services classified within each group are 
comparable clinically and with respect to the use of resources. In 
accordance with these provisions, we have developed the PHP APCs. Since 
a day of care is the unit that defines the structure and scheduling of 
partial hospitalization services, we established a per diem payment 
methodology for the PHP APCs, effective for services furnished on or 
after July 1, 2000 (65 FR 18452 through 18455). Under this methodology, 
the median per diem costs were used to calculate the relative payment 
weights for the PHP APCs. Section 1833(t)(9)(A) of the Act requires the 
Secretary to review, not less often than annually, and revise the 
groups, the relative payment weights, and the wage and other 
adjustments described in section 1833(t)(2) of the Act to take into 
account changes in medical practice, changes in technology, the 
addition of new services, new cost data, and other relevant information 
and factors.
    We began efforts to strengthen the PHP benefit through extensive 
data analysis, along with policy and payment changes finalized in the 
CY 2008 OPPS/ASC final rule with comment period (72 FR 66670 through 
66676). In that final rule with comment period, we made two refinements 
to the methodology for computing the PHP median: The first remapped 10 
revenue codes that are common among hospital-based PHP claims to the 
most appropriate cost centers; and the second refined our methodology 
for computing the PHP median per diem cost by computing a separate per 
diem cost for each day rather than for each bill.
    In CY 2009, we implemented several regulatory, policy, and payment 
changes, including a two-tier payment approach for partial 
hospitalization services under which we paid one amount for days with 3 
services under PHP APC 0172 (Level 1 Partial Hospitalization) and a 
higher amount for days with 4 or more services under PHP APC 0173 
(Level 2 Partial Hospitalization) (73 FR 68688 through 68693). We also 
finalized our policy to deny payment for any PHP claims submitted for 
days when fewer than 3 units of therapeutic services are provided (73 
FR 68694). Additionally, for CY 2009, we revised the regulations at 42 
CFR 410.43 to codify existing basic PHP patient eligibility criteria 
and to add a reference to current physician certification requirements 
under 42 CFR 424.24 to conform our regulations to our longstanding 
policy (73 FR 68694 through 68695). We also revised the partial 
hospitalization benefit to include several coding updates (73 FR 68695 
through 68697).
    For CY 2010, we retained the two-tier payment approach for partial 
hospitalization services and used only hospital-based PHP data in 
computing the PHP APC per diem costs, upon which PHP APC per diem 
payment rates are based. We used only hospital-based PHP data because 
we were concerned about further reducing both PHP APC per diem payment 
rates without knowing the impact of the policy and payment changes we 
made in CY 2009. Because of the 2-year lag between data collection and 
rulemaking, the changes we made in CY 2009 were reflected for the first 
time in the claims data that we used to determine payment rates for the 
CY 2011 rulemaking (74 FR 60556 through 60559).
    In the CY 2011 OPPS/ASC final rule with comment period (75 FR 
71994), we established four separate PHP APC per diem payment rates: 
Two for CMHCs (APC 0172 (for Level 1 services) and APC 0173 (for Level 
2 services)) and two for hospital-based PHPs (APC 0175 (for Level 1 
services) and APC 0176 (for Level 2 services)), based on each provider 
type's own unique data. For CY 2011, we also instituted a 2-year 
transition period for CMHCs to the CMHC APC per diem payment rates 
based solely on CMHC data. Under the transition methodology, CMHC APCs 
Level 1 and Level 2 per diem costs were calculated by taking 50 percent 
of the difference between the CY 2010 final hospital-based PHP median 
costs and the CY 2011 final CMHC median costs and then adding that 
number to the CY 2011 final CMHC median costs. A 2-year transition 
under this methodology moved us in the direction of our goal, which is 
to pay appropriately for partial hospitalization services based on each 
provider type's data, while at the same time allowing providers time to 
adjust their business operations and protect access to care for 
Medicare beneficiaries. We also stated that we would review and analyze 
the data during the CY 2012 rulemaking cycle and, based on these 
analyses, we might further refine the payment mechanism. We refer 
readers to section X.B. of the CY 2011 OPPS/ASC final rule with comment 
period (75 FR 71991 through 71994) for a full discussion.
    In addition, in accordance with section 1301(b) of the Health Care 
and Education Reconciliation Act of 2010 (HCERA 2010), we amended the 
description of a PHP in our regulations to specify that a PHP must be a 
distinct and organized intensive ambulatory treatment program offering 
less than 24-hour daily care other than in an individual's home or in 
an inpatient or residential setting. In accordance with section 1301(a) 
of HCERA 2010, we revised the definition of a CMHC in the regulations 
to conform to the revised definition now set forth under section 
1861(ff)(3)(B) of the Act (75 FR 71990).
    For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74348 through 74352), we determined the relative

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payment weights for partial hospitalization services provided by CMHCs 
based on data derived solely from CMHCs and the relative payment 
weights for partial hospitalization services provided by hospital-based 
PHPs based exclusively on hospital data.
    In the CY 2013 OPPS/ASC final rule with comment period, we 
finalized our proposal to base the relative payment weights that 
underpin the OPPS APCs, including the four PHP APCs (APCs 0172, 0173, 
0175, and 0176), on geometric mean costs rather than on the median 
costs. We established these four PHP APC per diem payment rates based 
on geometric mean cost levels calculated using the most recent claims 
and cost data for each provider type. For a detailed discussion on this 
policy, we refer readers to the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68406 through 68412).
    In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 through 43622), 
we solicited comments on possible future initiatives that may help to 
ensure the long-term stability of PHPs and further improve the accuracy 
of payment for PHP services, but proposed no changes. In the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75050 through 75053), we 
summarized the comments received on those possible future initiatives. 
We also continued to apply our established policies to calculate the 
four PHP APC per diem payment rates based on geometric mean per diem 
costs using the most recent claims data for each provider type. For a 
detailed discussion on this policy, we refer readers to the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75047 through 75050).
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66902 
through 66908), we continued to apply our established policies to 
calculate the four PHP APC per diem payment rates based on PHP APC 
geometric mean per diem costs, using the most recent claims and cost 
data for each provider type.
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70455 
through 70465), we described our extensive analysis of the claims and 
cost data and ratesetting methodology. We found aberrant data from some 
hospital-based PHP providers that were not captured using the existing 
OPPS 3 standard deviation trims for extreme cost-to-charge 
ratios (CCRs) and excessive CMHC charges resulting in CMHC geometric 
mean costs per day that were approximately the same as or more than the 
daily payment for inpatient psychiatric facility services. 
Consequently, we implemented a trim to remove hospital-based PHP 
service days that use a CCR that was greater than five to calculate 
costs for at least one of their component services, and a trim on CMHCs 
with a geometric mean cost per day that is above or below 2 (2) standard deviations from the mean. We stated in the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70456) that, without 
using a trimming process, the data from these providers would 
inappropriately skew the geometric mean per diem cost for Level 2 CMHC 
services.
    In addition, in the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70459 through 70460), we corrected a cost inversion that 
occurred in the final rule data with respect to hospital-based PHP 
providers. We corrected the cost inversion with an equitable adjustment 
to the actual geometric mean per diem costs by increasing the Level 2 
hospital-based PHP APC geometric mean per diem costs and decreasing the 
Level 1 hospital-based PHP APC geometric mean per diem costs by the 
same factor, to result in a percentage difference equal to the average 
percent difference between the hospital-based Level 1 PHP APC and the 
Level 2 PHP APC for partial hospitalization services from CY 2013 
through CY 2015.
    Finally, we renumbered the PHP APCs, which were previously APCs 
0172 and 0173 for CMHCs' partial hospitalization Level 1 and Level 2 
services, and APCs 0175 and 0176 for hospital-based partial 
hospitalization Level 1 and Level 2 services to APCs 5851 and 5852 for 
CMHCs' partial hospitalization Level 1 and Level 2 services, and APCs 
5861 and 5862 for hospital-based partial hospitalization Level 1 and 
Level 2 services, respectively. For a detailed discussion of the PHP 
ratesetting process, we refer readers to the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70462 through 70467).
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 
through 79691), we continued to apply our established policies to 
calculate the PHP APC per diem payment rates based on geometric mean 
per diem costs using the most recent claims and cost data for each 
provider type. However, we finalized a policy to combine the Level 1 
and Level 2 PHP APCs for CMHCs and to combine the Level 1 and Level 2 
APCs for hospital-based PHPs because we believed this would best 
reflect actual geometric mean per diem costs going forward, provide 
more predictable per diem costs, particularly given the small number of 
CMHCs, and generate more appropriate payments for these services, for 
example by avoiding the cost inversions for hospital-based PHPs 
addressed in the CY 2016 and CY 2017 OPPS/ASC final rules with comment 
period (80 FR 70459 and 81 FR 79682). We also implemented an eight-
percent outlier cap for CMHCs to mitigate potential outlier billing 
vulnerabilities by limiting the impact of inflated CMHC charges on 
outlier payments. We stated that we will continue to monitor the trends 
in outlier payments and consider policy adjustments as necessary.
    For a comprehensive description of PHP payment policy, including a 
detailed methodology for determining PHP per diem amounts, we refer 
readers to the CY 2016 and CY 2017 OPPS/ASC final rules with comment 
period (80 FR 70453 through 70455 and 81 FR 79678 through 79680).
    In the CYs 2018 and 2019 OPPS/ASC final rules with comment period 
(82 FR 59373 through 59381, and 83 FR 58983 through 58998, 
respectively), we continued to apply our established policies to 
calculate the PHP APC per diem payment rates based on geometric mean 
per diem costs using the most recent claims and cost data for each 
provider type. We also continued to designate a portion of the 
estimated 1.0 percent hospital outpatient outlier threshold 
specifically for CMHCs, consistent with the percentage of projected 
payments to CMHCs under the OPPS, excluding outlier payments. In the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58997 through 
58998), we also included proposed updates to the PHP allowable HCPCS 
codes. Specifically, we proposed to delete six psychological and 
neuropsychological testing CPT codes, which affect PHPs, and to add 
nine new codes as replacements. We refer readers to section VIII.D. of 
the proposed rule for a discussion of those proposed updates and the 
applicability for CY 2020.

B. Final PHP APC Update for CY 2020

1. Final PHP APC Geometric Mean Per Diem Costs
    In summary, for CY 2020, we are finalizing our proposal as proposed 
to use the CY 2020 CMHC geometric mean per diem cost calculated in 
accordance with our existing methodology, but with a cost floor equal 
to the CY 2019 final geometric mean per diem cost for CMHCs of $121.62 
(83 FR 58991), as the basis for developing the CY 2020 CMHC APC per 
diem rate. We are also finalizing our proposal to use the CY 2020 
hospital-based PHP geometric mean per diem cost of $233.52, calculated 
in accordance with our existing methodology for hospital-based

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PHPs, as the basis for developing the CY 2020 hospital-based APC per 
diem rate. We are finalizing our proposal to use the most recent 
updated claims and cost data to calculate CY 2020 geometric mean per 
diem costs in this final rule with comment period.
    Also, we are finalizing our proposal to continue to use CMHC APC 
5853 (Partial Hospitalization (3 or More Services Per Day)) and 
hospital-based PHP APC 5863 (Partial Hospitalization (3 or More 
Services Per Day)). These proposals, which we are finalizing as 
proposed in this final rule with comment period, are discussed in more 
detail.
2. Development of the Final PHP APC Geometric Mean Per Diem Costs
    In preparation for CY 2020 and subsequent years, we followed the 
PHP ratesetting methodology described in section VIII.B.2. of the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70462 through 
70466) to calculate the PHP APCs' geometric mean per diem costs and 
payment rates for APCs 5853 and 5863, incorporating the modifications 
made in the CY 2017 OPPS/ASC final rule with comment period. As 
discussed in section VIII.B.1. of the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79680 through 79687), the geometric mean per diem 
cost for hospital-based PHP APC 5863 is based upon actual hospital-
based PHP claims and costs for PHP service days providing 3 or more 
services. Similarly, the geometric mean per diem cost for CMHC APC 5853 
is based upon actual CMHC claims and costs for CMHC service days 
providing three or more services.
    The CMHC or hospital-based PHP APC per diem costs are the provider-
type specific costs derived from the most recent claims and cost data. 
The CMHC or hospital-based PHP APC per diem payment rates are the 
national unadjusted payment rates calculated from the CMHC or hospital-
based PHP APC geometric mean per diem costs, after applying the OPPS 
budget neutrality adjustments described in section II.A.4. of this 
final rule with comment period.
    As previously stated, in the CY 2020 OPPS/ASC proposed rule, we 
proposed to apply our established methodologies in calculating the CY 
2020 geometric mean per diem costs and payment rates, including the 
application of a 2 standard deviation trim on costs per day 
for CMHCs and a CCR greater than 5 hospital service day trim for 
hospital-based PHP providers. These two trims were finalized in the CY 
2016 OPPS/ASC fina