[Federal Register Volume 85, Number 156 (Wednesday, August 12, 2020)]
[Proposed Rules]
[Pages 48772-49082]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17086]
[[Page 48771]]
Vol. 85
Wednesday,
No. 156
August 12, 2020
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 410, 411 et al.
Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems and Quality Reporting
Programs; New Categories for Hospital Outpatient Department Prior
Authorization Process; Clinical Laboratory Fee Schedule: Laboratory
Date of Service Policy; Overall Hospital Quality Star Rating
Methodology; and Physician-Owned Hospitals; Proposed Rule
Federal Register / Vol. 85 , No. 156 / Wednesday, August 12, 2020 /
Proposed Rules
[[Page 48772]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 411, 412, 414, 416, and 419
[CMS-1736-P]
RIN 0938-AU12
Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems and Quality Reporting
Programs; New Categories for Hospital Outpatient Department Prior
Authorization Process; Clinical Laboratory Fee Schedule: Laboratory
Date of Service Policy; Overall Hospital Quality Star Rating
Methodology; and Physician-Owned Hospitals
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare hospital
outpatient prospective payment system (OPPS) and the Medicare
ambulatory surgical center (ASC) payment system for Calendar Year (CY)
2021 based on our continuing experience with these systems. In this
proposed rule, we describe the proposed 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
proposed rule would update and refine the requirements for the Hospital
Outpatient Quality Reporting (OQR) Program and the ASC Quality
Reporting (ASCQR) Program. In addition, this proposed rule would
establish and update the Overall Hospital Quality Star Rating beginning
with the CY 2021; remove certain restrictions on the expansion of
physician-owned hospitals that qualify as ``high Medicaid facilities,''
and clarify that certain beds are counted toward a hospital's baseline
number of operating rooms, procedure rooms, and beds; and add two new
service categories to the OPD Prior Authorization Process.
DATES: To be assured consideration, comments on all sections of this
proposed rule must be received at one of the addresses provided in the
ADDRESSES section no later than 5 p.m. EST on October 5, 2020.
ADDRESSES: In commenting, please refer to file code CMS-1736-P when
commenting on the issues in this proposed rule. 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-1736-P, P.O. Box 8013,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1736-P, 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: 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 Mitali Dayal via email
[email protected].
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Administration, Validation, and Reconsideration Issues, contact Anita
Bhatia via email at [email protected].
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Measures, contact Nicole Hewitt via email [email protected].
Blood and Blood Products, contact Josh McFeeters via email
[email protected].
Cancer Hospital Payments, contact Scott Talaga via email
[email protected].
CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck
Braver via email [email protected].
Composite APCs (Low Dose Brachytherapy and Multiple Imaging),
contact Au'Sha Washington via email [email protected].
Comprehensive APCs (C-APCs), contact Lela Strong-Holloway via email
[email protected], or Mitali Dayal via email
[email protected].
Hospital Outpatient Quality Reporting (OQR) Program Administration,
Validation, and Reconsideration Issues, contact Anita Bhatia via email
[email protected].
Hospital Outpatient Quality Reporting (OQR) Program Measures,
contact Nicole Hewitt via email [email protected].
Hospital Outpatient Visits (Emergency Department Visits and
Critical Care Visits), contact Elise Barringer via email
[email protected].
Hospital Quality Star Rating Methodology, contact Annese Abdullah-
Mclaughlin via email [email protected].
Inpatient Only (IPO) Procedures List, contact Au'Sha Washington via
email [email protected], or Allison Bramlett via email
[email protected], or Lela Strong-Holloway via email
[email protected].
Medical Review of Certain Inpatient Hospital Admissions under
Medicare Part A for CY 2021 and Subsequent Years (2-Midnight Rule),
contact Lela Strong-Holloway via email [email protected], or
Elise Barringer via email [email protected].
New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga
via email [email protected].
No Cost/Full Credit and Partial Credit Devices, contact Scott
Talaga via email [email protected].
OPPS Brachytherapy, contact Scott Talaga via email
[email protected].
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 Scott Talaga via email
[email protected], or Josh McFeeters via email at
[email protected].
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Josh McFeeters via email at
[email protected], or Gil Ngan via email at
[email protected] or, or Cory Duke via email at
[email protected].
OPPS New Technology Procedures/Services, contact the New Technology
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APC mailbox at [email protected].
OPPS Packaged Items/Services, contact Lela Strong-Holloway via
email [email protected], or Mitali Dayal via email at
[email protected].
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].
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 Covered
Outpatient Department Services, contact Thomas Kessler via email at
[email protected].
Rural Hospital Payments, contact Josh McFeeters via email at
[email protected].
Skin Substitutes, contact Josh McFeeters via email
[email protected].
Supervision of Outpatient Therapeutic Services in Hospitals and
CAHs, contact Josh McFeeters via email [email protected].
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/Hospital-Outpatient-Regulations-and-Notices. The Addenda relating to the ASC payment system are available
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.
Current Procedural Terminology (CPT) Copyright Notice
Throughout this proposed rule, we use CPT codes and descriptions to
refer to a variety of services. We note that CPT codes and descriptions
are copyright 2019 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 on the CY 2020 OPPS/ASC Final Rule
With Comment Period
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Payment Weights
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default Cost-to-Charge Ratios
(CCRs)
E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs)
and Essential Access Community Hospitals (EACHs) Under Section
1833(t)(13)(B) of the Act for CY 2021
F. Proposed Payment Adjustment for Certain Cancer Hospitals for
CY 2020
G. Proposed Hospital Outpatient Outlier Payments
H. Proposed Calculation of an Adjusted Medicare Payment From the
National Unadjusted Medicare Payment
I. Proposed Beneficiary Copayments
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. Proposed OPPS Treatment of New and Revised HCPCS Codes
B. Proposed OPPS Changes--Variations Within APCs
C. Proposed New Technology APCs
D. Proposed OPPS APC-Specific Policies
IV. OPPS Payment for Devices
A. Proposed Pass-Through Payments for Devices
B. Proposed Device-Intensive Procedures
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
B. Proposed 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. Proposed Estimate of Pass-Through Spending
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care
Services
VIII. Payment for Partial Hospitalization Services
A. Background
B. Proposed PHP APC Update for CY 2021
C. Proposed Outlier Policy for CMHCs
IX. Services That Will Be Paid Only as Inpatient Services
A. Background
B. Proposed Changes to the Inpatient Only (IPO) List
X. Proposed Nonrecurring Policy Changes
A. Proposed Changes in the Level of Supervision of Outpatient
Therapeutic Services in Hospitals and Critical Access Hospitals
(CAHs)
B. Proposed Medical Review of Certain Inpatient Hospital
Admissions Under Medicare Part A for CY 2021 and Subsequent Years
C. Comment Solicitation on OPPS Payment for Specimen Collection
for COVID-19 Tests
XI. Proposed CY 2021 OPPS Payment Status and Comment Indicators
A. Proposed CY 2021 OPPS Payment Status Indicator Definitions
B. Proposed CY 2021 Comment Indicator Definitions
XII. MedPAC Recommendations
A. Proposed OPPS Payment Rates Update
B. Proposed ASC Conversion Factor Update
C. Proposed ASC Cost Data
XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
B. Proposed ASC Treatment of New and Revised Codes
C. Proposed Update to the List of ASC Covered Surgical
Procedures and Covered Ancillary Services
D. Proposed Update and Payment for ASC Covered Surgical
Procedures and Covered Ancillary Services
E. Proposed New Technology Intraocular Lenses (NTIOLs)
F. Proposed ASC Payment and Comment Indicators
G. Proposed 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
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C. Administrative Requirements
D. Form, Manner, and Timing of Data Submitted for the Hospital
OQR Program
E. Proposed 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. Proposed Payment Reduction for ASCs That Fail To Meet the
ASCQR Program Requirements
XVI. Proposed Overall Hospital Quality Star Rating Methodology for
Public Release in CY 2021 and Subsequent Years
A. Background
B. Critical Access Hospitals in the Overall Star Rating
C. Veterans Health Administration Hospitals in Overall Star
Rating
D. History of the Overall Hospital Quality Star Rating
E. Current and Proposed Overall Star Rating Methodology
F. Preview Period
G. Overall Star Rating Suppressions
XVII. Addition of New Service Categories for Hospital Outpatient
Department (OPD) Prior Authorization Process
A. Background
B. Controlling Unnecessary Increases in the Volume of Covered
OPD Services
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. Proposed Revision to the Laboratory DOS Policy for Cancer-
Related Protein-Based MAAAs
XIX. Physician-Owned Hospitals
A. Background
B. Prohibition on Facility Expansion
C. Deference to State Law for Purposes of Determining the Number
of Beds for Which a Hospital Is Licensed
XX. Files Available to the Public via the internet
XXI. 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 Addition of New Service Categories for Hospital
Outpatient Department (OPD) Prior Authorization Process
E. ICRs for the Overall Hospital Quality Star Ratings
F. ICRs for Physician-Owned Hospitals
XXII. Waiver of the 60-Day Delayed Effective Date for the Final Rule
XXIII. Response to Comments
XXIV. Economic Analyses
A. Statement of Need
B. Overall Impact for the Provisions of This Proposed Rule
C. Detailed Economic Analyses
D. Regulatory Review Costs
E. Regulatory Flexibility Act (RFA) Analysis
F. Unfunded Mandates Reform Act Analysis
G. Reducing Regulation and Controlling Regulatory Costs
H. Conclusion
XXV. Federalism Analysis
Regulations Text
I. Summary and Background
A. Executive Summary of This Document
1. Purpose
In this proposed rule, we propose to update 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, 2021. 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 proposed rule
also includes additional policy changes made in accordance with our
experience with the OPPS and the ASC payment system and recent changes
in our statutory authority. We describe these and various other
statutory authorities in the relevant sections of this proposed rule.
In addition, this proposed rule would update and refine the
requirements for the Hospital Outpatient Quality Reporting (OQR)
Program and the ASC Quality Reporting (ASCQR) Program.
2. Summary of the Major Provisions
OPPS Update: For CY 2021, we propose to increase 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 proposed 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) 2021
would be approximately $83.9 billion, an increase of approximately $7.5
billion compared to estimated CY 2020 OPPS payments.
We propose to continue 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 0.9805 to the OPPS payments and copayments for all applicable
services.
Partial Hospitalization Update: For CY 2021 OPPS/ASC
proposed rule, CMS is proposing to maintain the unified rate structure
established in CY 2017, with a single PHP APC for each provider type
for days with three or more services per day. CMS is proposing to use
the CMHC and hospital-based PHP (HB PHP) geometric mean per diem costs,
consistent with existing policy, using updated data for each provider
type and a cost floor equal to the CY 2019 final geometric mean per
diem cost for each provider type. Accordingly, CMS is proposing to
calculate the CY 2021 PHP APC per diem rate for HB PHPs based on
updated cost data and to calculate the rate for CMHCs based on the
proposed cost floor.
Changes to the Inpatient Only (IPO) List: For CY 2021, we
propose to eliminate the IPO list over the course of three calendar
years beginning with the removal of approximately 300 musculoskeletal-
related services. We are also soliciting comments on whether three
years is an appropriate time frame for transitioning to eliminate the
IPO list; other services that are candidates for removal from the IPO
list for CY 2021; and the sequence in which to remove additional
clinical families and/or specific services from the IPO list in future
rulemaking.
Medical Review of Certain Inpatient Hospital Admissions
under Medicare Part A for CY 2021 and Subsequent Years (2-Midnight
Rule): For CY 2021, we propose to continue 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
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January 1, 2021. We are also seeking comments on whether the 2-year
exemption period continues to be appropriate, or if a longer or shorter
period may be more warranted.
340B-Acquired Drugs: We propose for CY 2021 and subsequent
years to pay for drugs acquired under the 340B program at ASP minus
34.7 percent, plus an add-on of 6 percent of the product's ASP, for a
net payment rate of ASP minus 28.7 percent based on the results of the
Hospital Acquisition Cost Survey for 340B-Acquired Specified Covered
Drugs. Similar to the 340B drug payment policy implemented in CY 2018,
we are also proposing that Rural SCHs, PPS-exempt cancer hospitals and
children's hospitals would be exempted from the 340B payment policy for
CY 2021 and subsequent years. Finally, we note that we propose in the
alternative to continue our current policy of paying ASP minus 22.5
percent for 340B-acquired drugs.
Comprehensive APCs: For CY 2021, we propose to create two
new comprehensive APCs (C-APCs). These new C-APCs include the
following: C-APC 5378 (Level 8 Urology and Related Services) and C-APC
5465 (Level 5 Neurostimulator and Related Procedures). Adding these C-
APCs would increase the total number of C-APCs to 69.
Device Pass-Through Payment Applications: For CY 2021, we
have received five applications for device pass-through payments that
we discuss in this proposed rule. Two of these applications
(CUSTOMFLEX[supreg] ARTIFICIALIRIS and EXALTTM Model D
Single-Use Duodenoscope) have received preliminary approval for pass-
through payment status through our quarterly review process. CMS is
soliciting public comments on these five applications and will make a
final determination on these applications in the CY 2021 OPPS/ASC final
rule.
Changes to the Level of Supervision of Outpatient
Therapeutic Services in Hospitals and Critical Access Hospitals: For CY
2021 and subsequent years, we propose to change the minimum default
level of supervision for non-surgical extended duration therapeutic
services (NSEDTS) to general supervision for the entire service,
including the initiation portion of the service, for which we had
previously required direct supervision. This would be consistent with
the minimum required level of general supervision that currently
applies for most outpatient hospital therapeutic services. We also
propose that, for CY 2021 and subsequent years, direct supervision for
pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac
rehabilitation services would include virtual presence of the physician
through audio/video real-time communications technology subject to the
clinical judgment of the supervising physician.
Cancer Hospital Payment Adjustment: For CY 2021, we
propose to continue 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
propose that a target PCR of 0.89 would be used to determine the CY
2021 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.
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
2021, we propose to increase payment rates under the ASC payment system
by 2.6 percent for ASCs that meet the quality reporting requirements
under the ASCQR Program. This proposed 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 proposed update, we estimate
that total payments to ASCs (including beneficiary cost-sharing and
estimated changes in enrollment, utilization, and case-mix) for CY 2021
would be approximately 5.45 billion, an increase of approximately 160
million compared to estimated CY 2020 Medicare payments.
Changes to the List of ASC Covered Surgical Procedures:
For CY 2021, we propose to add eleven procedures to the ASC covered
procedures list (CPL), including total hip arthroplasty (CPT 27130).
Additionally, we propose two alternatives for changing the way
procedures are added to the ASC CPL. Under the first alternative, we
propose to establish a nomination process beginning in CY 2021 for
procedures that would be added beginning in CY 2022 under which
external stakeholders, such as professional specialty societies, would
use suggested parameters to nominate procedures that can be safely
performed in the ASC setting and meet all other regulatory standards.
CMS would review nominated procedures and propose and finalize
procedures to be added to the ASC CPL through annual rulemaking.
Under the second alternative proposal, we would revise the criteria
for covered surgical procedures for the ASC payment system under 42 CFR
416.166, by keeping the general standards and eliminating five of the
general exclusions. The revised criteria would result in the addition
of approximately 270 surgery or surgery-like codes to the CPL that are
not on the CY 2020 IPO list. Finally, we solicit comment on whether the
conditions for coverage for ASCs should be revised if we adopt the
second alternative proposal described above.
Hospital Outpatient Quality Reporting (OQR) and Ambulatory
Surgical Center Quality Reporting (ASCQR) Programs: For the Hospital
OQR and ASCQR Programs, we propose to update and refine requirements to
further meaningful measurement and reporting for quality of care
provided in these outpatient settings while limiting compliance burden.
We propose to revise and codify previously finalized administrative
procedures and to propose and codify an expanded review and corrections
process to further the programs' alignment while clarifying program
requirements. We are not proposing any measure additions or removals
for either program.
Overall Hospital Quality Star Ratings: We propose to
establish and update the methodology that would be used to calculate
the Overall Hospital Quality Star Ratings beginning with 2021 and for
subsequent years. CMS is proposing to, among other proposals, update
and simplify how the ratings are calculated, reduce the total number of
measure groups, and stratify the Readmission measure group based on the
proportion of dual-eligible patients. These changes will simplify the
methodology, and therefore, reduce provider burden, improve the
predictability of the star ratings, and increase the comparability
between hospital star ratings.
Addition of New Service Categories for Hospital Outpatient
Department Prior Authorization Process: We propose the addition of the
following two categories of services to the prior authorization process
beginning for dates of service on or after July 1, 2021: (1) Cervical
fusion with disc removal and (2) implanted spinal neurostimulators.
Clinical Laboratory Date of Service (DOS) Policy: We
propose to exclude
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cancer-related protein-based MAAAs, which are not generally performed
in the HOPD setting, from the OPPS packaging policy and add them to the
laboratory DOS provisions at Sec. 414.510(b)(5).
Physician-Owned Hospitals: We propose the (1) removal of
unnecessary regulatory restrictions on high Medicaid facilities and (2)
including beds in a physician-owned hospital's baseline consistent with
state law.
3. Summary of Costs and Benefit
In sections XIX. and XX. of this proposed rule, we set forth a
detailed analysis of the regulatory and federalism impacts that the
changes would have on affected entities and beneficiaries. Key
estimated impacts are described below.
a. Impacts of All OPPS Changes
Table 55 in section XIX.B of this proposed rule displays the
distributional impact of all the OPPS changes on various groups of
hospitals and CMHCs for CY 2021 compared to all estimated OPPS payments
in CY 2020. We estimate that the policies in this proposed rule would
result in a 2.5 percent overall increase in OPPS payments to providers.
We estimate that total OPPS payments for CY 2021, including beneficiary
cost-sharing, to the approximately 3,628 facilities paid under the OPPS
(including general acute care hospitals, children's hospitals, cancer
hospitals, and CMHCs) would increase by approximately 1.6 billion
compared to CY 2020 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 1.3 percent increase in CY 2021
payments to CMHCs relative to their CY 2020 payments.
b. Impacts of the Proposed Updated Wage Indexes
We estimate that our proposed update of the wage indexes based on
the FY 2021 IPPS proposed rule wage indexes would result in an
estimated increase of 0.2 percent for urban hospitals under the OPPS
and an estimated increase of 0.4 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 proposed rule.
c. Impacts of the Proposed Rural Adjustment and the Cancer Hospital
Payment Adjustment
There are no significant impacts of our CY 2021 payment policies
for hospitals that are eligible for the rural adjustment or for the
cancer hospital payment adjustment. We are not proposing to make any
change in policies for determining the rural hospital payment
adjustments. While we propose to implement the required reduction to
the cancer hospital payment adjustment required by section 16002 of the
21st Century Cures Act for CY 2021, the target payment-to-cost ratio
(PCR) for CY 2021 is 0.89, equivalent to the 0.89 target PCR for CY
2020, and therefore has no budget neutrality adjustment.
d. Impacts of the Proposed OPD Fee Schedule Increase Factor
For the CY 2021 OPPS/ASC, we propose to establish an OPD fee
schedule increase factor of 2.6 percent and apply that increase factor
to the conversion factor for CY 2021. As a result of the OPD fee
schedule increase factor and other budget neutrality adjustments, we
estimate that urban hospitals would experience an increase of
approximately 2.8 percent and that rural hospitals would experience an
increase of 3.6 percent. Classifying hospitals by teaching status, we
estimate nonteaching hospitals would experience an increase of 3.5
percent, minor teaching hospitals would experience an increase of 3.2
percent, and major teaching hospitals would experience an increase of
1.6 percent. We also classified hospitals by the type of ownership. We
estimate that hospitals with voluntary ownership would experience an
increase of 2.7 percent in payments, while hospitals with government
ownership would experience a decrease of 0.3 percent in payments. We
estimate that hospitals with proprietary ownership would experience an
increase of 4.4 percent in payments.
e. Impacts of the Proposed 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 2021 payment
rates, compared to estimated CY 2020 payment rates, generally ranges
between an increase of 2 and 5 percent, depending on the service, with
some exceptions. We estimate the proposed impact of applying the
hospital market basket update to ASC payment rates would increase
payments by $160 million under the ASC payment system in CY 2021.
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
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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 proposed rule. 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.
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.
[[Page 48778]]
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;
May advise on OPPS APC rates for covered ASC procedures;
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, announce new members, and
any other changes of which the public should be aware. Beginning in CY
2017, we have transitioned to one meeting per year (81 FR 31941). In CY
2018, we published a Federal Register notice requesting nominations to
fill vacancies on the Panel (83 FR 3715). As published in this notice,
CMS is accepting nominations on a continuous basis.
In addition, the Panel has established an administrative structure
that, in part, currently includes the use of three subcommittee
workgroups to provide preparatory meeting and subject support to the
larger panel. The three current subcommittees include the following:
APC Groups and Status Indicator Assignments Subcommittee,
which advises and provides recommendations to 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 workgroup 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.
Discussions of the other recommendations made by the Panel at the
August 19, 2019 Panel meeting, namely APC assignments for certain CPT
codes, a comprehensive APC for skin substitute products, a
comprehensive APC for autologous hematopoietic stem cell
transplantation, and packaging policies, were discussed in the CY 2020
OPPS/ASC final rule with comment period (84 FR 61148). 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.
F. Public Comments Received on the CY 2020 OPPS/ASC Final Rule With
Comment Period
We received approximately 22 timely pieces of correspondence on the
CY 2020 OPPS/ASC final rule with comment period that appeared in the
Federal Register on November 12, 2019 (84 FR 61142), most of which were
outside of the scope of the final rule. In-scope comments related to
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 topics that were open
to comment and our responses to them will be set forth in various
sections of the final rule with comment period under the appropriate
subject-matter headings.
II. Proposed Updates Affecting OPPS Payments
A. Proposed 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
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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.
For the CY 2021 OPPS, we propose to recalibrate the APC relative
payment weights for services furnished on or after January 1, 2021, and
before January 1, 2022 (CY 2021), using the same basic methodology that
we described in the CY 2020 OPPS/ASC final rule with comment period (84
FR 61149), using updated CY 2019 claims data. That is, we propose to
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 proposed APC relative payment
weights for CY 2021, we began with approximately 167 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, 2019, and before January 1, 2020, before applying our
exclusionary criteria and other methodological adjustments. After the
application of those data processing changes, we used approximately 87
million final action claims to develop the proposed CY 2021 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 this
proposed rule on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
Addendum N to this proposed rule (which is available via the
internet on the CMS website) includes the proposed list of bypass codes
for CY 2021. The proposed list of bypass codes contains codes that are
reported on claims for services in CY 2019 and, therefore, includes
codes that were in effect in CY 2019 and used for billing, but were
deleted for CY 2020. We propose to retain these deleted bypass codes on
the proposed CY 2021 bypass list because these codes existed in CY 2019
and were covered OPD services in that period, and CY 2019 claims data
were used to calculate proposed CY 2021 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 propose
to add for CY 2021 are identified by asterisks (*) in the fourth column
of Addendum N.
b. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2021, we propose 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 2021 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 2019 claims data by comparing these claims
data to the most recently available hospital cost reports, which, in
most cases, are from CY 2018. For the proposed CY 2021 OPPS payment
rates, we used the set of claims processed during CY 2019. 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. To ensure the completeness of the
revenue code-to-cost center crosswalk, we reviewed changes to the list
of revenue codes for CY 2019 (the year of claims data we used to
calculate the proposed CY 2021 OPPS payment rates) and updates to the
NUBC 2019 Data Specifications Manual. 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.
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 this proposed rule.
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 we 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/ASC final rule with comment
period (78 FR 74847) 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. 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 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 in 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
[[Page 48780]]
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 1 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 2 provides statistical
values based on the CT and MRI standard cost center CCRs using the
different cost allocation methods.
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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 18.5 percent to 2,195 providers and the number of valid CT
CCRs has increased by 16.3 percent to 2,275 providers. Table 1 displays
the impact on proposed OPPS payment rates for CY 2021 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 1.
We note 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 had extended
the transition an additional 2 years to offer providers flexibility in
applying cost allocation methodologies for CT and MRI cost centers
other than ``square feet.'' In the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61152), we finalized a 2-year phased-in approach,
as suggested by some commenters, that applied 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.
We believe we have provided sufficient time for providers to adopt
an alternative cost allocation methodology for CT and MRI cost centers
if they intended to do so and many providers continue to use the
``square feet'' cost allocation methodology, which we
[[Page 48781]]
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, as finalized in the CY 2020 OPPS/ASC final rule with comment
period (84 FR 61152), in the CY 2021 OPPS we are using 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 1.
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 (PFS) to not exceed what Medicare pays
for these services under the OPPS. As required by law, for certain
imaging series paid for under the PFS, 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 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. Proposed Data Development and Calculation of Costs Used for
Ratesetting
In this section of this proposed rule, we discuss the use of claims
to calculate the OPPS payment rates for CY 2021. The Hospital OPPS page
on the CMS website on which this proposed rule 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 proposed payment rates. That accounting
provides additional detail regarding the number of claims derived at
each stage of the process. In addition, later 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 2020 claims that
were used to calculate the proposed payment rates for this CY 2021
OPPS/ASC proposed rule.
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 2021, we propose to continue to use geometric mean costs to
calculate the relative weights on which the proposed 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 proposed rule to calculate the costs we used to
establish the proposed relative payment weights used in calculating the
OPPS payment rates for CY 2021 shown in Addenda A and B to this
proposed rule (which are available via the internet on the CMS
website). We refer readers to section II.A.4. of this proposed rule 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
the claims data used for setting payment rates (CY 2017 data) contained
lines with the modifier ``PN'', which indicates 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 2021 OPPS, we will continue
to remove these claim lines with modifier ``PN'' from the ratesetting
process.
For details of the claims accounting process used in this proposed
rule, we refer readers to the claims accounting narrative under
supporting documentation for this CY 2021 OPPS/ASC proposed rule on the
CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
a. Proposed 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.
We propose 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, to address the differences in CCRs and to
better reflect hospitals' costs, we propose to continue to simulate
blood CCRs for each hospital that does not report a 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 propose to apply this mean ratio to the
overall CCRs of hospitals not reporting costs and charges for blood
cost centers on their cost reports to simulate blood-specific CCRs for
those hospitals. We propose to calculate the costs upon which the
proposed CY 2021 payment rates for blood and blood products are based
using the actual blood-specific CCR for hospitals that
[[Page 48782]]
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 continue to believe that this methodology in CY 2021
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 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. We propose
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 proposed payment rates of
the C-APCs), we propose not to 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 refer readers to Addendum B of this proposed rule (which is
available via the internet on the CMS website) for the proposed CY 2021
payment rates for blood and blood products (which are generally
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).
For CY 2021, we propose to continue to establish payment rates for
blood and blood products using our blood-specific CCR methodology.
(b) Payment for Blood Not Otherwise Classified (NOC) Code
Recently, providers and stakeholders in the blood products field
have reported that product development for new blood products has
accelerated. There may be several additional new blood products
entering the market by the end of CY 2021, compared to only one or two
new products entering the market over the previous 15 to 20 years. To
encourage providers to use these new products, providers and
stakeholders requested that we establish a new HCPCS code to allow for
payment for unclassified blood products prior to these products
receiving their own HCPCS code. Under the OPPS, unclassified procedures
are generally assigned to the lowest APC payment level of an APC
family. However, since blood products are each assigned to their own
unique APC, the concept of a lowest APC payment level does not apply in
this context.
Starting January 1, 2020, we established a new HCPCS code, P9099
(Blood component or product not otherwise classified) which allows
providers to report unclassified blood products. We assigned HCPCS code
P9099 to status indicator ``E2'' (Not payable by Medicare when
submitted on an outpatient claim) for CY 2020. We took this action
because HCPCS code P9099 potentially could be reported for multiple
products with different costs during the same period of time.
Therefore, we could not identify an individual blood product HCPCS code
that would have a similar cost to HCPCS code P9099, and were not able
to crosswalk a payment rate from an established blood product HCPCS
code to HCPCS code P9099. Some stakeholders expressed concerns that
assigning HCPCS code P9099 to a non-payable status in the OPPS meant
that hospitals would receive no payment when they used unclassified
blood products. Also, claim lines billed with P9099 are rejected by
Medicare, which prevents providers from tracking the utilization of
unclassified blood products.
Because of the challenges of determining an appropriate payment
rate for unclassified blood products, we are considering packaging the
cost of unclassified blood products into their affiliated primary
medical procedure. Although we typically do not package blood products
under the OPPS, for unclassified blood products, we do not believe it
is possible to accurately determine an appropriate rate that would
apply for all of the products (potentially several, with varying costs)
that may be reported using HCPCS code P9099. Packaging the cost of
unclassified blood products into the payment for the primary medical
service by assigning HCPCS code P9099 a status indicator of ``N'' would
allow providers to report the cost of unclassified blood products to
Medicare. Over time, the costs of unspecified blood products would be
reflected in the payment rate for the primary medical service if the
blood product remains unclassified. However, we expect that most blood
products would seek and be granted more specific coding such that the
unclassified HCPCS code P9099 would no longer be applicable. We believe
that packaging the costs of unclassified blood products would be an
improvement over the current non-payable status for HCPCS code P9099 as
it would allow for tracking of the costs and utilization of
unclassified blood products.
Another option we considered, but ultimately rejected is similar to
our policy under the OPPS to assign NOC codes to the lowest APC within
the appropriate clinical family. We could crosswalk and assign the same
payment rate for HCPCS code P9099 as HCPCS code P9043 (Infusion, plasma
protein fraction (human), 5 percent, 50 ml), which is the lowest cost
blood product with a proposed CY 2021 payment rate of $8.02 per unit.
This option would provide a small, separate payment for each
unclassified blood product service, and, similar to our proposal to
package the costs of HCPCS code P9099 into their primary procedure,
would allow for tracking of the cost utilization of unclassified blood
products. However, given that the cross-walked payment rate is
potentially significantly lower than the cost of the product, providers
may find that packaging the cost of unclassified blood products into
another medical service may generate more payment for the products over
time.
[[Page 48783]]
Thus, for CY 2021, we propose to package the cost of unclassified
blood products reported by HCPCS code P9099 into the cost of the
associated primary procedure. We propose to change the status indicator
for HCPCS code P9099 from ``E2'' (not payable by Medicare in the OPPS)
to ``N'' (payment is packaged into other services in the OPPS). In
addition, we also seek comment on the alternative proposal to make
HCPCS code P9099 separately payable with a payment rate equivalent to
the payment rate for the lowest cost blood product, HCPCS code P9043
(Infusion, plasma protein fraction (human), 5 percent, 50 ml), with a
proposed CY 2021 payment rate of $8.02 per unit. If we were to adopt
this option as our final policy, we would also change the status
indicator for HCPCS code P9099 from ``E2'' (not payable by Medicare in
the OPPS) to ``R'' (blood and blood products, paid under OPPS).
(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.
For CY 2021, except where otherwise indicated, we propose to use
the costs derived from CY 2019 claims data to set the proposed CY 2021
payment rates for brachytherapy sources because CY 2019 is the year of
data we propose to use to set the proposed payment rates for most other
items and services that would be paid under the CY 2021 OPPS. With the
exception of the proposed payment rate for brachytherapy source C2645
(Brachytherapy planar source, palladium-103, per square millimeter), we
propose to base the payment rates for brachytherapy sources on the
geometric mean unit costs for each source, consistent with the
methodology that we propose for other items and services paid under the
OPPS, as discussed in section II.A.2. of this proposed rule. We also
propose 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 propose 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 propose 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 2021
payment rates for brachytherapy sources are included in Addendum B to
this proposed rule (which is available via the internet on the CMS
website) and 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\. Our CY 2018 claims data available
for the final CY2020 OPPS/ASC final rule with comment period, included
two claims with a geometric mean cost of HCPCS code C2645 of $1.02 per
mm\2\. In response to comments from stakeholders, we agreed with
commenters that given the limited claims data available and a new
outpatient indication for C2645, a payment rate for HCPCS code C2645
based on the geometric mean cost of 1.02 per mm\2\ may not adequately
reflect the cost of HCPCS code C2645. In the CY 2020 OPPS/ASC final
rule with comment period, we finalized our policy 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 CY 2019 payment rate of $4.69 per mm\2\ for
HCPCS code C2645 for CY 2020.
For CY 2021, we propose to continue to assign status indicator
``U'' to HCPCS code C2645 (Brachytherapy planar source, palladium-103,
per square millimeter). For CY 2020, in the absence of sufficient
claims data, we continued to establish a payment rate for C2645 at
$4.69 per mm\2\. Our CY 2019 claims data available for the proposed CY
2021 rule, included one claim with over 4,000 units of HCPCS code
C2645. The geometric mean cost of HCPCS code C2645 from this one claim
is $1.07 per mm\2\ for CY 2019. We do not believe that this one claim
is adequate to establish an APC payment rate for HCPCS code C2645 and
to discontinue our use of external data for this brachytherapy source.
Therefore, for CY 2021, we propose to continue assigning the
brachytherapy source described by HCPCS code C2645 a payment rate of
$4.69 mm\2\ for CY 2021 through use of our equitable adjustment
authority.
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 & Medicaid
Services, 7500
[[Page 48784]]
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 2021
(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 proposed rule
(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
[[Page 48785]]
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 (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 proposed 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
[[Page 48786]]
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 2021, we propose 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 list the complexity adjustments for
``J1'' and add-on code combinations for CY 2021, along with all of the
other proposed complexity adjustments, in Addendum J to this CY 2021
OPPS/ASC proposed rule (which is available via the internet on the CMS
website).
Addendum J to this proposed rule includes 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
this proposed rule also contains summary cost statistics for each of
the paired code combinations that describe a complex code combination
that would qualify for a complexity adjustment and are 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 are 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 Similar
Procedures), includes all paired code combinations that are proposed to
be reassigned to C-APC 5224 when CPT code 33208 is the primary code.
Providing the information contained in Addendum J to this proposed rule
allows 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.
(2) 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.
To address this issue and 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 finalized
excluding 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. In the CY 2020 OPPS/ASC final rule with comment period, we
finalized that payment for services assigned to a New Technology APC
procedures would be excluded from being packaged into the payment for
comprehensive observation services assigned status indicator ``J2''
when they are included on a claim with a ``J2'' service starting in CY
2020 (84 FR 61167).
(3) Additional C-APCs for CY 2021
For CY 2021 and subsequent years, we propose 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, we are not proposing
to convert any conventional
[[Page 48787]]
APCs to C-APCs in CY 2021. However, as discussed in section III.D.7, we
propose to create an additional level for Urology and Related Services
C-APCs and, as discussed in section III.D.1, we propose to create an
additional level for Neurostimulator and Related Procedures C-APCs
Table 3 lists the proposed C-APCs for CY 2021, all of which were
established in past rules. All C-APCs are displayed in Addendum J to
this proposed rule (which is available via the internet on the CMS
website). Addendum J to this proposed rule also contains all of the
data related to the C-APC payment policy methodology, including the
list of complexity adjustments and other information.
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c. Proposed 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
We propose 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, 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.
We propose 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 2021. In addition, we propose 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 propose 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 2021.
(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, 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
[[Page 48791]]
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).
For CY 2021, we propose 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 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 2021 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 2019 claims available
for this CY 2021 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), are identified by asterisks in Addendum N to this
CY 2021 OPPS/ASC proposed rule (which is available via the internet on
the CMS website) and are discussed in more detail in section II.A.1.b.
of this CY 2021 OPPS/ASC proposed rule.
For this CY 2021 OPPS/ASC proposed rule, we were able to identify
approximately 964,000 ``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 2021 geometric mean
costs for the multiple imaging composite APCs. Table 4 of this CY 2021
OPPS/ASC proposed rule lists the proposed 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 2021.
Table 4 lists the HCPCS codes that we propose would be subject to
the multiple imaging composite APC policy and their respective families
and approximate composite APC final geometric mean costs for CY 2021.
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3. Proposed 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.
[[Page 48796]]
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), the CY 2019 OPPS/ASC
final rule with comment period (83 FR 58854), and the CY 2020 OPPS/ASC
final rule with comment period (84 FR 61173). 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 2021, 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 CY 2021, we propose no changes to this policy.
We will continue to conditionally package the costs of selected newly
identified ancillary services into payment for 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 changes to the packaging policies in CY 2021.
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 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. The public comments ranged from requests to
unpackage most items and services that are unconditionally packaged
under the OPPS, including drugs and devices, to specific requests for
separate payment for a specific drug or device.
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], a non-opioid analgesic that functions as a surgical
supply, 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 we
would continue to explore and evaluate packaging policies under the
OPPS and consider these policies in future rulemaking.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 58855
through 58860), we finalized a 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 due to decreased utilization in the ASC setting.
For the CY 2020 OPPS/ASC proposed rule (84 FR 39423 through 39427),
as required by section 1833(t)(22)(A)(i) of the Act, as added by
section 6082(a) of the SUPPORT Act, we reviewed 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. 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. For the CY
2020 OPPS/ASC proposed rule (84 FR 39423 through 39427), 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. In the CY 2020 OPPS/ASC final rule with comment period (84
FR 61173 through 61180), after reviewing data from stakeholders and
Medicare claims data, we did not find compelling
[[Page 48797]]
evidence to suggest that revisions to our OPPS payment policies for
non-opioid pain management alternatives were necessary for CY 2020. We
finalized our proposal to continue to unpackage and pay separately at
ASP+6 percent for the cost of non-opioid pain management drugs that
function as surgical supplies when furnished in the ASC setting for CY
2020. Under this policy, the only drug that meets these criteria is
Exparel.
(2) Evaluation and CY 2021 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.
As noted in the background section above, we conducted an
evaluation to determine whether there are payment incentives for using
opioids instead of non-opioid alternatives in the CY 2020 OPPS/ASC
final rule with comment period (84 FR 61176 through 61180). The results
of our review and evaluation of our claims data did not provide
evidence to indicate that the OPPS packaging policy had the unintended
consequence of discouraging the use of non-opioid treatments for
postsurgical pain management in the hospital outpatient department.
Higher utilization may be a potential indicator that the packaged
payment is not causing an access to care issue and that the payment
rate for the primary procedure adequately reflects the cost of the
drug. Our updated review of claims data showed a continued decline in
the utilization of Exparel[supreg] in the ASC setting, which supported
our proposal to continue paying separately for Exparel[supreg] in the
ASC setting. Decreased utilization could potentially indicate that the
packaging policy is discouraging use of that treatment and that
providers are choosing less expensive treatments. However, it is
difficult to attribute causality of changes in utilization to Medicare
packaging payment policy only. We believe that unpackaging and paying
separately for Exparel addresses decreased utilization because it
eliminates any potential Medicare payment disincentive for the use of
this non-opioid alternative, rather than prescription opioids.
We believe we fulfilled the statutory requirement to review
payments for opioids and evidence-based non-opioid alternatives to
ensure that there are not financial incentives to use opioids instead
of non-opioid alternatives in CY 2020 OPPS/ASC rulemaking. We are
committed to evaluating our current policies to adjust payment
methodologies, if necessary, in order to ensure appropriate access for
beneficiaries amid the current opioid epidemic. However, we do not
believe conducting a similar CY 2021 review would yield significantly
different outcomes or new evidence that would prompt us to change our
payment policies under the OPPS or ASC payment system.
Therefore, for CY 2021, we propose 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 2021.
c. Clinical Diagnostic Laboratory Tests Packaging Policy
(1) Background
Prior to CY 2014, clinical diagnostic laboratory tests were
excluded from payment under the hospital OPPS because they were paid
separately under the Clinical Laboratory Fee Schedule (CLFS). Section
1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the
hospital outpatient services that are paid under the OPPS. Under this
authority, the Secretary excluded from the OPPS those services that are
paid under fee schedules or other payment systems. Because laboratory
services are paid separately under the CLFS, laboratory tests were
excluded from separate payment under the OPPS. We codified this policy
at 42 CFR 419.22(l).
However, in CY 2014, we revised the categories of packaged items
and services under the OPPS to include certain laboratory tests. We
stated that certain laboratory tests, similar to other covered
outpatient services that are packaged under the OPPS, are typically
integral, ancillary, supportive, dependent, or adjunctive to a primary
hospital outpatient service and should be packaged under the hospital
OPPS. We stated that laboratory tests and their results support
clinical decision making for a broad spectrum of primary services
provided in the hospital outpatient setting, including surgery and
diagnostic evaluations (78 FR 74939). Consequently, we finalized the
policy to package payment for most laboratory tests in the OPPS when
they are integral, ancillary, supportive, dependent, or adjunctive to a
primary service or services provided in the hospital outpatient setting
(78 FR 74939 through 74942 and 42 CFR 419.2(b)(17)). In the same final
rule, we clarified that certain laboratory tests would be excluded from
packaging. Specifically, we stated that laboratory tests would be paid
separately under the CLFS when the laboratory test is the only service
provided to a beneficiary or when a laboratory test is conducted on the
same date of service as the primary service but is ordered for a
different purpose than the primary service by a practitioner different
than the practitioner who ordered the primary service or when the
laboratory test is a molecular pathology test (78 FR 74942). As
explained in the CY 2014 OPPS/ASC final rule, we excluded molecular
pathology tests from packaging because we believe these tests are
relatively new and may have a different pattern of clinical use, which
may make them generally less tied to a primary service in the hospital
outpatient setting than the more common and routine laboratory tests
that we package (78 FR 74939). Based on these changes, we revised the
regulation text at Sec. [thinsp]419.2(b)
[[Page 48798]]
and Sec. [thinsp]419.22(l) to reflect this laboratory test packaging
policy.
In CY 2016, we made some modifications to this policy (80 FR 70348
through 70350). First, we clarified that all molecular pathology tests
would be excluded from our packaging policy, including any new codes
that also describe molecular pathology tests. In the CY 2014 OPPS/ASC
final rule, we stated that only those molecular pathology codes
described by CPT codes in the ranges of 81200 through 81383, 81400
through 81408, and 81479 were excluded from OPPS packaging (78 FR 74939
through 74942). However, in 2016, we expanded this policy to include
not only the original code range but also all new molecular pathology
test codes (80 FR 70348). Secondly, we excluded preventive laboratory
tests from OPPS packaging and provided that they would be paid
separately under the CLFS. Laboratory tests that are considered
preventive are listed in Section 1.2, Chapter 18 of the Medicare Claims
Processing Manual (Pub. 100-04). As stated in the CY 2016 OPPS/ASC
final rule, we make an exception to conditional packaging of ancillary
services for ancillary services that are also preventive services (80
FR 70348). For consistency, we excluded from OPPS packaging those
laboratory tests that are classified as preventive services. In
addition, we modified our conditional packaging policy so that
laboratory tests provided during the same outpatient stay (rather than
specifically provided on a same date of service as the primary service)
are considered as integral, ancillary, supportive, dependent, or
adjunctive to a primary service or services, except when a laboratory
test is ordered for a different diagnosis and by a different
practitioner than the practitioner who ordered the other hospital
outpatient services. We explained in the CY 2016 OPPS/ASC final rule
that this modification did not affect our policy to provide separate
payment for laboratory tests: (1) If they are the only services
furnished to an outpatient and are the only services on a claim and
have a payment rate on the CLFS; or (2) if they are ordered for a
different diagnosis than another hospital outpatient service by a
practitioner different than the practitioner who ordered the other
hospital outpatient service (80 FR 70349 through 70350).
In CY 2017, we modified the policy to remove the ``unrelated''
laboratory test exclusion and to expand the laboratory test packaging
exclusion to apply to laboratory tests designated as advanced
diagnostic laboratory tests (ADLTs) under the CLFS. We clarified that
the exception would only apply to those ADLTs that meet the criteria of
section 1834A(d)(5)(A) of the Act, which are defined as tests that
provide an analysis of multiple biomarkers of DNA, RNA, or proteins
combined with a unique algorithm to yield a single patient-specific
result (81 FR 79592-79594).
(2) Current Categories of Clinical Diagnostic Laboratory Tests Excluded
From OPPS Packaging
Under our current policy, certain clinical diagnostic laboratory
tests (CDLTs) that are listed on the CLFS are packaged as integral,
ancillary, supportive, dependent, or adjunctive to the primary service
or services provided in the hospital outpatient setting during the same
outpatient encounter and billed on the same claim. While we package
most CDLTs under the OPPS, when a CDLT is listed on the CLFS and meets
one of the following four criteria, we do not pay for the test under
the OPPS, but rather, we pay for it under the CLFS when it is: (1) The
only service provided to a beneficiary on a claim; (2) considered a
preventive service; (3) a molecular pathology test; or (4) an advanced
diagnostic laboratory test (ADLT) that meets the criteria of section
1834A(d)(5)(A) of the Act. Generally, when laboratory tests are not
packaged under the OPPS and are listed on the CLFS, they are paid under
the CLFS instead of the OPPS.
(3) Proposed New Category of Laboratory Tests Excluded From OPPS
Packaging
(a) Background on Protein-Based MAAAs
As part of recent rulemaking cycles, stakeholders have suggested
that some protein-based Multianalyte Assays with Algorithmic Analyses
(MAAAs) may have a pattern of clinical use that makes them relatively
unconnected to the primary hospital outpatient service (84 FR 61439).
In the CY 2018 OPPS/ASC final rule (82 FR 59299), we stated that
stakeholders indicated that certain protein-based MAAAs, specifically
those described by CPT codes 81490, 81503, 81535, 81536, 81538, and
81539, are generally not performed in the HOPD setting and have similar
clinical patterns of use as the DNA and RNA-based MAAA tests that are
assigned to status indicator ``A'' under the OPPS and are paid
separately under the CLFS. Notably, all of the tests described by these
CPT codes (with the exception of CPT code 81490, which we discuss
below) are cancer-related protein-based MAAAs. In the same final rule,
stakeholders suggested that, based on the June 23, 2016 CLFS final rule
entitled ``Medicare Program; Medicare Clinical Diagnostic Laboratory
Tests Payment System,'' in which CMS defined an ADLT under section
1834A(d)(5)(A) of the Act to include DNA, RNA, and protein-based tests,
they believe that the reference to ``protein-based tests'' in the
definition applies equally to the tests they identified, that is,
protein-based MAAAs. Consequently, the stakeholders believed that
protein-based MAAAs should be excluded from OPPS packaging and paid
separately under the CLFS. We note that one of the protein-based MAAAs
previously requested by stakeholders to be excluded from OPPS packaging
policy is CPT code 81538 (Oncology (lung), mass spectrometric 8-protein
signature, including amyloid a, utilizing serum, prognostic and
predictive algorithm reported as good versus poor overall survival),
which has been designated as an ADLT under section 1834A(d)(5)(A) of
the Act as of December 21, 2018. Therefore, CPT code 81538 is currently
excluded from the OPPS packaging policy and paid under the CLFS instead
of the OPPS when it also meets the laboratory DOS requirements.
(b) CY 2021 Proposal for Cancer-Related Protein-Based MAAAs
Since publishing the CY 2020 OPPS/ASC final rule, we have continued
to consider previous stakeholder requests to exclude some protein-based
MAAAs from the OPPS packaging policy. After further review of this
issue, we believe that cancer-related protein-based MAAAs, in
particular, may be relatively unconnected to the primary hospital
outpatient service during which the specimen was collected from the
patient. Similar to molecular pathology tests, which are currently
excluded from the OPPS packaging policy, cancer-related protein-based
MAAAs appear to have a different pattern of clinical use, which may
make them generally less tied to the primary service in the hospital
outpatient setting than the more common and routine laboratory tests
that are packaged.
As we noted above, commenters to the CY 2018 OPPS/ASC final rule
identified specific cancer-related protein-based MAAAs as tests that
are generally not performed in the HOPD setting (82 FR 59299). In fact,
those tests identified by commenters are used to guide future surgical
procedures and chemotherapeutic interventions. Treatments that are
based on the results of cancer-related protein-based MAAAs are
typically furnished after the patient is no longer in the hospital, in
which
[[Page 48799]]
case they are not tied to the same hospital outpatient encounter during
which the specimen was collected.
For these reasons, we propose to exclude cancer-related protein-
based MAAAs from the OPPS packaging policy and pay for them separately
under the CLFS.
The AMA CPT 2020 manual currently describes MAAAs, in part, as
``procedures that utilize multiple results derived from panels of
analyses of various types, including molecular pathology assays,
fluorescent in situ hybridization assays, and non-nucleic acid based
assays (for example, proteins, polypeptides, lipids, carbohydrates).''
\1\ The code descriptors of MAAAs include several specifics, including
but not limited to disease type (for example, oncology, autoimmune,
tissue rejection), and material(s) analyzed (for example, DNA, RNA,
protein, antibody). As the AMA CPT 2020 manual describes a MAAA, and
the code descriptor of each MAAA distinguishes MAAAs that are cancer-
related assays from those that test for other disease types, the AMA
CPT manual is a useful tool to identify cancer-related MAAAs that are
``protein-based''. Accordingly, using the AMA CPT 2020 manual criteria
to identify a MAAA that is cancer-related, and, of those tests,
identifying the ones whose analytes test proteins, we have determined
there are currently six cancer-related protein-based MAAAs: CPT codes
81500, 81503, 81535, 81536, 81538 and 81539. As discussed previously in
this section, CPT code 81538 has been designated as an ADLT under
section 1834A(d)(5)(A) of the Act as of December 21, 2018 and
therefore, is already paid under the CLFS instead of the OPPS when it
meets the laboratory DOS requirements. As such, we propose to assign
status indicator ``A'' (``Not paid under OPPS. Paid by MACs under a fee
schedule or payment system other than OPPS'') to cancer-related
protein-based MAAAs as described by CPT codes 81500, 81503, 81535,
81536, and 81539. We would apply this policy to cancer-related protein-
based MAAAs that do not currently exist, but that are developed in the
future.
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\1\ Current Procedure Terminology (CPT[supreg]) page 586,
copyright 2020 American Medical Association. All Rights Reserved.
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We note that commenters to the CY 2018 OPPS/ASC final rule also
identified CPT code 81490 as a protein-based MAAA that should be
excluded from the OPPS packaging policy and paid outside of the OPPS.
However, the results for the test described by CPT code 81490 are used
to determine disease activity in rheumatoid arthritis patients, guide
current therapy to reduce further joint damage, and may be tied to the
primary hospital outpatient service, that is, the hospital outpatient
encounter during which the specimen was collected. Therefore, we
believe that payment for CPT code 81490 remains appropriately packaged
under the OPPS.
We refer readers to section XVIII. of this proposed rule regarding
our proposed revision to the laboratory date of service policy for
cancer-related protein-based MAAAs.
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 2020 OPPS/
ASC final rule with comment period (84 FR 61180 through 61182), we
applied this policy and calculated the relative payment weights for
each APC for CY 2020 that were shown in Addenda A 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 2021, as we did
for CY 2020, we propose to continue to apply the policy established in
CY 2013 and calculate relative payment weights for each APC for CY 2021
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 2021, as we did for CY 2020, we
propose 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
2021, as we did for CY 2020, we propose 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 note that in the CY 2019 OPPS/ASC final rule with comment period
(83 FR 59004 through 59015) and the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61365 through 61369), 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. 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 result from the change in payments for
these clinic visits are not 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 note that the volume control method
for clinic visit services furnished by non-excepted off-campus PBDs is
subject to litigation. For a full discussion of this policy and the
litigation, we refer readers to the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61142).
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
[[Page 48800]]
2021 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 propose to compare
the estimated aggregate weight using the CY 2020 scaled relative
payment weights to the estimated aggregate weight using the proposed CY
2021 unscaled relative payment weights.
For CY 2020, we multiplied the CY 2020 scaled APC relative payment
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2019 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 2021, we
propose to apply the same process using the estimated CY 2021 unscaled
relative payment weights rather than scaled relative payment weights.
We propose to calculate the weight scalar by dividing the CY 2020
estimated aggregate weight by the unscaled CY 2021 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 2021 OPPS
proposed rule link and open the claims accounting document link at the
bottom of the page.
We propose to compare the estimated unscaled relative payment
weights in CY 2021 to the estimated total relative payment weights in
CY 2020 using CY 2019 claims data, holding all other components of the
payment system constant to isolate changes in total weight. Based on
this comparison, we propose to adjust the calculated CY 2021 unscaled
relative payment weights for purposes of budget neutrality. We propose
to adjust the estimated CY 2021 unscaled relative payment weights by
multiplying them by a proposed weight scalar of 1.4443 to ensure that
the proposed CY 2021 relative payment weights are scaled to be budget
neutral. The proposed CY 2021 relative payment weights listed in
Addenda A and B to this proposed rule (which are available via the
internet on the CMS website) are scaled and incorporate the
recalibration adjustments discussed in sections II.A.1. and II.A.2. of
this 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 proposed rule) is
included in the budget neutrality calculations for the CY 2021 OPPS.
B. Proposed 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 2021 IPPS/LTCH PPS
proposed rule (85 FR 32738), consistent with current law, based on IHS
Global, Inc.'s fourth quarter 2019 forecast of the FY 2021 market
basket increase, the proposed FY 2021 IPPS market basket update was 3.0
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
2021.
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 2021 IPPS/LTCH PPS proposed rule (85 FR 32739), the
proposed MFP adjustment for FY 2021 was 0.4 percentage point.
Therefore, we propose that the MFP adjustment for the CY 2021 OPPS
is 0.4 percentage point. We also propose that if more recent data
become subsequently available after the publication of this proposed
rule (for example, a more recent estimate of the market basket increase
and/or the MFP adjustment), we will use such updated data, if
appropriate, to determine the CY 2021 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 the CY 2021 OPPS/ASC final rule.
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 propose for CY 2021 an OPD fee schedule increase factor of
2.6 percent for the CY 2021 OPPS (which is the proposed estimate of the
hospital inpatient market basket percentage increase of 3.0 percent,
less the proposed 0.4 percentage point MFP adjustment).
We propose 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 the proposed rule.
The adjustment described in section 1833(t)(3)(F)(ii) was required
only through 2019. The requirement in section 1833(t)(3)(F)(i) of the
Act that we reduce the OPD fee schedule increase factor by the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II),
however, applies for 2012 and subsequent years, and thus, continues to
apply. In the CY 2020 OPPS/ASC final rule with comment period, we
inadvertently did not amend the regulation at 42 CFR
419.32(b)(1)(iv)(B) to reflect that the adjustment required by section
1833(t)(3)(F)(i) of the Act is the only adjustment under section
1833(t)(3)(F) that applies in CY 2020 and subsequent years.
Accordingly, we propose to
[[Page 48801]]
amend our regulation at 42 CFR 419.32(b)(1)(iv)(B) by adding a new
paragraph (b)(1)(iv)(B)(11) to provide that, for CY 2020 and subsequent
years, we reduce the OPD fee schedule increase factor by the MFP
adjustment as determined by CMS.
To set the OPPS conversion factor for CY 2021, we propose to
increase the CY 2020 conversion factor of $80.793 by 2.6 percent. In
accordance with section 1833(t)(9)(B) of the Act, we propose further to
adjust the conversion factor for CY 2021 to ensure that any revisions
made to the wage index and rural adjustment were made on a budget
neutral basis. We propose to calculate an overall budget neutrality
factor of 1.0017 for wage index changes. This adjustment was comprised
of a 1.0027 proposed budget neutrality adjustment, using our standard
calculation, of comparing proposed total estimated payments from our
simulation model using the proposed FY 2021 IPPS wage indexes to those
payments using the FY 2020 IPPS wage indexes, as adopted on a calendar
year basis for the OPPS as well as a 0.9990 proposed budget neutrality
adjustment for the proposed CY 2021 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 2021 IPPS wage
index policy (85 FR 32706). We believe it is appropriate to ensure that
this proposed wage index transition policy (that is, the proposed CY
2021 5 percent cap on wage index decreases) does not increase estimated
aggregate payments under the OPPS beyond the payments that would be
made without this transition policy. We propose to calculate this
budget neutrality adjustment by comparing total estimated OPPS payments
using the FY 2021 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. These two proposed wage index budget neutrality
adjustments would maintain budget neutrality for the proposed CY 2021
OPPS wage index (which, as we discuss in section II.C of the proposed
rule, would use the FY 2021 IPPS post-reclassified wage index and any
adjustments, including without limitation any adjustments finalized
under the IPPS related to the proposed adoption of the revised OMB
delineations).
For the CY 2021 OPPS, we are maintaining the current rural
adjustment policy, as discussed in section II.E. of this proposed rule.
Therefore, the proposed budget neutrality factor for the rural
adjustment is 1.0000.
We propose 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 this
proposed rule. We propose to calculate a CY 2021 budget neutrality
adjustment factor for the cancer hospital payment adjustment by
comparing estimated total CY 2021 payments under section 1833(t) of the
Act, including the proposed CY 2021 cancer hospital payment adjustment,
to estimated CY 2021 total payments using the CY 2020 final cancer
hospital payment adjustment, as required under section 1833(t)(18)(B)
of the Act. The proposed CY 2021 estimated payments applying the
proposed CY 2021 cancer hospital payment adjustment were the same as
estimated payments applying the CY 2020 final cancer hospital payment
adjustment. Therefore, we propose to apply a budget neutrality
adjustment factor of 1.0000 to the conversion factor for the cancer
hospital payment adjustment. In accordance with section 16002(b) of the
21st Century Cures Act, 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 this CY 2021 OPPS/ASC proposed rule, we estimated that proposed
pass-through spending for drugs, biologicals, and devices for CY 2021
would equal approximately $783.2 million, which represented 0.93
percent of total projected CY 2021 OPPS spending. Therefore, the
proposed conversion factor would be adjusted by the difference between
the 0.88 percent estimate of pass-through spending for CY 2020 and the
0.93 percent estimate of proposed pass-through spending for CY 2021,
resulting in a proposed decrease to the conversion factor for CY 2021
of 0.05 percent.
We also estimate a 0.85 percent upward adjustment to nondrug OPPS
payment rates as a result of our payment proposal for separately
payable nonpass-through drugs purchased under the 340B Program.
Applying the proposed payment policy for drugs purchased under the 340B
Program, as described in section V.B.6. of this proposed rule, results
in an estimated reduction of approximately $427 million in separately
paid OPPS drug payments. To ensure budget neutrality under the OPPS
after applying this proposed payment methodology for drugs purchased
under the 340B Program, we propose to apply an offset of approximately
$427 million to the OPPS conversion factor, which would result in an
adjustment of 1.0085 to the OPPS conversion factor.
Proposed estimated payments for outliers would remain at 1.0
percent of total OPPS payments for CY 2021. We estimate for the
proposed rule that outlier payments would be 1.01 percent of total OPPS
payments in CY 2020; the 1.00 percent for proposed outlier payments in
CY 2021 would constitute a 0.01 percent decrease in payment in CY 2021
relative to CY 2020.
For this CY 2021 OPPS/ASC proposed rule, we also propose 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 propose to make all other adjustments discussed above, but
use a reduced OPD fee schedule update factor of 0.6 percent (that is,
the proposed OPD fee schedule increase factor of 2.6 percent further
reduced by 2.0 percentage points). This would result in a proposed
reduced conversion factor for CY 2021 of $82.065 for hospitals that
fail to meet the Hospital OQR Program requirements (a difference of -
1.632 in the conversion factor relative to hospitals that met the
requirements).
In summary, for CY 2021, we propose 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, CY 2021,
and subsequent years to satisfy the statutory requirements of section
1833(t)(3)(F) of the Act. We propose to use a reduced conversion factor
of $82.065 in the calculation of payments for hospitals that fail to
meet the Hospital OQR Program requirements (a difference of -1.632 in
the conversion factor relative to hospitals that met the requirements).
For CY 2021, we propose to use a conversion factor of $83.697 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 2.6 percent for CY 2021, the required proposed wage index
budget neutrality adjustment of approximately 1.0017, the proposed
cancer hospital payment adjustment of 1.0000, and the proposed
adjustment of 0.05 percentage point of projected OPPS spending for the
difference in pass-through spending that resulted in a
[[Page 48802]]
proposed conversion factor for CY 2021 of $83.697.
C. Proposed 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 proposed rule.
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). We propose to continue this policy for
the CY 2021 OPPS. We refer readers to section II.H. of this proposed
rule for a description and an example of how the wage index for a
particular hospital is used to determine payment for the hospital.
As discussed in the claims accounting narrative included with the
supporting documentation for this proposed rule (which is available via
the internet on the CMS website), for estimating APC costs, we would
standardize 60 percent of estimated claims costs for geographic area
wage variation using the same FY 2021 pre-reclassified wage index that
we would use 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 CY
2021, we propose 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. We refer readers to the FY 2011 through
FY 2020 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; for FY 2019, 83 FR 41380; and for FY 2020, 84
FR 42312.
In addition to the changes required by the Affordable Care Act, we
note that the proposed FY 2021 IPPS wage indexes continue to reflect a
number of adjustments implemented in past years, including, but not
limited to, reclassification of hospitals to different geographic
areas, the rural floor provisions, an adjustment for occupational mix,
an adjustment to the wage index based on commuting patterns of
employees (the out-migration adjustment), and an adjustment to the wage
index for certain low wage index hospitals to help address wage index
disparities between low and high wage index hospitals. We refer readers
to the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32695 through 32734)
for a detailed discussion of all proposed changes to the FY 2021 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 2020 IPPS/LTCH PPS final rule (84 FR 42300), 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
provided detailed information on the update to the statistical areas
since July 15, 2015, and were based on the application of the 2010
Standards for Delineating Metropolitan and Micropolitan Statistical
Areas to Census Bureau population estimates for July 1, 2014
[[Page 48803]]
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.
On April 10, 2018 OMB issued OMB Bulletin No. 18-03 which
superseded the August 15, 2017 OMB Bulletin No. 17-01. On September 14,
2018, OMB issued OMB Bulletin No. 18-04 which superseded the April 10,
2018 OMB Bulletin No. 18-03. Typically, interim OMB bulletins (those
issued between decennial censuses) have only contained minor
modifications to labor market delineations. However, as we stated in
the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32696 through 32697),
the April 10, 2018 OMB Bulletin No. 18-03 and the September 14, 2018
OMB Bulletin No. 18-04 included more modifications to the labor market
areas than are typical for OMB bulletins issued between decennial
censuses, including some material modifications that have a number of
downstream effects, such as IPPS hospital reclassification changes.
These bulletins established revised delineations for Metropolitan
Statistical Areas, Micropolitan Statistical Areas, and Combined
Statistical Areas, and provided guidance on the use of the delineations
of these statistical areas. A copy of OMB Bulletin No. 18-04 may be
obtained at https://www.whitehouse.gov/wpcontent/uploads/2018/09/Bulletin-18-04.pdf. According to OMB, ``[t]his bulletin provides the
delineations of all Metropolitan Statistical Areas, Metropolitan
Divisions, Micropolitan Statistical Areas, Combined Statistical Areas,
and New England City and Town Areas in the United States and Puerto
Rico based on the standards published on June 28, 2010 (75 FR 37246),
and Census Bureau data.''
As noted previously, while OMB Bulletin No. 18-04 is not based on
new census data, it includes some material changes to the OMB
statistical area delineations. Specifically, under the revised OMB
delineations, there would be some new CBSAs, urban counties that would
become rural, rural counties that would become urban, and some existing
CBSAs would be split apart. In addition, we stated in the FY 2021 IPPS/
LTCH PPS proposed rule that the revised OMB delineations would affect
various hospital reclassifications, the outmigration adjustment
(established by section 505 of Pub. L. 108-173), and treatment of
hospitals located in certain rural counties (that is, ``Lugar''
hospitals) under section 1886(d)(8)(B) of the Act. We refer readers to
the FY 2021 IPPS/LTCH PPS proposed rule for a complete discussion of
the revised OMB delineations we propose to adopt under the IPPS and the
effects of these revisions on the FY 2021 IPPS wage indexes (85 FR
32696 through 32707, 32717 through 32728). We stated in the FY 2021
IPPS/LTCH PPS proposed rule that we believe using the revised
delineations based on OMB Bulletin No. 18-04 would increase the
integrity of the IPPS wage index system by creating a more accurate
representation of geographic variations in wage levels. Therefore, in
the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to implement the
revised OMB delineations as described in the September 14, 2018 OMB
Bulletin No. 18-04, effective October 1, 2020 beginning with the FY
2021 IPPS wage index. In addition, in the FY 2021 IPPS/LTCH PPS
proposed rule, we proposed to apply a 5 percent cap for FY 2021 on any
decrease in a hospital's final wage index from the hospital's final
wage index for FY 2020 as a proposed transition wage index to help
mitigate any significant negative impacts of adopting the revised OMB
delineations (85 FR 32706 through 32707).
As further discussed below, in this CY 2021 OPPS proposed rule, we
propose to adopt these updated OMB delineations and related IPPS wage
index adjustments to calculate the CY 2021 OPPS wage indexes. Similar
to our discussion in the FY 2021 IPPS/LTCH PPS proposed rule, we
believe using the revised delineations based on OMB Bulletin No. 18-04
would increase the integrity of the OPPS wage index system by creating
a more accurate representation of geographic variations in wage levels.
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 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 2021, under the OPPS, we are continuing to use
only the FIPS county codes for purposes of crosswalking counties to
CBSAs.
We propose to use the FY 2021 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 2021. Therefore, any adjustments for the FY
2021 IPPS post-reclassified wage index, including, but not limited to,
any adjustments that we may finalize related to the proposed adoption
of the revised OMB delineations (such as a cap on wage index decreases
and revisions to hospital reclassifications), would be reflected in the
final CY 2021 OPPS wage index beginning on January 1, 2021. (We refer
readers to the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32695 through
32734) and the proposed FY 2021 hospital wage index files posted on the
CMS website.) With regard to budget neutrality for the CY 2021 OPPS
wage index, we refer readers to section II.B. of this CY 2021 OPPS/ASC
proposed rule. We continue to believe that using the IPPS post-
reclassified 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.
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 was
paid under the IPPS, based on its geographic location and any
applicable wage index adjustments. In this CY 2021 OPPS/ASC proposed
rule, we propose to continue this policy for CY 2021, and are including
a brief summary of the major proposed FY
[[Page 48804]]
2021 IPPS wage index policies and adjustments that we propose to apply
to these hospitals under the OPPS for CY 2021, which we have summarized
below. We refer readers to the FY 2021 IPPS/LTCH PPS proposed rule (85
FR 32695 through 32734) for a detailed discussion of the proposed
changes to the FY 2021 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 2021, we propose to continue our policy of
allowing non-IPPS hospitals paid under the OPPS to qualify for the
outmigration adjustment if they are located in a section 505 out-
migration county (section 505 of the MMA). Furthermore, the wage index
that would apply for CY 2021 to non-IPPS hospitals paid under the OPPS
would continue to include the rural floor adjustment and adjustments to
the wage index finalized in the FY 2020 IPPS/LTCH PPS final rule to
address wage index disparities (84 FR 42325 through 42336). In
addition, we propose that the wage index that would apply to non-IPPS
hospitals paid under the OPPS would include any adjustments we may
finalize for the FY 2021 IPPS post-reclassified wage index related to
the adoption of the revised OMB delineations, as discussed earlier in
this proposed rule.
For CMHCs, for CY 2021, we propose 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 propose that the wage index
that would apply to CMHCs would include any adjustments we may finalize
for the FY 2021 IPPS post-reclassified wage index related to the
adoption of the revised OMB delineations, as discussed earlier in this
proposed rule. In addition, we propose that the wage index that would
apply to CMHCs for CY 2021 would continue to include the rural floor
adjustment and adjustments to the wage index finalized in the FY 2020
IPPS/LTCH PPS final rule to address wage index disparities. Also, we
propose that the wage index that would apply to CMHCs would not include
the outmigration adjustment because that adjustment only applies to
hospitals.
Table 4 associated with the FY 2021 IPPS/LTCH PPS proposed rule
(available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index)
identifies counties that would be eligible for the out-migration
adjustment. Table 2 associated with the FY 2021 IPPS/LTCH PPS proposed
rule (available for download via the website above) identifies IPPS
hospitals that would receive the out-migration adjustment for FY 2021.
We are including the outmigration adjustment information from Table 2
associated with the FY 2021 IPPS/LTCH PPS proposed rule as Addendum L
to this proposed rule with the addition of non-IPPS hospitals that
would receive the section 505 outmigration adjustment under this CY
2021 OPPS/ASC proposed rule. Addendum L is available via the internet
on the CMS website. We refer readers to the CMS website for the OPPS
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index. At this link, readers will find a link to
the proposed FY 2021 IPPS wage index tables and Addendum L.
D. Proposed Statewide Average Default Cost-to-Charge Ratios (CCRs)
In addition to using CCRs to estimate costs from charges on claims
for ratesetting, we use 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), we use
the statewide average default CCRs to determine the payments mentioned
earlier if it is not possible 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. We also use 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 refer readers to the CY 2021
OPPS proposed rule Claims Accounting Narrative that is posted on our
website. We propose to update the default ratios for CY 2021 using the
most recent cost report data. We will update these ratios in the final
rule with comment period if more recent cost report data are available.
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 with comment period. 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 our 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. Proposed Adjustment for Rural Sole Community Hospitals (SCHs) and
Essential Access Community Hospitals (EACHs) Under Section
1833(t)(13)(B) of the Act for CY 2021
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
[[Page 48805]]
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.
For CY 2021, we propose 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.
F. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2021
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), the 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). For CY 2020, the
target PCR was 0.89, as discussed in the CY 2020 OPPS/ASC final rule
with comment period (83 FR 61190 through 61192).
[[Page 48806]]
2. Proposed Policy for CY 2021
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 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.
We propose 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 are not proposing an additional reduction beyond the 1.0
percentage point reduction required by section 16002(b) for CY 2021. To
calculate the proposed CY 2021 target PCR, we are using the same
extract of cost report data from HCRIS, as discussed in section II.A.
of this CY 2021 OPPS/ASC proposed rule and proposed rule, used to
estimate costs for the CY 2021 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 2019 claims
data that we used to model the impact of the proposed CY 2021 APC
relative payment weights (3,527 hospitals) because it is appropriate to
use the same set of hospitals that are being used to calibrate the
modeled CY 2021 OPPS. The cost report data for the hospitals in this
dataset were from cost report periods with fiscal year ends ranging
from 2014 to 2019. 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 14 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 3,464
hospitals with cost report data.
Using this smaller dataset of cost report data, we estimate 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 propose 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.
Table 5 shows the estimated percentage increase in OPPS payments to
each cancer hospital for CY 2021, due to the cancer hospital payment
adjustment policy. The actual amount of the CY 2021 cancer hospital
payment adjustment for each cancer hospital will be determined at cost
report settlement and will depend on each hospital's CY 2021 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 48807]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.011
G. Proposed 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 2020, 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 $5,075 (the fixed-dollar
amount threshold) (84 FR 61192 through 61194). 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 2019 OPPS payments, using CY 2019 claims available for this CY
2021 OPPS/ASC proposed rule is approximately 1.0 percent of the total
aggregated OPPS payments. Therefore, for CY 2019, 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 2021 OPPS/ASC
proposed rule, we estimate that we paid approximately 1.01 percent of
the total aggregated OPPS payments in outliers for CY 2019.
For this CY 2021 OPPS/ASC proposed rule, using CY 2019 claims data
and CY 2020 payment rates, we estimated that the aggregate outlier
payments for CY 2020 would be approximately 1.01 percent of the total
CY 2020 OPPS payments. We provided estimated CY 2021 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 2021
For CY 2021, we propose to continue our policy of estimating
outlier payments to be 1.0 percent of the estimated aggregate total
payments under the OPPS. We propose that a portion of that 1.0 percent,
an amount equal to less than 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
[[Page 48808]]
proposed CMHC outlier threshold as a proportion of total estimated OPPS
outlier payments. As discussed in section VIII.C. of this CY 2021 OPPS/
ASC proposed rule, 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 this CY 2021 OPPS/ASC proposed rule and proposed
rule.
To ensure that the estimated CY 2021 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 $5,300.
We calculated the proposed fixed-dollar threshold of $5,300 using
the standard methodology most recently used for CY 2020 (84 FR 61192
through 61194). 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 2021 hospital outlier payments for the
proposed rule, we inflated the charges on the CY 2019 claims using the
same inflation factor of 1.131096 that we used to estimate the IPPS
fixed-dollar outlier threshold for the FY 2021 IPPS/LTCH PPS proposed
rule (85 FR 32098). We used an inflation factor of 1.06353 to estimate
CY 2020 charges from the CY 2019 charges reported on CY 2019 claims.
The methodology for determining this charge inflation factor is
discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42044 through
42701). 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 propose to apply the same CCR
inflation adjustment factor that we propose to apply for the FY 2021
IPPS outlier calculation to the CCRs used to simulate the proposed CY
2021 OPPS outlier payments to determine the fixed-dollar threshold.
Specifically, for CY 2021, we propose to apply an adjustment factor of
0.975271 to the CCRs that were in the April 2020 OPSF to trend them
forward from CY 2020 to CY 2021. The methodology for calculating the
proposed adjustment is discussed in the FY 2021 IPPS/LTCH PPS proposed
rule (85 FR 32098).
To model hospital outlier payments for the proposed rule, we
applied the overall CCRs from the April 2020 OPSF after adjustment
(using the proposed CCR inflation adjustment factor of 0.976271 to
approximate CY 2021 CCRs) to charges on CY 2019 claims that were
adjusted (using the proposed charge inflation factor of 1.131096 to
approximate CY 2021 charges). We simulated aggregated CY 2021 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 2021 OPPS payments. We
estimated that a proposed fixed-dollar threshold of $5,300, 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 refer readers to section
XIV. of this proposed rule.
H. Proposed 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 2021 OPPS/ASC proposed
rule, 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 proposed rule and
the relative payment weight determined under section II.A. of this
proposed rule. Therefore, the proposed national unadjusted payment rate
for most APCs contained in Addendum A to this proposed rule (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 proposed rule (which is available via the internet on the CMS
website) was calculated by multiplying the proposed CY 2021 scaled
weight for the APC by the CY 2021 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
[[Page 48809]]
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 proposed rule.
Below we demonstrate 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.
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 the proposed
rule (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 0.9805
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 2021 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, for the CY 2021 OPPS wage index, we propose to
adopt the updated OMB delineations based on OMB Bulletin No. 18-04 and
any related IPPS wage index adjustments that may be finalized in the FY
2021 IPPS/LTCH PPS final rule, as discussed in section II.C. of this
proposed rule. The wage index values assigned to each area would
reflect the geographic statistical areas (which are based upon OMB
standards) to which hospitals are assigned for FY 2021 under the IPPS,
reclassifications through the Medicare Geographic Classification Review
Board (MGCRB), section 1886(d)(8)(B) ``Lugar'' hospitals, and
reclassifications under section 1886(d)(8)(E) of the Act, as
implemented in Sec. 412.103 of the regulations. We also propose to
continue to apply for the CY 2021 OPPS wage index any other adjustments
for the FY 2021 IPPS post-reclassified wage index, including, but not
limited to, the rural floor adjustment, a wage index floor of 1.00 in
frontier states, in accordance with section 10324 of the Affordable
Care Act of 2010, and an adjustment to the wage index for certain low
wage index hospitals. For further discussion of the wage index we
propose to apply for the CY 2021 OPPS, we refer readers to section
II.C. of this proposed rule.
Step 3. Adjust the wage index of hospitals located in certain
qualifying 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 proposed rule (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 2021 IPPS,
which are listed in Table 2 associated with the FY 2021 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 2021 IPPS Proposed Rule Home Page'' and select
``FY 2021 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.
[[Page 48810]]
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 previously. 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 proposed CY 2021
full national unadjusted payment rate for APC 5071 is $634.92. The
proposed reduced national unadjusted payment rate for APC 5071 for a
hospital that fails to meet the Hospital OQR Program requirements is
$622.54. This reduced rate is calculated by multiplying the reporting
ratio of 0.9805 by the full unadjusted payment rate for APC 5071.
The proposed FY 2021 wage index for a provider located in CBSA
35614 in New York, which includes the proposed adoption of IPPS 2021
wage index policies, is 1.3376. The labor-related portion of the
proposed full national unadjusted payment is approximately $509.56 (.60
* $634.92 * 1.3376). The labor-related portion of the proposed reduced
national unadjusted payment is approximately $499.62 (.60 * $622.54 *
1.3376). The nonlabor-related portion of the proposed full national
unadjusted payment is approximately $253.97 (.40 * $634.92). The
nonlabor-related portion of the proposed reduced national unadjusted
payment is approximately $249.02 (.40 * $622.54). The sum of the labor-
related and nonlabor-related portions of the proposed full national
adjusted payment is approximately $763.53 ($509.56 + $253.97). The sum
of the portions of the proposed reduced national adjusted payment is
approximately $748.64 ($499.62 + $249.02).
I. Proposed 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. Proposed OPPS Copayment Policy
For CY 2021, we propose 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 propose 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 under the OPPS that would be effective
January 1, 2021 are included in Addenda A and B to the proposed rule
(which are available via the internet on the CMS website).
As discussed in section XIV.E. of this proposed rule, for CY 2021,
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
[[Page 48811]]
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. Proposed 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, $126.99 is approximately 20 percent of the
full national unadjusted payment rate of $634.92. For APCs with only a
minimum unadjusted copayment in Addenda A and B to proposed rule (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 proposed rule. Calculate the rural adjustment
for eligible providers, as indicated in Step 6 under section II.H. of
proposed rule.
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 proposed rule, 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 0.9805.
The proposed unadjusted copayments for services payable under the
OPPS that will be effective January 1, 2021, are shown in Addenda A and
B to proposed rule (which are available via the internet on the CMS
website). We note that the proposed national unadjusted payment rates
and copayment rates shown in Addenda A and B to this proposed rule
reflect the CY 2021 OPD fee schedule increase factor discussed in
section II.B. of proposed rule.
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. Proposed OPPS Treatment of New and Revised HCPCS Codes
Payments 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) codes, a numeric
and alphanumeric coding system maintained by the American Medical
Association (AMA), and consists 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 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
[[Page 48812]]
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. of this proposed rule (Proposed CY
2021 OPPS Payment Status and Comment Indicators), 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 2021 OPPS/ASC proposed rule.
1. April 2020 HCPCS Codes for Which We Are Soliciting Public Comments
in This Proposed Rule
For the April 2020 update, 13 new HCPCS codes were established and
made effective on April 1, 2020. These codes and their long descriptors
are listed in Table 6. Through the April 2020 OPPS quarterly update CR
(Transmittal 10013, Change Request 11691, dated March 25, 2020), we
recognized several new HCPCS codes for separate payment under the OPPS.
In this CY 2021 OPPS/ASC proposed rule, we are soliciting public
comments on the proposed APC and status indicator assignments for the
codes listed Table 6. The proposed status indicator, APC assignment,
and payment rate for each HCPCS code can be found in Addendum B to this
proposed rule. The complete list of status indicators and corresponding
definitions used under the OPPS can be found in Addendum D1 to this
proposed rule. These new codes that are effective April 1, 2020 are
assigned to comment indicator ``NP'' in Addendum B to this proposed
rule to indicate that the codes are assigned to an interim APC
assignment and that comments will be accepted on their interim APC
assignments. Also, the complete list of comment indicators and
definitions used under the OPPS can be found in Addendum D2 to this
proposed rule. We note that OPPS Addendum B, Addendum D1, and Addendum
D2 are available via the internet on the CMS website.
BILLING CODE 4120-01-P
[[Page 48813]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.012
[[Page 48814]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.013
2. July 2020 HCPCS Codes for Which We Are Soliciting Public Comments in
This Proposed Rule
For the July 2020 update, over 100 new codes were established and
made effective July 1, 2020. The codes and long descriptors are listed
in Table 7. Through the July 2020 OPPS quarterly update CR
(Transmittal10207, Change Request 11814, dated July 2, 2020), we
recognized several new codes for separate payment and assigned them to
appropriate interim OPPS status indicators and APCs. In this CY 2021
OPPS/ASC proposed rule, we are soliciting public comments on the
proposed APC and status indicator assignments for the codes implemented
on July 1, 2020, all of which are listed in Table 7. The proposed
status indicator, APC assignment, and payment rate for each HCPCS code
can be found in Addendum B to this proposed rule. The complete list of
status indicators and corresponding definitions used under the OPPS can
be found in Addendum D1 to this proposed rule. These new codes that are
effective July 1, 2020 are assigned to comment indicator ``NP'' in
Addendum B to this proposed rule to indicate that the codes are
assigned to an interim APC assignment and that comments will be
accepted on their interim APC assignments. Also, the complete list of
comment indicators and definitions used under the OPPS can be found in
Addendum D2 to this proposed rule. We note that OPPS Addendum B,
Addendum D1, and Addendum D2 are available via the internet on the CMS
website.
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3. October 2020 HCPCS Codes for Which We Will Be Soliciting Public
Comments in the CY 2021 OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we will solicit comments on
the new CPT and Level II HCPCS codes that will be effective October 1,
2020 in the CY 2021 OPPS/ASC final rule with comment period, thereby
allowing us to finalize the status indicators and APC assignments for
the codes in the CY 2022 OPPS/ASC final rule with comment period. The
HCPCS codes will be released to the public through the October 2020
OPPS Update CR and the CMS HCPCS website while the CPT codes will be
released to the public through the AMA website.
For CY 2021, we propose to continue our established policy of
assigning comment indicator ``NI'' in Addendum B to the OPPS/ASC final
rule with comment period to those new HCPCS codes that are effective
October 1, 2020 to indicate that we are assigning them an interim
status indicator, which is subject to public comment. We will be
inviting public comments in the CY 2021 OPPS/ASC final rule with
comment period on the status indicator and APC assignments, which would
then be finalized in the CY 2022 OPPS/ASC final rule with comment
period.
4. January 2021 HCPCS Codes
a. New Level II HCPCS Codes for Which We Will Be Soliciting Public
Comments in the CY 2021 OPPS/ASC Final Rule With Comment Period
Consistent with past practice, we will solicit comments on the new
Level II HCPCS codes that will be effective January 1, 2021 in the CY
2021 OPPS/ASC final rule with comment period, thereby allowing us to
finalize the status indicators and APC assignments for the codes in the
CY 2022 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, and except for the HCPCS C-codes and G codes listed in Addendum
O of this proposed rule, 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. Therefore, these Level II HCPCS codes
will be released to the public through the CY 2021 OPPS/ASC final rule
with comment period, January 2021 OPPS Update CR, and the CMS HCPCS
website.
For CY 2021, we propose to continue our established policy of
assigning comment indicator ``NI'' in Addendum B to the OPPS/ASC final
rule with comment period to the new Level II HCPCS codes that will be
effective January 1, 2021 to indicate that we are assigning them an
interim status indicator, which is subject to public comment. We will
be inviting public comments in the CY 2021 OPPS/ASC final rule with
comment period on the status indicator and APC assignments, which would
then be finalized in the CY 2022 OPPS/ASC final rule with comment
period.
b. CPT Codes for Which We Are Soliciting Public Comments in This
Proposed Rule
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
[[Page 48824]]
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
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.
For the CY 2021 OPPS update, we received the CPT codes that will be
effective January 1, 2021 from AMA in time to be included in this
proposed rule. The new, revised, and deleted CPT codes can be found in
Addendum B to this proposed rule (which is available via the internet
on the CMS website). We note that the new and revised CPT codes are
assigned to comment indicator ``NP'' in Addendum B of this proposed
rule 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 assignment and status indicator.
Further, we note 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 are including the 5-digit placeholder codes and the long
descriptors for the new and revised CY 2021 CPT codes in Addendum O to
this proposed rule (which is available via the internet on the CMS
website) so that the public can adequately comment on our proposed APCs
and status indicator assignments. The 5-digit placeholder codes can be
found in Addendum O, specifically under the column labeled ``CY 2021
OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code''. The final CPT
code numbers will be included in the CY 2021 OPPS/ASC final rule with
comment period.
In summary, we are soliciting public comments on the proposed CY
2021 status indicators and APC assignments for the new and revised CPT
codes that will be effective January 1, 2021. Because the CPT codes
listed in Addendum B appear with short descriptors only, we list them
again in Addendum O to this proposed rule with long descriptors. In
addition, we propose to finalize the status indicator and APC
assignments for these codes (with their final CPT code numbers) in the
CY 2021 OPPS/ASC final rule with comment period. The proposed status
indicator and APC assignment for these codes can be found in Addendum B
to this proposed rule (which is available via the internet on the CMS
website).
Finally, in Table 8, we summarize 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. Proposed 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 devices, drugs, biologicals,
therapeutic radiopharmaceuticals, and brachytherapy devices that are
not packaged into the payment for the service.
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 proposed
rule.
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. For CY 2021, we propose 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
[[Page 48826]]
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 2021 OPPS update will be discussed in the
relevant specific sections throughout the CY 2021 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 this section of
this proposed rule, for CY 2021, we propose 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.
For the CY 2021 OPPS update, we have identified the APCs with
violations of the 2 times rule. Therefore, we propose changes to the
procedure codes assigned to these APCs in Addendum B to this proposed
rule. We note that Addendum B does not appear in the printed version of
the Federal Register as part of this CY 2021 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
propose 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 2021 included
in this proposed rule are related to changes in costs of services that
were observed in the CY 2019 claims data newly available for CY 2021
ratesetting. Addendum B to this CY 2021 OPPS/ASC proposed rule
identifies with a comment indicator ``CH'' those procedure codes for
which we propose a change to the APC assignment or status indicator, or
both, that were initially assigned in the July 1, 2020 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).
3. Proposed APC Exceptions to the 2 Times Rule
Taking into account the APC changes that we propose to make for CY
2021, 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 2019 claims data available for this CY 2021
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 propose to make exceptions under the 2 times rule for CY 2021, and
found that all of the 18 APCs we identified meet the criteria for an
exception to the 2 times rule based on the CY 2019 claims data
available for this proposed rule. We note that 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 similar geometric mean costs and do not
create a 2 times rule violation. Therefore, we have 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 9 of this proposed rule lists the 18 APCs for which we
propose to make an exception under the 2 times rule for CY 2021 based
on the criteria cited above and claims data submitted between January
1, 2019, and December 31, 2019, and processed on or before December 31,
2019. For the final rule with comment period, we intend to use claims
data for dates of service between January 1, 2019, and December 31,
2019, that were processed on or before June 30, 2020, and updated CCRs,
if available. The proposed geometric mean costs for covered hospital
outpatient services for these and all other APCs that were used in the
development of this proposed rule can be found on the CMS website at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.
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C. Proposed 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 2020, 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 reflect the costs that are associated
with providing care to Medicare beneficiaries and 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
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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 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 2021,
we included the proposed payment rates for New Technology APCs 1491 to
1599 and 1901 through 1908 in Addendum A to this CY 2021 OPPS/ASC
proposed rule (which is available via the internet on the CMS website).
2. Establishing Payment Rates for Low-Volume New Technology Services
Services that are assigned to New Technology APCs are typically new
services that do not have sufficient claims history to establish an
accurate payment for the services. One of the objectives of
establishing New Technology APCs is to generate sufficient claims data
for a new service so that it can be assigned to an appropriate clinical
APC. Some services that are assigned to New Technology APCs have very
low annual volume, which we consider to be fewer than 100 claims. We
consider services with fewer than 100 claims annually to be low-volume
services because there is a higher probability that the payment data
for a service 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 service
under the OPPS by calculating the geometric mean for all separately
paid claims for a HCPCS service code from the most recent available
year of claims data may not generate an accurate estimate of the actual
cost of the service for these low-volume services.
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
service to a new technology APC allows us to gather claims data to
price the service 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 services 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 services with fewer
than 100 claims annually as low-volume services because there is a
higher probability that the payment data for a service 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 service 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
service. 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 each annual
rulemaking, we stated that
[[Page 48829]]
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 2021, we propose 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).
3. Procedures Assigned to New Technology APC Groups for CY 2021
As we described 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 2021, we propose 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 propose to continue to assign to standard
APCs, and one that we propose to continue to assign to a New Technology
APC for CY 2021. 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.
For the procedure described by CPT code 0398T, we have identified
149 paid claims for CY 2019 with a geometric mean of $12,798.38. The
number of claims for the service means that the procedure is no longer
a low-volume new technology service, and we will use the geometric mean
of the CY 2019 claims data to determine the cost of the service for its
APC assignment. We reviewed the OPPS to determine whether CPT code
0398T could be assigned to a clinical APC. The most appropriate
clinical APC family for the service would be the Neurostimulator and
Related Procedures APC series (APC 5461-5464). However, there is large
payment rate difference between Level 2 Neurostimulator and Related
Procedures (APC 5462) with a payment rate of $6,169.27 and Level 3
Neurostimulator and Related Procedures (APC 5463) with a payment rate
of $19,737.37. Based on the geometric mean cost of CPT code 0398T
available for this proposed rule, we believe the payment rate for APC
5462 would be too low for CPT code 0398T since it is more than $6,000
less than the geometric mean cost for CPT code 0398T, and we believe
the payment rate for APC 5463 would be too high since it is around
$6,800 more than the geometric mean cost for CPT code 0398T.
In addition, given the significant difference in the payment rate
between APC 5462 and 5463, we believe a restructuring of this APC
family would be appropriate. We believe creating an additional payment
level between the two existing APC levels would allow for a smoother
distribution of the costs between the different levels based on their
resource costs and clinical characteristics. Please refer to section
III.D.1 for detailed explanation of our proposal to reorganize the
Neurostimulator and Related Procedures APCs (APCs 5461-5464).
Reorganizing the Neurostimulator and Related Procedures APCs would
create a proposed Level 3 APC to be referred to as ``Proposed APC
5463'' with a payment rate of approximately $12,286 that is close to
the geometric mean of CPT code 0398T which is approximately $12,798.
The payment rate of proposed APC 5463 is representative of the cost of
the service described by CPT code 0398T. Therefore, we propose to
reassign the service described by CPT code 0398T to the proposed new
Level 3 APC for Neurostimulator and Related Procedures (Proposed APC
5463) for CY 2021. The current and proposed APC assignments, status
indicators, and payment rates for CPT code 0398T are found in Table 10.
We refer readers to Addendum B of 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 48830]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.025
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
[[Page 48831]]
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 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, 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 fell within the same New Technology APC cost
band ($145,001- $160,000), where the Argus[supreg] II procedure was
assigned for CY 2019. Consistent with our policy stated in section
III.C.2, 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 assigned 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.
For CY 2021, 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 2021, we propose 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.
For CY 2021, we identified 35 claims reporting the procedure
described by CPT code 0100T for the 4-year period of CY 2016 through CY
2019. We found the geometric mean cost for the procedure described by
CPT code 0100T to be approximately $148,807, the arithmetic mean cost
to be approximately $154,504, and the median cost to be approximately
$151,974. All three potential statistical methodologies used to
estimate the cost of the Argus[supreg] II procedure fall within the
cost band for New Technology APC
[[Page 48832]]
1908, with the estimated cost being between $145,001 and $160,000.
Accordingly, we propose 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 2021. 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.
c. Administration of Subretinal Therapies Requiring Vitrectomy
CPT code J3398 (Injection, voretigene neparvovec-rzyl, 1 billion
vector genomes) is a gene therapy for a rare mutation-associated
retinal dystrophy. Voretigene neparvovec-rzyl (Luxturna[supreg]), was
approved by the FDA in December of 2017, and is indicated as an adeno-
associated virus vector-based gene therapy indicated for the treatment
of patients with confirmed biallelic RPE65 mutation-associated retinal
dystrophy.\2\ This therapy is administered through a subretinal
injection, which stakeholders describe as an extremely delicate and
sensitive surgical procedure. The FDA package insert describes one of
the steps for administering Luxturna as, ``after completing a
vitrectomy, identify the intended site of administration. The
subretinal injection can be introduced via pars plana.'' \1\
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\2\ Luxturna. FDA Package Insert. Available: https://www.fda.gov/media/109906/download.
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Stakeholders, including the manufacturer of Luxturna[supreg],
recommend HCPCS code 67036 (Vitrectomy, mechanical, pars plana
approach) for the administration of the gene therapy.\3\ However, the
manufacturer contends the administration is not currently described by
any existing codes as HCPCS code 67036 (Vitrectomy, mechanical, pars
plana approach) does not account for the administration itself. For
J3398, a typical patient would receive a standard dose of 150 billion
vector genomes, with an approximate payment rate of $436,575 (we refer
readers to Addendum B of this proposed rule for the proposed payment
rate associated with J3398).
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\3\ LUXTURNA REIMBURSEMENT GUIDE FOR TREATMENT CENTERS. https://mysparkgeneration.com/pdf/Reimbursement_Guide_for_Treatment_Centers_Interactive_010418_FINAL.pdf.
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It is important to note that CPT code J3398 was granted drug pass-
through status under the OPPS as of July 1, 2018 and is assigned to
status indicator ``G''. (We refer readers to Addendum D of this
proposed rule for the list of proposed status indicator definitions for
CY2021). J3398 is scheduled to have its drug pass-through status expire
June 30, 2021, at which point J3398 would be packaged into the payment
for any primary service with which it is billed when that primary
service is assigned to a comprehensive APC (C-APC). A C-APC packages
payment for adjunctive and secondary items, services, and procedures
into the most costly primary procedure (For a full discussion and
background on C-APCs, see section II.A.2.b). Based on information from
the manufacturer of Luxturna, we believe that CPT code J3398
(Injection, voretigene neparvovec-rzyl, 1 billion vector genomes) would
commonly be billed with the service described by HCPCS code 67036
(Vitrectomy, mechanical, pars plana approach), which describes the
administration of the gene therapy, and which is assigned to a
comprehensive APC, (APC 5492--Level 2 Intraocular Procedures). Thus,
when its pass-through status expires, payment for CPT code J3398, the
primary therapy, would be inappropriately packaged into payment for
HCPCS code 67036, its administration procedure.
CMS recognizes the necessity to accurately describe the unique
administration procedure that is required to administer the therapy
described by CPT J3398. We propose to establish a new HCPCS code, C97X1
(Vitrectomy, mechanical, pars plana approach, with subretinal injection
of pharmacologic/biologic agent) to describe this process. We believe
that this new HCPCS code accurately describes the service associated
with intraocular administration of HCPCS code J3398. CMS recognizes
that HCPCS code 67036 represents a similar procedure and process that
approximates similar resource utilization that is associated with
C97X1. CMS also recognizes that it is not prudent for the code that
describes the administration of this gene therapy, C97X1, to be
assigned to the same C-APC that is assigned to HCPCS code 67036, as
this would inappropriately package the primary therapy, J3398, into the
code that represents the process to administer the gene therapy.
For CY 2021, we propose to assign the services described by C97X1
to a new technology payment band based on the geometric mean cost for
HCPCS code 67036. For CY 2021, HCPCS code 67036 has a geometric mean
cost of $3407.84. Therefore, for CY 2021 we propose to assign C97X1 to
APC 1561--New Technology--Level 24 ($3001-$3500). Please see Table 11
for proposed descriptors and APC assignment.
[GRAPHIC] [TIFF OMITTED] TP12AU20.026
[[Page 48833]]
d. 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 (for example,
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.
In claims data available for CY 2019 for this proposed rule, there
were 4 claims reported for bronchoscopy with transbronchial ablation of
lesions by microwave energy. Given the low volume of claims for the
service, we propose for CY 2021 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 to calculate an appropriate payment
rate for purposes of assigning bronchoscopy with transbronchial
ablation of lesions by microwave energy to a New Technology APC. We
found the geometric mean cost for the service to be approximately
$4,051, the arithmetic mean cost to be approximately $4,067, and the
median cost to be approximately $4,067. All three potential statistical
methodologies used to estimate the cost of the service procedure fall
within the cost band for New Technology APC 1563, with the estimated
cost being between $4,001 and $4,500. Accordingly, we propose to change
the assignment of the HCPCS code C9751 to APC 1563 (New Technology--
Level 26 ($4001-$4500)), with a proposed payment rate of $4,250.50 for
CY 2021. Details regarding HCPCS code C9751 are shown in Table 12.
[GRAPHIC] [TIFF OMITTED] TP12AU20.027
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 services paid under the OPPS, payment for analytics that
are performed after the main diagnostic/image procedure are packaged
into the payment for the primary service. However, in CY 2018, we
determined that HeartFlow should receive a separate payment because the
service 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. We
did not have Medicare claims data in CY 2019 for CPT code 0503T, and we
continued to assign the service to New Technology APC 1516 (New
Technology--Level 16 ($1,401-$1,500)), with a payment rate of
$1,450.50.
CY 2020 was the first year we had Medicare claims data to calculate
the cost of HCPCS code 0503T. For the CY 2020 OPPS/ASC final rule,
there were 957 claims with CPT code 0503T of which 101 of the claims
were single frequency claims that were used to calculate the geometric
mean of the procedure. We planned to use the geometric mean to report
the cost of HeartFlow. However, the number of single frequency claims
for CPT code 0503T was below the low-volume payment policy threshold
for the proposed rule, and the number of single frequency claims was
only two claims above the threshold for the new technology APC low-
volume policy for the final rule. Therefore, we decided to use our
equitable adjustment authority under section 1833(t)(2)(E) of the Act
to
[[Page 48834]]
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 was just above our threshold to use
the low-volume payment policy, we still had 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 fell within the cost band for New Technology APC 1511
(New Technology--Level 11 ($901-$1,000)) with a payment rate of
$950.50. The arithmetic mean helped to account for some of the higher
costs of CPT code 0503T identified by the developer and other
stakeholders that may not have been reflected by either the median or
the geometric mean.
For CY 2021, we observed a significant increase in the number of
claims billed with CPT code 0503T that are available for this proposed
rule. Specifically, using the most recently available data for this
proposed rule (that is, CY 2019), we identified 2,820 claims billed
with CPT code 0503T including 415 single frequency claims. These totals
are well above the threshold of 100 claims for a procedure to be
evaluated using the new technology APC low-volume policy. Therefore, we
propose to use our standard methodology rather than the low-volume
methodology we previously used to determine the cost of CPT code 0503T.
Our analysis found the geometric mean cost for CPT code 0503T is
approximately $851. Therefore, we propose to reassign the service
described by CPT code 0503T in order to adjust the payment rate to
better reflect the cost for the service. While we considered proposing
to reassign CPT code 0503T to APC 5724 (Level 4--Diagnostic Tests and
Related Services), which has a payment rate of around $903 based on the
clinical and resource similarity to other services within that APC, we
did not propose such reassignment because the payment rate for the new
technology APC is closer to the geometric mean costs of CPT code 0503T.
Nonetheless, we welcome comments on whether reassignment to the
clinical APC would be more appropriate. Therefore, we propose to
reassign the service described by CPT code 0503T to New Technology APC
1510 (New Technology--Level 10 ($801-$900)), with a proposed payment
rate of $850.50 for CY 2021.
f. Cardiac Positron Emission Tomography (PET)/Computed Tomography (CT)
Studies
Effective January 1, 2020, we 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. CPT code 78431 was assigned to APC 1522 (New Technology--Level
22 ($2,001-$2,500)) with a payment rate of $2,250.50. CPT codes 78432
and 78433 were assigned to APC 1523 (New Technology--Level 23 ($2,501-
$3,000)) with a payment rate of $ 2,750.50.
We have not received any claims that have been billed with CPT
codes 78431, 78432, or 78433. Therefore, we propose to continue to
assign these CPT codes to the same new technology APCs as they were in
CY 2020. The proposed CY 2021 payment rate for the codes can be found
in Addendum B to this proposed rule (which is available via the
internet on the CMS website).
BILLING CODE 4120-01-P
[[Page 48835]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.028
BILLING CODE 4120-01-C
g. Pathogen Test for Platelets/Rapid Bacterial Testing
For the July 2017 update, the HCPCS Workgroup established HCPCS
code Q9987 (Pathogen(s) test for platelets) effective July 1, 2017.
This new code and the OPPS APC assignment was announced in the July
2017 OPPS quarterly update CR (Transmittal 3783, Change Request 10122,
dated May 26, 2017). Because HCPCS code Q9987 represented a test to
identify bacterial or other pathogen contamination in blood platelets,
we assigned the code to a new technology APC, specifically, New
Technology APC 1493 (New Technology-Level 1C ($21-$30)) with a status
indicator ``S'' and a payment rate of $25.50. We note that temporary
HCPCS code Q9987 was subsequently deleted on December 31, 2017, and
replaced with permanent HCPCS code P9100 (Pathogen(s) test for
platelets) effective January 1, 2018. For the January 2018 update, we
continued to assign the new code to the same APC and status indicator
as its predecessor code. Specifically, we assigned HCPCS code P9100 to
New Technology APC 1493 and status indicator ``S''. For the CY 2019
update, we made no change to the APC or status indicator assignment for
P9100, however, for the CY 2020 update, we revised the APC assignment
from New Technology APC 1493 to 1494 (New Technology--Level 1D ($31-
$40) based on the latest claims data
[[Page 48836]]
used to set the payment rates for CY 2020. We discussed the revision in
the CY 2020 OPPS/ASC final rule (84 FR 61219) and indicated that the
reassignment to APC 1494 appropriately reflected the cost of the
service.
For the CY 2021 update, we believe that we have sufficient claims
data to reassign the code from a New Technology APC to a clinical APC
and note that HCPCS code P9100 has been assigned to a New Technology
APC for over 3 years. As stated in section III.D. (New Technology
APCs), a service is paid under a New Technology APC until sufficient
claims data have been collected to allow CMS to assign the procedure to
a clinical APC group that is appropriate in clinical and resource
terms. We expect this to occur within two to three years from the time
a new HCPCS code becomes effective. However, if we are able to collect
sufficient claims data in less than 2 years, we would consider
reassigning the service to an appropriate clinical APC. Since HCPCS
code P9100 has been assigned to a new technology APC since July 2017,
we believe that we should reassign the code to a clinical APC.
Specifically, our claims data for this proposed rule shows a geometric
mean cost of approximately $30 for HCPCS code P9100 based on 70 single
claims (out of 1,835 total claims). Based on resource cost and clinical
homogeneity to the other services assigned to APC 5732 (Level 2 Minor
Procedures), we believe that HCPCS code P9100 should be reassigned to
clinical APC 5732 whose geometric mean cost is approximately $33.
As we have stated several times 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 the CY 2021 OPPS update, based
on claims submitted between January 1, 2019, and December 30, 2019, our
analysis of the latest claims data for this proposed rule supports
reassigning HCPCS code P9100 to APC 5732 based on its clinical and
resource homogeneity to the procedures and services in the APC.
Therefore, we propose to reassign HCPCS code P9100 from New Technology
APC 1494 to clinical APC 5732 for CY 2021. The proposed CY 2021 payment
rate for HCPCS code P9100 can be found in Addendum B to this proposed
rule with comment period. In addition, we refer readers to Addendum D1
of this proposed 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.
h. V-Wave Interatrial Shunt Procedure (HCPCS Code C9758; APC 1589)
A randomized, double-blinded control IDE study is currently in
progress for the V-Wave interatrial shunt. The V-Wave interatrial shunt
is for patients with severe symptomatic heart failure and is designed
to regulate left atrial pressure in the heart. All participants who
passed initial screening for the study receive a right heart
catheterization 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 was 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)).
No claims have been reported for HCPCS code C9758. Therefore, we
propose to continue to assign the service to New Technology APC 1589
for CY 2021. Details about the HCPCS code and its APC assignment are
shown in Table 14. The proposed CY 2021 payment rate for V-Wave
interatrial shunt procedure can be found in Addendum B to proposed rule
(which is available via the internet on the CMS website).
[GRAPHIC] [TIFF OMITTED] TP12AU20.029
[[Page 48837]]
i. Supervised Visits for Esketamine Self-Administration (HCPCS Codes
G2082 and G2083 APCs 1508 and 1511)
On March 5, 2019, the U.S. Food and Drug Administration (FDA)
approved Spravato\TM\ (esketamine) nasal spray, used in conjunction
with an oral antidepressant, for treatment of depression in adults who
have tried other antidepressant medicines but have not benefited from
them (treatment-resistant depression (TRD)). Because of the risk of
serious adverse outcomes resulting from sedation and dissociation
caused by Spravato administration, and the potential for abuse and
misuse of the product, it is only available through a restricted
distribution system under a Risk Evaluation and Mitigation Strategy
(REMS). A REMS is a drug safety program that the FDA can require for
certain medications with serious safety concerns to help ensure the
benefits of the medication outweigh its risks.
A treatment session of esketamine consists of instructed nasal
self-administration by the patient, followed by a period of post-
administration observation of the patient under direct supervision of a
health care professional. Esketamine is a noncompetitive N-methyl D-
aspartate (NMDA) receptor antagonist. It is a nasal spray supplied as
an aqueous solution of esketamine hydrochloride in a vial with a nasal
spray device. This is the first FDA approval of esketamine for any use.
Each device delivers two sprays containing a total of 28 mg of
esketamine. Patients would require either two (2) devices (for a 56mg
dose) or three (3) devices (for an 84 mg dose) per treatment.
Because of the risk of serious adverse outcomes resulting from
sedation and dissociation caused by Spravato administration, and the
potential for abuse and misuse of the product, Spravato is only
available through a restricted distribution system under a REMS;
patients must be monitored by a health care provider for at least 2
hours after receiving their Spravato dose; the prescriber and patient
must both sign a Patient Enrollment Form; and the product will only be
administered in a certified medical office where the health care
provider can monitor the patient. Please refer to the CY 2020 PFS final
rule and interim final rule for more information about supervised
visits for esketamine self-administration (84 FR 63102 through 63105).
To facilitate prompt beneficiary access to the new, potentially
life-saving treatment for TRD using esketamine, we created two new
HCPCS G codes, G2082 and G2083, effective January 1, 2020. HCPCS code
G2082 is for an outpatient visit for the evaluation and management of
an established patient that requires the supervision of a physician or
other qualified health care professional and provision of up to 56 mg
of esketamine nasal self-administration and includes 2 hours post-
administration observation. HCPCS code G2082 was assigned to New
Technology APC 1508 (New Technology--Level 8 ($601-$700)) with a
payment rate of $650.50. HCPCS code G2083 describes a similar service
to HCPCS code G2082, but involves the administration of more than 56 mg
of esketamine. HCPCS code G2083 was assigned to New Technology APC 1511
(New Technology--Level 11 ($901-$1,000)) with a payment rate of
$950.50.
No Medicare OPPS claims have been reported for either HCPCS code
G2082 or G2083. Therefore, we propose to continue to assign HCPCS code
G2082 to New Technology APC 1508 and to assign HCPCS code G2083 to New
Technology APC 1511. Details about the HCPCS codes and their APC
assignments are shown in Table G15 below. The proposed CY 2021 payment
rate for esketamine self-administration can be found in Addendum B to
proposed rule (which is available via the internet on the CMS website).
BILLING CODE 4120-01-P
[[Page 48838]]
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D. Proposed OPPS APC-Specific Policies
1. Neurostimulator and Related Procedures (APCs 5461 Through 5465)
In the CY 2015 OPPS/ASC final rule (79 FR 66807 through 66808), we
finalized a restructuring of what were previously several
neurostimulator procedure-related APCs into a four-level series. Since
CY 2015, the four-level APC structure for the series has remained
unchanged. In addition to that restructuring, in the CY 2015 OPPS/ASC
final rule, we also made the Level 2 through 4 APCs comprehensive APCs
(79 FR 66807 through 66808). Later, in the CY 2020 OPPS final rule, we
also established the Level 1 Neurostimulator and Related Procedure APC
(APC 5461) as a comprehensive APC (84 FR 61162 through 61166).
In reviewing the claims data available for CY 2021 OPPS proposed
rule, we believe that it is appropriate to create an additional
Neurostimulator and Related Procedures level, between the current Level
2 and 3 APCs. Creating this APC allows for a smoother distribution of
the costs between the different levels based on their resource costs
and clinical characteristics. Therefore, for the CY 2021 OPPS, we
propose to establish a five-level APC structure for the Neurostimulator
and Related Procedures series. We note that in addition to creating
this new level, we also propose to assign CPT 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) to this new
Level 3 APC, as discussed in further detail in section III.C.3.A of
this proposed rule with comment period.
Table 16 displays the proposed CY 2021 Neurostimulator and Related
Procedures APC series' structure and APC geometric mean costs
[[Page 48839]]
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BILLING CODE 4120-01-C
2. IDx-DR: Artificial Intelligence System To Detect Diabetic
Retinopathy (APC 5732)
As stated in a press release issued by the FDA on April 11, 2018,
the IDx-DR is the ``first medical device to use artificial intelligence
to detect greater than a mild level of the eye disease diabetic
retinopathy in adults who have diabetes'' (https://www.fda.gov/news-events/press-announcements/fda-permits-marketing-artificial-intelligence-based-device-detect-certain-diabetes-related-eye).
Approved for marketing by the FDA in April 2018, the artificial
intelligence algorithm provides a clinical decision without the need
for a clinician to also interpret the image. A provider uploads the
digital images of the patient's retinas to a cloud server on which the
IDx-DR software is installed, and once analysis is completed, the
provider is given one of the following two results:
More than mild diabetic retinopathy detected: Refer to an
eye care professional; or
negative for more than mild diabetic retinopathy; rescreen
in 12 months.
The test itself generally takes about 5 minutes to complete and
does not need to be performed by a clinician. The test associated with
the IDx-DR technology will receive a new CPT code effective January 1,
2021, and with the establishment of the new code, the CPT Editorial
Panel is also revising the descriptors associated with existing CPT
codes 92227 and 92228 to appropriately differentiate them from the IDx-
DR test.
Based on our evaluation of the service, we believe that IDx-DR is a
diagnostic test that should be payable under the hospital OPPS, similar
to existing CPT codes 92227 and 92228, which are assigned to APC 5732
(Level 2 Minor Procedures) and status indicator ``Q1.'' Based on its
clinical similarity to CPT codes 92227 (Remote imaging for detection of
retinal disease (for example, retinopathy in a patient with diabetes)
with analysis and report under physician supervision, unilateral or
bilateral) and 92228 (Remote imaging for monitoring and management of
active retinal disease (eg, diabetic retinopathy) with physician
review, interpretation and report, unilateral or bilateral), we believe
that the IDx-DR test should also be assigned to APC 5732 (Level 2 Minor
Procedures) and status indicator ``Q1.'' Consequently, we propose to
assign the new IDx-DR CPT code to APC 5732 with a proposed payment rate
of $33.16 for CY 2021. We note that we propose to assign the code to
status indicator ``Q1'' to indicate that the code is conditionally
packaged when performed with another service on the same day. Because
the IDx-DR test will most often be performed as part of a visit, we
believe that packaging the cost into the primary service is
appropriate. We note that under the OPPS, the current E&M visit code
(G0463) is paid separately when not billed with a C-APC, and we believe
this payment includes the cost of providing the IDx-DR test. Generally,
our process for tests with minimal costs is to package the cost into
the primary service. Because the IDx-DR test will generally be part of
another service provided on the same day, and involve minimal cost, we
believe that conditionally packaging the payment for the 5-minute IDx-
DR test is appropriate for this test in the hospital outpatient
setting.
In summary, we propose to assign the new CPT code associated with
IDx-DR to APC 5732 and status indicator ``Q1''. Table 17 lists the
proposed APC and SI for placeholder CPT code 9225X, which is associated
with the IDx-DR test. The final CPT code number for placeholder code
9225X will be included in the CY 2021 OPPS/ASC final rule with comment
period. The proposed CY 2021 payment rate for CPT code 9225X can be
found in Addendum B to this proposed rule with comment period. In
addition, we refer readers to Addendum D1 of this proposed 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. Furthermore, for discussion on the
proposed PFS payment for placeholder CPT code 9225X, refer to the CY
2021 PFS Proposed Rule.
[[Page 48840]]
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3. Intraocular Procedures (APCs 5491 Through 5495)
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, we assigned procedure code CPT code 0308T to
the APC 5494 (Level 4 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
significantly lower than the OPPS payments for the same service because
of the difference in 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 CY 2020 OPPS rulemaking, we reestablished APC 5495 (Level 5
Intraocular Procedures) because we believed that the procedure
described by CPT code 0308T would be most appropriately placed in the
APC based on its estimated cost (84 FR 61249 through 61250). Assignment
of the procedure to the Level 5 Intraocular Procedures APC was
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 we also implemented a policy where the
payment for a service when performed in an ASC (84 FR 61399 through
61400), would be no higher than the OPPS payment rate for the service
when performed in the hospital outpatient setting.
In reviewing the claims data available for CY 2021 ratesetting,
there was a single claim containing the code 0308T that was unable to
be used for the ratesetting process. In addition, this code and its APC
have historically had relatively low claims volume for ratesetting
purposes. While there are no claims usable for ratesetting in the CY
2021 OPPS proposed data under our standard process, we still need to
determine a payment weight for the APC. We believe that the most
recently available data that we used to set payment for this service in
the CY 2020 OPPS final rule is an appropriate proxy for both the
procedure's estimated cost and its relative payment weight. We note
that this proposed policy to use prior year claims data in ratesetting
is similar to the application of a geometric mean cost floor to the
Partial Hospitalization APCs, as initially established in the CY 2020
OPPS/ASC final rule (84 FR 61339 through 61347). Therefore, we believe
it is appropriate to propose to use the median cost of $20,229.78 for
CPT 0308T, calculated from claims data used in the CY 2020 OPPS final
rule, to establish the payment weight for the CY 2021 OPPS for CPT code
0308T. We will continue to monitor the claims available for ratesetting
as they are available for the CY 2021 OPPS final rule.
To summarize, for CY 2021, we propose to assign 0308T a payment
weight based on the most recently available data, from the CY 2020 OPPS
final rule, and therefore propose to assign CPT code 0308T to APC 5495
(Level 5 Intraocular Procedures). Under this proposal, the proposed CY
2021 OPPS payment rate for the service would be established based on
the 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. Therefore, the
proposed APC assignment for CPT 0308T would be based on the CY 2019
OPPS final rule median cost of $20,229.78.
4. 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
[[Page 48841]]
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
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
Musculoskeletal Procedures APCs (83 FR 58920 through 58921).
Based on the claims data available for this CY 2021 OPPS/ASC
proposed rule, we continue to believe that the six-level APC structure
for the Musculoskeletal Procedures APC series is appropriate.
Therefore, we propose to maintain the APC structure for the CY 2021
OPPS update.
In the CY 2020 OPPS/ASC final rule, we discussed issues related to
the APC assignment of 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 (84 FR 61253 through 61254).
Specifically, commenters believed that the code was inappropriately
assigned to APC 5115 due to one hospital inaccurately reporting its
costs and charges. While we recognized the concerns that the commenters
described, we noted that it is generally not our policy to judge the
accuracy of hospital coding and charging for purposes of ratesetting.
For the CY 2021 OPPS, the geometric mean cost of CPT code 22869 has
increased slightly relative to the prior year, from $11,023.45 to
$12,788.56. However, the geometric mean costs of the Level 5 and Level
6 Musculoskeletal Procedures APCs are $12,102.02 and $15,975.08,
respectively, and so, based on the data that is available, we continue
to believe that it is appropriate to assign CPT code 22869 to APC 5115
(Level 5 Musculoskeletal Procedures APC).
For the CY 2021 OPPS, we also propose to remove codes that were
previously on the Inpatient Only List and assign them to clinical APCs.
Many of these codes are being proposed for APC assignment to the
Musculoskeletal Procedures APC series, and so there may be effects on
the geometric means as the limited claims data for those codes is
included in OPPS ratesetting. For a more detailed discussion of the
proposal to remove certain codes from the inpatient only list, please
see section IX.B. of this proposed rule,
Table 18 displays the proposed CY 2021 Musculoskeletal Procedures
APC series' structure and APC geometric mean costs.
[GRAPHIC] [TIFF OMITTED] TP12AU20.033
5. Noncontact Real-Time Fluorescence Wound Imaging/MolecuLight (APC
5722)
For the July 2020 update, the CPT Editorial Panel established two
new codes, specifically, CPT codes 0598T and 0599T, to report
noncontact real-time fluorescence wound imaging for bacterial presence
in chronic and acute wounds. The codes and their long descriptors are
listed in Table 7 (New HCPCS Codes Effective July 1, 2020) above. We
note that CMS recently received a new technology application for the
MolecuLight i: X procedure, which is described by CPT codes 0598T and
0599T. In determining the appropriate payment for CPT code 0598T, we
considered whether there should be separate or conditionally packaged
payment for the procedure since the use of the MolecuLight imaging
device will most often involve another procedure or service during the
same session (for example, debridement of the wound, laboratory
service, or another skin-related procedure). In addition, we considered
whether the code should be placed in either the Diagnostic Procedures
or Minor Procedures APC group. Based on our review of the application
and input from our physicians, we assigned CPT code 0598T to APC 5722
((Level 2 Diagnostic Tests and Related Services)
[[Page 48842]]
and status indicator ``T'' with a payment rate of $253.10 effective
July 1, 2020. In addition, because CPT code 0599T is an add-on code, we
assigned the code to status indicator ``N'' to indicate that the
payment is included in the primary procedure. We note that the new
technology application indicated a higher projected cost involving care
in an operating room (OR), however, based on our review of the
MolecuLight service, we removed all OR-associated costs because it is
not clear to us that the test would routinely be performed in the OR
setting. However, we are soliciting public comments from hospital-based
providers that have used MolecuLight on the appropriate OPPS payment,
particularly with respect to the cost of providing the service in the
hospital outpatient setting as well as the performance of the
procedure. We note, as indicated in Table 8 (Comment Timeframe for New
and Revised HCPCS Codes), that we are seeking comments on CPT codes
that are effective July 1, 2020 in this proposed rule, particularly
with respect to the APC and SI assignments, and will finalize them in
the CY 2021 OPPS/ASC final rule with comment period.
In summary, we propose to assign CPT code 0598T to APC 5722
(Diagnostic Tests and Related Services) with status indicator ``T'' and
CPT code 0599T to status indicator ``N'' for CY 2021. The proposed CY
2021 payment rate for CPT code 0598T can be found in Addendum B to this
proposed rule with comment period. In addition, we refer readers to
Addendum D1 of this proposed 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.
6. Pathogen Test for Platelets/Rapid Bacterial Testing (APC 5732)
For CY 2020, the HCPCS code associated with pathogen test for
platelets or rapid bacterial testing was assigned to a new technology
APC 1494 (New Technology--Level 1D ($31-$40). For the CY 2021 update,
we propose to revise the APC assignment for this HCPCS code from New
Technology APC 1494 to clinical APC 5732 (level 2 Minor Procedures).
Refer to section III.C. of this proposed rule for the full discussion
on the proposal.
7. Urology and Related Services (APCs 5371 Through 5378)
For the CY 2020 OPPS/ASC final rule with comment period (84 FR
61268), we received a public comment suggesting we revise the
assignments for the services assigned to the Urology & Related Services
APCs. The commenter specifically noted that a reorganization for APCs
5374 through 5376 would be appropriate but added that there are other
inconsistencies across services within the urology APCs. We stated in
that same final rule that we would consider revisions to the urology
APCs in future rulemaking.
Currently, for CY 2020, there are seven levels of APCs for urology
services. We have reviewed the CY 2020 geometric mean cost for APCs
5371 through 5377 and, after our analysis of the claims data for this
proposed rule, we believe that a modification to the urology APCs is
appropriate.
For the CY 2021 OPPS/ASC proposed rule, we evaluated the claims
data and noted the large geometric mean cost differential between APC
5376 (level 6) and APC 5377 (level 7) has continued to grow. This
differential in the geometric mean cost from APC 5376 to APC 5377 would
have been about $9,700, with the geometric mean cost for APC 5377 being
about 220 percent of the geometric mean cost of APC 5376. With claims
data available for this CY 2021 OPPS proposed rule with comment period
showing an unusually large difference between the geometric mean costs
of the Level 6 Urology APC and the Level 7 Urology APC on both a dollar
and percentage basis, we believe that creating an additional APC in the
urology and related series will provide an appropriate structure
distinguishing between clinical and cost similarity for the procedures
in the different levels. Therefore, for CY 2021, we propose to create
an additional urology and related services APC 5378 (level 8) and re-
organize the current APC 5376 (level 6) and 5377 (level 7). As a
result, we propose a total of eight levels in the urology and related
services series. We believe this re-organization would address the lack
of an appropriate level for procedures with geometric mean costs that
fall between current APC 5376 and current APC 5377.
We note that the proposed re-organization re-assigns CPT 53440
(Male sling procedure) and CPT 0548T (Transperineal periurethral
balloon continence device; bilateral placement, including cystoscopy
and fluoroscopy) from the current APC 5376 to APC 5377.
In addition, this proposed revision reassigns the following
services from APC 5377 to APC 5378:
CPT 54416 (Removal and replacement of non-inflatable
(semi-rigid) or inflatable (self-contained) penile prosthesis at the
same operative session).
CPT 53444 (Insert tandem cuff).
CPT 54410 (Removal and replacement of all component(s) of
a multi-component, inflatable penile prosthesis at the same operative
session).
CPT 54411 (Removal and replacement of all components of a
multi-component inflatable penile prosthesis through an infected field
at the same operative session, including irrigation and debridement of
infected tissue).
CPT 54401 (Insertion of penile prosthesis; inflatable
(self-contained)).
CPT 54405 (Insertion of multi-component, inflatable penile
prosthesis, including placement of pump, cylinders, and reservoir).
CPT 53447 (Removal and replacement of inflatable urethral/
bladder neck sphincter including pump, reservoir, and cuff at the same
operative session).
CPT 53445 (Insertion of inflatable urethral/bladder neck
sphincter, including placement of pump, reservoir, and cuff).
We note that the APC reassignment for these 10 codes results in
geometric mean costs for Levels 6, 7, and 8 of the urology APCs that we
believe more appropriately align with the geometric mean costs for
services in these APCs than the current structure. Specifically, as
listed in Table 19, the geometric mean cost of $8,089.78 for APC 5376,
$11,275.15 for APC 5377, and $18,015.54 for APC 5378 reduces the
unusually large gaps on both a dollar and percentage basis in geometric
mean costs between each APC level.
[[Page 48843]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.034
In summary, to lessen the large payment gaps on both a dollar and
percentage basis between APCs 5376 and 5377, we propose to establish
APC 5378 (Level 8 Urology and Related Services) with status indicator
``J1'' for CY 2021. The proposed CY 2021 payment rates for all the
urology APCs, specifically APCs 5371 through 5378, can be found in
Addendum A to this proposed rule with comment period. In addition, we
refer readers to Addendum D1 of this proposed rule with comment period
for the status indicator (SI) meanings for all codes reported under the
OPPS. Both Addendum A and D1 are available via the internet on the CMS
website.
IV. OPPS Payment for Devices
A. Proposed 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 are 7 device categories eligible for
pass-through payment: C1823-Generator, neurostimulator (implantable),
nonrechargeable, with transvenous sensing and stimulation leads);
C1824-Generator, cardiac contractility modulation (implantable); C1982-
Catheter, pressure-generating, one-way valve, intermittently occlusive;
C1839-Iris prosthesis; C1734-Orthopedic/device/drug matrix for opposing
bone-to-bone or soft tissue-to bone (implantable); C2596-Probe, image-
guided, robotic, waterjet ablation; and C1748-Endoscope, single-use
(that is disposable), Upper GI, imaging/illumination device
(insertable).
The pass-through payment status of the device category for HCPCS
code C1823 will end on December 31, 2021; the pass-through payment
status of the device category for HCPCS code C1748 will end on June 30,
2022; and the pass-through payment status of the device categories for
HCPCS codes C1824, C1982, C1839, C1734, and C2596 will end on December
31, 2022. Table 20 shows the expiration of transitional
[[Page 48844]]
pass-through payments for these devices. All of these HCPCS codes will
have pass-through payment status and will continue to receive pass-
through payments in CY 2021.
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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). We note that, as discussed in section IV.A.4. of this CY
2021 OPPS/ASC proposed rule, we created an alternative pathway in the
CY 2020 OPPS/ASC final rule that granted 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 this CY 2021 OPPS/ASC proposed rule for a complete
discussion of this pathway.
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
marketing authorization (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 marketing
authorization, if required, unless there is a documented, verifiable
delay in U.S. market availability after FDA marketing authorization 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
[[Page 48845]]
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 cost 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).
In the CY 2020 annual rulemaking process, we finalized an
alternative pathway for devices that receive Food and Drug
Administration (FDA) marketing authorization and are granted a
Breakthrough Device designation (84 FR 61295). Under this alternative
pathway, devices that are granted a FDA Breakthrough Device designation
are not 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 do 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,
are part of the Breakthrough Devices Program, and meet the other
criteria in regulation can be approved through the quarterly process
and announced through that process (81 FR 79655). Proposals regarding
these devices and whether pass-through payment status should continue
to apply are included in the next applicable OPPS rulemaking cycle.
This process promotes timely pass-through payment status for innovative
devices, while also recognizing that such devices may not have a
sufficient evidence base to demonstrate substantial clinical
improvement at the time of FDA marketing authorization.
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 2021
We received five complete applications by the March 1, 2020
quarterly deadline, which was the last quarterly deadline for
applications to be received in time to be included in this CY 2021
OPPS/ASC proposed rule. We received one of the applications in the
second quarter of 2019, two of the applications in the fourth quarter
of 2019, and two of the applications in the first quarter of 2020. Two
of the applications were approved for device pass-through payment
during the quarterly review process: CUSTOMFLEX[supreg] ARTIFICIALIRIS
and EXALTTM Model D Single-Use Duodenoscope.
CUSTOMFLEX[supreg] ARTIFICIALIRIS received fast-track approval under
the alternative pathway effective January 1, 2020. EXALTTM
Model D Single-Use Duodenoscope received fast-track approval under the
alternative pathway effective July 1, 2020. As previously stated, all
applications that are preliminarily approved upon quarterly review will
automatically be included in the next applicable OPPS annual rulemaking
cycle. Therefore, CUSTOMFLEX[supreg] ARTIFICIALIRIS and
EXALTTM Model D Single-Use Duodenoscope are discussed below
in section IV.2.b.1.
Applications received for the later deadlines for the remaining
2020 quarters (June 1, September 1, and December 1), if any, will be
presented in the CY 2022 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, 2020
deadline is presented below.
1. Alternative Pathway Device Pass-Through Applications
We received three device pass-through applications by the March
2020 quarterly application deadline for devices that have received FDA
marketing authorization and a Breakthrough Device designation from FDA,
and therefore are eligible to apply under the alternative pathway. As
stated
[[Page 48846]]
above in section IV.2.a, under this alternative pathway, devices that
are granted a FDA Breakthrough Device designation are not evaluated in
terms of the current substantial clinical improvement criterion at
Sec. 419.66(c)(2)(i) for purposes of determining device pass-through
payment status, but will need to meet the other requirements for pass-
through payment status in our regulation at Sec. 419.66.
(1) CUSTOMFLEX[supreg] ARTIFICIALIRIS
VEO Ophthalmics submitted an application for a new device category
for transitional pass-through payment status for the CUSTOMFLEX[supreg]
ARTIFICIALIRIS by the June 2019 quarterly deadline. The
CUSTOMFLEX[supreg] ARTIFICIALIRIS device is described as a foldable
iris prosthesis that is custom-made for each individual patient who
requires one. The applicant states that the CUSTOMFLEX[supreg]
ARTIFICIALIRIS comes in two models--With Fiber or Fiber Free. The two
models are identical in every respect except that the With Fiber model
has a polyester meshwork layer embedded in it to provide adequate tear
strength to withstand suturing.
The applicant provides that the CUSTOMFLEX[supreg] ARTIFICIALIRIS
is intended to serve as an artificial iris prosthesis, inserted at the
time of cataract surgery or during a subsequent stand-alone procedure.
The CustomFlexTM Artificial Iris is indicated for use in children and
adults for the treatment of full or partial aniridia resulting from
congenital aniridia, acquired defects, or other conditions associated
with full or partial aniridia. The conditions that the
CUSTOMFLEX[supreg] ARTIFICIALIRIS treats are rare; congenital aniridia
is present in approximately 1.8 in 100,000 live births (1 in 40,000 to
1 in 100,000),4-2 congenital IridoCorneal Endothelial
Syndrome (ICE) syndrome is even less common (incidence not available).
Iris defects such as iatrogenic iridodialysis as a complication of
cataract surgery has variable prevalence, ranging from 0-0.84 percent
of surgeries,3 4 5 6 7 8 and may occur in approximately 0.2
percent of blunt orbital trauma.\9\ Although rare, these conditions are
cosmetically and functionally limiting. The applicant provides that in
addition to a noticeably absent or irregular iris/pupil, affected
patients frequently experience photophobia (light sensitivity) and
glare as well as symptoms such as dry eye.10 11
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\4\ Berlin HS, Ritch R. The treatment of glaucoma secondary to
aniridia. Mt Sinai J Med. 1981;48:11;
\2\ Nelson LB, Spaeth GL, Nowinski TS, et al. Aniridia. A
review. Surv Ophthalmol. 1984; 28:621-642.
\3\ Greenberg PB, Tseng VL, Wu WC, et al. Prevalence and
predictors of ocular complications associated with cataract surgery
in United States veterans. Ophthalmology. 2011 Mar;118(3):507-14.
\4\ Jaycock P, Johnston RL, Taylor H, et al., UK EPR User Group.
The Cataract National Dataset electronic multi-centre audit of
55,567 operations: Updating benchmark standards of care in the
United Kingdom and internationally. Eye (Lond). 2009;23:38-49.
\5\ Lum F, Schein O, Schachat AP, et al. Initial two years of
experience with the AAO National Eyecare Outcomes Network (NEON)
cataract surgery database. Ophthalmology. 2000;107:691-697.
\6\ Steinberg EP, Tielsch JM, Schein OD, et al. National study
of cataract surgery outcomes: Variation in 4-month postoperative
outcomes as reflected in multiple outcomes measures Ophthalmology.
1994;101:1131-1140.
\7\ Schein OD, Steinberg EP, Javitt JC, et al. Variation in
cataract surgery practice and clinical outcomes. Ophthalmology.
1994;101:1142-1152.
\8\ Powe NR, Schein OD, Gieser SC, et al. Cataract Patient
Outcome Research Team Synthesis of the literature on visual acuity
and complications following cataract extraction with intraocular
lens implantation. Arch Ophthalmol, 1994;112:239-252.
\9\ Kreidl KO, Kim DY, Mansour SE. Prevalence of significant
intraocular sequelae in blunt orbital trauma. Am J Emerg Med. 2003
Nov;21(7):525-8.
\10\ Weissbart SB, Ayres BD. Management of aniridia and iris
defects: an update on iris prosthesis options. Curr Opin Ophthalmol.
2016 May;27(3):244-9.
\11\ Lee HJ, Colby KA. A review of the clinical and genetic
aspects of aniridia. Semin Ophthalmol. 2013 Sep-Nov;28(5-6):306-12.
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According to the applicant, currently available treatments for
symptomatic glare, photophobia, and cosmesis are limited, and an FDA-
approved, commercially available iris prosthesis fills a needed gap.
Alternatives include tinted spectacles or contact lenses, iris
reconstruction (for example, pupilloplasty or iridodialysis repair),
and corneal tattooing.\10\ Among these, tinted spectacles can provide
some symptomatic relief, but the applicant states that they do not
address the underlying problem and cannot be used in all settings. Iris
reconstruction requires that sufficient iris tissue be present. Tinted
contact lenses and corneal tattooing are cosmetically not ideal and
have an associated risk of corneal infection (corneal ulcer and
infectious keratitis). According to the applicant, in addition, corneal
tattooing has risk of surface toxicity, anterior segment inflammation,
and/or corneal epithelial defect. The only other artificial iris
devices in the U.S. were previously available under FDA compassionate
use exemption (Morcher 50F, 96F; Ophtec 311 aniridia lens).\10\
However, these devices are no longer available following FDA approval
of the CUSTOMFLEX[supreg] ARTIFICIALIRIS.
With respect to the newness criterion at Sec. 419.66(b)(1), the
FDA granted the CUSTOMFLEX[supreg] ARTIFICIALIRIS premarket approval
(PMA) (P170039) on May 30, 2018 for use in the treatment of full or
partial aniridia resulting from congenital or acquired defects and was
designated a Breakthrough Device by FDA on December 21, 2017. The
applicant provided that there was a roughly 3-month market delay after
receipt of PMA approval while final labeling in its printed form was
submitted to FDA and FDA completed its review and approval process. The
applicant notes that commercial availability of the device commenced on
September 12, 2018 after it received FDA approval for the final
labeling. We received the application for a new device category for
transitional pass-through payment status for the CUSTOMFLEX[supreg]
ARTIFICIALIRIS on May 31, 2019, which is within 3 years of the date of
the initial FDA marketing authorization. We are inviting public comment
on whether the CUSTOMFLEX[supreg] ARTIFICIALIRIS meets the newness
criterion.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
the applicant states that the device is implanted via injection through
a 2.75-4 mm clear corneal incision. Depending on the site of
implantation (capsular bag, ciliary sulcus, sutured to sclera), the
device is cut (trephined) to the correct diameter. The device can also
be sutured to an intraocular lens if an intraocular lens is also
implanted at the time of surgery. The applicant further provides that
the CUSTOMFLEX[supreg] ARTIFICIALIRIS is integral to the service
provided, is used for one patient only, comes in contact with human
tissue, and is surgically implanted. The applicant also claimed that
the CUSTOMFLEX[supreg] ARTIFICIALIRIS 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, and it is not a supply or material furnished
incident to a service. We are inviting public comment on whether the
CUSTOMFLEX[supreg] ARTIFICIALIRIS meets the eligibility criteria at
Sec. 419.66(b).
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. Upon review,
it does not appear that there are any other existing pass-through
payment categories that might
[[Page 48847]]
apply to the CUSTOMFLEX[supreg] ARTIFICIALIRIS and we are inviting
public comments on this issue.
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (i)
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; or (ii) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device has received FDA marketing authorization and is part of the
FDA's Breakthrough Devices Program. As stated in section IV.2.a above,
devices that apply under the alternative pathway for devices with a FDA
marketing authorization and that have a Breakthrough Device designation
are not subject to evaluation for substantial clinical improvement (84
FR 61295). The CUSTOMFLEX[supreg] ARTIFICIALIRIS received FDA marketing
authorization and a Breakthrough Devices designation from FDA on
December 21, 2017.
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
CUSTOMFLEX[supreg] ARTIFICIALIRIS would be reported with CPT code
66999--Unlisted procedure, anterior segment of eye, which was assigned
to APC 5491 (Level 1 Intraocular Procedures) for Calendar Year (CY)
2020. 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 5491, which had a CY
2019 payment rate of $1,917. 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 66999 had a device offset amount of
$149.80 at the time the application was received. According to the
applicant, the cost of the CUSTOMFLEX[supreg] ARTIFICIALIRIS is $7,700,
for both the Fiber Free and with Fiber models.
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 $7,700 for the CUSTOMFLEX[supreg]
ARTIFICIALIRIS is 402 percent of the applicable APC payment amount for
the service related to the category of devices of $1,917 (($7,700/
$1,917) x 100 = 402 percent). Therefore, we believe the
CUSTOMFLEX[supreg] ARTIFICIALIRIS 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 $7,700 for the
CUSTOMFLEX[supreg] ARTIFICIALIRIS is 5,140 percent of the cost of the
device-related portion of the APC payment amount for the related
service of $150 (($7,700/$150) x 100 = 5,140 percent).
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 $7,700 for the CUSTOMFLEX[supreg] ARTIFICIALIRIS and
the portion of the APC payment amount for the device of $1,917 is 394
percent of the APC payment amount for the related service of $150
(($7,700-$150)/$1,917) x 100 = 394 percent). Therefore, we believe that
the CUSTOMFLEX[supreg] ARTIFICIALIRIS meets the third cost significance
requirement.
We are inviting public comment on whether the CUSTOMFLEX[supreg]
ARTIFICIALIRIS meets the device pass-through payment criteria discussed
in this section, including the cost criterion.
As stated above, we received the application for the
CUSTOMFLEX[supreg] ARTIFICIALIRIS application by the June 1, 2019
quarterly deadline and preliminarily approved for transitional pass-
through payment under the alternative pathway for CY 2020, effective
January 1, 2020. We are inviting public comment on whether the
CUSTOMFLEX[supreg] ARTIFICIALIRIS should continue to receive
transitional pass-through payment under the alternative pathway for
devices that are FDA market authorized and that have a FDA Breakthrough
Device designation.
(2) EXALTTM Model D Single-Use Duodenoscope
Boston Scientific Corporation submitted an application before the
March 2020 quarterly deadline for a new device category for
transitional pass-through payment status for the EXALTTM
Model D Single-Use Duodenoscope. The EXALTTM Model D Single-
Use Duodenoscope is described as a sterile, single-use, flexible
duodenoscope used to examine the duodenum and perform endoscopic
retrograde cholangiopancreatography (ERCP) procedures by facilitating
access to the pancreaticobiliary system. The applicant stated that it
has designed the technology of the EXALTTM Model D Single-
Use Duodenoscope to eliminate the risk of nosocomial infections due to
improper reprocessing of a reusable duodenoscope. As stated above, the
EXALTTM Model D Single-Use Duodenoscope is used during ERCP
procedures that are performed to examine bile and pancreatic ducts.
According to the applicant, the EXALTTM Model D Single-Use
Duodenoscope enables passage and manipulation of accessory devices in
the pancreaticobiliary system for diagnostic and therapeutic purposes,
as necessary. During the ERCP procedure, the physician inserts the
duodenscope through the patient's mouth, down the esophagus, into the
stomach, and then into the first part of the small intestine
(duodenum). The applicant stated that during ERCP a cannula is passed
through the duodenoscope via a working channel and used to cannulate a
small opening on the duodenal wall. Once that step is complete, the
physician injects contrast while x-rays are taken to study the bile
and/or pancreatic ducts. If the physician identifies an area that
warrants further investigation, accessory devices can be inserted
through the working channel of the scope and into the
pancreaticobiliary system for diagnosis or treatment. According to the
applicant, after the conclusion of the procedure, the single-use
EXALTTM Model D Single-Use Duodenoscope device has no
further medical use and is fully disposable.
With respect to the newness criterion at Sec. 419.66(b)(1), FDA
granted 510(k) premarket clearance (K193202) as of December 13, 2019.
Prior to 510(k) clearance, the applicant received Breakthrough Device
designation from FDA on November 19, 2019. We received the application
for a new device category for transitional pass-
[[Page 48848]]
through payment status for the EXALTTM Model D Single-Use
Duodenoscope on January 17, 2020, which is within 3 years of the date
of the initial FDA marketing authorization. We are inviting public
comment on whether the EXALTTM Model D Single-Use
Duodenoscope meets the newness criterion.
With regard to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, the EXALTTM Model D Single-Use
Duodenoscope is integral to the ERCP service provided, is used for one
patient only, and is surgically inserted as it is inserted through the
patient's mouth, down the esophagus, into the stomach, and then into
the first part of the small intestine. The applicant also stated that
the EXALTTM Model D Single-Use Duodenoscope 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, 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. With respect
to the existence of a previous pass-through device category that
describes EXALTTM Model D Single-Use Duodenoscope, the
applicant suggested a category descriptor of ``Duodenoscope, single-
use.'' The applicant also provided an existing device category ``C1749,
Endoscope, retrograde imaging/illumination colonoscope device
(implantable),'' for pass-through payment for another endoscope and
explained why they believe the category descriptor is not applicable to
EXALTTM Model D Single-Use Duodenoscope. The applicant
stated that HCPCS C1749 does not appropriately describe the EXALT Model
D, as C1749 is intended to describe endoscopic imaging devices that are
inserted through a colonoscope and into the colon. The applicant argues
that EXALT Model D is the first and only single-use duodenoscope
through which devices can be passed, and it is utilized in ERCP
procedures. The applicant further states that the scope that is the
subject of this request provides access to a different part of the
anatomy, specifically, the pancreaticobiliary system and facilitates
access for diagnostic and therapeutic purposes, as opposed to the
devices described by C1749, which are endoscopic imaging devices that
are inserted through a colonscope and into the colon, providing access
to a different part of the anatomy. Upon review, we agree with the
applicant that it does not appear that there are any other existing
pass-through payment categories that might apply and we are inviting
public comment on this issue.
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (i)
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; or (ii) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device has received FDA marketing authorization and is part of the
FDA's Breakthrough Devices Program. As previously discussed in section
2.a above, we finalized the alternative pathway for devices that
receive FDA marketing authorization and are granted a Breakthrough
Device designation in the CY 2020 OPPS/ASC final rule (84 FR 61295).
The EXALTTM Model D Single-Use Duodenoscope has marketing
authorization and a Breakthrough Device designation from the FDA and
therefore is not evaluated based on 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
EXALTTM Model D Single-Use Duodenoscope would be reported
with CPT code 43274 which is associated with APC 5331 (Complex GI
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. We used APC 5331 for our calculations, which had a CY
2020 payment rate of $4,780.30 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 43274 had a device offset amount of $1,287.81 at the time the
application was received. According to the applicant, the cost of the
EXALTTM Model D Single-Use Duodenoscope is $2,930.
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 $2,930 for the EXALTTM Model D
Single-Use Duodenoscope is 61 percent of the applicable APC payment
amount for the service related to the category of devices of $4,780.30
($2,930/$4,780.30 x 100 = 61.3 percent). Therefore, we believe the
EXALTTM Model D Single-Use Duodenoscope 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 $2,930 for the
EXALTTM Model D Single-Use Duodenoscope is 228 percent of
the cost of the device-related portion of the APC payment amount for
the related service of $1,287.81 ($2,930/$1,287.81) x 100 = 227.5
percent. Therefore, we believe that the EXALTTM Model D
Single-Use Duodenoscope 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 $2,930 for the EXALTTM Model D Single-Use
Duodenoscope and the portion of the APC payment amount for the device
of $1,287.81 is 34 percent of the APC payment amount for the related
service of $4,780.30 (($2,930-$1,287.81)/$4,780.30) x 100 = 34.4
percent). Therefore, we believe that the EXALTTM Model D
Single-Use Duodenoscope meets the third cost significance requirement.
We are inviting public comment on whether the EXALTTM Model
D Single-Use Duodenoscope meets the device pass-
[[Page 48849]]
through payment criteria discussed in this section, including the cost
criterion.
As specified above, the EXALTTM Model D Single-Use
Duodenoscope application was preliminarily approved for transitional
pass-through payment under the alternative pathway effective July 1,
2020. We are inviting public comment on whether the EXALTTM
Model D Single-Use Duodenoscope should continue to receive transitional
pass-through payment under the alternative pathway for devices that are
FDA market authorized and that have a FDA Breakthrough Device
designation.
(3) BAROSTIM NEOTM System
CVRx, Inc. submitted an application for the BAROSTIM
NEOTM System by the December 2019 quarterly deadline. The
applicant provides that the BAROSTIM NEOTM is indicated for
the treatment of symptoms of patients with advanced heart failure. The
applicant asserts that the BAROSTIM therapy triggers the body's main
cardiovascular reflex to regulate blood pressure and address the
underlying causes of the progression of heart failure. According to the
applicant, increased sympathetic and decreased parasympathetic activity
contribute to heart failure (HF) symptoms and disease progression.
Barostim's mechanism of action is stimulating the carotid baroreceptor
which results in centrally mediated reduction of sympathetic and
increase in parasympathetic activity. A single 2mm coated electrode
with a 7mm silicone backer is sutured to the carotid artery to activate
the baroreceptors. It is connected to an implantable pulse generator in
the chest which provides control of baroreflex activation energy. The
BAROSTIM NEOTM System uses CVRx patented BAROSTIM
THERAPYTM technology to trigger the body's own natural
systems (baroreflex) by electrically activating the carotid
baroreceptors, the body's natural cardiovascular regulation sensors.
According to the applicant, in conditions such as hypertension and
heart failure, it is believed the baroreceptors, the body's natural
sensors, are not functioning properly and are not sending sufficient
signals to the brain. This results in the brain sending signals to
other parts of the body (heart, blood vessels, kidneys) to constrict
the blood vessels, retain water and salt by the kidneys and increase
stress-related hormones. The applicant provides that when the
baroreceptors are activated by the BAROSTIM NEOTM system,
signals are sent through neural pathways to the brain. In response, the
brain works to counteract this stimulation by sending signals to other
parts of the body (heart, blood vessels, and kidneys) that relax the
blood vessels and inhibit the production of stress-related hormones.
These changes act to reduce cardiac after-load and enable the heart to
increase blood output, while maintaining or reducing its workload.
Parameters are programmed into the Implantable Pulse Generator (IPG)
using telemetry via a wireless external programming system. The
applicant states that the BAROSTIM NEOTM System is fully
programmable to adjust the therapy to each patient's need.
With respect to the newness criterion at Sec. 419.66(b)(1), the
FDA granted the BAROSTIM NEOTM System a premarket approval
(P180050) and a Breakthrough Device designation on August 16, 2019 for
the improvement of symptoms of heart failure--quality of life, six-
minute hall walk, and functional status--for patients who remain
symptomatic despite treatment with guideline-directed medical therapy,
are New York Heart Association (NYHA) Class III or Class II (who had a
recent history of Class III), have a left ventricular ejection fraction
<= 35 percent, a NT-proBNP < 1600 pg/ml and excluding patients
indicated for Cardiac Resynchronization Therapy (CRT) according to AHA/
ACC/ESC guidelines. We received the application for a new device
category for transitional pass-through payment status for the BAROSTIM
NEOTM on November 27, 2019, which is within 3 years of the
date of the initial FDA marketing authorization. We are inviting public
comment on whether the BAROSTIM NEOTM meets the newness
criterion.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, the use of BAROSTIM NEOTM is
integral to the service of providing baroflex therapyTM, is
used for one patient only, comes in contact with human skin and is
surgically implanted or inserted. The applicant also claimed the
BAROSTIM NEOTM 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, and it is not a supply or material furnished incident to a
service. We are inviting public comments on whether the BAROSTIM
NEOTM meets the eligibility criteria at Sec. 419.66(b).
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
BAROSTIM NEOTM, the applicant suggested a category
descriptor of ``Generator, neurostimulator (implantable), non-
rechargeable with carotid sinus stimulation lead.'' The applicant also
provided a list of current and expired device categories for pass-
through payment for other neurostimulation systems and their rationale
for why they believe the category descriptors are not applicable to
BAROSTIM NEOTM.
The applicant stated that BAROSTIM NEOTM is not
described by existing device category C1767, Generator, neurostimulator
(implantable), non-rechargeable. The applicant stated that similar to
the traditional spinal cord stimulation (SCS) systems included in this
category, the BAROSTIM NEOTM System is not rechargeable;
however, it is the only system that works to deliver CVRx's proprietary
baroreflex activation therapy (BAT). The applicant provided that BAT
uses afferent signaling to the brain by stimulating the carotid artery
to reduce the sympathetic signal and increase the parasympathetic
signal. The applicant stated that this unique therapy works to
rebalance the autonomic input to the heart to improve heart failure
symptoms.
Additionally, the applicant stated that traditional devices provide
pain relief by disrupting the pain signals traveling between the spinal
cord's nervous system and the brain, but the BAROSTIM NEO System uses
the generator to stimulate the baroreceptors in the carotid artery to
treat the symptoms of patients with advanced heart failure. The
applicant stated that the BAROSTIM NEO generator is unique in its
capability to drive electricity up to 20 mA/100 Hz with sufficient
battery capacity to provide the required therapy through the BAROSTIM
NEOTM carotid sinus lead. The applicant described that the
BAROSTIM NEOTM carotid sinus lead is sutured to the carotid
wall, where the baroreceptors (stretch fibers) are located. Electrical
current radiating from the carotid sinus lead activates the
baroreceptors. When activated, the baroreceptors send efferent signals
through the Carotid Sinus Nerve to the brain. The brain interprets
these afferent signals and reacts by reducing the sympathetic tone and
increasing the parasympathetic tone. The applicant states that the
BAROSTIM NEOTM System is the only device currently approved
by FDA that leverages this mechanism of action to treat the
[[Page 48850]]
symptoms of patients with advanced heart failure.
The applicant stated that BAROSTIM NEOTM is not
described by existing device category C1823, Generator, neurostimulator
(implantable), non-rechargeable, with transvenous sensing and
stimulation leads. The applicant states that existing device category
C1823 is exclusively used to describe a complete system comprised of a
generator implanted in the chest, a stimulation lead attached to the
phrenic nerve and a sensing lead to control the function of the
diaphragm for the treatment of moderate to severe central sleep apnea.
The applicant states that the BAROSTIM NEOTM System utilizes
a single stimulation lead positioned on the carotid artery to stimulate
baroreceptors. The stimulation of the baroreceptors creates afferent
nerve traffic through the Carotid Sinus Nerve, and results in the
activation of the baroreflex. The applicant again states that the
BAROSTIM NEOTM System is the only device currently approved
by FDA that leverages this mechanism of action to improve quality of
life and functional status in heart failure.
The applicant also provided that BAROSTIM NEOTM is not
described by existing device category C1778, Lead, neurostimulator
(implantable). The applicant stated that leads used in traditional
neurostimulation are implanted on nerves (for example, spinal cord,
peripheral nerves). The applicant stated that in contrast, the BAROSTIM
NEO carotid sinus lead is sutured onto the carotid artery and is the
only lead that is designed to be secured on an arterial wall to
stimulate sensors located inside the arterial wall (baroreceptors). The
applicant provided that stimulation is delivered to the arterial wall,
where the baroreceptors (stretch fibers) are located. The applicant
stated that the BAROSTIM NEOTM generator is uniquely
designed to send electric current via the BAROSTIM NEOTM
carotid sinus lead and that the BAROSTIM NEOTM carotid sinus
lead is uniquely designed to only interface with the BAROSTIM NEO
generator. Again, the applicant provided that the BAROSTIM
NEOTM System is the only device currently approved by FDA
that leverages this mechanism of action to treat the symptoms of
patients with advanced heart failure.
We are concerned that the BAROSTIM NEOTM System may be
appropriately described by existing pass-through payment categories.
Specifically, we believe that Barostim may be appropriately described
by C1767 as the Barostim device consists of a generator, a
neurostimulator, and a lead. We are inviting public comment on this
issue.
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (i)
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; or (ii) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device has received FDA marketing authorization and is part of the
FDA's Breakthrough Devices Program. As stated in section 2.a above,
devices that apply under the alternative pathway for devices with a FDA
marketing authorization and that have a Breakthrough Device designation
are not subject to evaluation for substantial clinical improvement (84
FR 61295). Barostim has FDA marketing authorization and a Breakthrough
Device designation.
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 BAROSTIM
NEOTM would be reported with CPT code 0266T, which they
consider to be a total system code. CPT code 0266T is assigned to APC
5464 (Level 4 Neurostimulator and Related 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 5464, which has a CY 2020 payment rate of
$29,115.50. 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 0266T had a device offset amount of $24,253 at the
time the application was received. According to the applicant, the cost
of the BAROSTIM NEOTM is $35,000.
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 $35,000 for the BAROSTIM NEOTM is
120 percent of the applicable APC payment amount for the service
related to the category of devices of $29,116 (($35,000/29,116) x 100 =
120.2 percent). Therefore, we believe the BAROSTIM NEOTM
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 $35,000 for the
BAROSTIM NEOTM is 144 percent of the cost of the device-
related portion of the APC payment amount for the related service of
$24,253 (($35,000/$24,253) x 100 = 144.3 percent). Therefore, we
believe that the BAROSTIM NEOTM 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 $35,000 for BAROSTIM NEOTM and the
portion of the APC payment amount for the device of $24,253 is 37
percent of the APC payment amount for the related service of $29,116
(($35,000-$24,253)/$29,116) x 100 = 36.9 percent). Therefore, we
believe that the BAROSTIM NEOTM System meets the third cost
significance requirement.
We are inviting public comment on whether the BAROSTIM
NEOTM System meets the device pass-through payment criteria
discussed in this section, including the cost criterion.
2. Traditional Device Pass-Through Applications
(1) Hemospray[supreg] Endoscopic Hemostat
Cook Medical submitted an application for a new device category for
transitional pass-through payment status for the Hemospray[supreg]
Endoscopic Hemostat (Hemospray) for CY 2021. Hemospray[supreg]
Endoscopic Hemostat is a prescription use device consisting of a
hemostatic agent and a delivery system. The hemostatic agent is an
inert, bentonite powder, naturally sourced from aluminum phyllosilicate
clay, developed for endoscopic hemostasis.
[[Page 48851]]
According to the applicant, Hemospray[supreg] is indicated by the FDA
for hemostasis of nonvariceal gastrointestinal bleeding. Using an
endoscope to access the gastrointestinal tract, the Hemospray delivery
system is passed through the accessory channel of the endoscope and
positioned just above the bleeding site without making contact with the
GI tract wall. The Hemospray[supreg] powder is propelled through the
application catheter, either a 7 or 10 French polyethylene catheter, by
release of CO2 from the cartridge located in the device
handle and sprayed onto the bleeding site. Bentonite can absorb five to
ten times its weight in water and swell up to 15 times its dry volume.
Bentonite rapidly absorbs water and becomes cohesive to itself and
adhesive to tissue, forming a physical barrier to aqueous fluid (for
example, blood). Hemospray[supreg] is not absorbed by the body and does
not require removal as it passes through the GI tract within 72 hours.
Hemospray[supreg] is single-use and disposable.
With respect to the newness criterion at Sec. 419.66(b)(1), the
FDA granted a de novo request classifying the Hemospray[supreg]
Endoscopic Hemostat (Hemospray[supreg]) as a Class II device under
section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act on May 7,
2018. We received the application for a new device category for
transitional pass-through payment status for the Hemospray[supreg]
Endoscopic Hemostat on December 2, 2019, which is within 3 years of the
date of the initial FDA marketing authorization. We are inviting public
comments on whether Hemospray[supreg] meets the newness criterion.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, Hemospray[supreg] 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 Hemospray[supreg] 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, and it is not a supply or material
furnished incident to a service. We are inviting public comments on
whether Hemospray[supreg] meets the eligibility criteria at Sec.
[thinsp]419.66(b).
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
yet identified an existing pass-through payment category that describes
Hemospray[supreg]. We are inviting public comment on whether
Hemospray[supreg] meets the device category criterion.
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (i)
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; or (ii) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device has received FDA marketing authorization and is part of the
FDA's Breakthrough Devices Program. The applicant stated that
Hemospray[supreg] represents a substantial clinical improvement over
existing technologies. With respect to this criterion, the applicant
submitted studies that examined the impact of Hemospray[supreg] on
endoscopic hemostasis outcomes, rebleeding occurrence, and mortality.
According to the applicant, Hemospray[supreg] is a topically
applied mineral powder that offers a novel primary treatment option for
endoscopic bleeding management, serves as an option for patients who
fail conventional endoscopic treatments, and serves as an alternative
to interventional radiology hemostasis (IRH) and surgery. Broadly, the
applicant outlined two treatment areas in which it stated
Hemospray[supreg] would provide a substantial clinical improvement: (1)
As a primary treatment or a rescue treatment after the failure of a
conventional method, and (2) in use for the treatment of malignant
lesions. The applicant provided seven articles specifically for the
purpose of addressing the substantial clinical improvement criterion.
The first article provided by the applicant was a prospective
single armed multicenter phase two safety and efficacy study performed
in France.\15\ From March 2013 to January 2015, 64 endoscopists in 20
centers enrolled 202 patients in the study in which Hemospray[supreg]
was used as either a first line treatment (46.5 percent) or salvage
therapy (53.5 percent) following unsuccessful treatment with another
method. The indication for Hemospray[supreg] as a first-line therapy or
salvage therapy was at the discretion of the endoscopist. Of the 202
patients, the mean age was 68.9, 69.3 percent were male, and all
patients were classified into four primary etiologic groups: Ulcers
(37.1 percent), malignant lesions (30.2 percent), post-endoscopic
bleeding (17.3 percent), and other (15.3 percent). Patients were
further classified by the American Society of Anesthesiologist (ASA)
physical status scores with 4.5 percent as a normal healthy patient,
24.3 percent as a patient with mild systemic disease, 46 percent as a
patient with severe systemic disease, 22.8 percent as a patient with
severe systemic disease that is a constant threat to life, and 2.5
percent as a moribund patient who is not expected to survive without an
operation.6 7 Immediate hemostasis was achieved in 96.5
percent across all patients; among treatment subtypes immediate
hemostasis was achieved in 96.8 percent of first-line treated patients
and 96.3 percent of salvage therapy patients. At day 30 the overall
rebleeding was 33.5 percent of 185 patients with cumulative incidences
of 41.4 percent for ulcers, 37.7 percent for malignant lesions, 17.6
percent for post-endoscopic bleedings, and 25 percent for others. When
Hemospray[supreg] was used as a first-line treatment, rebleeding at day
30 occurred in 26.5 percent (22/83) of overall lesions, 30.8 percent of
ulcers, 33.3 percent of malignant lesions, 13.6 percent of post-
endoscopic bleedings, and 22.2 percent of other. When Hemospray[supreg]
was used as a salvage therapy, rebleeding at day 30 occurred in 39.2
percent (40/102) of overall lesions, 43.9 percent of ulcers, 50.0
percent of malignant lesions, 25.0 percent of post-endoscopic
bleedings, and 26.3 percent for others. According to the article, the
favorable hemostatic results seen from Hemospray[supreg] are due to its
threefold mechanism of action: formation of a mechanical barrier;
concentration of clotting factors at the bleeding site; and enhancement
of clot formation.\8\ No severe adverse events
[[Page 48852]]
were noted, however the authors note the potential for pain exists due
to the use of carbon dioxide. Lastly, the authors stated that while
Hemospray[supreg] was found to reduce the need for radiological
embolization and surgery as salvage therapies, it was not found to be
better than other hemostatic methods in terms of preventing rebleeding
of ulcers.
---------------------------------------------------------------------------
\5\ Haddara S, Jacques J, Lecleire S et al. A novel hemostatic
powder for upper gastrointestinal bleeding: a multicenter study (the
GRAPHE registry). Endoscopy 2016; 48: 1084-95.
\6\ Ibid.
\7\ ASA House of Delegates/Executive Committee. (2014, October
15). ASA Physical Status Classification System. Retrieved from
American Society of Anesthesiologists: https://www.asahq.org/standards-and-guidelines/asa-physical-status-classification-system
\8\ Haddara S, Jacques J, Lecleire S et al. A novel hemostatic
powder for upper gastrointestinal bleeding: a multicenter study (the
GRAPHE registry). Endoscopy 2016; 48: 1084-95.
---------------------------------------------------------------------------
The applicant provided a second article consisting of an abstract
from another systematic review article.\9\ The abstract purports to
cover a review of prospective, retrospective, and randomized control
trials evaluating Hemospray[supreg] as a rescue therapy. Eighty-five
articles were initially identified and 23 were selected for review. Of
those, 5 studies were selected which met the inclusion criteria of the
analysis. The median age of patients was 69; 68 percent were male. The
abstract concludes that when used as a rescue therapy after the failure
of conventional endoscopic modalities, in nonvariceal gastrointestinal
bleeding, Hemospray[supreg] seems to have significantly higher rates of
immediate hemostasis.
---------------------------------------------------------------------------
\9\ Moole, V., Chatterjee, T., Saca, D., Uppu, A., Poosala, A.,
& Duvvuri, A. A Systematic review and meta-analysis: analyzing the
efficacy of hemostatic nanopowder (TC-325) as rescue therapy in
patients with nonvariceal upper gastrointestinal bleeding.
Gastroenterology 2019; 156(6), S-741.
---------------------------------------------------------------------------
A third article provided by the applicant described a single-arm
retrospective analytical study of 261 enrolled patients conducted at 21
hospitals in Spain.\10\ The mean age was 67 years old, 69 percent of
patients were male, and the overall technical success, defined as
correct assembled and delivery of Hemospray[supreg] to a bleeding
lesion, was 97.7 percent (95.1 percent-99.2 percent). The most common
causes of bleeding in patients were peptic ulcer (28 percent),
malignancy (18.4 percent), therapeutic endoscopy-related (17.6
percent), and surgical anastomosis (8.8 percent). Overall, 93.5 percent
(89.5 percent to 96 percent) of procedures achieved hemostasis.
Recurrent bleeding, defined as (1) a new episode of bleeding symptoms,
(2) a decrease in hemoglobin of >2 g/dL within 48 hours of an index
endoscopy or >3g/dL in 24 hours, or (3) direct visualization of active
bleeding at the previously treated lesion on repeat endoscopy, had a
cumulative incidence at 3 and 30 days of 16.1 percent (11.9 percent-21
percent) and 22.9 percent (17.8 percent-28.3 percent) respectively. The
overall risk of Hemospray[supreg] failure at 3 and 30 days was 21.1
percent (16.4 percent-26.2 percent) and 27.4 percent (22.1 percent-32.9
percent) respectively with no statistically significant differences (p
= 0.07) between causes at 30 days (for example, peptic ulcer,
malignancy, anastomosis, therapeutic endoscopy-related, and other
causes). With the use of multivariate analysis spurting bleeding vs.
nonspurting bleeding (subdistribution hazard ratio [sHR] 1.97 (1.24-
3.13)), hypotension vs. normotensive (sHR 2.14 (1.22-3.75)), and the
use of vasoactive drugs (sHR 1.80 (1.10-2.95)) were independently
associated with Hemospray[supreg] failure. The overall 30-day survival
was 81.9 percent (76.5 percent-86.1 percent) with 46 patients dying
during follow-up and 22 experiencing bleeding related deaths; twenty
patients (7.6 percent) with intraprocedural hemostasis died before day
30. The authors indicated the majority of Hemospray[supreg] failures
occurred within the first 3 days and the rate of immediate hemostasis
was similar to literature reports of intraprocedural success rates of
over 90 percent. The authors stated that the hemostatic powder of
Hemospray[supreg] is eliminated from the GI tract as early as 24 hours
after use, which could explain the wide ranging recurrent bleeding
percentage. The authors reported that importantly, adverse events are
rare, but cases of abdominal distension, visceral perforation,
transient biliary obstruction, and splenic infarct have been reported;
one patient involved in this study experienced an esophageal
perforation without a definitive causal relationship.
---------------------------------------------------------------------------
\10\ Rodriguez de Santiago E, Burgos-Santamaria D, Perez-Carazo
L, et. al. Hemostatic spray TC-325 for GI bleeding in a nationwide
study: Survival analysis and predictors of failure via competing
risks analysis. Gastrointest Endosc 2019; 90(4), 581-590.
---------------------------------------------------------------------------
A fourth article provided by the applicant described a single-arm
multicenter prospective registry involving 314 patients in Europe which
collected data on days 0, 1, 3, 7, 14, and 30 after endotherapy with
Hemospray[supreg].\11\ The outcomes of interest in this study were
immediate endoscopic hemostasis (observed cessation of bleeding within
5 minutes post Hemospray[supreg] application) with secondary outcomes
of rebleeding immediately following treatment and during follow-up, 7
and 30 day all-cause mortality, and adverse events. The sample was 74
percent male with a median age of 71 with the most common pathologies
of peptic ulcer (53 percent), malignancy (16 percent), post-endoscopic
bleeding (16 percent), bleeding from severe inflammation (11 percent),
esophageal variceal bleeding (2.5 percent), and cases with no obvious
cause (1.6 percent). The median baseline Blatchford score (BS) and RS
were 11 and 7 respectively. The BS ranges from 0 to 23 with higher
scores indicating increasing risk for required endoscopic intervention
and is based upon the blood urea nitrogen, hemoglobin, systolic blood
pressure, pulse, presence of melena, syncope, hepatic disease, and/or
cardiac failure.\12\ The RS ranges from 0 to 11 with higher scores
indicating worse potential outcomes and is based upon age, presence of
shock, comorbidity, diagnosis, and endoscopic stigmata of recent
hemorrhage.\13\ Immediate hemostasis was achieved in 89.5 percent of
patients following the use of Hemospray[supreg]; only the BS was found
to have a positive correlation with treatment failure in multivariate
analysis (OR 1.21 (1.10-1.34)). Rebleeding occurred in 10.3 percent of
patients who achieved immediate hemostasis again with only the BS
having a positive correlation with rebleeding (OR: 1.13 (1.03-1.25)).
At 30 days the all-cause mortality was 20.1 percent with 78 percent of
these patients having achieved immediate endoscopic hemostasis and a
cause of death resulting from the progression of other comorbidities. A
subgroup analysis of treatment type (monotherapy, combination therapy,
and rescue therapy groups) was performed showing no statistically
significant difference in immediate hemostasis across groups (92.4
percent, 88.7 percent, and 85.5 percent respectively). Higher all-cause
mortality rates at 30 days were highest in the monotherapy group (25.4
percent, p = 0.04) as compared to all other groups. According to the
authors, in comparison to major recent studies they were able to show
lower rebleeding rates overall and in all subgroups despite the high-
risk population.\14\ The authors further note limitations in that the
inclusion of patients was nonconsecutive and at the discretion of the
endoscopist, at the time of the endoscopy, which allows for the
potential introduction of selection bias, which may have affected these
study results.
---------------------------------------------------------------------------
\11\ Alzoubaidi D, Hussein M, Rusu R, et al. Outcomes from an
international multicenter registry of patients with acute
gastrointestinal bleeding undergoing endoscopic treatment with
Hemospray. Digestive Endoscopy 2019.
\12\ Saltzman, J. (2019, October). Approach to acute upper
gastrointestinal bleeding in adults. (M. Feldman, Editor) Retrieved
from UpToDate: https://www.uptodate.com/contents/approach-to-acute-upper-gastrointestinal-bleeding-in-adults.
\13\ Ibid.
\14\ Alzoubaidi D, Hussein M, Rusu R, et al. Outcomes from an
international multicenter registry of patients with acute
gastrointestinal bleeding undergoing endoscopic treatment with
Hemospray. Digestive Endoscopy 2019.
---------------------------------------------------------------------------
[[Page 48853]]
The fourth article also described the utility of Hemospray[supreg]
in the treatment of malignant lesions. According to the applicant,
malignant lesions pose a significant clinical challenge as successful
hemostasis rates are as low as 40 percent with high recurrent bleeding
over 50 percent within 1 month following standard
treatments.15 16 The applicant added that bleeding from
tumors is often diffuse and consists of friable mucosa decreasing the
utility of traditional treatments (for example, ligation, cautery).
From the fourth article, the applicant noted that 50 patients were
treated for malignant bleeding with an overall immediate hemostasis in
94 percent of patients.\17\ Of the 50 patients, 33 were treated with
Hemospray[supreg] alone, 11 were treated with Hemospray[supreg] as the
final treatment, and 4 were treated with Hemospray[supreg] as a rescue
therapy of which 100 percent, 84.6 percent and 75 percent experienced
immediate hemostasis respectively.\18\ Similarly, from the first
discussed article, the applicant noted that among malignant bleeding
patients, 95.1 percent achieved immediate hemostasis with lower
rebleeding rates at 8 days when Hemospray[supreg] was used as a primary
treatment as compared to when used as a rescue therapy (17.1 percent
vs. 46.7 percent respectively).\19\ The applicant concluded that
Hemospray[supreg] may provide an advantage as a primary treatment to
patients with malignant bleeding.
---------------------------------------------------------------------------
\15\ Kim YI, Choi IJ, Cho SJ, et al. Outcome of endoscopic
therapy for cancer bleeding in patients with unresectable gastric
cancer. J Gastroenterol Hepatol 2013;28:1489-95.
\16\ Roberts SE, Button LA, Williams JG. Prognosis following
upper gastrointestinal bleeding. PLoS One 2012;7:e49507.
\17\ Alzoubaidi D, Hussein M, Rusu R, et al. Outcomes from an
international multicenter registry of patients with acute
gastrointestinal bleeding undergoing endoscopic treatment with
Hemospray. Digestive Endoscopy 2019.
\18\ Alzoubaidi D, Hussein M, Rusu R, et al. Outcomes from an
international multicenter registry of patients with acute
gastrointestinal bleeding undergoing endoscopic treatment with
Hemospray. Digestive Endoscopy 2019.
\19\ Haddara S, Jacques J, Lecleire S et al. A novel hemostatic
powder for upper gastrointestinal bleeding: a multicenter study (the
GRAPHE registry). Endoscopy 2016; 48: 1084-95.
---------------------------------------------------------------------------
The applicant provided a fifth article, which consisted of a
journal pre-proof article detailing a 1:1 randomized control trial of
20 patients treated with Hemospray[supreg] versus the standard of care
(for example, thermal and injection therapies) in the treatment of
malignant gastrointestinal bleeding.\20\ The goals of this pilot study
were to determine the feasibility of a definitive trial. The primary
outcome of the study was immediate hemostasis (absence of bleeding
after 3 minutes) with secondary outcomes of recurrent bleeding at days
1, 3, 30, 90, and 180 and adverse events at days 1, 30, and 180. The
mean age of patients was 67.2, 75 percent were male, and on average
patients presented with 2.9 1.7 comorbidities. All
patients had active bleeding at endoscopy and the majority of patients
had an ASA score of 2 (45 percent) or 3 (40 percent). Immediate
hemostasis was achieved in 90 percent of Hemospray[supreg] patients and
40 percent of standard of care patients (5 injection alone, 3 thermal,
1 injection with clips, and 1 unknown). Of those patients in the
control group, 83.3 percent crossed over to the Hemospray[supreg]
treatment. One patient died while being treated with Hemospray[supreg]
from exsanguination; post-mortem examination demonstrated that bleeding
was caused by rupture of a malignant inferior mesenteric artery
aneurysm. Overall, 86.7 percent of patients treated with
Hemospray[supreg] initially or as crossover treatment achieved
hemostasis. Recurrent bleeding was lower in the Hemospray[supreg] group
(20 percent) as compared to the control group (60 percent) at 180 days.
Forty percent of the treated group received blood transfusions as
compared to 70 percent of the control group. The overall length of stay
was 14.6 days among treated patients as compared to 9.4 in the control
group. Mortality at 180 days was 80 percent in both the treated and
control groups. The authors noted the potential for operator bias in
the use of Hemospray[supreg] prior to switching to another method when
persistent bleeding exists. Lastly, the authors noted that while they
did not occur during this study, there are concerns around the risks of
perforation, obstruction, and systemic embolization with the use of
Hemospray[supreg].
---------------------------------------------------------------------------
\20\ Chen Y-I, Wyse J, Lu Y, Martel M, Barkun AN, TC-325
hemostatic powder versus current standard of care in managing
malignant GI bleeding: a pilot randomized clinical trial.
Gastrointestinal Endoscopy (2019), doi: https://doi.org/10.1016/j.gie.2019.08.005.
---------------------------------------------------------------------------
A sixth article provided by the applicant was a case-controlled
study with 10 patients with active upper gastrointestinal bleeding from
tumor compared with 10 conventional therapy patients selected as
historical controls, matched by type of tumor.\21\ The study evaluated
efficacy for tumor-related bleeding and compared Hemospray[supreg] to
conventional therapies, specifically examining 14-day rebleeding rates,
lengths of hospital stay (LOS), and mortality rate at 30-day follow up.
Historical controls were selected from patient medical records from
2010 to 2014. Among the patients who received Hemospray[supreg], the
14-day rebleeding rate (10 percent vs. 30 percent; P = 0.60). and the
30-day mortality rates (10 percent vs. 30 percent, P = 0.7) were three
times lower compared to the control group; neither rate was
statistically significant. There was no difference in LOS between the
Hemospray[supreg] and conventional therapy patients.
---------------------------------------------------------------------------
\21\ Pittayanon, R., Prueksapanich, P., & Rerknimitr, R. (2016).
The efficacy of Hemospray in patients with upper gastrointestinal
bleeding from tumor. Endoscopy international open, 4(09), E933-E936.
---------------------------------------------------------------------------
A seventh article provided by the applicant described a single-arm
multicenter retrospective study from 2011 to 2016 involving 88 patients
who bled as a result of either a primary GI tumor or metastases to the
GI tract.\22\ In this study the authors define immediate hemostasis as
no further bleeding at least one minute after treatment with
Hemospray[supreg] and recurrent bleeding was suspected if one of seven
criteria were met: (1) Hematemesis or bloody nasogastric tube >6 hours
after endoscopy; (2) melena after normalization of stool color; (3)
hematochezia after normalization of stool color or melena; (4)
development of tachycardia or hypotension after >1 hour of vital sign
stability without other cause; (5) decrease in hemoglobin level greater
than or equal to 3 hours apart; (6) tachycardia or hypotension that
does not resolve within 8 hours after index endoscopy; or (7)
persistent decreasing hemoglobin of >3 g/dL in 24 hours associated with
melena or hematochezia). The sample for this study consisted of 88
patients (with a mean age of 65 years old and 70.5 percent male) of
which 33.3 percent possessed no co-morbid illness, and 25 percent were
on current antiplatelet/anticoagulant medication. The mean BS was 8.7
plus or minus 3.7 with a range from 0 to 18. Overall, 72.7 percent of
patients had a stage 4 adenocarcinoma, squamous cell carcinoma, or
lymphoma. Immediate hemostasis was achieved in 97.7 percent of
patients. Recurrent bleeding occurred among 13 of 86 (15 percent) and 1
of 53 (1.9 percent) at 3 and 30 days, respectively. A total of 25
patients (28.4 percent) died during the 30-day follow up period.
Overall, 27.3 percent of patients re-bled within 30 days after
treatment of which half were within 3 days. Using multivariate
analysis, the authors found patients with good performance status, no
end-
[[Page 48854]]
stage cancer, or receiving any combination of definitive hemostasis
treatment modalities had significantly greater survival. The authors
acknowledged the recurrent bleeding rate post Hemospray[supreg]
treatment at 30 days of 38 percent is comparable with that seen in sole
conventional hemostatic techniques and state this implies that
Hemospray[supreg] does not differ from conventional techniques and
remains unsatisfactory.
---------------------------------------------------------------------------
\22\ Pittayanon R, Rerknimitr R, Barkun A. Prognostic factors
affecting outcomes in patients with malignant GI bleeding treated
with a novel endoscopically delivered hemostatic powder.
Gastrointest Endosc 2018; 87:991-1002.
---------------------------------------------------------------------------
Ultimately, the applicant concluded nonvariceal gastrointestinal
bleeding is associated with significant morbidity and mortality in
older patients with multiple co-morbid conditions. Inability to achieve
hemostasis and early rebleeding are associated with increased cost and
greater resource utilization. According to the applicant, patients with
bleeding from malignant lesions have few options that can provide
immediate hemostasis without further disrupting fragile mucosal tissue
and worsening the active bleed. The applicant stated Hemospray[supreg]
is an effective agent that provides immediate hemostasis in patients
with GI bleeding as part of multimodality treatment, as well as when
used to rescue patients who have failed more conventional endoscopic
modalities. Furthermore, the applicant stated that in patients with
malignant bleeding in the GI tract, Hemospray[supreg] provides a high
rate of immediate hemostasis and fewer recurrent bleeding episodes,
which, in combination with definitive cancer treatment, may lead to
improvements in long term survival. Lastly, the applicant stated
Hemospray[supreg] is an important new technology that permits immediate
and long-term hemostasis in GI bleeding cases where standard of care
treatment with clip ligation or cautery are not effective.
We note that the majority of studies provided lack a comparator
when assessing the effectiveness of Hemospray[supreg]. Three of the
articles provided are systematic reviews of the literature. While we
find these articles helpful in establishing a background for the use of
Hemospray[supreg], we are concerned that they may not provide strong
evidence of substantial clinical improvement. Four studies appear to be
single-armed studies assessing the efficacy of Hemospray[supreg] in the
patient setting. In all of these articles, comparisons are made between
Hemospray[supreg] and standard of care treatments; however, without the
ability to control for factors such as study design, patient
characteristics, etc., it is difficult to determine if any differences
seen result from Hemospray[supreg] or confounding variables.
Furthermore, within the retrospective and prospective studies lacking a
control subset, some level of selection bias appears to potentially be
introduced in that providers may be allowed to select the manner and
order in which patients are treated, thereby potentially influencing
outcomes seen in these studies.
Additionally, one randomized control trial provided by the
applicant appears to be in the process of peer-review and is not yet
published. Furthermore, this article is written as a feasibility study
for a potentially larger randomized control trial and contains a sample
of only 20 patients. This small sample size leaves us concerned that
the results are not representative of the larger Medicare population.
Lastly, as described we are concerned the control group can receive one
of multiple treatments which lack a clear designation methodology
beyond physician choice. For instance, 50 percent of the control
patients received injection therapy alone, which according to the
literature provided by the applicant is not an acceptable treatment for
endoscopic bleeding. Accordingly, it is not clear whether performance
seen in the treated group as compared to the control group is due to
Hemospray[supreg] itself or due to confounding factors.
Third, we are concerned with the samples chosen in many of the
studies presented. Firstly, the Medicare population is approximately 54
percent female and 46 percent male.\23\ Many of the samples provided by
the applicant are overwhelmingly male. Secondly, many of the studies
provided were performed in European and other settings outside of the
United States. We are therefore concerned that the samples chosen
within the literature provided may not represent the Medicare
population.
---------------------------------------------------------------------------
\23\ https://www.cms.gov/files/document/2018-mdcr-enroll-ab-5.pdf.
---------------------------------------------------------------------------
Lastly, we are concerned about the potential for adverse events
resulting from Hemospray[supreg]. It is unclear from the literature
provided by the applicant what the likelihood of these events is and
whether or not an evaluation for the safety of Hemospray[supreg] was
performed. About one-third of the articles submitted specifically
addressed adverse events with Hemospray[supreg]. However, the
evaluation of adverse events was limited and most of the patients in
the studies died of disease progression. A few of the provided articles
mention the potential for severe adverse reactions (for example,
abdominal distension, visceral perforation, biliary obstruction,
splenic infarct). Specifically, one article \24\ recorded adverse
events related to Hemospray[supreg], including abdominal distention and
esophageal perforation.
---------------------------------------------------------------------------
\24\ Rodriguez de Santiago E, Burgos-Santamaria D, Perez-Carazo
L, et. al. Hemostatic spray TC-325 for GI bleeding in a nationwide
study: survival analysis and predictors of failure via competing
risks analysis. Gastrointest Endosc 2019; 90(4), 581-590.
---------------------------------------------------------------------------
According to information submitted by the applicant, Cook Medical
is voluntarily recalling Hemospray[supreg] Endoscopic Hemostat due to
complaints received that the handle and/or activation knob on the
device in some cases has cracked or broken when the device is activated
and in some cases has caused the carbon dioxide cartridge to exit the
handle. The applicant stated that Cook Medical has received 1 report of
a superficial laceration to the user's hand that required basic first
aid; however, there have been no reports of laceration, infection, or
permanent impairment of a body structure to users or to patients due to
the carbon dioxide cartridge exiting the handle. The applicant stated
that Cook Medical has initiated an investigation and will determine the
appropriate corrective action(s) to prevent recurrence of this issue.
According to the applicant, although the recall does restrict
availability of the device, they wish to continue their application as
they believe the use of Hemospray[supreg] significantly improves
clinical outcomes for certain patient populations compared to currently
available treatments.
Based upon the evidence presented, we are inviting public comments
on whether the Hemospray[supreg] Endoscopic Hemostat meets 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 Hemospray[supreg]
would be reported with HCPCS codes 43227, 43255, 44366, 44378, 44391,
45334, and 45382. 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 5312,
which had a CY 2020 payment rate of $1,004.10 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
[[Page 48855]]
79657). HCPCS code 45382 had a device offset amount of $33.54 at the
time the application was received. According to the applicant, the cost
of the Hemospray[supreg] Endoscopic Hemostat 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 Hemospray[supreg] is 249 percent
of the applicable APC payment amount for the service related to the
category of devices of $1004.10 (($2,500/$1,004.10) x 100 = 249
percent). Therefore, we believe Hemospray[supreg] 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 $2,500 for
Hemospray[supreg] is 7,454 percent of the cost of the device-related
portion of the APC payment amount for the related service of $33.54
(($2,500/$33.54) x 100 = 7,453.8 percent). Therefore, we believe that
Hemospray[supreg] 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 Hemospray[supreg] and the portion of the
APC payment amount for the device of $33.54 is 246 percent of the APC
payment amount for the related service of $1004.10 t ((($2,500-$33.54)/
$ 1,004.10) x 100 = 245.6 percent). Therefore, we believe that
Hemospray[supreg] meets the third cost significance requirement.
We are inviting public comment on whether the Hemospray[supreg]
Endoscopic Hemostat meets the device pass-through payment criteria
discussed in this section, including the cost criterion for device
pass-through payment status.
(2) The SpineJack[supreg] Expansion Kit
Stryker, Inc., submitted an application for a new device category
for transitional pass-through payment status for the SpineJack[supreg]
Expansion Kit (hereinafter referred to as the SpineJack[supreg] system)
by the March 2020 quarterly deadline. The applicant described the
SpineJack[supreg] system as an implantable fracture reduction system,
which is indicated for use in the reduction of painful osteoporotic
vertebral compression fractures (VCFs) and is intended to be used in
combination with Stryker VertaPlex and VertaPlex High Viscosity (HV)
bone cement.
The applicant described the SpineJack[supreg] system as including
two cylindrical implants constructed from Titanium-6-Aluminum-4-
Vanadium (Ti6Al4V) with availability in three sizes: 4.2 mm (12.5 mm
expanded), 5.0 mm (17 mm expanded) and 5.8 mm (20 mm expanded). The
applicant explained implant size selection is based upon the internal
cortical diameter of the pedicle. According to the SpineJack[supreg]
system Instructions for Use, the use of two implants is recommended to
treat a fractured VB. According to the applicant, multiple VBs can also
be treated in the same operative procedure as required. Additionally,
the applicant explained that titanium alloy allows for plastic
deformation when it encounters the hard cortical bone of the endplate
yet still provides the lift force required to restore midline VB height
in the fractured vertebra. The applicant stated that the
SpineJack[supreg] system notably contains a self-locking security
mechanism that restricts further expansion of the device when extreme
load forces are concentrated on the implant. As a result, the applicant
stated that this feature significantly reduces the risk of vertebral
endplate breakage while it further allows functional recovery of the
injured disc.\25\
---------------------------------------------------------------------------
\25\ Vanni D et al. ``Third-generation percutaneous vertebral
augmentation systems.'' Journal of Spine Surgery. 2016, vol 2(1),
pp. 13-20.
---------------------------------------------------------------------------
The applicant stated that the implants are then progressively
expanded though actuation of an implant tube that pulls the two ends of
the implant towards each other in situ to mechanically restore VB
height. The applicant explained that the mechanical working system of
the implant allows for a progressive and controlled reduction of the
vertebral fracture.\26\ The applicant stated that when expanded, each
SpineJack[supreg] implant exerts a lifting pressure on the fracture
through a mechanism that may be likened to the action of a scissor car
jack, and that the longitudinal compression on the implant causes it to
open in a craniocaudal direction. The applicant explained that the
implant is locked into the desired expanded position as determined and
controlled by the treating physician.\27\
---------------------------------------------------------------------------
\26\ Vanni D., et al., ``Third-generation percutaneous vertebral
augmentation systems,'' J. Spine Surg., 2016, vol. 2(1) pp. 13-20.
\27\ Noriega D. et al., ``Clinical Performance and Safety of 108
SpineJack Implantations: 1-Year Results of a Prospective Multicentre
Single-Arm Registry Study,'' BioMed Res. Int., 2015, vol. 173872.
---------------------------------------------------------------------------
The applicant further explained that the expansion of the
SpineJack[supreg] implants creates a preferential direction of flow for
the bone cement and once the desired expansion has been obtained,
polymethylmethacrylate (PMMA) bone cement is deployed from the center
of the implant into the VB. The applicant stated that when two implants
are symmetrically positioned in the VB, this allows for a more
homogenous spread of PMMA bone cement. The applicant stated that the
interdigitation of bone cement creates a broad supporting ring under
the endplate, which is essential to confer stability to the VB.
According to the applicant, osteoporosis is one of the most common
bone diseases worldwide that disproportionately affects aging
individuals. The applicant explained that in 2010, approximately 54
million Americans aged 50 years or older had osteoporosis or low bone
mass,\28\ which resulted in more than 2 million osteoporotic fragility
fractures in that year alone.\29\ The applicant stated it has been
estimated that more than 700,000 VCFs occur each year in the United
States (U.S.),\30\ and of these VCFs, about 70,000 result in hospital
admissions with an average length of stay of 8 days per patient.\31\
Furthermore, the applicant noted that in the first year after a painful
vertebral fracture, patients have been found to require primary care
services at a rate 14 times
[[Page 48856]]
greater than the general population.\32\ The applicant explained that
medical costs attributed to VCFs in the U.S. exceeded $1 billion in
2005 and are predicted to surpass $1.6 billion by 2025.\33\
---------------------------------------------------------------------------
\28\ National Osteoporosis Foundation. (2019). What is
osteoporosis and what causes it? Available from: https://www.nof.org/patients/what-is-osteoporosis/.
\29\ King A and Fiorentino D. ``Medicare payment cuts for
osteoporosis testing reduced use despite tests' benefit in reducing
fractures.'' Health Affairs (Millwood), 2011, vol. 30(12), pp. 2362-
2370.
\30\ Riggs B and Melton L. ``The worldwide problem of
osteoporosis: Insights afforded by epidemiology.'' Bone, 1995, vol.
17(Suppl 5), pp. 505-511.
\31\ Siemionow K and Lieberman I. ``Vertebral augmentation in
osteoporotic and osteolytic fractures: Current Opinion in Supportive
and Palliative Care.'' 2009, vol. 3(3), pp. 219-225.
\32\ Wong C and McGirt M. ``Vertebral compression fractures: A
review of current management and multimodal therapy.'' Journal of
Multidisciplinary Healthcare, 2013, vol 6, pp. 205-214.
\33\ Burge R et al. ``Incidence and economic burden of
osteoporosis-related fractures in the United States: 2005-2025.''
Journal of Bone and Mineral Research. 2007, vol 22(3), pp. 465-475.
---------------------------------------------------------------------------
The applicant explained that osteoporotic VCFs occur when the
vertebral body (VB) of the spine collapses and can result in chronic
disabling pain, excessive kyphosis, loss of functional capability,
decreased physical activity, and reduced quality of life. The applicant
stated that as the spinal deformity progresses, it reduces the volume
of the thoracic and abdominal cavities, which may lead to crowding of
internal organs. The applicant noted that the crowding of internal
organs may cause impaired pulmonary function, abdominal protuberance,
early satiety and weight loss. The applicant indicated that other
complications may include bloating, distention, constipation, bowel
obstruction, and respiratory disturbances such as pneumonia,
atelectasis, reduced forced vital capacity and reduced forced
expiratory volume in 1 second.
The applicant explained that the SpineJack[supreg] implants provide
symmetric, broad load support for osteoporotic vertebral collapse,
which is based upon precise placement of bilateral ``struts'' that are
encased in PMMA bone cement, whereas BKP and vertebroplasty (VP) do not
provide structural support via an implanted device. The applicant
explained that the inflatable balloon tamps utilized in BKP are not
made from titanium and are not a permanent implant. According to the
applicant, the balloon tamps are constructed from thermoplastic
polyurethane, which have limited load bearing capacity. The applicant
noted that although the balloon tamps are expanded within the VB to
create a cavity for bone cement, they do not remain in place and are
removed before the procedure is completed. The applicant explained that
partial lift to the VB is obtained during inflation, resulting in
kyphotic deformity correction and partial gains in anterior VB height
restoration, but inflatable balloon tamps are deflated prior to removal
so some of the VB height restoration obtained is lost upon removal of
the bone tamps. According to the applicant, BKP utilizes the placement
of PMMA bone cement to stabilize the fracture and does not include an
implant that remains within the VB to maintain fracture reduction and
midline VB height restoration.
The applicant stated that if VB collapse is >50 percent of the
initial height, segmental instability will ensue. As a result, the
applicant explained that adjacent levels of the VB must support the
additional load and this increased strain on the adjacent levels may
lead to additional VCFs. Furthermore, the applicant summarized that
VCFs also lead to significant increases in morbidity and mortality risk
among elderly patients, as evidenced by a 2015 study by Edidin et al.,
in which researchers investigated the morbidity and mortality of
patients with a newly diagnosed VCF (n = 1,038,956) between 2005 to
2009 in the U.S. Medicare population. For the osteoporotic VCF
subgroup, the adjusted 4-year mortality was 70 percent higher in the
conservatively managed group than in the balloon kyphoplasty procedures
(BKP)-treated group, and 17 percent lower in the BKP group than in the
vertebroplasty (VP) group. According to the applicant, when evaluating
treatment options for osteoporotic VCFs, one of the main goals of
treatment is to restore the load bearing bone fracture to its normal
height and stabilize the mechanics of the spine by transferring the
adjacent level pressure loads across the entire fractured vertebra and
in this way, the intraspinal disc pressure is restored and the risk of
adjacent level fractures (ALFs) is reduced.
The applicant explained that treatment of osteoporotic VCFs in
older adults most often begins with conservative care, which includes
bed rest, back bracing, physical therapy and/or analgesic medications
for pain control. According to the applicant, for those patients that
do not respond to conservative treatment and continue to have
inadequate pain relief or pain that substantially impacts quality of
life, vertebral augmentation (VA) procedures may be indicated. The
applicant explained that VP and BKP are two minimally invasive
percutaneous VA procedures that are most often used in the treatment of
osteoporotic VCFs and another VA treatment option includes the use of a
spiral coiled implant made from polyetheretherketone (PEEK), which is
part of the Kiva[supreg] system.
According to the applicant, among the treatment options available,
BKP is the most commonly performed procedure and the current gold
standard of care for VA treatment. The applicant stated that it is
estimated that approximately 73 percent of all vertebral augmentation
procedures performed in the United States between 2005 and 2010 were
BKP.\34\ According to the applicant, the utilization of the
Kiva[supreg] system is relatively low in the U.S. and volume
information was not available in current market research data.\35\
---------------------------------------------------------------------------
\34\ Goz V et al. ``Vertebroplasty and kyphoplasty: National
outcomes and trends in utilization from 2005 through 2010.'' The
Spine Journal. 2015, vol. 15(5), pp. 959-965.
\35\ Lin M. ``Minimally invasive vertebral compression fracture
treatments. Medtech 360, Market Insights, Millennium Research Group.
2019.
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The applicant stated that VA treatment with VP may alleviate pain,
but it cannot restore VB height or correct spinal deformity. The
applicant stated that BKP attempts to restore VB height, but the
temporary correction obtained cannot be sustained over the long term.
The applicant stated that the Kiva[supreg] implant attempts to
mechanically restore VB height, but it has not demonstrated superiority
to BKP for this clinical outcome.\36\
---------------------------------------------------------------------------
\36\ Ibid.
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The applicant provided additional detail comparing the construction
and mechanism of action for other VA treatments, provided below.
According to the applicant the Kiva[supreg] system is constructed of a
nitinol coil and PEEK-OPTIMA sheath, with sizes including a 4-loop
implant (12 mm expanded) and a 5-loop implant (15 mm expanded) and
unlike the SpineJack[supreg] system, is not made of titanium and does
not include a locking scissor jack design. The applicant stated that
the specific mechanism of action for the Kiva[supreg] system is
different from the SpineJack[supreg] system. The applicant explained
that during the procedure that involves implanting the Kiva[supreg]
system, nitinol coils are inserted into the VB to form a cylindrical
columnar cavity. The applicant stated that the PEEK-OPTIMA is then
placed over the nitinol coil. The applicant explained that the nitinol
coil is removed from the VB and the PEEK material is filled with PMMA
bone cement. The applicant stated that the deployment of 5 coils
equates to a maximum height of 15 mm. The applicant stated that the
lifting direction of the Kiva implant is caudate and unidirectional.
According to the applicant, in the KAST (Kiva Safety and Effectiveness
Trial) pivotal study, it was reported that osteoporotic VCF patients
treated with the Kiva[supreg] system had an average of 2.6 coils
deployed.\37\
[[Page 48857]]
Additionally, in a biomechanical comparison conducted for the
Kiva[supreg] system and BKP using a loading cycle of 200-500 Newtons in
osteoporotic human cadaver spine segments filled with bone cement,
there were no statistically significant differences observed between
the two procedures for VB height restoration, stiffness at high or low
loads, or displacement under compression.\38\
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\37\ Tutton S et al. KAST Study: The Kiva system as a vertebral
augmentation treatment--a safety and effectiveness trial: A
randomized, noninferiority trial comparing the Kiva system with
balloon kyphoplasty in treatment of osteoporotic vertebral
compression fractures. Spine. 2015; 40(12):865-875.
\38\ Wilson D et al. An ex vivo biomechanical comparison of a
novel vertebral compression fracture treatment system to
kyphoplasty. Clinical Biomechanics. 2012; 27(4):346-353.
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The applicant summarized the differences and similarities of the
SpineJack[supreg], BKP, and PEEK coiled implant as follows: (1) With
respect to construction, SpineJack[supreg] is made of Titanium-6-
Aluminum-4-Vanadium compared to thermoplastic polyurethanes for BKP and
nitinol and PEEK for the PEEK coiled implant; (2) with respect to
mechanism of action, the SpineJack[supreg] uses a locking scissor jack
encapsulated in PMMA bone cement compared to hydrodynamic cavity
creation and PMMA cavity filler for BKP and coil cavity creation and
PEEK implant filled with PMMA bone cement for the PEEK coiled implant;
(3) with respect to plastic deformation, SpineJack[supreg] and BKP
allow for plastic deformation while the PEEK coiled implant does not;
(4) with respect to craniocaudal expansion, SpineJack[supreg] allows
for craniocaudal expansion, whereas BKP and the PEEK coiled implant do
not; (5) with respect to bilateral load support, SpineJack[supreg]
provides bilateral load support whereas BKP and the PEEK coiled implant
do not; and (6) with respect to lift pressure of >500 N,
SpineJack[supreg] provides lift pressure of >500 N whereas BKP and the
PEEK coiled implant do not. The applicant summarized that the
SpineJack[supreg] system is uniquely constructed and utilizes a
different mechanism of action than BKP, which is the gold standard of
treatment for osteoporotic VCFs, and that the construction and
mechanism of action of the SpineJack[supreg] system is further
differentiated when compared with the PEEK coiled implant.
With respect to the newness criterion, the SpineJack[supreg]
Expansion Kit received FDA 510(k) clearance on August 30, 2018, based
on a determination of substantial equivalence to a legally marketed
predicate device. The applicant explained that although the
SpineJack[supreg] Expansion Kit received FDA 510(k) clearance on August
30, 2018, due to the time required to prepare for supply and
distribution channels, it was not available on the U.S. market until
October 2018. As we discussed previously, the SpineJack[supreg]
Expansion Kit is indicated for use in the reduction of painful
osteoporotic VCFs and is intended to be used in combination with
Stryker VertaPlex and VertaPlex High Viscosity (HV) bone cements. We
received the application for a new device category for transitional
pass-through payment status for the SpineJack[supreg] Expansion Kit on
February 4, 2020, which is within 3 years of the date of the initial
FDA marketing authorization. We are inviting public comments on whether
the SpineJack[supreg] Expansion Kit meets the newness criterion.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, the use of the SpineJack[supreg] Expansion
Kit is integral to the service of reducing painful osteoporotic
vertebral compression fractures (VCFs), is used for one patient only,
comes in contact with human skin, and is surgically implanted or
inserted into the patient. Specifically, the applicant explained that
the SpineJack[supreg] system is designed to be implanted into a
collapsed vertebral body (VB) via a percutaneous transpedicular
approach under fluoroscopic guidance. According to the applicant, the
implants remain within the VB with the delivered bone cement. The
applicant also claimed the SpineJack[supreg] Expansion Kit 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, and it is not a supply or material
furnished incident to a service. We are inviting public comments on
whether the SpineJack[supreg] Expansion Kit meets the eligibility
criteria at Sec. 419.66(b).
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. The
applicant describes the SpineJack[supreg] Expansion Kit as an
implantable fracture reduction system used to treat vertebral
compression fractures (VCFs). The applicant reported that it does not
believe that the SpineJack[supreg] Expansion Kit is described by an
existing category and requested category descriptor ``Vertebral body
height restoration device, scissor jack (implantable).'' We have
identified one existing pass-through payment categories that may be
applicable to SpineJack[supreg] Expansion Kit. The SpineJack[supreg]
Expansion Kit may be described by HCPCS code C1821 (interspinous
process distraction device (implantable)). We are inviting public
comments on this issue.
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines either of the following: (i)
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; or (ii) for devices for which
pass-through status will begin on or after January 1, 2020, as an
alternative to the substantial clinical improvement criterion, the
device has received FDA marketing authorization and is part of the
FDA's Breakthrough Devices Program. With respect to the substantial
clinical improvement criterion, the applicant submitted 8 studies and
19 other references to support assertions that the treatment of
osteoporotic vertebral compression fracture (VCF) patients with the
SpineJack[supreg] system represents a substantial clinical improvement
over existing technologies because clinical research supports that it
reduces future interventions, hospitalizations, and physician visits
through a decrease in adjacent level fractures (ALFs), which the
applicant stated are clinically significant adverse events associated
with osteoporotic VCF. The applicant also stated that treatment with
the SpineJack[supreg] system greatly reduces pain scores and pain
medication use when compared to BKP, which the applicant stated is the
current gold standard in vertebral augmentation (VA) treatment.
The applicant explained that the SpineJack[supreg] system has been
available for the treatment of patients with osteoporotic VCFs for over
10 years in Europe. The applicant explained that, as a result, the
SpineJack[supreg] implant has been extensively studied, and claims from
smaller studies are supported by the results from a recent, larger
prospective, randomized study known as the SAKOS (SpineJack[supreg]
versus Kyphoplasty in Osteoporotic Patients) study. The applicant cited
the SAKOS study \39\ in support of multiple
[[Page 48858]]
substantial clinical improvement claims: Reduction in adjacent level
fractures, superiority in mid-vertebral body height restoration, and
pain relief. The applicant explained that the SAKOS study was the
pivotal trial conducted in support of the FDA 510(k) clearance for the
SpineJack[supreg] system and that the intent of the study was to
compare the safety and effectiveness of the SpineJack[supreg] system
with the KyphX Xpander Inflatable Bone Tamp (BKP) for treatment of
patients with painful osteoporotic VCFs in order to establish a non-
inferiority finding for use of the SpineJack[supreg] system versus
balloon kyphoplasty procedure (BKP).
---------------------------------------------------------------------------
\39\ Noriega, D., et al., ``A prospective, international,
randomized, noninferiority study comparing an implantable titanium
vertebral augmentation device versus balloon kyphoplasty in the
reduction of vertebral compression fractures (SAKOS study),'' The
Spine Journal, 2019, vol. 19(11), pp. 1782-1795.
---------------------------------------------------------------------------
The SAKOS study is a prospective, international, randomized, non-
inferiority study comparing a titanium implantable vertebral
augmentation device (TIVAD), the SpineJack[supreg] system, versus BKP
in the reduction of vertebral compression fractures with a 12-month
follow-up. The primary endpoint was a 12-month responder rate based on
a composite of three components: (1) Reduction in VCF fracture-related
pain at 12 months from baseline by >20 mm as measured by a 100-mm
Visual Analog Scale (VAS) measure; (2) maintenance or functional
improvement of the Oswestry Disability Index (ODI) score at 12 months
from baseline; and (3) absence of device-related adverse events or
symptomatic cement extravasation requiring surgical reintervention or
retreatment at the index level. If the primary composite endpoint was
successful, a fourth component (absence of ALF) was added to the three
primary components for further analysis. If the analysis of this
additional composite endpoint was successful, then midline target
height restoration at 6 and 12 months was assessed. According to the
applicant, freedom from ALFs and midline VB height restoration were two
additional superiority measures that were tested. According to the
SAKOS study, secondary clinical outcomes included changes from baseline
in back pain intensity, ODI score, EuroQol 5-domain (EQ-5D) index score
(to evaluate quality of life), EQ-VAS score, ambulatory status,
analgesic consumption, and length of hospital stay. Radiographic
endpoints included restoration of vertebral body height (mm), and Cobb
angle at each follow-up visit. Adverse events (AEs) were recorded
throughout the study period. The applicant explained that researchers
did not blind the treating physicians or patients, so each group was
aware of the treatment allocation prior to the procedure; however, the
three independent radiologists that performed the radiographic reviews
were blinded to the personal data of the patients, study timepoints,
and results of the study.
The SAKOS study recruited patients from 13 hospitals across 5
European countries and randomized 152 patients with osteoporotic
vertebral compression fractures (OVCFs) (1:1) to either
SpineJack[supreg] or BKP procedures. Specifically, patients were
considered eligible for inclusion if they met a number of criteria,
including: (1) At least 50 years of age; (2) had radiographic evidence
of one or two painful VCF between T7 and L4, aged less than 3 months,
due to osteoporosis; (3) fracture(s) that showed loss of height in the
anterior, middle, or posterior third of the VB >=15 percent but <=40
percent; and (4) patient failed conservative medical therapy, defined
as either having a VAS back pain score of >=50 mm at 6 weeks after
initiation of fracture care or a VAS pain score of >=70 percent mm at 2
weeks after initiation of fracture care. Eleven of the originally
recruited patients were subsequently excluded from surgery (9
randomized to SpineJack[supreg] and 2 to BKP). A total of 141 patients
underwent surgery, and 126 patients completed the 12-month follow-up
period (61 TIVAD and 65 BKP). The applicant contended that despite the
SAKOS study being completed outside the U.S., results are applicable to
the Medicare patient population, noting that 82 percent (116 of 141) of
the patients in the SAKOS trial that received treatment
(SpineJack[supreg] system or BKP) were age 65 or older. The applicant
explained further that the FDA evaluated the applicability of the SAKOS
clinical data to the U.S. population and FDA concluded that although
the SAKOS study was performed in Europe, the final study demographics
were very similar to what has been reported in the literature for U.S.-
based studies of BKP. The applicant also explained that FDA determined
that the data was acceptable for the SpineJack[supreg] system 510(k)
clearance, including two clinical superiority claims versus BKP.
The SAKOS study reported that analysis on the intent to treat
population using the observed case method resulted in a 12-month
responder rate of 89.8 percent and 87.3 percent, for SpineJack[supreg]
and BKP respectively (p = 0.0016). The additional composite endpoint
analyzed in observed cases resulted in a higher responder rate for
SpineJack[supreg] compared to BKP at both 6 months (88.1 percent vs.
60.9 percent; p < 0.0001) and 12 months (79.7 percent vs. 59.3 percent;
p < 0.0001). Midline VB height restoration, tested for superiority
using a t test with one-sided 2.5 percent alpha in the ITT population,
was greater with SpineJack[supreg] than BKP at 6 months (1.14 2.61 mm vs 0.31 2.22 mm; p = 0.0246) and at 12
months (1.31 2.58 mm vs. 0.10 2.23 mm; p =
0.0035), with similar results in the per protocol (PP) population.
Also, according to the SAKOS study, decrease in pain intensity
versus baseline was more pronounced in the SpineJack[supreg] group
compared to the BKP group at 1 month (p = 0.029) and 6 months (p =
0.021). At 12 months, the difference in pain intensity was no longer
statistically significant between the groups, and pain intensity at 5
days post-surgery was not statistically different between the groups.
The SAKOS study publication also reported that at each timepoint, the
percentage of patients with reduction in pain intensity >20 mm was >=90
percent in the SpineJack[supreg] group and >=80 percent in the BKP
group, with a statistically significant difference in favor of
SpineJack[supreg] at 1-month post-procedure (93.8 percent vs 81.4
percent; p = 0.03). The study also reported: (1) No statistically
significant difference in disability (ODI score) between groups during
the follow-up period, although there was a numerically greater
improvement in the SpineJack[supreg] group at most time points; (2) at
each time point, the percentage of patients with maintenance or
improvement in functional capacity was at or close to 100 percent; and
(3) in both groups, a clear and progressive improvement in quality of
life was observed throughout the 1-year follow-up period without any
statistically significant between-group differences.
In the SAKOS study, both groups had similar proportions of VCFs
with cement extravasation outside the treated VB (47.3 percent for
TIVAD, 41.0 percent for BKP; p = 0.436). No symptoms of cement leakage
were reported. The SAKOS study also reported that the BKP group had a
rate of adjacent fractures more than double the SpineJack[supreg] group
(27.3 percent vs. 12.9 percent; p = 0.043). The SAKOS study also
reported that the BKP group had a rate of non-adjacent subsequent
thoracic fractures nearly 3 times higher than the SpineJack[supreg]
group (21.9 percent vs. 7.4 percent) (a p-value was not reported for
this result). The most common AEs reported over the study period were
backpain (11.8 percent with SpineJack[supreg], 9.6 percent with BKP),
new lumbar vertebral fractures (11.8 percent with SpineJack[supreg],
12.3 percent with
[[Page 48859]]
BKP), and new thoracic vertebral fractures (7.4 percent with
SpineJack[supreg], 21.9 percent with BKP). The most frequent SAEs were
lumbar vertebral fractures (8.8 percent with SpineJack[supreg]; 6.8
percent with BKP) and thoracic vertebral fractures (5.9 percent with
SpineJack[supreg], 9.6 percent with BKP). We also note that the length
of hospital stay (in days) for osteoporotic VCF patients treated in the
SAKOS trial was 3.8 3.6 days for the SpineJack[supreg]
group and 3.3 2.4 days for the BKP group (p = 0.926,
Wilcoxon test).
The applicant also submitted additional studies, which are
described in more detail in this section, related to the applicant's
specific assertions regarding substantial clinical improvement.
As stated previously, the applicant stated that the
SpineJack[supreg] system represents a substantial clinical improvement
over existing technologies because it will reduce future interventions,
hospitalizations, and physician visits through a decrease in ALFs. The
applicant explained that ALFs are considered clinically significant
adverse events associated with osteoporotic VCFs, citing studies by
Lindsay et al.\40\ and Ross et al.\41\ The applicant explained that
these studies reported, respectively, that having one or more VCFs
(irrespective of bone density) led to a 5-fold increase in the
patient's risk of developing another vertebral fracture, and the
presence of two or more VCFs at baseline increased the risk of ALF by
12-fold. The applicant stated that analysis of the additional composite
endpoint in the SAKOS study demonstrated statistical superiority of the
SpineJack[supreg] system over BKP (p < 0.0001) for freedom from ALFs at
both 6 months (88.1 percent vs. 60.9 percent) and 12 months (79.7
percent vs. 59.3 percent) post-procedure. The applicant noted that the
results were similar on both the intent to treat and PP patient
populations. In addition, the applicant stated the SpineJack[supreg]
system represents a substantial clinical improvement because in the
SAKOS study, compared to patients treated with the SpineJack[supreg]
system, BKP-treated patients had more than double the rate of ALFs
(27.3 percent vs. 12.9 percent; p = 0.043) and almost triple the rate
of non-adjacent thoracic VCFs (21.9 percent vs. 7.4 percent).
---------------------------------------------------------------------------
\40\ Lindsay R. et al., ``Risk of new vertebral fracture in the
year following a fracture,'' Journal of the American Medical
Association, 2001, vol. 285(3), pp. 320-323.
\41\ Ross P. et al., Pre-existing fractures and bone mass
predict vertebral fracture incidence in women. Annals of Internal
Medicine. 1991, vol. 114(11), pp. 919-923.
---------------------------------------------------------------------------
The applicant also stated superiority with respect to mid-vertebral
body height restoration with the SpineJack[supreg] system. The
applicant explained that historical treatments of osteoporotic VCFs
have focused on anterior VB height restoration and kyphotic Cobb angle
correction; however, research indicates that the restoration of middle
VB height may be as important as Cobb angle correction in the
prevention of ALFs.\42\ According to the applicant, the depression of
the mid-vertebral endplate leads to decreased mechanics of the spinal
column by transferring the person's weight to the anterior wall of the
level adjacent to the fracture, and as a result the anterior wall is
the most common location for ALFs. The applicant further stated that by
restoring the entire fracture, including mid-VB height, the vertebral
disc above the superior vertebral endplate is re-pressurized and
transfers the load evenly, preventing ALFs.\43\ The applicant stated
that the SpineJack[supreg] system showed superiority over BKP with
regard to midline VB height restoration at both 6 and 12 months,
pointing to the SAKOS study results in the intent to treat population
at 6 months (1.14 2.61 mm vs 0.31 2.22 mm; p
= 0.0246) and 12 months (1.31 2.58 mm vs. 0.10 2.23 mm; p = 0.0035) post-procedure. The applicant noted that
similar results were also observed in the PP population (134 patients
in the intent-to-treat population without any major protocol
deviations).
---------------------------------------------------------------------------
\42\ Lin J et al. Better height restoration, greater kyphosis
correction, and fewer refractures of cemented vertebrae by using an
intravertebral reduction device: A 1-year follow-up study. World
Neurosurgery. 2016; 90:391-396.
\43\ Tzermiadianos M., et al., ``Altered disc pressure profile
after an osteoporotic vertebral fracture is a risk factor for
adjacent vertebral body fracture,'' European Spine Journal, 2008,
vol. 17(11), pp. 1522-1530.
---------------------------------------------------------------------------
The applicant also provided two prospective studies, a
retrospective study, and two cadaveric studies in support of its
assertions regarding superior VB height restoration. The applicant
stated that in a prospective comparative study by Noriega D., et
al.,\44\ VB height restoration outcomes utilizing the SpineJack[supreg]
system were durable out to 3 years. This study was a safety and
clinical performance pilot that randomized 30 patients with painful
osteoporotic vertebral compression fractures to SpineJack[supreg] (n =
15) or BKP (n = 15).\45\ Twenty-eight patients completed the 3-year
study (14 in each group). The clinical endpoints of analgesic
consumption, back pain intensity, ODI, and quality of life were
recorded preoperatively and through 36-months post-surgery.\46\ Spine
X-rays were also taken 48 hours prior to the procedure and at 5 days,
6, 12, and 36 months post-surgery.\47\ The applicant explained that
over the 3-year follow-up period, VB height restoration and kyphosis
correction was better compared to BKP, specifically that VB height
restoration and kyphotic correction was still evident at 36 months with
a greater mean correction of anterior VB height (10 13
percent vs 2 8 percent for BKP, p = 0.007) and midline VB
height (10 11 percent vs 3 7 percent for BKP,
p = 0.034), while there was a larger correction of the VB angle (-
4.97[deg] 5.06[deg] vs 0.42[deg] 3.43[deg]; p
= 0.003) for the SpineJack[supreg] group. The applicant stated that
this study shows superiority with regards to VB height restoration.
---------------------------------------------------------------------------
\44\ Noriega D., et al., ``Long-term safety and clinical
performance of kyphoplasty and SpineJack procedures in the treatment
of osteoporotic vertebral compression fractures: a pilot,
monocentric, investigator-initiated study,'' Osteoporosis
International, 2019, vol. 30, pp. 637-645.
\45\ Ibid.
\46\ Ibid.
\47\ Ibid.
---------------------------------------------------------------------------
The applicant stated that Arabmotlagh M., et al., also supported
superiority with regard to VB height restoration. Arabmotlagh M., et
al. reported an observational case series (with no comparison group) of
SpineJack[supreg]. They enrolled 42 patients with osteoporotic
vertebral compression fracture of the thoracolumbar, who were
considered for kyphoplasty, 31 of whom completed the clinical and
radiological evaluations up to 12 months after the procedure.\48\
According to materials provided by the applicant, the purpose of the
study was to evaluate the efficacy of kyphoplasty with the
SpineJack[supreg] system to correct the kyphotic deformity and to
analyze parameters affecting the restoration and maintenance of spinal
alignment. The applicant explained that the mean VB height calculated
prior to fracture was 2.8 cm (standard deviation (SD) of 0.47), which
decreased to 1.5 cm (SD of 0.59) after the fracture. According to the
applicant, following the procedure performed with the SpineJack[supreg]
device, the VB height significantly increased to 1.9 cm (SD of 0.64; p
< 0.01), but was reduced to 1.8 cm (SD of 0.61; p < 0.01) at 12 months
post-procedure. We note that according to Arabmotlagh M., et al., these
results were specifically for mean anterior VB height. The study does
not
[[Page 48860]]
appear to report results for midline VB height.\49\ The applicant also
stated that the mean kyphotic angle (KA) calculated prior to fracture
was -1[deg] (SD of 5.8), which increased to 13.4[deg] (SD of 8.1) after
the fracture. The applicant also stated that following the procedure
performed with the SpineJack[supreg] device, KA significantly decreased
to 10.8[deg] (SD of 9.1; p < 0.01); however, KA correction was lost at
12 months post-procedure with an increase to 13.3[deg] (SD of 9.5; p <
0.01).
---------------------------------------------------------------------------
\48\ Arabmotlagh M., et al., ``Radiological Evaluation of
Kyphoplasty With an Intravertebral Expander After Osteoporotic
Vertebral Fracture,'' Journal of Orthopaedic Research, 2018. Doi:
10.1002.jor.24180.
\49\ Arabmotlagh M., et al., ``Radiological Evaluation of
Kyphoplasty With an Intravertebral Expander After Osteoporotic
Vertebral Fracture,'' Journal of Orthopaedic Research, 2018. Doi:
10.1002.jor.24180.
---------------------------------------------------------------------------
The applicant provided a Lin et al., retrospective study of 75
patients that compared radiologic and clinical outcomes of kyphoplasty
with the SpineJack[supreg] system to vertebroplasty (VP) in treating
osteoporotic vertebral compression fractures to support its assertions
regarding superiority with regard to midline VB height restoration.\50\
The applicant stated that the radiologic outcomes from this study were:
(1) The mean KA and mean KA restoration were more efficient after
SpineJack[supreg] than VP at all time points (up to 1 year), except for
mean KA observed postoperatively at 1 week; and (2) the mean middle VB
heights and mean VB height restoration were more favorable after
SpineJack[supreg] than VP.\51\ We note that this study did not compare
the SpineJack[supreg] system to BKP, which the applicant stated is the
gold-standard in vertebral augmentation.
---------------------------------------------------------------------------
\50\ Lin J., et al., ``Better Height Restoration, Greater
Kyphosis Correction, and Fewer Refractures of Cemented Vertebrae by
Using an Intravertebral Reduction Device: a 1-Year Follow-up
Study,'' World Neurosurg. 2016, vol. 60, pp. 391-396.
\51\ Ibid.
---------------------------------------------------------------------------
In the two cadaveric studies, Kruger A., et al. (2013) and Kruger
A., et al. (2015), wedge compression fractures were created in human
cadaveric vertebrae by a material testing machine and the axial load
was increased until the height of the anterior edge of the VB was
reduced by 40 percent.\52\ The VBs were fixed in a clamp and loaded
with 100 N in a custom made device. In Kruger A., et al. (2013),
vertebral heights were measured at the anterior wall as well as in the
center of the vertebral bodies in the medial sagittal plane in 36 human
cadaveric vertebrae pre- and post-fracture as well as after treatment
and loading in (twenty-seven vertebrae were treated with
SpineJack[supreg] with different cement volumes (maximum, intermediate,
and no cement), and 9 vertebrae were treated with BKP). In Kruger A.,
et al. (2015), anterior, central, and posterior height as well as the
Beck index were measured in 24 vertebral bodies pre-fracture and post-
fracture as well as after treatment (twelve treated with
SpineJack[supreg] and twelve treated with BKP). The applicant stated
that Kruger A., et al. (2013) showed superiority on VB height
restoration and height maintenance, and summarized that: (1) Height
restoration was significantly better for the SpineJack[supreg] group
compared to BKP; (2) height maintenance was dependent on the cement
volume used; and (3) the group with the SpineJack[supreg] without
cement nevertheless showed better results in height maintenance, yet
the statistical significance could not be demonstrated.\53\ The
applicant stated that Kruger A., et al. (2015) showed superiority on VB
height restoration, because the height restoration was significantly
better in the SpineJack[supreg] group compared with the BKP group. The
applicant explained that the clinical implications include a better
restoration of the sagittal balance of the spine and a reduction of the
kyphotic deformity, which may relate to clinical outcome and the
biological healing process.\54\
---------------------------------------------------------------------------
\52\ Kruger A., et al., ``Height restoration and maintenance
after treating unstable osteoporotic vertebral compression fractures
by cement augmentation is dependent on the cement volume used,''
Clinical Biomechanics, 2013, vol. 28, pp. 725-730; and Kruger A., et
al., ``Height restoration of osteoporotic vertebral compression
fractures using different intervertebral reduction devices: a
cadaveric study,'' The Spine Journal, 2015, vol. 15, pp. 1092-1098.
\53\ Ibid.
\54\ Ibid.
---------------------------------------------------------------------------
The applicant also stated that use of the SpineJack[supreg] system
represents a substantial clinical improvement with respect to pain
relief. According to the applicant, pain is the first and most
prominent symptom associated with osteoporotic VCFs, which drives many
elderly patients to seek hospital treatment and negatively impacts on
their quality of life. The applicant provided the SAKOS randomized
controlled study, a prospective consecutive observational study, and a
retrospective case series to support its assertions regarding pain
relief with the SpineJack[supreg] system. The applicant cited the SAKOS
trial for statistically significant greater pain relief achieved at 1
month and 6 months after surgery with the SpineJack[supreg] system. The
applicant summarized that in the SAKOS trial: (1) Progressive
improvement in pain relief was observed over the follow-up period in
the SpineJack[supreg] system group only; (2) the decrease in pain
intensity versus baseline was more pronounced in the SpineJack[supreg]
system group compared to the BKP group at 1 month (p = 0.029) and 6
months (p = 0.021); and (3) at each time point, the percentage of
patients with reduced pain intensity >20 mm was >=90 percent in the
SpineJack[supreg] system group and >=80 percent in the BKP group, with
a statistically significant difference in favor of the
SpineJack[supreg] system at 1 month post-procedure (93.8 percent vs
81.5 percent; p = 0.030). The applicant also noted that although
continued pain score improvements were seen out to 1 year for patients
treated with the SpineJack[supreg] system, the difference between the
treatment groups did not meet statistical significance (p = 0.061). The
applicant also explained that in the SAKOS study, at 5 days after
surgery, there were significantly fewer patients taking central
analgesic agent medications in the SpineJack[supreg] implant-treated
group as compared to those in the BKP-treated group (SJ 7.4 percent vs.
BKP 21.9 percent, p = 0.015). According to the applicant, central
analgesic agents included medications such as non-steroidal anti-
inflammatory drugs (NSAIDS), salicylates, or opioid analgesics.
The applicant also cited a prospective consecutive observational
study by Noriega D., et al. for statistically significant pain relief
immediately after surgery and at both 6 and 12 months. Noriega D., et
al. was a European multicenter, single-arm registry study that aimed to
confirm the safety and clinical performance of the SpineJack[supreg]
system for the treatment of vertebral compression fractures of
traumatic origin (no comparison procedure).\55\ The study enrolled 103
patients (median age: 61.6 years) with 108 VCFs due to trauma (n = 81),
or traumatic VCF with associated osteoporosis (n = 22) who had a
SpineJack[supreg] procedure. Twenty-three patients withdrew from the
study before the 12-month visit. The study reported a significant
improvement in back pain at 48 hours after SpineJack[supreg] procedure,
with the mean VAS pain score decreasing from 6.6 2.6 cm at
baseline to 1.4 1.3 cm (mean change: -5.2 2.7
cm; p < 0.001) (median relative decrease in pain intensity of 81.5
percent) for the total study population. Noriega D., et al. also
reported that the improvement was maintained over the 12-month follow-
up period and similar results were observed with both pure traumatic
VCF
[[Page 48861]]
and traumatic VCF in patients with osteoporosis. The traumatic VCF with
osteoporosis sub-group had a mean change of -5.5 (SD = 1.9) (median
relative change of 81.0 percent) (p < 0.001) at 48 hours post-surgery
(n = 22), and -5.7 (SD = 2.3) mean change (90.3 percent median relative
change) (p < 0.001) at 12 months (n = 16). The applicant stated that
this study supported a claim of statistically significant pain relief
immediately after surgery and at both 6 and 12 months. The applicant
summarized that (1) Pain relief and improvements in pain scores were
statistically significant immediately after treatment (48-72 hours) and
at 6 and 12 months following surgery (p < 0.001); and (2) the mean
improvement between baseline and at 48-72 hours after the procedure (n
= 31) was-4.6 (2.6) (p < 0.001), while the mean improvement between
baseline and at the 12-month follow-up (n = 22) was-6.0 (3.4) (p <
0.001). We note that Noriega D., et al. did not report results for 6
months (although it does include results for 3 months versus baseline)
and does not include the results of mean improvement stated by the
applicant.\56\ It is also unclear if the applicant intended to rely on
the overall results of the study or the subgroup of traumatic VCF with
osteoporosis.
---------------------------------------------------------------------------
\55\ Noriega D., et al., ``Clinical performance and safety of
108 SpineJack implantations: 1-year results of a prospective
multicentre single arm registry study.'' BioMed Research
International. 2015, 173872.
\56\ Ibid.
---------------------------------------------------------------------------
The applicant also cited a retrospective case series, Renaud C., et
al., for statistically significant pain relief after surgery with the
SpineJack[supreg] system. Renaud C., et al., included 77 patients with
a mean age of 60.9 years and 83 VCFs (51 due to trauma and 32 to
osteoporosis) treated with 164 SpineJack[supreg] devices (no comparison
procedure).\57\ The applicant summarized that: (1) Pain relief was
statistically significant (p < 0.001), with a pain score decrease from
7.9 pre-operatively to 1.8 at 1 month after the procedure; (2) the pain
score improvement was 77 percent at hospital discharge and gradually
increased to 86 percent after 1 year following surgery; and (3) the
study outcomes demonstrated that the SpineJack[supreg] system provided
both immediate and long-lasting pain relief.
---------------------------------------------------------------------------
\57\ Renaud C., ``Treatment of vertebral compression fractures
with the cranio-caudal expandable implant SpineJack: Technical note
and outcomes in 77 consecutive patients.'' Orthopaedics &
Traumatology: Surgery & Research, 2015, vol. 101, pp. 857-859.
---------------------------------------------------------------------------
We note that the results of the SAKOS trial do not appear to have
been corroborated in any other randomized controlled study.
Additionally, although the applicant stated that BKP is the gold
standard in VA, there appears to be a lack of data comparing the
SpineJack[supreg] system to other existing technology, such as the PEEK
coiled implant (Kiva[supreg] system), particularly since the PEEK
coiled system was considered the predicate device for the SpineJack
510(k). Furthermore, there appears to be a lack of data comparing the
SpineJack[supreg] system to conservative medical therapy. We note there
is an active study posted on clinicaltrials.gov comparing
SpineJack[supreg] system to conservative orthopedic management
consisting of brace and pain medication in acute stable traumatic
vertebral fractures in subjects aged 18 to 60 years old. The
clinicaltrials.gov entry indicates that findings should be forthcoming
in 2020. Additionally, we note that the recent systematic reviews of
the management of vertebral compression fracture (Buchbinder et al. for
Cochrane (2018), Ebeling et al. (2019) for the American Society for
Bone and Mineral Research (ASBMR)), do not support vertebral
augmentation procedures due to lack of evidence compared to
conservative medical management.\58\ The ASBMR recommended more
rigorous study of treatment options including ``larger sample sizes,
inclusion of a placebo control and more data on serious AEs (adverse
events).''
---------------------------------------------------------------------------
\58\ Buchbinder R., Johnston R.V., Rischin K.J., Homik J., Jones
C.A., Golmohammadi K., Kallmes D.F., ``Percutaneous vertebroplasty
for osteoporotic vertebral compression fracture,'' Cochrane Database
Syst Rev. 2018 Apr 4 and Nov 6. PMID: 29618171; Ebeling P.R.,
Akesson K., Bauer D.C., Buchbinder R., Eastell R., Fink H.A.,
Giangregorio L., Guanabens N., Kado D., Kallmes D., Katzman W.,
Rodriguez A., Wermers R., Wilson H.A., Bouxsein M.L., ``The Efficacy
and Safety of Vertebral Augmentation: A Second ASBMR Task Force
Report.'' J Bone Miner Res., 2019, vol. 34(1), pp. 3-21.
---------------------------------------------------------------------------
We are inviting public comment on whether the SpineJack[supreg]
system meets 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
SpineJack[supreg] system would be reported with CPT code 22513, which
is assigned to APC 5114 (Level 4 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 5114, which has a CY 2019 payment
rate of $5,891.95. 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 22513 had a device offset amount of $1,127 at the
time the application was received. According to the applicant, the cost
of the SpineJack[supreg] system is $5,623.\59\
---------------------------------------------------------------------------
\59\
---------------------------------------------------------------------------
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 $5,622.64 for the SpineJack[supreg] system
is 94 percent of the applicable APC payment amount for the service
related to the category of devices of SpineJack[supreg] system
(($5,622.64/$5,981.28) x 100 = 94 percent). Therefore, we believe the
SpineJack[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 $5,622.64 for
the SpineJack[supreg] system is 499 percent of the cost of the device-
related portion of the APC payment amount for the related service of
$1,126.87(($5,622.64/$1,126.87) x 100 = 499 percent). Therefore, we
believe that the SpineJack[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 $5,622.64 for the SpineJack[supreg] system and the
portion of the APC payment amount for the device of $1,126.87 is 75
percent of the APC payment amount for the related service of $5,987.28
(($5,622.64-$1,126.87)/$5,981.28) = 75.2 percent). Therefore, we
believe that the SpineJack[supreg] Expansion Kit meets the third cost
significance requirement.
We are inviting public comment on whether the SpineJack[supreg]
Expansion Kit meets the device pass-through payment
[[Page 48862]]
criteria discussed in this section, including the cost criterion.
3. Technical Clarification to the Alternative Pathway to the OPPS
Device Pass-Through Substantial Clinical Improvement Criterion for
Certain Transformative New Devices
As described previously, in the CY 2020 annual rulemaking process,
we finalized an alternative pathway for devices that receive Food and
Drug Administration (FDA) marketing authorization and are granted a
Breakthrough Device designation (84 FR 61295 through 61297). Under this
alternative pathway, devices that are granted an FDA Breakthrough
Device designation are not evaluated in terms of the current
substantial clinical improvement criterion at Sec. 419.66(c)(2) for
purposes of determining device pass-through payment status, but will
need to meet the other requirements for pass-through payment status in
our regulation at Sec. 419.66. Similarly, in the FY 2020 IPPS/LTCH PPS
final rule, we finalized an alternative pathway for new technology add-
on payments for certain transformative new devices. Under the existing
regulations at Sec. 412.87(c), to be eligible for approval for IPPS
new technology add-on payments under this alternative pathway, the
device must be part of the FDA's Breakthrough Devices Program and have
received FDA marketing authorization.
We have received questions from the public regarding CMS's intent
with respect to the ``marketing authorization'' required for purposes
of approval under the alternative pathway for certain transformative
new devices at Sec. 412.87(c). Some of the public appear to assert
that so long as a technology has received marketing authorization for
any indication, even if that indication differs from the indication for
which the technology was designated by FDA as part of the Breakthrough
Devices Program, the technology would meet the marketing authorization
requirement at Sec. 412.87(c). Because of this potential confusion, we
clarified in the FY 2021 IPPS/LTCH PPS proposed rule that an applicant
cannot combine a marketing authorization for an indication that differs
from the technology's indication under the Breakthrough Device Program,
and for which the applicant is seeking to qualify for the new
technology add-on payment, for purposes of approval under the
alternative pathway for certain transformative devices (85 FR 32692).
We are clarifying in this proposed rule that the same policy
applies for purposes of the OPPS alternative pathway policy.
Specifically, we are clarifying that under the OPPS, in order to be
eligible for the alternative pathway, the device must receive marketing
authorization for the indication covered by the Breakthrough Devices
Program designation and we are making a conforming change to the
regulations at 419.66(c)(2). We also note that the transitional pass-
through payment application for the device must be received within 2 to
3 years of the initial FDA marketing authorization (or a verifiable
market delay) for the device for the indication covered by the
Breakthrough Devices Program designation.
In summary, in this CY 2021 OPPS/ASC proposed rule, we propose to
amend the regulations in Sec. 419.66(c)(2)(ii) to state that ``A new
medical device is part of the FDA's Breakthrough Devices Program and
has received marketing authorization for the indication covered by the
Breakthrough Device designation.''
4. Comment Solicitation on Continuing To Provide Separate Payment in
CYs 2022 and Future Years for Devices With OPPS Device Pass-Through
Payment Status During the COVID-19 Public Health Emergency (PHE)
In this proposed rule, we are soliciting comments on whether we
should adjust future payments for devices currently eligible to receive
transitional pass-through payments that may have been impacted by the
PHE, and if so, how we should implement that adjustment and for how
long the adjustment should apply. On January 31, 2020, HHS Secretary
Azar determined that a PHE exists retroactive to January 27, 2020 \60\
under section 319 of the Public Health Service Act (42 U.S.C. 247d) in
response to COVID-19, and on April 21, 2020 Secretary Azar renewed,
effective April 26, 2020 and again effective July 25, 2020, the
determination that a PHE exists.\61\ On March 13, 2020, the President
of the United States declared that the COVID-19 outbreak in the United
States constitutes a national emergency,\62\ retroactive to March 1,
2020. Due to the PHE, we received multiple inquiries from stakeholders
regarding potential adjustments to the pass-through payment for devices
with OPPS transitional pass-through payment status that may be impacted
by the PHE. According to stakeholders, healthcare resources have been
triaged to assist in the COVID-19 pandemic response effort, which has
reduced utilization for devices receiving transitional pass-through
payment, particularly for devices used in services that could be
considered elective. Stakeholders cited the CMS recommendations issued
on March 18, 2020 to postpone elective surgeries due to the COVID-19
PHE.\63\ Stakeholders claim that devices on pass-through status are
frequently used during such elective procedures, and that CMS's ability
to calculate appropriate payment for services that include these
devices once the devices transition off of pass-through status could be
hindered by a reduction in claims being submitted with these devices
during the PHE.
---------------------------------------------------------------------------
\60\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx.
\61\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/covid19-21apr2020.aspx.
\62\ https://www.whitehouse.gov/presidentialactions/proclamation-declaring-nationalemergency-concerning-novel-coronavirus-diseasecovid-19-outbreak/.
\63\ https://www.cms.gov/newsroom/press-releases/cms-releases-recommendations-adult-elective-surgeries-non-essential-medical-surgical-and-dental.
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Transitional pass-through payment for devices is described in
section 1833(t)(6) of the Act. It is intended as an interim measure to
allow for adequate payment of new innovative technology while we
collect the necessary data to incorporate the costs for these items
into the procedure APC rate (66 FR 55861). As previously stated,
transitional pass-through payments for devices can be made for a period
of at least 2 years, but not more than 3 years, beginning on the first
date on which pass-through payment was made for the device.
In response to stakeholder concerns regarding reduced utilization
of procedures that include pass-through devices during the PHE, we are
specifically requesting public comment on utilizing our equitable
adjustment authority under section 1833(t)(2)(E) of the Act to provide
separate payment for some period of time after pass-through status ends
for these devices in order to account for the period of time that
utilization for the devices was reduced due to the PHE. Any rulemaking
on this issue in response to this comment solicitation would be
included in the CY 2022 OPPS/ASC proposed rule and would consider the
impact of the PHE on devices with OPPS device pass-through payment
status during the PHE. Note that OPPS device pass-through payment
status generally lasts three years, and none of the devices with less
than three years of pass-through payment status at the start of the PHE
have pass-through payment status set to end before December 31st, 2021.
[[Page 48863]]
B. Proposed 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 this CY 2021 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 this CY 2021 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 2021 OPPS/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 previously--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 previously described 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 our 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 a
procedure's 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
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
[[Page 48864]]
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 the
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 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 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 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 previously 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 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 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 insertion) of a 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 &
[[Page 48865]]
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.
In response to stakeholder requests for additional detail on our
device-intensive methodology, we have updated our claims accounting
narrative with a description of our device offset percentage
calculation. Our claims accounting narrative for this proposed rule can
be found under supporting documentation for the CY 2021 OPPS/ASC
proposed rule on our website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
For CY 2021, we are not proposing any changes to our device-
intensive policy.
The full listing of the proposed CY 2021 device-intensive
procedures can be found in Addendum P to this CY 2021 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 are not proposing any changes to this policy for CY 2021.
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 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 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.
[[Page 48866]]
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 a 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.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005
through 75007), we adopted a policy of reducing OPPS payment for
specified APCs when a hospital furnishes a specified device without
cost or with a full or partial credit by the lesser of the device
offset amount for the APC or the amount of the credit. Although we
adopted this change in policy in the preamble of the CY 2014 OPPS/ASC
final rule with comment period and discussed it in subregulatory
guidance, including Chapter 4, Section 61.3.6 of the Medicare Claims
Processing Manual, we inadvertently did not make conforming changes to
the regulation text. In particular, we did not change our regulation at
42 CFR 419.45(b)(1) and (2), which describes the amount of the
reduction in the APC payment in situations where the beneficiary
receives an implanted device that is replaced without cost to the
provider or the beneficiary or where the provider receives a full or
partial credit for the cost of a replaced device and which continues to
state that the amount of the reduction is the device offset amount.
Therefore, in this CY 2021 OPPS/ASC proposed rule, we are changing our
regulation at Sec. 419.45(b)(1) and (2) to conform with the policy we
adopted in CY 2014. In particular, we are revising our regulations at
Sec. 419.45(b)(1) to state that, for situations in which a beneficiary
has received an implanted device that is replaced without cost to the
provider or the beneficiary, or where the provider receives full credit
for the cost of a replaced device, the amount of reduction to the APC
payment is calculated by reducing the APC payment amount by the lesser
of the amount of the credit or the device offset amount that would
otherwise apply if the procedure assigned to the APC had transitional
pass-through status under Sec. 419.66. Additionally, we are revising
our regulation at Sec. 419.45(b)(2) to state that, for situations in
which the provider receives partial credit for the cost of a replaced
device, but only where the amount of the device credit is greater than
or equal to 50 percent of the cost of the replacement device being
implanted, the amount of the reduction to the APC payment is calculated
by reducing the APC payment amount by the lesser of the amount of the
credit or the device offset amount that would otherwise apply if the
procedure assigned to the APC had transitional-pass through status
under Sec. 419.66. The revisions to Sec. 419.45(b)(1) and (2) appear
in section XXVII. of this 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 previously 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 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 finalized our policy to continue 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. In CY
2020, this policy applied to CPT code 0308T which we assigned to APC
5495 (Level 5 Intraocular Procedures) in the CY 2020 OPPS/ASC final
rule with comment period (84 FR 61301).
For CY 2021, we propose 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 2021, this policy would not apply to any procedure.
As discussed in section, III.D.3., we received no claims data with CPT
code 0308T for this OPPS/ASC proposed rule, which we previously
assigned as a low-volume device-intensive procedure for CY 2017 through
CY 2020. As such, we propose to assign 0308T a payment weight based on
the most recently
[[Page 48867]]
available data, from the CY 2020 OPPS final rule, and therefore propose
to assign CPT code 0308T to APC 5495 (Level 5 Intraocular Procedures).
Additionally, in the absence of CY 2019 claims data for this CY 2021
OPPS/ASC proposed rule, we propose to use the most recently available
data, from the CY 2020 OPPS final rule, to establish the device offset
percentage for 0308T. Therefore, the proposed CY 2021 device offset
percentage for CPT code 0308T is based on the CY 2020 OPPS final rule
device offset percentage of 82.21 percent for CPT code 0308T. For more
discussion on the APC assignment and payment rate for CPT code 0308T,
see section III.D.3. of this proposed rule.
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed 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 diseases 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 2021 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
our 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 our 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.
3. Drugs and Biologicals With Expiring Pass-Through Payment Status in
CY 2020
There are 28 drugs and biologicals whose pass-through payment
status will expire during CY 2020 as listed in Table 21. Most of these
drugs and biologicals will have received OPPS pass-through payment for
3 years during the period of April 1, 2017 through December 31, 2020.
However, there are two groups of drugs and biologicals included in
Table
[[Page 48868]]
21 whose current period of OPPS pass-through payment is less than 3
years. The first group are five drugs and biologicals that have already
had 3 years of pass-through payment status but for which pass-through
payment status was extended for an additional 2 years from October 1,
2018 until September 30, 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 (Pub. L. 115-141). The drugs covered by this provision
include: HCPCS code A9586 (Florbetapir f18, diagnostic, per study dose,
up to 10 millicuries); HCPCS code J1097 (Phenylephrine 10.16 mg/ml and
ketorolac 2.88 mg/ml ophthalmic irrigation solution, 1 ml); HCPCS code
Q4195 (Puraply, per square centimeter); HCPCS code Q4196 (Puraply am,
per square centimeter); and HCPCS code Q9950 (Injection, sulfur
hexafluoride lipid microspheres, per ml). The second group are two
diagnostic radiopharmaceuticals, HCPCS code Q9982 (Flutemetamol F18,
diagnostic, per study dose, up to 5 millicuries) and HCPCS code Q9983
(Florbetaben F18, diagnostic, per study dose, up to 8.1 millicuries)
whose pass-through payment status was extended for an additional 9
months from January 1, 2020 to September 30, 2020 under Division N,
Title I, Subtitle A, Section 107(a) of the Further Consolidated
Appropriations Act of 2020, which amended section 1833(t)(6) of the
Social Security Act and added a new section 1833(t)(6)(J) to the Act.
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 2021), as discussed
further in section V.B.2. of this 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 non-340B drugs for CY 2021, as discussed further in section V.B.3.
of this proposed rule).
The packaged or separately payable status of each of these drugs or
biologicals is listed in Addendum B of this proposed rule (which is
available via the internet on the CMS website).
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4. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through
Payment Status Expiring in CY 2021
We propose to end pass-through payment status in CY 2021 for 26
drugs and biologicals. These drugs and biologicals, which were approved
for pass-through payment status between April 1, 2018 and January 1,
2019, are listed in Table 22. The APCs and HCPCS codes for these drugs
and biologicals, which have pass-through payment status that will end
by December 31, 2021, are assigned status indicator ``G'' in Addenda A
and B to this proposed rule (which are available via the internet on
the CMS website).
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 2021, we propose 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 2021. We propose that a $0 pass-
through payment amount would be paid for pass-through drugs and
biologicals under the CY 2021 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 2021 minus a payment
offset for the portion of the otherwise applicable OPD fee schedule
that the Secretary determines is associated with the drug or biological
as described in section V.A.6. of this proposed rule. We propose this
policy 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 propose to continue to update pass-through payment rates on a
quarterly basis on the CMS website during CY 2021 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 2021, consistent with our CY 2020 policy for diagnostic and
therapeutic radiopharmaceuticals, we propose 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 2021, we propose 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 on the WAC+3
percent payment policy can be found in section V.B.2.b. of the proposed
rule. If WAC information also is not available, we propose to provide
payment for the pass-through radiopharmaceutical at 95 percent of its
most recent AWP.
The drugs and biologicals that we propose to have pass-through
payment status expire between March 31, 2021 and December 31, 2021 are
shown in Table 22.
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5. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through
Payment Status Continuing in CY 2021
We propose to continue pass-through payment status in CY 2021 for
46 drugs and biologicals. These drugs and biologicals, which were
approved for pass-through payment status beginning between April 1,
2019 and April 1, 2020 are listed in Table 23. The APCs and HCPCS codes
for these drugs and biologicals, which have pass-through payment status
that will continue after December 31, 2021, are assigned status
indicator ``G'' in Addenda A and B to this proposed rule (which are
available via the internet on the CMS website).
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 2021, we propose 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 2021. We propose that a $0 pass-
through payment amount would be paid for pass-through drugs and
biologicals under the CY 2021 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
[[Page 48873]]
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 2021 minus a payment offset for
any predecessor drug products contributing to the pass-through payment
as described in section V.A.6. of this proposed rule. We propose this
policy 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 propose to continue to update pass-through payment rates on a
quarterly basis on our website during CY 2021 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 2021, consistent with our CY 2020 policy for diagnostic and
therapeutic radiopharmaceuticals, we propose 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 2021, we propose 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 on the WAC+3
percent payment policy can be found in section V.B.2.b. of the proposed
rule. If WAC information also is not available, we propose to provide
payment for the pass-through radiopharmaceutical at 95 percent of its
most recent AWP.
The drugs and biologicals that we propose to have pass-through
payment status expire after December 31, 2021 are shown in Table 23.
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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
[[Page 48876]]
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 2021, as we did in CY 2020,
we propose 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 24.
[GRAPHIC] [TIFF OMITTED] TP12AU20.042
We propose to continue to post annually on our 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. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Payment Status
1. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Proposed 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 $130 for CY
2020 (84 FR 61312 through 61313).
Following the CY 2007 methodology, for this CY 2021 OPPS/ASC
proposed 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 2021 and rounded the
resulting dollar amount ($130.95) 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 2021 OPPS/ASC proposed rule, based on these calculations using
the CY 2007 OPPS methodology, we propose a packaging threshold for CY
2021 of $130.
b. Proposed 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 2021 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
[[Page 48877]]
radiopharmaceuticals (collectively called ``threshold-packaged'' drugs)
that had a HCPCS code in CY 2019 and were paid (via packaged or
separate payment) under the OPPS. We used data from CY 2019 claims
processed before January 1, 2020 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 propose to continue to package in CY 2021:
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 2021, we use the methodology that was described in detail
in the CY 2006 OPPS proposed rule (70 FR 42723 through 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 propose for separately payable drugs and biologicals (other than
340B drugs) for CY 2021, as discussed in more detail in section
V.B.2.b. of the proposed rule) to calculate the CY 2021 proposed rule
per day costs. We used the manufacturer-submitted ASP data from the
fourth quarter of CY 2019 (data that were used for payment purposes in
the physician's office setting, effective April 1, 2020) to determine
the proposed rule per day cost.
As is our standard methodology, for CY 2021, we propose to use
payment rates based on the ASP data from the fourth 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, 2020. 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
2019 hospital claims data to determine their per day cost.
We propose 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
2019 HCPCS codes that were reported to the CY 2020 HCPCS codes that we
display in Addendum B to this proposed rule (which is available via the
internet on the CMS website) for proposed payment in CY 2021.
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 2021 OPPS/ASC
proposed rule, we proposed to use ASP data from the fourth quarter of
CY 2019, 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, 2020, along with updated hospital
claims data from CY 2019. We note that we also propose to use these
data for budget neutrality estimates and impact analyses for this CY
2021 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 second quarter of CY 2020.
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, 2020. These payment rates would then
be updated in the January 2021 OPPS update, based on the most recent
ASP data to be used for physicians' office and OPPS payment as of
January 1, 2021. 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 2019 claims data and update cost report information available
for the CY 2021 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 2021 OPPS drug packaging
threshold and the drug's payment status (packaged or separately
payable) in CY 2020. 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 2021,
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 2020 and that are proposed for separate payment in CY
2021, and that then have per day costs equal to or less than the CY
2021 final rule drug packaging threshold, based on the updated ASPs and
hospital claims data used for the CY 2021 final rule, would continue to
receive separate payment in CY 2021.
HCPCS codes for drugs and biologicals that were packaged
in CY 2020 and that are proposed for separate payment in CY 2021, and
that then have per day costs equal to or less than the CY 2021 final
rule drug packaging threshold, based on the updated ASPs and hospital
claims data used for the CY 2021 final rule, would remain packaged in
CY 2021.
HCPCS codes for drugs and biologicals for which we
proposed packaged payment in CY 2021 but that then have per-day costs
greater than the CY 2021 final rule drug packaging threshold, based on
the updated ASPs and hospital claims data used for the CY 2021 final
rule, would receive separate payment in CY 2021.
c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals
As mentioned earlier in this section, under the OPPS, we package
several categories of nonpass-through 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
[[Page 48878]]
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).
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
2021.
For CY 2021, 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 2019 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 2021 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 2019 claims data to make the proposed
packaging determinations for these drugs: HCPCS code C9257 (Injection,
bevacizumab, 0.25 mg); 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 2021 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 2021 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 2021
is displayed in Table 25.
BILLING CODE 4120-01-P
[[Page 48879]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.043
BILLING CODE 4120-01-C
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 the average
acquisition cost for the drug
[[Page 48880]]
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.\64\
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\64\ 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.
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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 2021
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 2020.
b. Proposed CY 2021 Payment Policy
For CY 2021, we propose to continue our payment policy that has
been in effect since CY 2013 to pay for separately payable drugs and
biologicals, with the exception of 340B-acquired drugs, at ASP+6
percent in accordance with section 1833(t)(14)(A)(iii)(II) of the Act
(the statutory default). We propose to pay for separately payable
nonpass-through drugs acquired with a 340B discount at a net rate of
ASP minus 28.7 percent (as described in section V.B.6). We refer
readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR
59353 through 59371), the CY 2019 OPPS/ASC final rule with comment
period (83 FR 58979 through 58981), and the CY 2020 OPPS/ASC final rule
with comment period (84 FR 61321 through 61327) for more information
about our current payment policy for drugs and biologicals acquired
with a 340B discount.
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) of the Act, 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) of the Act, 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). In the CY 2020 OPPS/ASC final rule with comment
period, we adopted a policy 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) (84 FR 61318). For CY 2021, we propose 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 propose to
apply this provision to non-SCOD separately payable drugs. Because we
propose 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 propose 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 under 1847A(c)(4). For drugs and biologicals that
would otherwise be subject to a payment reduction because they were
acquired under the 340B Program, the payment amount for these drugs
(proposed as a net rate of WAC minus 28.7 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 policy.
We propose that payments for separately payable drugs and
biologicals would be included in the budget neutrality adjustments,
under the requirements in section 1833(t)(9)(B) of the Act. We also
propose that the budget neutral weight scalar would not be applied in
determining payments for these separately payable drugs and
biologicals.
We note that separately payable drug and biological payment rates
listed in Addenda A and B to this proposed rule
[[Page 48881]]
(available via the internet on the CMS website), which illustrate the
proposed CY 2021 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, 2020, or WAC, AWP, or
mean unit cost from CY 2019 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 2021
payment rates. This is because payment rates for drugs and biologicals
with ASP information for January 2021 will be determined through the
standard quarterly process where ASP data submitted by manufacturers
for the third quarter of CY 2020 (July 1, 2020 through September 30,
2020) will be used to set the payment rates that are released for the
quarter beginning in January 2021 near the end of December 2020. 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 2020 are based on mean unit cost in the available CY 2019 claims
data. If ASP information becomes available for payment for the quarter
beginning in January 2021, 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 2020 ASP data) that do not have
ASP information available for the quarter beginning in January 2021.
These drugs and biologicals would then be paid based on mean unit cost
data derived from CY 2019 hospital claims. Therefore, the proposed
payment rates listed in Addenda A and B to the proposed rule are not
for January 2021 payment purposes and are only illustrative of the CY
2021 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 plus 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 payment policy for
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 noted
that we believed that these changes would better reflect the resources
and production costs that biosimilar manufacturers incur. We also
stated that we 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 explained that we believed 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),
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 2021, we propose 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 propose to continue our current policy for paying for
nonpass-through biosimilars acquired under the 340B program, except
that we propose to pay for these biosimilars at the biosimilar's ASP
minus 28.7 percent of the biosimilar's ASP instead of the biosimilar's
ASP minus 28.7 percent of the reference
[[Page 48882]]
product's ASP, in accordance with section 1833(t)(14)(A)(iii)(II) of
the Act. ASP minus 28.7 percent reflects the proposed net payment rate.
3. Payment Policy for Therapeutic Radiopharmaceuticals
For CY 2021, we propose 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 2021. Therefore, we propose for CY 2021 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 propose to rely on CY 2019 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 2021 payment rates for
nonpass-through, separately payable therapeutic radiopharmaceuticals
are included in Addenda A and B to this proposed rule (which are
available via the internet on the CMS website).
4. Payment for Blood Clotting Factors
For CY 2020, 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 2020, 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 2020 updated furnishing fee was $0.226 per unit.
For CY 2021, we propose 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 are 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 propose 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
our website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
We propose 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.
5. Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims
Data
For CY 2021, we propose to continue to use the same payment policy
as in CY 2020 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 2021 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 proposed rule, which is available via the internet on the CMS
website.
6. CY 2021 OPPS Payment Methodology for 340B Purchased Drugs
a. Overview and Background
Section Overview
Under the OPPS, payment rates for drugs are typically based on
their average acquisition cost. This payment is governed by section
1847A of the Act, which generally sets a default rate of average sales
price (ASP) plus 6 percent for certain drugs; however, the Secretary
has statutory authority to adjust that rate under the OPPS. As
described below, beginning in CY 2018, the Secretary adjusted the 340B
drug payment rate to ASP minus 22.5 percent to approximate a minimum
average discount for 340B drugs, which was based on findings of the GAO
and MedPAC that hospitals were acquiring drugs at a significant
discount under HRSA's 340B Drug Pricing Program. As described in the
following sections, the United States District Court for the District
of Columbia (the district court) concluded that the Secretary lacks the
authority to bring the default rate in line with average acquisition
cost unless the Secretary obtains survey data from hospitals on their
acquisition costs. Although HHS disagrees with that ruling and appealed
the decision, HHS meanwhile gathered the relevant survey data from 340B
hospitals. As described in detail below, those survey data confirm that
the ASP minus 22.5 percent rate is generous to 340B hospitals, and the
survey data supports
[[Page 48883]]
an even lower payment rate. The following sections expand upon the
points discussed in this overview.
Background
In the CY 2018 OPPS/ASC proposed rule (82 FR 33558 through 33724),
we proposed changes to the OPPS payment methodology for drugs and
biologicals (hereinafter referred to collectively as ``drugs'')
acquired under the 340B Program. We proposed these changes to better,
and more accurately, reflect the resources and acquisition costs that
these hospitals incur. We stated our belief 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 with 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
paid under the OPPS and therefore, are not subject to the OPPS payment
policy for 340B-acquired drugs. 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 with 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 non-
excepted off-campus PBDs paid under the PFS. We adopted this payment
policy effective for CY 2019 and subsequent years.
We clarified in the CY 2019 OPPS/ASC proposed rule (83 FR 37125)
that the 340B payment adjustment applies to drugs that are priced using
either WAC or AWP, and that 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. 340B-
acquired drugs that are priced using AWP are paid an adjusted amount of
69.46 percent of AWP. 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.
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, we 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, were 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 were excepted from
the 340B payment adjustment. These hospitals were 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 modifiers
``JG'' and ``TB''.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR
58981), we continued the Medicare 340B payment policies that were
implemented in CY 2018 for CY 2019 and adopted a policy 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. In
the CY 2020 OPPS/ASC final rule with comment period (84 FR 61321) we
continued the 340B policies that were implemented in CY 2018 and CY
2019.
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
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.\65\ 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.\66\ 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.\67\ 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,'' \68\ 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.'' \69\ Id. at 19. ``And
because
[[Page 48884]]
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.'' \70\
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\65\ American Hosp. Ass'n, et al. v. Azar, et al., No. 1:18-cv-
2084 (D.D.C. Dec. 27, 2018).
\66\ Id. at 35 (quoting Amgen, Inc. v. Smith, 357 F.3d 103, 112
(D.C. Cir. 2004) (citations omitted)).
\67\ 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.
\68\ Id. at 13.
\69\ Id. at 19.
\70\ Id. (citing Declaration of Elizabeth Richter).
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We respectfully disagreed with the district court's understanding
of the scope of the Secretary's adjustment authority. On July 10, 2019,
the district court entered final judgment. The agency appealed to the
D.C. Circuit, and on July 31, 2020 the court entered an opinion
reversing the district court's judgement in this matter. Nonetheless,
we stated in the CY 2020 OPPS/ASC final rule with comment period that
we were taking the steps necessary to craft an appropriate remedy in
the event of an unfavorable decision on appeal. Notably, after the CY
2020 OPPS/ASC proposed rule was issued, we announced in the Federal
Register (84 FR 51590) our intent to conduct a 340B hospital survey to
collect drug acquisition cost data for certain quarters within CY 2018
and 2019. We stated that 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.\71\ 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, which is significant because 340B
hospitals have internal data regarding their own drug acquisition
costs. We stated in the CY 2020 OPPS/ASC final rule with comment period
that we thus anticipated that survey data collected for CY 2018 and
2019 would confirm that the ASP minus 22.5 percent rate is a
conservative amount that overcompensates covered entity hospitals for
drugs acquired under the 340B program. We also explained that a remedy
that relies on such survey data could avoid the complexities referenced
in the district court's opinion.
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\71\ See American Hosp. Assoc. v. Azar, 348 F. Supp. 3d 62, 82
(D.D.C. 2018).
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We noted that under current law, any changes to the OPPS must be
budget neutral, and reversal of the payment adjustment for 340B drugs,
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
approximately 3,900 facilities that are paid for outpatient items and
services covered under the OPPS. In addition, we stated that any remedy
that increases payments to 340B hospitals could 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 law, are required to pay cost-sharing for most items and services,
which is usually 20 percent of the total Medicare payment rate.
Accordingly, we solicited comments on how to formulate an appropriate
remedy in the event of an unfavorable decision on appeal. Those
comments are summarized in the CY 2020 OPPS/ASC final rule with comment
period (84 FR 61323 through 61327).
b. Hospital Acquisition Cost Survey for 340B-Acquired Specified Covered
Outpatient Drugs (SCODs)
As discussed in the CY 2020 OPPS/ASC final rule with comment period
(84 FR 61326), we announced in the Federal Register (84 FR 51590) our
intent to conduct a 340B hospital survey to collect drug acquisition
cost data for the fourth quarter of CY 2018 and the first quarter of CY
2019. We noted that the 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 pending
litigation. We explained that our current policy to adjust payment for
drugs acquired under the 340B program was the subject of litigation and
while we believed we would prevail on appeal, we also believed it was
prudent to use the Secretary's existing authority to collect survey
data to set OPPS payment rates for drugs acquired under the 340B
Program at rates based on hospitals' costs to acquire such drugs. We
believe it is appropriate for the Medicare program to pay for SCODs
purchased under the 340B program at a rate that approximates what
hospitals actually pay to acquire the drugs, and we believe it is
inappropriate for Medicare to subsidize other programs through Medicare
payments for separately payable drugs. We stated that this approach
will ensure that the Medicare program uses Medicare trust fund dollars
prudently, while maintaining beneficiary access to these drugs and
allowing beneficiary cost-sharing to be based on the amounts hospitals
actually pay to acquire the drugs.
Section 1833(t)(14)(D)(i)(I) of the Act required the Comptroller
General of the United States to conduct a survey in each of 2004 and
2005 to determine the hospital acquisition cost for each SCOD and, not
later than April 1, 2005, to furnish data from such surveys to the
Secretary for purposes of setting payment rates under the OPPS for
SCODs for 2006. The Comptroller General was then required to make
recommendations to the Secretary under section 1833(t)(14)(D)(i)(II) of
the Act regarding the frequency and methodology of subsequent surveys
to be conducted by the Secretary under clause (ii). Clause (ii) of
section 1833(t)(14)(D) of the Act provides that the Secretary, taking
into account such recommendations, shall conduct periodic subsequent
surveys to determine the hospital acquisition cost for SCODs for use in
setting payment rates under subparagraph (A) of section 1833(t)(14).
In response to the requirements at section 1833(t)(14)(D)(i)(I) and
(II) of the Act, the Government Accountability Office (GAO) surveyed
hospitals and prepared a report that included its recommendations for
the Secretary regarding the frequency and methodology for subsequent
surveys.\72\ While GAO recognized that collecting accurate and current
drug price data was important to ensure the agency does not pay too
much or too little for drugs, GAO's 2006 report recommended that CMS
conduct a streamlined hospital survey once or twice per decade because
of the significant operational difficulties and burden that such a
survey would place on hospitals and CMS.\73\ In response to questions
about whether the data undercounted rebates, GAO acknowledged that
their data did not include drug rebates or 340B rebates as part of its
calculation.\74\ In the CY 2006 OPPS final rule, we explained that the
data collected by the GAO was ultimately not used to set payment rates,
in part because the data did not fully account for rebates from
manufacturers or other price concessions or payments from group
purchasing organizations made to hospitals (70 FR 68640). Instead, we
adopted a policy to pay hospitals at ASP+6 percent because we believed
ASP+6 percent was a reasonable level of payment for both the hospital
acquisition and pharmacy overhead cost of drugs and biologicals (70 FR
68642).
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\72\ https://www.gao.gov/new.items/d06372.pdf.
\73\ Id. at 18.
\74\ https://www.gao.gov/new.items/d06372.pdf (Appendix I:
Purchase Price for Drug SCODs).
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[[Page 48885]]
Between 2006 and 2017, we have generally paid for separately
payable drugs for which ASP data is available at ASP plus 6 percent.
Beginning in 2018, we adopted the current policy to pay for 340B-
acquired drugs at ASP-22.5 percent to better align Medicare payment
with acquisition costs for 340B-acquired drugs. The Medicare Payment
Advisory Commission (MedPAC) has consistently stated that Medicare
should institute policies that improve the program's value to
beneficiaries and taxpayers. For example, in its March 2019 Report to
the Congress, MedPAC noted that outpatient payments increased in part
due to rapid growth in Part B drug spending. MedPAC stated this rapid
growth in OPPS specifically, was ``largely driven by the substantial
margins for drugs obtained through the 340B Drug Pricing Program.''
\75\ While we continue to believe that ASP+6 percent represents a
reasonable proxy for Part B drug acquisition costs for most hospitals,
we do not believe the same is true for hospitals that acquire Part B
drugs under the 340B program since such hospitals are able to purchase
drugs at deeply discounted 340B ceiling prices or at even lower ``sub-
ceiling'' prices. For this reason, we concluded that it was appropriate
to survey 340B hospitals to gather drug acquisition cost data for drugs
acquired under the 340B program to allow us to pay hospitals for these
drugs at amounts that approximate the hospitals' acquisition costs.
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\75\ http://www.medpac.gov/docs/default-source/reports/mar19_medpac_entirereport_sec.pdf?sfvrsn=0.
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Population of Surveyed Hospitals
Because of our longstanding belief that ASP plus 6 percent is a
reasonable proxy for hospital acquisition costs and overhead for
separately payable drugs, we did not believe it was necessary or
appropriate to burden hospitals that are not eligible to acquire drugs
under the 340B program with a drug acquisition cost survey where we
have a proxy for hospital acquisition costs for those drugs. ASP data
does not, however, include 340B drug prices. (CY 2011 OPPS/ASC final
rule with comment period (75 FR 71800, 71960)). When GAO surveyed
hospitals in 2005, it found that the survey ``created a considerable
burden for hospitals as the data suppliers and considerable costs for
GAO as the data collector,'' and recommended that CMS survey hospitals
only once or twice per decade to ``occasionally validat[e] CMS's proxy
for SCODs' average acquisition costs--the [ASP] data that manufacturers
report.'' GAO Report to Congress: Survey Shows Price Variation and
Highlights Data Collection Lessons and Outpatient Rate-Setting
Challenges for CMS, 4 (April 2006). Section 1833(t)(14)(D)(ii) requires
the Secretary, in conducting periodic subsequent surveys, to take into
account GAO's recommendations on the frequency and methodology of
subsequent surveys. We considered GAO's conclusion that the 2005 survey
created ``considerable burden'' for hospitals and, thus, only surveyed
340B hospitals given our belief that the current payment rate for non-
340B hospitals continues to be an appropriate rate. For the same
reason, we also limited the data we requested from 340B hospitals to
acquisition costs for 340B-acquired drugs, rather than for drugs
purchased outside the 340B program for 340B participating hospitals. We
note that section 1833(t)(14)(D)(ii) refers to use of surveys conducted
by the Secretary to determine the hospital acquisition costs for SCODs
in setting payment rates under subparagraph (A). Therefore, we believe
it is appropriate to read the two provisions together that permit the
Secretary to survey 340B hospitals only and formulate a 340B payment
policy for this hospital group that is distinct from the payment policy
for non-340B hospitals.
Survey Methodology
Under the authority at section 1833(t)(14)(D)(ii) to conduct
periodic subsequent surveys to determine hospital acquisition costs, we
administered the survey to 1,422 340B entities between April 24 and May
15, 2020. We requested that all hospitals that participated in the 340B
program, including rural sole community hospitals (SCHs), children's
hospitals, and PPS-exempt cancer hospitals (which are currently exempt
from the Medicare 340B payment rate adjustment), supply their average
acquisition cost for each SCOD purchased under the 340B program during
in the last quarter of CY 2018 (October 1, 2018 through December 31,
2018) and/or first quarter of 2019 (January 1, 2019 through March 31,
2019), which could be the 340B ceiling price, a 340B sub-ceiling price,
or another amount, depending on the discounts the hospital received
when it acquired a particular drug. The ceiling price is the maximum
amount covered entities may permissibly be required to pay for a drug
under section 340B(a)(1) of the Public Health Service Act, so we would
not expect any 340B hospital to have acquisition costs for any acquired
drug that are greater than the ceiling price. For this reason, where
the acquisition price for a particular drug was not available or
submitted in response to the survey, we stated that we would use the
340B ceiling price for that drug as a proxy for the hospitals'
acquisition cost in order to produce the most conservative drug
discount for when data was missing or not submitted.
We incorporated valuable input from stakeholders on the development
and construction of the 340B acquisition cost survey. We collected the
stakeholders' input in two rounds of public comment through the survey
Paperwork Reduction Act (PRA) submission process. We published the
initial 340B drug hospital acquisition cost survey proposal in the
Federal Register (84 FR 51590) for a 60-day public comment period that
began September 30, 2019 and ended November 29, 2019. After
incorporating comments from the 60-day public comment period, we
released a revised 340B acquisition cost survey proposal in the Federal
Register (85 FR 7306) for a 30-day public comment period from February
7, 2020 to March 9, 2020.
After incorporating the stakeholders' comments and suggestions from
the second public comment period, OMB approved CMS' survey design (OMB
control number 0938-1374, expires 10/31/2021), and CMS released the
340B acquisition cost survey to the relevant 340B hospitals under the
OPPS. As mentioned earlier in this section, the survey was open from
April 24, 2020, to May 15, 2020. The survey sample was 100 percent of
the potential respondent universe, or all hospitals that acquired drugs
under the 340B Program and were paid for those drugs under OPPS in the
fourth quarter of 2018 and/or the first quarter of 2019. We provided
respondents with two options to complete the survey: the Detailed
Survey and the Quick Survey.
Respondents that selected the Detailed Survey provided acquisition
costs for each individual SCOD. We requested that these respondents
report the net acquisition cost for each SCOD that they acquired under
the 340B program (that is, the sub-ceiling price after all applicable
discounts). We stated that if the acquisition cost for the SCOD was
unknown, the respondent may leave the field blank and we would use the
340B ceiling price as a proxy for the acquisition cost for that drug.
In the survey instructions, we stated that acquisition cost for
purposes of the survey meant the price that the hospitals paid upon
receiving the product, including, but not limited to,
[[Page 48886]]
prices paid for 340B drugs purchased via a replenishment model under
the 340B program, or under penny pricing. We explained that applicable
discounts are any discounts below the discounted ceiling price. We also
made clear that for purposes of the survey the 340B drug acquisition
cost should be reported regardless of whether the drug was dispensed at
all, or whether the drug was dispensed in multiple settings. We only
requested the acquisition cost of the drugs acquired under the 340B
program during the specified timeframes: the fourth quarter of 2018
and/or the first quarter of 2019. We also stated that acquisition costs
for drugs acquired by 340B hospitals outside of the 340B program should
not be submitted in response to the survey.
The Quick Survey option allowed the hospital to indicate that it
preferred that CMS utilize the 340B ceiling prices obtained from (HRSA)
as reflective of their hospital acquisition costs. Additionally, we
stated that in instances where the acquisition price for a particular
drug is not available or submitted in response to the survey, we would
use the 340B ceiling price for that drug as a proxy for the hospitals'
acquisition cost because the price for a drug acquired under the 340B
program cannot be higher than the 340B ceiling price by statute.
Finally, we noted that where a hospital did not affirmatively respond
to the Detailed or Quick Survey within the open period of response, we
would use the 340B ceiling prices in lieu of their responses because
the ceiling price represents the highest possible price that a 340B
hospital could permissibly be required to pay for a 340B-acquired drug.
c. Analysis of Hospital Acquisition Cost Survey Data for 340B Drugs
The results of the survey, which closed on May 15, 2020 are as
follows: Seven percent (n=100) of surveyed hospitals affirmatively
responded via the Detailed Survey option; 55 percent (n=780) of
surveyed hospitals affirmatively responded via the Quick Survey option;
and the remaining 38 percent (n=542) of surveyed hospitals did not
respond affirmatively to either survey option. As previously noted, we
applied 340B ceiling prices for hospitals that did not affirmatively
respond to the survey; such action may skew the survey results towards
the minimum average discount (that is, the ceiling price) that a 340B
hospital would receive on a drug.
We also examined the hospital characteristics of those hospitals
that submitted either a Detailed or Quick Survey to the general 340B
survey population. The characteristics we analyzed included hospital
bed count, teaching hospital status, hospital type, and geographic
classification as a rural or urban hospital. Our findings showed that
the survey respondent hospitals were generally similar to the general
340B survey population.
d. Proposed Payment Policy for Drugs Acquired Under the 340B Program
for CY 2021 and Subsequent Years
(1) Grouping Hospitals by 340B Covered Entity Status
Section 1833(t)(14)(A)(iii)(I) authorizes the Secretary to set the
amount of payment for SCODs at an amount equal to the average
acquisition cost for the drug for that year (which, at the option of
the Secretary, may vary by hospital group (as defined by the Secretary
based on volume of covered OPD services or other relevant
characteristics)), as determined by the Secretary taking into account
the hospital acquisition cost survey data under subparagraph (D). In
this proposed rule, we are exercising the authority to vary the amount
of payment for the group of hospitals that is enrolled in the 340B
program because their drug acquisition costs vary significantly from
those not enrolled in that program. Section 1833(t)(14)(A)(iii) of the
Act allows the Secretary to exercise discretion to vary payment by
hospital group, ``as defined by the Secretary based on the volume of
covered OPD services or other relevant characteristics.'' We believe
that is it within the Secretary's authority to distinguish between
hospital groups based on whether or not they are covered entities under
section 340B(a)(4) of the PHSA that are eligible to receive drugs and
biologicals at discounted rates under the 340B program. We believe that
the significant drug acquisition cost discounts that 340B covered
entity hospitals receive enable these hospitals to acquire drugs at
much lower costs than non-340B hospitals incur for the same drugs.
Accordingly, we propose to use 340B covered entity status as a relevant
characteristic to group hospitals for purposes of payment based on
average acquisition cost under section 1833(t)(14)(A)(iii)(I).
(2) Applying a Single Reduction Amount to ASP for 340B-Acquired Drugs
Section 1833(t)(14)(A)(iii)(I) provides that the payment amount for
a SCOD for a year is equal to the average acquisition cost for the drug
``as determined by the Secretary taking into account'' the survey data
collected under subparagraph (D). We interpret the reference to
acquisition costs being ``determined'' by the Secretary, ``taking into
account'' survey data, to give us discretion to determine the
appropriate payment rate based on data collected from the hospital
acquisition cost survey for 340B drugs. We propose to apply a single
discount factor to ASP for drugs acquired by 340B hospitals in lieu of
calculating individual acquisition cost amounts for 340B-acquired
drugs. We note that 340B ceiling prices are protected from disclosure
both because the prices themselves are sensitive, and because they
could potentially be used to reverse-engineer average manufacturer
prices, which are protected under section 1927(b)(3)(D). We also
pledged confidentiality of individual responses regarding acquisition
prices for each SCOD to the extent required by law. Given that the
survey data is heavily weighted towards 340B ceiling prices (because
340B ceiling prices were used for any SCODs within the Detailed Survey
for which a hospital did not provide responses, for hospitals that
selected the Quick Survey option, and for hospitals that did not
affirmatively respond) and since ceiling prices are protected by law
from public disclosure, we are instead proposing to establish one
aggregate discount amount relative to ASP for SCODs acquired under the
340B program rather than proposing drug-specific prices, which could
reveal sensitive or protected pricing information.
(3) Methodology To Calculate ASP Reduction Amount Based on Survey Data
As described in detail in the following sections, we analyzed the
survey results and applied various statistical methodologies to
determine an appropriate average or typical amount by which to reduce
ASP that would approximate hospital acquisition costs for 340B drugs
and biologicals. In fairness to hospitals, we generally chose
methodologies that yield the most conservative reduction to ASP when
establishing the payment rate, and thus would be most generous to
hospitals. This includes the use of 340B ceiling prices, which must be
kept confidential, where applicable in the survey results. Based on our
analysis of the available information, we estimate that the typical
acquisition cost for 340B drugs for hospitals paid under the OPPS is
ASP minus 34.7 percent.
We determined the average discount of 34.7 percent by assessing a
number of factors including: Multiple measures of central tendencies
(arithmetic mean,
[[Page 48887]]
median, geometric mean); the effect of including penny priced drugs;
mapping of multi-source NDCs to a single HCPCS code; weighting values
by volume/utilization; and applying trimming methodologies to remove
anomalous or outlier data. The analysis of each of these variables is
discussed in the next section.
(a) Selecting an Averaging Methodology
When determining the appropriate average reduction amount relative
to ASP for 340B drugs, we assessed multiple measures of central
tendencies, including the arithmetic mean, median, and geometric mean,
on the typical 340B discount based on drug acquisition cost survey
data. Based upon the cumulative data from the Detailed Survey option,
the Quick Survey option, and imputed responses for hospitals that did
not affirmatively respond, we analyzed the effects of each averaging
method, combining the data from all three sources in both survey
quarters (fourth quarter 2018 and first quarter 2019). Using the raw
data without accounting for outliers, we determined that the arithmetic
mean would result in an average discount from ASP of approximately 66.3
percent; the median would result in an average discount from ASP of
approximately 70.4 percent, and the geometric mean would result in an
average discount from ASP of approximately 58.3 percent.
Under the OPPS, we generally calculate resource costs for a given
service using the geometric mean. The geometric mean minimizes the
effects of the outliers without ignoring them. Minimizing outliers is
consistent with our methodology to estimate an average or typical 340B
discount that is representative across all 340B SCODs. Therefore, we
propose to utilize the geometric mean discount to ASP from both survey
quarters--2018 Q4 and 2019 Q1--as a component of our overall analysis
of the survey data. Without any further adjustments, applying the
geometric mean to the survey results would result in an average drug
acquisition cost estimate of ASP minus 58.3 percent for 340B acquired
drugs.
(b) Volume Weighting Survey Data
While we realize the geometric mean minimizes the effects of some
outliers, it does not take into consideration several other important
factors. Notably, we believe that in calculating the average discount
that 340B drugs receive relative to ASP, we should take into account
how often those drugs were billed by all hospitals under the OPPS for
2018 and 2019, to give a better reflection of each drug's overall
utilization under the OPPS. Therefore, we volume-weighted the drug
discounts determined from the survey to mirror the drug utilization in
the OPPS. That is, drugs that were commonly used were assigned a higher
weight while those less commonly used were assigned a lower weight. We
incorporated volume weighting into our analysis by assessing the
utilization rate of each individual drug (using its HCPCS code) under
the OPPS for CY 2018 and CY 2019. Specifically, we calculated the
average discount by taking the utilization of each drug under the OPPS
into account to arrive at a case-weighted average for each HCPCS code.
For example, a highly utilized HCPCS code for an oncology drug would be
weighted higher than that of a drug for snake anti-venom that has a
relative low utilization in the OPPS. The data for CY 2018 Q4 was
volume weighted based upon OPPS utilization during CY 2018 as
determined using OPPS claims data. The data for CY 2019 Q1 was volume
weighted based upon OPPS utilization during CY 2019 as determined using
OPPS claims data. This resulted in a change in the geometric mean to an
average discount of 58.0 percent from 58.3 percent non-weighted.
(c) Addressing HCPCS Code With Multiple NDCs
In addition, a small portion of the SCODs that were subject to the
340B drug acquisition cost survey contain multiple NDCs that map to a
single HCPCS code. This is because these drugs are multiple source
drugs, meaning that they were manufactured by different entities and
have varying package sizes or strengths, and thus, multiple different
NDCs for the same drug. For payment purposes under the OPPS, we pay for
drug products based on the drug's HCPCS code, regardless of which NDC
is used. Hospitals that completed the Detailed Survey option were
instructed to report their average acquisition costs for each drug
during the surveyed quarters per HCPCS code. However, for those
hospitals that opted for the Quick Survey option or that did not
affirmatively respond, we were unable to determine which combination of
NDCs mapped to the HCPCS codes these entities would have used during
the given quarters. Therefore, we analyzed the effects of averaging all
of the NDCs' acquisition costs for a given HCPCS when determining the
average discount, as well as selecting the NDC with the highest
acquisition cost for a given HCPCS code and using that NDC's
acquisition cost amount to determine the average discount. When we
calculate the average discount using an average of the acquisition
costs for all of the NDCs assigned to the HCPCS code, the average
volume weighted geometric mean discount off of ASP is 58.0 percent. The
58.0 percent was calculated by taking all of the various NDCs (across
various manufacturers, package sizes, and strengths) for the same drug
and averaging the unit costs together in order to arrive at a single
amount for each HCPCS code for a drug. When we calculated the average
discount using the highest acquisition cost NDC for each HCPCS code for
a drug, the average volume weighted geometric mean discount from ASP is
47.0 percent. This was achieved by analyzing all of the various NDCs
(across various manufacturers, package sizes, and strengths) assigned
to the HCPCS code for the same drug and selecting the NDC that has the
highest unit cost in order to arrive at a single cost for each HCPCS
code. Consistent with the general principle of choosing the
methodological approach that is most generous to hospitals, we propose
to use the highest acquisition cost NDC for each HCPCS code for a drug
to determine the average 340B discount.
(d) Addressing Penny Pricing in the Survey Data
As part of our analysis of the survey data, we examined the effect
of including ``penny priced'' drugs on the average discount off of ASP.
The 340B ceiling price is statutorily defined as the Average
Manufacturer Price (AMP) reduced by the rebate percentage, which is
commonly referred to as the Unit Rebate Amount (URA).\76\ The
calculation of the 340B ceiling price is defined in section 340B(a)(1)
of the PHSA. Penny pricing occurs when, under section 1927(c)(2)(A) of
the Social Security Act, the AMP increases at a rate faster than
inflation, in which case the manufacturer is required to pay an
additional rebate amount, which is reflected in an increased URA and
could result in a 340B ceiling price of zero. We propose to exclude
penny priced drugs to remove outliers that may distort the average
discount in order to provide the most conservative estimate of the
average 340B discount from ASP. HRSA noted in the 340B Drug Pricing
Program Ceiling Price and Manufacturer Civil Monetary Penalties
Regulation Final Rule (82 FR 1210) that although infrequent, that there
are instances when the 340B ceiling price is zero. HRSA did not believe
that it is consistent with the statutory scheme to
[[Page 48888]]
set the price at zero. In this circumstance, HRSA required that
manufacturers charge a $0.01 for the drug, which they believed best
effectuates the statutory scheme by requiring a payment.\77\
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\76\ https://www.hrsa.gov/opa/updates/2015/may.html.
\77\ https://www.govinfo.gov/content/pkg/FR-2017-01-05/pdf/2016-31935.pdf.
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We acknowledge that penny pricing of drugs is not intended to be
permanent and, by its very nature, is dynamic, meaning the select group
of drugs to which penny pricing applies could vary from quarter to
quarter. We analyzed the inclusion and exclusion of penny pricing on
the overall average discount of 340B drugs compared to ASP. As
expected, we found that the excluding penny pricing provides a much
more conservative estimate of the average 340B discount from ASP
relative to including penny pricing. When we excluded penny pricing,
the geometric mean volume weighted average discount, using the highest
NDC for a drug's HCPCS code, decreased to 40.9 percent from 47.0
percent. We observed penny pricing in less than 10 percent of the drugs
surveyed. Because penny pricing is dynamic and the drugs to which it
applies may vary from quarter to quarter, we believe it is appropriate
to propose to exclude penny pricing from our survey analysis, although
we acknowledge that penny pricing, when it does apply, represents the
acquisition cost for the drug to which it applies.
We are concerned that including a discount of a penny priced drug
from the two quarters surveyed may inappropriately increase the average
discount, where the drug may not have been priced based on penny
pricing in following or preceding quarters. However, it also is the
case that a drug could have penny pricing for any given quarter and it
could be appropriate to include penny priced drugs in the calculation
of the average acquisition cost because in such cases, penny prices do
represent the maximum (ceiling) price the 340B hospital would pay for
that drug. Nonetheless, in order to provide for a more conservative
discount estimate, we propose to exclude penny priced drugs at this
time from our analysis, but we welcome public comment on whether such
policy accurately represents 340B-drug acquisition costs.
(e) Addressing Outliers
In response to the Detailed Survey, hospitals provided some drug
acquisition cost data that exceeded 340B ceiling prices, and in some
cases even exceeded the ASP or ASP+6 percent payment rate for certain
drugs. As previously noted, covered entities cannot be required to pay
more than the ceiling price to acquire a drug under the 340B program.
Therefore, we attributed any Detailed Survey acquisition cost data
greater than the ceiling price to potential data entry error, for
instance, miscalculation or incorrect decimal point placement. However,
because hospitals may have been overcharged for their drug acquisition
costs and could have accurately reported acquisition costs greater than
the HRSA ceiling price, we did not eliminate these data from our
calculations. Instead, consistent with our standard methodology for
processing extreme outliers under the OPPS, we excluded responses for
any SCODs that were three standard deviations from the geometric mean.
We believe applying a three standard deviation limit to the reported
acquisition data is appropriate because it removes outliers from both
the high and low reported values. In addition, applying a three
standard deviations limit may be more representative of the
respondents' acquisition cost, even though it may not eliminate some
data values that are above the ceiling price. While this approach means
that some values above the ceiling price will be included in our data
analysis, we are not proposing to trim them because we propose to apply
a standard trimming methodology. The cumulative application of this
trimming methodology, along with other methodologies applied to the
survey data described above, results in an average acquisition cost for
drugs that hospitals acquire under the 340B program of ASP minus 34.7
percent. For the reasons previously discussed, we propose to exclude
survey data from the Detailed Survey that is more than three standard
deviations from the mean. We note that we also explored capping any
survey submissions received at the 340B ceiling price, as no covered
entity can be required to pay more than the ceiling price. This
approach, holding all other methodological approaches constant, would
have resulted in an average acquisition cost of ASP minus 41.5 percent
for drugs acquired under the 340B program.
Table 26, Aggregate 340B Drug Program Cost Savings Percentage
Relative to ASP, shows the aggregate 340B drug program discount
percentage relative to ASP using several different statistical
measures. In this table, we outlined some additional figures following
a similar path as described above. For example, we arrived at the 33.8
percent figure in the table under median, and penny pricing excluded,
by initially choosing the median as the averaging methodology, and then
performing trimming methodologies as described above, which include
volume weighting by HCPCS, using the highest NDC per HCPCS, and using
only data within three standard deviations of the median. This would
have resulted in a final proposed discount of 33.8 percent. While this
final discount appears more generous to hospitals than our proposal, we
do not believe it is appropriate. Specifically, we believe using the
geometric mean as outlined in the methodology above is the most
generous methodology for establishing a final discount amount that also
maintains accuracy and consistency with past OPPS practices. As
described previously, under the OPPS, we generally calculate resource
costs for a given service using the geometric mean. The geometric mean
minimizes the effects of the outliers without ignoring them. As an
additional example, under the arithmetic mean methodology with penny
pricing included in table 26, the final determined discount was
determined to be 23.1 percent. We arrived at this figure of 23.1
percent by initially choosing the arithmetic mean as the averaging
methodology, and then performing trimming methodologies as described
above, with the exception of including penny prices in this figure.
Similar to the discussion above regarding the use of the median, we do
not think utilizing the arithmetic mean is appropriate or consistent
with the averaging methodologies historically used under the OPPS. The
arithmetic mean could easily skew towards outlier data and anomalous
data not captured by previously described trimming methodologies.
Additionally, with this 23.1 percent figure, while penny pricing is a
valid maximum (i.e., ceiling) price for drugs to which it applies, as
noted above we believe it would be appropriate to exclude penny priced
drugs for purposes of our proposal.
We believe the manner in which we arrived at the proposed payment
amount of ASP minus 34.7 percent for 340B-acquired drugs is the most
appropriate and accurate method of determining the average discount or
typical discount. We believe it is reflective of stakeholder's actual
acquisition costs, and is as generous as possible without compromising
accuracy. We also believe the geometric mean is the most appropriate
averaging methodology as it mitigates the effects of outliers relative
to the arithmetic mean and median and is consistent with OPPS payment
methodologies. Although ceiling prices are protected by
[[Page 48889]]
statute and the respondents to the survey were given a pledge of
confidentiality, we are exploring and seek comment on the possibility
of providing microdata to qualified researchers through their
restricted access infrastructure, in accordance with best practices for
transparency.
[GRAPHIC] [TIFF OMITTED] TP12AU20.044
(4) Determining an Add-on Payment for 340B Drugs
Under the OPPS, Medicare pays separately payable drugs at rates
that approximate their acquisition costs, such as at ASP or WAC. These
drugs typically also receive an add-on payment. Under the OPPS, section
1833(t)(14)(E) authorizes, but does not require, the Secretary to make
an adjustment to payment rates for SCODs to take into account overhead
and related expenses, such as pharmacy services and handling costs.
In the MedPAC report from 2005,\78\ MedPAC recommended that the
Secretary:
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\78\ http://medpac.gov/docs/default-source/reports/June05_ch6.pdf?sfvrsn=0.
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Establish separate, budget neutral payments to cover the
costs that hospitals incur for handling separately paid drugs,
biologicals, and radiopharmaceuticals;
define a set of handling fee APCs that group drugs,
biologicals, and radiopharmaceuticals based on attributes of the
products that affect handling costs;
instruct hospitals to submit charges for those APCs; and
base payment rates for the handling fee APCs on submitted
charges, reduced to costs.
Because we took a conservative approach in estimating the average
acquisition costs for 340B-acquired drugs, we do not believe that it is
imperative to establish an add-on for overhead and handling as we
believe that such a conservative estimate may already account for the
costs of overhead and handling. In addition, our current 340B drug
payment policy under the OPPS pays separately payable drugs at ASP
minus 22.5 percent with no add-on payment because this payment rate
represents the minimum average discount that a 340B entity would
receive on a drug. We believe hospitals receive a significant margin on
340B drugs under our current policy, so an additional add-on payment is
not necessary. Nonetheless, under the methodology in section 1847A, the
Part B payments for separately payable drugs and biologicals furnished
by practitioners and certain suppliers generally include an add-on set
at 6 percent of the ASP for the specific drug. As discussed in the CY
2019 Physician Fee Schedule final rule with comment period (83 FR
59661-59662) the 6 percent add-on is widely believed to include
services associated with drug acquisition that are not separately paid
for, such as handling, storage, and other overhead. We realize that the
acquisition costs for drugs acquired under the 340B program are
significantly lower than for those drugs purchased outside of the 340B
program, so we did not find it appropriate to base the add-on for 340B
drugs on the 340B acquisition cost as previously discussed. However, we
believe that it is reasonable to assume that a given drug will have
similar overhead and other administrative costs regardless of whether
the drug was purchased under the 340B Program or a by non-340B entity.
Additionally, utilizing a drug add-on will ensure a level of payment
parity with the add-on that applies to Part B drugs outside of the 340B
program.
Therefore, for CY 2021 and subsequent years, we propose to pay for
drugs acquired under the 340B program at ASP minus 34.7 percent, plus
an add-on of 6 percent of the product's ASP, for a net payment rate of
ASP minus 28.7 percent. Under this payment methodology, each drug would
receive the same add-on payment regardless of whether it is paid at the
340B rate or at the traditional ASP rate for drugs not purchased under
the 340B program. We note that this add-on percentage would be more
generous to hospitals than adding 6 percent of the reduced 340B rate.
As an example, assuming a non-340B drug is paid its ASP of $1,000 and
$60 for the 6 percent add-on, the 340B rate would be $653 ($1,000-$347)
plus $60 or $713 total, instead of $653 plus $39.18 (6 percent of the
reduced rate of $653) which would equal $39.18 or $692.18 total. We
propose that this payment methodology would be our Medicare payment
policy for 340B-acquired drugs going forward for CY 2021 and subsequent
years.
(5) 340B Payment Policy for Drugs for Which ASP Is Unavailable
As we clarified in the CY 2019 OPPS/ASC proposed rule, 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. We propose the 340B payment adjustment for
WAC-priced drugs mirror that of ASP payment with
[[Page 48890]]
payment being WAC minus 34.7 percent plus 6 percent of the drug's WAC,
except for when WAC plus 3 percent policy applies under 1847A(c)(4) and
as discussed in V.B.2.b., for which we would propose a payment rate of
WAC minus 34.7 percent plus 3 percent of the drug's WAC. Previously,
AWP-priced drugs have had a payment rate of 69.46 percent of AWP when
the 340B payment adjustment is applied. The 69.46 percent of AWP was
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 applied 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.
Similarly, for CY 2021, we propose to pay for drugs paid at AWP under
the 340B program at 95 percent AWP first reduced by 6 percent to
generate a value that is similar to ASP or WAC with no percentage mark
up. Then we propose to apply the net 28.7 percent reduction resulting
in a payment rate of 63.90 percent of AWP.
(6) 340B Payment Policy Exemptions
In the CY 2018 OPPS/ASC proposed rule, we sought public comment on
whether, due to access to care issues, certain groups of hospitals,
such as those with special adjustments under the OPPS (for example,
children's hospital or PPS-exempt cancer hospitals) should be excepted
from a policy to adjust OPPS payments for drugs acquired under the 340B
program. Specifically, in accordance with section 1833(t)(7)(D)(ii) of
the Act, we make transitional outpatient payments (TOPs) to both
children's and PPS-exempt cancer hospitals. This means that these
hospitals are permanently held harmless to their ``pre-BBA amount,''
and they receive 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. Accordingly, if we were to reduce drug payments to these
hospitals on a per claim basis, it is very likely that the reduction in
payment would be paid back to these hospitals at cost report
settlement, given the TOPs structure. Taking into consideration the
comments regarding rural hospitals, we believed further study on the
effect of the 340B drug payment policy was warranted for classes of
hospitals that receive statutory payment adjustments under the OPPS.
Accordingly, we believed and continue to believe it is appropriate to
exempt children's and PPS-exempt cancer hospitals from the alternative
340B drug payment methodology.
In addition to the children's and PPS-exempt cancer hospitals,
Medicare has long recognized the particularly unique needs of rural
communities and the financial challenges rural hospital providers face.
Across the various Medicare payment systems, CMS has established a
number of special payment provisions for rural providers to maintain
access to care and to deliver high quality care to beneficiaries in
rural areas. With respect to the OPPS, 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, and devices paid under the pass-
through payment policy, in accordance with section 1833(t)(13)(B) of
the Act. We have continued this 7.1 percent payment adjustment since
2006.
For CY 2021 and subsequent years, similar to previous years, we
propose that rural sole community hospitals (as described under the
regulations at 42 CFR 412.92 and designated as rural for Medicare
purposes), children's hospitals, and PPS-exempt cancer hospitals would
be excepted from the 340B payment adjustment and that these hospitals
continue to report informational modifier ``TB'' for 340B-acquired
drugs, and continue to be paid ASP+6 percent. We may revisit our policy
to exempt rural SCHs, as well as other hospital designations for
exemption from the 340B drug payment reduction, in future rulemaking.
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. Similarly, for CY 2021, we propose to pay nonpass-
through biosimilars acquired under the 340B Program at the biosimlar's
ASP minus the net payment discount reduction, 34.7 percent plus an add
on of 6 percent, of the biosimilar's ASP, for a net payment rate of the
biosimilar's ASP minus 28.7 percent of the biosimilar's ASP.
e. Alternative Proposal To Continue Policy To Pay ASP-22.5 Percent
Previously, we adopted the OPPS 340B payment policy based on the
average minimum discount for 340B-acquired drugs being approximately
ASP minus 22.5 percent. The estimated discount was based on a MedPAC
analysis identifying 22.5 percent as a conservative minimum discount
that 340B entities receive when they purchased drugs under the 340B
program, which we discussed in the CY 2018 OPPS/ASC final rule with
comment period (82 FR 52496). We continue to believe that ASP minus
22.5 percent is an appropriate payment rate for 340B-acquired drugs
under the authority of 1833(t)(14)(A)(iii)(II) for the reasons we
stated when we adopted this policy in CY 2018 (82 FR 59216). On July
31, 2020, the D.C. Circuit reversed the decision of the district court,
holding that this interpretation of the statute was reasonable.
Therefore, we also propose in the alternative that the agency could
continue the current Medicare payment policy for CY 2021. If adopted,
this proposed policy would continue the current Medicare payment policy
for CY 2021 and subsequent years.
Summary
In summary, we propose for CY 2021 and subsequent years to pay for
drugs acquired under the 340B program at ASP minus 34.7 percent, plus
an add-on of 6 percent of the product's ASP, for a net payment rate of
ASP minus 28.7 percent using the authority under section
1833(t)(14)(A)(iii)(I) of the Act. This proposal includes our
previously discussed methodology used to arrive at the 34.7 percent
average discount that we propose to apply to all drugs acquired under
the 340B program. This methodology includes using the geometric mean of
the survey data, volume weighting the average based upon utilization of
the drug in the OPPS, using the highest priced NDC when multiple NDCs
are available for a single HCPCS code, eliminating penny pricing from
the average, and eliminating any data outside of 3 standard deviations
from the mean when calculating the average discount of 34.7 percent.
Our intent is that, if finalized, this payment methodology would apply
begin January 1, 2021 and any changes to this permanent payment policy
would be required to be adopted through notice and comment rulemaking.
We are also proposing that Rural SCHs, PPS-exempt cancer hospitals and
children's hospitals would be exempted from the 340B
[[Page 48891]]
payment policy for CY 2021 and subsequent years. Finally, we note that
we propose in the alternative to continue our current policy of paying
ASP minus 22.5 percent for 340B-acquired drugs as we prevailed on
appeal to the D.C. Circuit in the litigation.
7. Proposed High Cost/Low Cost Threshold for Packaged Skin Substitutes
a. Background
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 package 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 earlier 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 2020, the payment rate for APC
5053 (Level 3 Skin Procedures) was $497.02, the payment rate for APC
5054 (Level 4 Skin Procedures) was $1,622.74, 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 2020 OPPS/ASC final rule with
comment period, correction notice (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 propose to continue it for CY 2021. 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). Beginning in CY 2016 and in subsequent years, we
adopted a policy where we determined 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. We assigned each skin substitute that exceeded
either the MUC threshold or the PDC threshold to the high cost group.
In addition, we assigned 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 (84 FR 61327 through 61328).
However, some skin substitute manufacturers have raised concerns
about significant fluctuation in both the MUC threshold and the PDC
threshold from year to year using the methodology developed in CY 2016.
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
[[Page 48892]]
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.
For CY 2020, we sought more extensive comments on the two policy
ideas that generated the most comment from the CY 2019 comment
solicitation. One of the ideas was to establish a payment episode
between 4 to 12 weeks where a lump-sum payment would be made to cover
all of the care services needed to treat the wound. There would be
options for either a complexity adjustment or outlier payments for
wounds that require a large amount of resources to treat. The other
policy idea 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.
b. Discussion of CY 2019 and CY 2020 Comment Solicitations for Episode-
Based Payment for Graft Skin Substitute Procedures
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 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 encouraged us to continue to study the
issues 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.
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. Other 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
comorbidities.
Some commenters opposed the idea of a complexity adjustment for
skin
[[Page 48893]]
substitute application procedures. The commenters stated 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. In recent
meetings, stakeholders have expressed concerns that establishing a
comprehensive APC for graft skin substitute procedures could lead to
other unrelated wound care services such as hyperbaric oxygen
treatments being bundled into those procedures. Some stakeholders have
provided suggestions to provide additional payment for the treatment of
complicated wounds, similar to a complexity adjustment, without
bundling unrelated wound care services.
The additional comments we received in CY 2020 related to including
a complexity adjustment with an episode-based payment, along with the
comments we received on episode-based payment in general from the CY
2019 comment solicitation show, that there are many issues that
continue to require study for this payment methodology. In addition, we
also need more time to assess the benefits and drawbacks of episode-
based payment as compared to other possible options to change the
payment methodology for graft skin substitute procedures. Therefore in
CY 2021, we will continue our review of the feasibility of using
episode-based payment for graft skin substitute procedures, and we will
not propose any episode-based payment for these procedures.
c. Discussion of CY 2019 and CY 2020 Comment Solicitations To Have a
Single Payment Category for Graft Skin Substitute Procedures
Another policy option on which we solicited comments in CY 2019 and
CY 2020 was 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 graft skin
substitute 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 substitute 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''.
Commenters and stakeholders who support this option believed 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 and stakeholders note that
lower Medicare payments for graft skin substitute procedures would lead
to lower copayments for beneficiaries. In addition, commenters and
stakeholders believe a single payment category would reduce incentives
to apply skin substitute products in excessive amounts. Commenters and
stakeholders 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. Supporters of a single
payment category believed it would simplify coding for providers and
reduce administrative burden. Finally, some stakeholders believe that a
single payment category policy could serve as a transitional payment
policy for graft skin substitute products while we continue to study
the feasibility of establishing an episode-based payment for skin
substitutes.
Most commenters and stakeholders were opposed to a single payment
category for skin substitute products. Commenters and stakeholders
stated that the large difference in resource costs between higher cost
and lower cost skin substitute products would provide an incentive for
hospitals to use the most inexpensive products, which would hurt both
product innovation and the quality of care beneficiaries receive.
Commenters and stakeholders 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 and stakeholders also stated that a single payment
category would increase incentives for providers to use cheaper
products that require more applications to generate more revenue and
emphasize volume over value. A couple of commenters believed 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 and stakeholders stated that a single payment
rate would lead to too much heterogeneity in the products receiving
payment through the skin substitute application procedures. That is,
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 and stakeholders would
prefer to have multiple payment categories where the payment rate is
more reflective of the cost of the product. Commenters and stakeholders
believe that a single payment category would discourage providers from
treating more complicated wounds and wounds larger than 100 cm\2\.
The responses to the comment solicitation demonstrated 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 some of the concerns commenters who oppose a single
[[Page 48894]]
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 in CY 2020, we
solicited public comments that provide additional information about how
commenters believe we should transition from the current low cost/high
cost payment 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 included--
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.
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 or
wanted it to last multiple years, with one commenter suggesting a
transition period of four years. In the end, having a transition period
before establishing a single payment category did not affect the views
of commenters who were initially opposed to establishing a single
payment category as they continued to be against the policy option.
Based on the comments received regarding establishing a single
payment category for graft skin substitute procedures, we need more
time to consider the trade-offs between potential benefits of a single
category against the potential substantial drawbacks. We also need to
consider the merits of this policy option compared to episode-based
payment for graft skin substitute procedures. Therefore, we are not
proposing a single payment category for graft skin substitute
procedures for CY 2021.
d. Proposals for Packaged Skin Substitutes for CY 2021
For CY 2021, consistent with our policy since CY 2016, we propose
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. Consistent with the methodology as established in the CY
2014 through CY 2018 final rules with comment period, we analyzed CY
2019 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 proposed CY 2021 MUC threshold is
$47 per cm\2\ (rounded to the nearest $1) and the proposed CY 2021 PDC
threshold is $936 (rounded to the nearest $1). We also propose to
clarify that our definition of skin substitutes includes synthetic skin
substitute products in addition to biological skin substitute products
as described in section V.B.7.d. of this proposed rule. We also want to
clarify that the availability of an HCPCS code for a particular human
cell, tissue, or cellular or tissue-based product (HCT/P) does not mean
that that product is appropriately regulated solely under section 361
of the PHS Act and the FDA regulations in 21 CFR part 1271.
Manufacturers of HCT/Ps should consult with the FDA Tissue Reference
Group (TRG) or obtain a determination through a Request for Designation
(RFD) on whether their HCT/Ps are appropriately regulated solely under
section 361 of the PHS Act and the regulations in 21 CFR part 1271.
For CY 2021, as we did for CY 2020, we propose to assign each skin
substitute that exceeds either the MUC threshold or the PDC threshold
to the high cost group. In addition, we propose 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 2021, we
propose that any skin substitute product that was assigned to the high
cost group in CY 2020 would be assigned to the high cost group for CY
2021, regardless of whether it exceeds or falls below the CY 2021 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 CY 2021, we propose to continue to assign skin substitutes with
pass-through payment status to the high cost category. We propose 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 propose 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 propose
to use 95 percent of AWP to assign a skin substitute to either the high
cost or low cost category. We propose 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 this 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 2021 MUC and PDC
thresholds. 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).
Table 27 displays the final CY 2021 cost category assignment for each
skin substitute product.
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e. Proposal To Allow Synthetic Skin Graft Sheet Products To Be Reported
With Graft Skin Substitute Procedure Codes
The CY 2014 OPPS/ASC final rule with comment period describes skin
substitute products as ``. . . a category of products that are most
commonly used in outpatient settings for the treatment of diabetic foot
ulcers and venous leg ulcers . . . [T]hese products do not actually
function like human skin that is grafted onto a wound; they are not a
substitute for a skin graft. Instead, these products are applied to
wounds to aid wound healing and through various mechanisms of action
they stimulate the host to regenerate lost tissue.'' (78 FR 74930
through 74931) The CY 2014 final rule also described skin substitutes
as ``. . . a class of products that we treat as biologicals . . .'' and
mentioned that prior to CY 2014, skin substitutes were separately paid
in the OPPS as if they were biologicals according to the ASP
methodology (78 FR 74930 through 74931).
The 2014 rule did not specifically mention whether synthetic
products could be considered to be skin substitute products in the same
manner as biological products, because there were no synthetic products
at that time that were identified as skin substitute products. Then in
2018, a manufacturer made a request that an entirely synthetic product
that it claimed is used in the same manner as biological skin
substitutes receive a HCPCS code that would allow the product to be
billed with graft skin substitute procedure codes, including CPT codes
15271 through 15278 and C5271 through C5278 starting in 2019.
Initially, the synthetic product was not described as a graft skin
substitute product. However, we now believe that both biological and
synthetic products could be considered to be skin substitutes for
Medicare payment purposes.
This view is supported by a paper referenced in a report we cited
in the CY 2014 OPPS/ASC final rule with comment period titled ``Skin
Substitutes for Treating Chronic Wounds Technology Assessment Report at
ES-2'', which is available on the AHRQ website at: https://www.ahrq.gov/sites/default/files/wysiwyg/research/findings/ta/skinsubs/HCPR0610_skinsubst-final.pdf. That paper, titled ``Regenerative
medicine in dermatology: Biomaterials, tissue engineering, stem cells,
gene transfer and beyond'' by Dieckmann et al.,\79\ states that skin
substitutes should be divided into two broad categories: Biomaterial
and cellular. The paper explains that ``. . . biomaterial skin
substitutes do not contain cells (acellular) and are derived from
natural or synthetic sources . . .'' \80\ The paper continues by
describing biomaterial skin substitutes further: ``Synthetic sources
include various degradable polymers such as polylactide and
polyglycolide. Whether natural or synthetic, the biomaterial provides
an extracellular matrix that allows for infiltration of surrounding
[[Page 48898]]
cells.'' \81\ The paper by Dieckmann et al. confirms that skin
substitute products may be synthetic products as well as biological
products.
---------------------------------------------------------------------------
\79\ Dieckmann C, Renner R, Milkova L, et al. Regenerative
medicine in dermatology: biomaterials, tissue engineering, stem
cells, gene transfer and beyond. Exp Dermatol 2010 Aug;19(8):697-
706.
\80\ Ibid, Dieckmann C, Renner R, Milkova L, et al.
\81\ Ibid, Dieckmann C, Renner R, Milkova L, et al.
---------------------------------------------------------------------------
Therefore, for CY 2021 we propose to include synthetic products in
addition to biological products in our description of skin substitutes.
Our new description would define skin substitutes as a category of
biological and synthetic products that are most commonly used in
outpatient settings for the treatment of diabetic foot ulcers and
venous leg ulcers. We also propose to retain the additional description
of skin substitute products from the CY 2014 OPPS final rule which
states ``. . . that skin substitute products do not actually function
like human skin that is grafted onto a wound; they are not a substitute
for a skin graft. Instead, these products are applied to wounds to aid
wound healing and through various mechanisms of action they stimulate
the host to regenerate lost tissue . . .'' (78 FR 74930 through 74931).
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 2021 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 2021. 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 2020 or beginning in CY
2021. The sum of the proposed CY 2021 pass-through spending estimates
for these two groups of device categories equaled the proposed total CY
2021 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 2021, 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 2021 for this group of items is $473.4 million, as discussed
below, because we propose that most nonpass-through separately payable
drugs and biologicals would be paid under the CY 2021 OPPS at ASP+6
percent with the exception of 340B-acquired separately payable drugs,
which are currently generally paid at ASP minus 22.5 percent, but for
which we propose to pay a net rate of ASP minus 28.7 percent, and
because we proposed to pay for CY 2021 pass-through payment drugs and
biologicals at ASP+6 percent, as we discuss in section V.A. of this CY
2021 OPPS/ASC proposed rule.
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
V.B.1.c. of this CY 2021 OPPS/ASC proposed rule. We propose 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 2021 was not $0, as discussed
below. In section V.A.6. of this CY 2021 OPPS/ASC proposed rule, we
discuss 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 propose to
offset the amount of pass-through
[[Page 48899]]
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
propose 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 2021. 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 2020 or beginning in CY 2021.
The sum of the CY 2021 pass-through spending estimates for these two
groups of drugs and biologicals equals the total CY 2021 pass-through
spending estimate for drugs and biologicals with pass-through payment
status.
B. Proposed Estimate of Pass-Through Spending
For CY 2021, we propose to set the applicable pass-through payment
percentage limit at 2.0 percent of the total projected OPPS payments
for CY 2021, consistent with section 1833(t)(6)(E)(ii)(II) of the Act
and our OPPS policy from CY 2004 through CY 2020 (83 FR 61336 through
61337).
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 2021, there are four active
categories for CY 2021. The active categories are described by HCPCS
codes C1734, C1824, C1982, and C2596. Based on the information from the
device manufacturer, we estimate that C1824 will cost $46 million in
pass-through expenditures in CY 2021, C1982 will cost $116.3 million in
pass-through expenditures in CY 2021, C2596 will cost $11.3 million in
pass-through expenditures in CY 2021, and C1734 will cost $37.2 million
in pass-through expenditures in CY 2021. Therefore, we propose an
estimate for the first group of devices of $210.8 million.
In estimating our proposed CY 2021 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 2021; additional device
categories that we estimated could be approved for pass-through status
after the development of the proposed rule and before January 1, 2021;
and contingent projections for new device categories established in the
second through fourth quarters of CY 2021. For CY 2021, we propose 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.
The proposed estimate of CY 2021 pass-through spending for this second
group of device categories is $99 million.
There are 5 devices we are evaluating for potential pass-through
payment status in the CY 2021 rulemaking cycle: Barostim NEO[supreg]
System, Hemospray[supreg] Endoscopic Hemostat, EXALTTM Model
D Single-Use Duodenoscope, The SpineJack[supreg] Expansion Kit, and
Customflex[supreg] Artificial Iris. The manufacturers of these systems
provided utilization and cost data that indicate the spending for the
devices would be approximately $4 million for Barostim NEO[supreg]
System, $40 million for Hemospray[supreg] Endoscopic Hemostat, $40
million for EXALTTM Model D Single-Use Duodenoscope, $14
million for SpineJack[supreg] Expansion Kit, and $600 thousand for
Customflex[supreg] Artificial Iris. Therefore, we are finalizing an
estimate of $99 million for this second group of devices for CY 2021.
To estimate proposed CY 2021 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 2021, we propose 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 2021 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 2021, we estimate the pass-through
payment amount as the difference between ASP+6 percent and the payment
rate for nonpass-through 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, for which we generally currently
pay ASP minus 22.5 percent but for which we propose to pay a net rate
of ASP minus 28.7 percent. Therefore, the payment rate difference
between the pass-through payment amount and the nonpass-through payment
amount is $463.4 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 2021 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 2021 for the
first group of policy-packaged drugs to be $0 since there are currently
no policy-packaged drugs that will be on pass-through in CY 2021.
To estimate proposed CY 2021 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 2021, 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, 2021 and projections for new drugs and biologicals that could be
initially eligible for pass-through payment in the second through
fourth quarters of CY 2021), we propose 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 2021 pass-through payment estimate. We also
propose to consider the most recent OPPS experience in approving new
pass-through drugs and biologicals. Using our proposed methodology for
estimating CY 2021 pass-through
[[Page 48900]]
payments for this second group of drugs, we calculate a proposed
spending estimate for this second group of drugs and biologicals of
approximately $10 million.
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 2021 and those device categories, drugs, and
biologicals that first become eligible for pass-through payment during
CY 2021 would be approximately $783.2 million (approximately $309.8
million for device categories and approximately $473.4 million for
drugs and biologicals) which represents 0.934 percent of total
projected OPPS payments for CY 2021 (approximately $84 billion).
Therefore, we estimate that pass-through spending in CY 2021 will not
amount to 2.0 percent of total projected OPPS CY 2021 program spending.
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care
Services
For CY 2021, we propose 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 propose 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 this proposed rule, we are seeking
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.
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 that
proposed rule and the CY 2019 OPPS/ASC final rule with comment period
(83 FR 58818 through 59179), CY 2020 was the second year of the 2-year
transition of this policy, and beginning in CY 2020, these departments
are paid the site-specific PFS rate for the clinic visit service. We
note that on September 1, 2019, the United States District Court for
the District of Columbia (the district court) entered an order vacating
the portion of the CY 2019 OPPS/ASC final rule with comment period that
adopted the volume control method for clinic visit services furnished
by nonexcepted off-campus PBDs and remanded the matter to the Secretary
for further proceedings consistent with the district court's
opinion.\82\ In the CY 2020 OPPS/ASC final rule with comment period, we
acknowledged that the district court vacated the volume control policy
for CY 2019 and we stated that we were working to ensure affected 2019
claims for clinic visits are paid consistent with the court's order. We
also stated that we did not believe it was appropriate at that time to
make a change to the second year of the 2-year phase-in of the clinic
visit policy. We explained that we still had appeal rights, and were
evaluating the rulings and considering whether to appeal from the final
judgment. On July 17, 2020, the United States Court of Appeals for the
District of Columbia Circuit ruled in favor of CMS, holding that our
regulation was a reasonable interpretation of the statutory authority
to adopt a method to control for unnecessary increases in the volume of
the relevant service. For a full discussion of this policy, we refer
readers to the CY 2020 OPPS/ASC final rule with comment period (84 FR
61142).
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\82\ American Hospital Ass'n, et al. v. Azar, No. 1:18-cv-02841-
RMC (D.D.C. Sept. 17, 2019).
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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 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. We refer readers to sections 1833(t)(1)(B)(i), 1833(t)(2)(B),
1833(t)(2)(C), and 1833(t)(9)(A) of the Act and 42 CFR 419.21, for
additional guidance regarding PHP.
In CY 2008, we began efforts to strengthen the PHP benefit through
extensive data analysis, along with policy and payment changes by
implementing two refinements to the methodology for computing the PHP
median. For a detailed discussion on these policies, we refer readers
to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66670
through 66676). In CY 2009, we implemented several regulatory, policy,
and payment changes. For a detailed discussion on these policies, we
refer readers to the CY 2009 OPPS/ASC final rule (73 FR 68688 through
68697). In 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 (74 FR 60556 through 60559). In CY 2011, (75 FR
71994), we established four separate PHP APC per diem payment rates:
Two for CMHCs (APC 0172 and APC 0173) and two for hospital-based PHPs
(APC 0175 and APC 0176) and instituted a 2-year transition period for
CMHCs to the CMHC APC per diem payment rates. For a detailed
discussion, we refer readers to section X.B. of the CY 2011 OPPS/ASC
final rule with comment period (75 FR 71991 through 71994). In CY 2012,
we determined the relative 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
[[Page 48901]]
on hospital data (76 FR 74348 through 74352). 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. 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)
and 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 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 2016, we described our extensive analysis of the
claims and cost data and ratesetting methodology, corrected a cost
inversion that occurred in the final rule data with respect to
hospital-based PHP providers and renumbered the PHP APCs. In 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 and
finalized a policy to combine the Level 1 and Level 2 PHP APCs for
CMHCs and for hospital-based PHPs. We also implemented an eight-percent
outlier cap for CMHCs to mitigate potential outlier billing
vulnerabilities. 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, designated a portion of the estimated 1.0 percent
hospital outpatient outlier threshold specifically for CMHCs, and
proposed updates to the PHP allowable HCPCS codes. We finalized these
proposals in the CY 2020 OPPS/ASC final rule with comment period (84 FR
61352). We refer readers to section VIII.D. of this proposed rule for a
discussion of the proposed updates and the applicability for CY 2021.
In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61339
through 61350), we finalized our proposal to use the calculated CY 2020
CMHC geometric mean per diem cost and the calculated CY 2020 hospital-
based PHP geometric mean per diem cost, but with a cost floor equal to
the CY 2019 final geometric mean per diem costs as the basis for
developing the CY 2020 PHP APC per diem rates. Also, we 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 April 30th, 2020 interim final rule with comment (85 FR
27562-27566), effective as of March 1, 2020 and for the duration of the
COVID-19 Public Health Emergency (PHE), hospital and CMHC staff are
permitted to furnish certain outpatient therapy, counseling, and
educational services (including certain PHP services), incident to a
physician's services, to beneficiaries in temporary expansion
locations, including the beneficiary's home, so long as the location
meets all conditions of participation to the extent not waived. A
hospital or CMHC can furnish such services using telecommunications
technology to a beneficiary in a temporary expansion location if that
beneficiary is registered as an outpatient. These provisions apply only
for the duration of the COVID-19 PHE.
B. Proposed PHP APC Update for CY 2021
1. Proposed PHP APC Geometric Mean Per Diem Costs
In summary, for CY 2021 and subsequent years, we propose to use the
CY 2021 CMHC geometric mean per diem cost calculated in accordance with
our existing methodology, but with a cost floor equal to the per diem
cost for CMHCs of $121.62 calculated last year for CY 2020 ratesetting
(84 FR 61339 through 61344), as the basis for developing the CY 2021
CMHC APC per diem rate. For CY 2021 and subsequent years, we also
propose to use the CY 2021 hospital-based geometric mean per diem cost
calculated in accordance with our existing methodology, but with a cost
floor equal to the per diem cost for hospital-based providers of
$222.76 calculated last year for CY 2020 ratesetting (84 FR 61344
through 61345). Following this methodology, we propose to use the cost
floor value of $121.62 for CMHCs as the basis for developing the CY
2021 CMHC APC per diem rate. We propose to use the CY 2021 hospital-
based PHP geometric mean per diem cost of $243.94, calculated in
accordance with our existing methodology for hospital-based PHPs, as
the basis for developing the CY 2021 hospital-based APC per diem rate.
We propose to use the most recent updated claims and cost data to
determine CY 2021 geometric mean per diem costs in this proposed rule.
The rationale behind this proposal is discussed in greater detail
below.
Also, we propose to continue to use CMHC APC 5853 (Partial
Hospitalization (three or More Services Per Day)) and hospital-based
PHP APC 5863 (Partial Hospitalization (three or More Services Per
Day)). These proposals are discussed in more detail below.
2. Development of the Proposed PHP APC Geometric Mean Per Diem Costs
In preparation for CY 2021, 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 three 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 proposed rule.
a. CMHC Data Preparation: Data Trims, Exclusions, and CCR Adjustments
For this CY 2021 proposed rule, prior to calculating the proposed
geometric mean per diem cost for CMHC APC 5853, we are preparing the
data by first
[[Page 48902]]
applying trims and data exclusions, and assessing CCRs as described in
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70463
through 70465), so that ratesetting is not skewed by providers with
extreme data. Before any trims or exclusions were applied, there were
38 CMHCs in the PHP claims data file. Under the 2 standard
deviation trim policy, we excluded any data from a CMHC for ratesetting
purposes when the CMHC's geometric mean cost per day was more than
2 standard deviations from the geometric mean cost per day
for all CMHCs. In applying this trim for CY 2021 ratesetting, no CMHCs
had geometric mean costs per day below the trim's lower limit of $18.89
or had geometric mean costs per day above the trim's upper limit of
$572.65. Therefore, we do not exclude any CMHCs because of the 2 standard deviation trim.
In accordance with our PHP ratesetting methodology, we also remove
service days with no wage index values, because we use the wage index
data to remove the effects of geographic variation in costs prior to
APC geometric mean per diem cost calculation (80 FR 70465). For this CY
2021 proposed rule ratesetting, no CMHC was missing wage index data for
all of its service days and, therefore, no CMHC was excluded. In
addition to our trims and data exclusions, before calculating the PHP
APC geometric mean per diem costs, we also assess CCRs (80 FR 70463).
Our longstanding PHP OPPS ratesetting methodology defaults any CMHC CCR
greater than one to the statewide hospital CCR (80 FR 70457). For this
CY 2021 OPPS/ASC proposed rule ratesetting, there are no CMHCs that
showed CCRs greater than one. Therefore, it is not necessary to default
any CMHC to its statewide hospital CCR for ratesetting.
In summary, these data preparation steps did not adjust the CCR for
any CMHCs with a CCR greater than one during our ratesetting process.
We also do not exclude any CMHCs for other missing data or for failing
the 2 standard deviation trim, resulting in the inclusion
of 38 CMHCs. There are 212 CMHC claims removed during data preparation
steps because they either had no PHP-allowable codes or had zero
payment days, leaving 9,369 CMHC claims in our CY 2021 proposed rule
ratesetting modeling. After applying all of the previously listed
trims, exclusions, and adjustments, we followed the methodology
described in the CY 2016 OPPS/ASC final rule with comment period (80 FR
70464 through 70465) and modified in the CY 2017 OPPS/ASC final rule
with comment period (81 FR 79687 through 79688, and 79691) to calculate
a CMHC APC geometric mean per diem cost.\83\ The calculated CY 2021
geometric mean per diem cost for all CMHCs for providing three or more
services per day (CMHC APC 5853) is $104.00, a decrease from $121.62
calculated last year for CY 2020 ratesetting (84 FR 61347).
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\83\ Each revenue code on the CMHC claim must have a HCPCS code
and charge associated with it. We multiply each claim service line's
charges by the CMHC's overall CCR from the OPSF (or statewide CCR,
where the overall CCR was greater than 1 to estimate CMHC costs.
Only the claims service lines containing PHP allowable HCPCS codes
and PHP allowable revenue codes from the CMHC claims remaining after
trimming are retained for CMHC cost determination. The costs,
payments, and service units for all service lines occurring on the
same service date, by the same provider, and for the same
beneficiary are summed. CMHC service days must have three or more
services provided to be assigned to CMHC APC 5853. The final
geometric mean per diem cost for CMHC APC 5853 is calculated by
taking the nth root of the product of n numbers, for days where
three or more services were provided. CMHC service days with costs
3 standard deviations from the geometric mean costs
within APC 5853 are deleted and removed from modeling. The remaining
PHP service days are used to calculate the final geometric mean per
diem cost for each PHP APC by taking the nth root of the product of
n numbers for days where three or more services were provided.
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We investigated why the CY 2021 calculated CMHC APC geometric mean
per diem cost had fallen below the cost floor established in the prior
year (84 FR 61339 through 61344). We found that six providers,
collectively representing 39.7 percent of all CMHC days, reported lower
costs per day than those reported for the CY 2020 final rule
ratesetting. These six providers heavily influenced the calculated
geometric mean per diem cost for CY 2021. Because these providers had a
high number of paid PHP days, and because the CMHC data set is so small
(n=38), these providers had a significant influence on the calculated
CY 2021 CMHC APC geometric mean per diem cost. In the case of PHPs
provided by CMHCs, we have a low number of PHP providers in our
ratesetting dataset (38 CMHCs compared to 363 hospital-based PHPs) that
provide a small volume of services and, therefore, account for a
limited amount of payments, relative to the rest of OPPS payments
(total CY 2019 CMHC payments are estimated to be approximately 0.01
percent of all OPPS payments).
We are concerned that a CMHC APC geometric mean per diem cost of
$104.00 would not support ongoing access to PHPs in CMHCs. This cost is
roughly a 14.5 percent decrease from the final CY 2020 CMHC geometric
mean per diem cost floor of $121.62. We believe access to partial
hospitalization services and PHPs is better supported when the
geometric mean per diem cost does not fluctuate greatly. In addition,
while the CMHC APC 5853 is described as providing three or more partial
hospitalization services per day (81 FR 79680), 85 percent of CMHC paid
days in CY 2020 were for providing four or more services per day. To be
eligible for a PHP, a patient must need at least 20 hours of
therapeutic services per week, as evidenced in the patient's plan of
care (42 CFR 410.43(c)(1)). To meet those patient needs, most PHP
provider paid days are for providing four or more services per day (we
refer readers to Table 30--Percentage of PHP Days by Service Unit
Frequency of the proposed rule). Therefore, the CMHC APC 5853 is
actually heavily weighted to the cost of providing four or more
services. The per diem costs for CMHC APC 5853 have been calculated as
$124.92, $143.22, and $121.62 for CY 2017 (81 FR 79691), CY 2018 (82 FR
59378), and CY 2019 (83 FR 58991), respectively. We do not believe it
is likely that the actual cost of providing partial hospitalization
services through a PHP by CMHCs has suddenly declined when costs
generally increase over time. We are concerned by this fluctuation,
which we believe is influenced by data from several high-utilization
providers with low costs.
Therefore, rather than simply proposing the calculated CY 2021 CMHC
APC geometric mean per diem cost of $104.00 for CY 2021 ratesetting, we
are instead proposing to extend to CY 2021 and subsequent years the
policy initially finalized only for CY 2020 (84 FR 61340 through
61341), to use the current year's CMHC APC geometric mean per diem cost
(in this case, the CY 2021 CMHC APC geometric mean per diem cost),
calculated in accordance with our existing methodology, but with a cost
floor equal to $121.62 as established in the CY 2020 OPPS/ASC final
rule with comment period (84 FR 61345), as the basis for developing the
proposed CY 2021 CMHC APC per diem rate. We believe using the CY 2020
CMHC geometric mean per diem cost floor as the floor for CY 2021 is
appropriate because it is based on very recent CMHC PHP claims and cost
data and would help to protect provider access by preventing wide
fluctuation in the per diem costs for CMHC APC 5853. In this proposed
rule, we used the most recent updated claims and cost data to calculate
CY 2021 CMHC geometric mean per diem cost, which was $104.00. Because
the CY 2021 CMHC calculated geometric mean per diem cost of $104.00 is
less than the proposed cost floor (which equals the final CY 2020 CMHC
APC geometric
[[Page 48903]]
mean per diem cost of $121.62), the proposed CY 2021 CMHC geometric
mean per diem cost is $121.62. Implementing the cost floor for CY 2021
would protect CMHCs since the CY 2021 calculated per diem cost of
$104.00 results in an amount that is less than $121.62. We further
propose that the established CMHC geometric mean per diem cost floor of
$121.62 be extended to subsequent years and that if the calculated
geometric mean per diem cost for a given year is below the floor, then
the geometric mean per diem cost that would be used for ratesetting in
that year would be equal to the geometric mean per diem cost floor of
$121.62. We believe proposing the CMHC cost floor amount of $121.62 as
the proposed CMHC APC geometric mean per diem cost for CY 2021 and
subsequent years allows us to use the most recent or very recent CMHC
claims and cost reporting data while still protecting provider access.
We estimate the aggregate difference in the (prescaled) CMHC
geometric mean per diem costs for CY 2021 from proposing the CMHC cost
floor amount of $121.62 rather than the calculated CMHC geometric mean
per diem cost of $104.00 to be $1.3 million. We refer readers to
section XX of this proposed rule for payment impacts, which are budget
neutral.
Because the proposed CY 2021 calculated CMHC geometric mean per
diem cost of $104.00 is less than the cost floor amount of $121.62, the
proposed CY 2021 CMHC geometric mean per diem cost is $121.62.
b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions
For this CY 2021 proposed rule, we prepared data consistent with
our policies as described in the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70463 through 70465) for hospital-based PHP
providers, which is similar to that used for CMHCs. The CY 2019 PHP
claims included data for 436 hospital-based PHP providers for our
calculations in this CY 2021 OPPS/ASC proposed rule.
Consistent with our policies as stated in the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70463 through 70465), we prepared
the data by applying trims and data exclusions. We applied a trim on
hospital service days for hospital-based PHP providers with a CCR
greater than 5 at the cost center level. To be clear, the CCR greater
than 5 trim is a service day-level trim in contrast to the CMHC 2 standard deviation trim, which is a provider-level trim.
Applying this CCR greater than 5 trim removed affected service days
from two hospital-based PHP providers from our proposed ratesetting.
However, 100 percent of the service days for these two hospital-based
PHP provider had at least one service associated with a CCR greater
than 5, so the trim removed these providers entirely from our proposed
ratesetting. In addition, 68 hospital-based PHPs were removed for
having no days with PHP payment. Two hospital-based PHPs were removed
because none of their days included PHP-allowable HCPCS codes. No
hospital-based PHPs were removed for missing wage index data, and a
single hospital-based PHP was removed by the OPPS 3
standard deviation trim on costs per day. (We refer readers to the OPPS
Claims Accounting Document, available online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/CMS-1717-P-2020-OPPS-Claims-Accounting.pdf.
Overall, we removed 73 hospital-based PHP providers [(2 with all
service days having a CCR greater than 5) + (68 with no PHP payment) +
(2 with no PHP-allowable HCPCS codes) + (1 provider with geometric mean
costs per day outside the 3 SD limits)], resulting in 363
(436 total-73 excluded) hospital-based PHP providers in the data used
for calculating ratesetting.
After completing these data preparation steps, we calculated the
proposed CY 2021 geometric mean per diem cost for hospital-based PHP
APC 5863 for hospital-based partial hospitalization services by
following the methodology described in the CY 2016 OPPS/ASC final rule
with comment period (80 FR 70464 through 70465) and modified in the CY
2017 OPPS/ASC final rule with comment period (81 FR 79687 and
79691).\84\ The calculated CY 2021 hospital-based PHP APC geometric
mean per diem cost for hospital-based PHP providers that provide three
or more services per service day (hospital-based PHP APC 5863) is
$243.94, which is an increase of 4.5 percent from $233.52 calculated
last year for CY 2020 ratesetting (84 FR 61344 through 61348). We
believe that a hospital-based PHP APC geometric mean per diem cost of
$243.94 best supports ongoing access to hospital-based PHPs. This cost
is nearly a 5 percent increase from the final CY 2020 hospital-based
PHP geometric mean per diem cost.
---------------------------------------------------------------------------
\84\ Each revenue code on the hospital-based PHP claim must have
a HCPCS code and charge associated with it. We multiply each claim
service line's charges by the hospital's department-level CCR; in CY
2020 and subsequent years, that CCR is determined by using the PHP-
only revenue-code-to-cost-center crosswalk. Only the claims service
lines containing PHP-allowable HCPCS codes and PHP-allowable revenue
codes from the hospital-based PHP claims remaining after trimming
are retained for hospital-based PHP cost determination. The costs,
payments, and service units for all service lines occurring on the
same service date, by the same provider, and for the same
beneficiary are summed. Hospital-based PHP service days must have
three or more services provided to be assigned to hospital-based PHP
APC 5863. The final geometric mean per diem cost for hospital-based
PHP APC 5863 is calculated by taking the nth root of the product of
n numbers, for days where three or more services were provided.
Hospital-based PHP service days with costs 3 standard
deviations from the geometric mean costs within APC 5863 are deleted
and removed from modeling. The remaining hospital-based PHP service
days are used to calculate the final geometric mean per diem cost
for hospital-based PHP APC 5863.
---------------------------------------------------------------------------
We stated that we believe access is better supported when the
geometric mean per diem cost does not fluctuate greatly. In addition,
while the hospital-based PHP APC 5863 is described as providing payment
for the cost of three or more services per day (81 FR 79680), 89.3
percent of hospital-based PHP paid service days in CY 2019 were for
providing four or more services per day. To be eligible for a PHP, a
patient must need at least 20 hours of therapeutic services per week,
as evidenced in the patient's plan of care (42 CFR 410.43(c)(1)). To
meet those patient needs, most PHP paid service days provide four or
more services (we refer readers to Table 30.--Percentage of PHP Days by
Service Unit Frequency in the proposed rule). Therefore, the hospital-
based PHP APC 5863 is actually heavily weighted to the cost of
providing four or more services. The per diem costs for hospital-based
PHP APC 5863 have been calculated as $213.14, $208.09, and $222.76 for
CY 2017 (81 FR 79691), CY 2018 (82 FR 59378), and CY 2019 (83 FR
58991), respectively.
As we noted for CMHCs above, we likewise do not believe that it is
likely that the cost of providing hospital-based PHP services would
suddenly decline when costs generally increase over time. In order to
address concerns about potential fluctuations, which we believe could
be influenced by data from a small number of providers with low service
costs per day, we propose to use the CY 2021 hospital-based PHP APC
geometric mean per diem cost, calculated in accordance with our
existing methodology, but with a cost floor equal to the floor for
hospital-based providers of $222.76 calculated last year for CY 2020
ratesetting (84 FR 61344 through 61345), as the basis for developing
the CY 2021 hospital-based PHP APC per diem rate. As part of this
proposal, we propose that we would use the most recent updated claims
and cost data to calculate CY 2021 geometric mean per diem costs, just
as we did for CMHCs. We further propose that the established hospital-
based geometric
[[Page 48904]]
mean per diem cost floor of $222.76 be extended to CY 2021 and
subsequent years and that if the calculated geometric mean per diem
cost for a given year is below the floor, then the geometric mean per
diem cost that would be used for ratesetting in that year would be
equal to the geometric mean per diem cost floor of $222.76. We believe
using the CY 2020 hospital-based PHP per diem cost floor as the floor
for CY 2021 is appropriate because it is based on very recent hospital-
based PHP claims and cost data and would help to protect provider
access by preventing wide fluctuation in the per diem costs for
hospital-based APC 5863.
While the cost floor would protect hospital-based PHPs if the CY
2021 calculated hospital-based PHP APC geometric mean per diem cost
were less than $222.76, the calculated hospital-based PHP geometric
mean per diem cost of $243.94 is greater than the floor, and therefore,
we propose this calculated CY 2021 cost for hospital-based PHPs. As
stated above, we believe this proposal allows us to use the most recent
or very recent hospital-based PHP claims and cost reporting data while
still protecting provider access.
Because the CY 2021 calculated hospital-based PHP geometric mean
per diem cost of $243.94 is greater than the cost floor amount of
$222.76, the proposed CY 2021 hospital-based PHP geometric mean per
diem cost is $243.94. We refer readers to section XX. of this proposed
rule for a discussion of payment impacts and the budget neutrality
adjustment for OPPS rates.
c. Alternative Methodologies Considered
For this CY 2021 discussion of the proposed cost, we also
considered proposing a 3-year collective PHP geometric mean per diem
cost for each provider type calculated using the cost data from the
three most recent years, that is the final cost data from CY 2017 and
CY 2018, along with the latest available cost data from CY 2019. The
resulting 3-year collective PHP geometric mean per diem cost for CMHCs
was $110.73, and the value was $243.31 for hospital-based PHP
providers. While we believe that this option would support access to
CMHCs better than the calculated geometric mean per diem cost of
$104.00, it is significantly lower than the final CY 2020 CMHC
geometric mean per diem cost of $121.62. As we discussed previously, we
do not believe it is likely that the actual cost of providing partial
hospitalization services through a PHP by CMHCs has suddenly declined
when costs generally increase over time. We are concerned by this
fluctuation, which we believe is influenced by data from several high-
utilization providers with aberrantly low costs. We are further
concerned that such an impact, though not observed for the CY 2021
proposed ratesetting, could affect hospital-based providers in the same
way. Because each year's geometric mean per diem cost would be
calculated from the prior 3 years, any similar fluctuations would
therefore be reflected in the average for at least 3 years.
We also considered proposing a 4-year collective PHP geometric mean
per diem cost for each provider type calculated using the cost data
from the four most recent years, which is the final cost data from CY
2016, CY 2017, and CY 2018, along with the latest available cost data
from CY 2019. The resulting 4-year collective PHP geometric mean per
diem cost for CMHCs was $119.68, and the value was $232.15 for
hospital-based PHP providers. For CMHCs as well as hospital-based
providers, these calculated 4-year geometric mean per diem cost values
are slightly lower than the previous year's final geometric mean per
diem costs ($121.62 and $233.52 respectively (84 FR 61347)). However,
the value for hospital-based providers would be substantially lower
than the calculated CY 2021 geometric mean per diem cost of $243.94.
Fundamentally, our concern with the 3-year collective geometric mean is
applicable to the 4-year collective as well, as any fluctuations
observed would be reflected in the average for at least 4 years.
We believe that it is important to support access to partial
hospitalization services in both CMHCs and in hospital-based PHPs, and
note that hospital-based PHPs provide 82 percent of all paid PHP
service days. Therefore, we believe that it is most appropriate to
propose to use the calculated CY 2021 CMHC geometric mean per diem cost
and the calculated CY 2021 hospital-based PHP geometric mean per diem
cost, each calculated in accordance with our existing methodology, but
with a cost floor for each provider type equal to the cost floor
established in the CY 2020 final rule (84 FR 61339 through 61347).
Because the floors established for CY 2020 per diem costs are based on
very recent CMHC and hospital-based PHP claims and cost data, are the
easiest to understand, and would result in final geometric mean per
diem costs which would help to protect provider access by preventing
wide fluctuation in the per diem costs for both CMHCs and hospital-
based PHPs, we propose to extend these two floors to CY 2021 and
subsequent years.
In summary, for CY 2021, we propose to use the calculated CY 2021
CMHC geometric mean per diem cost and the calculated CY 2021 hospital-
based PHP geometric mean per diem cost, each calculated in accordance
with our existing methodology, but with a cost floor for each provider
type equal to the cost floor established in the CY 2020 final rule (84
FR 61339 through 61347), that is $121.62 for CMHCs and $222.76 for
hospital-based providers, as the basis for developing the CY 2021 PHP
APC per diem rates. Because the CY 2021 calculated geometric mean per
diem cost for CMHCs is less than the cost floor amount of $121.62, we
propose a CY 2021 geometric mean per diem cost for CMHCs of $121.62. In
addition, because the CY 2021 calculated hospital-based PHP geometric
mean per diem cost is greater than the hospital-based PHP cost floor
amount of $222.76, we propose a CY 2021 hospital-based PHP geometric
mean per diem cost of $243.94. In this proposed rule, we used the most
recent updated claims and cost data to calculate CY 2021 geometric mean
per diem costs. The inclusion of a cost floor, which is based on very
recent data, would protect CMHCs as their calculated per diem cost is
less than the cost floor amount, but would not be relied upon for
hospital-based PHPs for CY 2021.
These proposed CY 2021 PHP geometric mean per diem costs are shown
in Table 28 and are used to derive the proposed CY 2021 PHP APC per
diem rates for CMHCs and hospital-based PHPs. The proposed CY 2021 PHP
APC per diem rates are included in Addendum A to this proposed rule
(which is available on our website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html).\85\
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\85\ As discussed in section II.A. of this CY 2021 OPPS/ASC
proposed rule, OPPS APC geometric mean per diem costs (including PHP
APC geometric mean per diem costs) are divided by the geometric mean
per diem costs for APC 5012 (Clinic Visits and Related Services) to
calculate each PHP APC's unscaled relative payment weight. An
unscaled relative payment weight is one that is not yet adjusted for
budget neutrality. Budget neutrality is required under section
1833(t)(9)(B) of the Act, and ensures that the estimated aggregate
weight under the OPPS for a calendar year is neither greater than
nor less than the estimated aggregate weight that would have been
made without the changes. To adjust for budget neutrality (that is,
to scale the weights), we compare the estimated aggregated weight
using the scaled relative payment weights from the previous calendar
year at issue. We refer readers to the ratesetting procedures
described in Part 2 of the OPPS Claims Accounting narrative and in
section II. of this proposed rule for more information on scaling
the weights, and for details on the final steps of the process that
leads to final PHP APC per diem payment rates. The OPPS Claims
Accounting narrative is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.
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[[Page 48905]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.048
3. PHP Service Utilization Updates
a. Provision of Individual Therapy
In the CY 2016 OPPS/ASC final rule with comment period (81 FR 79684
through 79685), we expressed concern over the low frequency of
individual therapy provided to beneficiaries. The CY 2019 claims data
used for this CY 2021 proposed rule revealed some changes in the
provision of individual therapy compared to CY 2015, CY 2016, CY 2017,
and CY 2018 claims data as shown in the Table 29.
[GRAPHIC] [TIFF OMITTED] TP12AU20.049
As shown in Table 29, the CY 2019 claims show that CMHCs have
slightly increased the provision of individual therapy on days with
four or more services, compared to CY 2018 claims. However, on CMHC
days with three services, the provision of individual therapy decreased
sharply from the prior year CY 2018. This appears to follow a downward
trend which started in CY 2016 and has continued through CY 2019. In
comparing CY 2018 to CY 2019, we see that for CMHCs the provision of 3-
service days also sharply increased (this increase is shown in Table 30
in subsection b below). The net effect of these two changes is that for
all CMHC days with three or more services, the provision of individual
therapy decreased from 4.4 percent in CY 2018 to 4.0 percent in CY
2019. We are concerned by this decrease in the provision of individual
therapy among CMHCs from CY 2018, and will continue to monitor this
trend. As we stated in the CY 2017 final rule with comment period (81
FR 79684 through 79685), the PHP is intensive in nature, and we believe
that appropriate treatment for PHP patients includes individual
therapy. We continue to encourage providers to examine their provision
of individual therapy to PHP patients to ensure that patients are
receiving all of the services that they may need.
For Hospital-based providers, the CY 2019 claims show that the
provision of individual therapy has slightly decreased on days with
only 3 services as well as days with four or more services. These very
small decreases correspond with an overall decrease of less than one
tenth of one percent in the provision of individual therapy on all days
with three or more services, comparable with fluctuations in prior
years.
[[Page 48906]]
b. Provision of 3-Service Days
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
59378), we stated that we are aware that our single-tier payment policy
may influence a change in service provision because providers are able
to obtain payment that is heavily weighted to the cost of providing
four or more services when they provide only 3 services. We indicated
that we are interested in ensuring that providers furnish an
appropriate number of services to beneficiaries enrolled in PHPs.
Therefore, with the CY 2017 implementation of CMHC APC 5853 and
hospital-based PHP APC 5863 for providing 3 or more PHP services per
day, we are continuing to monitor utilization of days with only 3 PHP
services.
For this CY 2021 OPPS/ASC proposed rule, we used the CY 2019 claims
data. Table 30 shows the utilization findings based on the 2019 claims
data.
[GRAPHIC] [TIFF OMITTED] TP12AU20.050
As shown in Table 30, the CY 2019 claims data used for proposed
rule show that for CMHCs, utilization of 3 service days is increasing
compared to the 3 prior claim years, whereas it is decreasing for
hospital-based providers. Compared to CY 2018, in CY 2019 hospital-
based PHPs provided fewer days with three services only, more days with
four services only, and fewer days with five or more services. Compared
to CY 2018, in CY 2019 CMHCs provided substantially more days with
three services, fewer days with four services, and more days with five
or more services.
The CY 2017 data were the first year of claims data to reflect the
change to the single-tier PHP APCs. Since that time, we have observed a
steady increase in the percentage of CMHC days with three services
only. We are concerned by this increase, because as noted below, the
intent of the PHP is for three-service days to be the exception, rather
than the norm. As we noted in the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79685), we will continue to monitor the provision
of days with only three services, particularly now that the single-tier
PHP APCs 5853 and 5863 are established for providing three or more
services per day for CMHCs and hospital-based PHPs, respectively.
It is important to reiterate our expectation that days with only
three services are meant to be an exception and not the typical PHP
day. In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68694), we clearly stated that we consider the acceptable minimum units
of PHP services required in a PHP day to be 3 and explained that it was
never our intention that three units of service represent the number of
services to be provided in a typical PHP day. PHP is furnished in lieu
of inpatient psychiatric hospitalization and is intended to be more
intensive than a half-day program. We further indicated that a typical
PHP day should generally consist of 5 to 6 units of service (73 FR
68689). We explained that days with only three units of services may be
appropriate to bill in certain limited circumstances, such as when a
patient might need to leave early for a medical appointment and,
therefore, would be unable to complete a full day of PHP treatment. At
that time, we noted that if a PHP were to only provide days with three
services, it would be difficult for patients to meet the eligibility
requirement in 42 CFR 410.43(c)(1) that patients must require a minimum
of 20 hours per week of therapeutic services as evidenced in their plan
of care (73 FR 68689).
C. Proposed Outlier Policy for CMHCs
For CY 2021, we propose to continue to calculate the CMHC outlier
percentage, cutoff point and percentage payment amount, outlier
reconciliation, outlier payment cap, and fixed-dollar threshold
according to previously established policies. These topics are
discussed in more detail. We refer readers to section II.G. of this CY
2021 OPPS/ASC proposed rule for our general policies for hospital
outpatient outlier payments.
[[Page 48907]]
1. Background
As discussed in the CY 2004 OPPS final rule with comment period (68
FR 63469 through 63470), we noted a significant difference in the
amount of outlier payments made to hospitals and CMHCs for PHP
services. Given the difference in PHP charges between hospitals and
CMHCs, we did not believe it was appropriate to make outlier payments
to CMHCs using the outlier percentage target amount and threshold
established for hospitals. Therefore, beginning in CY 2004, we created
a separate outlier policy specific to the estimated costs and OPPS
payments provided to CMHCs. We designated a portion of the estimated
OPPS outlier threshold specifically for CMHCs, consistent with the
percentage of projected payments to CMHCs under the OPPS each year,
excluding outlier payments, and established a separate outlier
threshold for CMHCs. This separate outlier threshold for CMHCs resulted
in $1.8 million in outlier payments to CMHCs in CY 2004 and $0.5
million in outlier payments to CMHCs in CY 2005 (82 FR 59381). In
contrast, in CY 2003, more than $30 million was paid to CMHCs in
outlier payments (82 FR 59381).
2. CMHC Outlier Percentage
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267
through 59268), we described the current outlier policy for hospital
outpatient payments and CMHCs. We note that we also discussed our
outlier policy for CMHCs in more detail in section VIII.C. of that same
final rule (82 FR 59381). We set our projected target for all OPPS
aggregate outlier payments at 1.0 percent of the estimated aggregate
total payments under the OPPS (82 FR 59267). This same policy was also
reiterated in the CY 2019 OPPS/ASC final rule with comment period (83
FR 58996). We estimate CMHC per diem payments and outlier payments by
using the most recent available utilization and charges from CMHC
claims, updated CCRs, and the updated payment rate for APC 5853. For
increased transparency, we are providing a more detailed explanation of
the existing calculation process for determining the CMHC outlier
percentages. We propose to continue to calculate the CMHC outlier
percentage according to previously established policies, and we do not
propose any changes to our current methodology for calculating the CMHC
outlier percentage for CY 2021. To calculate the CMHC outlier
percentage, we followed three steps:
Step 1: We multiplied the OPPS outlier threshold, which is
1.0 percent, by the total estimated OPPS Medicare payments (before
outliers) for the prospective year to calculate the estimated total
OPPS outlier payments:
(0.01 x Estimated Total OPPS Payments) = Estimated Total OPPS
Outlier Payments.
Step 2: We estimated CMHC outlier payments by taking each
provider's estimated costs (based on their allowable charges multiplied
by the provider's CCR) minus each provider's estimated CMHC outlier
multiplier threshold (we refer readers to section VIII.C.3. of this
proposed rule). That threshold is determined by multiplying the
provider's estimated paid days by 3.4 times the CMHC PHP APC payment
rate. If the provider's costs exceeded the threshold, we multiplied
that excess by 50 percent, as described in section VIII.C.3. of this
proposed rule, to determine the estimated outlier payments for that
provider. CMHC outlier payments are capped at 8 percent of the
provider's estimated total per diem payments (including the
beneficiary's copayment), as described in section VIII.C.5. of this
proposed rule, so any provider's costs that exceed the CMHC outlier cap
will have its payments adjusted downward. After accounting for the CMHC
outlier cap, we summed all of the estimated outlier payments to
determine the estimated total CMHC outlier payments.
(Each Provider's Estimated Costs-Each Provider's Estimated
Multiplier Threshold) = A. If A is greater than 0, then (A x 0.50) =
Estimated CMHC Outlier Payment (before cap) = B. If B is greater than
(0.08 x Provider's Total Estimated Per Diem Payments), then cap-
adjusted B = (0.08 x Provider's Total Estimated Per Diem Payments);
otherwise, B = B. Sum (B or cap-adjusted B) for Each Provider = Total
CMHC Outlier Payments.
Step 3: We determined the percentage of all OPPS outlier
payments that CMHCs represent by dividing the estimated CMHC outlier
payments from Step 2 by the total OPPS outlier payments from Step 1:
(Estimated CMHC Outlier Payments/Total OPPS Outlier Payments).
In CY 2019, we designated approximately 0.01 percent of that
estimated 1.0 percent hospital outpatient outlier threshold for CMHCs
(83 FR 58996), based on this methodology. For CY 2021, we propose to
continue to use the same methodology as CY 2020. Therefore, based on
our CY 2021 payment estimates, CMHCs are projected to receive 0.01
percent of total hospital outpatient payments in CY 2021, excluding
outlier payments. We propose to designate approximately less than 0.01
percent of the estimated 1.0 percent hospital outpatient outlier
threshold for CMHCs. This percentage is based upon the formula given in
Step 3.
3. Cutoff Point and Percentage Payment Amount
As described in the CY 2018 OPPS/ASC final rule with comment period
(82 FR 59381), our policy has been to pay CMHCs for outliers if the
estimated cost of the day exceeds a cutoff point. In CY 2006, we set
the cutoff point for outlier payments at 3.4 times the highest CMHC PHP
APC payment rate implemented for that calendar year (70 FR 68551). For
CY 2018, the highest CMHC PHP APC payment rate is the payment rate for
CMHC PHP APC 5853. In addition, in CY 2002, the final OPPS outlier
payment percentage for costs above the multiplier threshold was set at
50 percent (66 FR 59889). In CY 2018, we continued to apply the same 50
percent outlier payment percentage that applies to hospitals to CMHCs
and continued to use the existing cutoff point (82 FR 59381).
Therefore, for CY 2018, we continued to pay for partial hospitalization
services that exceeded 3.4 times the CMHC PHP APC payment rate at 50
percent of the amount of CMHC PHP APC geometric mean per diem costs
over the cutoff point. For example, for CY 2018, if a CMHC's cost for
partial hospitalization services paid under CMHC PHP APC 5853 exceeds
3.4 times the CY 2018 payment rate for CMHC PHP APC 5853, the outlier
payment would be calculated as 50 percent of the amount by which the
cost exceeds 3.4 times the CY 2018 payment rate for CMHC PHP APC 5853
[0.50 x (CMHC Cost-(3.4 x APC 5853 rate))]. This same policy was also
reiterated in the CY 2019 OPPS/ASC final rule with comment period (83
FR 58996 through 58997) and the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61351). For CY 2021, we propose to continue to
pay for partial hospitalization services that exceed 3.4 times the
proposed CMHC PHP APC payment rate at 50 percent of the CMHC PHP APC
geometric mean per diem costs over the cutoff point. That is, for CY
2021, if a CMHC's cost for partial hospitalization services paid under
CMHC PHP APC 5853 exceeds 3.4 times the payment rate for CMHC APC 5853,
the outlier payment will be calculated as [0.50 x (CMHC Cost-(3.4 x APC
5853 rate))].
[[Page 48908]]
4. Outlier Reconciliation
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594
through 68599), we established an outlier reconciliation policy to
address charging aberrations related to OPPS outlier payments. We
addressed vulnerabilities in the OPPS outlier payment system that lead
to differences between billed charges and charges included in the
overall CCR, which are used to estimate cost and would apply to all
hospitals and CMHCs paid under the OPPS. We initiated steps to ensure
that outlier payments appropriately account for the financial risk when
providing an extraordinarily costly and complex service, but are only
being made for services that legitimately qualify for the additional
payment.
For a comprehensive description of outlier reconciliation, we refer
readers to the CY 2019 OPPS/ASC final rules with comment period (83 FR
58874 through 58875 and 81 FR 79678 through 79680).
We propose to continue these policies for partial hospitalization
services provided through PHPs for CY 2021. The current outlier
reconciliation policy requires that providers whose outlier payments
meet a specified threshold (currently $500,000 for hospitals and any
outlier payments for CMHCs) and whose overall ancillary CCRs change by
plus or minus 10 percentage points or more, are subject to outlier
reconciliation, pending approval of the CMS Central Office and Regional
Office (73 FR 68596 through 68599). The policy also includes provisions
related to CCRs and to calculating the time value of money for
reconciled outlier payments due to or due from Medicare, as detailed in
the CY 2009 OPPS/ASC final rule with comment period and in the Medicare
Claims Processing Manual (73 FR 68595 through 68599 and Medicare Claims
Processing Internet Only Manual, Chapter 4, Section 10.7.2 and its
subsections, available online at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf).
5. Outlier Payment Cap
In the CY 2017 OPPS/ASC final rule with comment period, we
implemented a CMHC outlier payment cap to be applied at the provider
level, such that in any given year, an individual CMHC will receive no
more than a set percentage of its CMHC total per diem payments in
outlier payments (81 FR 79692 through 79695). We finalized the CMHC
outlier payment cap to be set at 8 percent of the CMHC's total per diem
payments (81 FR 79694 through 79695). This outlier payment cap only
affects CMHCs, it does not affect other provider types (that is,
hospital-based PHPs), and is in addition to and separate from the
current outlier policy and reconciliation policy in effect. In the CY
2020 OPPS/ASC final rule with comment period (84 FR 61351), we
finalized a proposal to continue this policy in CY 2020 and subsequent
years.
For CY 2021, we propose to continue to apply the 8 percent CMHC
outlier payment cap to the CMHC's total per diem payments.
6. Fixed-Dollar Threshold
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267
through 59268), for the hospital outpatient outlier payment policy, we
set a fixed-dollar threshold in addition to an APC multiplier
threshold. Fixed-dollar thresholds are typically used to drive outlier
payments for very costly items or services, such as cardiac pacemaker
insertions. CMHC PHP APC 5853 is the only APC for which CMHCs may
receive payment under the OPPS, and is for providing a defined set of
services that are relatively low cost when compared to other OPPS
services. Because of the relatively low cost of CMHC services that are
used to comprise the structure of CMHC PHP APC 5853, it is not
necessary to also impose a fixed-dollar threshold on CMHCs. Therefore,
in the CY 2018 OPPS/ASC final rule with comment period, we did not set
a fixed-dollar threshold for CMHC outlier payments (82 FR 59381). This
same policy was also reiterated in the CY 2020 OPPS/ASC final rule with
comment period (84 FR 61351). We propose to continue this policy for CY
2021.
IX. Services That Will Be Paid Only as Inpatient Services
A. Background
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74352 through 74353) for a full discussion of our
longstanding policies for identifying services that are typically
provided only in an inpatient setting (referred to as the inpatient
only (IPO) list) and, therefore, that will not be paid by Medicare
under the OPPS, as well as the criteria we use to review the IPO list
each year to determine whether or not any services should be removed
from the list. The complete list of codes that describe services that
will be paid by Medicare in CY 2021 as inpatient only services is
included as Addendum E to this CY 2021 OPPS/ASC proposed rule, which is
available via the internet on the CMS website.\86\
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\86\ Note, the IPO list is proposed to be eliminated beginning
in CY 2021, with all services being removed from the list over the
course of a three-year transition period. The CY 2020 IPO List can
be found here: Hospital Outpatient PPS, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.
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B. Proposed Changes to the Inpatient Only (IPO) List
1. Methodology for Identifying Appropriate Changes to IPO List
Currently, there are approximately 1,740 services on the IPO list.
Under our current policy, we annually review the IPO list to identify
any services that should be removed from or added to the list based on
the most recent data and medical evidence available. We have
established five criteria to determine whether a procedure should be
removed from the IPO list (65 FR 18455). As noted in the CY 2012 OPPS/
ASC final rule with comment period (76 FR 74353), we utilize these
criteria when reviewing services to determine whether or not they
should be removed from the IPO list and assigned to an APC group for
payment under the OPPS when provided in the hospital outpatient
setting. We note that a procedure is not required to meet all of the
established criteria to be removed from the IPO list. The criteria
include the following:
Most outpatient departments are equipped to provide the
services to the Medicare population.
The simplest procedure described by the code may be
furnished in most outpatient departments.
The procedure is related to codes that we have already
removed from the IPO list.
A determination is made that the procedure is being
furnished in numerous hospitals on an outpatient basis.
A determination is made that the procedure can be
appropriately and safely furnished in an ASC and is on the list of
approved ASC services or has been proposed by us for addition to the
ASC list.
2. CY 2021 Proposal To Eliminate the IPO List
The IPO List was established with the implementation of the OPPS in
the CY 2000 OPPS/ASC final rule with comment period (65 FR 18455).
Using the authority under section 1833(t)(1)(B)(i) of the Act, the IPO
List was created to identify services that require inpatient care
because of the invasive nature of the procedure, the need for at least
24 hours of postoperative recovery time, or the
[[Page 48909]]
underlying physical condition of the patient who would require the
surgery and, therefore, the service would not be paid by Medicare under
the OPPS. For example, the list includes certain surgically invasive
services on the brain, heart, and abdomen, such as craniotomies,
coronary-artery bypass grafting, and laparotomies.
Since the IPO list was established in 2000, we have stated that
regardless of how a procedure is classified for purposes of payment, we
expect that in every case the surgeon and the hospital will assess the
risk of a procedure or service to the individual patient, taking site
of service into account, and will act in that patient's best interests
(65 FR 18456). We have reiterated this sentiment in rulemaking several
times over the years, including in our discussion of the removal of
total knee arthroplasty (TKA) from the IPO list in the CY 2018 OPPS/ASC
final rule with comment period (82 FR 59383) and most recently when we
discussed removing total hip arthroplasty (THA) from the IPO List in
the CY 2020 OPPS/ASC final rule with comment period, where we stated
that the decision regarding the most appropriate care setting for a
given surgical procedure is a complex medical judgment made by the
physician based on the beneficiary's individual clinical needs and
preferences and on the general coverage rules requiring that any
procedure be reasonable and necessary (84 FR 61354).
In previous years, we received several comments from stakeholders
who believe that we should eliminate the IPO list entirely and instead
defer to the clinical judgment of physicians for decisions regarding
site of service. For example, in the CY 2000 final rule with comment
period, in response to the establishment of the IPO list, commenters
stated that they believed CMS was making decisions, such as the
appropriate site of service for a particular medical procedure, that
should be left to the discretion of surgeons and their patients (65 FR
18455, 18442). In the CY 2012 OPPS/ASC final rule with comment period,
a number of commenters suggested that regulations should not supersede
the physician's level of knowledge and assessment of the patient's
condition, and that the physician can appropriately determine whether a
procedure can be performed in a hospital outpatient setting (76 FR
74354). In the CY 2014 rulemaking, we again noted that some commenters
requested that the IPO list be eliminated in its entirety (78 FR
75055). Stakeholders have also commented that the exclusion of services
from payment under the OPPS is unnecessary and could have an adverse
effect on advances in surgical care (65 FR 18442). Furthermore, some
stakeholders have suggested that when a service is removed from the IPO
list, it creates an expectation among hospitals that the service must
be furnished in the outpatient setting, regardless of the clinical
judgment of the physician or needs of the patient.
Other stakeholders have supported maintaining the IPO list and
consider it an important tool to indicate which services are
appropriate to furnish in the outpatient setting and to ensure that
Medicare beneficiaries receive quality care. They have agreed that many
of the procedures that we designated as ``inpatient only'' are
currently performed appropriately and safely only in the inpatient
setting (65 FR 18442). Commenters have expressed concerns that without
the IPO list, patient safety and care quality could decline, and have
noted the potential for surgical complications in response to allowing
specific procedures to be paid under the OPPS when performed in the
outpatient setting for the Medicare population, such as TKA and THA.
Stakeholders have also supported the use of the IPO list because
services included on the IPO list are an exception to the 2-midnight
rule and as such are considered appropriate for inpatient hospital
admission and payment under Medicare Part A regardless of the expected
length of stay and therefore are not subject to medical review by
Beneficiary and Family- Centered Care -Quality Improvement
Organizations (BFCC-QIOs) for ``patient status'' (that is, site-of-
service). We note that in the CY 2020 OPPS/ASC final rule with comment
period we finalized a policy to exempt procedures that have been
removed from the IPO list from certain medical review activities for 2
calendar years following their removal from the IPO list. For CY 2021
and subsequent years, we propose to continue this 2-year exemption from
site-of-service claim denials, BFCC-QIO referrals to Recovery Audit
Contractors (RACs), and RAC reviews for ``patient status'' for
procedures that are removed from the IPO list under the OPPS beginning
on January 1, 2021. We are also seeking comment on whether a 2-year
exemption continues to be appropriate, or if a longer or shorter period
may be more warranted. For more information on these policies please
refer to section X.B of this proposed rule.
While we agreed with commenters in previous rulemakings that the
IPO list was necessary, we stated there are many surgical procedures
that cannot be safely performed on a typical Medicare beneficiary in
the hospital outpatient setting, and that it would be inappropriate for
us to establish payment rates for those services under the OPPS (78 FR
75055), recently we have reconsidered the various stakeholder comments
requesting that we eliminate the IPO list and reevaluated the need for
CMS to restrict payment for certain procedures in the hospital
outpatient setting. We have concluded that we no longer believe there
is a need for the IPO list in order to identify services that require
inpatient care. Instead, we agree with past commenters that the
physician should use his or her clinical knowledge and judgment,
together with consideration of the beneficiary's specific needs, to
determine whether a procedure can be performed appropriately in a
hospital outpatient setting or whether inpatient care is required for
the beneficiary, subject to the general coverage rules requiring that
any procedure be reasonable and necessary. We believe that this change
will ensure maximum availability of services to beneficiaries in the
outpatient setting.
We also believe that since the IPO list was established, there have
been significant developments in the practice of medicine that have
allowed numerous services to be provided safely and effectively in the
outpatient setting. We acknowledged in the CY 2000 OPPS/ASC final rule
with comment period that we believed that emerging new technologies and
innovative medical practice were blurring the difference between the
need for inpatient care and the sufficiency of outpatient care for many
services (65 FR 18456). We also stated in the CY 2001 OPPS/ASC interim
final rule with comment period that, over time, given advances in
technology and surgical technique, many of the procedures that were on
the IPO list at the time may eventually be performed safely in a
hospital outpatient setting and that we would continue to evaluate
services to determine whether they should be removed from the IPO list
(65 FR 67826). Specifically, we stated that insofar as advances in
medical practice mitigate concerns about these services being furnished
on an outpatient basis, we would be prepared to remove them from the
IPO list and provide for payment under the OPPS (65 FR 67826). Since
that time, there have been many new technologies and advances in
surgical techniques and surgical care protocols, including the use of
minimally invasive surgical procedures
[[Page 48910]]
such as laparoscopy, improved perioperative anesthesia, expedited
rehabilitation protocols, as well as significant enhancements to
postoperative processes, such as improvements in pain management, that
have reduced the inpatient length of stay and as well as the need for
postoperative care following a surgical service. In consideration of
these advancements, we have removed services from the IPO list that
were previously considered to require inpatient care, including TKA in
CY 2018 (82 FR 59385) and THA in CY 2020 (84 FR 61355). As medical
practice continues to develop, we believe that the difference between
the need for inpatient care and the appropriateness of outpatient care
has become less distinct for many services. Therefore, we believe that
the IPO list is no longer necessary to identify services that require
inpatient care.
We acknowledge the seriousness of the concerns regarding patient
safety and quality of care that various stakeholders have expressed
regarding removing procedures from the IPO list or eliminating the IPO
list altogether. However, we believe that the evolving nature in of the
practice of medicine, which has allowed more procedures to be performed
on an outpatient basis with a shorter recovery time, in addition to
physician judgment, state and local licensure requirements,
accreditation requirements, hospital conditions of participation
(CoPs), medical malpractice laws, and CMS quality and monitoring
initiatives and programs will continue to ensure the safety of
beneficiaries in both the inpatient and outpatient settings, even in
the absence of the IPO list. In the past, we stated that although
hospitals must meet minimum safety standards through accreditation or
state survey and certification of compliance with the CoPs that ensure
a hospital is generally safe and an appropriate environment for
providing care, we were concerned that those measures did not determine
whether a particular service could be safely provided in the outpatient
setting to beneficiaries (76 FR 74355). However, the CoPs are
regulations that are focused on protecting the health and safety of all
patients receiving services from Medicare enrolled providers. The CoPs
are the baseline health and safety requirements for Medicare
certification. Accrediting organizations and states and localities,
through their licensure authorities, may have more specific and
stringent requirements. Often professional organizations or other
nonprofit organizations give additional guidance to health care
providers to improve patient safety and quality of care. We note that
the CoPs already require hospitals to be in compliance with applicable
Federal laws related to the health and safety of patients (42 CFR
482.11) Additionally, there are numerous provisions in the hospital
CoPs at 42 CFR part 482 that provide extensive patient safeguards and
that provide enough room and flexibility to ensure that hospitals can
follow nationally recognized standards of practice and of care where
they are applicable and can adapt if those standards change over time
through innovative new practices. For example, the hospital CoPs
require that hospitals must have in effect a utilization review (UR)
plan that provides for review of services furnished by the institution
and by members of the medical staff to patients entitled to benefits
under the Medicare and Medicaid programs (42 CFR 482.30). More
specifically, the utilization review includes a review of the length of
stay, medical necessity of admission and services rendered, and also
looks to promote the most efficient use of available health facilities
and services.
Additionally, as indicated in the 2020 Quality Strategy,\87\ CMS
has also continued to develop safety measures and tools, like the
Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare
Providers and Systems Survey and the CMS' case management system, to
help determine the safety and quality of the performance of procedures
in the outpatient setting, to address concerns about the safety and
quality of more varied, complex procedures performed in the outpatient
setting. We believe that the aforementioned federally established CoPs,
the CMS Quality Strategy and state and local safety requirements help
ensure important patient safeguards for all patients, including
Medicare beneficiaries. Further, although we believe it is important to
pause certain medical contractor reviews for patient status to allow
providers time to adjust to the proposed changes to the IPO, we note
that the BFCC-QIO program's beneficiary case review contractors
routinely address, and will continue to address any beneficiary quality
of care complaints that include concerns about treatment as a hospital
inpatient or outpatient, not receiving expected services, early
discharge, and discharge planning. CMS' case management system
currently allows QIOs and CMS to monitor the frequency and status of
beneficiary quality of care complaints and other beneficiary appeals by
topic, provider type, and geographic area. These numbers are compiled
by the BFCC-QIO national coordinating and oversight review contractor
and reported to the QIOs and CMS leadership on a weekly basis for
monitoring purposes. As previously noted, although we propose to
continue a 2-year exemption from site-of-service claim denials, BFCC-
QIO referrals to Recovery Audit Contractors (RACs), and RAC reviews for
``patient status'' for procedures that are removed from the IPO list
under the OPPS beginning on January 1, 2021, BFCC-QIOs will continue to
conduct initial medical reviews for both the medical necessity of the
services, the medical necessity of the site of service, and will also
continue to be permitted and expected to deny claims if the service
itself is determined not to be reasonable and medically necessary as
noted in the CY 2020 OPPS/ASC final rule (84 FR 61365). Therefore,
given CMS' increasing ability to measure the safety of procedures
performed in the outpatient setting and to monitor the quality of care,
in addition to the other safeguards detailed above, we now believe that
quality of care is unlikely to be negatively affected by the
elimination of the IPO list. However, we are also requesting that
commenters submit evidence on what effect, if any, they believe
eliminating the IPO list may have on the quality of care.
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\87\ Speech: Remarks by CMS Administrator Seema Verma at the
2020 CMS Quality Conference, https://www.cms.gov/newsroom/press-releases/speech-remarks-cms-administrator-seema-verma-2020-cms-quality-conference.
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Furthermore, some stakeholders have shared concerns with us that
removing procedures from the IPO list and allowing them to be paid
under the OPPS when performed in the outpatient setting may result in
an increased financial burden for beneficiaries for certain complex
services. Under current law, the OPPS cost-sharing for a service is
capped at the applicable Part A hospital inpatient deductible amount
for that year for each service. However, this cap applies to individual
services, so if a Medicare beneficiary receives multiple separately
payable OPPS services, it is possible that the aggregate cost-sharing
for a beneficiary may be higher for services provided in the outpatient
setting than it would be had the services been furnished during an
inpatient stay. We emphasize that services included on the IPO list
tend to be surgical procedures that would typically be the focus of the
hospital outpatient stay and would likely be assigned to a
[[Page 48911]]
comprehensive APC (C-APC) when they are removed from the IPO list. As
such, these services would likely be considered to be a single episode
of care with one payment rate and one copayment amount instead of
multiple copayments for each individual service. In most instances, we
expect that beneficiaries will not be responsible for multiple
copayments for individual ancillary services associated with services
removed from the IPO list, since because of their assignment to C-APCs,
the inpatient deductible cap will apply to the entire hospital claim
which is paid as a comprehensive service or procedure. In the event
there are separately payable OPPS services included on a claim with a
service assigned to a C-APC, our previously mentioned policy remains
applicable, that is the OPPS cost-sharing for an individual service is
capped at the applicable Part A hospital inpatient deductible amount
for that year for each service. For further information regarding
beneficiary copayments, please refer to section II.I.1. of this
proposed rule.
After careful consideration of the need for the IPO list and taking
into account the feedback that we have received since the OPPS was
implemented, we believe that instead of maintaining a list of services
that typically require inpatient care and are not paid under the OPPS,
physicians should continue to use their clinical knowledge and judgment
to appropriately determine whether a procedure can be performed in a
hospital outpatient setting or whether inpatient care is required for
the beneficiary based on the beneficiary's specific needs and
preferences, subject to the general coverage rules requiring that any
procedure be reasonable and necessary, and that payment should be made
pursuant to the otherwise applicable payment policies. We also believe
that developments in surgical technique and technological advances in
the delivery of services may obviate the need for the IPO list.
Finally, we believe physician judgment, state and local regulations,
accreditation requirements, hospital conditions of participation
(CoPs), medical malpractice laws, and other CMS quality and monitoring
initiatives will continue to ensure the safety of beneficiaries in both
the inpatient and outpatient settings in the absence of the IPO list.
Therefore, we propose to eliminate the IPO list over a transitional
period beginning in CY 2021. While we believe that the list could be
eliminated in its entirety at this point, as explained in further
detail below, we propose a transitional period.
Given the significant number of services on the list and that they
will be newly priced under the OPPS, we recognize that stakeholders may
need time to adjust to the removal of procedures from the list.
Providers may need time to prepare, update their billing systems, and
gain experience with newly removed procedures eligible to be paid under
either the inpatient prospective payment system or outpatient
prospective payment system. Therefore, we propose to transition
services off of the IPO list over a 3-year period, with the list
completely eliminated by 2024. In accordance with this proposal, we
propose to amend 42 CFR 419.22(n) to state that effective beginning on
January 1, 2021, the Secretary shall eliminate the list of services and
procedures designated as requiring inpatient care through a 3-year
transition, with the full list eliminated in its entirety by January 1,
2024.
For CY 2021, we propose that musculoskeletal services would be the
first group of services that would be removed from the IPO list. We
believe it is appropriate to remove this group of services first for
several reasons. In recent years, due to new technologies and advances
in surgical care protocols, expedited rehabilitation protocols, and
significant enhancements to postoperative processes we have removed TKA
and THA, which are both musculoskeletal services, from the IPO list.
During the process of proposing and finalizing removing TKA and THA
from the IPO list, stakeholders have continuously requested that CMS
remove other musculoskeletal services from the IPO list as well, citing
shortened length of stay times, advancements in technologies and
surgical techniques, and improved postoperative processes.
Additionally, we note that, more often than not, stakeholders'
historical requests for removals were for musculoskeletal services. We
also recognize that there is already a set of comprehensive APCs for
musculoskeletal services for payment in the outpatient setting, which
facilitates the removal of these types of services for CY 2021.
Specifically, because we have previously removed codes from the IPO
list that are similar clinically and in terms of resource cost and
assigned them to these comprehensive APCs, these APCs generally
describe appropriate ranges and placements for these musculoskeletal
codes being proposed for removal in CY 2021, which will allow for
appropriate payment. We have identified 266 musculoskeletal services
that we propose to remove from the IPO list for CY 2021.
3. Comment Solicitation on Order of Removal of Additional Clinical
Families From the IPO List During the Transition To Complete
Elimination of the IPO List
As stated above, we propose to eliminate the current IPO list of
1,740 services, starting with the 266 musculoskeletal-related services
as provided in Table 31. We are requesting comments from the public on
whether 3 years is an appropriate time frame for the transition,
whether there are other services that would be ideal candidates for
removal from the IPO list in the near term given known technological
and other advances in care, and the order of removal of additional
clinical families and/or specific services for each of the CY 2022 and
CY 2023 rulemakings, until the IPO list is completely eliminated.
Additionally, we seek comment on whether we should restructure or
create any new APCs to allow for OPPS payment for services that are
removed from the IPO list. We are also soliciting public comments on
whether any of the musculoskeletal codes proposed for removal from the
IPO list for CY 2021 may meet the criteria to be added to the ASC
Covered Procedures List. We refer readers to section XIII.C.1.c. of
this proposed rule for a complete discussion of the ASC Covered
Procedures List.
The 266 services that we propose to remove from the IPO list for CY
2021 and subsequent years, including the CPT/HCPCS code, long
descriptor, and the proposed CY 2021 payment indicators, are included
in Table 31 of this proposed rule.
In summary, given the developments in surgical technique and
technological advances in the practice of medicine as well as the
various safeguards discussed above, we propose to eliminate the IPO
list over the course of the next 3 years, starting with the removal of
266 musculoskeletal-related services as provided in Table 31 in CY
2021. We propose to amend 42 CFR 419.22(n) to state that effective
beginning on January 1, 2021, the Secretary shall eliminate the list of
services and procedures designated as requiring inpatient care through
a 3-year transition, with the full list eliminated in its entirety by
January 1, 2024. We believe that several safety mechanisms that will
remain in place will ensure the safety of our beneficiaries and the
quality of care, including, but not limited to, physician judgment,
state and local regulations, accreditation requirements, medical
malpractice laws, hospital conditions of participation, and other CMS
initiatives.
[[Page 48912]]
Table 31 lists the procedures we propose to remove from the IPO
list for CY 2021. These services and their proposed status indicators
and APC assignments (if applicable) are included in Addendum B to this
proposed rule as well.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
[[Page 48935]]
X. Proposed Nonrecurring Policy Changes
A. Proposed Changes in the Level of Supervision of Outpatient
Therapeutic Services in Hospitals and Critical Access Hospitals (CAHs)
In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61359
through 61363), we implemented a policy for CY 2020 and subsequent
years to change the generally applicable minimum required level of
supervision for most hospital outpatient therapeutic services from
direct supervision to general supervision for services furnished by all
hospitals and CAHs. However, some groups of services were not subject
to the change in the required supervision level and those services
continue to have a minimum default level of supervision that is higher
than general supervision.
On January 31, 2020, Health and Human Services Secretary Alex M.
Azar II determined that a PHE exists retroactive to January 27, 2020
\88\ under section 319 of the Public Health Service Act (42 U.S.C.
247d), in response to COVID-19), and on April 21, 2020, Secretary Azar
renewed, effective April 26, 2020, and again effective July 25, 2020,
the determination that a PHE exists.\89\ On March 13, 2020, the
President of the United States declared the COVID-19 outbreak in the
United States constitutes a national emergency,\90\ beginning March 1,
2020. On March 31, 2020, we issued an interim final rule with comment
period (IFC) to give individuals and entities that provide services to
Medicare beneficiaries needed flexibilities to respond effectively to
the serious public health threats posed by the spread of the COVID-19.
The goal of the IFC issued on March 31, 2020, was to provide the
necessary flexibility for Medicare beneficiaries to be able to receive
medically necessary services without jeopardizing their health or the
health of those who are providing those services, while minimizing the
overall risk to public health (85 FR 19232).
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\88\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx.
\89\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/covid19-21apr2020.aspx.
\90\ https://www.whitehouse.gov/presidentialactions/proclamation-declaring-nationalemergency-concerning-novel-coronavirus-diseasecovid-19-outbreak/.
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In the IFC issued March 31, 2020, we adopted a policy to reduce, on
an interim basis for the duration of the PHE, the minimum default level
of supervision for non-surgical extended duration therapeutic services
(NSEDTS) to general supervision for the entire service, including the
initiation portion of the service, for which we had previously required
direct supervision. We also specified in the IFC issued March 31, 2020,
that, for the duration of the PHE for the COVID-19 pandemic, the
requirement for direct physician supervision of pulmonary
rehabilitation, cardiac rehabilitation, and intensive cardiac
rehabilitation services includes virtual presence of the physician
through audio/video real-time communications technology when use of
such technology is indicated to reduce exposure risks for the
beneficiary or health care provider.
These policies were adopted on an interim final basis for the
duration of the PHE. However, we believe that these policies are
appropriate outside of the PHE and should apply permanently. Therefore,
we propose to adopt these policies for CY 2021 and beyond as described
in more detail below.
1. Proposal To Allow General Supervision of Outpatient Hospital
Therapeutic Services Currently Assigned to the Non-Surgical Extended
Duration Therapeutic Services (NSEDTS) Level of Supervision
NSEDTS describe services that have a significant monitoring
component that can extend for a lengthy period of time, that are not
surgical, and that typically have a low risk of complications after the
assessment at the beginning of the service. The minimum default
supervision level of NSEDTS was established in the CY 2011 OPPS/ASC
final rule with comment period (75 FR 72003 through 72013) as being
direct supervision during the initiation of the service, which may be
followed by general supervision at the discretion of the supervising
physician or the appropriate nonphysician practitioner (Sec.
410.27(a)(1)(iv)(E)). In this case, initiation means the beginning
portion of the NSEDTS which ends when the patient is stable and the
supervising physician or the appropriate nonphysician practitioner
determines that the remainder of the service can be delivered safely
under general supervision. We originally established general
supervision as the appropriate level of supervision after the
initiation of the service because it is challenging for hospitals to
ensure direct supervision for services with an extended duration and a
significant monitoring component, particularly for CAHs and small rural
hospitals.
In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61359
through 61363), we changed the generally applicable minimum required
level of supervision for most hospital outpatient therapeutic services
from direct supervision to general supervision for hospitals and CAHs.
We made this change because we believe it is critical that hospitals
have the most flexibility possible to provide the services Medicare
beneficiaries need while minimizing provider burden. In the IFC issued
March 31, 2020 (85 FR 19266), we assigned, on an interim basis, a
minimum required supervision level of general supervision for NSEDTS
services, including during the initiation portion of the service,
during the PHE. Changing the minimum level of supervision to general
supervision during the PHE gives providers additional flexibility to
handle the burdens created by the PHE for the COVID-19 pandemic.
We believe changing the level of supervision for NSEDTS permanently
for the duration of the service would be beneficial to patients and
outpatient hospital providers as it would allow greater flexibility in
providing these services and reduce provider burden, and thus, improve
access to these services in cases where the direct supervision
requirement may have otherwise prevented some services from being
furnished due to lack of availability of the supervising physician or
nonphysician practitioner. In addition, as we explained in the CY 2020
OPPS/ASC final rule with comment period (84 FR 61360), our experience
indicates that Medicare providers will provide a similar quality of
hospital outpatient therapeutic services, including NSEDTS, regardless
of whether the minimum level of supervision required under the Medicare
program is direct or general. It is important to remember that the
requirement for general supervision for an entire NSEDTS does not
preclude these hospitals from providing direct supervision for any part
of a NSEDTS when the practitioners administering the medical procedures
decide that it is appropriate to do so. Many outpatient therapeutic
services including NSEDTS may involve a level of complexity and risk
such that direct supervision would be warranted even though only
general supervision is required.
In addition, CAHs and hospitals in general continue to be subject
to conditions of participation (CoPs) that complement the general
supervision requirements for hospital outpatient therapeutic services,
including NSEDTS, to ensure that the medical services Medicare patients
receive are properly supervised. CoPs for hospitals require Medicare
patients to be under the care of a physician (42 CFR
[[Page 48936]]
482.12(c)(4)), and for the hospital to ``have an organized medical
staff that operates under bylaws approved by the governing body, and
which is responsible for the quality of medical care provided to
patients by the hospital'' (42 CFR 482.22). The CoPs for CAHs (42 CFR
485.631(b)(1)(i)) require physicians to provide medical direction for
the CAHs' health care activities, consultation for, and medical
supervision of the health care staff. The physicians' responsibilities
in hospitals and CAHs include supervision of all services performed at
those facilities. In addition, physicians must also follow state laws
regarding scope of practice.
Therefore, we propose to establish general supervision as the
minimum required supervision level for all NSEDTS that are furnished on
or after January 1, 2021. This would be consistent with the minimum
required level of general supervision that currently applies for most
outpatient hospital therapeutic services. General supervision, as
defined in our regulation at Sec. 410.32(b)(3)(i), means that the
procedure is furnished under the physician's overall direction and
control, but that the physician's presence is not required during the
performance of the procedure; and as provided under Sec.
410.27(a)(1)(iv)(C), certain non-physician practitioners can provide
the required supervision of services that they can personally furnish
in accordance with state law and all other applicable requirements.
Because we propose a minimum required level of general supervision for
NSEDTS, including during the initiation of the service, we propose to
delete subparagraph (E) from the regulations at Sec. 410.27(a)(1)(iv).
We are seeking public comments on this proposal.
2. Proposal To Allow Direct Supervision of Pulmonary Rehabilitation
Services, Cardiac Rehabilitation Services, and Intensive Cardiac
Rehabilitation Services Using Interactive Telecommunications Technology
Direct physician supervision was the standard set forth in the
April 7, 2000 OPPS final rule with comment period (68 FR 18524 through
18526) for supervision of hospital outpatient therapeutic services
covered and paid by Medicare in hospitals and provider-based
departments of hospitals, including for cardiac rehabilitation,
intensive cardiac rehabilitation, and pulmonary rehabilitation services
provided to hospital outpatients. As we explained in the CY 2011 OPPS/
ASC final rule with comment period, the statutory language of sections
1861(eee)(2)(B) and (eee)(4)(A) and section 1861(fff)(1) of the Act (as
added by section 144(a)(1) of Pub. L. 110-275) defines cardiac
rehabilitation, intensive cardiac rehabilitation, and pulmonary
rehabilitation programs as ``physician supervised.'' More specifically,
section 1861(eee)(2)(B) of the Act establishes that, for cardiac
rehabilitation, intensive cardiac rehabilitation, and pulmonary
rehabilitation programs, ``a physician is immediately available and
accessible for consultation and medical emergencies at all times items
and services are being furnished under the program, except that, in the
case of items and services furnished under such a program in a
hospital, such availability shall be presumed.'' As we explained in the
CY 2009 OPPS/ASC proposed rule and final rule with comment period (73
FR 41518 through 41519 and 73 FR 68702 through 68704, referencing the
April 7, 2000 OPPS final rule (65 FR 18525)), the ``presumption'' or
``assumption'' of direct supervision means that direct physician
supervision is the standard for all hospital outpatient therapeutic
services. We have assumed this requirement is met on hospital premises
because staff physicians would always be nearby in the hospital. In
other words, the requirement is not negated by a presumption that the
requirement is being met. Recently, some stakeholders suggested to us
that we have the authority to change the default minimum level of
supervision for pulmonary rehabilitation services, cardiac
rehabilitation services, and intensive cardiac rehabilitation services
to general supervision because of the policy we adopted in CY 2020 to
change the generally applicable minimum required level of supervision
for most other hospital outpatient therapeutic services from direct
supervision to general supervision (84 FR 61359 through 61363). For the
reasons explained above, we disagree that we can change the default
level of supervision for these services to general supervision under
current law.
In the IFC issued March 31, 2020 (85 FR 19246), we implemented a
policy for the duration of the PHE that allows the direct supervision
requirement for cardiac rehabilitation, intensive cardiac
rehabilitation, and pulmonary rehabilitation services to be met by the
virtual presence of the supervising physician through audio/video real-
time communications technology when use of such technology is indicated
to reduce exposure risks to COVID-19 for the beneficiary or health care
provider. While we adopted this policy to help improve the availability
of rehabilitation services during the PHE and reduce the burden for
providers, we also believe the policy to allow direct supervision
provided by the virtual presence of the physician could continue to
improve access for patients and reduce burden for providers after the
end of the PHE. In some cases, depending upon the circumstances of
individual patients and supervising physicians, we believe that
telecommunications technology could be used in a manner that would
facilitate the physician's immediate availability to furnish assistance
and direction without necessarily requiring the physician's physical
presence in the location where the service is being furnished. For
example, use of real-time audio and video telecommunications technology
could allow a supervising physician to observe the patient during
treatment as they interact with or respond to the in-person clinical
staff. Thus, the supervising physician's immediate availability to
furnish assistance and direction during the service could be met
virtually without requiring the physician's physical presence in that
location.
Therefore for pulmonary rehabilitation, cardiac rehabilitation, and
intensive cardiac rehabilitation services, we propose to change our
regulation at Sec. 410.27(a)(1)(iv)(D) to specify that, beginning on
or after January 1, 2021, direct supervision for these services
includes virtual presence of the physician through audio/video real-
time communications technology subject to the clinical judgment of the
supervising physician. We clarify that the virtual presence required
for direct supervision using audio/video real-time communications
technology would not be limited to mere availability, but rather real-
time presence via interactive audio and video technology throughout the
performance of the procedure. We are seeking public comments on this
proposal.
B. Proposed Medical Review of Certain Inpatient Hospital Admissions
Under Medicare Part A for CY 2021 and Subsequent Years
1. Background on the 2-Midnight Rule
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50913 through
50954), we clarified our policy regarding when an inpatient admission
is considered reasonable and necessary for purposes of Medicare Part A
payment. Under this policy, we established a benchmark providing that
surgical procedures, diagnostic tests, and other treatments would be
generally considered appropriate for inpatient hospital admission and
payment under Medicare Part A when the physician expects the
[[Page 48937]]
patient to require a stay that crosses at least 2 midnights and admits
the patient to the hospital based upon that expectation. Conversely,
when a beneficiary enters a hospital for a surgical procedure not
designated as an inpatient-only (IPO) procedure as described in 42 CFR
419.22(n), a diagnostic test, or any other treatment, and the physician
expects to keep the beneficiary in the hospital for only a limited
period of time that does not cross 2 midnights, the services would be
generally inappropriate for payment under Medicare Part A, regardless
of the hour that the beneficiary came to the hospital or whether the
beneficiary used a bed. With respect to services designated under the
OPPS as IPO procedures, we explained that because of the intrinsic
risks, recovery impacts, or complexities associated with such services,
these procedures would continue to be appropriate for inpatient
hospital admission and payment under Medicare Part A regardless of the
expected length of stay. We also indicated that there might be further
``rare and unusual'' exceptions to the application of the benchmark,
which would be detailed in subregulatory guidance.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50913 through
50954), we also finalized the 2-midnight presumption, which is related
to the 2-midnight benchmark but is a separate medical review policy.
The 2-midnight benchmark represents guidance to reviewers to identify
when an inpatient admission is generally reasonable and necessary for
purposes of Medicare Part A payment, while the 2-midnight presumption
relates to instructions to medical reviewers regarding the selection of
claims for medical review. Specifically, under the 2-midnight
presumption, inpatient hospital claims with lengths of stay greater
than 2 midnights after the formal admission following the order are
presumed to be appropriate for Medicare Part A payment and are not the
focus of medical review efforts, absent evidence of systematic gaming,
abuse, or delays in the provision of care in an attempt to qualify for
the 2-midnight presumption. Thus, for purposes of the 2-midnight
presumption, the ``clock'' starts at the point of admission as an
inpatient.
With respect to the 2-midnight benchmark, however, the starting
point is when the beneficiary begins receiving hospital care either as
a registered outpatient or after inpatient admission. That is, for
purposes of determining whether the 2-midnight benchmark is met and,
therefore, whether an inpatient admission is appropriate for Medicare
Part A payment, we consider the physician's expectation including the
total time spent receiving hospital care--not only the expected
duration of care after inpatient admission, but also any time the
beneficiary has spent (before inpatient admission) receiving outpatient
services, such as observation services, treatments in the emergency
department, and procedures provided in the operating room or other
treatment area. From the medical review perspective, while the time the
beneficiary spent as an outpatient before the admission order is
written is not considered inpatient time, it is considered during the
medical review process for purposes of determining whether the 2-
midnight benchmark was met and, therefore, whether payment is
appropriate under Medicare Part A. For beneficiaries who do not arrive
through the emergency department or are directly receiving inpatient
services (for example, inpatient admission order written prior to
admission for an elective admission), the starting point for medical
review purposes is when the beneficiary starts receiving medically
responsive services following arrival at the hospital. For Medicare
payment purposes, both the decision to keep the patient at the hospital
and the expectation of needed duration of the stay must be supported by
documentation in the medical record based on factors such as
beneficiary medical history and comorbidities, the severity of signs
and symptoms, current medical needs, and the risk of an adverse event
during hospitalization.
With respect to inpatient stays spanning less than 2 midnights
after admission, we instructed contractors that, although such claims
would not be subject to the presumption, the admission may still be
appropriate for Medicare Part A payment because time spent as an
outpatient should be considered in determining whether there was a
reasonable expectation that the hospital care would span 2 or more
midnights. In other words, even if an inpatient admission was for only
1 Medicare utilization day, medical reviewers are instructed to
consider the total duration of hospital care, both pre- and post-
inpatient admission, when making the determination of whether the
inpatient stay was reasonable and necessary for purposes of Medicare
Part A payment.
We continue to believe that use of the 2-midnight benchmark gives
appropriate consideration to the medical judgment of physicians and
also furthers the goal of clearly identifying when an inpatient
admission is appropriate for payment under Medicare Part A. More
specifically, as we described in the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50943 through 50954), factors such as the procedures being
performed and the beneficiary's condition and comorbidities apply when
the physician formulates his or her expectation regarding the need for
hospital care, while the determination of whether an admission is
appropriately billed and paid under Medicare Part A or Part B is
generally based upon the physician's medical judgment regarding the
beneficiary's expected length of stay. We have not identified any
circumstances where the 2-midnight benchmark restricts the physician to
a specific pattern of care, because the 2-midnight benchmark does not
prevent the physician from ordering or providing any service at any
hospital, regardless of the expected duration of the service. Rather,
this policy provides guidance on when the hospitalized beneficiary's
care is appropriate for coverage and payment under Medicare Part A as
an inpatient, and when the beneficiary's care is reasonable and
necessary for payment under Medicare Part B as an outpatient.
We also acknowledge that certain procedures may have intrinsic
risks, recovery impacts, or complexities that would cause them to be
appropriate for inpatient coverage under Medicare Part A regardless of
the length of hospital time the admitting physician expects a
particular patient to require.
2. Current Policy for Medical Review of Inpatient Hospital Admissions
Under Medicare Part A
As mentioned previously, in the FY 2014 IPPS/LTCH PPS final rule
(78 FR 50943 through 50954), we provided guidance for payment purposes
that specified that, generally, a hospital inpatient admission is
considered reasonable and necessary if a physician or other qualified
practitioner (collectively, ``physician'') orders such admission based
on the expectation that the beneficiary's length of stay will exceed 2
midnights or if the beneficiary requires a procedure specified as
inpatient-only under Sec. 419.22 of the regulations. We finalized at
Sec. 412.3(d)(1) of the regulations that services designated under the
OPPS as inpatient only procedures would continue to be appropriate for
inpatient hospital admission and payment under Medicare Part A. In
addition, we finalized a benchmark providing that surgical procedures,
diagnostic tests, and other treatments would be generally considered
appropriate for inpatient hospital admission and payment under
[[Page 48938]]
Medicare Part A when the physician expects the patient to require a
stay that crosses at least 2 midnights and admits the patient to the
hospital based upon that expectation.
In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70538
through 70549), we revisited the previous rare and unusual exceptions
policy and finalized a proposal to allow for case-by-case exceptions to
the 2-midnight benchmark, whereby Medicare Part A payment may be made
for inpatient admissions where the admitting physician does not expect
the patient to require hospital care spanning 2 midnights, if the
documentation in the medical record supports the physician's
determination that the patient nonetheless requires inpatient hospital
care.
We note that, in the CY 2016 OPPS/ASC final rule with comment
period, we reiterated our position that the 2-midnight benchmark
provides clear guidance on when a hospital inpatient admission is
appropriate for Medicare Part A payment, while respecting the role of
physician judgment. We stated that the following criteria will be
relevant to determining whether an inpatient admission with an expected
length of stay of less than 2 midnights is nonetheless appropriate for
Medicare Part A payment:
Complex medical factors such as history and comorbidities;
The severity of signs and symptoms;
Current medical needs; and
The risk of an adverse event.
In other words, for purposes of Medicare payment, an inpatient
admission is payable under Part A if the documentation in the medical
record supports either the admitting physician's reasonable expectation
that the patient will require hospital care spanning at least 2
midnights, or the physician's determination based on factors such as
those identified previously that the patient nonetheless requires care
on an inpatient basis. The exceptions for procedures on the IPO list
and for ``rare and unusual'' circumstances designated by CMS as
national exceptions were unchanged by the CY 2016 OPPS/ASC final rule
with comment period.
As we stated in the CY 2016 OPPS/ASC final rule with comment
period, the decision to formally admit a patient to the hospital is
subject to medical review. For instance, for cases where the medical
record does not support a reasonable expectation of the need for
hospital care crossing at least 2 midnights, and for inpatient
admissions not related to a surgical procedure specified by Medicare as
an IPO procedure under 42 CFR 419.22(n) or for which there was not a
national exception, payment of the claim under Medicare Part A is
subject to the clinical judgment of the medical reviewer. The medical
reviewer's clinical judgment involves the synthesis of all submitted
medical record information (for example, progress notes, diagnostic
findings, medications, nursing notes, and other supporting
documentation) to make a medical review determination on whether the
clinical requirements in the relevant policy have been met. In
addition, Medicare review contractors must abide by CMS' policies in
conducting payment determinations, but are permitted to take into
account evidence-based guidelines or commercial utilization tools that
may aid such a decision. While Medicare review contractors may continue
to use commercial screening tools to help evaluate the inpatient
admission decision for purposes of payment under Medicare Part A, such
tools are not binding on the hospital, CMS, or its review contractors.
This type of information also may be appropriately considered by the
physician as part of the complex medical judgment that guides their
decision to keep a beneficiary in the hospital and formulation of the
expected length of stay.
In the CY 2020 OPPS/ASC final rule with comment period we finalized
a policy to exempt procedures that have been removed from the IPO list
from eligibility for referral to Recovery Audit Contractors (RACs) for
noncompliance with the 2-midnight rule within the 2-calendar years
following their removal from the IPO list. We stated that these
procedures will not be considered by the Beneficiary and Family-
Centered Care Quality Improvement Organizations (BFCC-QIOs) in
determining whether a provider exhibits persistent noncompliance with
the 2-midnight rule for purposes of referral to the RAC nor will these
procedures be reviewed by RACs for ``patient status.'' We explained
that during this 2-year period, BFCC-QIOs will have the opportunity to
review such claims in order to provide education for practitioners and
providers regarding compliance with the 2-midnight rule, but claims
identified as noncompliant will not be denied with respect to the site-
of-service under Medicare Part A.
3. Medical Review of Certain Inpatient Hospital Admissions Under
Medicare Part A for CY 2021 and Subsequent Years
As stated earlier in this section, services on the IPO list are not
subject to the 2-midnight rule for purposes of determining whether
payment is appropriate under Medicare Part A. However, the 2-midnight
rule is applicable once services have been removed from the IPO list.
Services that are removed from the IPO list are subject to initial
medical reviews of claims for short-stay inpatient admissions conducted
by BFCC-QIOs.
BFCC-QIOs may also refer providers to the RACs for further medical
review due to exhibiting persistent noncompliance with Medicare payment
policies, including, but not limited to:
Having high denial rates;
Consistently failing to adhere to the 2-midnight rule; or
Failing to improve their performance after QIO educational
intervention.
However, as finalized in the CY 2020 OPPS/ASC final rule with
comment period, procedures that have been removed from the IPO list are
exempt from eligibility for referral to RACs for noncompliance with the
2-midnight rule within the 2-calendar years following their removal
from the IPO list.
As stated in section IX., we propose to eliminate the IPO list in
CY 2021 with a transitional period of 3 years. For CY 2021, we propose
to remove all musculoskeletal procedures from the IPO list. The
elimination of the IPO list would mean that procedures currently on the
IPO list would be subject to the 2-midnight rule (both the 2-midnight
benchmark and 2-midnight presumption).
We believe that with the proposed elimination of the IPO list, the
2-midnight benchmark would remain an important metric to help guide
when Part A payment for inpatient hospital admissions is appropriate.
With more services available to be paid in the hospital outpatient
setting, it would be increasingly important for physicians to exercise
their clinical judgment in determining the generally appropriate
clinical setting for their patient to receive a procedure, whether that
be as an inpatient or on an outpatient basis. Importantly, removal of a
service from the IPO list has never meant that a beneficiary cannot
receive the service as a hospital inpatient--as always, the physician
should use his or her complex medical judgment to determine the
generally appropriate setting.
[[Page 48939]]
As stated previously, our current policy regarding IPO list
procedures is that they are appropriate for inpatient hospital
admission and payment under Medicare Part A regardless of the expected
length of stay. With the proposed elimination of the IPO list, this
policy would no longer be applicable. Instead, just as for services
removed from the IPO list, the elimination of the IPO list would mean
that any service that was once on the IPO list would be subject to the
2-midnight benchmark and 2-midnight presumption. This means that for
services removed from the IPO list, under the 2-midnight presumption,
inpatient hospital claims with lengths of stay greater than 2 midnights
after admission would be presumed to be appropriate for Medicare Part A
payment and would not be the focus of medical review efforts, absent
evidence of systematic gaming, abuse, or delays in the provision of
care in an attempt to qualify for the 2-midnight presumption.
Additionally, under the 2-midnight benchmark, services formerly on the
IPO list would be generally considered appropriate for inpatient
hospital admission and payment under Medicare Part A when the physician
expects the patient to require a stay that crosses at least 2 midnights
and admits the patient to the hospital based upon that expectation.
As finalized in the CY 2020 OPPS/ASC final rule with comment
period, procedures that have been removed from the IPO list are not
eligible for referral to RACs for noncompliance with the 2-midnight
rule within the first 2 calendar years of their removal from the IPO
list. These procedures are not considered by the BFCC-QIOs in
determining whether a provider exhibits persistent noncompliance with
the 2-midnight rule for purposes of referral to the RAC nor are these
procedures be reviewed by RACs for ``patient status.'' During the 2-
year period, BFCC-QIOs have the opportunity to review such claims in
order to provide education for practitioners and providers regarding
compliance with the 2-midnight rule, but claims identified as
noncompliant are not denied with respect to the site-of-service under
Medicare Part A. Again, information gathered by the BFCC-QIO when
reviewing procedures as they are newly removed from the IPO list can be
used for educational purposes and does not result in a claim denial
during the 2-year exemption period.
We continue to believe that in order to facilitate compliance with
our payment policy for inpatient admissions, the 2-year exemption from
certain medical review activities by the BFCC-QIOs for services removed
from the IPO list under the OPPS in CY 2021 and subsequent years is
appropriate. Accordingly, we propose to retain the existing 2-year
exemption even in the event that we finalize the proposal to eliminate
the IPO list. However, given that many more services would be removed
from the IPO list during the proposed transition to elimination of the
list, we seek comment on whether this 2-year period is appropriate or
whether a longer or shorter period may be more appropriate in order for
providers to gain experience with applying the 2-midnight rule to these
services.
We also continue to believe that a 2-year exemption from BFCC-QIO
referral to RACs and RAC ``patient status'' review of the setting for
procedures removed from the IPO list under the OPPS and performed in
the inpatient setting would be an adequate amount of time to allow
providers to gain experience with application of the 2-midnight rule to
these procedures and the documentation necessary for Part A payment for
those patients for which the admitting physician determines that the
procedures should be furnished in an inpatient setting. Furthermore, it
is our belief that the 2-year exemption from referrals to RACs, RAC
patient status review, and claims denials would be sufficient to allow
providers time to update their billing systems and gain experience with
respect to newly removed procedures eligible to be paid under either
the IPPS or the OPPS, while avoiding potential adverse site-of-service
determinations. Nonetheless, we solicit public comments regarding the
appropriate period of time for this exemption. Commenters may indicate
whether and why they believe the 2-year period is appropriate, or
whether they believe a longer or shorter exemption period would be more
appropriate.
In summary, for CY 2021 and subsequent years, we propose to
continue the 2-year exemption from site-of-service claim denials, BFCC-
QIO referrals to RACs, and RAC reviews for ``patient status'' (that is,
site-of-service) for procedures that are removed from the IPO list
under the OPPS beginning on January 1, 2021. We encourage BFCC-QIOs to
review these cases for medical necessity in order to educate themselves
and the provider community on appropriate documentation for Part A
payment when the admitting physician determines that it is medically
reasonable and necessary to conduct these procedures on an inpatient
basis. We note that we will monitor changes in site-of-service to
determine whether changes may be necessary to certain CMS Innovation
Center models. Finally, while we propose to retain the current 2-year
exemption period, given that many more services will be removed from
the IPO as part of the transition towards the elimination of the list,
we are seeking comment on whether that time period continues to be
appropriate, or if a longer or shorter period may be more warranted.
C. Comment Solicitation on OPPS Payment for Specimen Collection for
COVID-19 Tests
In the interim final with comment period (IFC) (85 FR 27604 through
27605) entitled, ``Additional Policy and Regulatory Revisions in
Response to the COVID-19 Public Health Emergency and Delay of Certain
Reporting Requirements for the Skilled Nursing Facility Quality
Reporting Program'', published on May 8, 2020, we created HCPCS code
C9803 (Hospital outpatient clinic visit specimen collection for severe
acute respiratory syndrome coronavirus 2 (sars-cov-2) (coronavirus
disease [covid-19]), and specimen source). This code was established in
response to the significant increase in specimen collection and testing
for COVID-19 in Hospital Outpatient Departments (HOPDs) during the
COVID-19 Public Health Emergency (PHE). On January 31, 2020,\91\ HHS
Secretary Alex M. Azar II determined that a PHE exists for the United
States retroactive to January 27, 2020. On April 21, 2020 Secretary
Azar renewed, effective April 26, 2020, the determination that a COVID-
19 PHE exists.\92\ On July 23, 2020, Secretary Azar again renewed the
determination that a COVID-19 PHE exists, effective July 25, 2020.\93\
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\91\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx.
\92\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/covid19-21apr2020.aspx.
\93\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/covid19-23June2020.aspx.
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In our prior review of HCPCS codes for the May 8, 2020 IFC, we did
not identify a code that described the standalone services of symptom
assessment and specimen collection that HOPDs were undertaking to
facilitate widespread testing for COVID-19. As stated in that IFC, we
believed that HCPCS code C9803 was necessary to meet the resource
requirements for HOPDs to provide extensive testing for the duration of
the COVID-19 PHE. This code was created only to meet the need of the
COVID-19 PHE and we stated that we expected to retire this code at
[[Page 48940]]
the conclusion of the COVID-19 PHE (85 FR 27605).
As stated in the aforementioned IFC (85 FR 27604 through 27605), we
assigned HCPCS code C9803 to APC 5731--Level 1 Minor Procedures
effective March 1, 2020 for the duration of the COVID-19 PHE. In
accordance with Section 1833(t)(2)(B) of the Act, APC 5731--Level 1
Minor Procedures contains services similar to HCPCS code C9803. APC
5731--Level 1 Minor Procedures has a payment rate of $22.98 for CY
2020. HCPCS code C9803 was also assigned a status indicator of ``Q1.''
The Q1 status indicator indicates that the OPPS will package services
billed under HCPCS code C9803 when billed with a separately payable
primary service in the same encounter. When HCPCS code C9803 is billed
without another separately payable primary service, we will make
separate payment for the service under the OPPS. The OPPS also makes
separate payment for HCPCS code C9803 when it is billed with a clinical
diagnostic laboratory test with a status indicator of ``A'' on Addendum
B of the OPPS.
As noted previously, the current determination of the existence of
a COVID-19 PHE was recently renewed for another 90 day period,
effective July 25, 2020. Given that the COVID-19 PHE is still active at
this time and the possibility that it may need to be extended into
2021, for CY 2021 we propose to continue to assign HCPCS code C9803 to
APC 5731 with a status indicator of ``Q1'', should the COVID-19 PHE
continue to exist during CY 2021, with the presumption, as stated in
the IFC that this code will be deleted when COVID-19 PHE ends. In this
proposed rule, we are accepting public comments on the proposed APC and
status indicator assignment for HCPCS code C9803 for CY 2021 (and
remind commenters that the code is only active for the duration of the
COVID-19 PHE under the IFC).
We are also soliciting public comments on whether we should keep
HCPCS code C9803 active beyond the COVID-19 PHE and whether we should
extend or make permanent the OPPS payment associated with specimen
collection for COVID-19 tests after the COVID-19 PHE ends, including
the reasoning for continuing to provide OPPS payment for this service
as well as the timeframe for extending payment for this code. In the
event we keep HCPCS code C9803 active after the COVID-19 PHE concludes,
we are seeking public input on whether we should continue to assign
HCPCS code C9803 to APC 5731--Level 1 Minor Procedures with a proposed
status indicator of ``Q1''. In summary, we are requesting public
comments on whether this code should continue to be payable under the
OPPS to support COVID-19 testing beyond the conclusion of the COVID-19
PHE.
XI. Proposed CY 2021 OPPS Payment Status and Comment Indicators
A. Proposed CY 2021 OPPS Payment Status Indicator Definitions
Payment status indicators (SIs) that we assign to HCPCS codes and
APCs serve an important role in determining payment for services under
the OPPS. They indicate whether a service represented by a HCPCS code
is payable under the OPPS or another payment system, and also whether
particular OPPS policies apply to the code.
For CY 2021, we are not proposing to make any changes to the
existing definitions of status indicators that were listed in Addendum
D1 to the CY 2020 OPPS/ASC final rule with comment period available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/HospitalOutpatientPPS/Hospital_OutpatientRegulations-
and-Notices-Items/CMS-1717-
P.html?DLPage=1&DLEntries=10&10DLSort=2DLSortDir=descending.
We are requesting public comments on the proposed definitions of
the OPPS status indicators for CY 2021.
The complete list of the proposed payment status indicators and
their definitions that would apply for CY 2021 is displayed in Addendum
D1 to this proposed rule, which is available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
The proposed CY 2021 payment status indicator assignments for APCs
and HCPCS codes are shown in Addendum A and Addendum B, respectively,
to this proposed rule, which are available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
B. Proposed CY 2021 Comment Indicator Definitions
In this proposed rule, we propose to use four comment indicators
for the CY 2021 OPPS. These comment indicators, ``CH'', ``NC'', ``NI'',
and ``NP'', are in effect for CY 2020 and we propose to continue their
use in CY 2021. The proposed CY 2021 OPPS comment indicators are as
follows:
``CH''--Active HCPCS code in current and next calendar
year, status indicator and/or APC assignment has changed; or active
HCPCS code that will be discontinued at the end of the current calendar
year.
``NC''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year for which we
requested comments in the proposed rule, final APC assignment; comments
will not be accepted on the final APC assignment for the new code.
``NI''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year, interim APC
assignment; comments will be accepted on the interim APC assignment for
the new code.
``NP''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year, proposed APC
assignment; comments will be accepted on the proposed APC assignment
for the new code.
The definitions of the proposed OPPS comment indicators for CY 2021
are listed in Addendum D2 to this proposed rule, which is available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
We believe that the existing CY 2020 definitions of the OPPS
comment indicators continue to be appropriate for CY 2021. Therefore,
we propose to use those definitions without modification for CY 2021.
XII. MedPAC Recommendations
The Medicare Payment Advisory Commission (MedPAC) was established
under section 1805 of the Act in large part to advise the U.S. Congress
on issues affecting the Medicare program. As required under the
statute, MedPAC submits reports to the Congress no later than March and
June of each year that present its Medicare payment policy
recommendations. The March report typically provides discussion of
Medicare payment policy across different payment systems and the June
report typically discusses selected Medicare issues. We are including
this section to make stakeholders aware of certain MedPAC
recommendations for the OPPS and ASC payment systems as discussed in
its March 2020 report.
A. Proposed OPPS Payment Rates Update
The March 2020 MedPAC ``Report to the Congress: Medicare Payment
Policy,'' recommended that Congress
[[Page 48941]]
update Medicare OPPS payment rates by 2 percent, with the difference
between this and the update amount specified in current law to be used
to increase payments in a new suggested Medicare quality program, the
``Hospital Value Incentive Program (HVIP).'' We refer readers to the
March 2020 report for a complete discussion on these
recommendations.\94\ We appreciate MedPAC's recommendations, but as
MedPAC acknowledged in its March 2020 report, the Congress would need
to change current law to enable us to implement its recommendations.
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\94\ Medicare Payment Advisory Committee. March 2020 Report to
the Congress. Chapter 5: Ambulatory surgical center services, pp.94-
95. Available at: http://www.medpac.gov/docs/default-source/reports/mar20_entirereport_sec.pdf?sfvrsn=0.
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B. Proposed ASC Conversion Factor Update
In the March 2020 MedPAC ``Report to the Congress: Medicare Payment
Policy,'' MedPAC found that, based on its analysis of indicators of
payment adequacy, the number of ASCs had increased, beneficiaries' use
of ASCs had increased, and ASC access to capital has been adequate.\95\
As a result, for CY 2021, MedPAC stated that payments to ASCs are
adequate and recommended that in the absence of cost report data no
payment update should be given for CY 2021 (that is, the update factor
would be zero percent).
---------------------------------------------------------------------------
\95\ Medicare Payment Advisory Committee. March 2020 Report to
the Congress. Chapter 5: Ambulatory surgical center services, p.147.
Available at: http://www.medpac.gov/docs/default-source/reports/mar20_entirereport_sec.pdf?sfvrsn=0.
---------------------------------------------------------------------------
In the CY 2019 OPPS/ASC final rule with comment period (83 FR
59079), we adopted a policy, which we codified at 42 CFR 416.171(a)(2),
to apply the MFP-adjusted hospital market basket update to ASC payment
system rates for an interim period of 5 years. We refer readers to the
CY 2019 OPPS/ASC final rule with comment period for complete details
regarding our policy to use the MFP-adjusted hospital market basket
update for the ASC payment system for CY 2019 through CY 2023.
Therefore, consistent with our policy for the ASC payment system, as
discussed in section XIII.G. of this proposed rule, we propose to apply
a 2.6 percent MFP-adjusted hospital market basket update factor to the
CY 2020 ASC conversion factor for ASCs meeting the quality reporting
requirements to determine the CY 2021 ASC payment amounts.
C. Proposed ASC Cost Data
In the March 2020 MedPAC ``Report to the Congress: Medicare Payment
Policy,'' MedPAC recommended that Congress require ASCs to report cost
data to enable the Commission to examine the growth of ASCs' costs over
time and analyze Medicare payments relative to the costs of efficient
providers, and that CMS could use ASC cost data to examine whether an
existing Medicare price index is an appropriate proxy for ASC costs or
an ASC specific market basket should be developed. Further, MedPAC
suggested that CMS could limit the scope of the cost reporting system
to minimize administrative burden on ASCs and the program.\96\
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\96\ Medicare Payment Advisory Committee. March 2020 Report to
the Congress. Chapter 5: Ambulatory surgical center services.
Available at: http://www.medpac.gov/docs/default-source/reports/mar20_entirereport_sec.pdf?sfvrsn=0.
---------------------------------------------------------------------------
We recognize that the submission of cost data could place
additional administrative burden on most ASCs. We are interested in
methods that would mitigate the burden of reporting costs on ASCs while
also collecting enough data to reliably use such data in the
determination of ASC costs. We are not proposing any cost reporting
requirements for ASCs in this CY 2021 OPPS/ASC proposed rule.
The full March 2020 MedPAC Report to Congress can be downloaded
from MedPAC's website at: http://www.medpac.gov.
XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
1. Legislative History, Statutory Authority, and Prior Rulemaking for
the ASC Payment System
For a detailed discussion of the legislative history and statutory
authority related to payments to ASCs under Medicare, we refer readers
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through
32292). For a discussion of prior rulemaking on the ASC payment system,
we refer readers to the CYs 2012, 2013, 2014, 2015, 2016, 2017, 2018,
2019 and 2020 OPPS/ASC final rules with comment period (76 FR 74378
through 74379; 77 FR 68434 through 68467; 78 FR 75064 through 75090; 79
FR 66915 through 66940; 80 FR 70474 through 70502; 81 FR 79732 through
79753; 82 FR 59401 through 59424; 83 FR 59028 through 59080, and 84 FR
61370 through 61410, respectively).
2. Policies Governing Changes to the Lists of Codes and Payment Rates
for ASC Covered Surgical Procedures and Covered Ancillary Services
Under 42 CFR 416.2 and 416.166 of the Medicare regulations, subject
to certain exclusions, covered surgical procedures in an ASC are
surgical procedures that are separately paid under the OPPS, that would
not be expected to pose a significant risk to beneficiary safety when
performed in an ASC, and for which standard medical practice dictates
that the beneficiary would not typically be expected to require active
medical monitoring and care at midnight following the procedure
(``overnight stay''). We adopted this standard for defining which
surgical procedures are covered under the ASC payment system as an
indicator of the complexity of the procedure and its appropriateness
for Medicare payment in ASCs. We use this standard only for purposes of
evaluating procedures to determine whether or not they are appropriate
to be furnished to Medicare beneficiaries in ASCs. Historically, we
have defined surgical procedures as those described by Category I CPT
codes in the surgical range from 10000 through 69999 as well as those
Category III CPT codes and Level II HCPCS codes that directly crosswalk
or are clinically similar to procedures in the CPT surgical range that
we have determined do not pose a significant safety risk, that we would
not expect to require an overnight stay when performed in ASCs, and
that are separately paid under the OPPS (72 FR 42478).
In the August 2, 2007 final rule (72 FR 42495), we also established
our policy to make separate ASC payments for the following ancillary
items and services when they are provided integral to ASC covered
surgical procedures: (1) Brachytherapy sources; (2) certain implantable
items that have pass-through payment status under the OPPS; (3) certain
items and services that we designate as contractor-priced, including,
but not limited to, procurement of corneal tissue; (4) certain drugs
and biologicals for which separate payment is allowed under the OPPS;
and (5) certain radiology services for which separate payment is
allowed under the OPPS. In the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66932 through 66934), we expanded the scope of ASC
covered ancillary services to include certain diagnostic tests within
the medicine range of Current Procedural Terminology (CPT) codes for
which separate payment is allowed under the OPPS when they are
[[Page 48942]]
provided integral to an ASC covered surgical procedure. Covered
ancillary services are specified in 42 CFR 416.164(b) and, as stated
previously, are eligible for separate ASC payment. Payment for
ancillary items and services that are not paid separately under the ASC
payment system is packaged into the ASC payment for the covered
surgical procedure.
We update the lists of, and payment rates for, covered surgical
procedures and covered ancillary services in ASCs in conjunction with
the annual proposed and final rulemaking process to update the OPPS and
the ASC payment system (42 CFR 416.173; 72 FR 42535). We base ASC
payment and policies for most covered surgical procedures, drugs,
biologicals, and certain other covered ancillary services on the OPPS
payment policies, and we use quarterly change requests (CRs) to update
services covered under the OPPS. We also provide quarterly update CRs
for ASC covered surgical procedures and covered ancillary services
throughout the year (January, April, July, and October). We release new
and revised Level II HCPCS codes and recognize the release of new and
revised CPT codes by the American Medical Association (AMA) and make
these codes effective (that is, the codes are recognized on Medicare
claims) via these ASC quarterly update CRs. We recognize the release of
new and revised Category III CPT codes in the July and January CRs.
These updates implement newly created and revised Level II HCPCS and
Category III CPT codes for ASC payments and update the payment rates
for separately paid drugs and biologicals based on the most recently
submitted ASP data. New and revised Category I CPT codes, except
vaccine codes, are released only once a year, and are implemented only
through the January quarterly CR update. New and revised Category I CPT
vaccine codes are released twice a year and are implemented through the
January and July quarterly CR updates. We refer readers to Table 41 in
the CY 2012 OPPS/ASC proposed rule for an example of how this process
is used to update HCPCS and CPT codes, which we finalized in the CY
2012 OPPS/ASC final rule with comment period (76 FR 42291; 76 FR 74380
through 74384).
In our annual updates to the ASC list of, and payment rates for,
covered surgical procedures and covered ancillary services, we
undertake a review of excluded surgical procedures, new codes, and
codes with revised descriptors, to identify any that we believe meet
the criteria for designation as ASC covered surgical procedures or
covered ancillary services. Updating the lists of ASC covered surgical
procedures and covered ancillary services, as well as their payment
rates, in association with the annual OPPS rulemaking cycle is
particularly important because the OPPS relative payment weights and,
in some cases, payment rates, are used as the basis for the payment of
many covered surgical procedures and covered ancillary services under
the revised ASC payment system. This joint update process ensures that
the ASC updates occur in a regular, predictable, and timely manner.
3. Definition of ASC Covered Surgical Procedures
Since the implementation of the ASC prospective payment system, we
have historically defined a ``surgical'' procedure under the payment
system as any procedure described within the range of Category I CPT
codes that the CPT Editorial Panel of the AMA defines as ``surgery''
(CPT codes 10000 through 69999) (72 FR 42478). We also have included as
``surgical,'' procedures that are described by Level II HCPCS codes or
by Category III CPT codes that directly crosswalk or are clinically
similar to procedures in the CPT surgical range that we have determined
do not pose a significant safety risk, would not expect to require an
overnight stay when performed in an ASC, and that are separately paid
under the OPPS (72 FR 42478).
As we noted in the August 7, 2007 final rule that implemented the
revised ASC payment system, using this definition of surgery would
exclude from ASC payment certain invasive, ``surgery-like'' procedures,
such as cardiac catheterization or certain radiation treatment services
that are assigned codes outside the CPT surgical range (72 FR 42477).
We stated in that final rule that we believed continuing to rely on the
CPT definition of surgery is administratively straightforward, is
logically related to the categorization of services by physician
experts who both establish the codes and perform the procedures, and is
consistent with a policy to allow ASC payment for all outpatient
surgical procedures.
However, in the CY 2019 OPPS/ASC final rule with comment period (83
FR 59029 through 59030), after consideration of public comments
received in response to the CY 2019 OPPS/ASC proposed rule and earlier
OPPS/ASC rulemaking cycles, we revised our definition of a surgical
procedure under the ASC payment system. We now define a surgical
procedure under the ASC payment system as any procedure described
within the range of Category I CPT codes that the CPT Editorial Panel
of the AMA defines as ``surgery'' (CPT codes 10000 through 69999) (72
FR 42476), as well as procedures that are described by Level II HCPCS
codes or by Category I CPT codes or by Category III CPT codes that
directly crosswalk or are clinically similar to procedures in the CPT
surgical range that we have determined are not expected to pose a
significant risk to beneficiary safety when performed in an ASC, for
which standard medical practice dictates that the beneficiary would not
typically be expected to require an overnight stay following the
procedure, and are separately paid under the OPPS.
B. Proposed ASC Treatment of New and Revised Codes
1. Background on Current Process for Recognizing New and Revised HCPCS
Codes
Payment for ASC procedures, services, and items are generally based
on medical billing codes, specifically, HCPCS codes, that are reported
on ASC 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) codes, a numeric and
alphanumeric coding system maintained by the American Medical
Association (AMA), and includes Category I, II, and III CPT codes.
Level II of the HCPCS, 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. Together, Level I and II
HCPCS codes are used to report procedures, services, items, and
supplies under the ASC payment system. Specifically, we recognize the
following codes on ASC 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 alpha-numeric codes),
which are used primarily to identify drugs, devices, supplies,
temporary procedures, and services not described by CPT codes.
We finalized a policy in the August 2, 2007 final rule (72 FR 42533
through 42535) to evaluate each year all new and revised Category I and
Category III CPT codes and Level II HCPCS codes that describe surgical
procedures, and to
[[Page 48943]]
make preliminary determinations during the annual OPPS/ASC rulemaking
process regarding whether or not they meet the criteria for payment in
the ASC setting as covered surgical procedures and, if so, whether or
not they are office-based procedures. In addition, we identify new and
revised codes as ASC covered ancillary services based upon the final
payment policies of the revised ASC payment system. In prior
rulemakings, we refer to this process as recognizing new codes.
However, this process has always involved the recognition of new and
revised codes. We consider revised codes to be new when they have
substantial revision to their code descriptors that necessitate a
change in the current ASC payment indicator. To clarify, we refer to
these codes as new and revised in this CY 2021 OPPS/ASC proposed rule.
We have separated our discussion below based on when the codes are
released and whether we propose to solicit public comments in this
proposed rule (and respond to those comments in the CY 2021 OPPS/ASC
final rule with comment period) or whether we will be soliciting public
comments in the CY 2021 OPPS/ASC final rule with comment period (and
responding to those comments in the CY 2022 OPPS/ASC final rule with
comment period).
2. April 2020 HCPCS Codes for Which We Are Soliciting Public Comments
in This Proposed Rule
For the April 2020 update, there were no new CPT codes, however,
there were several new Level II HCPCS codes. In the April 2020 ASC
quarterly update (Transmittal 10046, dated April 13, 2020, CR 11694),
we added four new Level II HCPCS codes to the list of covered ancillary
services. Table 32 lists the new Level II HCPCS codes that were
implemented April 1, 2020, along with their proposed payment indicators
for CY 2021. The proposed comment indicators, payment indicators and
payment rates, where applicable, for these April codes can be found in
Addendum BB to this proposed rule. The list of ASC payment indicators
and corresponding definitions can be found in Addendum DD1 to this
proposed rule. These new codes that are effective April 1, 2020 are
assigned to comment indicator ``NP'' in Addendum BB to this proposed
rule to indicate that the codes are assigned to an interim APC
assignment and that comments will be accepted on their interim APC
assignments. The list of comment indicators and definitions used under
the ASC payment system can be found in Addendum DD2 to this proposed
rule. We note that ASC Addenda AA, BB, DD1, and DD2 are available via
the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP12AU20.074
We are inviting public comments on these proposed payment
indicators for the new HCPCS codes that were recognized as ASC covered
ancillary services in April 2020 through the quarterly update CRs, as
listed in Table 32. We propose to finalize their payment indicators in
the CY 2021 OPPS/ASC final rule with comment period.
3. July 2020 HCPCS Codes for Which We Are Soliciting Public Comments in
This Proposed Rule
In the July 2020 ASC quarterly update (Transmittal 10188, Change
Request 11842, dated June 19, 2020), we added several separately
payable CPT and Level II HCPCS codes to the list of covered surgical
procedures and ancillary services. Table 33 lists the new HCPCS codes
that are effective July 1, 2020. The proposed comment indicators,
payment indicators and payment rates for these codes can be found in
Addendum AA and Addendum BB to this proposed rule. The list of ASC
payment indicators and corresponding definitions can be found in
Addendum DD1 to this proposed rule. These new codes that are effective
July 1, 2020 are assigned to comment indicator ``NP'' in Addendum BB to
this proposed rule to indicate that the codes are assigned to an
interim APC assignment and that comments will be accepted on their
interim APC
[[Page 48944]]
assignments. The list of comment indicators and definitions used under
the ASC payment system can be found in Addendum DD2 to this proposed
rule. We note that ASC Addenda AA, BB, DD1, and DD2 are available via
the internet on the CMS website.
BILLING CODE 4120-01-P
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[[Page 48945]]
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[[Page 48946]]
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[[Page 48947]]
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BILLING CODE 4120-01-C
In addition, through the July 2020 quarterly update CR, we are
establishing ASC payment for two new Category III CPT codes as ASC
covered ancillary services, effective July 1, 2020. These codes are
listed in Table 34, along with the proposed comment indicator and
payment indicator. The CY 2021 proposed payment rate for these new
Category III CPT codes can be found in Addendum BB. As noted above, the
list of payment indicators and comment indicators used under the ASC
can be found in Addendum DD1 and DD2, respectively, of this proposed
rule. We note that ASC Addenda AA, BB, DD1, and DD2 are available via
the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TP12AU20.079
We are inviting public comments on the proposed payment indicators
for the new CPT and Level II HCPCS codes newly recognized as ASC
covered surgical procedures or covered ancillary services in July 2020
through the quarterly update CRs, as listed in Tables 32, 33, and 34.
We propose to finalize the payment indicators in the CY 2021 OPPS/ASC
final rule with comment period.
4. October 2020 HCPCS Codes for Which We Will Be Soliciting Public
Comments in the CY 2021 OPPS/ASC Final Rule With Comment Period
For CY 2021, consistent with our established policy, we propose
that the Level II HCPCS codes that will be effective October 1, 2020,
would be flagged with comment indicator ``NI'' in Addendum BB to the CY
2021 OPPS/ASC final rule with comment period to indicate that we have
assigned the codes an interim OPPS payment status for CY 2021. We will
invite public comments in the CY 2021 OPPS/ASC final rule with comment
period on the interim payment indicators, which would then be finalized
in the CY 2022 OPPS/ASC final rule with comment period.
5. January 2021 HCPCS Codes
a. Level II HCPCS Codes for Which We Will Be Soliciting Public Comments
in the CY 2021 OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we incorporate those new
Level II HCPCS codes that are effective January 1 in the final rule
with comment period, thereby updating the ASC payment system for the
calendar year. We note that unlike the CPT codes that are effective
January 1 and are included in the OPPS/ASC proposed rules, and except
for the G-codes listed in Addendum O to this proposed rule, most Level
II HCPCS codes are not released until sometime around
[[Page 48948]]
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. Therefore, these Level II HCPCS codes will be released
to the public through the CY 2021 OPPS/ASC final rule with comment
period, January 2021 ASC Update CR, and the CMS HCPCS website.
In addition, for CY 2021, we will propose to continue our
established policy of assigning comment indicator ``NI'' in Addendum AA
and Addendum BB to the OPPS/ASC final rule with comment period to the
new Level II HCPCS codes that will be effective January 1, 2021 to
indicate that we are assigning them an interim payment indicator, which
is subject to public comment. We will be inviting public comments in
the CY 2021 OPPS/ASC final rule with comment period on the payment
indicator assignments, which would then be finalized in the CY 2022
OPPS/ASC final rule with comment period.
b. CPT Codes for Which We Are Soliciting Public Comments in This
Proposed Rule
For new and revised CPT codes effective January 1, 2021 that were
received in time to be included in this proposed rule, we propose the
appropriate payment indicator assignments, and soliciting public
comments on the ASC payment indicators. We will accept comments and
finalize the payment indicators in the CY 2021 OPPS/ASC final rule with
comment period. For those new/revised CPT codes that are received too
late for inclusion in this OPPS/ASC proposed rule, we may either make
interim final assignments in the final rule with comment period or
possibly 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.
For the CY 2021 ASC update, the new and revised Category I and III
CPT codes that will be effective on January 1, 2021 can be found in ASC
Addendum AA and Addendum BB to this proposed rule (which are available
via the internet on the CMS website). The CPT codes are assigned to
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 and that comments will be accepted on the proposed
payment indicator. Further, we remind readers that the CPT code
descriptors that appear in Addendum AA and Addendum BB are short
descriptors and do not describe the complete procedure, service, or
item described by the CPT code. Therefore, we include the 5-digit
placeholder codes and their long descriptors for the new and revised CY
2021 CPT codes in Addendum O to this proposed rule (which is available
via the internet on the CMS website) so that the public can comment on
our proposed payment indicator assignments. The 5-digit placeholder
codes can be found in Addendum O to this proposed rule, specifically
under the column labeled ``CY 2021 OPPS/ASC Proposed Rule 5-Digit
Placeholder Code.'' We intend to include the final CPT code numbers the
CY 2021 OPPS/ASC final rule with comment period.
In summary, we are soliciting public comments on the proposed CY
2021 payment indicators for the new and revised Category I and III CPT
codes that will be effective January 1, 2021. Because these codes are
listed in Addendum AA and Addendum BB with short descriptors only, we
are listing them again in Addendum O with the long descriptors. We also
propose to finalize the payment indicator for these codes (with their
final CPT code numbers) in the CY 2021 OPPS/ASC final rule with comment
period. The proposed payment indicator and comment indicator for these
codes can be found in Addendum AA and BB to this proposed rule. The
list of ASC payment indicators and corresponding definitions can be
found in Addendum DD1 to this proposed rule. These new CPT codes that
will be effective January 1, 2021 are assigned to comment indicator
``NP'' in Addendum AA and BB to this proposed rule to indicate that the
codes are assigned to an interim payment indicator and that comments
will be accepted on their interim ASC payment assignments. The list of
comment indicators and definitions used under the ASC can be found in
Addendum DD2 to this proposed rule. We note that ASC Addenda AA, BB,
DD1, and DD2 are available via the internet on the CMS website.
Finally, in Table 35, we summarize our process for updating codes
through our ASC quarterly update CRs, seeking public comments, and
finalizing the treatment of these new codes under the ASC.
[[Page 48949]]
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C. Proposed Update to the List of ASC Covered Surgical Procedures and
Covered Ancillary Services
1. Covered Surgical Procedures
a. Covered Surgical Procedures Designated as Office-Based
(1) Background
In the August 2, 2007 ASC final rule, we finalized our policy to
designate as ``office-based'' those procedures that are added to the
ASC Covered Procedures List (CPL) in CY 2008 or later years that we
determine are furnished predominantly (more than 50 percent of the
time) in physicians' offices based on consideration of the most recent
available volume and utilization data for each individual procedure
code and/or, if appropriate, the clinical characteristics, utilization,
and volume of related codes. In that rule, we also finalized our policy
to exempt all procedures on the CY 2007 ASC list from application of
the office-based classification (72 FR 42512). The procedures that were
added to the ASC CPL beginning in CY 2008 that we determined were
office-based were identified in Addendum AA to that rule by payment
indicator ``P2'' (Office-based surgical procedure added to ASC list in
CY 2008 or later with MPFS nonfacility PE RVUs; payment based on OPPS
relative payment weight); ``P3'' (Office-based surgical procedures
added to ASC list in CY 2008 or later with MPFS nonfacility PE RVUs;
payment based on MPFS nonfacility PE RVUs); or ``R2'' (Office-based
surgical procedure added to ASC list in CY 2008 or later without MPFS
nonfacility PE RVUs; payment based on OPPS relative payment weight),
depending on whether we estimated the procedure would be paid according
to the standard ASC payment methodology based on its OPPS relative
payment weight or at the MPFS nonfacility PE RVU-based amount.
Consistent with our final policy to annually review and update the
ASC CPL to include all covered surgical procedures eligible for payment
in ASCs, each year we identify covered surgical procedures as either
temporarily office-based (these are new procedure codes with little or
no utilization data that we have determined are clinically similar to
other procedures that are permanently office-based), permanently
office-based, or non office-based, after taking into account updated
volume and utilization data.
(2) Proposed Changes for CY 2021 to Covered Surgical Procedures
Designated as Office-Based
In developing this CY 2021 OPPS/ASC proposed rule, we followed our
policy to annually review and update the covered surgical procedures
for which ASC payment is made and to identify new procedures that may
be appropriate for ASC payment (described in detail in section
XIII.C.1.d), including their potential designation as office-based. We
reviewed the most recent claims volume and utilization data (CY 2019
claims) and the clinical characteristics for all covered surgical
procedures that are currently assigned a payment indicator in CY 2020
of ``G2'' (Non office-based surgical procedure added in CY 2008 or
later; payment based on OPPS relative payment weight), as well as for
those procedures assigned one of the temporary office-based payment
indicators, specifically ``P2'', ``P3'', or ``R2'' in the CY 2020 OPPS/
ASC final rule with comment period (84 FR 61376 through 61380).
Our review of the CY 2019 volume and utilization data of covered
surgical procedures currently assigned a payment indicator of ``G2''
(Non office-based surgical procedure added in CY 2008 or later; payment
based on OPPS relative payment weight.) resulted in our identification
of seven covered
[[Page 48950]]
surgical procedures that we believe meet the criteria for designation
as permanently office-based. The data indicate that these procedures
are performed more than 50 percent of the time in physicians' offices,
and we believe that the services are of a level of complexity
consistent with other procedures performed routinely in physicians'
offices. The CPT codes that we propose to permanently designate as
office-based for CY 2021 are listed as Table 36.
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We also reviewed CY 2019 volume and utilization data and other
information for 18 procedures designated as temporarily office-based
and temporarily assigned one of the office-based payment indicators,
specifically ``P2,'' ``P3'' or ``R2,'' as shown in Table 56 and Table
57 in the CY 2020 OPPS/ASC final rule with comment period (84 FR 61380
through 61383). These procedures were surgical procedures that were
designated as temporarily office-based in the CY 2019 OPPS/ASC final
rule with comment period or were new CPT codes for CY 2020 that were
designated as temporarily office-based. Of these 18 procedures, for
each procedure, there were fewer than 50 claims in our data and no
claims data for 11 of the 18 procedures described by CPT codes 64454,
64624, 65785, 67229, 0402T, 0512T, 0551T, 0566T, 0588T, 93985 and
93986. Therefore, we propose to continue to designate these procedures,
shown in Table 37, as temporarily office-based for CY 2021. The
procedures for which the proposed office-based designation for CY 2021
is temporary are indicated by an asterisk in Addendum AA to this
proposed rule with comment period (which is available via the internet
on the CMS website).
[[Page 48951]]
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For the remaining seven procedures of the 18 procedures designated
as temporarily office-based as shown in Table 56 and Table 57 in the CY
2020 OPPS/ASC final rule with comment period (84 FR 61380 through
61383), we propose to permanently assign an office-based designation
for five of the procedures, represented by CPT codes
[[Page 48952]]
10007, 10011, 11102, 11104, and 11106. After reviewing CY 2019 volume
and utilization data for these five procedures, the claims data are
sufficient to indicate that these covered surgical procedures are
performed predominantly in physicians' offices (greater than 50 percent
of the time) and, therefore, we propose to permanently assign one of
the office-based payment indicators, specifically ``P2,'' ``P3'' or
``R2,''--to these codes for CY 2021 as shown in Table 38. For the two
remaining procedures that had temporary office-based designations for
CY 2020, described by CPT codes 10005 (Fine needle aspiration biopsy,
including ultrasound guidance; first lesion) and 10009 (Fine needle
aspiration biopsy, including ct guidance; first lesion), utilization
data are sufficient to indicate that these covered surgical procedures
are not performed predominantly in physician's offices (performed in
physician's offices less than 50 percent of the time) and, therefore,
we propose to assign a non office-based payment indicator--``G2''--to
these codes for CY 2021 as shown in Table 38.
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As discussed in the August 2, 2007 revised ASC payment system final
rule (72 FR 42533 through 42535), we finalized our policy to designate
certain new surgical procedures temporarily as office-based until
adequate claims data to assess their predominant sites of services,
whereupon if we confirm their office-based nature, the procedures would
be permanently assigned to the list of office-based procedures. In the
absence of claims data, we stated we would use other available
information, including our clinical advisors' judgment, predecessor CPT
and Level II HCPCS codes, information submitted by representatives of
specialty societies and professional associations, and information
submitted by commenters during the public comment period.
For CY 2021 we propose to designate 2 new CY 2021 CPT codes for ASC
covered surgical procedures as temporarily office-based. After
reviewing the clinical characteristics, utilization, and volume of
related procedure codes, we determined that the procedures in Table 39
would be predominantly performed in physicians' offices. We believe the
procedures described by CPT codes 0596T (Temporary female intraurethral
valve-pump (that is, voiding prosthesis); initial insertion, including
urethral measurement) and 0597T (Temporary female intraurethral valve-
pump (that is, voiding prosthesis); replacement) are similar to CPT
code 55285 (Cystourethroscopy for treatment of the female urethral
syndrome with any or all of the following: Urethral meatotomy, urethral
dilation, internal urethrotomy, lysis of urethrovaginal septal
fibrosis, lateral incisions of the bladder neck, and fulguration of
polyp(s) of urethra, bladder neck, and/or trigone) which is currently
on the list of covered surgical procedures and assigned a proposed
payment indicator ``A2''--Surgical procedure on ASC list in CY 2007;
payment based on OPPS relative payment weight.--for CY 2021. While CPT
code 52285 is not subject to office-based determinations as it is
assigned an ``A2'' payment indicator, we note that this procedure is
predominantly performed in a physician office setting (52 percent based
on CY 2019 claims). As such, we propose to add CPT codes 0596T and
0597T in Table 39 to the list of temporarily office-based covered
surgical procedures.
[[Page 48953]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.084
(3) Comment Solicitation on Office-Based Exemption for Dialysis
Vascular Access Procedures
As we stated in the CY 2019 OPPS/ASC final rule with comment period
(83 FR 59036), the office-based utilization for CPT codes 36902 and
36905 (dialysis vascular access procedures) was greater than 50
percent. However, we did not designate CPT codes 36902 and 36905 as
office-based procedures for CY 2019. These codes became effective
January 1, 2017 and CY 2017 was the first year we had claims volume and
utilization data for CPT codes 36902 and 36905. We shared commenters'
concerns that the available data were not adequate to make a
determination that these procedures should be office-based, and
believed it was premature to assign office-based payment status to
those procedures for CY 2019. For CY 2019, CPT codes 36902 and 36905
were assigned payment indicators of ``G2''--Non office-based surgical
procedure added in CY 2008 or later; payment based on OPPS relative
weight.
As we stated in the CY 2020 OPPS/ASC final rule with comment period
(84 FR 61378), volume and utilization data for CPT code 36902 for CY
2018 showed the procedure was performed more than 50 percent of the
time in physicians' offices. However, the office-based utilization for
CPT code 36902 had fallen from 62 percent based on 2017 data to 52
percent based on 2018 data. In addition, there was a sizeable increase
in claims for this service in ASCs--from approximately 14,000 in 2017
to 38,000 in 2018. In light of these changes in utilization and due to
the high utilization of this procedure in all settings (over 125,000
claims in 2018), we believed it may have been premature to assign
office-based payment status to CPT code 36902 for CY 2020. Therefore,
for CY 2020, we finalized our proposal to not designate CPT code 36902
as an office-based procedure, but to continue to assign CPT code 36902
a payment indicator of ``G2''--non office-based surgical procedure paid
based on OPPS relative weights. Additionally, CY 2018 volume and
utilization data for CPT code 36905 showed the procedure was not
performed more than 50 percent of the time in physicians' offices and
we finalized our proposal to retain its payment indicator of ``G2''--
non office-based surgical procedure based on OPPS relative weights for
CY 2020.
For this CY 2021 OPPS/ASC proposed rule, we reviewed CY 2019 volume
and utilization data for CPT code 36902 and determined that this
procedure was performed less than 50 percent of the time in physicians'
offices. We note that the office-based utilization for CPT code 36902
has fallen from 52 percent in 2018 to 41 percent in 2019. Similarly, CY
2019 volume and utilization data for CPT code 36905 continues to show
that this procedure was performed less than 50 percent of the time in
physician's offices. Therefore, we are not proposing to designate CPT
codes 36902 and 36905 as office-based procedures for CY 2021.
In past rulemaking, commenters have requested we permanently exempt
dialysis vascular access procedures from office-based designations
similar to our exemption for radiology services that involve certain
nuclear medicine procedures and radiology services that involve
contrast agents (42 CFR 416.171(d)(1) and (2)) (83 FR 59036).
Commenters contended that an office-based designation for dialysis
vascular access procedures (in particular CPT codes 36902 and 36905)
would result in a lower ASC payment rate if frequently used additional
services, which are often packaged under the ASC payment system but
separately payable under the Physician Fee Schedule, are factored in to
the analysis. Therefore, an office-based designation and payment at
Physician Fee Schedule amounts under the ASC payment system may provide
an inappropriate and lower global payment, after factoring in
additional surgical procedures and/or ancillary items and services,
when compared to the Physician Fee Schedule. Further, commenters have
noted that ASCs are generally able to provide a wider array of dialysis
vascular access procedures than a physician's office setting and at a
lower Medicare payment rate than the hospital outpatient department
setting. Providing an office-based ASC payment rate using PFS non
facility PE RVUs for dialysis vascular access procedures may reduce the
number of ASCs willing to perform such services and, subsequently,
reduce beneficiary access for dialysis vascular access procedures in an
ASC setting. Such an outcome may inadvertently encourage migration of
dialysis vascular access procedures related services to the more
expensive hospital outpatient department setting.
While current volume and utilization data shows that dialysis
vascular access procedures are not predominantly performed in a
physician's office setting, future data for office-based designations
may illustrate a different result. ASC rates established at PFS non
[[Page 48954]]
facility PE RVU values may reduce the number of ASCs performing these
procedures and inadvertently encourage greater utilization in the
hospital outpatient department setting. While we are not currently
proposing an exemption from payment at Physician Fee Schedule non
facility PE RVU amounts, characterized by payment indicator ``P3'' for
CY 2021, for dialysis vascular access procedures, we are contemplating
implementing such an exemption in the future if necessary and are
seeking comment on whether we might be justified in establishing a
permanent exemption from Physician Fee Schedule non facility PE RVU
amounts for dialysis vascular access procedures under Sec. 416.171(d)
in future rulemaking.
b. ASC Covered Surgical Procedures To Be Designated as Device-Intensive
(1) Background
We refer readers to the CY 2019 OPPS/ASC final rule with comment
period (83 FR 59040 through 59041), for a summary of our existing
policies regarding ASC covered surgical procedures that are designated
as device-intensive.
(2) Changes to List of ASC Covered Surgical Procedures Designated as
Device-Intensive for CY 2021
In the CY 2019 OPPS/ASC final rule with comment period (83 FR
590401 through 59043), for CY 2019, we modified our criteria for
device-intensive procedures to better capture costs for procedures with
significant device costs. We adopted a policy to allow procedures that
involve surgically inserted or implanted, high-cost, single-use devices
to qualify as device-intensive procedures. In addition, we modified our
criteria to lower the device offset percentage threshold from 40
percent to 30 percent. Specifically, for CY 2019 and subsequent years,
we adopted a policy that device-intensive procedures would 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.
Corresponding to this change in the cost criterion we adopted a policy
that the default device offset for new codes that describe procedures
that involve the implantation of medical devices will be 31 percent
beginning in CY 2019. For new codes describing procedures that are
payable when furnished in an ASC involving the implantation of a
medical device, we adopted a policy that the default device offset
would be applied in the same manner as the policy we adopted in section
IV.B.2. of the CY 2019 OPPS/ASC final rule with comment period (83 FR
58944 through 58948). We amended Sec. 416.171(b)(2) of the regulations
to reflect these new device criteria.
In addition, as also adopted in section IV.B.2. of CY 2019 OPPS/ASC
final rule with comment period, to further align the device-intensive
policy with the criteria used for device pass-through status, we
specified, 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 Food and Drug Administration (FDA) marketing
authorization, has received an FDA investigational device exemption
(IDE) and has been classified as a Category B device by the 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 any of the following:
++ 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
++ 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).
Based on our modified device-intensive criteria, for CY 2021, we
propose to update the ASC CPL to indicate procedures that are eligible
for payment according to our device-intensive procedure payment
methodology, based on the proposed individual HCPCS code device-offset
percentages using the CY 2018 OPPS claims and cost report data
available for the CY 2020 OPP/ASC proposed rule.
The ASC covered surgical procedures that we propose to designate as
device-intensive, and therefore subject to the device-intensive
procedure payment methodology for CY 2021, are assigned payment
indicator ``J8'' and are included in ASC Addendum AA to this proposed
rule (which is available via the internet on the CMS website). The CPT
code, the CPT code short descriptor, and the proposed CY 2021 ASC
payment indicator, and an indication of whether the full credit/partial
credit (FB/FC) device adjustment policy would apply because the
procedure is designated as device-intensive are also included in
Addendum AA to the proposed rule (which is available via the internet
on the CMS website).
Under current policy, the payment rate under the ASC payment system
for device-intensive procedures furnished with an implantable or
inserted medical device are calculated by applying the device offset
percentage based on the standard OPPS APC ratesetting methodology to
the OPPS national unadjusted payment based on the standard ratesetting
methodology to determine the device cost included in the OPPS payment
rate for a device-intensive ASC covered surgical procedure, which we
then set as equal to the device portion of the national unadjusted ASC
payment rate for the procedure. We calculate the service portion of the
ASC payment for device intensive procedures by applying the uniform ASC
conversion factor to the service (non-device) portion of the OPPS
relative payment weight for the device-intensive procedure. Finally, we
sum the ASC device portion and ASC service portion to establish the
full payment for the device-intensive procedure under the ASC payment
system. 82 FR 59409.
c. Adjustment to ASC Payments for No Cost/Full Credit and Partial
Credit Devices
Our ASC payment policy for costly devices implanted or inserted in
ASCs at no cost/full credit or partial credit, is set forth in Sec.
416.179 of our regulations, and is consistent with the OPPS policy that
was in effect until CY 2014. We refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66845 through 66848) for a full
discussion of the ASC payment adjustment policy for no cost/full credit
and partial credit devices.) Established ASC policy provides a
reduction in ASC 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.
[[Page 48955]]
Effective CY 2014, under the OPPS, we finalized our proposal to
reduce OPPS payment for applicable APCs by the full or partial credit a
provider receives for a device, capped at the device offset amount.
Although we finalized our proposal to modify the policy of reducing
payments when a hospital furnishes a specified device without cost or
with full or partial credit under the OPPS, in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75076 through 75080), we
finalized our proposal to maintain our ASC policy for reducing payments
to ASCs for specified device-intensive procedures when the ASC
furnishes a device without cost or with full or partial credit. Unlike
the OPPS, there is currently no mechanism within the ASC claims
processing system for ASCs to submit to CMS the actual credit received
when furnishing a specified device at full or partial credit.
Therefore, under the ASC payment system, we finalized our proposal for
CY 2014 to continue to reduce ASC payments by 100 percent or 50 percent
of the device offset amount when an ASC furnishes a device without cost
or with full or partial credit, respectively.
Under current ASC policy, all ASC covered device-intensive
procedures are subject to the no cost/full credit and partial credit
device adjustment policy. Specifically, when a device-intensive
procedure is performed to implant or insert a device that is furnished
at no cost or with full credit from the manufacturer, the ASC would
append the HCPCS ``FB'' modifier on the line in the claim with the
procedure to implant or insert the device. The contractor would reduce
payment to the ASC by the device offset amount that we estimate
represents the cost of the device when the necessary device is
furnished without cost or with full credit to the ASC. We continue to
believe that the reduction of ASC payment in these circumstances is
necessary to pay appropriately for the covered surgical procedure
furnished by the ASC.
Effective in CY 2019 (83 FR 59043 through 59044), for partial
credit, we adopted a policy to reduce the payment for a device-
intensive procedure for which the ASC receives partial credit by one-
half of the device offset amount that would be applied if a device was
provided at no cost or with full credit, if the credit to the ASC is 50
percent or more (but less than 100 percent) of the cost of the new
device. The ASC will append the HCPCS ``FC'' modifier to the HCPCS code
for the device-intensive surgical procedure when the facility receives
a partial credit of 50 percent or more (but less than 100 percent) of
the cost of a device. To report that the ASC received a partial credit
of 50 percent or more (but less than 100 percent) of the cost of a new
device, ASCs have the option of either: (1) Submitting the claim for
the device-intensive procedure to their Medicare contractor after the
procedure's performance, but prior to manufacturer acknowledgment of
credit for the device, and subsequently contacting the contractor
regarding a claim adjustment, once the credit determination is made; or
(2) holding the claim for the device implantation or insertion
procedure until a determination is made by the manufacturer on the
partial credit and submitting the claim with the ``FC'' modifier
appended to the implantation procedure HCPCS code if the partial credit
is 50 percent or more (but less than 100 percent) of the cost of the
device. Beneficiary coinsurance would be based on the reduced payment
amount. As finalized in the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66926), to ensure our policy covers any situation
involving a device-intensive procedure where an ASC may receive a
device at no cost or receive full credit or partial credit for the
device, we apply our ``FB''/``FC'' modifier policy to all device-
intensive procedures.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043
through 59044) we stated we would reduce the payment for a device-
intensive procedure for which the ASC receives partial credit by one-
half of the device offset amount that would be applied if a device was
provided at no cost or with full credit, if the credit to the ASC is 50
percent or more (but less than 100 percent) of the cost of the device.
In the CY 2020 OPPS/ASC final rule with comment period, we finalized
continuing our existing policies for CY 2020. We note that we
inadvertently omitted language that this policy would apply not just in
CY 2019 but also in subsequent calendar years. We intended to apply
this policy in CY2019 and subsequent calendar years. Therefore, we
propose to apply our policy for partial credits specified in the CY
2019 OPPS/ASC final rule with comment period (83 FR 59043 through
59044) in CY 2021 and subsequent calendar years. Specifically, for CY
2021 and subsequent calendar years, we would reduce the payment for a
device-intensive procedure for which the ASC receives partial credit by
one-half of the device offset amount that would be applied if a device
was provided at no cost or with full credit, if the credit to the ASC
is 50 percent or more (but less than 100 percent) of the cost of the
device. To report that the ASC received a partial credit of 50 percent
or more (but less than 100 percent) of the cost of a device, ASCs have
the option of either: (1) Submitting the claim for the device intensive
procedure to their Medicare contractor after the procedure's
performance, but prior to manufacturer acknowledgment of credit for the
device, and subsequently contacting the contractor regarding a claim
adjustment, once the credit determination is made; or (2) holding the
claim for the device implantation or insertion procedure until a
determination is made by the manufacturer on the partial credit and
submitting the claim with the ``FC'' modifier appended to the
implantation procedure HCPCS code if the partial credit is 50 percent
or more (but less than 100 percent) of the cost of the device.
Beneficiary coinsurance would be based on the reduced payment amount.
We are not proposing any other changes to our policies related to no/
cost full credit or partial credit devices.
d. Additions to the List of ASC Covered Surgical Procedures
Section 1833(i)(1) of the Act requires us, in part, to specify, in
consultation with appropriate medical organizations, surgical
procedures that are appropriately performed on an inpatient basis in a
hospital but that can be safely performed in an ASC, a CAH, or an HOPD
and to review and update the list of ASC procedures at least every 2
years. We evaluate the ASC covered procedures list (ASC-CPL) each year
to determine whether procedures should be added to or removed from the
list, and changes to the list are often made in response to specific
concerns raised by stakeholders
Under our current regulations at 42 CFR 416.2 and 416.166, covered
surgical procedures furnished on or after January 1, 2008 are surgical
procedures that meet the general standards specified in 42 CFR
416.166(b) and are not excluded under the general exclusion criteria
specified in 42 CFR 416.166(c). Specifically, under 42 CFR 416.166(b),
the general standards provide that covered surgical procedures are
surgical procedures specified by the Secretary and published in the
Federal Register and/or via the internet on the CMS website that are
separately paid under the OPPS, that would not be expected to pose a
significant safety risk to a Medicare beneficiary when performed in an
ASC, and for which standard medical practice dictates that the
beneficiary would not typically be expected to require active medical
[[Page 48956]]
monitoring and care at midnight following the procedure. 42 CFR
416.166(c) sets out the general exclusion criteria used under the ASC
payment system to evaluate the safety of procedures for performance in
an ASC. The general exclusion criteria provide that covered surgical
procedures do not include those surgical procedures that: (1) Generally
result in extensive blood loss; (2) require major or prolonged invasion
of body cavities; (3) directly involve major blood vessels; (4) are
generally emergent or life threatening in nature; (5) commonly require
systemic thrombolytic therapy; (6) are designated as requiring
inpatient care under 42 CFR 419.22(n); (7) can only be reported using a
CPT unlisted surgical procedure code; or (8) are otherwise excluded
under 42 CFR 411.15.
For purposes of identifying procedures eligible to be added to the
covered surgical procedure list, we define surgical procedures as those
procedures described by Category I CPT codes in the surgical range from
10000 through 69999 as well as those Category I and III CPT codes and
Level II HCPCS codes that directly crosswalk or are clinically similar
to procedures in the CPT surgical range (83 FR 59044-59045), that we
have determined do not pose a significant safety risk, would not be
expected to require an overnight stay when performed in an ASC, and are
separately paid under the OPPS. We propose to continue to apply the
revised definition of ``surgery'' we adopted in the CY 2019 OPPS/ASC
final rule with comment period (83 FR 59029 through 59030), which
includes certain ``surgery-like'' procedures that are assigned codes
outside the CPT surgical range, for CY 2021 and subsequent years.
As discussed above, section 1833(i)(1) of the Act requires the
Secretary to specify, in consultation with appropriate medical
organizations, surgical procedures that are appropriately performed on
an inpatient basis in a hospital but that can be safely performed on an
ambulatory basis in an ASC, a CAH, or an HOPD and to review and update
the list of ASC procedures at least every 2 years. The report
accompanying the legislation establishing section 1833(i)(1) of the Act
explained that Congress intended procedures routinely performed on an
ambulatory basis in a physician's office that do not generally require
the more elaborate facilities of an ASC not to be included in the list
of ASC covered procedures (H.R. Rep. No. 96-1167, at 390-91, reprinted
in 1980 U.S.C.C.A.N. 5526, 5753-54).
In consideration of the statutory requirements and legislative
history, in the implementing regulations of the current ASC system
(effective in 2008), which we adopted in the August 2, 2007 final ASC
rule (72 FR 42487), we excluded procedures that would otherwise pose a
significant safety risk to the typical Medicare beneficiary if
performed in the ASC setting. However, we agreed with stakeholders who
have noted that ASCs are increasingly able to safely provide a greater
range of services as medical practice continues to evolve and advance.
We also believe that physicians play an important role and should be
able to exercise their clinical judgment in making site-of-service
determinations. Accordingly, CMS has continued to reexamine the process
of how we determine which procedures are payable under Medicare when
furnished in the ASC setting, keeping in mind the statutory requirement
in section 1833(i)(1)(A) of the Act that the Secretary must specify
those surgical procedures that are appropriately performed on an
inpatient basis in a hospital but which also can be performed safely on
an ambulatory basis in an ASC, CAH or HOPD as part of reviewing and
updating the list of procedures.
In the CY 2020 OPPS/ASC final rule with comment period, we added
total knee arthroplasty and several coronary intervention procedures to
the ASC-CPL (84 FR 61386 to 61397). Although the coronary intervention
procedures involved blood vessels that could be considered major, based
on our policy to consider the involvement of major blood vessels in the
context of the clinical characteristics of the individual procedures
and to maintain logical and clinical consistency in excluding
procedures from the ASC-CPL (72 FR 42481), as well as our review of the
clinical characteristics of the procedures and their similarity to
other procedures that were included on the ASC-CPL, we believed these
procedures could be safely performed in the ASC setting for appropriate
beneficiaries. In the CY 2019 OPPS/ASC final rule with comment period,
we also noted that in light of our conditions of coverage for ASCs,
including 42 CFR 416.42, which require surgical procedures to be
performed in a safe manner by qualified physicians who have been
granted clinical privileges by the governing body of the ASC in
accordance with approved policies and procedures of the ASC, we believe
that the CfCs provide further assurance that services furnished in the
ASC setting are held to a high standard of safety. While we
acknowledged in the CY 2019 OPPS/ASC final rule with comment period
that it could be more appropriate for certain beneficiaries to receive
the coronary intervention procedures we were adding to the ASC CPL in a
hospital-level setting, which typically has a higher level of emergency
staff and equipment available, including onsite cardiac surgery backup,
when compared to an ASC setting, we also noted that many beneficiaries
could be ideal candidates to receive these services in an ASC setting
and that beneficiaries and their physicians should be able to choose an
appropriate site of service for surgeries based on the clinical
characteristics of the patient and other factors (83 FR 59046). We
continue to believe that relatively healthy and less complex patients
would benefit from the shorter length of stay and reduced cost-sharing
that would be expected in an ASC setting.
In the August 2, 2007 final rule with comment period establishing
the revised ASC payment system, we discussed criteria for excluding
procedures from the ASC-CPL (72 FR 42478 to 42484). In that same final
rule, we adopted the current general standards and general exclusion
criteria described above. One of the general exclusion criteria we
established for the revised ASC payment system, at Sec. 416.166(c)(6),
excludes any procedure on the OPPS Inpatient Only (IPO) list, which is
a list of procedures for which we do not make payment under the OPPS
and that are typically performed in the hospital inpatient setting
because of the nature of the procedure, the need for at least 24 hours
of postoperative recovery time or monitoring before the patient can be
safely discharged, and the underlying physical condition of the patient
(65 FR 18456). We also stated that we believed that any procedures for
which we did not allow payment in the hospital outpatient setting due
to safety concerns would not be safe to perform in an ASC (72 FR
42478). We stated that we were committed to revising the ASC-CPL so
that it excludes only those surgical procedures that pose significant
safety risks to beneficiaries or that are expected to require an
overnight stay (72 FR 42479).
Also in the August 2, 2007 final rule with comment period, we
discussed the exclusion of procedures involving major blood vessels,
but we noted that it was important to maintain flexibility in our
review of procedures for safe performance in the ASC setting,
consistent with our past practice regarding this criterion (72 FR
42481). We discussed that there were some procedures already on the ASC
list
[[Page 48957]]
being safely performed in ASCs that involve blood vessels that would
generally be defined as major. We did not agree with commenters that it
would be logical or clinically consistent for us to adopt a specific
definition of major blood vessels to evaluate procedures for exclusion
from ASC payment (72 FR 42481). We noted the involvement of major blood
vessels is best considered in the context of the clinical
characteristics of individual procedures.
We noted that we proposed to exclude surgical procedures that were
expected to involve major blood vessels, major or prolonged invasion of
body cavities, extensive blood loss, or that are emergent or life-
threatening in nature from ASC payment, based on evaluation by our
medical advisors (72 FR 42478-42479). We also noted that most of the
procedures that our medical advisors identified as involving any of the
characteristics listed in 42 CFR 416.65(b)(3) also require overnight or
inpatient stays, reinforcing our belief that they should be excluded
from ASC payment (72 FR 42478-42479). We also disagreed, at that time,
that all procedures performed in HOPDs were appropriate for performance
in ASCs. This was due in part to the fact that we believed that HOPDs
were able to provide much higher acuity care, and because hospitals
were subject to more stringent infection prevention, documentation, and
patient assessment requirements than ASCs. As discussed in the August
2, 2007 final rule with comment period, ASCs were not required to meet
patient safety standards consistent with those in place for hospitals
(that is, hospital conditions of participation), and ASCs were not
required, and are not currently required, to have the trained staff and
equipment needed to provide the breadth and intensity of care that
hospitals are required to maintain (72 FR 42479).
Many of these concerns have been addressed with the passage of
time. We believe that our approach needs to evolve away from the
criteria we established in 2008, in order to reflect the significant
advances in medical practice and ASC capabilities over the last 12
years. In particular, we believe that significant advancements in
medical practice, surgical techniques, medical technology, and other
factors have allowed certain ASCs to safely perform procedures that
were once too complex, including those involving major blood vessels
and other general exclusion criteria. We acknowledge that ASCs and
hospitals have different health and safety requirements. Despite this
fact, ASCs often undergo accreditation as a condition of state
licensure and share some similar licensure and compliance requirements
with hospitals as well as meet Medicare conditions for coverage (see 42
CFR 416.40 through 416.54).
As mentioned above, in recent years, we have added procedures to
the ASC-CPL that were largely considered hospital inpatient procedures
in the past, such as TKA and certain coronary intervention procedures.
As the practice of medicine has evolved, hospital lengths of stay have
become shorter for many surgical procedures. Many services that used to
be predominantly performed in the hospital inpatient setting are now
routinely performed in the hospital outpatient setting on an ambulatory
basis. Further, many procedures that are currently only payable as
hospital outpatient services under Medicare fee-for-service are safely
performed in the ASC setting for other payors. While we recognize that
non-Medicare patients tend to be younger and have fewer comorbidities
than the Medicare population, we note that careful patient selection
can identify Medicare beneficiaries who are suitable candidates for
these services in the ASC setting. Further, Medicare Advantage plans
are not obligated to adopt the ASC-CPL as it exists in Medicare fee-
for-service and, based on Medicare Advantage encounter data, many MA
enrollees have had services performed in the ASC setting that are not
currently payable under Medicare fee-for-service.
In addition, the COVID-19 pandemic has highlighted the need for
more healthcare access points throughout the country. Many ASCs
temporarily closed or significantly scaled back their operations based
on state and federal recommendations to delay elective procedures
during the public health emergency associated with COVID-19; while,
some ASCs opted to temporarily enroll as hospitals. Looking ahead to
after the pandemic, it will be more important than ever to ensure that
the health care system has as many access points and patient choices
for all Medicare beneficiaries as possible. Because the pandemic has
forced many ASCs to close, thereby decreasing Medicare beneficiary
access to care in that setting, we believe allowing greater flexibility
for physicians and patients to choose ASCs as the site of care,
particularly during the pandemic, would help to alleviate both access
to care concerns for elective procedures as well as access to emergency
care concerns for hospital outpatient departments.
(1) Proposed Changes to the List of ASC Covered Surgical Procedures for
CY 2021
Historically, we have reviewed the clinical characteristics of
procedures and consulted with stakeholders and our clinical advisors to
determine if those procedures would meet our existing regulatory
criteria under 42 CFR 416.2 and 42 CFR 416.166. Our regulation at
416.166(b) specifies the general standard criteria for covered surgical
procedures, and requires that covered surgical procedures be surgical
procedures: (1) That are separately paid under OPPS, (2) that would not
be expected to pose a significant safety risk to a Medicare beneficiary
when performed in an ASC, and (3) for which standard medical practice
dictates that the beneficiary would not typically be expected to
require active medical monitoring and care at midnight following the
procedure. Additionally, 42 CFR 416.166(b) requires that a procedure
not meet our exclusion criteria set forth in 42 CFR 416.166(c).
For CY 2021, we propose to continue to apply our current policies
and criteria set forth in 42 CFR 416.2 and 42 CFR 416.166 for updating
the ASC-CPL. In addition, we propose two alternative options for
modifying our approach to adding surgical procedures to the ASC-CPL--
(1) a nomination process for adding new procedures to the ASC-CPL, and
(2) a broader approach under which we would revise our regulatory
criteria at 42 CFR 416.166 to evaluate potential additions to the ASC-
CPL. Under our first alternative proposal, a proposed nomination
process along with modifications to certain regulatory criteria (as
described later in this proposed rule), the effective date would be CY
2021 to accept and consider nominations and nominated procedures could
be proposed to be added to the ASC-CPL beginning in the CY 2022
rulemaking. Under our second alternative proposal, we propose to revise
our regulatory criteria by removing certain general exclusion criteria
at 42 CFR 416.166(c) and under the revised criteria, we propose to add
certain surgical procedures to the ASC-CPL beginning in CY 2021. We
expect either of these options would have the effect of expanding the
ASC-CPL, while maintaining the balance between safety and access for
Medicare beneficiaries.
A. Standard ASC-CPL Review Process for CY 2021
For CY 2021, consistent with our current policy for reviewing the
ASC-CPL, we conducted a review of HCPCS codes that currently are paid
under the
[[Page 48958]]
OPPS, but not included on the ASC-CPL, and that meet the definition of
surgery to determine if changes in technology and/or medical practice
affected the clinical appropriateness of these procedures for the ASC
setting. Based on this review, and as explained in more detail below,
we propose to update the list of ASC covered surgical procedures by
adding eleven procedures to the list for CY 2021 as shown in Table 40
of this proposed rule. Procedures that we propose to add to the ASC-CPL
for CY 2021 include total hip arthroplasty (THA), vaginal colpopexy,
transcervical uterine fibroid ablation, and intravascular lithotripsy
procedures, among others. After reviewing the clinical characteristics
of these eleven procedures and consulting with our clinical advisors,
we determined that these procedures are separately paid under the OPPS,
would not be expected to pose a significant risk to beneficiary safety
when performed in an ASC, and would not be expected to require active
medical monitoring and care of the beneficiary at midnight following
the procedure. We have assessed each of the proposed procedures against
the regulatory safety criteria in the regulation at 42 CFR 416.166(c)
and believe that none of the procedures meet the general exclusion
criteria.
Of the eleven procedures we propose to add, we believe that the THA
procedure merits additional discussion in this proposed rule, given
prior discussion of this procedure in past rulemaking, to explain our
belief that the procedure meets existing safety criteria for purposes
of adding this procedure to the ASC-CPL. In the CY 2018 OPPS/ASC
proposed rule, we solicited public comments on whether the THA
procedure, CPT code 27130 (Arthroplasty, acetabular and proximal
femoral prosthetic replacement (total hip arthroplasty), with or
without autograft or allograft), met the criteria to be added to the
ASC-CPL. In the CY 2018 OPPS/ASC final rule with comment period, we
noted that some commenters argued many ASCs are equipped to perform
this procedure and orthopedic surgeons in ASCs are increasingly
performing this procedure safely and effectively on non-Medicare
patients and appropriate Medicare patients (82 FR 59412). Commenters
also stated that adding THA to the ASC-CPLwould allow for greater
choices in care settings for Medicare patients, would provide a more
patient-centered approach to joint arthroplasty procedures, and that it
may be safer in some cases to have joint arthroplasty procedures
performed in an outpatient setting to prevent certain hospital-acquired
infections (82 FR 59412).
However, other commenters recommended that ASCs obtain enhanced
certification from a national accrediting organization that certifies
an ASC meets higher quality standards and can safely perform joint
arthroplasty procedures (82 FR 59412). Some commenters opposed adding
THA to the ASC-CPL as they believed the vast majority of ASCs are not
equipped to safely perform these procedures on patients and the vast
majority of Medicare patients are not suitable candidates to receive
``overnight'' joint arthroplasty procedures in an ASC setting (82 FR
59412). For CY 2018, we did not finalize adding THA to the ASC-CPL, but
noted that we would take commenters' suggestions and recommendations
into consideration for future rulemaking.
In this CY 2021 OPPS/ASC proposed rule, we are seeking to continue
to promote site neutrality, where possible, between the hospital
outpatient department and ASC settings, and expanding the ASC-CPL to
include as many procedures that can be performed in the HOPD as
reasonably possible will advance that goal. Further, we believe that
there are at least a subset of Medicare beneficiaries who may be
suitable candidates to receive THA procedures in an ASC setting based
on the beneficiaries' clinical characteristics. We believe physicians
should continue to play an important role in exercising their clinical
judgment when making site-of-service determinations, including for THA.
We believe THA would meet our existing regulatory requirements
established under 42 CFR 416.2 and 416.166(b) and (c) for covered
surgical procedures in the ASC setting. In light of this information
and the public comments submitted in support of adding THA to the ASC-
CPL in response to our CY 2018 public comment solicitation, we propose
to add THA to the ASC-CPL in CY 2021, as shown in Table 40.
We propose to add a total of eleven procedures, displayed in Table
40 with their HCPCS code long descriptors, to the list of ASC covered
surgical procedures for CY 2021. We seek public comment on our
proposal, including any medical evidence or literature to support the
commenters' views on whether or not we should add any of these
procedures to the ASC-CPL for CY 2021. In addition, we also seek
comment on the two alternative proposals described below. Note that
under both alternative proposals, we still propose to add the eleven
procedures proposed under this section for CY 2021.
(1) Proposed Changes to General Exclusion Criterion for Procedures
Requiring Inpatient Care To Conform to Proposed Changes to the
Underlying Requirements Under the OPPS
As described in section IX.B. of this proposed rule, CMS is
proposing to eliminate the OPPS IPO list and amend 42 CFR 419.22(n) to
state that effective beginning on January 1, 2021, the Secretary shall
eliminate the list of services and procedures designated as requiring
inpatient care through a 3-year transition, with the full list
eliminated in its entirety by January 1, 2024. We believe that
retaining Sec. 416.166(c)(6) will ensure that procedures that are
largely performed on an inpatient basis and cannot be safely performed
on an ambulatory basis will not be added to the CPL prematurely. As a
result, we propose to revise the regulatory language and modify this
standard to exclude procedures designated as requiring inpatient care
under 419.22(n) as of December 31, 2020.
(2) Alternative Proposals Under Consideration for CY 2021
For CY 2021, we are continuing to build on our efforts to maximize
patient and physician choice and access to care by exploring broader
approaches to adding procedures to the ASC-CPL in order to further
increase the availability of ASCs as an alternative site of care for
Medicare beneficiaries, often at a lower cost than other options. In
light of the current national Public Health Emergency related to COVID-
19 and its anticipated lasting effects on the health care system, we
also believe a broader approach for adding procedures to the ASC-CPL
would allow for a more efficient use of healthcare resources and
infrastructure. An expansion of the ASC-CPL would maximize the ability
of ASCs to divert patients that can be safely treated in an ASC setting
away from the hospital setting, which would preserve the capacity of
hospitals to treat more acute patients. Expanding the procedures placed
on the ASC-CPL would also build on the policy changes we have made in
recent years to further site neutrality between the HOPD and ASC
settings. In light of these objectives, we propose two alternatives to
our existing policy of adding procedures to the ASC-CPL, each of which
would further support these goals.
a. Alternative Proposal One
Under the first approach, we propose and may finalize in the final
rule a policy to adopt a nomination process for
[[Page 48959]]
adding new procedures to the ASC-CPL. This process would involve
soliciting recommendations from external stakeholders, like medical
specialty societies and other members of the public, for procedures
that may be suitable candidates to add to the ASC-CPL. As discussed in
greater detail below, under this approach, we would provide parameters
as guidelines that we would strongly encourage stakeholders to consider
in nominating procedures for the ASC-CPL. CMS anticipates that
stakeholders, such as specialty societies who specialize in and have a
deep understanding of the complexities involved in providing certain
procedures, would be able to provide valuable suggestions on which
additional procedures may reasonably and safely be provided in an ASC
context.
While members of the public may already suggest procedures to be
added to the CPL through meetings with CMS or through public comments
to the proposed rule, we believe it may be beneficial to adopt a
streamlined process under which the public, particularly specialty
societies who are very familiar with procedures in their specialty, can
to nominate procedures based on the latest evidence available as well
as input from their memberships. We believe that this revised process
could increase transparency in how we are assessing procedures to add
to the ASC list and also help ensure that we are assessing the list in
a more streamlined fashion.
We propose that the nomination process would be conducted through
annual notice and comment rulemaking and the final determinations
regarding nominated procedures would be decided in the final rule.
Specifically, for the OPPS/ASC rulemaking for a calendar year, we would
request stakeholder nominations by March 1 of the previous calendar
year, with all nominations received by that date considered in the next
applicable rulemaking cycle, likely the rulemaking for the following
calendar year. Any nominations received after that date, including
those received through comments as part of the rulemaking cycle, would
generally be addressed in rulemaking the following year. CMS would
evaluate procedures nominated by stakeholders based on the applicable
statutory and regulatory requirements for ASC covered surgical
procedures and the additional parameters specified in detail below. We
propose to establish the nomination process in the CY 2021 final rule
to begin in CY 2021, for surgical procedures that could be added to the
ASC-CPL beginning in CY 2022. We propose a process under which
nominated procedures would be included in the proposed rule for that
calendar year, along with a summary of the policy and factual
justification for adding or not adding each procedure, which would
allow members of the public to assess and provide comment on nominated
procedures during the public comment period. After reviewing comments
provided during the public comment period, CMS would finalize adding
the procedures that meet the requisite criteria to the ASC-CPL in the
final rule. In the event that CMS disagrees with any procedures
nominated, we would provide a specific rationale in the final rule. In
certain cases, CMS may need to defer a final determination regarding a
nominated procedure to future rulemaking, in order to provide
sufficient time to evaluate and make the most appropriate decision
about the nominated procedure.
Under this alternative proposal, we would update the ASC-CPL by
considering whether nominated procedures meet the requirements for
covered surgical procedures under 42 CFR 416.166, as we propose to
amend them. This would include 42 CFR 416.166(b), which sets out the
general standards for covered surgical procedures, requiring that
surgical procedures be separately paid under the OPPS, not be expected
to pose a significant safety risk to a Medicare beneficiary when
performed in an ASC, and for which standard medical practice dictates
that the beneficiary would not typically be expected to require active
medical monitoring and care at midnight following the procedure. We
also propose to eliminate the general exclusion criteria in 42 CFR
416.166(c)(1) through (c)(5) such that nominated procedures would not
have to meet those criteria. Further, we propose to modify Sec.
416.166(c)(6) to align the regulatory text with the proposed
elimination of the IPO list. Finally, we propose that nominated
procedures would need to meet the general exclusions at 42 CFR
416.166(c)(7) and (c)(8).
With respect to the existing general exclusion at 42 CFR
416.166(c)(6), which excludes procedures designated as requiring
inpatient care under 42 CFR 419.22(n) from classification as covered
surgical procedures, this alternative proposal would modify this
standard since the IPO list is being proposed to be eliminated
beginning in CY 2021, as described in section IX.B of this proposed
rule. Therefore, we would propose to modify this criterion to exclude
procedures designated as requiring inpatient care under 419.22(n) as of
December 31, 2020. In other words, we would not accept any nominations
for procedures to add to the ASC-CPL if the procedure is on the CY 2020
IPO list. We are retaining the criteria Sec. Sec. 416.166(c)(6)
through (8) and eliminating the five criteria currently at Sec. Sec.
416.166(c)(1) through (5) because we believe that the general standards
at 416.166(b) provide sufficient guardrails to ensure, along with
appropriate patient selection and the complex medical judgment of the
physician, that procedures can be performed safely on an ambulatory
basis, including certain procedures that may involve these five
characteristics. We believe that this alternative proposal could
balance the goals of increasing physician and patient choice and
expanding site neutral options with patient safety considerations.
As noted above, under this alternative proposal, stakeholders would
nominate procedures to be added to the ASC-CPL by March 1 of a year to
be considered for addition to the ASC-CPL for the next calendar year.
As stated above, and similar to the second alternative described in the
next section, we propose that nominated procedures must meet the
general standards for covered surgical procedures under 42 CFR
416.166(b) and the general exclusions under 42 CFR 416.166(c)(6)
through (8), subject to the modifications we propose for 42 CFR
416.166(c)(6), to reflect the proposed phase out of the IPO list under
the OPPS, as discussed in section IX.B of this proposed rule.
Specifically with respect to the existing general exclusion at 42 CFR
416.166(c)(6), which excludes procedures designated as requiring
inpatient care under 42 CFR 419.22(n) from classification as covered
surgical procedures, the alternative proposal would modify this
standard because the IPO list is being proposed to be eliminated
beginning in CY 2021, as described in section IX.B of this proposed
rule. Therefore, we would propose to modify this criterion to exclude
procedures designated as requiring inpatient care under 419.22(n) as of
December 31, 2020. Under this alternative proposal, a nomination
process would be added at 42 CFR 416.166(d), explaining the process
that would be used to review and update the list of ASC procedures each
year. We propose to remove the general exclusions under 42 CFR
416.166(c)(1) through (c)(5), as discussed above.
Additionally, we are also proposing to adopt the following
parameters for stakeholders to consider and specifically address in
nominating procedures to add to the ASC-CPL.
[[Page 48960]]
These parameters are meant as general guidelines, not requirements, and
we seek public comment on these suggested parameters including language
changes, recommendations for additional parameters, potential
unintended implications of the parameters we propose, and whether we
should finalize these parameters if this alternative proposal is
finalized in the CY 2021 final rule:
Does the procedure involve a risk of life-threatening
complications?
Example: Does the procedure involve high or low risk of life-
threatening complications?
[cir] If the procedure involves lower risk for life-threatening
complications, it may be a reasonable candidate for consideration.
[cir] If the procedure involves a higher risk, consider the next
question.
Is there a need for specialized resources, not generally
available in an ASC, to mitigate the risk of one or more life-
threatening complications?
Example: Are specialized resources, not generally available in an
ASC, needed to mitigate the risk of one or more life-threatening
complications from the procedure?
[cir] If specialized resources are not needed for this procedure,
it may be a reasonable candidate for consideration.
[cir] If specialized resources are needed to reduce the patient's
risk of life-threatening complications, consider the next question.
What is the average length of time for patients to be
stabilized for transport to another facility?
Example: If a complication occurs, can the patient generally be
stabilized in transport for at least 90 minutes?
[cir] If a patient undergoing the procedure cannot be stabilized
for 90 minutes, this would be a serious consideration regarding the
appropriateness of performing the procedure for Medicare beneficiaries
in the ASC setting.
[cir] If a patient undergoing this procedure can be stabilized for
90 minutes, please consider the next question.
Are resources and providers required for intervention
generally available at nearby facilities for intervention?
Example: If a patient is transferred to another institution, can a
team be mobilized and prepared to intervene within a relatively short
period from complication onset, inclusive of transport? Although the
length of this time period may vary, it should be enough time to ensure
the patient has a viable chance of rescue from the other facility.
[cir] If a team cannot be mobilized and prepared to intervene
within this period, then this procedure should not be considered for
the ASC-CPL.
[cir] If a team can be mobilized and prepared to intervene within
this period, then this procedure could be a reasonable candidate for
consideration.
We believe a nomination process will take time to develop and
stakeholders will need time to consider and evaluate potential
nominations. We propose to implement this process for CY 2021 in order
to accept nominations for procedures to be added to the ASC CPL
beginning in CY 2022.
b. Alternative Proposal Two
We also considered another alternative approach that would allow
for more immediate changes to the ASC-CPL for CY 2021 and beyond.
Specifically, under this alternative proposal, we propose, and may
finalize in the CY 2021 final rule, to keep the existing general
standards under 42 CFR 416.166(b) that currently require covered
surgical procedures to be surgical procedures specified by the
Secretary and published in the Federal Register and/or via the internet
on the CMS website, separately paid under the OPPS, not be expected to
pose a significant safety risk to a Medicare beneficiary when performed
in an ASC, and for which standard medical practice dictates that the
beneficiary would not typically be expected to require active medical
monitoring and care at midnight following the procedure. However, under
this alternative proposal, we would eliminate five of the current
general exclusion criteria at 42 CFR 416.166(c)(1) through (c)(5). We
considered whether these five exclusionary criteria may no longer be
necessary to determine what procedures can be safely added to the ASC-
CPL because many ASCs are currently able to safely provide services
with these characteristics based on prior stakeholder feedback and
public comments we have received.
We explored whether it is appropriate to remove the general
exclusion criteria. This would allow physicians practicing in the ASC
setting, who have the greatest familiarity and insight into the needs
of individual beneficiaries, to use their complex medical judgment to
determine whether they can safely perform a procedure in the ASC, given
the entirety of the circumstances, including the clinical profile of
the patient, the surgical back-up available at the ASC, and the ability
to safely and timely respond to unexpected complications. Under this
alternative proposal, we would keep the remaining three general
exclusion criteria at 42 CFR 416.166(c)(6) through (c)(8), as the
original reasons we adopted them in CY 2008 continue to exist, subject
to the proposed modifications to 416.166(c)(6). These criteria would
continue to prohibit the addition of certain procedures to the ASC CPL,
namely those that are either designated as requiring inpatient care
under 42 CFR 419.22(n) as of December 31, 2020, which can only be
reported using a CPT unlisted surgical procedure code, and any
procedures that are otherwise excluded under 42 CFR 411.15. We propose
to retain these criteria and eliminate the previous five criteria
because we believe that the general standards alone are sufficient
guardrails to ensure, along with appropriate patient selection and
complex medical judgment of the physician, that the procedure can be
performed safely on an ambulatory basis, including procedures that
involve these five characteristics.
With respect to the existing general exclusion at 42 CFR
416.166(c)(6), which excludes procedures designated as requiring
inpatient care under 42 CFR 419.22(n) from classification as covered
surgical procedures, the alternative proposal would modify this
standard since the IPO list is being proposed to be eliminated
beginning in CY 2021, as described in section IX.B of this proposed
rule. Therefore, we would propose to modify this criterion to exclude
procedures designated as requiring inpatient care under 419.22(n) as of
December 31, 2020. In other words, not all procedures on the current
(that is, CY 2020) IPO list would necessarily meet the remaining
revised criteria to be added to the ASC-CPL. However, because any
procedure not on the IPO can be performed safely on an ambulatory basis
in the hospital outpatient setting, we believe that the remaining
criteria in 42 CFR 416.166, most notably the exclusion of services that
are on the current IPO list, could sufficiently limit the expansion of
the ASC-CPL to those services that can be safely performed on an
ambulatory basis. As previously mentioned, we are proposing to retain
the criteria in Sec. Sec. 416.166(c)(6) through (8) and eliminate the
five criteria currently at Sec. Sec. 416.166(c)(1) through (5) because
we believe that the general standards at 416.166(b) provide sufficient
guardrails to ensure, along with appropriate patient selection and the
complex medical judgment of the physician, that procedures can be
performed safely on an ambulatory basis, including certain procedures
that may involve these five
[[Page 48961]]
characteristics. We believe that this alternative proposal could
balance the goals of increasing physician and patient choice and
expanding site neutral options with patient safety considerations.
We identified approximately 270 potential surgery or surgery-like
codes that we believe would meet the proposed revised criteria for
being added to the ASC-CPL under 42 CFR 416.166. That is, we reviewed
these procedures and found that they would meet the proposed revised
regulatory requirements that would be in effect if we were to adopt
this alternative proposal. Specifically, the identified procedures
under this alternative proposal were surgical procedures that are
separately paid under the OPPS, that would not be expected to pose a
significant safety risk to a Medicare beneficiary when performed in an
ASC, and for which standard medical practice dictates that the
beneficiary would not typically be expected to require active medical
monitoring and care of the beneficiary at midnight following the
procedure, that have not been designated as requiring inpatient care
under 419.22(n) as of December 31, 2020, that can be reported without
using a CPT unlisted surgical procedure code, and are not otherwise
excluded under 42 CFR 411.15.
Additionally, while several of the identified procedures may
typically require hospital care that lasts beyond midnight, we expect
that appropriately selected patient population in the ASC setting would
be healthier and less complex and would likely not require active
monitoring or medical care past midnight beyond the procedure. We
believe that these procedures are safe to perform in an ASC setting
because all procedures identified are already payable in the HOPD
setting and, therefore, are already safely performed on an ambulatory
basis, consistent with the statutory requirement under section
1833(i)(1) of the Act. We would retain the general standard criteria,
as we believe these criteria are sufficient to ensure that procedures
meet the statutory requirements and can be safely performed in ASCs. We
seek public comment on whether any of these procedures would typically
require care after midnight, and, therefore, should not be added to the
ASC-CPL.
We believe that this alternative proposal could have beneficial
effects for Medicare beneficiaries and healthcare professionals. For
beneficiaries, expansion of the ASC-CPL would increase access to
procedures in ambulatory surgery settings, often at a lower cost. ASCs
and healthcare professionals would also benefit from this proposal as
this expansion would better utilize the potential of existing
healthcare resources and expand the capacity of the healthcare system.
Further, under this alternative, physicians would have greater
flexibility to divert patients who can be safely treated in the ASC
setting away from hospitals and preserve hospital capacity for more
acute patients.
We acknowledge that this approach is a departure from the existing
criteria that we established effective beginning in 2008. However, we
believe that this approach would expand and build upon our 2008 policy
intent. In the August 2, 2007 final rule with comment period, we
discussed criteria for procedures excluded from the ASC-CPL under the
revised ASC payment system (72 FR 42478 to 42484). However, although
there are differences, much of the underlying rationale we used to
develop the August 2, 2007 final rule revised criteria remains true
under the broader CY 2021 proposal. For example, in the August 2, 2007
final rule with comment period, we indicated that we believed that any
procedure for which we did not allow payment in the hospital outpatient
setting due to safety concerns would not be safe to perform in an ASC
(72 FR 42478). Much like we are considering now, we excluded from the
ASC list any procedure on the IPO list, and committed to excluding
surgical procedures that pose significant safety risks to beneficiaries
or that are expected to require an overnight stay (72 FR 42478 to
42479). Although there are some differences when comparing our CY 2008
criteria and the proposed CY 2021 criteria, such as removing several of
the original general exclusion criteria, permitting the addition of
procedures to the ASC-CPL that would have been prohibited by those
criteria, and the different accreditation requirements and conditions
of participation requirements between HOPDS and ASCs, these concerns
have largely been addressed by the progress in medical practice and ASC
capabilities in the twelve years since the criteria were developed as
previously noted. In particular, given advances in the practice of
medicine and the evolving nature of ASCs, we believe ASCs are now
better equipped to safely perform procedures that were once too complex
or risky to be performed safely on Medicare beneficiaries in the ASC
setting. As previously mentioned, although ASCs and hospitals have
different health and safety requirements, many ASCs often undergo
accreditation as a condition of state licensure and share some similar
licensure and compliance requirements with hospitals. Each of these
requirements provides additional safeguards for the health and safety
of Medicare beneficiaries receiving surgical procedures in an ASC.
(c) Comment Solicitation on Potential Revisions to the ASC Conditions
of Coverage if Alternative 2 Is Adopted
Providers and suppliers participating in Medicare must comply with
our regulations (variously called Conditions of Participation (CoPs),
Conditions for Coverage (CfCs), Conditions of Certification, or
Requirements) in order to begin and continue participating in the
Medicare program. These health and safety standards are the foundation
for improving quality and protecting the health and safety of
beneficiaries. For ambulatory surgical centers (ASCs), the CfCs are
located at 42 CFR part 416.
Section 416.2 of our regulations defines an ambulatory surgical
center (ASC) as any distinct entity that operates exclusively for the
purpose of providing surgical services to patients not requiring
hospitalization, in which the expected duration of services would not
exceed 24 hours following an admission. The surgical services performed
at ASCs are scheduled, primarily elective, non-life-threatening
procedures that can be safely performed in an ambulatory setting.
The ASC CfCs were first published on August 5, 1982 (47 FR 34082),
and have since been amended several times. The ASC CfCs currently
contain 14 separate conditions that include requirements regarding
compliance with State licensure law; governing body; surgical services;
quality assessment and performance improvement; environment; medical
staff; nursing services; medical records; pharmaceutical services;
laboratory and radiologic services; patient rights; infection control;
patient admission, assessment and discharge; and emergency
preparedness.
As noted previously, CMS agrees with stakeholders that as medical
practice continues to evolve and advance, ASCs are increasingly able to
safely provide a greater range of services. The proposed expansion of
the ASC-CPL would allow physicians to exercise their clinical judgment
in making site-of-service determinations that are appropriate and also
beneficial to the patient. In recent years, more complex surgical
procedures that have been identified to be appropriate for certain
Medicare patients have been added to the ASC-CPL. For example,
effective CY 2020,
[[Page 48962]]
the total knee arthroplasty (TKA) procedure was added to the ASC-CPL as
part of the rulemaking process (84 FR 61385). CMS agreed with public
commenters that there is a small subset of Medicare beneficiaries who
may be suitable candidates to receive TKA in an ASC setting based on
their clinical characteristics. In addition, certain coronary
intervention procedures were added even though these procedures involve
blood vessels that could be considered major; it was appropriate to add
these procedures in our view based upon our belief that the procedures
should be considered in the context of proper patient selection and
clinical characteristics.
The current ASC CfCs provide the baseline health and safety
standards that accommodate the oversight of a broad spectrum of ASC
facility types that include services such as orthopedics,
ophthalmology, endoscopy, dental and other specialty practices. We
believe the current ASC CfCs provide sufficient flexibility and
protection to patients such that they would not need to be revised even
if we were to adopt a significant expansion of the ASC-CPL as outlined
under the second alternative proposal described in the above section.
The current ASC CfCs require the ASC, governing body and the medical
staff to be responsible for the policies and procedures that are
reflective of the patients that are served in the ASC. The ASC is
directly responsible for ensuring the ASC and medical staff evaluate
their patient base and ensure appropriate precautions and services are
in place for all surgical procedures performed in their facility.
The CfCs are one part of our coordinated requirements and
expectations for ASCs, which also include reporting of quality measures
under the ASCQR program. Both the CfCs and quality reporting program
would remain in place to ensure patient safety during and after any
changes to the ASC-CPL, but we request comments on whether the CfCs or
quality metrics should also change in response to an expanded range of
services that may be paid under Medicare in the ASC setting. We refer
readers to section XV.B. of this proposed rule regarding ASCQR Program
quality measures.
In the event that CMS were to finalize a proposal to allow more
invasive and lengthy surgical procedures in ASCs, we are requesting
comment on whether or not the ASC CfCs should be revised in the CY 2021
final rule to ensure that our health and safety standards are
sufficiently updated to reflect the additional range of complex
services that would be added to the ASC-CPL, and, if so, the
recommended revisions. For example, the current surgical services CfC
regulations under 42 CFR 416.42(a)(1)(I) require that a physician must
examine the patient to evaluate the risk of the procedure to be
performed while the regulations at 42 CFR 416.42(a)(1)(II) require a
physician or anesthetist as defined at Sec. 410.69(b) to examine the
patient to evaluate the risk of anesthesia. We seek public comment on
whether or not these risk evaluations should be expanded to be more
prescriptive and require additional elements such as requiring the
referring doctor to submit pertinent health information and attest that
an individual patient can safely undergo the specified procedure(s) in
an ASC and, if appropriate, may adopt such changes in the CY 2021 final
rule.
In addition, current standards at 42 CFR 416.46(a) require a
registered nurse be available for emergency treatment whenever there is
a patient in the ASC. We are soliciting comment on whether we should
add an additional CfC at Sec. 416.46 to require that an adequate
number of nurses be on duty in the ASC at all times that the ASC has
patient(s), consistent with the standard required of hospitals under
Sec. 482.23(b) and the associated guidance in the Medicare State
Operations Manual A-0392 (https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107ap_a_hospitals.pdf). Similar to the
hospital requirements, we anticipate that ASCs must take into account
the specific types of services being furnished and the acuity of the
patients in ensuring that there is adequate nursing staff available.
Further, standards under 42 CFR 416.44(e) also currently require
personnel trained in the use of emergency equipment and cardiopulmonary
resuscitation be available whenever there is a patient in the ASC.
Despite ASCs having access to local emergency services to transfer
patients to the nearest appropriate hospital for continued care, we
request comment on whether, in the final rule for CY 2021, we should
change the requirements to increase the mandatory level of
certification for personnel. For example, with respect to the current
regulations at 42 CFR 416.44(e), we are interested in whether or not
CMS should require the presence of staff certified to provide Advance
Cardiac Life Support (ACLS) in the ASC to respond to any life
threatening emergencies, and be capable of providing a full and
complete medical resuscitation response in the ASC, to stabilize the
patient before an emergency transfer to the closest hospital.
We also request comment on whether we should make specific
requirements in the CfC regulations at 42 CFR 416.52(a) for particular
patient conditions or more complex and invasive surgical procedures
ASCs would need to meet and for any evidence that would support such
recommendations. As mentioned previously, we also request comments on
possible additions or revisions to the quality measures under ASCQR if
additional procedures are added to the ASC-CPL.
We note the most useful comments are those that include data or
evidence to support the position, offer suggestions to amend specific
sections of the existing regulations, or offer particular additions.
In summary, in light of the possibility of significantly expanding
the ASC-CPL for CY 2021, we are considering whether changes to the ASC
CfCs may be appropriate. As noted above, the current ASC CfCs provide
the baseline health and safety standards that accommodate the oversight
of a broad spectrum of ASC facility types that include a variety of
services. We believe the current ASC CfCs provide sufficient
flexibility and protection to patients such that they would not need to
be revised even if we were to adopt a significant expansion of the
covered ASC-CPL, however, we seek comment on whether certain revisions
may be necessary and may adopt such revisions as final in the CY 2021
final rule.
(4) Summary of Proposals
For CY 2021, we propose to add eleven procedures using the standard
ASC-CPL review process under our current regulations. In addition, we
include two alternative proposals that we may finalize for CY 2021. One
alternative is to establish a nomination process for CY 2021, which
would allow us to propose to add nominated procedures beginning in CY
2022. Under this proposal, external stakeholders, such as professional
specialty societies, would nominate procedures that can be safely
performed in the ASC setting based on the requirements in the ASC
regulations, revised as described in this proposed rule (that is,
retaining the general standard criteria and eliminating five of the
general exclusion criteria), along with suggested parameters and all
other regulatory standards. CMS would review and finalize procedures
through annual rulemaking.
Alternatively, we propose to revise the ASC-CPL criteria under 42
CFR
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416.166, retaining the general standard criteria and eliminating five
of the general exclusion criteria. Using these revised criteria, we
propose to add approximately 270 potential surgery or surgery-like
codes to the CPL that are not on the CY 2020 IPO list. We propose to
finalize only one of these alternative proposals, and we welcome public
comment as to which policy should be adopted in the final rule.
After consideration of priorities discussed above, we believe that
these proposed policies strike an appropriate balance of between
flexibility for physicians to exercise their complex medical judgment
in factoring in patient safety considerations and flexibility for
patients to choose from more settings of care in which to receive
surgical procedures.
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D. Proposed Update and Payment for ASC Covered Surgical Procedures and
Covered Ancillary Services
1. Proposed ASC Payment for Covered Surgical Procedures
a. Background
Our ASC payment policies for covered surgical procedures under the
revised ASC payment system are described in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66828 through 66831). Under our
established policy, we use the ASC standard ratesetting methodology of
multiplying the ASC relative payment weight for the procedure by the
ASC conversion factor for that same year to calculate the national
unadjusted payment rates for procedures with payment indicators ``G2''
and ``A2''. Payment indicator ``A2'' was developed to identify
procedures that were included on the list of ASC covered surgical
procedures in CY 2007 and, therefore, were subject to transitional
payment prior to CY 2011. Although the 4-year transitional period has
ended and payment indicator ``A2'' is no longer required to identify
surgical procedures subject to transitional payment, we retained
payment indicator ``A2'' because it is used to identify procedures that
are exempted from the application of the office-based designation.
The rate calculation established for device-intensive procedures
(payment indicator ``J8'') is structured so only the service portion of
the rate is subject to the ASC standard ratesetting methodology. In the
CY 2019 OPPS/ASC final rule with comment period (83 FR 59028 through
59080), we updated the CY 2018 ASC payment rates for ASC covered
surgical procedures with payment indicators of ``A2'', ``G2'', and
``J8'' using CY 2017 data, consistent with the CY 2019 OPPS update. We
also updated payment rates for device-intensive procedures to
incorporate the CY 2019 OPPS device offset percentages calculated under
the standard APC ratesetting methodology, as discussed earlier in this
section.
Payment rates for office-based procedures (payment indicators
``P2'', ``P3'', and ``R2'') are the lower of the PFS nonfacility PE
RVU-based amount or the amount calculated using the ASC standard rate
setting methodology for the procedure. In the CY 2018 OPPS/ASC final
rule with comment period, we updated the payment amounts for office-
based procedures (payment indicators ``P2'', ``P3'', and ``R2'') using
the most recent available MPFS and OPPS data. We compared the estimated
CY 2018 rate for each of the office-based procedures, calculated
according to the ASC standard rate setting methodology, to the PFS
nonfacility PE RVU-based amount to determine which was lower and,
therefore, would be the CY 2018 payment rate for the procedure under
our final policy for the revised ASC payment system (Sec. 416.171(d)).
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75081), we finalized our proposal to calculate the CY 2014 payment
rates for ASC covered surgical procedures according to our established
methodologies, with the exception of device removal procedures. For CY
2014, we finalized a policy to conditionally package payment for device
removal procedures under the OPPS. Under the OPPS, a conditionally
packaged procedure (status indicators ``Q1'' and ``Q2'') describes a
HCPCS code where the payment is packaged when it is provided with a
significant procedure but is separately paid when the service appears
on the claim without a significant procedure. Because ASC services
always include a covered surgical procedure, HCPCS codes that are
conditionally packaged under the OPPS are always packaged (payment
indicator ``N1'') under the ASC payment system. Under the OPPS, device
removal procedures are conditionally packaged and, therefore, would be
packaged under the ASC payment system. There would be no Medicare
payment made when a device removal procedure is performed in an ASC
without another surgical procedure included on the claim; therefore, no
Medicare payment would be made if a device was removed but not
replaced. To ensure that the ASC payment system provides separate
payment for surgical procedures that only involve device removal--
conditionally packaged in the OPPS (status indicator ``Q2'')--we
continued to provide separate payment since CY 2014 and assigned the
current ASC payment indicators associated with these procedures.
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for
CY 2021
We propose to update ASC payment rates for CY 2021 and subsequent
years using the established rate calculation methodologies under Sec.
416.171 and using our definition of device-intensive procedures, as
discussed in section XII.C.1.b. of this CY 2021 OPPS/ASC proposed rule.
Because the proposed OPPS relative payment weights are generally based
on geometric mean costs, the ASC system would generally use the
geometric mean to determine proposed relative payment weights under the
ASC standard methodology. We propose to continue to use the amount
calculated under the ASC standard ratesetting methodology for
procedures assigned payment indicators ``A2'' and ``G2''.
We propose to calculate payment rates for office-based procedures
(payment indicators ``P2'', ``P3'', and ``R2'') and device-intensive
procedures (payment indicator ``J8'') according to our established
policies and, for device-intensive procedures, using our modified
definition of device-intensive procedures, as discussed in section
XII.C.1.b. of this CY 2021 OPPS/ASC proposed rule. Therefore, we
propose to update the payment amount for the service portion of the
device-intensive procedures using the ASC standard rate setting
methodology and the payment amount for the device portion based on the
proposed CY 2021 OPPS device offset percentages that have been
calculated using the standard OPPS APC ratesetting methodology. Payment
for office-based procedures would be at the lesser of the proposed CY
2021 MPFS nonfacility PE RVU-based amount or the proposed CY 2021 ASC
payment amount calculated according to the ASC standard ratesetting
methodology.
As we did for CYs 2014 through 2020, for CY 2021 we propose to
continue our policy for device removal procedures, such that device
removal procedures that are conditionally packaged in the OPPS (status
indicators ``Q1'' and ``Q2'') would be assigned the current ASC payment
indicators associated with those procedures and would continue to be
paid separately under the ASC payment system.
c. Proposed Limit on ASC Payment Rates for Low Volume Device-Intensive
Procedures
As stated in section XIII.D.1.b. of this CY 2021 OPPS/ASC proposed
rule, the ASC payment system generally uses OPPS geometric mean costs
under the standard methodology to determine proposed relative payment
weights under the standard ASC ratesetting methodology. However, for
low-volume device-intensive procedures, the proposed relative payment
weights are based on median costs, rather than geometric mean costs, as
discussed in section IV.B.5. of this CY 2021 OPPS/ASC proposed rule.
In the CY 2020 OPPS/ASC final rule with comment period (84 FR
61400), we finalized our policy to limit the ASC payment rate for low-
volume device-intensive procedures to a payment rate equal to the OPPS
payment rate for that procedure. Under our new policy,
[[Page 48977]]
where the ASC payment rate based on the standard ASC ratesetting
methodology for low volume device-intensive procedures would exceed the
rate paid under the OPPS for the same procedure, we establish an ASC
payment rate for such procedures equal to the OPPS payment rate for the
same procedure. For CY 2020, this policy only affected HCPCS code
0308T, which had very low claims volume (7 claims from CY 2018 used for
CY 2020 ratesetting in the OPPS). Additionally, we amended Sec.
416.171(b) of the regulations to reflect the new limit on ASC payment
rates for low-volume device-intensive procedures. CMS' existing
regulation at Sec. 416.171(b)(2) requires the payment of the device
portion of a device-intensive procedure at an amount derived from the
payment rate for the equivalent item under the OPPS using our standard
ratesetting methodology. We added paragraph (b)(4) to Sec. 416.171 to
require that, notwithstanding paragraph (b)(2), low volume device-
intensive procedures where the otherwise applicable payment rate
calculated based on the standard methodology for device-intensive
procedures would exceed the payment rate for the equivalent procedure
set under the OPPS, the payment rate for the procedure under the ASC
payment system would be equal to the payment rate for the same
procedure under the OPPS.
Based on our review of CY 2019 claims using our standard
ratesetting methodology, there are no low volume device-intensive
procedures that would exceed the rate paid under the OPPS for the same
procedure. However, there was a single claim containing CPT code 0308T
that was unable to be used for the CY 2021 OPPS/ASC proposed rule
ratesetting process as it was packaged into a comprehensive APC.
Because our claims accounting logic does not assign the costs of
individual procedures provided as part of a comprehensive APC to the
APC that would otherwise apply the costs for CPT code 0308T were not
assigned to the APC for that procedure, APC 5495 (Level 5 Intraocular
Procedures). As a result, there was no available cost data from CY 2019
claims data to construct relative payment weights for CPT code 0308T.
As discussed in section III.D.2., under the OPPS, we propose to
establish the payment weight for the CY 2021 OPPS for CPT code 0308T
using the CY 2020 OPPS final rule median cost of $20,229.78 and
relative payment weight as reflecting the most recent claims and cost
data. Similarly, as there are no usable claims with CPT code 0308T from
CY 2019, which we would normally use for this CY 2021 proposed rule
under our standard ratesetting methodology, to establish an appropriate
payment rate in CY 2021 for CPT code 0308T using the most recent claims
and cost data, we propose to establish the payment rate under the ASC
payment system for CY 2021 using CY 2020 final rule OPPS median cost of
$20,229.78 and relative payment weight as reflecting the most recent
available claims and cost data.
However, CPT code 0308T was designated as a low volume device-
intensive procedure in CY 2020. For CY 2020, under the low-volume
procedure payment policies in effect through CY 2019, the available
claims data would have resulted in a payment rate of approximately
$111,019.30 for CPT code 0308T when performed in the ASC setting, which
would have been several times greater than the OPPS payment rate.
Therefore, for CY 2020 we finalized our policy to limit the ASC payment
rate for low-volume device intensive procedures to a payment rate equal
to the OPPS payment rate for the procedures. This policy had the effect
of limiting the ASC payment rate for CPT code 0308T to the applicable
payment rate under the OPPS (which was $20,675.62 in CY 2020).
Therefore, for this CY 2021 proposed rule, we propose to apply a
payment rate under the ASC payment system equal to the OPPS payment
rate for CPT code 0308T, which is $20, 994.57 in this proposed rule.
Further, in the absence of claims data for this proposed rule, we also
propose in this CY 2021 OPPS/ASC proposed rule to continue the CY 2020
final rule device offset percentage of 90.18 percent for CPT code
0308T. We will continue to monitor the claims available for ratesetting
as they become available in preparation for the CY 2021 OPPS/ASC final
rule.
The proposed payment rate for covered surgical procedures for CY
2021, including CPT code 0308T, are listed in Addendum AA of this CY
2021 OPPS/ASC proposed rule (which is available via the internet on the
CMS website).
2. Proposed Payment for Covered Ancillary Services
a. Background
Our payment policies under the ASC payment system for covered
ancillary services generally vary according to the particular type of
service and its payment policy under the OPPS. Our overall policy
provides separate ASC payment for certain ancillary items and services
integrally related to the provision of ASC covered surgical procedures
that are paid separately under the OPPS and provides packaged ASC
payment for other ancillary items and services that are packaged or
conditionally packaged (status indicators ``N'', ``Q1'', and ``Q2'')
under the OPPS. In the CY 2013 OPPS/ASC rulemaking (77 FR 45169 and 77
FR 68457 through 68458), we further clarified our policy regarding the
payment indicator assignment of procedures that are conditionally
packaged in the OPPS (status indicators ``Q1'' and ``Q2''). Under the
OPPS, a conditionally packaged procedure describes a HCPCS code where
the payment is packaged when it is provided with a significant
procedure but is separately paid when the service appears on the claim
without a significant procedure. Because ASC services always include a
surgical procedure, HCPCS codes that are conditionally packaged under
the OPPS are generally packaged (payment indictor ``N1'') under the ASC
payment system (except for device removal procedures, as discussed in
section IV. of this CY 2021 OPPS/ASC proposed rule). Thus, our policy
generally aligns ASC payment bundles with those under the OPPS (72 FR
42495). In all cases, in order for those ancillary services also to be
paid, ancillary items and services must be provided integral to the
performance of ASC covered surgical procedures for which the ASC bills
Medicare.
Our ASC payment policies generally provide separate payment for
drugs and biologicals that are separately paid under the OPPS at the
OPPS rates and package payment for drugs and biologicals for which
payment is packaged under the OPPS. However, as discussed in section
XIII.D.3. of this CY 2021 OPPS/ASC proposed rule, for CY 2019, we
finalized a 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 furnished in the ASC setting, even though payment for
these drugs continues to be packaged under the OPPS. We generally pay
for separately payable radiology services at the lower of the PFS
nonfacility PE RVU-based (or technical component) amount or the rate
calculated according to the ASC standard ratesetting methodology (72 FR
42497). However, as finalized in the CY 2011 OPPS/ASC final rule with
comment period (75 FR 72050), payment indicators for all nuclear
medicine procedures (defined as CPT codes in the range of 78000 through
78999) that are designated as
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radiology services that are paid separately when provided integral to a
surgical procedure on the ASC list are set to ``Z2'' so that payment is
made based on the ASC standard ratesetting methodology rather than the
MPFS nonfacility PE RVU amount (``Z3''), regardless of which is lower
(Sec. 416.171(d)(1)).
Similarly, we also finalized our policy to set the payment
indicator to ``Z2'' for radiology services that use contrast agents so
that payment for these procedures will be based on the OPPS relative
payment weight using the ASC standard ratesetting methodology and,
therefore, will include the cost for the contrast agent (Sec.
416.171(d)(2)).
ASC payment policy for brachytherapy sources mirrors the payment
policy under the OPPS. ASCs are paid for brachytherapy sources provided
integral to ASC covered surgical procedures at prospective rates
adopted under the OPPS or, if OPPS rates are unavailable, at
contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs
have been paid for brachytherapy sources provided integral to ASC
covered surgical procedures at prospective rates adopted under the
OPPS.
Our ASC policies also provide separate payment for: (1) Certain
items and services that CMS designates as contractor-priced, including,
but not limited to, the procurement of corneal tissue; and (2) certain
implantable items that have pass-through payment status under the OPPS.
These categories do not have prospectively established ASC payment
rates according to ASC payment system policies (72 FR 42502 and 42508
through 42509; Sec. 416.164(b)). Under the ASC payment system, we have
designated corneal tissue acquisition and hepatitis B vaccines as
contractor-priced. Corneal tissue acquisition is contractor-priced
based on the invoiced costs for acquiring the corneal tissue for
transplantation. Hepatitis B vaccines are contractor-priced based on
invoiced costs for the vaccine.
Devices that are eligible for pass-through payment under the OPPS
are separately paid under the ASC payment system and are contractor-
priced. Under the revised ASC payment system (72 FR 42502), payment for
the surgical procedure associated with the pass-through device is made
according to our standard methodology for the ASC payment system, based
on only the service (non-device) portion of the procedure's OPPS
relative payment weight if the APC weight for the procedure includes
other packaged device costs. We also refer to this methodology as
applying a ``device offset'' to the ASC payment for the associated
surgical procedure. This ensures that duplicate payment is not provided
for any portion of an implanted device with OPPS pass-through payment
status.
In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933
through 66934), we finalized that, beginning in CY 2015, certain
diagnostic tests within the medicine range of CPT codes for which
separate payment is allowed under the OPPS are covered ancillary
services when they are integral to an ASC covered surgical procedure.
We finalized that diagnostic tests within the medicine range of CPT
codes include all Category I CPT codes in the medicine range
established by CPT, from 90000 to 99999, and Category III CPT codes and
Level II HCPCS codes that describe diagnostic tests that crosswalk or
are clinically similar to procedures in the medicine range established
by CPT. In the CY 2015 OPPS/ASC final rule with comment period, we also
finalized our policy to pay for these tests at the lower of the PFS
nonfacility PE RVU-based (or technical component) amount or the rate
calculated according to the ASC standard ratesetting methodology (79 FR
66933 through 66934). We finalized that the diagnostic tests for which
the payment is based on the ASC standard ratesetting methodology be
assigned to payment indicator ``Z2'' and revised the definition of
payment indicator ``Z2'' to include a reference to diagnostic services
and those for which the payment is based on the PFS nonfacility PE RVU-
based amount be assigned payment indicator ``Z3,'' and revised the
definition of payment indicator ``Z3'' to include a reference to
diagnostic services.
b. Proposed Payment for Covered Ancillary Services for CY 2021
We propose to update the ASC payment rates and to make changes to
ASC payment indicators, as necessary, to maintain consistency between
the OPPS and ASC payment system regarding the packaged or separately
payable status of services and the proposed CY 2021 OPPS and ASC
payment rates and subsequent year payment rates. We also propose to
continue to set the CY 2020 ASC payment rates and subsequent year
payment rates for brachytherapy sources and separately payable drugs
and biologicals equal to the OPPS payment rates for CY 2021 and
subsequent year payment rates.
Based on our quarterly updates for April and July 2020, we propose
to add CPT 0598T (Noncontact real-time fluorescence wound imaging, for
bacterial presence, location, and load, per session; first anatomic
site (for example, lower extremity)), CPT 0599T (Noncontact real-time
fluorescence wound imaging, for bacterial presence, location, and load,
per session; each additional anatomic site (for example, upper
extremity) (List separately in addition to code for primary
procedure)), C9762 (Cardiac magnetic resonance imaging for morphology
and function, quantification of segmental dysfunction; with strain
imaging), and C7963 (Cardiac magnetic resonance imaging for morphology
and function, quantification of segmental dysfunction; with stress
imaging) as covered ancillary services.
Covered ancillary services and their proposed payment indicators
for CY 2021 are listed in Addendum BB of this CY 2021 OPPS/ASC proposed
rule (which is available via the internet on the CMS website). For
those covered ancillary services where the payment rate is the lower of
the proposed rates under the ASC standard rate setting methodology and
the PFS final rates, the proposed payment indicators and rates set
forth in the proposed rule are based on a comparison using the proposed
PFS rates effective January 1, 2021. For a discussion of the PFS rates,
we refer readers to the CY 2021 PFS proposed rule, which is available
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
3. CY 2021 ASC Packaging Policy for Non-Opioid Pain Management
Treatments
Section 6082 of the ``Substance Use-Disorder Prevention that
Promotes Opioid Recovery and Treatment for Patients and Communities
Act,'' also referred to as the ``SUPPORT for Patients and Communities
Act'' (SUPPORT Act) (Pub. L. 115-271) was enacted on October 24, 2018.
Section 6082(a) of the SUPPORT Act requires in part that the Secretary:
``(i) shall, as soon as practicable, conduct a review (part of which
may include a request for information) of payments 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; (ii) may,
as the Secretary determines appropriate, conduct subsequent reviews of
such payments; and (iii) shall consider the
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extent to which revisions under this subsection to such payments (such
as the creation of additional groups of covered OPD services to
classify separately those procedures that utilize opioids and non-
opioid alternatives for pain management) would reduce payment
incentives to use opioids instead of non-opioid alternatives for pain
management.'' Section 6082(b) of the SUPPORT Act requires that the
Secretary conduct a similar type of review in ambulatory surgical
centers.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59066
through 59072), we finalized the 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 finalized conforming changes to Sec.
416.164(a)(4) to exclude non-opioid pain management drugs that function
as a supply when used in a surgical procedure from our policy to
package payment for drugs and biologicals for which separate payment is
not allowed under the OPPS into the ASC payment for the covered
surgical procedure. We added a new Sec. 416.164(b)(6) to include non-
opioid pain management drugs that function as a supply when used in a
surgical procedure as covered ancillary services that are integral to a
covered surgical procedure. Finally, we finalized a change to Sec.
416.171(b)(1) to exclude non-opioid pain management drugs that function
as a supply when used in a surgical procedure from our policy to pay
for ASC covered ancillary services an amount derived from the payment
rate for the equivalent item or service set under the OPPS.
For the CY 2020 OPPS/ASC proposed rule (84 FR 39424 through 39427),
we reviewed payments under the ASC 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. We used available data to analyze the
payment and utilization patterns associated with specific non-opioid
alternatives to determine whether our packaging policies reduced the
use of non-opioid alternatives. For the CY 2020 OPPS/ASC proposed rule
(84 FR 39426), 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 for CY 2020. In the CY 2020
OPPS/ASC final rule with comment period (84 FR 61177), after reviewing
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 were necessary for
CY 2020. We finalized our proposal to continue to unpackage and pay
separately at ASP+6 percent for the cost of non-opioid pain management
drugs that function as surgical supplies when furnished in the ASC
setting for CY 2020. Under this policy, the only FDA-approved drug that
meets these criteria is Exparel.
We conducted an evaluation to determine whether there are payment
incentives for using opioids instead of non-opioid alternatives in the
CY 2020 OPPS/ASC final rule with comment period (84 FR 61176 to 61180).
The results of our review and evaluation of our claims data did not
provide evidence to indicate that the OPPS packaging policy had the
unintended consequence of discouraging the use of non-opioid treatments
for postsurgical pain management in the hospital outpatient department.
Our updated review of claims data for the CY 2020 proposed rule showed
a continued decline in the utilization of Exparel[supreg] in the ASC
setting, which supported our proposal to continue paying separately for
Exparel[supreg] in the ASC setting.
(4) Evaluation and CY 2021 Proposal for Payment for Non-Opioid
Alternatives
Over the last 2 years, we have conducted detailed evaluations of
our payment policies regarding the use of opioids and non-opioid
alternatives. We have reviewed multiple years of Medicare claims data,
all public comments received on this topic, and studies and data from
external stakeholders. Each of these reviews have led to the consistent
conclusion that CMS's packaging policies are not discouraging the use
of non-opioid alternatives or impeding access to these products, with
the exception of Exparel, the only non-opioid pain management drug that
functions as a surgical supply when furnished in the ASC setting.
Section 6082(a) of the SUPPORT Act also provides that after an
initial review, the Secretary can conduct subsequent reviews of covered
payments as the Secretary deems appropriate. In light of the fact that
CMS has conducted a thorough review of payments for opioids and
evidence-based non-opioid alternatives for pain management to ensure
that there are not financial incentives to use opioids instead of non-
opioid alternatives, we do not believe that conducting a similar review
for CY2021 would be a fruitful effort. After careful consideration, we
believe we have fulfilled the statutory requirement to review payments
for opioids and evidence-based non-opioid alternatives for pain
management to ensure that there are not financial incentives to use
opioids instead of non-opioid alternatives, as described in the CY 2020
OPPS/ASC rulemaking. We are committed to evaluating our current
policies to adjust payment methodologies, if necessary, in order to
ensure appropriate access for beneficiaries amid the current opioid
epidemic. However, we do not believe conducting a similar CY 2021
review would yield significantly different outcomes or new evidence
that would prompt us to change our payment policies under the OPPS or
ASC payment system.
Current claims data suggest that CMS' current policies are having a
positive impact on the utilization of non-opioid alternatives,
including Exparel. A preliminary claims analysis showed that the total
units of Exparel have increased over the last year. From CY 2015 to CY
2018, we saw an annual decline in the total units of Exparel furnished
in the ASC setting, with 244,756 total units provided in CY 2015
dropping to 60,125 total units provided in CY 2018. In CY 2019, ASCs
furnished a total of 1,379,286 units of Exparel. Due to this positive
trend that reflects the increased use of non-opioid treatment for pain,
we do not believe that further changes are necessary under the ASC
payment system for non-opioid pain management drugs that function as a
surgical supply in the ASC setting. Therefore, for CY 2021, we propose
to continue our policy to unpackage and 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 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 2021.
E. Proposed New Technology Intraocular Lenses (NTIOLs)
New Technology Intraocular Lenses (NTIOLs) are intraocular lenses
that replace a patient's natural lens that has been removed in cataract
surgery and that also meet the requirements listed in Sec. 416.195.
[[Page 48980]]
1. NTIOL Application Cycle
Our process for reviewing applications to establish new classes of
NTIOLs is as follows:
Applicants submit their NTIOL requests for review to CMS
by the annual deadline. For a request to be considered complete, we
require submission of the information that is found in the guidance
document entitled ``Application Process and Information Requirements
for Requests for a New Class of New Technology Intraocular Lenses
(NTIOLs) or Inclusion of an IOL in an Existing NTIOL Class'' posted on
the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html.
We announce annually, in the proposed rule updating the
ASC and OPPS payment rates for the following calendar year, a list of
all requests to establish new NTIOL classes accepted for review during
the calendar year in which the proposal is published. In accordance
with section 141(b)(3) of Public Law 103-432 and our regulations at
Sec. 416.185(b), the deadline for receipt of public comments is 30
days following publication of the list of requests in the proposed
rule.
In the final rule updating the ASC and OPPS payment rates
for the following calendar year, we--
++ Provide a list of determinations made as a result of our review
of all new NTIOL class requests and public comments.
++ When a new NTIOL class is created, identify the predominant
characteristic of NTIOLs in that class that sets them apart from other
IOLs (including those previously approved as members of other expired
or active NTIOL classes) and that is associated with an improved
clinical outcome.
++ Set the date of implementation of a payment adjustment in the
case of approval of an IOL as a member of a new NTIOL class
prospectively as of 30 days after publication of the ASC payment update
final rule, consistent with the statutory requirement.
++ Announce the deadline for submitting requests for review of an
application for a new NTIOL class for the following calendar year.
2. Requests To Establish New NTIOL Classes for CY 2021
We did not receive any requests for review to establish a new NTIOL
class for CY 2021.3. Payment Adjustment
The current payment adjustment for a 5-year period from the
implementation date of a new NTIOL class is $50 per lens. Since
implementation of the process for adjustment of payment amounts for
NTIOLs in 1999, we have not revised the payment adjustment amount, and
we are not proposing to revise the payment adjustment amount for CY
2021.
F. Proposed ASC Payment and Comment Indicators
1. Background
In addition to the payment indicators that we introduced in the
August 2, 2007 final rule, we created final comment indicators for the
ASC payment system in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66855). We created Addendum DD1 to define ASC payment
indicators that we use in Addenda AA and BB to provide payment
information regarding covered surgical procedures and covered ancillary
services, respectively, under the revised ASC payment system. The ASC
payment indicators in Addendum DD1 are intended to capture policy-
relevant characteristics of HCPCS codes that may receive packaged or
separate payment in ASCs, such as whether they were on the ASC CPL
prior to CY 2008; payment designation, such as device-intensive or
office-based, and the corresponding ASC payment methodology; and their
classification as separately payable ancillary services, including
radiology services, brachytherapy sources, OPPS pass-through devices,
corneal tissue acquisition services, drugs or biologicals, or NTIOLs.
We also created Addendum DD2 that lists the ASC comment indicators.
The ASC comment indicators included in Addenda AA and BB to the
proposed rules and final rules with comment period serve to identify,
for the revised ASC payment system, the status of a specific HCPCS code
and its payment indicator with respect to the timeframe when comments
will be accepted. The comment indicator ``NI'' is used in the OPPS/ASC
final rule to indicate new codes for the next calendar year for which
the interim payment indicator assigned is subject to comment. The
comment indicator ``NI'' also is assigned to existing codes with
substantial revisions to their descriptors such that we consider them
to be describing new services, and the interim payment indicator
assigned is subject to comment, as discussed in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60622).
The comment indicator ``NP'' is used in the OPPS/ASC proposed rule
to indicate new codes for the next calendar year for which the proposed
payment indicator assigned is subject to comment. The comment indicator
``NP'' also is assigned to existing codes with substantial revisions to
their descriptors, such that we consider them to be describing new
services, and the proposed payment indicator assigned is subject to
comment, as discussed in the CY 2016 OPPS/ASC final rule with comment
period (80 FR 70497).
The ``CH'' comment indicator is used in Addenda AA and BB to the
proposed rule (which are available via the internet on the CMS website)
to indicate that the payment indicator assignment has changed for an
active HCPCS code in the current year and the next calendar year, for
example if an active HCPCS code is newly recognized as payable in ASCs;
or an active HCPCS code is discontinued at the end of the current
calendar year. The ``CH'' comment indicators that are published in the
final rule with comment period are provided to alert readers that a
change has been made from one calendar year to the next, but do not
indicate that the change is subject to comment.
2. ASC Payment and Comment Indicators for CY 2021
For CY 2021, we propose new and revised Category I and III CPT
codes as well as new and revised Level II HCPCS codes. Therefore,
proposed Category I and III CPT codes that are new and revised for CY
2021 and any new and existing Level II HCPCS codes with substantial
revisions to the code descriptors for CY 202a compared to the CY 2020
descriptors are included in ASC Addenda AA and BB to this proposed rule
were labeled with proposed comment indicator ``NP'' to indicate that
these CPT and Level II HCPCS codes were open for comment as part of the
proposed rule. Proposed comment indicator ``NP'' meant a new code for
the next calendar year or an existing code with substantial revision to
its code descriptor in the next calendar year, as compared to current
calendar year; and denoted that comments would be accepted on the
proposed ASC payment indicator for the new code.
For the CY 2021 update, we propose to add ASC payment indicator
``K5''--Items, Codes, and Services for which pricing information and
claims data are not available. No payment made.--) to ASC Addendum DD1
to this proposed rule (which is available via the internet on the CMS
website). New drug HCPCS codes that do not have claims data or payment
rate information are currently assigned to OPPS status indicator
``E2''--Not paid by Medicare when submitted on outpatient claims (any
outpatient bill type). These codes are
[[Page 48981]]
categorized and included in the ASC payment system as nonpayable codes
and are currently assigned an ASC payment indicator ``Y5''--Non-
surgical procedure/item not valid for Medicare purposes because of
coverage, regulation and/or statute; no payment made--because that is
the ASC payment indicator that currently best describes the status of
these HCPCS codes. However, ``Y5'' assignments include both those drug
codes that would not be integral to the performance of a surgical
procedure and are therefore not payable in the ASC payment system and
those codes that may become separately payable in the ASC payment
system. Since there is not a separate payment indicator that describes
the subset of drug codes that will become payable when claims data or
payment information is available the existing ASC payment indicators
cannot currently communicate the distinction between these two classes
of drugs. Therefore, for CY2021 and subsequent calendar years, we
propose to add ASC payment indicator ``K5''--Items, Codes, and Services
for which pricing information and claims data are not available. No
payment made.--to ASC Addendum DD1 to this proposed rule (which is
available via the internet on the CMS website) to indicate those
services and procedures that CMS anticipates will become payable when
claims data or payment information becomes available.
We will respond to public comments on ASC payment and comment
indicators and finalize their ASC assignment in the CY 2021 OPPS/ASC
final rule with comment period. We refer readers to Addenda DD1 and DD2
of this proposed rule (which are available via the internet on the CMS
website) for the complete list of ASC payment and comment indicators
proposed for the CY 2020 update. Addenda DD1 and DD2 to this proposed
rule (which are available via the internet on the CMS website) contain
the complete list of ASC payment and comment indicators for CY 2021.
G. Proposed Calculation of the ASC Payment Rates and the ASC Conversion
Factor
1. Background
In the August 2, 2007 final rule (72 FR 42493), we established our
policy to base ASC relative payment weights and payment rates under the
revised ASC payment system on APC groups and the OPPS relative payment
weights. Consistent with that policy and the requirement at section
1833(i)(2)(D)(ii) of the Act that the revised payment system be
implemented so that it would be budget neutral, the initial ASC
conversion factor (CY 2008) was calculated so that estimated total
Medicare payments under the revised ASC payment system in the first
year would be budget neutral to estimated total Medicare payments under
the prior (CY 2007) ASC payment system (the ASC conversion factor is
multiplied by the relative payment weights calculated for many ASC
services in order to establish payment rates). That is, application of
the ASC conversion factor was designed to result in aggregate Medicare
expenditures under the revised ASC payment system in CY 2008 being
equal to aggregate Medicare expenditures that would have occurred in CY
2008 in the absence of the revised system, taking into consideration
the cap on ASC payments in CY 2007, as required under section
1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the
system budget neutral in subsequent calendar years (72 FR 42532 through
42533; Sec. 416.171(e)).
We note that we consider the term ``expenditures'' in the context
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of
the Act to mean expenditures from the Medicare Part B Trust Fund. We do
not consider expenditures to include beneficiary coinsurance and
copayments. This distinction was important for the CY 2008 ASC budget
neutrality model that considered payments across the OPPS, ASC, and
MPFS payment systems. However, because coinsurance is almost always 20
percent for ASC services, this interpretation of expenditures has
minimal impact for subsequent budget neutrality adjustments calculated
within the revised ASC payment system.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857
through 66858), we set out a step-by-step illustration of the final
budget neutrality adjustment calculation based on the methodology
finalized in the August 2, 2007 final rule (72 FR 42521 through 42531)
and as applied to updated data available for the CY 2008 OPPS/ASC final
rule with comment period. The application of that methodology to the
data available for the CY 2008 OPPS/ASC final rule with comment period
resulted in a budget neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS relative payment weights as the
ASC relative payment weights for most services and, consistent with the
final policy, we calculated the CY 2008 ASC payment rates by
multiplying the ASC relative payment weights by the final CY 2008 ASC
conversion factor of $41.401. For covered office-based surgical
procedures, covered ancillary radiology services (excluding covered
ancillary radiology services involving certain nuclear medicine
procedures or involving the use of contrast agents, as discussed in
section XII.D.2. of this CY 2021 OPPS/ASC proposed rule), and certain
diagnostic tests within the medicine range that are covered ancillary
services, the established policy is to set the payment rate at the
lower of the MPFS unadjusted nonfacility PE RVU-based amount or the
amount calculated using the ASC standard ratesetting methodology.
Further, as discussed in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66841 through 66843), we also adopted alternative
ratesetting methodologies for specific types of services (for example,
device-intensive procedures).
As discussed in the August 2, 2007 final rule (72 FR 42517 through
42518) and as codified at Sec. 416.172(c) of the regulations, the
revised ASC payment system accounts for geographic wage variation when
calculating individual ASC payments by applying the pre-floor and pre-
reclassified IPPS hospital wage indexes to the labor-related share,
which is 50 percent of the ASC payment amount based on a GAO report of
ASC costs using 2004 survey data. Beginning in CY 2008, CMS accounted
for geographic wage variation in labor costs when calculating
individual ASC payments by applying the pre-floor and pre-reclassified
hospital wage index values that CMS calculates for payment under the
IPPS, using updated Core Based Statistical Areas (CBSAs) issued by OMB
in June 2003.
The reclassification provision in section 1886(d) (10) of the Act
is specific to hospitals. We believe that using the most recently
available pre-floor and pre-reclassified IPPS hospital wage indexes
results in the most appropriate adjustment to the labor portion of ASC
costs. We continue to believe that the unadjusted hospital wage
indexes, which are updated yearly and are used by many other Medicare
payment systems, appropriately account for geographic variation in
labor costs for ASCs. Therefore, the wage index for an ASC is the pre-
floor and pre-reclassified hospital wage index under the IPPS of the
CBSA that maps to the CBSA where the ASC is located.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. On February 28,
2013, OMB issued OMB Bulletin No. 13-01, which provides the
delineations of all Metropolitan Statistical Areas, Metropolitan
Divisions, Micropolitan Statistical Areas, Combined Statistical
[[Page 48982]]
Areas, and New England City and Town Areas in the United States and
Puerto Rico based on the standards published on June 28, 2010 in the
Federal Register (75 FR 37246 through 37252) and 2010 Census Bureau
data. (A copy of this bulletin may be obtained at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2013/b13-01.pdf). In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through
49963), we implemented the use of the CBSA delineations issued by OMB
in OMB Bulletin 13-01 for the IPPS hospital wage index beginning in FY
2015.
OMB occasionally issues minor updates and revisions to statistical
areas in the years between the decennial censuses. On July 15, 2015,
OMB issued OMB Bulletin No. 15-01, which provides updates to and
supersedes OMB Bulletin No. 13-01 that was issued on February 28, 2013.
OMB Bulletin No. 15-01 made changes that are relevant to the IPPS and
ASC wage index. We refer readers to the CY 2017 OPPS/ASC final rule
with comment period (81 FR 79750) for a discussion of these changes and
our implementation of these revisions. (A copy of this bulletin may be
obtained at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2015/15-01.pdf).
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. We refer readers to the CY 2019 OPPS/ASC final
rule with comment period (83 FR 58864 through 58865) for a discussion
of these changes and our implementation of these revisions. (A copy of
this bulletin may be obtained at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf).
For CY 2021, the proposed CY 2021 ASC wage indexes fully reflect
the OMB labor market area delineations (including the revisions to the
OMB labor market delineations discussed above, as set forth in OMB
Bulletin Nos. 15-01 and 17-01).
We note that, in certain instances, there might be urban or rural
areas for which there is no IPPS hospital that has wage index data that
could be used to set the wage index for that area. For these areas, our
policy has been to use the average of the wage indexes for CBSAs (or
metropolitan divisions as applicable) that are contiguous to the area
that has no wage index (where ``contiguous'' is defined as sharing a
border). For example, for CY 2014, we applied a proxy wage index based
on this methodology to ASCs located in CBSA 25980 (Hinesville-Fort
Stewart, GA) and CBSA 08 (Rural Delaware).
When all of the areas contiguous to the urban CBSA of interest are
rural and there is no IPPS hospital that has wage index data that could
be used to set the wage index for that area, we determine the ASC wage
index by calculating the average of all wage indexes for urban areas in
the state (75 FR 72058 through 72059). (In other situations, where
there are no IPPS hospitals located in a relevant labor market area, we
continue our current policy of calculating an urban or rural area's
wage index by calculating the average of the wage indexes for CBSAs (or
metropolitan divisions where applicable) that are contiguous to the
area with no wage index.)
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2021 and Future
Years
We update the ASC relative payment weights each year using the
national OPPS relative payment weights (and PFS nonfacility PE RVU-
based amounts, as applicable) for that same calendar year and uniformly
scale the ASC relative payment weights for each update year to make
them budget neutral (72 FR 42533). The OPPS relative payment weights
are scaled to maintain budget neutrality for the OPPS. We then scale
the OPPS relative payment weights again to establish the ASC relative
payment weights. To accomplish this we hold estimated total ASC payment
levels constant between calendar years for purposes of maintaining
budget neutrality in the ASC payment system. That is, we apply the
weight scalar to ensure that projected expenditures from the updated
ASC payment weights in the ASC payment system equal to what would be
the current expenditures based on the scaled ASC payment weights. In
this way we ensure budget neutrality and that the only changes to total
payments to ASCs result from increases or decreases in the ASC payment
update factor.
Where the estimated ASC expenditures for an upcoming year are
higher than the estimated ASC expenditures for the current year, the
ASC weight scalar is reduced, in order to bring the estimated ASC
expenditures in line with the expenditures for the baseline year. This
frequently results in ASC relative payment weights for surgical
procedures that are lower than the OPPS relative payment weights for
the same procedures for the upcoming year. Therefore, over time, even
if procedures performed in the HOPD and ASC receive the same update
factor under the OPPS and ASC payment system, payment rates under the
ASC payment system would increase at a lower rate than payment for the
same procedures performed in the HOPD as a result of applying the ASC
weight scalar to ensure budget neutrality.
Consistent with our established policy, we propose to scale the CY
2021 relative payment weights for ASCs according to the following
method. Holding ASC utilization, the ASC conversion factor, and the mix
of services constant from CY 2019, we propose to compare the total
payment using the CY 2020 ASC relative payment weights with the total
payment using the CY 2021 ASC relative payment weights to take into
account the changes in the OPPS relative payment weights between CY
2020 and CY 2021. We propose to use the ratio of CY 2020 to CY 2021
total payments (the weight scalar) to scale the ASC relative payment
weights for CY 2021. The proposed CY 2021 ASC weight scalar is 0.8494.
Consistent with historical practice, we would scale the ASC relative
payment weights of covered surgical procedures, covered ancillary
radiology services, and certain diagnostic tests within the medicine
range of CPT codes, which are covered ancillary services for which the
ASC payment rates are based on OPPS relative payment weights.
Scaling would not apply in the case of ASC payment for separately
payable covered ancillary services that have a predetermined national
payment amount (that is, their national ASC payment amounts are not
based on OPPS relative payment weights), such as drugs and biologicals
that are separately paid or services that are contractor-priced or paid
at reasonable cost in ASCs. Any service with a predetermined national
payment amount would be included in the ASC budget neutrality
comparison, but scaling of the ASC relative payment weights would not
apply to those services. The ASC payment weights for those services
without predetermined national payment amounts (that is, those services
with national payment amounts that would be based on OPPS relative
payment weights) would be scaled to eliminate any difference in the
total payment between the current year and the update year.
For any given year's ratesetting, we typically use the most recent
full calendar year of claims data to model budget neutrality
adjustments. At the time of this proposed rule, we have
[[Page 48983]]
available 90 percent of CY 2019 ASC claims data.
To create an analytic file to support calculation of the weight
scalar and budget neutrality adjustment for the wage index (discussed
below), we summarized available CY 2019 ASC claims by ASC and by HCPCS
code. We used the National Provider Identifier for the purpose of
identifying unique ASCs within the CY 2019 claims data. We used the
supplier zip code reported on the claim to associate State, county, and
CBSA with each ASC. This file is available to the public as a
supporting data file for this proposed rule and is posted on the CMS
website at: http://http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. Updating the ASC Conversion Factor
Under the OPPS, we typically apply a budget neutrality adjustment
for provider level changes, most notably a change in the wage index
values for the upcoming year, to the conversion factor.
Consistent with our final ASC payment policy, for the CY 2017 ASC
payment system and subsequent years, in the CY 2017 OPPS/ASC final rule
with comment period (81 FR 79751 through 79753), we finalized our
policy to calculate and apply a budget neutrality adjustment to the ASC
conversion factor for supplier level changes in wage index values for
the upcoming year, just as the OPPS wage index budget neutrality
adjustment is calculated and applied to the OPPS conversion factor. For
CY 2021, we calculated the proposed adjustment for the ASC payment
system by using the most recent CY 2019 claims data available and
estimating the difference in total payment that would be created by
introducing the proposed CY 2021 ASC wage indexes. Specifically,
holding CY 2019 ASC utilization, service-mix, and the proposed CY 2021
national payment rates after application of the weight scalar constant,
we calculated the total adjusted payment using the CY 2020 ASC wage
indexes and the total adjusted payment using the proposed CY 2021 ASC
wage indexes. We used the 50-percent labor-related share for both total
adjusted payment calculations. We then compared the total adjusted
payment calculated with the CY 2020 ASC wage indexes to the total
adjusted payment calculated with the proposed CY 2021 ASC wage indexes
and applied the resulting ratio of 0.9999 (the proposed CY 2021 ASC
wage index budget neutrality adjustment) to the CY 2020 ASC conversion
factor to calculate the proposed CY 2021 ASC conversion factor.
Section 1833(i)(2)(C)(i) of the Act requires that, if the Secretary
has not updated amounts established under the revised ASC payment
system in a calendar year, the payment amounts shall be increased by
the percentage increase in the Consumer Price Index for all urban
consumers (CPI-U), U.S. city average, as estimated by the Secretary for
the 12-month period ending with the midpoint of the year involved. The
statute does not mandate the adoption of any particular update
mechanism, but it requires the payment amounts to be increased by the
CPI-U in the absence of any update. Because the Secretary updates the
ASC payment amounts annually, we adopted a policy, which we codified at
Sec. 416.171(a)(2)(ii)), to update the ASC conversion factor using the
CPI-U for CY 2010 and subsequent calendar years.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075
through 59080), we finalized our proposal to apply the MFP-adjusted
hospital market basket update to ASC payment system rates for an
interim period of 5 years (CY 2019 through CY 2023), during which we
will assess whether there is a migration of the performance of
procedures from the hospital setting to the ASC setting as a result of
the use of a MFP-adjusted hospital market basket update, as well as
whether there are any unintended consequences, such as less than
expected migration of the performance of procedures from the hospital
setting to the ASC setting. In addition, we finalized our proposal to
revise our regulations under Sec. 416.171(a)(2), which address the
annual update to the ASC conversion factor. During this 5-year period,
we intend to assess the feasibility of collaborating with stakeholders
to collect ASC cost data in a minimally burdensome manner and could
propose a plan to collect such information. We refer readers to that
final rule for a detailed discussion of the rationale for these
policies.
The proposed hospital market basket update for CY 2021 is projected
to be 3.0 percent, as published in the FY 2021 IPPS/LTCH PPS proposed
rule (85 FR 32738), based on IHS Global Inc.'s (IGI's) 2019 fourth
quarter forecast with historical data through the third quarter of
2019.
We finalized the methodology for calculating the MFP adjustment in
the CY 2011 PFS final rule with comment period (75 FR 73394 through
73396) and revised it in the CY 2012 PFS final rule with comment period
(76 FR 73300 through 73301) and the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70500 through 70501). The proposed MFP adjustment
for CY 2021 is projected to be 0.4 percentage point, as published in
the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32739) based on IGI's
2019 fourth quarter forecast.
For CY 2021, we propose to utilize the hospital market basket
update of 3.0 percent minus the MFP adjustment of 0.4 percentage point,
resulting in an MFP-adjusted hospital market basket update factor of
2.6 percent for ASCs meeting the quality reporting requirements.
Therefore, we propose to apply a 2.6 percent MFP-adjusted hospital
market basket update factor to the CY 2020 ASC conversion factor for
ASCs meeting the quality reporting requirements to determine the CY
2021 ASC payment amounts. The ASCQR Program affected payment rates
beginning in CY 2014 and, under this program, there is a 2.0 percentage
point reduction to the update factor for ASCs that fail to meet the
ASCQR Program requirements. We refer readers to section XIV.E. of the
CY 2019 OPPS/ASC final rule with comment period (83 FR 59138 through
59139) and section XIV.E. of this CY 2021 OPPS/ASC proposed rule for a
detailed discussion of our policies regarding payment reduction for
ASCs that fail to meet ASCQR Program requirements. We propose to
utilize the hospital market basket update of 3.0 percent reduced by 2.0
percentage points for ASCs that do not meet the quality reporting
requirements and then subtract the 0.4 percentage point MFP adjustment.
Therefore, we propose to apply a 0.6 percent MFP-adjusted hospital
market basket update factor to the CY 2020 ASC conversion factor for
ASCs not meeting the quality reporting requirements. We also propose
that if more recent data are subsequently available (for example, a
more recent estimate of the hospital market basket update or MFP
adjustment), we would use such data, if appropriate, to determine the
CY 2021 ASC update for the CY 2021 OPPS/ASC final rule with comment
period.
For CY 2021, we propose to adjust the CY 2020 ASC conversion factor
($47.747) by the proposed wage index budget neutrality factor of 0.9999
in addition to the MFP-adjusted hospital market basket update of 2.6
percent discussed above, which results in a proposed CY 2021 ASC
conversion factor of $48.984 for ASCs meeting the quality reporting
requirements. For ASCs not meeting the quality reporting requirements,
we propose to adjust the CY 2020 ASC conversion factor ($47.747) by the
proposed wage index budget neutrality factor of 0.9999 in
[[Page 48984]]
addition to the quality reporting/MFP-adjusted hospital market basket
update of 0.6 percent discussed above, which results in a proposed CY
2021 ASC conversion factor of $48.029.
3. Display of Proposed CY 2021 ASC Payment Rates
Addenda AA and BB to this proposed rule (which are available on the
CMS website) display the proposed ASC payment rates for CY 2021 for
covered surgical procedures and covered ancillary services,
respectively. For those covered surgical procedures and covered
ancillary services where the payment rate is the lower of the proposed
rates under the ASC standard ratesetting methodology and the MPFS
proposed rates, the proposed payment indicators and rates set forth in
this proposed rule are based on a comparison using the PFS rates that
would be effective January 1, 2021. For a discussion of the PFS rates,
we refer readers to the CY 2021 PFS proposed rule that is available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
The proposed payment rates included in addenda AA and BB to this
proposed rule reflect the full ASC payment update and not the reduced
payment update used to calculate payment rates for ASCs not meeting the
quality reporting requirements under the ASCQR Program. These addenda
contain several types of information related to the proposed CY 2021
payment rates. Specifically, in Addendum AA, a ``Y'' in the column
titled ``To be Subject to Multiple Procedure Discounting'' indicates
that the surgical procedure would be subject to the multiple procedure
payment reduction policy. As discussed in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66829 through 66830), most covered
surgical procedures are subject to a 50-percent reduction in the ASC
payment for the lower-paying procedure when more than one procedure is
performed in a single operative session.
Display of the comment indicator ``CH'' in the column titled
``Comment Indicator'' indicates a change in payment policy for the item
or service, including identifying discontinued HCPCS codes, designating
items or services newly payable under the ASC payment system, and
identifying items or services with changes in the ASC payment indicator
for CY 2021. Display of the comment indicator ``NI'' in the column
titled ``Comment Indicator'' indicates that the code is new (or
substantially revised) and that comments will be accepted on the
interim payment indicator for the new code. Display of the comment
indicator ``NP'' in the column titled ``Comment Indicator'' indicates
that the code is new (or substantially revised) and that comments will
be accepted on the ASC payment indicator for the new code.
For CY 2021, we propose to add a new column to ASC Addendum BB
titled ``Drug Pass-Through Expiration during Calendar Year'' where we
would flag through the use of an asterisk each drug for which pass-
through payment is expiring during the calendar year (that is, on a
date other than December 31st).
The values displayed in the column titled ``Proposed CY 2021
Payment Weight'' are the proposed relative payment weights for each of
the listed services for CY 2021. The proposed relative payment weights
for all covered surgical procedures and covered ancillary services
where the ASC payment rates are based on OPPS relative payment weights
were scaled for budget neutrality. Therefore, scaling was not applied
to the device portion of the device-intensive procedures, services that
are paid at the MPFS nonfacility PE RVU-based amount, separately
payable covered ancillary services that have a predetermined national
payment amount, such as drugs and biologicals and brachytherapy sources
that are separately paid under the OPPS, or services that are
contractor-priced or paid at reasonable cost in ASCs. This includes
separate payment for non-opioid pain management drugs.
To derive the proposed CY 2021 payment rate displayed in the
``Proposed CY 2021 Payment Rate'' column, each ASC payment weight in
the ``Proposed CY 2021 Payment Weight'' column was multiplied by the
proposed CY 2021 conversion factor of $48.984. The conversion factor
includes a budget neutrality adjustment for changes in the wage index
values and the annual update factor as reduced by the productivity
adjustment. The proposed CY 2021 ASC conversion factor uses the CY 2021
MFP-adjusted hospital market basket update factor of 2.6 percent (which
is equal to the projected hospital market basket update of 3.0 percent
minus a projected MFP adjustment of 0.4 percentage point).
In Addendum BB, there are no relative payment weights displayed in
the ``Proposed CY 2021 Payment Weight'' column for items and services
with predetermined national payment amounts, such as separately payable
drugs and biologicals. The ``Proposed CY 2021 Payment'' column displays
the proposed CY 2021 national unadjusted ASC payment rates for all
items and services. The proposed CY 2021 ASC payment rates listed in
Addendum BB for separately payable drugs and biologicals are based on
ASP data used for payment in physicians' offices in 2020.
Addendum EE provides the HCPCS codes and short descriptors for
surgical procedures that are proposed to be excluded from payment in
ASCs for CY 2021.
XIV. Requirements for the Hospital Outpatient Quality Reporting (OQR)
Program
A. Background
1. Overview
CMS seeks to promote higher quality and more efficient healthcare
for Medicare beneficiaries. Consistent with these goals, CMS has
implemented quality reporting programs for multiple care settings
including the quality reporting program for hospital outpatient care,
known as the Hospital Outpatient Quality Reporting (OQR) Program,
formerly known as the Hospital Outpatient Quality Data Reporting
Program (HOP QDRP). The Hospital OQR Program is generally aligned with
the quality reporting program for hospital inpatient services known as
the Hospital Inpatient Quality Reporting (IQR) Program.
2. Statutory History of the Hospital OQR Program
We refer readers to the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72064 through 72065) for a detailed discussion of the
statutory history of the Hospital OQR Program.
3. Regulatory History of the Hospital OQR Program
We refer readers to the CY 2008 through 2019 OPPS/ASC final rules
with comment period (72 FR 66860 through 66875; 73 FR 68758 through
68779; 74 FR 60629 through 60656; 75 FR 72064 through 72110; 76 FR
74451 through 74492; 77 FR 68467 through 68492; 78 FR 75090 through
75120; 79 FR 66940 through 66966; 80 FR 70502 through 70526; 81 FR
79753 through 79797; 82 FR 59424 through 59445; 83 FR 59080 through
59110; and 84 FR 61410 through 61420) for the regulatory history of the
Hospital OQR Program. We have codified certain requirements under the
Hospital OQR Program at 42 CFR 419.46.
4. Proposal To Codify Statutory Authority for Hospital OQR Program
The Hospital OQR Program regulations are codified at 42 CFR
[[Page 48985]]
419.46. We propose to update the regulations to include a reference to
the statutory authority for the Hospital OQR Program. Section
1833(t)(17)(A) of the Social Security Act (the Act) states that
subsection (d) hospitals (as defined under section 1886(d)(1)(B) of the
Act) that do not submit data required to be submitted on measures
selected with respect to such a year, in the form and manner required
by the Secretary, will incur a 2.0 percentage point reduction to their
annual OPD fee schedule increase factor. We propose to redesignate the
existing paragraphs (a) through (h) as paragraphs (b) through (i) and
codify the Hospital OQR Program's statutory authority at new paragraph
Sec. 419.46(a). Because of the proposed redesignations, the cross-
references throughout Sec. 419.46 are also proposed to be updated.
Table 42 shows the correlation between the cross-references
proposed to be removed and added if the proposed redesignations are
finalized.
[GRAPHIC] [TIFF OMITTED] TP12AU20.098
We request public comment on this proposal.
We refer readers to section XIV.E. of the preamble of this proposed
rule for a detailed discussion of the payment reduction for hospitals
that fail to meet Hospital OQR Program requirements for the CY 2023
payment determination.
B. Hospital OQR Program Quality Measures
1. Considerations in Selecting Hospital OQR Program Quality Measures
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74458 through 74460) for a detailed discussion of the
priorities we consider for the Hospital OQR Program quality measure
selection. We are not proposing any changes to these policies in this
proposed rule.
2. Retention of Hospital OQR Program Measures Adopted in Previous
Payment Determinations
We previously adopted a policy to retain measures from a previous
year's Hospital OQR Program measure set for subsequent years' measure
sets in the CY 2013 OPPS/ASC final rule with comment period (77 FR
68471). For more information regarding this policy, we refer readers to
that final rule with comment period. We codified this policy at 42 CFR
419.46(h)(1) in the CY 2019 OPPS/ASC final rule with comment period (83
FR 59082). We are not proposing any changes to these policies in this
proposed rule.
3. Removal of Quality Measures From the Hospital OQR Program Measure
Set
a. Immediate Removal
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60634
through 60635), we finalized a process for removal of Hospital OQR
Program measures, based on evidence that the continued use of the
measure as specified raises patient safety concerns.\97\ We codified
this policy at 42 CFR 419.46(h)(2) in the CY 2019 OPPS/ASC final rule
with comment period (83 FR 59082). In the case of suspension or removal
due to patient safety concerns, action would need to be taken quickly
and may not coincide with rulemaking cycles (77 FR 68472). In this
case, we would promptly remove the measure and notify hospitals of its
removal, and confirm the removal of the measure in the next rulemaking
cycle. We are not proposing any changes to these policies in this
proposed rule.
---------------------------------------------------------------------------
\97\ We refer readers to the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68472 through 68473) for a discussion of our
reasons for changing the term ``retirement'' to ``removal'' in the
Hospital OQR Program.
---------------------------------------------------------------------------
b. Consideration Factors for Removing Measures
In the CY 2010 OPPS/ASC final rule with comment period (74 FR
60635), we finalized a process to use the regular rulemaking process to
remove a measure for circumstances for which we do not believe that
continued use of a measure raises specific patient safety concerns.\98\
We codified this policy at 42 CFR 419.46(h)(3) in the CY 2019 OPPS/ASC
final rule with comment period (83 FR 59082). In the CY 2019 OPPS/ASC
final rule with comment period (83 FR 59083 through 59085), we
clarified, finalized, and codified at 42 CFR 419.46(h)(3) an updated
set of factors \99\ and policies for determining whether to remove
measures from the Hospital OQR Program. We refer readers to that final
rule with comment period for a detailed discussion of our policies
regarding measure removal factors. We are not proposing any changes to
these policies in this proposed rule.
---------------------------------------------------------------------------
\98\ We initially referred to this process as ``retirement'' of
a measure in the 2010 OPPS/ASC proposed rule, but later changed it
to ``removal'' during final rulemaking.
\99\ We note that we previously referred to these factors as
``criteria'' (for example, 77 FR 68472 through 68473); we now use
the term ``factors'' in order to align the Hospital OQR Program
terminology with the terminology we use in other CMS quality
reporting and pay-for-performance (value-based purchasing) programs.
---------------------------------------------------------------------------
4. Summary of Hospital OQR Program Measure Set for the CY 2023 Payment
Determination and Subsequent Years
We refer readers to the CY 2020 OPPS/ASC final rule with comment
period (84 FR 61410 through 61420) for a summary of the previously
finalized Hospital OQR Program measure set for the CY 2022 payment
determination and subsequent years.
We are not proposing any changes to the previously finalized
measure set.
[[Page 48986]]
Table 43 summarizes the previously finalized Hospital OQR Program
measure set for the CY 2023 payment determination and subsequent years.
[GRAPHIC] [TIFF OMITTED] TP12AU20.099
5. Maintenance of Technical Specifications for Quality Measures
CMS maintains technical specifications for previously adopted
Hospital OQR Program measures. These specifications are updated as we
modify the Hospital OQR Program measure set. The manuals that contain
specifications for the previously adopted measures can be found on the
QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1196289981244. We refer readers to the CY 2019 OPPS/ASC final rule with comment
period (83 FR 59104 through 59105), where we changed the frequency of
the Hospital OQR Program Specifications Manual release beginning with
CY 2019 and for subsequent years, such that we will release a manual
once every 12 months and release addenda as necessary. We are not
proposing any changes to these policies in this proposed rule.
6. Public Display of Quality Measures
We refer readers to the CY 2009, CY 2014, and CY 2017 OPPS/ASC
final rules with comment period (73 FR 68777 through 68779, 78 FR
75092, and 81 FR 79791, respectively) for our previously finalized
policies regarding public display of quality measures.
a. Codification
In the 2009 OPPS/ASC final rule with comment period (73 FR 68778),
we finalized that hospitals sharing the same
[[Page 48987]]
CCN must combine data collection and submission across their multiple
campuses for all clinical measures for public reporting purposes. While
we previously finalized this policy, it was not codified. In this
proposed rule, we propose to codify this policy by adding language at
the redesignated paragraph (d)(1). If finalized, the newly redesignated
paragraph (d)(1) would specify that ``Hospitals sharing the same CCN
must combine data collection and submission across their multiple
campuses for all clinical measures for public reporting purposes.'' We
are soliciting public comment on our proposal.
b. Overall Hospital Quality Star Rating
In this proposed rule, we propose a methodology to calculate the
Overall Hospital Quality Star Rating (Overall Star Rating). The Overall
Star Rating would utilize data collected on hospital inpatient and
outpatient measures that are publicly reported on a CMS website,
including data from the Hospital OQR Program. We refer readers to
section XVI. Proposed Overall Hospital Quality Star Rating Methodology
for Public Release in CY 2021 and Subsequent Years of this proposed
rule for details.
C. Administrative Requirements
1. QualityNet Account and Security Administrator/Security Official
The previously finalized QualityNet security administrator
requirements, including setting up a QualityNet account and the
associated timelines, are described in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75108 through 75109). We codified these
procedural requirements at 42 CFR 419.46(a) in that final rule with
comment period.
In this proposed rule, we propose to use the term ``security
official'' instead of ``security administrator'' to denote the exercise
of authority invested in the role. The term ``security official'' would
refer to ``the individual(s)'' who have responsibilities for security
and account management requirements for a hospital's QualityNet
account. To be clear, this proposed update in terminology would not
change the individual's responsibilities or add burden. We propose to
revise existing Sec. 419.46(a)(2), proposed redesignated Sec.
419.46(b)(2), by replacing the term ``security administrator'' with the
term ``security official.'' If finalized, the newly redesignated
paragraph (b)(2) would read: ``Identify and register a QualityNet
security official as part of the registration process under paragraph
(b)(1) of this section.'' We invite public comment on our proposal to
replace the term ``security administrator'' with ``security official''
and codify this change.
2. Requirements Regarding Participation Status
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75108 through 75109), the CY 2016 OPPS/ASC final rule
with comment period (80 FR 70519) and the CY 2019 OPPS/ASC final rule
with comment period (83 FR 59103 through 59104) for requirements for
participation and withdrawal from the Hospital OQR Program. We codified
these procedural requirements regarding participation status at 42 CFR
419.46(a) and (b).
In this proposed rule, we propose to revise existing Sec.
419.46(b) (proposed redesignated Sec. 419.46(c)) by removing the
phrase ``submit a new participation form'' to align with previously
finalized policy; submission of this form was removed as a program
requirement in the CY 2019 OPPS/ASC final rule (83 FR 59103 to 59104).
We also propose to update internal cross-references as a result of the
redesignations discussed under section XIV.A.4. of this proposed rule.
If finalized as proposed, the newly redesignated Sec. 419.46(c) would
specify that ``A withdrawn hospital will not be able to later sign up
to participate in that payment update, is subject to a reduced annual
payment update as specified under Sec. 419.46(i), and is required to
renew participation as specified in Sec. 419.46(b) in order to
participate in any future year of the Hospital OQR Program.'' Our
proposal also includes updated cross-referenced provisions in the newly
redesignated Sec. 419.46(c). We are soliciting public comment on our
proposal.
D. Form, Manner, and Timing of Data Submitted for the Hospital OQR
Program
1. Hospital OQR Program Annual Submission Deadlines
We refer readers to the CYs 2014, 2016, and 2018 OPPS/ASC final
rules with comment period (78 FR 75110 through 75111; 80 FR 70519
through 70520; and 82 FR 59439) where we finalized our policies for
data submission deadlines. We codified these submission requirements at
42 CFR 419.46(c). The submission deadlines for the CY 2023 payment
determination and subsequent years are illustrated in Table 44.
[GRAPHIC] [TIFF OMITTED] TP12AU20.100
To align with statute, in this proposed rule, we propose one change
to our submission deadlines. We propose that all deadlines falling on a
nonwork day be moved forward consistent with section 216(j) of the Act,
42 U.S.C. 416(j), ``Periods of Limitation Ending on Nonwork Days,''
beginning with the effective date of this rule. Section 1872 of the
Act, incorporates section 216(j) of the Act, to apply to Title XVIII,
the Medicare program to which the Hospital OQR Program is administered.
Under this proposal, all deadlines occurring on a Saturday, Sunday, or
legal holiday, or on any other day all or part of which is declared to
be a nonwork day for federal employees by statute or Executive order
would be extended to the first day thereafter which is not a Saturday,
Sunday or legal holiday or any other day all or part of which is
declared to be a nonwork day for federal employees by statute or
Executive order.
[[Page 48988]]
We propose to revise our policy regarding submission deadlines at
existing Sec. 419.46(c)(2), proposed redesignated Sec. 419.46(d)(2).
If finalized, the newly redesignated paragraph (d)(2) would specify
that ``All deadlines occurring on a Saturday, Sunday, or legal holiday,
or on any other day all or part of which is declared to be a nonwork
day for Federal employees by statute or Executive order are extended to
the first day thereafter which is not a Saturday, Sunday or legal
holiday or any other day all or part of which is declared to be a
nonwork day for Federal employees by statute or Executive order.'' We
invite public comment on our proposal.
2. Requirements for Chart-Abstracted Measures Where Patient-Level Data
Are Submitted Directly to CMS for the CY 2023 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68481 through 68484) for a discussion of the form,
manner, and timing for data submission requirements of chart-abstracted
measures for the CY 2014 payment determination and subsequent years. We
are not proposing any changes to these policies in this proposed rule.
The following previously finalized Hospital OQR Program chart-
abstracted measures will require patient-level data to be submitted for
the CY 2022 payment determination and subsequent years:
OP-2: Fibrinolytic Therapy Received Within 30 Minutes of
ED Arrival (NQF #0288);
OP-3: Median Time to Transfer to Another Facility for
Acute Coronary Intervention (NQF #0290);
OP-18: Median Time from ED Arrival to ED Departure for
Discharged ED Patients (NQF #0496); and
OP-23: Head CT Scan Results for Acute Ischemic Stroke or
Hemorrhagic Stroke Patients who Received Head CT Scan Interpretation
Within 45 Minutes of ED Arrival (NQF #0661).
3. Claims-Based Measure Data Requirements for the CY 2023 Payment
Determination and Subsequent Years
Currently, the following previously finalized Hospital OQR Program
claims-based measures are required for the CY 2022 payment
determination and subsequent years:
OP-8: MRI Lumbar Spine for Low Back Pain (NQF #0514);
OP-10: Abdomen CT--Use of Contrast Material;
OP-13: Cardiac Imaging for Preoperative Risk Assessment
for Non-Cardiac, Low Risk Surgery (NQF #0669);
OP-32: Facility 7-Day Risk-Standardized Hospital Visit
Rate after Outpatient Colonoscopy (NQF #2539);
OP-35: Admissions and Emergency Department Visits for
Patients Receiving Outpatient Chemotherapy; and
OP-36: Hospital Visits after Hospital Outpatient Surgery
(NQF #2687).
We refer readers to the CY 2019 OPPS/ASC final rule with comment
period (83 FR 59106 through 59107), where we established a 3-year
reporting period for OP-32: Facility 7-Day Risk-Standardized Hospital
Visit Rate after Outpatient Colonoscopy beginning with the CY 2020
payment determination and for subsequent years. In that final rule with
comment period (83 FR 59136 through 59138), we established a similar
policy under the ASCQR Program. We are not proposing any changes to
these policies in this proposed rule.
4. Data Submission Requirements for the OP-37a-e: Outpatient and
Ambulatory Surgery Consumer Assessment of Healthcare Providers and
Systems (OAS CAHPS) Survey-Based Measures for the CY 2023 Payment
Determination and Subsequent Years
We refer readers to the CY 2017 OPPS/ASC final rule with comment
period (81 FR 79792 through 79794) for a discussion of the previously
finalized requirements related to survey administration and vendors for
the OAS CAHPS Survey-based measures. In addition, we refer readers to
the CY 2018 OPPS/ASC final rule with comment period (82 FR 59432
through 59433), where we finalized a policy to delay implementation of
the OP-37a-e OAS CAHPS Survey-based measures beginning with the CY 2020
payment determination (2018 reporting period) until further action in
future rulemaking. We are not proposing any changes to the previously
finalized requirements related to survey administration and vendors for
the OAS CAHPS Survey-based measures in this proposed rule.
5. Data Submission Requirements for Measures for Data Submitted via a
Web-Based Tool for the CY 2022 Payment Determination and Subsequent
Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75112 through 75115), the CY 2016 OPPS/ASC final rule
with comment period (80 FR 70521), and the CMS QualityNet website
(www.qualitynet.org for a discussion of the requirements for measure
data submitted via the CMS QualityNet Secure Portal (also referred to
as the Hospital Quality Reporting (HQR) system secure portal) for the
CY 2017 payment determination and subsequent years. In addition, we
refer readers to the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75097 through 75100) for a discussion of the requirements for
measure data submitted via the CDC NHSN website. We are not proposing
any changes to these policies in this proposed rule.
The following previously finalized quality measures will require
data to be submitted via a CMS web-based tool for the CY 2023 payment
determination and subsequent years with the exception of OP-31:
Cataracts: Improvement in Patient's Visual Function within 90 Days
Following Cataract Surgery (NQF #1536) for which data submission
remains voluntary:
OP-22: Left Without Being Seen (NQF #0499);
OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up
Interval for Normal Colonoscopy in Average Risk Patients (NQF #0658);
and
OP-31: Cataracts: Improvement in Patient's Visual Function
within 90 Days Following Cataract Surgery (NQF #1536).
6. Population and Sampling Data Requirements for the CY 2021 Payment
Determination and Subsequent Years
We refer readers to the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72100 through 72103) and the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74482 through 74483) for discussions of our
population and sampling requirements. We are not proposing any changes
to these policies in this proposed rule.
7. Review and Corrections Period for Measure Data Submitted to the
Hospital OQR Program
a. Chart-Abstracted Measures
We refer readers to the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66964 and 67014) where we formalized a review and
corrections period for chart-abstracted measures in the Hospital OQR
Program. Per the previously finalized policy, the Hospital OQR Program
implemented a 4-month review and corrections period for chart-
abstracted measure data, which runs concurrently with the data
submission period. During the review and corrections period for chart-
abstracted data, hospitals can enter, review, and correct data
submitted directly to CMS for the chart-abstracted measures.
[[Page 48989]]
b. Web-Based Measures
In this proposed rule, we propose to expand our review and
corrections policy to apply to measure data submitted via the CMS web-
based tool beginning with data submitted for the CY 2023 payment
determination and subsequent years. Hospitals would have a review and
corrections period for web-based measures, which would run concurrently
with the data submission period. The review and corrections period for
web-based measures is from the time the submission period opens to the
submission deadline. During this review and corrections period,
hospitals can enter, review, and correct data submitted directly to
CMS. However, after the submission deadline, hospitals would not be
allowed to change these data. The expansion of the existing policy for
chart-abstracted measures to data submitted via the CMS web-based tool
would accommodate a growing diversity of measure types in the Hospital
OQR Program. We are soliciting public comment on our proposal.
c. Codification of the Review and Corrections Periods for Measure Data
Submitted to the Hospital OQR Program
We note that the previously finalized policy relating to the review
and corrections period for chart-abstracted measures has not yet been
codified. Therefore, in this proposed rule, we propose to codify at 42
CFR 419.46 the review and corrections period policy for measure data
submitted to the Hospital OQR Program for chart-abstracted measure
data, as well as for the proposed policy for measure data submitted
directly to CMS via the CMS web-based tool. Specifically, we propose to
add a new paragraph (4) at existing Sec. 419.46(c), proposed
redesignated Sec. 419.46(d). If finalized, the new paragraph (d)(4)
would read: ``Review and Corrections Period. For both chart-abstracted
and web-based measures, hospitals have a review and corrections period,
which runs concurrently with the data submission period. During this
timeframe, hospitals can enter, review, and correct data submitted.
However, after the submission deadline, this data cannot be changed.''
We are soliciting public comment on our proposal.
8. Hospital OQR Program Validation Requirements
We refer readers to the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72105 through 72106), the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68484 through 68487), the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66964 through 66965), the CY 2016
OPPS/ASC final rule with comment period (80 FR 70524), and the CY 2018
OPPS/ASC final rule with comment period (82 FR 59441 through 59443),
and 42 CFR 419.46(e) for our policies regarding validation. In this
proposed rule, while we are not proposing changes to our validation
policies, we propose to codify certain previously finalized policies;
these are discussed in more detail in section XIV.D.8.b.
a. Educational Review Process and Score Review and Correction Period
for Chart-Abstracted Measures
(1) Background
In the CY 2018 final rule (82 FR 59441 through 59443), we finalized
a policy to formalize the Educational Review Process for Chart-
Abstracted Measures, including Validation Score Review and Correction.
Under the informal process, hospitals that were selected and received a
score for validation may request an educational review to better
understand the results. A hospital has 30 calendar days from the date
the validation results are made available via the QualityNet Secure
Portal (also referred to as the Hospital Quality Reporting (HQR)
System) to contact the CMS designated contractor, currently known as
the Validation Support Contractor (VSC), to request an educational
review (82 FR 59442). In response to a request, the VSC obtains and
reviews medical records directly from the Clinical Data Abstraction
Center (CDAC) and provides feedback (82 FR 59442). CMS, or its
contractor, generally provides educational review results and responses
via a secure file transfer to the hospital (82 FR 59442). In the CY
2018 final rule (82 FR 59441 through 59443), we (1) formalized this
process; and (2) specified that if the results of an educational review
indicate that we incorrectly scored a hospital's medical records
selected for validation, the corrected quarterly validation score would
be used to compute the hospital's final validation score at the end of
the calendar year. We are not proposing any changes to this finalized
policy in this proposed rule.
(2) Proposed Codification of Educational Review Process and Score
Review and Correction Period for Chart-Abstracted Measures
The previously finalized policy to formalize the Educational Review
Process for Chart-Abstracted Measures, including Validation Score
Review and Correction finalized in the CY 2018 OPPS/ASC final rule with
comment period (82 FR 59441 through 59442), has not yet been codified
at 42 CFR 419.46. In this proposed rule, we propose to codify those
policies by adding a new paragraph (4) to existing Sec. 419.46(e),
proposed redesignated Sec. 419.46(f). If finalized, the new paragraph
(f)(4) would specify that ``Hospitals that are selected and receive a
score for validation of chart-abstracted measures may request an
educational review in order to better understand the results within 30
calendar days from the date the validation results are made available.
If the results of an educational review indicate that a hospital's
medical records selected for validation for chart-abstracted measures
was incorrectly scored, the corrected quarterly validation score will
be used to compute the hospital's final validation score at the end of
the calendar year.'' We invite public comment on this proposal.
9. Extraordinary Circumstances Exception (ECE) Process for the CY 2021
Payment Determination and Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75119 through 75120), the CY 2015 OPPS/ASC final rule
with comment period (79 FR 66966), the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70524), the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79795), the CY 2018 OPPS/ASC final rule with
comment period (82 FR 59444), and 42 CFR 419.46(d) for a complete
discussion of our extraordinary circumstances exception (ECE) process
under the Hospital OQR Program. We are not proposing any changes to
these policies in this proposed rule.
10. Hospital OQR Program Reconsideration and Appeals Procedures for the
CY 2021 Payment Determination and Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68487 through 68489), the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75118 through 75119), the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70524), the CY 2017 OPPS/ASC
final rule with comment period (81 FR 79795), and 42 CFR 419.46(f) for
our reconsideration and appeals procedures.
In alignment with our proposal to change submission deadlines in
section XIV.D.1. of this proposed rule, we propose one change to our
reconsideration deadlines. We propose
[[Page 48990]]
that all deadlines falling on a nonwork day be moved forward consistent
with section 216(j) of the Act, 42 U.S.C. 416(j), ``Periods of
Limitation Ending on Nonwork Days,'' beginning with the effective date
of this rule. Section 1872 of the Act, incorporates section 216(j) of
the Act, to apply to Title XVIII, the Medicare program to which the
Hospital OQR Program is administered. Under this proposal, all
deadlines occurring on a Saturday, Sunday, or legal holiday, or on any
other day all or part of which is declared to be a nonwork day for
federal employees by statute or Executive order would be extended to
the first day thereafter which is not a Saturday, Sunday or legal
holiday or any other day all or part of which is declared to be a
nonwork day for federal employees by statute or Executive order.
Specifically, we propose to remove ``the first business day on or
after'' from existing Sec. 419.46(f)(1), proposed redesignated Sec.
419.46(g)(1), to ensure the language of the regulatory text regarding
deadlines for reconsideration requests is consistent with 42 U.S.C.
416(j). If finalized, the newly redesignated paragraph (g)(1) would
read: ``A hospital may request reconsideration of a decision by CMS
that the hospital has not met the requirements of the Hospital OQR
Program for a particular calendar year. Except as provided in paragraph
(e) of this section, a hospital must submit a reconsideration request
to CMS via the QualityNet website, no later than March 17, or if March
17 falls on a nonwork day, on the first day after March 17 which is not
a nonwork day as defined in Sec. 419.46(d)(2), of the affected payment
year as determined using the date the request was mailed or submitted
to CMS.'' We invite public comment on our proposal.
E. Proposed Payment Reduction for Hospitals That Fail To Meet the
Hospital OQR Program Requirements for the CY 2021 Payment Determination
1. Background
Section 1833(t)(17) of the Act, which applies to subsection (d)
hospitals (as defined under section 1886(d)(1)(B) of the Act), states
that hospitals that fail to report data required to be submitted on
measures selected by the Secretary, in the form and manner, and at a
time, specified by the Secretary will incur a 2.0 percentage point
reduction to their Outpatient Department (OPD) fee schedule increase
factor; that is, the annual payment update factor. Section
1833(t)(17)(A)(ii) of the Act specifies that any reduction applies only
to the payment year involved and will not be taken into account in
computing the applicable OPD fee schedule increase factor for a
subsequent year.
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 in order to receive the full
payment update factor and that fail to meet the Hospital OQR Program
requirements. Hospitals that meet the reporting requirements receive
the full OPPS payment update without the reduction. For a more detailed
discussion of how this payment reduction was initially implemented, we
refer readers to the CY 2009 OPPS/ASC final rule with comment period
(73 FR 68769 through 68772).
The national unadjusted payment rates for many services paid under
the OPPS equal the product of the OPPS conversion factor and the scaled
relative payment weight for the APC to which the service is assigned.
The OPPS conversion factor, which is updated annually by the OPD fee
schedule increase factor, is used to calculate the OPPS payment rate
for services with the following status indicators (listed in Addendum B
to the proposed rule, which is available via the internet on the CMS
website): ``J1'', ``J2'', ``P'', ``Q1'', ``Q2'', ``Q3'', ``R'', ``S'',
``T'', ``V'', or ``U''. In the CY 2017 OPPS/ASC final rule with comment
period (81 FR 79796), we clarified that the reporting ratio does not
apply to codes with status indicator ``Q4'' because services and
procedures coded with status indicator ``Q4'' are either packaged or
paid through the Clinical Laboratory Fee Schedule and are never paid
separately through the OPPS. Payment for all services assigned to these
status indicators will be subject to the reduction of the national
unadjusted payment rates for hospitals that fail to meet Hospital OQR
Program requirements, with the exception of services assigned to New
Technology APCs with assigned status indicator ``S'' or ``T''. We refer
readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR
68770 through 68771) for a discussion of this policy.
The OPD fee schedule increase factor is an input into the OPPS
conversion factor, which is used to calculate OPPS payment rates. To
reduce the OPD fee schedule increase factor for hospitals that fail to
meet reporting requirements, we calculate two conversion factors--a
full market basket conversion factor (that is, the full conversion
factor), and a reduced market basket conversion factor (that is, the
reduced conversion factor). We then calculate a reduction ratio by
dividing the reduced conversion factor by the full conversion factor.
We refer to this reduction ratio as the ``reporting ratio'' to indicate
that it applies to payment for hospitals that fail to meet their
reporting requirements. Applying this reporting ratio to the OPPS
payment amounts results in reduced national unadjusted payment rates
that are mathematically equivalent to the reduced national unadjusted
payment rates that would result if we multiplied the scaled OPPS
relative payment weights by the reduced conversion factor. For example,
to determine the reduced national unadjusted payment rates that applied
to hospitals that failed to meet their quality reporting requirements
for the CY 2010 OPPS, we multiplied the final full national unadjusted
payment rate found in Addendum B of the CY 2010 OPPS/ASC final rule
with comment period by the CY 2010 OPPS final reporting ratio of 0.980
(74 FR 60642).
We note that the only difference in the calculation for the full
conversion factor and the calculation for the reduced conversion factor
is that the full conversion factor uses the full OPD update and the
reduced conversion factor uses the reduced OPD update. The baseline
OPPS conversion factor calculation is the same since all other
adjustments would be applied to both conversion factor calculations.
Therefore, our standard approach of calculating the reporting ratio as
described earlier in this section is equivalent to dividing the reduced
OPD update factor by that of the full OPD update factor. In other
words:
Full Conversion Factor = Baseline OPPS conversion factor * (1 + OPD
update factor)
Reduced Conversion Factor = Baseline OPPS conversion factor * (1 + OPD
update factor-0.02)
Reporting Ratio = Reduced Conversion Factor / Full Conversion Factor
Which is equivalent to:
Reporting Ratio = (1 + OPD Update factor-0.02) / (1 + OPD update
factor)
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771
through 68772), we established a policy that the Medicare beneficiary's
minimum unadjusted copayment and national unadjusted copayment for a
service to which a reduced national unadjusted payment rate applies
would each equal the product of the reporting ratio and the national
unadjusted copayment or the minimum unadjusted copayment, as
applicable, for the service. Under this policy, we apply the
[[Page 48991]]
reporting ratio to both the minimum unadjusted copayment and national
unadjusted copayment for services provided by hospitals that receive
the payment reduction for failure to meet the Hospital OQR Program
reporting requirements. This application of the reporting ratio to the
national unadjusted and minimum unadjusted copayments is calculated
according to Sec. 419.41 of our regulations, prior to any adjustment
for a hospital's failure to meet the quality reporting standards
according to Sec. 419.43(h). Beneficiaries and secondary payers
thereby share in the reduction of payments to these hospitals.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68772), we established the policy that all other applicable adjustments
to the OPPS national unadjusted payment rates apply when the OPD fee
schedule increase factor is reduced for hospitals that fail to meet the
requirements of the Hospital OQR Program. For example, the following
standard adjustments apply to the reduced national unadjusted payment
rates: The wage index adjustment; the multiple procedure adjustment;
the interrupted procedure adjustment; the rural sole community hospital
adjustment; and the adjustment for devices furnished with full or
partial credit or without cost. Similarly, OPPS outlier payments made
for high cost and complex procedures will continue to be made when
outlier criteria are met. For hospitals that fail to meet the quality
data reporting requirements, the hospitals' costs are compared to the
reduced payments for purposes of outlier eligibility and payment
calculation. We established this policy in the OPPS beginning in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60642). For a
complete discussion of the OPPS outlier calculation and eligibility
criteria, we refer readers to section II.G. of the proposed rule.
2. Reporting Ratio Application and Associated Adjustment Policy for CY
2021
We propose to continue our established policy of applying the
reduction of the OPD fee schedule increase factor through the use of a
reporting ratio for those hospitals that fail to meet the Hospital OQR
Program requirements for the full CY 2021 annual payment update factor.
For this CY 2021 OPPS/ASC proposed rule, the proposed reporting ratio
is 0.9805, which when multiplied by the proposed full conversion factor
of $83.697 equals a proposed conversion factor for hospitals that fail
to meet the requirements of the Hospital OQR Program (that is, the
reduced conversion factor) of $82.016. We propose to continue to apply
the reporting ratio to all services calculated using the OPPS
conversion factor. For this CY 2021 OPPS/ASC proposed rule, we propose
to continue to apply the reporting ratio, when applicable, to all HCPCS
codes to which we have proposed status indicator assignments of ``J1'',
``J2'', ``P'', ``Q1'', ``Q2'', ``Q3'', ``R'', ``S'', ``T'', ``V'', and
``U'' (other than new technology APCs to which we have proposed status
indicator assignment of ``S'' and ``T''). We propose to continue to
exclude services paid under New Technology APCs. We propose to continue
to apply the reporting ratio to the national unadjusted payment rates
and the minimum unadjusted and national unadjusted copayment rates of
all applicable services for those hospitals that fail to meet the
Hospital OQR Program reporting requirements. We also propose to
continue to apply all other applicable standard adjustments to the OPPS
national unadjusted payment rates for hospitals that fail to meet the
requirements of the Hospital OQR Program. Similarly, we propose to
continue to calculate OPPS outlier eligibility and outlier payment
based on the reduced payment rates for those hospitals that fail to
meet the reporting requirements. In addition to our proposal to
implement the policy through the use of a reporting ratio, we also
propose to calculate the reporting ratio to four decimals (rather than
the previously used three decimals) to more precisely calculate the
reduced adjusted payment and copayment rates.
For CY 2021, the proposed reporting ratio is 0.9805, which when
multiplied by the final full conversion factor of 83.697 equals a
proposed conversion factor for hospitals that fail to meet the
requirements of the Hospital OQR Program (that is, the reduced
conversion factor) of 82.065. We note that the proposed reporting ratio
can be applied to the full national unadjusted payment rates to
determine reduced national unadjusted payment rates.
XV. Requirements for the Ambulatory Surgical Center Quality Reporting
(ASCQR) Program
A. Background
1. Overview
We refer readers to section XIV.A.1. of the CY 2020 final rule (84
FR 61410) for a general overview of our quality reporting programs and
to the CY 2019 OPPS/ASC final rule with comment period (83 FR 58820
through 58822) where we previously discussed our Meaningful Measures
Initiative and our approach in evaluating quality program measures.
2. Statutory History of the ASCQR Program
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74492 through 74494) for a detailed discussion of the
statutory history of the ASCQR Program.
3. Regulatory History of the ASCQR Program
We refer readers to the CYs 2014 through 2020 OPPS/ASC final rules
with comment period (78 FR 75122; 79 FR 66966 through 66987; 80 FR
70526 through 70538; 81 FR 79797 through 79826; 82 FR 59445 through
59476; 83 FR 59110 through 59139; and 84 FR 61420 through 61434,
respectively) for an overview of the regulatory history of the ASCQR
Program. We have codified certain requirements under the ASCQR Program
at 42 CFR, part 16, subpart H (42 CFR 416.300 through 416.330). In this
proposed rule, we propose to update certain currently codified program
policies and propose a review and corrections period as well as other
administrative changes. We discuss these proposals in more detail below
in sections XV.C. and XV.D.
B. ASCQR Program Quality Measures
1. Considerations in the Selection of ASCQR Program Quality Measures
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68493 through 68494) for a detailed discussion of the
priorities we consider for the ASCQR Program quality measure selection.
We are not proposing any changes to these policies in this proposed
rule.
2. Policies for Retention and Removal of Quality Measures From the
ASCQR Program
a. Retention of Previously Adopted ASCQR Program Measures
We previously finalized a policy that quality measures adopted for
an ASCQR Program measure set for a previous payment determination year
be retained in the ASCQR Program for measure sets for subsequent
payment determination years, except when such measures are removed,
suspended, or replaced as indicated (76 FR 74494 and 74504; 77 FR 68494
through 68495; 78 FR 75122; and 79 FR 66967 through 66969). We are not
proposing any changes to this policy in this proposed rule.
[[Page 48992]]
b. Removal Factors for ASCQR Program Measures
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59111
through 59115), we clarified, finalized, and codified at 42 CFR 416.320
an updated set of factors \100\ and the process for removing measures
from the ASCQR Program. We refer readers to the CY 2019 OPPS/ASC final
rule with comment period (83 FR 59111 through 59115) for a detailed
discussion of our process regarding measure removal. We are not
proposing any changes to the measure removal factors in this proposed
rule.
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\100\ We note that we previously referred to these factors as
``criteria'' (for example, 79 FR 66967 through 66969); we now use
the term ``factors'' in order to align the ASCQR Program terminology
with the terminology we use in other CMS quality reporting and pay-
for-performance (value-based purchasing) programs.
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3. Summary of ASCQR Program Quality Measure Set Previously Finalized
for the CY 2024 Payment Determination and for Subsequent Years
We are not proposing to remove any existing measures or to adopt
any new measures for the CY 2023 payment determination. Table 45
summarizes the previously finalized ASCQR Program measure set for the
CY 2024 payment determination and subsequent years.
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[GRAPHIC] [TIFF OMITTED] TP12AU20.101
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4. Maintenance of Technical Specifications for Quality Measures
We refer readers to the CYs 2012 through 2016 OPPS/ASC final rules
with comment period (76 FR 74513 through 74514; 77 FR 68496 through
68497; 78 FR 75131; 79 FR 66981; and 80 FR 70531, respectively) for
detailed discussion of our policies regarding the maintenance of
technical specifications for the ASCQR Program, which are codified at
42 CFR 416.325. We are not proposing any changes to these policies.
5. Public Reporting of ASCQR Program Data
We refer readers to the CYs 2012, 2016, 2017 and 2018 OPPS/ASC
final rules with comment period (76 FR 74514 through 74515; 80 FR 70531
through 70533; 81 FR 79819 through
[[Page 48993]]
79820; and 82 FR 59455 through 59470, respectively) for detailed
discussion of our policies regarding the public reporting of ASCQR
Program data, which are codified at 42 CFR 416.315 (80 FR 70533). We
are not proposing any changes to these policies.
6. ASCQR Program Measures and Topics for Future Considerations
We seek to develop a comprehensive set of quality measures to be
available for widespread use for informed decision-making and quality
improvement in the ASC setting. We also seek measures that would
facilitate meaningful comparisons between ASCs and hospitals.
Therefore, we invite public comment on new measures for our
consideration that address care quality in the ASC settings as well as
on additional measures that could facilitate comparison of care
provided in ASCs and hospitals.
C. Administrative Requirements
1. Requirements Regarding QualityNet Account and Security Administrator
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75132 through 75133) for a detailed discussion of the
QualityNet security administrator requirements, including setting up a
QualityNet account and the associated timelines for the CY 2014 payment
determination and subsequent years. In the CY 2016 OPPS/ASC final rule
with comment period (80 FR 70533), we codified the administrative
requirements regarding the maintenance of a QualityNet account and
security administrator for the ASCQR Program at Sec. 416.310(c)(1)(i).
In this proposed rule, we propose to use the term ``security
official'' instead of ``security administrator'' to denote the exercise
of authority invested in the role. The term ``security official''
refers to ``the individual(s)'' who have responsibilities for security
and account management requirements for a facility's QualityNet
account. To be clear, this proposed update in terminology would not
change the individual's responsibilities or add burden. We also propose
to revise Sec. 416.310(c)(1)(i) by replacing the term ``security
administrator'' with the term ``security official''. The new sentence
would read: ``A QualityNet security official is necessary to set up
such an account for the purpose of submitting this information.'' We
invite public comment on our proposals.
2. Requirements Regarding Participation Status
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75133 through 75135) for a complete discussion of the
participation status requirements for the CY 2014 payment determination
and subsequent years. In the CY 2016 OPPS/ASC final rule with comment
period (80 FR 70533 through 70534), we codified these requirements
regarding participation status for the ASCQR Program at 42 CFR 416.305.
We are not proposing any changes to these policies.
D. Form, Manner, and Timing of Data Submitted for the ASCQR Program
1. Data Collection and Submission
a. Update of Language Generally
We previously codified our existing policies regarding data
collection and submission under the ASCQR Program at 42 CFR 416.310. We
currently use the phrases ``data collection period'' and ``data
collection time period'' interchangeably in Sec. 416.310(a) through
(c). We believe that using one, consistent phrase will streamline and
simplify the section and our policies to help avoid potential
confusion. As such, we propose to remove the phrase ``data collection
time period'' in all instances where it appears in Sec. 416.310, and
replace it with the phrase ``data collection period''--specifically at
Sec. 416.310(a)(2), (b), (c)(1)(ii), and (c)(2), as well as replacing
the phrase ``time period'' with ``period'' in Sec. 416.310(c)(1)(ii)
for language consistency. We invite comment on our proposal.
b. Requirements Regarding Data Processing and Collection Periods for
Claims-Based Measures Using Quality Data Codes (QDCs)
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75135) for a complete summary of the data processing and
collection periods for the claims-based measures using QDCs for the CY
2014 payment determination and subsequent years. In the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70534), we codified the
requirements regarding data processing and collection periods for
claims-based measures using QDCs for the ASCQR Program at 42 CFR
416.310(a)(1) and (2).
We are not proposing any changes to these requirements. We note
that data submission for the following claims-based measures using QDCs
was suspended in the CY 2019 OPPS/ASC final rule with comment period
(83 FR 59117 through 59123 and 83 FR 59134 through 59135) until further
action in rulemaking:
ASC-1: Patient Burn;
ASC-2: Patient Fall;
ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong
Procedure, Wrong Implant; and
ASC-4: Hospital Transfer/Admission.
Furthermore, we note that the previously finalized data processing
and collection period requirements will apply to any future claims-
based -measures using QDCs adopted in the ASCQR Program.
c. Minimum Threshold, Minimum Case Volume, and Data Completeness for
Claims-Based Measures Using QDCs
We refer readers to the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59472) (and the previous rulemakings cited therein), as
well as 42 CFR 416.310(a)(3) and 42 CFR 416.305(c) for our policies
about minimum threshold, minimum case volume, and data completeness for
claims-based measures using QDCs. We are not proposing any changes to
these policies.
As noted above, while data submission for certain claims-based
measures using QDCs was suspended, our policies for minimum threshold,
minimum case volume, and data completeness requirements will apply to
any future claims-based measures using QDCs adopted in the ASCQR
Program.
d. Requirements Regarding Data Processing and Collection Periods for
Non-QDC Based, Claims-Based Measure Data
We refer readers to the CY 2019 OPPS/ASC final rule with comment
period (83 FR 59136 through 59138), for a complete summary of the data
processing and collection requirements for the non-QDC based, claims-
based measures. We codified the requirements regarding data processing
and collection periods for non-QDC, claims-based measures for the ASCQR
Program at 42 CFR 416.310(b). We note that these requirements for non-
QDC based, claims-based measures apply to the following previously
finalized measures:
ASC-12: Facility 7-Day Risk-Standardized Hospital Visit
Rate after Outpatient Colonoscopy.
ASC-19: Facility-Level 7-Day Hospital Visits after General
Surgery Procedures Performed at Ambulatory Surgical Centers (NQF
#3357).
We are not proposing any changes to the requirements for non-QDC
based, claims-based measures.
[[Page 48994]]
e. Requirements for Data Submitted via an Online Data Submission Tool
(1) Requirements for Data Submitted via a CMS Online Data Submission
Tool
We refer readers to the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59473) (and the previous rulemakings cited therein) and
42 CFR 416.310(c)(1) for our requirements regarding data submitted via
a CMS online data submission tool. We are currently using the CMS
QualityNet Secure Portal (also referred to as the Hospital Quality
Reporting (HQR) secure portal) to host our CMS online data submission
tool: https://www.qualitynet.org. We note that in the CY 2018 OPPS/ASC
final rule with comment period (82 FR 59473), we finalized expanded
submission via the CMS online tool to also allow for batch data
submission and made corresponding changes at 42 CFR 416.310(c)(1)(i).
The following previously finalized measures require data to be
submitted via a CMS online data submission tool for the CY 2021 payment
determination and subsequent years:
ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-Up
Interval for Normal Colonoscopy in Average Risk Patients
ASC-11: Cataracts: Improvement in Patients' Visual Function
within 90 Days Following Cataract Surgery
ASC-13: Normothermia Outcome
ASC-14: Unplanned Anterior Vitrectomy
We are not proposing any changes to these policies for data
submitted via a CMS online data submission tool.
(2) Requirements for Data Submitted via a Non-CMS Online Data
Submission Tool
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75139 through 75140) and the CY 2015 OPPS/ASC final rule
with comment period (79 FR 66985 through 66986) for our requirements
regarding data submitted via a non-CMS online data submission tool
(that is, the CDC NHSN website). We codified our existing policies
regarding the data collection periods for measures involving online
data submission and the deadline for data submission via a non-CMS
online data submission tool at 42 CFR 416.310(c)(2).
As we noted in the CY 2019 OPPS/ASC final rule with comment period
(83 FR 59135), no measures submitted via a non-CMS online data
submission tool remain in the ASCQR Program beginning with the CY 2020
payment determination. We are not proposing any changes to our non-CMS
online data submission tool reporting requirements; these requirements
would apply to any future non-CMS online data submission tool measures
adopted in the ASCQR Program.
f. Requirements for Data Submission for ASC-15a-e: Outpatient and
Ambulatory Surgery Consumer Assessment of Healthcare Providers and
Systems (OAS CAHPS) Survey-Based Measures
We refer readers to the CY 2017 OPPS/ASC final rule with comment
period (81 FR 79822 through 79824) for our previously finalized
policies regarding survey administration and vendor requirements for
the CY 2020 payment determination and subsequent years. In addition, we
codified these policies at 42 CFR 416.310(e). However, in the CY 2018
OPPS/ASC final rule with comment period (82 FR 59450 through 59451), we
delayed implementation of the ASC15a-e: OAS CAHPS--Survey-based -
measures beginning with the CY 2020 payment determination (CY 2018 data
submission) until further action in future rulemaking, and we refer
readers to that discussion for more details. We are not proposing any
changes to this policy.
g. ASCQR Program Data Submission Deadlines
While the ASCQR Program has established submission deadlines (42
CFR 416.310), there is no specified policy for deadlines falling on
nonwork days. Therefore, we propose that all program deadlines falling
on a nonwork day be moved forward consistent with section 216(j) of the
Social Security Act (the Act), 42 U.S.C. 416(j), ``Periods of
Limitation Ending on Nonwork Days.'' Specifically, the Act indicates
that all deadlines occurring on a Saturday, Sunday, or legal holiday,
or on any other day, all or part of which is declared to be a nonwork
day for federal employees by statute or Executive order, shall be
extended to the first day thereafter which is not a Saturday, Sunday or
legal holiday or any other day all or part of which is declared to be a
nonwork day for federal employees by statute or Executive order (42
U.S.C. 416(j)). Section 1872 of the Act, incorporates section 216(j) of
the Act, to apply to Title XVIII, the Medicare program to which the
ASCQR Program is administered. As such, we propose to add this policy
for the submission deadlines associated with the ASCQR Program
beginning with the effective date of this rule. We also propose to
codify this policy by adding a new paragraph (f) at Sec. 416.310,
which would read ``All deadlines occurring on a Saturday, Sunday, or
legal holiday, or on any other day all or part of which is declared to
be a nonwork day for Federal employees by statute or Executive order
are extended to the first day thereafter which is not a Saturday,
Sunday or legal holiday or any other day all or part of which is
declared to be a nonwork day for Federal employees by statute or
Executive order.'' We invite public comment on our proposals.
2. Proposed Review and Corrections Period for Data Submitted via a CMS
Online Data Submission Tool in the ASCQR Program
Under the ASCQR Program, for measures submitted via a CMS online
data submission tool, ASCs submit measure data to CMS from January 1
through May 15 during the calendar year subsequent to the current data
collection period (84 FR 61432).\101\ For example, ASCs collect measure
data from January 1, 2019 through December 31, 2019 and submit these
data to CMS from January 1, 2020 through May 15, 2020. ASCs may begin
submitting data to CMS as early as January 1. ASCs are encouraged, but
not required, to submit data early in the submission period so that
they can identify errors and resubmit data before the established
submission deadline.
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\101\ ASCQR Program Data Submission Deadlines. Available at:
https://www.qualitynet.org/asc/data-submission#tab2.
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In this proposed rule, we propose to formalize that process and
create a review and corrections period similar to that being proposed
for the Hospital OQR Program in section XIV.D.7 of this proposed rule.
For the ASCQR Program, we propose to implement a review and corrections
period which would run concurrently with the data submission period
beginning with the effective date of this rule. During this review and
corrections period, ASCs could enter, review, and correct data
submitted directly to CMS. However, after the submission deadline, ASCs
would not be allowed to change these data. We also propose to codify
this review and corrections period at new paragraph (c)(1)(iii) in
Sec. 416.310, which would read ``For measures submitted to CMS via a
CMS online tool, ASCs have a review and corrections period, which runs
concurrently with the data submission period. During this timeframe,
ASCs can enter, review, and correct data submitted. After the
submission deadline, this data cannot be changed.'' We invite public
comment
[[Page 48995]]
on our proposals, including on the burden and benefits of such a review
and corrections period.
3. ASCQR Program Reconsideration Procedures
We refer readers to the CY 2016 OPPS/ASC final rule with comment
period (82 FR 59475) (and the previous rulemakings cited therein) and
42 CFR 416.330 for the ASCQR Program's reconsideration policy. We are
not proposing any changes to this policy.
4. Extraordinary Circumstances Exception (ECE) Process for the CY 2020
Payment Determination and Subsequent Years
We refer readers to the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59474 through 59475) (and the previous rulemakings cited
therein) and 42 CFR 416.310(d) for the ASCQR Program's policies for
extraordinary circumstance exceptions (ECE) requests. In the CY 2018
OPPS/ASC final rule with comment period (82 FR 59474 through 59475),
we: (1) Changed the name of this policy from ``extraordinary
circumstances extensions or exemption'' to ``extraordinary
circumstances exceptions'' for the ASCQR Program, beginning January 1,
2018; and (2) revised 42 CFR 416.310(d) of our regulations to reflect
this change. We will strive to complete our review of each request
within 90 days of receipt. We are not proposing any changes to these
policies.
E. Proposed Payment Reduction for ASCs That Fail To Meet the ASCQR
Program Requirements
1. Statutory Background
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68499) for a detailed discussion of the statutory
background regarding payment reductions for ASCs that fail to meet the
ASCQR Program requirements.
2. Policy Regarding Reduction to the ASC Payment Rates for ASCs That
Fail To Meet the ASCQR Program Requirements for a Payment Determination
Year
The national unadjusted payment rates for many services paid under
the ASC payment system are equal to the product of the ASC conversion
factor and the scaled relative payment weight for the APC to which the
service is assigned. For CY 2021, the ASC conversion factor is equal to
the conversion factor calculated for the previous year updated by the
multifactor productivity (MFP)-adjusted hospital market basket update
factor. The MFP adjustment is set forth in section 1833(i)(2)(D)(v) of
the Act. The MFP-adjusted hospital market basket update is the annual
update for the ASC payment system for a 5-year period (CY 2019 through
CY 2023). Under the ASCQR Program in accordance with section
1833(i)(7)(A) of the Act and as discussed in the CY 2013 OPPS/ASC final
rule with comment period (77 FR 68499), any annual increase shall be
reduced by 2.0 percentage points for ASCs that fail to meet the
reporting requirements of the ASCQR Program. This reduction applied
beginning with the CY 2014 payment rates (77 FR 68500). For a complete
discussion of the calculation of the ASC conversion factor and our
finalized proposal to update the ASC payment rates using the inpatient
hospital market basket update for CYs 2019 through 2023, we refer
readers to the CY 2019 OPPS/ASC final rule with comment period (83 FR
59073 through 59080).
In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499
through 68500), in order to implement the requirement to reduce the
annual update for ASCs that fail to meet the ASCQR Program
requirements, we finalized our proposal that we would calculate two
conversion factors: A full update conversion factor and an ASCQR
Program reduced update conversion factor. We finalized our proposal to
calculate the reduced national unadjusted payment rates using the ASCQR
Program reduced update conversion factor that would apply to ASCs that
fail to meet their quality reporting requirements for that calendar
year payment determination. We finalized our proposal that application
of the 2.0 percentage point reduction to the annual update may result
in the update to the ASC payment system being less than zero prior to
the application of the MFP adjustment.
The ASC conversion factor is used to calculate the ASC payment rate
for services with the following payment indicators (listed in Addenda
AA and BB to the proposed rule, which are available via the internet on
the CMS website): ``A2'', ``G2'', ``P2'', ``R2'' and ``Z2'', as well as
the service portion of device-intensive procedures identified by ``J8''
(77 FR 68500). We finalized our proposal that payment for all services
assigned the payment indicators listed above would be subject to the
reduction of the national unadjusted payment rates for applicable ASCs
using the ASCQR Program reduced update conversion factor (77 FR 68500).
The conversion factor is not used to calculate the ASC payment
rates for separately payable services that are assigned status
indicators other than payment indicators ``A2'', ``G2'', ``J8'',
``P2'', ``R2'' and ``Z2.'' These services include separately payable
drugs and biologicals, pass-through devices that are contractor-priced,
brachytherapy sources that are paid based on the OPPS payment rates,
and certain office-based procedures, radiology services and diagnostic
tests where payment is based on the PFS nonfacility PE RVU-based
amount, and a few other specific services that receive cost-based
payment (77 FR 68500). As a result, we also finalized our proposal that
the ASC payment rates for these services would not be reduced for
failure to meet the ASCQR Program requirements because the payment
rates for these services are not calculated using the ASC conversion
factor and, therefore, not affected by reductions to the annual update
(77 FR 68500).
Office-based surgical procedures (generally those performed more
than 50 percent of the time in physicians' offices) and separately paid
radiology services (excluding covered ancillary radiology services
involving certain nuclear medicine procedures or involving the use of
contrast agents) are paid at the lesser of the PFS nonfacility PE RVU-
based amounts or the amount calculated under the standard ASC
ratesetting methodology. Similarly, in the CY 2015 OPPS/ASC final rule
with comment period (79 FR 66933 through 66934), we finalized our
proposal that payment for certain diagnostic test codes within the
medical range of CPT codes for which separate payment is allowed under
the OPPS will be at the lower of the PFS nonfacility PE RVU-based (or
technical component) amount or the rate calculated according to the
standard ASC ratesetting methodology when provided integral to covered
ASC surgical procedures. In the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68500), we finalized our proposal that the
standard ASC ratesetting methodology for this type of comparison would
use the ASC conversion factor that has been calculated using the full
ASC update adjusted for productivity. This is necessary so that the
resulting ASC payment indicator, based on the comparison, assigned to
these procedures or services is consistent for each HCPCS code,
regardless of whether payment is based on the full update conversion
factor or the reduced update conversion factor.
For ASCs that receive the reduced ASC payment for failure to meet
the ASCQR Program requirements, we believe that it is both equitable
and
[[Page 48996]]
appropriate that a reduction in the payment for a service should result
in proportionately reduced coinsurance liability for beneficiaries (77
FR 68500). Therefore, in the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68500), we finalized our proposal that the Medicare
beneficiary's national unadjusted coinsurance for a service to which a
reduced national unadjusted payment rate applies will be based on the
reduced national unadjusted payment rate.
In that final rule with comment period, we finalized our proposal
that all other applicable adjustments to the ASC national unadjusted
payment rates would apply in those cases when the annual update is
reduced for ASCs that fail to meet the requirements of the ASCQR
Program (77 FR 68500). For example, the following standard adjustments
would apply to the reduced national unadjusted payment rates: The wage
index adjustment; the multiple procedure adjustment; the interrupted
procedure adjustment; and the adjustment for devices furnished with
full or partial credit or without cost (77 FR 68500). We believe that
these adjustments continue to be equally applicable to payment for ASCs
that do not meet the ASCQR Program requirements (77 FR 68500).
In the CY 2015 through CY 2020 OPPS/ASC final rules with comment
period we did not make any other changes to these policies. We propose
the continuation of these policies for CY 2021.
XVI. Proposed Overall Hospital Quality Star Rating Methodology for
Public Release in CY 2021 and Subsequent Years
A. Background
The Overall Star Rating provides a summary of certain existing
hospital quality information based on publicly available quality
measure results reported through CMS programs, in a way that is simple
and easy for patients to understand, by assigning hospitals between one
and five stars. The Overall Star Rating was first introduced and
reported on Hospital Compare in July 2016 \102\ and has been refreshed
six times,103 104 105 106 two of which included minor
methodology updates,107 108 over the past years. Hospital
Compare, and any successor site, is a public website hosted by CMS with
transparent information and data on over 100 quality measure for over
4,000 hospitals, nationwide in the United States, for consumers and
researchers. In this rule, for the Overall Star Ratings, the term
``publish'' refers to the public posting of the Overall Star Rating and
``refresh'' refers to the public posting quality measure and program
data on Hospital Compare or its successor website.
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\102\ Centers for Medicare & Medicaid Services. (2016, July 27).
First Release of the Overall Hospital Quality Star Rating on
Hospital Compare. Retrieved from www.cms.gov/newsroom: https://www.cms.gov/newsroom/fact-sheets/first-release-overall-hospital-quality-star-rating-hospital-compare.
\103\ Centers for Medicare & Medicaid Services. (2016, May).
Overall Hospital Quality Star Rating on Hospital Compare: July 2016
Updates and Specifications Report.
\104\ Centers for Medicare & Medicaid Services. (2016, October).
Overall Hospital Quality Star Rating on Hospital Compare: December
2016 Updates and Specifications Report.
\105\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare: July 2017
Updates and Specifications Report.
\106\ Centers for Medicare & Medicaid Services. (2019, November
4). Overall Hospital Quality Star Rating on Hospital Compare:
January 2020 Updates and Specifications Report. Retrieved from
qualitynet.org: https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab2.
\107\ Centers for Medicare & Medicaid Services. (2018, November
30). Overall Hospital Quality Star Rating on Hospital Compare:
February 2019 Updates and Specifications Report. Retrieved from
qualitynet.org: https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab2.
\108\ Centers for Medicare & Medicaid Services. (2017,
November). Star Methodology Enhancement for December 2017 Public
Release. Retrieved from www.qualitynet.org: https://qualitynet.org/outpatient/public-reporting/overall-ratings/resources.
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During development of the Overall Star Rating, we established
guiding principles to use methods that were scientifically valid,
inclusive of hospitals and measure information, accounted for the
heterogeneity of available measures and hospital reporting, and
accommodated changes in the underlying measures.\109\ In addition, we
aimed to provide alignment with the information displayed on Hospital
Compare and the measures and methods used within CMS programs,
transparency of Overall Star Rating methods, and responsiveness to
stakeholder input. After the launch of the Overall Star Rating in July
2016 and as the Overall Star Rating gained broader use by multiple
stakeholders, we added new guiding principles to guide reevaluation of
the methodology.\110\
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\109\ Centers for Medicare & Medicaid Services. (2017,
December). Overall Hospital Quality Star Rating on Hospital Compare
Methodology Report (v3.0). Retrieved from www.qualitynet.org:
https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab1.
\110\ Ibid.
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In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose a methodology which includes
elements of the current methodology as well as updates (we refer
readers to section E. Current and Proposed Overall Star Rating
Methodology) that aim to increase simplicity of the methodology,
predictability of measure emphasis within the methodology over time,
and comparability of ratings among hospitals. We are also proposing to
include Veterans Health Administration (VHA) hospitals (we refer
readers to section C. Veterans Health Administration Hospitals in
Overall Star Rating) and Critical Access Hospitals (CAHs) (we refer
readers to B. Critical Access Hospitals in the Overall Star Rating) in
the Overall Star Rating. In addition, we propose to establish the
Overall Hospital Quality Star Rating and methodology at subpart J of
part 412 (proposed Sec. 412.190).
Because of our production timeline to calculate and distribute
Overall Star Rating results in time for hospitals to preview the
ratings in advance of public release, we are using this CY 2021 OPPS/
ASC proposed rule to propose the methodology for the Overall Star
Rating even though it includes not only hospital outpatient measures,
but also hospital inpatient measures, which are generally discussed in
the Inpatient Prospective Payment System (IPPS) rule. We plan to
reference policies for the Overall Star Rating in the FY 2022 IPPS
rule.
1. Purpose, Authority, and Applicable Hospital Quality Data
a. Purpose
In 2014, to inform the initial methodology for the Overall Star
Rating, we conducted a review of the literature as well as a review of
prior and current star rating efforts. This review supported the notion
that patients care about information on hospital quality, but that
patient use of this information is limited by low understanding of
quality information. Additionally, we heard feedback that hospital
quality information is often intimidating as displayed and is not user-
friendly in comparison to other consumer ratings. The key findings of
the review were consistent with consumer priorities to bring a wide
variety of measures together into a single overall star rating.
Therefore, we sought to help consumers understand hospital quality
information through development of a summary measure, which combines
publicly reported quality information in an easy-to-understand rating
that is familiar to consumers.
The primary objective of the Overall Star Rating was to use an
established, evidence-based statistical approach to summarize hospital
quality measure
[[Page 48997]]
results reported on Hospital Compare with the goal of assigning acute
care hospitals and facilities that provide acute inpatient and
outpatient care in the U.S. to an overall rating between one and five
whole stars.\111\ The Overall Star Rating is meant to complement other
hospital quality information publicly posted on Hospital Compare or its
successor website, including the individual measure scores and the
Hospital Consumer Assessment of Healthcare Providers and Systems
(HCAHPS) Star Rating.\112\ The original guiding principles of the
Overall Star Rating was to use scientifically valid methods that are
inclusive of hospitals and measure information, able to account for
different hospitals reporting on different measures, and able to
accommodate changes in the underlying measures over time.\113\ We also
aimed to create alignment with Hospital Compare and CMS programs,
transparency of the methods for calculating the Overall Star Rating,
and responsiveness to stakeholder input through various and ongoing
engagement activities.
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\111\ Centers for Medicare and& Medicaid Services. (2017,
December). Overall Hospital Quality Star Rating on Hospital Compare
Methodology Report (v3.0). Retrieved from www.qualitynet.org:
https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab1.
\112\ Centers for Medicare and& Medicaid Services. (2017,
November). Star Methodology Enhancement for December 2017 Public
Release. Retrieved from www.qualitynet.org: https://qualitynet.org/outpatient/public-reporting/overall-ratings/resources.
\113\ Centers for Medicare and& Medicaid Services. (2017,
December). Overall Hospital Quality Star Rating on Hospital Compare
Methodology Report (v3.0). Retrieved from www.qualitynet.org:
https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab1.
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The goal of the Overall Star Rating is to summarize hospital
quality information in a way that is simple and easy for patients to
understand, by assigning hospitals between one and five stars, to
increase transparency and empower stakeholders to make more informed
decisions about their healthcare. To this end, we propose that (1) the
Overall Star Rating is a summary of certain publicly reported hospital
measure data for the benefit of stakeholders, such as patients,
consumers, and hospitals, (2) the guiding principles of the Overall
Star Rating are to use scientifically valid methods, inclusive of
hospitals and measure information and able to accommodate measure
changes; alignment with Hospital Compare or its successor website and
CMS programs; provide transparency of the methods for calculating the
Overall Star Ratings; and be responsive to stakeholder input; and (3)
and to codify this at Sec. 412.190.
b. Subsection (d) Hospitals
The Overall Star Rating includes measures that (1) capture quality
of care at hospitals and facilities providing acute inpatient and
outpatient care and (2) are publicly reported on Hospital Compare or
its successor websites. CMS currently publicly reports information
regarding the performance of individual hospitals in the following CMS
quality programs: Hospital Inpatient Quality Reporting (IQR) Program,
Hospital Readmission Reduction Program (HRRP), Hospital-Acquired
Condition (HAC) Reduction Program, Hospital Value-Based Purchasing
(VBP) Program, and Hospital Outpatient Quality Reporting (OQR) Program.
Such authority is granted under applicable sections 1833 and 1886 of
the Act.\114\
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\114\ U.S. Congress. (1934) United States Code: Social Security
Act, 18 U.S.C. 1833 and 1886.
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Specifically, under sections 1886(b)(3)(B)(viii)(VII) and
1833(t)(17)(E) of the Act for the Hospital IQR and OQR Programs
respectively, the Secretary is required to make quality information
available to the public. Section 1886(b)(3)(B)(viii)(VII) of the Act
states that ``The Secretary shall establish procedures for making
information regarding measures submitted under this clause available to
the public. Such procedures shall ensure that a hospital has the
opportunity to review the data that are to be made public with respect
to the hospital prior to such data being made public. The Secretary
shall report quality measures of process, structure, outcome, patients'
perspectives on care, efficiency, and costs of care that relate to
furnished in inpatient settings in on the internet website of the
Centers for Medicare & Medicaid Services.'' Section 1833(t)(17)(E) of
the Act states that ``The Secretary shall establish procedures for
making data submitted under this paragraph available to the public.
Such procedures shall ensure that a hospital has the opportunity to
review the data that are to be made public with respect to the hospital
prior to such data being made public. The Secretary shall report
quality measures of process, structure, outcome, patients' perspectives
on care, efficiency, and costs of care that relate to services
furnished in outpatient settings in hospitals on the internet website
of the Centers for Medicare and Medicaid Services.'' We believe that
these requirements allow the agency to create the Overall Star Rating
as a means to summarize existing publicly reported quality measure data
from the Hospital IQR and OQR Programs, along with quality measure data
from other hospitals, in a form and manner that improves accessibility
of hospital quality information for the benefit of patients and
consumers.
In addition, the HRRP (under section 1886(q)(6)(A) of the Act) and
the HAC Reduction Program (under section 1886(p)(6)(A) of the Act)
require that the Secretary must make information regarding readmission
and hospital acquired condition rates for hospitals available to the
public. Specifically, section 1886(q)(6)(A) of the Act states that
``The Secretary shall make information available to the public
regarding readmission rates of each subsection (d) hospital under the
program'' and section 1886(p)(6)(A) of the Act states that ``The
Secretary shall make information available to the public regarding
hospital acquired conditions of each applicable hospital.'' Similar to
Hospital IQR and OQR Programs, we believe that these requirements allow
the agency to create and publicly release the Overall Star Rating as a
means to summarize existing publicly reported quality measure data from
the HRRP and HAC Reduction Program, along with quality measure data
from other hospitals, in a form and manner that improves accessibility
of hospital quality information for the benefit of patients and
consumers.
Our use of data reported by hospitals under the Hospital VBP
Program in the Overall Star Ratings is supported by section
1886(o)(10)(A)(i) of the Act. Specifically, section 1886(o)(10)(A) of
the Act states that ``The Secretary shall make information available to
the public regarding the performance of individual hospitals under the
Program, including (i) the performance of the hospital with respect to
each measure that applies to the hospital; (ii) the performance of the
hospital with respect to each condition or procedure; and (iii) the
hospital performance score assessing the total performance of the
hospital.'' Hospitals that participate in the Hospital VBP Program
report data on each Hospital VBP measure for a specified performance
period that applies to the program year. Under our proposed star rating
methodology, which we describe in detail below, we would use these
Hospital VBP measure rates, in combination with measure rates reported
by various hospitals under the Hospital IQR Program, Hospital OQR
Program, HRRP, and HAC Reduction Program to calculate and make public a
star rating that applies to the hospital for a corresponding star
rating period, making that star reflective of the hospital's measured
level of quality in all of these programs.
[[Page 48998]]
The Overall Star Ratings does not use data reported by hospitals
under the Prospective Payment System-Exempt Cancer Hospitals Quality
Reporting (PCHQR) Program, the Inpatient Psychiatric Facilities (IPF)
Quality Reporting Program, or the Ambulatory Surgical Centers (ASC)
Quality Reporting Program.
Beginning with publication of Overall Star Rating in CY 2021 and
subsequent years, we propose to: (1) Continue to use data publicly
reported on a CMS website from the programs described above as a basis
to calculate the Overall Star Ratings, and (2) codify this at Sec.
412.190. We invite public comment on our proposals.
B. Critical Access Hospitals in the Overall Star Rating
1. Current Critical Access Hospitals in the Overall Star Rating
The current Overall Star Rating is calculated based on certain data
that is publicly reported on a CMS website and includes data from
hospitals and facilitates that provide acute inpatient and outpatient
care, including critical access hospitals (CAHs). Many CAHs currently
voluntarily submit measure data consistent with certain CMS quality
programs and elect to have their quality measure data publicly reported
through their QualityNet account by selecting Optional Public Reporting
Notice of Participation. We note, however, that the Hospital OQR
Program no longer uses a Notice of Participation form (83 FR 59103
through 59104). Submission of data through the Hospital OQR Program is
considered participation specifically in that program. If a CAH elects
to voluntarily submit data and have their quality measure data publicly
reported, they are subsequently eligible to receive a star rating so
long as they meet the specified reporting thresholds, discussed in
detail in section E.6. Step 5: Application of Minimum Thresholds for
Receiving a Star Rating.
We note that many CAHs do not meet the minimum threshold to receive
a star rating due to serving too few patients to report some of the
underlying measures. To date, typically anywhere from 48 to 55 percent
of CAHs report enough measures to receive a star rating.
2. Proposal To Continue To Include Critical Access Hospitals in the
Overall Star Rating
In this proposed rule, the Overall Star Rating beginning in CY 2021
and subsequent years, we propose to continue to include voluntary
measure data from CAHs for the purpose of calculating Overall Star
Rating through authority in section 1704 of the Public Health Service
Act (PHSA).\115\ Section 1704 of the PHSA states that ``The Secretary
is authorized to conduct and support by grant or contract (and
encourage others to support) such activities as may be required to make
information respecting health information and health promotion,
preventive health services, and education in the appropriate use of
health care available to the consumers of medical care, providers of
such care, schools, and others who are or should be informed respecting
such matters.'' We believe that this authority allows the agency to
include CAHs in Overall Star Rating because the purpose of the Overall
Star Rating is to summarize hospital quality information in a way that
is simple and easy for patients to understand, by assigning hospitals
between one and five stars, to increase transparency and empower
stakeholders to make informed decisions about their healthcare. We have
an existing contract mechanism through our current Healthcare Quality
Analytics and Reports (HCQAR) contract, which would continue under a
future similar contract vehicle as appropriate, for the calculation of
the Overall Star Rating for all hospitals that provide acute inpatient
and outpatient care, including CAHs, and for the dissemination of
reports to these hospitals prior to public release. Any hospital or
facility providing acute inpatient and outpatient care, including CAHs,
with measure or measure group scores reported on Hospital Compare or
its successor website are given a confidential hospital-specific report
(HSR) during the Overall Star Rating preview where they may review
their measure, measure group, and star rating results prior to public
release. The Overall Star Rating preview period and confidential
hospital-specific reports are discussed in more detail in section F.
Preview Period.
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\115\ Public Health Service Act of 2019, Public Law 116-69, Page
133 STAT. 1134, codified as amended at 42 U.S.C. 201.
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In addition, section 1851(d) of the Act allows the Secretary to
disseminate information to Medicare beneficiaries to promote informed
choice among coverage options.\116\ Many CAHs are located in remote
areas that face unique challenges in resources and are often one of the
only options for patients to seek care.\117\ We believe it is important
to include CAH data when available because it aligns with CMS goals of
healthcare transparency, consumer choice, and the guiding principle of
the Overall Star Rating, which is to include as much information as
possible about hospital quality. The inclusion of CAHs in the Overall
Star Rating has been supported by the Health Resources and Services
Administration (HRSA) through their ongoing work with rural hospitals
and facilities that provide acute inpatient and outpatient care,
including CAHs. HRSA encourages CAHs to report quality measure data as
part of quality improvement and public reporting and supports the
inclusion of publicly reported measure scores for CAHs within the
Overall Star Rating. Additionally, as part of ongoing stakeholder
engagement activities, we have heard from some CAHs that they are
interested in receiving a star rating and that voluntary measure
reporting places no additional burden on CAHs.
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\116\ U.S. Congress. (1934) United States Code: Social Security
Act, 42 U.S.C. 1851.
\117\ Centers for Medicare & Medicaid Services. (2013, April 9).
Critical Access Hospitals. Retrieved from www.cms.gov: https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/CertificationandComplianc/CAHs.
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Therefore, we propose that CAHs that wish to be voluntarily
included in the Overall Star Rating must have elected to both (a.)
voluntarily submit quality measures included in and as specified by CMS
hospital programs and (b.) publicly report their quality measure data
on one of CMS' public websites. We propose to codify this at Sec.
412.190. CAHs that do not elect to participate or that elect to
withhold their data from public reporting will not be included in the
Overall Star Rating calculation. Since CAHs voluntarily report
measures, CAHs may have their Overall Star Rating withheld from public
release provided they submit a timely request, as described in more
detail under section G. Overall Star Rating Suppressions.
Of note, the proposal to peer group hospitals by the number of
measure groups, as outlined in section E.7. Proposed Approach to Peer
Grouping Hospitals, is dependent on CAH participation in the Overall
Star Rating since CAHs make up approximately half of the hospitals
within the three measure peer group and excluding CAHs from the Overall
Star Rating would not provide a sufficient amount of hospitals to make
peer group comparisons.
We invite public comment on our proposals to include CAHs in the
Overall Star Rating, the processes for CAHs to (a.) voluntarily submit
quality measures included in CMS hospital programs and (b.) publicly
report their quality measure data on one of CMS' public websites, and
to codify this at
[[Page 48999]]
Sec. 412.190. We note that for the purposes of the rest of this
discussion, we will refer to both subsection (d) hospitals and CAHs as
``hospitals.''
C. Veterans Health Administration Hospitals in the Overall Star Rating
In this proposed rule, we propose to include quality measure data
from Veterans Health Administration hospitals (VHA hospitals) for the
purpose of calculating Overall Star Rating beginning with the CY 2023.
CMS has an existing contract mechanism with the Veterans Health
Administration (VHA) through an Interagency Agreement to publish their
hospitals' quality measure data on Hospital Compare \118\ in accordance
with section 206(c) of the Veterans Access, Choice, and Accountability
Act (Choice Act) of 2014 (Pub. L. 113-146).\119\
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\118\ Centers for Medicare & Medicaid Services. (2016, October
19). Veterans Health Administration Hospital Performance Data.
Retrieved July 6, 2020, from www.cms.gov; https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/VA-Data.
\119\ Veterans Access, Choice, and Accountability Act of 2014,
Public Law 113-146, Page 128 STAT. 1754, codified as amended at 38
U.S.C. 1703C(b)(1).
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Furthermore, section 1704 of the PHSA \120\ allows the Secretary to
make health information available to consumers of medical care through
grant or contract mechanism including, but not limited to, the
publication of health information. In addition, section 1851(d) of the
Act allows the Secretary to disseminate information to Medicare
beneficiaries to promote informed choice among coverage options.\121\
We believe this includes the publication of quality measure data and
Overall Star Rating for VHA hospitals.
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\120\ Public Health Service Act of 2019, Public Law 116-69, Page
133 STAT. 1134, codified as amended at 42 U.S.C. 201.
\121\ U.S. Congress. (1934) United States Code: Social Security
Act, 42 U.S.C. 1851.
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Therefore, in this proposed rule, we propose to include VHA
hospitals in the Overall Star Rating beginning in CY 2023. Including
VHA hospitals in the Overall Star Rating beginning in CY 2023 allows
CMS to establish the methodology through this proposed rule and host
confidential reporting of the Overall Star Rating for VHA hospitals
prior to public release of VHA star ratings. In order to be eligible to
receive a star rating, VHA data would be subject to the same reporting
threshold as subsection (d) hospitals and CAHs included in the Overall
Star Rating (proposed as three measure groups, one of which must be
Mortality or Safety of Care, with at least three measures in each
measure group as discussed in section E.6. Step 5: Application of
Minimum Thresholds for Receiving a Star Rating).
We anticipate that adding VHA hospital data to the Overall Star
Rating calculation would influence national results due to several
steps in the Overall Star Rating methodology that inherently assess
quality measure performance in a relative manner, or by comparing
hospitals to other hospitals. This influence is present in three places
of the Overall Star Rating methodology: In the standardization of
individual measure scores, in the standardization of measure group
scores, and in the calculation of star ratings using k-means
clustering. The addition of VHA hospitals has no direct influence on
CMS-administered programs, however. CMS program impacts, including
payment and burden, are assessed based on hospitals participating in
CMS' programs and do not include VHA hospitals in those determinations.
CMS intends to provide more information about the statistical impact of
adding VHA hospitals to the Overall Star Rating and discuss procedural
aspects in a future rule.
We invite public comment on our proposal to include VHA hospitals
in the Overall Star Rating beginning with CY 2023.
D. History of the Overall Hospital Quality Star Rating
Prior to introduction of the Overall Star Rating on the Hospital
Compare website in July 2016, we engaged stakeholders throughout
development of the methodology. CMS' Overall Star Rating development
contractor convened both a Technical Expert Panel (TEP), consisting of
national statistical experts, providers, purchasers, and patient
advocates, and a Patient & Advocate Work Group, as well as hosted two
public input periods 122 123 to gain stakeholder feedback on
aspects of the methodology. Specifically, feedback was solicited on
topics such as measure inclusion and groupings, statistical and non-
statistical approaches to summarizing measures, weightings for
individual measures and measure groups, and approaches to classifying
hospitals to star ratings. In 2015, we hosted a confidential hospital
dry run to provide all hospitals and facilities that provide acute
inpatient and outpatient care with a private report on their measure
performance, measure group scores, and star ratings results, which
allowed hospitals to preview their preliminary results without public
posting and to familiarize themselves with the methodology.\124\
Concurrent with the July 2016 preview period, we also hosted a national
provider call to present the final methodology and answer stakeholder
questions.\125\
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\122\ Centers for Medicare & Medicaid Services. (2015, January).
Hospital Compare Star Ratings Public Comment Report 1: Measure
Selection for Hospital Star Ratings.
\123\ Centers for Medicare & Medicaid Services. (2015, June).
Hospital Quality Star Ratings on Hospital Compare Public Comment
Report #2: Methodology of Overall Hospital Quality Star Ratings.
\124\ Centers for Medicare & Medicaid Services. (2018, September
18). Hospital Compare Overall Star Ratings Dry Run Q&A. Retrieved
from www.qualitynet.org: https://www.qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab4.
\125\ Centers for Medicare & Medicaid Services. (2015, August
13). Centers for Medicare & Medicaid Services Hospital Compare
Overall Star Ratings Methodology MLN Connects National Provider
Call. Retrieved from www.cms.gov: https://www.cms.gov/Outreach-and-Education/Outreach/NPC/National-Provider-Calls-and-Events-Items/2015-08-13-Star-Ratings.
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For the initial July 2016 and each subsequent release of the
Overall Star Rating, including October 2016, December 2016, December
2017, February 2019, and January 2020, we have continuously provided
resources to maintain transparency and facilitate understanding of the
methods, including three National Provider Calls 126 127 128
as well as methodology reports,\129\ hospital-specific reports,\130\
and open access datasets with quality measure data used to calculate
the Overall Star Rating (referred to as the public input file), and SAS
programing code used to calculate the Overall Star Rating along with
supporting documents to allow stakeholders to understand and replicate
the Overall Star Rating results.
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\126\ Ibid.
\127\ Centers for Medicare & Medicaid Services. (2016, May 12).
Centers for Medicare & Medicaid Services Overall Hospital Quality
Star Ratings on Hospital Compare National Provider Call. Retrieved
from: https://www.qualityreportingcenter.com/en/inpatient-quality-reporting-programs/hospital-inpatient-quality-reporting-iqr-program/archived-events/hiqr-event134/.
\128\ Centers for Medicare & Medicaid Services. (2017, November
30). Centers for Medicare & Medicaid Services Hospital Quality Star
Ratings on Hospital Compare December 2017 Methodology Enhancements
National Provider Call. Retrieved from: https://www.qualityreportingcenter.com/en/inpatient-quality-reporting-programs/hospital-inpatient-quality-reporting-iqr-program/archived-events/hiqr-event107/.
\129\ Centers for Medicare & Medicaid Services. (2018, January).
Overall Hospital Quality Star Rating on Hospital Compare Methodology
Report (v3.0). Retrieved from: https://www.qualitynet.org/files/5d0d3a1b764be766b0103ec1?filename=Star_Rtngs_CompMthdlgy_010518.pdf.
\130\ Centers for Medicare & Medicaid Services. Hospital-
Specific Reports. Retrieved from: https://www.qualitynet.org/inpatient/public-reporting/overall-ratings/reports.
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Since the introduction of the Overall Star Rating on the Hospital
Compare
[[Page 49000]]
website in July 2016, the Overall Star Rating development contractor
has continued to engage stakeholders by convening two additional TEPs,
maintaining the Patient & Advocate Work Group, convening a new Provider
Leadership Work Group, consisting of hospital quality and medical
staff, and hosting two additional public input
periods.131 132 As a result of ongoing reevaluation and
stakeholder engagement, we updated the methodology in December 2017 and
February 2019. CMS also hosted a National Provider Call \133\ to
facilitate the December 2017 methodology enhancements and nine
listening sessions to facilitate the February 2019 methodology
enhancements. The current methodology includes enhancements made in
December 2017 \134\ and February 2019.\135\
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\131\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
\132\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\133\ Centers for Medicare & Medicaid Services. Overall Hosptial
Quality Star Ratings on Hospital Compare. (2016, 12 May). Retrieved
from www.qualityreportingcenter.com: https://www.qualityreportingcenter.com/globalassets/migrated-pdf/iqr_20160512_npc-overall-star-rating_vfinal5.9.16.508.pdf.
\134\ Centers for Medicare & Medicaid Services. (2017,
November). Star Methodology Enhancement for December 2017 Public
Release. Retrieved from www.qualitynet.org: https://qualitynet.org/outpatient/public-reporting/overall-ratings/resources.
\135\ Centers for Medicare & Medicaid Services. (2018, November
30). Quarterly Updates and Specifications Report (February 2019).
Retrieved from www.qualitynet.org: https://qualitynet.org/outpatient/public-reporting/overall-ratings/resources#tab2.
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1. Reevaluation of the Overall Hospital Quality Star Rating Methodology
The Overall Star Rating is a summary of certain existing hospital
quality information, which is collected and reported as part of several
CMS programs to improve and make transparent the quality of care
provided at hospitals that provide acute inpatient and outpatient care.
As the underlying measures reported on Hospital Compare have been
added, updated, and removed, and as stakeholders have begun using the
methodology for purposes beyond consumer transparency, including
provider quality improvement efforts, we propose refinements to the
methodology of the Overall Star Rating. Since the first reporting of
the Overall Star Rating in July 2016, we have maintained an active
monitoring and re-evaluation process for the methodology, as well as
engaged stakeholders for continuous feedback. Based on this ongoing
reevaluation work, we have released multiple, iterative updates to the
methodology in December 2017 \136\ and February 2019 \137\ that
addressed stakeholder concerns revealed through previous stakeholder
engagement by the TEP 138 139 and during public input. We
refer readers to section E.4.a.(2) Latent Variable Modeling Measure
Loadings for an overview of the February 2019 methodology updates.
---------------------------------------------------------------------------
\136\ Centers for Medicare & Medicaid Services. (2017,
November). Star Methodology Enhancement for December 2017 Public
Release. Retrieved from www.qualitynet.org: https://qualitynet.org/outpatient/public-reporting/overall-ratings/resources.
\137\ Centers for Medicare & Medicaid Services. (2018, November
30). Quarterly Updates and Specifications Report (February 2019).
Retrieved from www.qualitynet.org: https://qualitynet.org/outpatient/public-reporting/overall-ratings/resources#tab2.
\138\ Centers for Medicare & Medicaid Services. (2017, June).
Hospital Quality Star Ratings on Hospital Compare Technical Expert
Panel.
\139\ Centers for Medicare & Medicaid Services. (2018, June).
Summary of Technical Expert Panel (TEP): Hospital Quality Star
Rating on Hospital Compare.
---------------------------------------------------------------------------
Between 2018 and 2019, CMS' Overall Star Rating development
contractor received input on several potential methodology updates
through two TEP meetings,\140\ three Patient & Advocate Work Group
meetings, two Provider Leadership Work Group meetings, nine public
listening sessions,\141\ and one public input period.\142\ Through
these reevaluation analyses and stakeholder engagement, we identified
three aforementioned overarching areas of improvement for the Overall
Star Rating methodology--simplicity of the methodology, predictability
of measure emphasis within the methodology over time, and comparability
of ratings among hospitals that provide acute inpatient and outpatient
care.143 144 Simplicity of the methodology means we aim to
reduce the statistical complexity of the methodology, while maintaining
a representative summary of hospital quality data, so that stakeholders
can better understand how the Overall Star Rating is calculated.
Predictability of measure emphasis within the methodology over time
means we aim to create a methodology that assigns similar measure
weight, or emphasis, to each measure to calculate measure group scores
and Overall Star Rating over time (each Overall Star Rating
publication). Comparability of ratings among hospitals means we aim to
create a methodology that compares hospitals that are more similar to
each other, such as the measures they report or services they provide,
when calculating the Overall Star Rating.
---------------------------------------------------------------------------
\140\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
\141\ Centers for Medicare & Medicaid Services. (2019,
November). Overall Hospital Quality Star Rating Listening Session
Meeting Summary Report. Retrieved from https://www.cms.gov/files/document/overall-hospital-quality-star-ratings-listening-session-summary-report.
\142\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\143\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\144\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
---------------------------------------------------------------------------
Since the original introduction of the Overall Star Rating,
stakeholders have requested a less complex, or simplified, methodology
so that providers can better understand the methodology, interpret
their star rating, and use the Overall Star Rating to identify areas
for quality improvement.\145\ We developed the current methodology
under the original principles of the Overall Star Rating, which was to
use a statistical approach to summarize quality measures for
patients.\146\ The current methodology aims to prioritize patient
usability and employs data-driven statistical modeling approaches,
including latent variable modeling \147\ and k-means clustering,\148\
to calculate measure group scores and to assign hospital summary scores
to star ratings. In summary, the current methodology is designed to
rely on data for several
[[Page 49001]]
critical steps in the star ratings calculation. A couple of the
proposed methodology updates aim to increase the simplicity of the
methodology for health care providers seeking to replicate, better
understand, or communicate an interpretation of the Overall Star
Rating,--including (1) regrouping measures into five measure groups,
rather than seven, due to measure removals as a result of the
Meaningful Measure Initiative discussed below in section E.3.b.(2)
Proposed New Measure Group: Timely and Effective Care and (2) using a
simple average of measure scores to calculate measure group scores
discussed below in section E.4. Step 3: Calculation of Measure Group
Scores.
---------------------------------------------------------------------------
\145\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\146\ Centers for Medicare & Medicaid Services. (2018, January).
Overall Hospital Quality Star Rating on Hospital Compare Methodology
Report (v3.0). Retrieved from: https://www.qualitynet.org/files/5d0d3a1b764be766b0103ec1?filename=Star_Rtngs_CompMthdlgy_010518.pdf.
\147\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
\148\ Illowsky, B., & Dean, S. (2013). Introductary Statistics.
Houston, TX: 12th Media Services. Retrieved from: https://openstax.org/details/books/introductory-statistics.
---------------------------------------------------------------------------
Several proposed refinements aim to address the predictability of
measure emphasis within the methodology over time. Between the December
2017 and the intended July 2018 publication of the Overall Star Rating,
there were no Overall Star Rating methodology updates; however, there
were several measure-level updates, including the introduction of two
new measures (Severe Sepsis and Septic Shock: Early Management Bundle
and Pneumonia Excess Days in Acute Care), the removal of one measure
(Pneumonia 30-day Readmission), and updated specifications for the CMS
Patient Safety Indicator Composite (CMS PSI-90) measure.\149\ The
updates to the underlying measures for the July 2018 confidential
preview period resulted in differences in the emphasis of measure
contributions to the star rating calculation from previous
releases.\150\ These observed changes in star ratings were similar to
star rating shifts observed between reporting periods for other CMS
star rating programs, however greater than the shifts observed in prior
Overall Star Rating publications. While some shifts in star ratings are
expected as hospital performance worsens or improves relative to other
hospitals in the nation and as measures are added, updated, and removed
from the Overall Star Rating calculation, results from the July 2018
confidential preview period illuminated the extent of the sensitivity
of a data-driven statistical model to underlying measure updates. As a
result of this unexpected change in measure emphasis, we did not move
forward with public release of the July 2018 Overall Star Rating and
instead focused on potential improvements to the methodology and
stakeholder engagement. Several of the proposed methodology updates,
including (1) regrouping measures into five measure groups, rather than
seven, due to measure removals as a result of the Meaningful Measure
Initiative, discussed below in section E.3. Step 2: Assignment of
Measures to Groups; (2) use of a simple average of measure scores to
calculate measure group scores, discussed below in section E.4.b.
Proposal to Use a Simple Average of Measure Scores to Calculate Measure
Group Scores; and (3) requiring at least three measures in three
measure groups, one of which must be Mortality or Safety of Care, to
receive a star rating discussed below in section E.6. Step 5:
Application of Minimum Thresholds for Receiving a Star Rating, aim to
address concerns around the predictability of measure emphasis, and in
turn star ratings, over time.
---------------------------------------------------------------------------
\149\ Centers for Medicare & Medicaid Services. Hospital-
Specific Reports. Retrieved from: https://www.qualitynet.org/inpatient/public-reporting/overall-ratings/reports.
\150\ Centers for Medicare & Medicaid Services. (2018, May).
Quarterly Updates and Specifications Report: July 2018. Retrieved
from: https://www.qualitynet.org/files/5d0d3abf764be766b0104a21?filename=StarRatingsJul18_UpdtSpecsRpt.pdf.
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Comparability of the Overall Star Rating is a commonly expressed
priority by stakeholders.151 152 Hospitals that provide
acute inpatient and outpatient care differ in size or patient volume,
geographical location, urban or rural location, patient populations
treated, and services offered. In turn, hospitals differ in the number
and type of quality measures reported. All hospitals providing acute
inpatient and outpatient care, regardless of differences in any of
these characteristics, are included within the Overall Star Rating
calculation and are eligible to receive a star rating. Stakeholders,
primarily providers on the TEP, Provider Leadership Work Group, and
during a public input period, have highly recommended that the Overall
Star Rating account for differences in hospital case-mix or type to
increase comparability of hospital star ratings.153 154
Several of the proposed methodology updates, including (1) stratifying
the Readmission measure group according to proportion of dual-eligible
patients at each hospital; (2) requiring at least three measures in
three measure groups, one of which must be Mortality or Safety of Care,
to receive a star rating discussed below in section E.6. Step 5:
Application of Minimum Thresholds for Receiving a Star Rating; and (3)
peer grouping hospitals by number of measure groups, discussed below in
section E.7. Proposed Approach to Peer Grouping Hospitals, aim to
increase the comparability of hospitals for patients and providers.
---------------------------------------------------------------------------
\151\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
\152\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\153\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\154\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
---------------------------------------------------------------------------
In 2019, we conducted extensive analyses and engaged multiple
stakeholder groups to evaluate each of the proposed methodology updates
outlined below. Most notably, CMS' Overall Star Rating development
contractor recruited and convened a third TEP to provide technical
input,\155\ a second Provider Leadership Work Group to provide policy
input, and a second Patient & Advocate Work Group to provide input on
usability, and we hosted a public listening session,\156\ all to gain a
range of new perspectives on the current methodology and potential
methodology updates.
---------------------------------------------------------------------------
\155\ Ibid.
\156\ Centers for Medicare & Medicaid Services. (2019,
November). Overall Hospital Quality Star Rating Listening Session
Meeting Summary Report. Retrieved from https://www.cms.gov/files/document/overall-hospital-quality-star-ratings-listening-session-summary-report.
---------------------------------------------------------------------------
E. Current and Proposed Overall Star Rating Methodology
1. Overview
The current Overall Star Rating methodology can be outlined within
six steps briefly described here and in more detail further below. In
the first step, the measures are selected from among those reported on
Hospital Compare to include as much information as possible while
considering whether the measures are suitable for combination within
the Overall Star Rating. In the first step, the measure scores are also
standardized to be consistent in terms of direction (that is, higher
scores are better) and numerical magnitude. In the second step, the
measures are grouped into one of seven measure groups. Third, for each
group, a statistical model, called a latent
[[Page 49002]]
variable model (LVM), is used to determine a group score for each
hospital reporting on measures in that group. In the fourth step, a
weight is applied to each measure group score and all available measure
groups are averaged to calculate the hospital summary score. In the
fifth step, hospitals that provide acute inpatient and outpatient care
reporting too few measures and measure groups are excluded. Finally,
hospital summary scores are organized into five categories,
representing the five star ratings, using an algorithm process called
k-means clustering. K-means clustering is a method to cluster data so
that observations within one cluster are more similar to each other
than observations in another cluster.\157\
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\157\ Huang, Z. Extensions to the k-Means Algorithm for
Clustering Large Data Sets with Categorical Values. Data Mining and
Knowledge Discovery 2, 283-304 (1998) doi:10.1023/A:1009769707641.
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In this proposed rule, for public release of the Overall Star
Rating beginning in CY 2021 and subsequent years, we propose to both
retain and update certain aspects of the current Overall Star Rating
methodology, as outlined below within each of the six steps of the
current methodology. Generally, we propose to retain the following
aspects of the current Overall Star Rating methodology:
An annual publication cycle using data posted on Hospital
Compare or its successor site from data publicly reported within the
prior year; for example, the Overall Star Ratings published in January
2020 used data publicly reported from the October 2019 refresh;
Suppression policy for subsection (d) hospitals;
Inclusion of measures publicly reported on Hospital
Compare or its successor sites that meet specific inclusion and
exclusion criteria and standardization of measure score within Step 1:
Selection and Standardization of Measures for Inclusion in the Overall
Star Rating;
Publicly displaying measure group level information for
measure groups for which a hospital has at least three measures, use of
weighted average of measure group scores to calculate summary scores
and measure group reweighting to account for measure group scores which
are not reported within Step 4: Calculation of Hospital Summary Scores
as a Weighted Average of Group Scores; and
Use of k-means clustering to assign hospitals that provide
acute inpatient and outpatient care to one of five star ratings within
Step 6: Application of Clustering Algorithm to Obtain a Star Rating.
We propose to make the following methodology updates:
Regroup measures as a result of the Meaningful Measure
Initiative (83 FR 41147 through 41148) by combining the three process
measure groups into one group, Timely and Effective Care, within Step
2: Assignment of Measures to Groups;
Update the calculation of measure group scores to include
standardization of measure group scores and to use a simple average of
measure scores, rather than latent variable modeling;
Stratify the Readmission measure group scores using the
proportion of dual-eligible patients at each hospital within Step 3:
Calculation of Measure Group Scores;
Change the reporting thresholds to receive a star rating
to three measures within three measure groups, one of which must be
Mortality or Safety of Care, within Step 5: Application of Minimum
Thresholds for Receiving a Star Rating; and
Apply peer grouping of hospitals that provide acute
inpatient and outpatient care based on number of measure groups between
Step 5: Application of Minimum Thresholds for Receiving a Star Rating
and Step 6: Application of Clustering Algorithm to Obtain a Star
Rating. These are discussed in more detail in section E.7. Proposed
Approach to Peer Grouping Hospitals.
2. Step 1: Selection and Standardization of Measures for Inclusion in
the Overall Star Rating
a. Timeframe
(1) Current Timeframe
Generally, for CMS quality programs, we update measure data results
on the Hospital Compare or its successor website quarterly in January,
April, July, and October of each year. In the past, the Overall Star
Rating was published on Hospital Compare both quarterly and biannually.
Beginning in February 2019, the Overall Star Rating was published
annually. In January 2020, the Overall Star Rating continued the annual
publication cycle with the additional approach of using data publicly
posted on Hospital Compare in a quarter prior to the update to
calculate star ratings. For example, we used October 2019 publicly
reported measure data on Hospital Compare to calculate Overall Star
Rating results for the January 2020 publication.\158\ Note that the
data collection period for each measure varies depending on measure
specifications that set minimum case requirements to ensure individual
measure reliability and meet the requirements of CMS quality programs,
as detailed in each program's respective rules as well as on Hospital
Compare or its successor website.
---------------------------------------------------------------------------
\158\ Centers for Medicare & Medicaid Services. (2019, November
4). Overall Hospital Quality Star Rating on Hospital Compare:
January 2020 Updates and Specifications Report. Retrieved from
qualitynet.org: https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab2.
---------------------------------------------------------------------------
(2) Proposal To Retain Current Timeframe With Modification
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose to retain the current timeframe
with modification, such that the Overall Star Rating would continue to
be published once annually; however, instead of using data from the
same quarter as or the quarter prior to the publication of the Overall
Star Rating, we would use publicly available measure results on
Hospital Compare or successor website from a quarter within the prior
year. As mentioned above, for CMS quality programs, we generally update
measure data results on the Hospital Compare or its successor website
quarterly in January, April, July, and October of each year. Therefore,
we would use publically reported data from one of those four Hospital
Compare refreshes to calculate the Overall Star Rating. For example,
for a January 2021 Overall Star Rating release, we could use data
refreshed on Hospital Compare in, July or October of 2020. We propose
to codify this timeframe at Sec. 412.190.
We believe publishing the Overall Star Rating once a year is
appropriate because it may minimize period to period changes in
hospital star ratings that may result from small changes in individual
hospital and national performance for the underlying measures.
Furthermore, publishing the Overall Star Ratings once a year would
allow time for the star ratings to reflect improvements or updates in
hospital performance on the underlying measures. It also is aligned
with the current cycle of many underlying measures, particularly highly
weighted outcome measures that are also refreshed annually. Also, using
data publicly reported on Hospital Compare or its successor website
within the prior year, rather than data publicly reported concurrent
with the Overall Star Rating, would allow providers more time, beyond
the standard 30 days, to review their star rating as well as the
measure and measure group results that
[[Page 49003]]
contribute to their star rating during the confidential preview period
(we refer readers to section F. Preview Period). Hospitals that provide
acute inpatient and outpatient care may use this additional time to
more thoroughly anticipate and understand their results as well as
generate communication or improvement strategies.
We invite public comment on our proposals to: (1) Publish the
Overall Star Rating once annually using data publicly reported on
Hospital Compare or its successor website from a quarter within the
prior year, and (2) codify this at Sec. 412.190.
b. Measure Inclusion
(1) Current Measure Inclusion
Generally, measures publicly reported on Hospital Compare or its
successor site through CMS quality programs, specifically the Hospital
IQR Program, Hospital OQR Program, HRRP, HAC Reduction Program, and
Hospital VBP Program, were used to calculate Overall Star Rating. We
did not include publicly reported measures from any CMS programs not
measuring acute inpatient or outpatient care or pertaining to specialty
hospitals, such as cancer hospitals, and ambulatory surgical centers,
such as the PPS-Exempt Cancer Hospitals Quality Reporting (PCHQR)
Program, Inpatient Psychiatric Facilities Quality Reporting (IPFQR)
Program, or Ambulatory Surgical Centers Quality Reporting (ASCQR). The
goal of Overall Star Rating is to summarize quality of care at
hospitals providing acute inpatient and outpatient care and thus, only
include measure scores representing quality of acute inpatient and
outpatient care.
Any measures that were removed or suspended from one of the listed
quality programs and not displayed on Hospital Compare or successor
website were not included.
(2) Proposal To Retain Current Measure Inclusion
In this proposed rule, we propose to continue the same practice by
incorporating measures summarizing quality of care at inpatient and
outpatient care hospitals in the Overall Star Rating. Specifically, for
the Overall Star Rating beginning in CY 2021 and subsequent years, we
propose to use certain measures publicly reported on the Hospital
Compare or successor website through certain CMS quality programs,
specifically the Hospital IQR Program, Hospital OQR Program, HRRP, HAC
Reduction Program, and Hospital VBP Program, to calculate the Overall
Star Rating. We also propose to codify this policy at Sec. 412.190.
We believe hospital inpatient and outpatient measures publicly
reported on Hospital Compare or its successor website are appropriate
for the Overall Star Rating because they capture the quality of care at
hospitals providing acute inpatient and outpatient care and provide a
snapshot of quality when combined together. We recognize that measures
reported on Hospital Compare or its successor website undergo a
rigorous development process which includes extensive measure testing,
vetting by stakeholders, evaluation by the National Quality Forum, and
undergo rulemaking for inclusion in CMS programs and public reporting.
We have not and do not intend to make any changes to the underlying
measures or measure scores specifically for the calculation of the
Overall Star Rating. As such, the Overall Star Rating methodology uses
the measures as specified under the CMS programs, and measure scores as
reported on Hospital Compare or its successor website at the time of
the Overall Star Rating calculation. As noted above, any measures that
are removed or suspended from one of the listed quality programs and
not displayed on Hospital Compare or successor website are not
included. Additional measure exclusions are discussed in the next
section. Also, we refer readers to sections B. Critical Access
Hospitals in the Overall Star Rating and C. Veterans Health
Administration Hospitals in Overall Star Rating for our discussions
about CAHs and VHA hospitals.
We invite public comment on our proposals: (1) Use measures
publicly reported on Hospital Compare or its successor websites through
certain CMS quality programs, specifically the Hospital IQR Program,
Hospital OQR Program, HRRP, HAC Reduction Program, and Hospital VBP
Programs, for the Overall Star Rating in CY 2021 and subsequent years,
and (2) codify this policy at Sec. 412.190.
c. Measure Exclusions
(1) Current Measure Exclusions
Of the measures publicly reported on the Hospital Compare website
through the CMS quality programs listed in a previous section, in the
past, we have excluded some measures from the Overall Star Rating
methodology for various reasons. The measures excluded fall into the
following categories:
1. Measures with no more than 100 hospitals reporting performance
publicly, as these measures would not produce reliable measure group
scores based on so few hospitals;
2. Structural measures not amenable to inclusion in a summary
scoring calculation alongside process and outcome measures, as these
measures cannot be as easily combined with other measures captured on a
continuous scale with more granular data;
3. Non-directional measures (for which it is unclear whether a
higher or lower score is better, such as payment measures), as these
measures cannot be standardized to form an aggregate measure group
score;
4. Measures not required for reporting on Hospital Compare or its
successor websites through CMS programs, that is the Hospital IQR
Program, Hospital OQR Program, HRRP, HAC Reduction Program and Hospital
VBP Program, due to the purpose of Overall Star Rating being a summary
of measure information as displayed on Hospital Compare or its
successor websites;
5. Overlapping measures (for example, measures that are identical
to another measure, measures with substantial overlap in cohort and/or
outcome, and measures that are part of an already-included composite
measure), in order to avoid duplicative measure results within the
methodology; and
6. Measures with statistically significant negative loadings
estimated by the LVM as described further in section E.4.a.(2) Latent
Variable Model Measure Loadings.
In February 2019, we excluded measures for which the LVM estimates
as statistically significant negative loading, which indicated the
measure had an inverse relationship with other measures in the
group.\159\ LVM is the a statistical method for combining information
that represents a latent trait, in this case measures within a measure
group that represent an aspect of hospital quality, to estimate a
numerical score, in this case measure group scores.\160\ Measure
loadings are the contribution, or emphasis, of each measure as assigned
by the LVM.\161\ Latent variable modeling and measure loadings are
described in more detail under section E.4. Step 3: Calculation of
Measure Group Scores below.
---------------------------------------------------------------------------
\159\ Centers for Medicare & Medicaid Services. (2018, November
30). Quarterly Updates and Specifications Report (February 2019).
Retrieved from www.qualitynet.org: https://qualitynet.org/outpatient/public-reporting/overall-ratings/resources#tab2.
\160\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
\161\ Ibid.
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[[Page 49004]]
(2) Proposal To Retain and Update Select Measure Exclusions
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we intend to continue to exclude certain
measures used to calculate the Overall Star Rating. We believe these
measure exclusions remain appropriate moving forward because the
Overall Star Rating is a summary of the existing publicly reported
measures of hospital quality of care but not all measure scores can be
reliably or appropriately combined with other measure scores. These are
discussed in more detail below.
1. We propose to continue to exclude measures that only 100
hospitals or less publicly report. These measures would not produce
reliable measure group scores based on too few hospitals.;
2. We propose to continue to exclude measures that are not able to
be standardized and otherwise not amenable to inclusion in a summary
score calculation alongside process and outcome measures or measures
that cannot be combined in a meaningful way. This includes measures
that cannot be as easily combined with other measures captured on a
continuous scale with more granular data.;
3. We propose to continue to exclude non-directional measures for
which it is unclear whether a high or lower score is better. Without
directional scores these measures cannot be standardized to be combined
with other measures and form an aggregate measure group score as
detailed in section E.2.d Measure Score Standardization.;
4. We propose to continue to exclude measures not required for
reporting on Hospital Compare or its successor websites through CMS
programs.; and
5. We propose to continue to exclude measures that overlap with
another measure in terms of cohort or outcome; this includes component
measures that are part of an already-included composite measure. This
exclusion criterion avoids duplicative measure results within the
Overall Star Rating methodology. In general, we would determine which
measures to include or exclude based on the level of information
provided by the measure. For example, we would include a composite
measure, such as PSI-90, over the component measures, such as PSI-03.
As another example, we would include the excess days in acute care
(EDAC) measures over the readmission measures, because while both
measure sets have the same cohort, the EDAC measures capture a broader
outcome inclusive of emergency department visits and observation stays
in addition to the unplanned readmissions captured by both measures.
We also propose to codify these exclusions at Sec. 412.190. We
note that we are not proposing to continue to exclude measures with
statistically significant negative loadings estimated by the LVM.
(Measure loadings are the contribution, or emphasis, of each measure as
assigned by the LVM.\162\ and are further discussed in section
E.4.a.(2) Latent Variable Model Measure Loadings). This is because, in
section E.4.b. of this proposed rule, we propose to calculate measure
group scores using a simple average of measure scores, instead of
latent variable modeling. Should that proposal be finalized, measure
loadings would no longer be produced as a product of latent variable
modeling and, therefore, the exclusion criteria of measures with
statistically significant negative loadings would no longer be
necessary. However, should that proposal not be finalized, we would
continue using LVM to calculate measure group scores and exclude
measures with statistically significant negative loadings as discussed
in section E.4.a.(2) Latent Variable Modeling Measure Loadings. We
invite public comment on our measure exclusion proposals.
---------------------------------------------------------------------------
\162\ Ibid.
---------------------------------------------------------------------------
d. Measure Score Standardization
(1) Current Measure Score Standardization
In the past, once the relevant measures were excluded, the
remaining measures are standardized to a single, common scale to
account for differences in measure score units, such as ratios or
rates, and direction, specifically whether a higher or lower score
indicates better quality.\163\ It is necessary to standardize all
measure scores to the same scale (that is, units and direction) for
combination into and calculation of measure group scores. To
standardize, we used a statistical technique to calculate Z-scores for
each measure.\164\ A Z-score is a standard deviation score, which
relays the amount of variation in a dataset, or in this case, the
variation in hospital measure scores. In the Overall Star Rating, Z-
scores were produced by subtracting the national mean measure score
from each hospital's measure score and dividing by the standard
deviation \165\ across hospitals. Standard deviation is a number that
measures how far data values are from their average.\166\ See the
measure score standardization example and table 46. In addition, we
changed the direction of all measures that indicate better performance
with a lower score so that they were reversed to uniformly indicate
that a higher score indicates better performance for all the measures
prior to combination with other measures to calculate measure group
scores.
---------------------------------------------------------------------------
\163\ Centers for Medicare & Medicaid Services. (2017,
December). Overall Hospital Quality Star Rating on Hospital Compare
Methodology Report (v3.0). Retrieved from www.qualitynet.org:
https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab1.
\164\ DeVore, G.R. (2017, January 17). ``Computing the Z score
and centiles for cross[hyphen]sectional analysis: a practical
approach.'' Journal of Ultrasound in Medicine 36.3: 459-473.
\165\ Illowsky, B., & Dean, S. (2013). Introductary Statistics.
Houston, TX: 12th Media Services. Retrieved from: https://openstax.org/details/books/introductory-statistics.
\166\ Ibid.
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(2) Proposal To Retain Current Measure Score Standardization
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose to continue to standardize
measure scores as it allows for measures, which are different in units
and direction, to be combined into aggregate measure group scores.
Specifically, we propose that once applicable measures are excluded, we
would standardize the remaining measures by calculating Z-scores for
each measure prior to being combined in an aggregate measure group
score so that all measures are on a single, common scale. That is, we
would subtract the national mean measure score from each hospital's
measure score and divide the difference by the measure standard
deviation in order to standardize measures. We also propose to codify
this at Sec. 412.190.
Example of Standardization of Measure Score
Standardized measures score (HAI-6) =-(0.470-0.694)/0.49 = 0.46
[[Page 49005]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.102
We invite public comment on our proposal to standardize measure
scores and codify this policy at Sec. 412.190.
e. Measure Score Winsorization
(1) Current Measure Score Winsorization
In the past, to avoid extreme outlier performance that may be
potentially inaccurate or pose technical challenges to statistical
estimations, the standardized measure scores were Winsorized \167\ at
the 0.125th and 99.875th percentiles of a standard normal distribution
so that all measure scores range from negative 3 to positive 3 (-3 to
3). Winsorization \168\ is a common strategy used to set extreme
outliers to a specified percentile of the data. This step was necessary
in order to minimize the impact of extreme measure score outliers on
the performance of the latent variable modeling (LVM) (we refer readers
to section E.4.a.(1) Latent Variable Modeling Overview for details). We
chose to Winsorize the 0.125th and 99.875th percentiles to minimize the
number of scores requiring Winsorization, while also allowing the
models to perform properly and produce results. This approach to
measure inclusion and standardization within the Overall Star Rating
has been vetted previously through the TEP,169 170 Patient &
Advocate Work Group, and a public input period.\171\
---------------------------------------------------------------------------
\167\ Kwak, S.K., & Kim, J.H. (2017, July 27).''Statistical data
preparation: management of missing values and outliers.'' Korean
journal of anesthesiology 70.4: 407.
\168\ Ibid.
\169\ Centers for Medicare & Medicaid Services. (2015,
February). Summary of Technical Expert Panel (TEP) Evaluation of
Hospital Quality Star Ratings on Hospital Compare.
\170\ Centers for Medicare & Medicaid Services. (2014,
December). Summary of Technical Expert Panel (TEP) Evaluation of
Hospital Quality Star Ratings on Hospital Compare.
\171\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
---------------------------------------------------------------------------
(2) Elimination of Measure Score Winsorization Moving Forward
We refer readers to section E.4.b. Proposal to Use a Simple Average
of Measure Scores to Calculate Measure Group Scores of this discussion
in this proposed rule, where moving forward, we propose to calculate
measure group scores using a simple average of measure scores for the
Overall Star Rating beginning in CY 2021 and subsequent years, instead
of latent variable modeling, as was used in the past. Because
Winsorization was only necessary to minimize the impact of extreme
outliers prior to statistical modeling to ensure model stability, the
absence of LVM would eliminate the need for Winsorization. Eliminating
Winsorization would be consistent with the proposal to replace the LVM
with a simple average of measure scores, would support the goal of
refinements to simplify the methodology, and would retain the original,
observed performance of outlier hospitals within
[[Page 49006]]
the calculations. However, should we not finalize our proposal to adopt
the simple average of measure scores and retain LVM to calculate
measure group scores, as discussed in section E.4.a. Current Approach
to Calculating Measure Group Scores Using Latent Variable Modeling, we
would continue to Winsorize measure scores to minimize the impact of
extreme outliers.
3. Step 2: Assignment of Measures to Groups
a. Past Assignment of Measures to Groups
In the past, we have grouped measures into one of seven measure
groups: Mortality, Safety of Care, Readmission, Patient Experience,
Effectiveness of Care, Timeliness of Care, and Efficient Use of Medical
Imaging. Measures were grouped this way to align with the Hospital VBP
Program \172\ and the previous display of Hospital Compare,\173\ to
clinically reflect shared components of hospital quality, allow for
measures to be added or removed as they are added or removed from
public reporting, and to be useful to patients in making healthcare
decisions as communicated by the Patient & Advocate Work Group.
Grouping measures is also consistent with other CMS star rating
initiatives, including Nursing Home Compare Star Ratings,\174\ Medicare
Plan Finder Star Ratings,\175\ and Dialysis Facility Compare.\176\
---------------------------------------------------------------------------
\172\ Centers for Medicare & Medicaid Services. (2017,
December). Overall Hospital Quality Star Rating on Hospital Compare
Methodology Report (v3.0). Retrieved from www.qualitynet.org:
https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab1.
\173\ Centers for Medicare & Medicaid Services. (2019) Hospital
Compare. Retrieved from: www.medicare.gov/hospitalcompare: https://www.medicare.gov/hospitalcompare/search.html?
\174\ Centers for Medicare and Medicaid Services (2019,
October). Design for Nursing Home Compare. Retrieved from
www.cms.gov: https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/CertificationandComplianc/Downloads/usersguide.pdf.
\175\ Centers for Medicare and Medicaid Services (2019, October
1). Medicare 2020 Part C & D Star Ratings Technical Notes. Retrieved
from www.cms.gov: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/Downloads/Star-Ratings-Technical-Notes-Oct-10-2019.pdf.
\176\ Centers for Medicare and Medicaid Services (2016, June).
Technical Notes on the Updated Dialysis Facility. Retrieved from
dialysisdata.org: https://dialysisdata.org/sites/default/files/content/Methodology/UpdatedDFCStarRatingMethodology.pdf.
---------------------------------------------------------------------------
b. Proposed New Measure Group and Continuation of Certain Groups
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose to consolidate the three process
measure groups--Effectiveness of Care, Timeliness of Care, and
Efficient Use of Medical Imaging--into one process measure group:
Timely and Effective Care. We also propose to retain the current
structure of the Mortality, Safety of Care, and Readmission, and the
Patient Experience measure groups. These are discussed in more detail
below.
(1) Continuation of the Mortality, Safety of Care, Readmission, and
Patient Experience Measure Groups.
The Mortality, Safety of Care, Readmission, and Patient Experience
measure groups were used in the past as noted above. The Mortality,
Safety of Care, Readmission, and Patient Experience measure groups
contain an adequate number of publicly reported measures to produce
robust measure group scores, reflective of differences in hospital
quality. These measure groups were not as affected as the process of
care measure groups, discussed in the next section, by the Meaningful
Measure Initiative (83 FR 41147 through 41148).\177\ In this proposed
rule, for the Overall Star Rating beginning CY 2021 and subsequent
years, we propose to continue to use these measure groups. We also
propose to codify these measure groups at Sec. 412.190.
---------------------------------------------------------------------------
\177\ Ibid.
---------------------------------------------------------------------------
(2) Proposed New Measure Group: Timely and Effective Care
Since the first release of the Overall Star Rating, measures have
been: (1) Developed and adopted in CMS programs to address measurement
gaps, and also (2) removed as a result of the Meaningful Measures
Initiative (83 FR 41147 through 41148).\178\ However, there has been a
steady overall reduction in both the number of measures in CMS quality
programs, as well as the number of measures publicly reported and
available for inclusion in the Overall Star Rating--from 64 measures in
the first publication of Overall Star Rating in 2016, to 51 measures
for the most recent January 2020 publication.
---------------------------------------------------------------------------
\178\ Inpatient Prospective Payment System/Long-Term Care
Hospital (IPPS/LTCH) Final Rule, 83 FR 41147 (Aug 17, 2018) (to be
codified at 42 CFR parts 412, 413, 424 and 495).
---------------------------------------------------------------------------
More specifically, as finalized in the CY 2018 \179\ and CY 2019
OPPS/ASC \180\ final rules, and the FY 2019 IPPS/LTCH PPS final
rule,\181\ resulting from the Meaningful Measure Initiative (83 FR
41147 through 41148),\182\ the following 12 process measures have been
removed from the Hospital IQR and Hospital OQR Programs, and therefore,
also from public reporting and the Overall Star Rating process measure
groups between CY 2019 and CY 2021.
---------------------------------------------------------------------------
\179\ Hospital Outpatient Prospective Payment and Ambulatory
Surgical Center Payment Systems and Quality Reporting Programs
(OPPS/ASC), 83 FR 59216 (Dec 14, 2017) (to be codified at 42 CFR
parts 414, 416, and 419).
\180\ Hospital Outpatient Prospective Payment and Ambulatory
Surgical Center Payment Systems and Quality Reporting Programs
(OPPS/ASC), 83 FR 58818 (Nov 21, 2018) (to be codified at 42 CFR
parts 416 and 419).
\181\ Inpatient Prospective Payment System/Long-Term Care
Hospital (IPPS/LTCH) Final Rule, 83 FR 41151 (Aug 17, 2018) (to be
codified at 42 CFR parts 412, 413, 424 and 495).
\182\ Ibid.
---------------------------------------------------------------------------
From the Effectiveness of Care measure group:
Influenza Immunization (IMM-2) (83 FR 41151),
Influenza Vaccination Coverage Among Healthcare Personnel
(OP-27) (83 FR 37179 through 37186),
Aspirin at Arrival (OP-4) (82 FR 59430),
Colonoscopy Interval for Patients with a History of
Adenomatous Polyps (OP-30) (83 FR 37179 through 37186), and
Incidence of potentially preventable VTE (VTE-6) (83 FR
41151).
From the Timeliness of Care measure group:
Median Time from ED Arrival to ED Departure for Admitted
ED Patients (ED-1b) (83 FR 41151),
Median Time to ECG (OP-5) (83 FR 37179 through 37186),
Door to Diagnosis Evaluation by a Qualified Medical
Professional (OP-20) (82 FR 59430),
Median Time to Pain Management for Long Bone Fracture (OP-
21) (82 FR 59428), and
Median Time to Fibrinolysis (OP-1) (83 FR 37179 through
37186).
From the Efficient Use of Medical Imaging group:
Thorax CT--Use of Contrast Material (OP-11) (83 FR 37179
through 37186), and
Simultaneous Use of Brain Computed Tomography (CT) and
Sinus Computed Tomography (CT) (OP-14) (83 FR 37179 through 37186).
The aforementioned measure removals from CMS quality programs and
public reporting ultimately result in two of the previously used
measure groups, Timeliness of Care and Efficient Use of Medical
Imaging, being comprised each of only three measures, which would not
produce robust or predictable measure group scores.
Therefore, in this proposed rule, for the Overall Star Rating
beginning in CY 2021 and subsequent years, we propose
[[Page 49007]]
combining three previously used measure groups--Effectiveness of Care,
Timeliness of Care, and Efficient Use of Medical Imaging--into one
group entitled Timely and Effective Care. We also propose to codify
this new group at Sec. 412.190. This new consolidated group would
reflect the principles of measure reduction under the Meaningful
Measures Initiative and align with the current display of measures on
Hospital Compare.\183\ This consolidation would be necessary to ensure
that a sufficient number of measures exist in this
group.184 185 186 In general, the TEP supported regrouping
of measures into five measure groups with one process measure group
(Timely and Effective Care) given the available measures and scheduled
removal of measures in the upcoming years.\187\
---------------------------------------------------------------------------
\183\ Centers for Medicare & Medicaid Services. Hospital
Compare. (2019). Retrieved from www.medicare.gov/hospitalcompare:
https://www.medicare.gov/hospitalcompare/search.html?
\184\ Inpatient Prospective Payment System/Long-Term Care
Hospital (IPPS/LTCH) Final Rule, 83 FR 41151 (Aug 17, 2018) (to be
codified at 42 CFR parts 412, 413, 424 and 495).
\185\ Hospital Outpatient Prospective Payment and Ambulatory
Surgical Center Payment Systems and Quality Reporting Programs
(OPPS/ASC), 83 FR 59216 (Dec 14, 2017) (to be codified at 42 CFR
parts 414, 416, and 419).
\186\ Hospital Outpatient Prospective Payment and Ambulatory
Surgical Center Payment Systems and Quality Reporting Programs
(OPPS/ASC), 83 FR 58818 (Nov 21, 2018) (to be codified at 42 CFR
parts 416 and 419).
\187\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
---------------------------------------------------------------------------
In order to simulate the potential effects of these proposals, we
used October 2019 publicly reported measure data on Hospital Compare to
test the January 2020 Overall Star Rating to determine how many
hospitals would be eligible to receive a star under the proposed
measure grouping. Of the 4,576 hospitals that provide acute inpatient
care, including CAHs, and reported measures on Hospital Compare in
October 2019, 180 more hospitals (3,780 hospitals total) would have met
the current reporting thresholds (that is, at least three measures in
at least three measure groups, one of which must be an outcome group)
to receive a star rating with the proposed five measure groups as
compared to the original seven measure groups (3,600 hospitals).
Additionally, the proposed new grouping would allow approximately 157
additional CAHs, beyond the 1,149 CAHs already receiving a star rating
with the current methodology, to receive a star rating. To note, with
the current methodology of seven measure groups, these 157 CAHs usually
do not meet the minimum threshold to receive a star rating due to
serving too few patients to report the underlying measures in each of
the individual process groups. The minimum reporting threshold
requirements are discussed in section E.6.b. Proposals to Update the
Minimum Reporting Thresholds for Receiving a Star Rating of this
proposed rule.
The above estimations of how many hospitals would receive a star
rating are based on the measure regrouping methodology proposed in this
rule; we note that other proposals may also influence hospitals meeting
or not meeting reporting thresholds for star ratings. This measure
regrouping proposal aligns with the guiding principles of the Overall
Star Rating,\188\ which include being inclusive of hospitals and
measure information, accommodating changes in the underlying measures,
and accounting for the heterogeneity of available measures. We invite
public comment on our proposed measure groupings and codification of
those groupings.
---------------------------------------------------------------------------
\188\ Centers for Medicare & Medicaid Services. (2018, January).
Overall Hospital Quality Star Rating on Hospital Compare Methodology
Report (v3.0). Retrieved from: https://www.qualitynet.org/files/5d0d3a1b764be766b0103ec1?filename=Star_Rtngs_CompMthdlgy_010518.pdf.
---------------------------------------------------------------------------
4. Step 3: Calculation of Measure Group Scores
In the past, we have used latent variable modeling (LVM) to
calculate measure group scores. In this proposed rule, we propose to
replace LVM with a simple average of measure group scores to increase
the simplicity of the methodology and predictability of measure weights
within the methodology. LVM and the proposal to utilize a simple
average of measure group scores is discussed in detail below.
a. Current Approach To Calculating Measure Group Scores Using Latent
Variable Modeling
Latent Variable Modeling \189\ (LVM) is a statistical approach used
to combine or summarize multiple pieces of information, such as
hospital quality measures, into a single number, such as measure group
scores. LVM is described further within section E.4.a.(1) Latent
Variable Modeling Overview below. Notably, LVM estimates loadings, or
the contribution of each measure within each of the measure groups,
using the data from hospitals that provide acute inpatient and
outpatient care, as described in section E.4.a.(2) Latent Variable
Modeling Measure Loadings. LVM also produces point estimates and
standard errors for each hospitals' measure group score, allowing for
the calculation of confidence intervals to assign hospitals with at
least three measures in a measure group to ``above,'' ``same as,'' or
``below the national average,'' as described in section E.4.a.(3)
Measure Group Performance Categories.
---------------------------------------------------------------------------
\189\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
---------------------------------------------------------------------------
(1) Latent Variable Modeling Overview
Latent Variable Modeling \190\ (LVM) is a statistical approach used
to combine or summarize multiple pieces of information and has been
used to summarize information in a variety of settings ranging from
education to healthcare.191 192 193 The purpose for using
LVM is to quantify the underlying quality trait, or an aspect of
quality, as a number which best explains the correlation and variation
of measures in a given group.
---------------------------------------------------------------------------
\190\ Ibid.
\191\ Henderson CR. Best Linear Unbiased Estimation and
Prediction under a Selection Model. Biometrics 1975;31:423-47.
\192\ Shwartz M, Ren J, Pekoz EA, Wang X, Cohen AB, Restuccia
JD. Estimating a composite measure of hospital quality from the
Hospital Compare database: differences when using a Bayesian
hierarchical latent variable model versus denominator-based weights.
Med Care 2008;46:778-85.
\193\ Landrum M, Bronskill S, Normand S-L. Analytic Methods for
Constructing Cross-Sectional Profiles of Health Care Providers.
Health Services and Outcomes Research Methodology 2000;1:23-47.
---------------------------------------------------------------------------
In the past, we have employed LVM to estimate measure group scores
for each of the seven measure groups. In this context, LVM accounted
for the relationship, or correlation, between measures for a given
hospital so that measures that are more consistent with each other have
a greater influence on the underlying aspect of quality calculated as a
measure group score.\194\ In addition, the LVM also accounted for
differences in the size of each hospital's measure denominator so that
measures with larger denominators also have more influence on the
measure group score.\195\
---------------------------------------------------------------------------
\194\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
\195\ Ibid.
---------------------------------------------------------------------------
When we developed the initial methodology for Overall Star Rating,
we investigated multiple approaches to calculating measure group
scores, including simple or weighted averages of measures, as well as
more complex approaches such as LVM and factor
[[Page 49008]]
analyses.\196\ Both the simple and weighted average approaches take the
sum of measures, either with equal (that is, simple) or varying weights
(that is, weighted), and divide by the number of measures a hospital
reports in the measure group. Both LVM \197\ and factor analysis \198\
attempt to identify underlying traits, in this case quality of acute
inpatient and outpatient care, within large datasets, such as hospital
measure scores. Each approach was reviewed by the TEP and presented for
public input prior to the launch of Overall Star Rating in 2016. We
ultimately chose LVM to calculate measure group scores based on support
from the TEP,\199\ which favored the ability of LVM to utilize data to
account for the relationship between measures, measures which are not
reported, and sampling variation.\200\
---------------------------------------------------------------------------
\196\ Oh, J.H., et al. (2016, October 17). ``A factor analysis
approach for clustering patient reported outcomes.'' Methods of
information in medicine 55.05: 431-439.
\197\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
\198\ Oh, J.H., et al. (2016, October 17). ``A factor analysis
approach for clustering patient reported outcomes.'' Methods of
information in medicine 55.05: 431-439.
\199\ Centers for Medicare & Medicaid Services. (2015,
February). Summary of Technical Expert Panel (TEP) Evaluation of
Hospital Quality Star Ratings on Hospital Compare.
\200\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
---------------------------------------------------------------------------
Each LVM assumes that each measure in a measure group reflects
information about an underlying aspect or domain of hospital quality as
represented by each of the measure groups. For example, safety,
mortality, or readmission are each aspects of quality represented by a
distinct set of individual measures. Previously, we constructed a
separate LVM for each of the seven measure groups. Each LVM estimated a
quantitative value, or measure group score, for the group's underlying
aspect of quality for each hospital that reports enough measures in
each group.
LVM accounts for the correlation between measures by allowing
measures that are more consistent with each other to have a greater
influence on the measure group scores.\201\ The LVM also accounts for
differences in the size of each hospital's measure denominator so that
measures with larger denominators have more influence on the measure
group score, since their measure scores are considered more
precise.\202\ A measure's influence on the measure group score, or
loading, is derived by the LVM, ultimately by using the national
performance of each measure, as well as the correlation between
measures to find the best combination of measure emphasis for each
measure group.\203\ Measure loadings are further discussed below in
section E.4.a.(2) Latent Variable Model Measure Loadings. The loading
represents the measure's relationship to the underlying aspect of
quality and therefore, the measure's contribution to the measure group
score.\204\ Measure loadings were re-estimated for each publication of
the Overall Star Rating and were the same value for all hospitals that
provide acute inpatient and outpatient care. In other words, LVM
accounts for measures which are not reported by estimating and
assigning the same measure loading values to all hospitals, regardless
of differences in the number of measures hospitals report.
---------------------------------------------------------------------------
\201\ Ibid.
\202\ Ibid.
\203\ Ibid
\204\ Ibid.
---------------------------------------------------------------------------
The LVM for each measure group can be explained using the below
path diagram presented in Figure 1. In the sample path diagram, the
ovals represent the measure group scores, calculated using LVM, and
hospital summary scores, calculated by a weighted average of measure
group scores. The measure group score is not directly observed but
estimated from the LVM using the individual measures. The arrows
between the measure group scores and each individual measure represent
the relationship of that measure to the aspect of quality reflected by
each measure with respect to the other measures in that group; each
arrow has a different degree of association, also known as a
``loading'' or coefficient, which is explained in detail within section
E.4.a.(2) Latent Variable Modeling Measure Loadings. The small circles
on the left represent the residual error within each hospital for each
of the measures included in the Overall Star Rating. The residual error
([epsi]) is the variation which could not be explained by the measure
group score (random effect).
[[Page 49009]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.103
The LVM equation used to derive a hospital's measure group score is
as follows:
Ykhd = [mu]kd +
Ykd[alpha]hd + [epsi]khd,
k=1,...,Nd
[alpha]hd ~ N(0,1) and [epsi]khd ~
N(0,[sigma]2kd)
Let Ykhd denote the standardized score for hospital h
and measure k in measure group d. [alpha]hd is the hospital-
specific group-level latent trait (random effect) for hospital h and
measure group d and follows a normal distribution \205\ with mean 0 and
variance 1. The estimated value of [alpha]hd will be used as
a measure group score. [gamma]kd is the loading (regression
coefficient of the latent variable) for measure k, which shows the
relationship with the measure group score of measure group d.
Nd is the total number of measures in measure group d. The
assumption of unit variance here is an innocuous choice of units
required to identify the parameter [mu]kd and
[gamma]kd. For detailed descriptions of the LVM model
parameters and equation, please see the Overall Hospital Quality Star
Rating on Hospital Compare Methodology Report (v3.0).\206\
---------------------------------------------------------------------------
\205\ Illowsky, B., & Dean, S. (2013). Introductary Statistics.
Houston, TX: 12th Media Services. Retrieved from: https://openstax.org/details/books/introductory-statistics.
\206\ Centers for Medicare & Medicaid Services. (2017,
December). Overall Hospital Quality Star Rating on Hospital Compare
Methodology Report (v3.0). Retrieved from www.qualitynet.org:
https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab1.
---------------------------------------------------------------------------
(2) Latent Variable Modeling Measure Loadings
In the past, the LVMs within the Overall Star Rating methodology
estimate loadings for each measure within each of the measure groups. A
measure's loading indicates its relative contribution to a hospital's
measure group score, with higher loadings indicating measures with more
influence.\207\ A measure's loading is specific to the measure and the
same for all hospitals reporting that measure.
---------------------------------------------------------------------------
\207\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
---------------------------------------------------------------------------
A measure loading is a regression coefficient,\208\ which is
estimated through the LVM by using a statistical approach called
maximum likelihood. Maximum likelihood \209\ uses the observed data for
each measure in a group, including the national performance on the
measure and the measure's relationship to other measures in the group,
to find the best combination of measure emphasis for the aspect of
quality represented by the measure group. In other words, measure score
variation nationally and the correlation between measures in a measure
group influence measure loadings. Measures with more variation
nationally and higher correlations with other measures in a measure
group have higher measure loadings because such measures are assumed to
convey more information about a given aspect of acute inpatient and
outpatient quality of care than measures with limited variation or less
correlation with other measures in the same group.
---------------------------------------------------------------------------
\208\ Ibid.
\209\ Cole, S.R., Chu, H., & Greenland, S. (2014, January 15)
``Maximum likelihood, profile likelihood, and penalized likelihood:
a primer.'' American journal of epidemiology 179.2: 252-260.
---------------------------------------------------------------------------
The LVM also accounts for sampling variation, or differences in the
amount of information available for different hospitals to estimate
loadings. For example, for each measure, some hospitals may report a
score based on data from fewer cases while other hospitals report
scores based on more cases, resulting in differing precision for each
hospital's individual measure score. We accounted for these differences
in case size by giving more weight to measures with larger
denominators. Measure scores based on larger denominators are assumed
to have more precise measure scores and therefore contribute more when
estimating measure loadings. The weighted likelihood equation for
accounting for sampling variation within each measure group is as
follows:
[[Page 49010]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.104
L is the likelihood function. Nkd is the total number of
hospitals for measure k in measure group d and nkhd is the
denominator for hospital h and measure k in measure group d. A hospital
with a larger denominator will be weighted more in the LVM. The
specified weighted likelihood is maximized with respect to all the
parameters in the first LVM equation.
Measures with higher loadings have a greater association and impact
on the measure group score than measures with lower loadings. Measures
highly correlated with other measures in the measure group and the
measure group score, measures with large denominators, and measures
more commonly reported are likely to have higher loadings because they
are generally expected to provide more information about a hospital's
quality profile than other measures.
In February 2019, we made an update to remove measures with
statistically significant negative loadings from the LVM
calculations.\210\ Measure loadings can be positive or negative.
Measures with statistically significant negative loadings have an
inverse relationship with other measures in the group. Although
negative loadings rarely occur and are almost always statistically
insignificant, some stakeholders, including those on the TEP, and
during a public input period, expressed concern that measures with
negative loadings could be perceived to promote lower quality with
respect to measure group scores.211 212 213 214 215 While
internal analyses have not identified any substantial effect of
measures with negative loadings on hospital star ratings, CMS
understood the theoretical concern and decided to remove measures with
statistically significant negative loadings, beginning in February
2019.\216\
---------------------------------------------------------------------------
\210\ Centers for Medicare & Medicaid Services. (2018, November
30). Quarterly Updates and Specifications Report (February 2019).
Retrieved from www.qualitynet.org: https://qualitynet.org/outpatient/public-reporting/overall-ratings/resources#tab2.
\211\ Centers for Medicare & Medicaid Services. (2015, June 8).
Summary of Technical Expert Panel (TEP) Evaluation of Hospital
Quality Star Ratings on Hospital Compare.
\212\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
\213\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\214\ Centers for Medicare & Medicaid Services. (2017, June).
Hospital Quality Star Ratings on Hospital Compare Technical Expert
Panel.
\215\ Centers for Medicare & Medicaid Services. (2018, June).
Summary of Technical Expert Panel (TEP): Hospital Quality Star
Rating on Hospital Compare.
\216\ Centers for Medicare & Medicaid Services. (2018, November
30). Overall Hospital Quality Star Rating on Hospital Compare:
February 2019 Updates and Specifications Report. Retrieved from
qualitynet.org: https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab2.
---------------------------------------------------------------------------
Measure loadings were re-estimated for each publication of the
Overall Star Rating and could change dynamically as the measure
methodologies, hospitals' performance, and the relationship between
measures evolved.
(3) Measure Group Performance Categories
We reported Overall Star Rating measure group performance
categories to individual hospitals that provide acute inpatient and
outpatient care and on Hospital Compare in order to provide context for
measure group scores in comparison to all other hospitals in the
nation. Performance categories were not calculated by the LVM, nor did
they have influence on star ratings. Rather, they were assigned
categories of ``above'', ``same as'', or ``below the national average''
as additional public information on each of the measure groups a
hospital reports by comparing a hospital's measure group score to the
national average measure group score.
These measure group performance categories were assigned using
information from the LVM, separate from measure loadings. For each
measure group, LVM produced a point estimate \217\ and standard error
\218\ for each hospital's measure group score that we used to construct
a 95 percent confidence interval.\219\ A point estimate is a statistic
close to the exact value in a dataset, whereas the standard error is a
measure of the variability, or how spread out individual points are
around the average in the dataset, and both are used to construct a
confidence interval, or a range of reasonable values in which we expect
a value to fall.\220\ We compared this 95 percent confidence interval
to the national mean measure group score. Measure group scores with
confidence intervals that fall entirely above the national average were
considered ``above the national average'', confidence intervals that
include the national average were considered ``same as the national
average'', and confidence intervals that fall entirely below the
national average were considered ``below the national average''.
---------------------------------------------------------------------------
\217\ Illowsky, B., & Dean, S. (2013). Introductary Statistics.
Houston, TX: 12th Media Services. Retrieved from: https://openstax.org/details/books/introductory-statistics.
\218\ Ibid.
\219\ Ibid.
\220\ Ibid.
---------------------------------------------------------------------------
b. Proposal To Use a Simple Average of Measure Scores To Calculate
Measure Group Scores
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose to eliminate use of the LVM and
instead use a simple average of measure scores to calculate measure
group scores beginning with the Overall Star Rating in CY 2021 and
subsequent years.
We recognize that LVM may be challenging for stakeholders to
understand and explain to others. Stakeholders, specifically providers,
serving on the Provider Leadership Work Group and during a public input
period,\221\ have requested a less complex methodology that can be
easily understood by their organization, explained to their patients,
and used to identify areas for quality improvement. In addition, LVM is
a data-driven statistical approach that relies on underlying measure
data to re-estimate measure loadings \222\ for each release of the
Overall Star Rating. Since the underlying measure data is refreshed
variably based on the measure and CMS quality program requirements--
either quarterly, biannually, or annually--the estimated measure
loadings based on the underlying data for each annual publication of
the Overall Star Ratings were unpredictable, further complicating
understanding of the methodology and efforts to allocate resources for
quality improvement.
---------------------------------------------------------------------------
\221\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\222\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
---------------------------------------------------------------------------
Therefore, in this proposed rule, for the Overall Star Rating
beginning in CY 2021 and subsequent years, we propose to discontinue
the use of the LVM, and instead, propose to adopt a simple
[[Page 49011]]
average of measure scores to calculate measure group scores. This
method would average the measure scores a hospital reports within a
given measure group, which have been standardized, to calculate the
measure group scores. In other words, we would take 100 percent divided
by the number of measures reported to give us the percentage each
measure would weigh; this measure weight would then be multiplied by
the standardized measure score to calculate the measure's weighted
score. Then, all of the individual measure weighted scores within a
group would be added together to calculate the measure group score. We
also propose to codify this policy at Sec. 412.190.
For example, if a hospital reports all eight measures in the Safety
of Care measure group, the measure weights would be determined by
calculating 100 percent divided by eight measures reported (100 percent
/ 8 reported measures = 12.5 percent) and each measure would be
weighted 12.5 percent within the group. The standardized measure scores
for each of the eight measures would then be multiplied by the weight
of 12.5 percent and summed to determine the Safety of Care measure
group score. See Table 47 for an example of measure weights in which a
hospital reports all eight measures within Safety of Care. For the
Readmission measure group for example, a hospital's score on the
Hospital-Wide, All-Cause Unplanned Readmission measure, which includes
most patient admissions at a hospital, would have the same influence as
their score on the condition specific Chronic Obstructive Pulmonary
Disease (COPD) Readmission measures, which includes significantly fewer
patients.
Example of Simple Average of Measure Scores To Calculate Measure Group
Scores
Measure group score = [(-1.13*0.125) + (-0.75*0.125) + (0.09*0.125) +
(1.21*0.125) + (0.97*0.125) + (0.98*0.125) + (0.46*0.125) +
(0.02*0.125)] = 0.23
BILLING CODE 4120-01-P
[[Page 49012]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.105
Under certain circumstances, hospitals may not report all measures
within a measure group. However, we note that the proposed minimum
threshold is three measures within three measure groups, one of which
must be Mortality or Safety of Care. Once this threshold is met, any
additional measures or groups may contribute to a hospital's star
rating. We refer readers to section E.6. Step 5 Application of Minimum
Thresholds for Receiving a Star Rating where the proposed minimum
threshold is discussed. As an example, if a hospital reports three
measures in the Safety of Care measure group, the measure weights would
be determined by calculating 100 percent divided by three measures
reported (100 percent 3 reported measures = 33.3 percent) and each
measure would be weighted 33.3 percent within the group. The
standardized measure scores for each of the three measures would then
be multiplied by the weight of 33.3 percent and summed to determine the
Safety of Care measure group score. See Table 48 for an example of
measure weights in which a hospital reports three measures within
Safety of Care.
Example of Simple Average of Measures Scores To Calculate Measure Group
Scores When Measures Are Not Reported
Measure group score = [(-1.13*0.333) + (0.46*0.333) + (0.02*0.333)] = -
0.22
[[Page 49013]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.106
BILLING CODE 4120-01-C
As previously noted, LVM accounted for measures which are not
reported by uniformly assigning the same loading for a measure to
hospitals that provide acute inpatient and outpatient care,\223\
whereas use of a simple average of measure scores would result in
hospitals having varying measure weights depending on differences in
the number of measures reported. For example, if a hospital reports
three of the eight measures in the Safety of Care measure group, each
measure would be weighted at 33 percent within that group. On the other
hand, a hospital that reports all eight measures in the Safety of Care
measure group would have a different weighting of 12.5 percent for each
measure within the measure group. We simulated the possible range of
measure weights using the data used for January 2020 Overall Star
Rating (October 2019 public reporting data), which included 51
measures. We simulated the results using the measure group weights
proposed in section E.5.a.(2) Proposal to Continue Current Calculation
of Hospital Summary Scores Through a Weighted Average of Measure Group
Scores; outcome and patient experience measure groups were weighted 22
percent and the process group was weighted 12 percent. Taking into
account the measure group weights applied later in the methodology, the
minimum effective measure weight, or the percentage of the hospital
summary score based on a single measure, would be 3 percent for a
hospital reporting all 51 measures and the maximum effective measure
weight would be 33 percent for another hospital reporting the minimum
[[Page 49014]]
threshold number of nine measures (at least three measures in at least
three groups). Hospitals with more measures will have lower measure
weights for each measure, whereas hospitals with fewer measures will
have higher measure weights for each measure. The number of measures
included in the Overall Star Rating varies for each publication
depending on measure removals from and additions for public reporting.
---------------------------------------------------------------------------
\223\ Cai, L. (2012, March 31). Latent variable modeling.
Shanghai archives of psychiatry, 24(2), 118-120. doi:10.3969/
j.issn.1002-0829.2012.02.010.
---------------------------------------------------------------------------
Using a simple average of measure scores to calculate measure group
scores would be responsive to stakeholder feedback that requested CMS
increase the simplicity of the methods and the predictability of
measure emphasis between publications.224 225 226 227 Using
a simple average of measure scores would increase the predictability of
measure emphasis by allowing hospitals to anticipate equal measure
weights across the measures they report within a given group. While
there may be differences in measure emphasis between hospitals that
provide acute inpatient and outpatient care based on differences in
measure reporting, a simple average of measure scores will be
responsive to stakeholder feedback and make the methodology easier for
stakeholders to understand, interpret, and explain to patients.
---------------------------------------------------------------------------
\224\ Centers for Medicare & Medicaid Services. (2018, June).
Summary of Technical Expert Panel (TEP): Hospital Quality Star
Rating on Hospital Compare.
\225\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\226\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
\227\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
---------------------------------------------------------------------------
Since measure loadings are an artifact of the LVM approach, they
would no longer be calculated under the proposed new method using a
simple average of measure scores. In addition, since the point
estimates and standard errors used to calculate 95 percent confidence
intervals and assign hospital measure group performance to ``above,''
``same as,'' or ``below the national average'' were products of the LVM
approach, measure group performance categories will no longer be
available under the proposed new method using a simple average of
measure scores. However, we intend to continue to publicly display
alternative summaries of hospital performance within measure groups for
transparency and patient usability. Should the proposal to use a simple
average of measure scores to calculate measure group scores not be
finalized, measure group performance categories would still be
available in the same manner described above.
In crafting this proposal, we also considered continuing to utilize
LVM as we have in the past and as discussed in the section above.
Ultimately, we chose to propose to discontinue the use LVM because of
the complexity associated with understanding how measure loadings are
empirically assigned with the LVM and contribute to the measure group
scores. We invite public comment on our proposals to use a simple
average of measure scores to calculate measure group scores and to
codify this policy at Sec. 412.190 as discussed.
c. Proposal to Standardize Measure Group Scores
Standardizing \228\ scores is a way to make varying scores directly
comparable by putting them on a common scale. While standardization is
used in other parts of the methodology, particularly to standardize
measure scores within the first step of methodology, it was previously
not necessary to standardize measure group scores when using
statistical modeling, such as LVM. In the absence of statistical
modeling, under the use of the proposed simple average of measure
scores as discussed in section E.4.b. Proposal to Use a Simple Average
of Measure Scores to Calculate Measure Group Scores, the distributions
and interpretations of measure group scores may differ. For example, a
0.5 measure group score in Safety of Care may not conceptually be
similar to a 0.5 measure group score in Patient Experience,
exaggerating the influence of some measure groups when calculating a
weighted average of measure group scores.
---------------------------------------------------------------------------
\228\ Illowsky, B., & Dean, S. (2013). Introductary Statistics.
Houston, TX: 12th Media Services. Retrieved from: https://openstax.org/details/books/introductory-statistics.
---------------------------------------------------------------------------
Therefore, for the Overall Star Rating beginning with CY 2021 and
subsequent years, we propose to standardize measure group scores. More
specifically, we propose to standardize measure group scores by
calculating Z-scores for each measure group. As mentioned in section
E.2.d. Measure Score Standardization, a Z-score \229\ is a standard
deviation \230\ score which relays the amount of variation in a
dataset, or in this case, the variation in hospital measure scores. Z-
scores would be calculated by subtracting the national average measure
group scores from each hospital's measure group score and dividing by
the standard deviation across hospitals. Standardization of measure
group scores would occur prior to combining measure group scores
through a weighted average to calculate summary scores, and would
result in all measure group scores centered near zero with a standard
deviation \231\ of one. We also propose to codify this policy at Sec.
412.190.
---------------------------------------------------------------------------
\229\ DeVore, G.R. (2017, January 17). ``Computing the Z score
and centiles for cross[hyphen]sectional analysis: a practical
approach.'' Journal of Ultrasound in Medicine 36.3: 459-473.
\230\ Illowsky, B., & Dean, S. (2013). Introductary Statistics.
Houston, TX: 12th Media Services. Retrieved from: https://openstax.org/details/books/introductory-statistics.
\231\ Ibid.
---------------------------------------------------------------------------
See Table 49 for an example of how measures would be combined
through a simple average of measure scores to calculate measure group
scores and then how the measure group scores would be standardized. The
standardization of measure group scores would not impact hospital
performance within the measure group or the natural distribution of
scores. As a result of standardization,\232\ mean group scores and
standard deviations would become more similar across measure groups. We
simulated the potential effects of standardization using data from the
January 2020 publication of Overall Star Rating and found that hospital
summary scores with and without standardization of measure group scores
are highly correlated with a Pearson correlation of 0.975, indicating
that standardizing measure group scores does not substantially alter
hospital performance assessment. We note that, should the proposal to
use a simple average of measure scores to calculate measure group
scores not be finalized, we would not need to standardize measure group
scores.
---------------------------------------------------------------------------
\232\ Ibid.
---------------------------------------------------------------------------
We invite public comment on our proposal to standardize measure
group scores and codify this policy at Sec. 412.190.
d. Proposal To Stratify Readmission Measure Group Scores
(1) Current Measure Group Scores Without Stratification
In the past, we have not stratified or adjusted any of the
measures, measure groups, summary scores, or star ratings by social
risk factor variables within the Overall Star Rating methodology,
primarily based on the original guiding principles of the Overall Star
Rating.
[[Page 49015]]
The Overall Star Rating is meant to summarize the existing quality
measure information that is publicly reported through CMS programs,
including Hospital IQR Program, Hospital OQR Program, HRRP, HAC
Reduction Program, and Hospital VBP Program, on Hospital Compare or its
successor websites. Individual measures undergo rigorous development
and reevaluation processes under each program that include extensive
analytic testing and stakeholder engagement. As such, individual
measure methodologies as specified under each program, including
approaches to risk adjustment, are included within the Overall Star
Rating. As measure data and methodologies are updated under each of the
programs, they are subsequently reflected within the Overall Star
Rating methodology. CMS' Overall Star Rating development contractor has
engaged stakeholders in discussion regarding the comparability of
hospital star ratings for over five years throughout the development
and reevaluation of the Overall Star Rating. Throughout that
engagement, some stakeholders, primarily providers, requested
incorporation of social risk factor adjustment within the Overall Star
Rating, while other stakeholders expressed concerns regarding
adjustment in general or the specific variables available for
adjustment.\233\ Specifically, some stakeholders have requested social
risk factor adjustment of the readmission measures or the Readmission
measure group.234 235 Recently a HHS Report to Congress has
set forth a broad range of recommendations regarding social risk
factors and Medicare's value-based purchasing programs, which do not
recommend adjusting quality measures for social risk for public
reporting.\236\ We seek comment on our proposal to stratify the
Readmission measure group based on the proportion of dual-eligible
patients, and an alternative not to stratify the Readmission measure
group based on the proportion of dual-eligible patients.
---------------------------------------------------------------------------
\233\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\234\ National Quality Forum. (2019, November 6). National
Quality Forum Hosptial Quality Star Ratings Summit. Retrieved from
www.qualityforum.org: http://www.qualityforum.org/NQF_Hospital_Quality_Star_Rating_Summit.aspx.
\235\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
\236\ Department of Health and Human Services, Office of the
Assistant Secretary of Planning and Evaluation (ASPE). (2020) Second
Report to Congress: Social Risk Factors and Performance in
Medicare's Value-based Purchasing Programs. Retrieved from: https://aspe.hhs.gov/system/files/pdf/263676/Social-Risk-in-Medicare%E2%80%99s-VBP-2nd-Report.pdf. Accessed July 2, 2020.
---------------------------------------------------------------------------
(2) Proposal To Stratify Only the Readmission Measure Group Scores
In this proposed rule, for Overall Star Rating beginning in CY 2021
and subsequent years, we propose to stratify only the Readmission
measure group score by hospitals' proportion of dual-eligible patients
and codify this at Sec. 412.190. We propose to specifically stratify
only the Readmission measure group, and not other measure groups, based
on hospitals' proportion of dual-eligible hospital discharges, to be
responsive to select stakeholder concerns that some hospitals providing
acute inpatient and outpatient care face unique challenges preventing
readmissions among patients with complex social risk factors,\237\ and
to align with the payment adjustment recently implemented for HRRP
payment determination (82 FR 38231 through 38237). We propose to
utilize and repurpose the same peer group quintiles assigned by the
HRRP annually. We propose to assign hospitals that do not participate
in the HRRP, but have their proportion of dual-eligible patients
available, to HRRP designated peer groups, as they would not have
already been assigned to a peer group through the HRRP. We also propose
that in the event a hospital's proportion of dual-eligible patient data
is missing, CMS would not adjust that hospital's Readmission measure
group score and that hospital would retain its original, unadjusted
Readmission measure group score, as calculated through a simple average
of their measure scores.
---------------------------------------------------------------------------
\237\ National Quality Forum. (2014, August). Risk Adjustment
for Socioeconomic Status or Other Sociodemographic Factors.
Retrieved from: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=77474.
---------------------------------------------------------------------------
The proposed stratification of the Overall Star Rating Readmission
measure group score would use the same dual-eligible variable and a
similar peer grouping approach as is used in the HRRP for payment
determinations (82 FR 38231 through 38237). To be clear, the Overall
Star Rating is not used to determine hospital payments. Dual-eligible
\238\ patients are those that are dually eligible for Medicare and
full-benefit Medicaid among a hospital's total Medicare Fee-for-Service
(FFS) and Medicare Advantage patient discharges (42 U.S. Code Sec.
1315b(f)). Dual-eligible status is consistently captured for patients
and available through enrollment files, which are updated annually, and
does not require extrapolation from area of residence variables, such
as census or community surveys.
---------------------------------------------------------------------------
\238\ Centers for Medicare & Medicaid Services. (2018, May).
Dual Eligible Beneficiaries Under Medicare and Medicaid. Retrieved
from www.cms.gov: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/Medicare_Beneficiaries_Dual_Eligibles_At_a_Glance.pdf.
---------------------------------------------------------------------------
In 2016, the 21st Century Cures Act mandated that CMS determine
hospital penalties for readmissions that account for social risk
factors through a transitional methodology that calculates excess
readmissions ratios within hospital peer groups defined by the
percentage of dual-eligible patients served by the hospital within the
HRRP (Pub. L. 114-255). Section 15002 of the 21st Century Cures Act,
adding a new section 1886(q)(3)(D) and (E) to the Act, also indicated
this methodology could be characterized as a ``transitional
adjustment'' and that the Secretary of Health and Human Services may
revise the stratification methodology, taking into account
recommendations made on risk-adjustment methodologies for HRRP based on
the studies conducted under the IMPACT Act by the Office of the
Assistant Secretary for Planning and Evaluation (ASPE) on the role of
socioeconomic status in Medicare's value-based purchasing program.
In the FY 2018 IPPS/LTCH PPS rule, we finalized our HRRP proposal
to implement a methodology that categorizes participating hospitals
that provide acute inpatient care into five peer groups by quintiles,
based on the proportion of dual-eligible patients to total patients
served by the hospital. The methodology uses the median excess
readmission ratio of hospitals within each of the five peer groups as
the threshold to assess hospital performance on each measure (82 FR
38231 through 38237). The excess readmission ratio measures a
hospital's relative performance and is the ratio of predicted-to-
expected readmissions.\239\ This methodology was implemented within
HRRP in FY 2019 as announced in the associated correction notice (82 FR
49837). The individual readmission measures included within HRRP and
publicly reported on Hospital Compare
[[Page 49016]]
or its successor website are not adjusted for social risk factors.
---------------------------------------------------------------------------
\239\ Centers for Medicare & Medicaid Services. (2019, Novemebr
19). Hospital Readmissions Reduction Program (HRRP). Retrieved from
www.cms.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/HRRP/Hospital-Readmission-Reduction-Program.
---------------------------------------------------------------------------
The proposal to stratify the Readmission measure group based on the
proportion of dual-eligible patients is intended to provide consistency
between the current stratification method used for the HRRP and the
Overall Star Rating methodology. It is not in any way intended to
suggest a new policy direction for the more general question of whether
CMS programs should employ social risk factor adjustment methods of any
kind. The rationale for this proposal is based on alignment between the
two CMS efforts. If changes are made in the future to the HRRP
stratification approach, CMS may consider similar changes to the
Overall Star Rating methodology through future rulemaking. Recently a
HHS Report to Congress has set forth a broad range of recommendations
regarding social risk factors and Medicare's value-based purchasing
programs, which do not recommend adjusting quality measures for social
risk for public reporting.\240\ The stratification approach in the HRRP
has been recommended for removal based on HHS recommendations in a
second Report to Congress, mandated by the IMPACT Act of 2014, titled
``Social Risk Factors and Performance in Medicare's Value-Based
Purchasing Programs'' submitted by ASPE on June 29, 2020.\241\ The
report recommends not adjusting outcome measures for social risk
factors in CMS programs and recommends that, eventually, stratification
of hospitals by the proportion dual-eligible patients should be removed
from the HRRP. CMS is currently reviewing the report recommendations
and considering how to incorporate these recommendations within CMS
programs.
---------------------------------------------------------------------------
\240\ Department of Health and Human Services, Office of the
Assistant Secretary of Planning and Evaluation (ASPE). (2020) Second
Report to Congress: Social Risk Factors and Performance in
Medicare's Value-based Purchasing Programs. Retrieved from: https://aspe.hhs.gov/system/files/pdf/263676/Social-Risk-in-Medicare%E2%80%99s-VBP-2nd-Report.pdf. Accessed July 2, 2020.
\241\ Department of Health and Human Services, Office of the
Assistant Secretary of Planning and Evaluation (ASPE). (2020) Second
Report to Congress: Social Risk Factors and Performance in
Medicare's Value-based Purchasing Programs. Retrieved from: https://aspe.hhs.gov/system/files/pdf/263676/Social-Risk-in-Medicare%E2%80%99s-VBP-2nd-Report.pdf. Accessed July 2, 2020.
---------------------------------------------------------------------------
The Overall Star Rating uses individual measure scores, as
calculated under the quality programs and reported on Hospital Compare
or its successor website, to calculate measure group scores. Individual
measure methodologies, including current and future approaches to risk
adjustment for each measure, as specified in the measures, are
inherently included within the Overall Star Rating. Since the Overall
Star Rating utilizes the individual measure scores as publicly
reported, it is not appropriate to apply social risk factor adjustment
to the individual measure scores for the purpose of the Overall Star
Rating. In addition, stakeholders have agreed that social risk factor
adjustment is not appropriate for all measure types, such as measures
capturing healthcare-associated infections where the onset of adverse
events occur in the hospital setting should not be influenced by a
patient's socioeconomic status.242 243 The proposed
stratification approach would stratify only the Readmission measure
group scores based on a comparison to other hospitals with similar
proportions of dual-eligible patients, as opposed to in comparison to
all hospitals.
---------------------------------------------------------------------------
\242\ National Quality Forum. (2019, November 6). National
Quality Forum Hosptial Quality Star Ratings Summit. Retrieved from
www.qualityforum.org: http://www.qualityforum.org/NQF_Hospital_Quality_Star_Rating_Summit.aspx.
\243\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
---------------------------------------------------------------------------
Since the Overall Star Rating is not used to determine hospital
payment, we propose calculating the readmission measure group score
within each dual-eligible peer group. In the formula below, ah is the
readmission group score for hospital h, a is the national average of
readmission group score, apeer group j is the average readmission group
score for dual-eligible peer group j (j = 1, 2, . . . , 5).
[GRAPHIC] [TIFF OMITTED] TP12AU20.107
During public input periods,\244\ CMS' contractor received feedback
from stakeholders, specifically providers, encouraging alignment
between Overall Star Rating and CMS programs, with specific mention of
alignment with HRRP's approach to peer grouping by dual-eligibility. In
response to stakeholder feedback to promote alignment between programs
and provide consistent measurement standards for providers, we propose
to utilize the same dual-eligible quintiles as HRRP for the Readmission
measure group. Applying stratification to the Readmission measure group
scores based on proportion of dual-eligible patients would align with
HRRP (82 FR 38231 through 38237). Consistent with HRRP, stratifying the
Overall Star Rating Readmission measure group would assign hospitals to
one of five peer groups based on the proportion of dual-eligible
patients. For FY 2019, the range of proportion of dual-eligible
patients within each of the hospital peer group quintiles for HRRP are
as follows: 0 to 13.69 percent, 13.70 to 18.40 percent, 18.41 to 23.23
percent, 23.24 to 30.98 percent, 30.99 to 100 percent for peer groups
one, two, three, four, five, respectively. We propose to utilize and
repurpose the same peer group quintiles assigned by the HRRP, annually.
Peer groups for the Overall Star Rating would not be exact quintiles,
as a greater number of hospitals are included in Overall Star Rating
than those participating in HRPP. The Overall Star Rating includes
hospitals providing acute inpatient and outpatient care, including both
subsection (d) hospitals and CAHs, whereas HRRP only includes
subsection (d) hospitals. We refer readers to section A.1.b. Subsection
(d) Hospitals and B. Critical Access Hospitals in the Overall Star
Rating for more information on the hospitals
[[Page 49017]]
included within the Overall Star Rating. For the 2020 Overall Star
Rating release, 4,384 hospitals received a Readmission group score,
while 3,077 hospitals participated in HRRP received a readmission
score. Since the hospitals within the Overall Star Rating that do not
participate in HRRP would not already be assigned to a peer group by
the HRRP methodology, we propose to calculate their proportion of dual-
eligible patients and assign them to one of the five peer groups based
on the HRRP designated peer groups.
---------------------------------------------------------------------------
\244\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
---------------------------------------------------------------------------
As stated above, we propose to assign hospitals that do not
participate in the HRRP, but have their proportion of dual-eligible
patients available, to HRRP designated peer groups, as they would not
have already been assigned to a peer group through the HRRP. This is
necessary to maintain alignment with HRRP so that hospitals in HRRP are
assigned to the same peer group within both HRRP and the Overall Star
Ratings. As also stated above, we propose to not adjust a hospital's
Readmission measure group score if that hospital has missing dual-
eligible patient data. This is necessary because we would not have the
dual-eligible data necessary to produce an adjusted score.
(i) Other Methods Considered
In developing our proposal, we also considered recalculating the
peer group quintiles based on all hospitals in the Overall Star Rating
dataset, and not solely based on those participating in HRRP. Using all
hospitals to calculate peer group quintiles would be more consistent
with other aspects of the methodology that use all hospital data, such
as the calculation of measure group scores and weighted average of
measure groups scores to calculate summary scores. However, calculating
quintiles based on all hospitals would create potential misalignment
between quintiles, and therefore peer group assignment, for HRRP and
the Overall Star Rating Readmission measure group. More specifically,
if dual-eligible quintiles were recalculated based on all hospitals
within the Overall Star Rating, some hospitals that are within both
HRRP and the Overall Star Rating would be assigned to different peer
groups in each of the two methodologies based on the different dual-
eligible quintile cutoffs.
Using January 2020 Overall Star Rating release data (from October
2019 publicly reported measure data on Hospital Compare), we simulated
calculation of quintiles based on all hospitals, 155 (5.04 percent) of
the 3,174 HRRP hospitals would move down a peer group quintile; that
is, they would move to a quintile with a lower proportion of patients
that are dual-eligible, indicating their patient case mix has lower
social risk. Under this simulation, specifically, 23 (3.67 percent)
hospitals assigned dual-eligible quintiles in HRRP would move from peer
group two to peer group one, with the lowest proportion of dual-
eligible patients, 40 (6.46 percent) hospitals would move from peer
group three to peer group two, 48 (7.74 percent) hospitals would move
from peer group four to peer group three, and 44 (7.28 percent)
hospitals would move from peer group five, with the highest proportion
of dual-eligible patients, to peer group four.
For the January 2020 Overall Star Rating release, 4,384 hospitals
received a Readmission group score, while 1,307 hospitals did not
participate in HRRP. Similarly, using the same simulated calculation of
quintiles based on all hospitals, 90 (6.89 percent) of the 1,307 non-
HRRP hospitals would move down a peer group quintile if calculating
based on all hospitals than they would have if using only HRRP
hospitals. Specifically, 9 (0.69 percent) hospitals would move from
peer group two to peer group one, with the lowest proportion of dual-
eligible patients, 31 (2.37 percent) hospitals would move from peer
group three to peer group two, 27 (2.07 percent) hospitals would move
from peer group four to peer group three, and 23 (1.76 percent)
hospitals would move from peer group five, with the highest proportion
of dual-eligible patients, to peer group four.
After calculation, mean Readmission measure group scores would be
the same for each hospital peer group, resulting in more similar
measure group scores across hospital peer groups. While stratifying
results in more comparable measure group scores across peer groups of
proportions of dual-eligible patients, the effect on the Overall Star
Rating Readmission measure group is modest; our simulations showed a
0.967 correlation between unadjusted and adjusted Readmission measure
group scores using January 2020 Overall Star Rating release data (from
October 2019 publicly reported measure data on Hospital Compare).
In developing our proposal, as discussed in section a. Alternatives
Considered, we also considered not stratifying the Readmission measure
group and retaining the current measure group without stratification
based on proportion of dual-eligible patients within the calculation of
the Overall Star Ratings. CMS' Overall Star Rating development
contractor engaged stakeholders in discussion regarding the
comparability of hospital star ratings for over five years throughout
the development and reevaluation of the methodology. Throughout that
engagement, some stakeholders expressed concerns regarding adjustment
for social risk factors in general, adjustment for social risk factors
within the Overall Star Rating methodology, or use of specific social
risk factor variables that are currently available for adjustment.\245\
Most stakeholders agreed that social risk factor adjustment is not
appropriate for all measure types, such as measures capturing
healthcare-associated infections, and therefore, not appropriate to be
applied at aggregated levels, such as the Overall Star
Rating.246 247 Some stakeholders, including patients and
patient advocates, expressed concern that stratifying the Readmission
measure group by the proportion of dual-eligible patients would result
in a misrepresentation of quality of care at hospitals, particularly
for dual-eligible patients, and would be confusing to patients as
consumers of the Overall Star Rating.248 249 250
Furthermore, the effect of stratifying the Overall Star Rating
Readmission measure group score is negligible, as shown through a 0.967
correlation between unadjusted and adjusted Readmission measure group
scores using January 2020 Overall Star Rating release data (from
October
[[Page 49018]]
2019 publicly reported measure data on Hospital Compare).
---------------------------------------------------------------------------
\245\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\246\ National Quality Forum. (2019, November 6). National
Quality Forum Hosptial Quality Star Ratings Summit. Retrieved from
www.qualityforum.org: http://www.qualityforum.org/NQF_Hospital_Quality_Star_Rating_Summit.aspx.
\247\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
\248\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\249\ Centers for Medicare & Medicaid Services. (2019, October
24) Patient and Patient Advocate Work Group Minutes--October 2019.
\250\ National Quality Forum. (2019, November 6). National
Quality Forum Hospital Quality Star Ratings Summit. Retrieved from
www.qualityforum.org: http://www.qualityforum.org/NQF_Hospital_Quality_Star_Rating_Summit.aspx.
---------------------------------------------------------------------------
CMS is also considering recommendations on risk-adjustment recently
submitted to Congress. On behalf of the Secretary for Health and Human
Services (HHS), ASPE recently submitted a HHS Report to Congress on
Social Risk Factors and Performance in Medicare's Value-Based
Purchasing Programs that includes recommendations on risk-adjustment
for CMS programs and quality efforts, including the Overall Star
Rating. For publicly reported quality measures, recommendations are
that ``Quality measures, resource use measures, and composite scores
should not be adjusted for social risk factors for public reporting.''
Instead, recommendations are for quality and resource use measures to
be reported separately for dual-eligible beneficiaries and other
beneficiaries in order to monitor disparities and improvements over
time. The report indicates for public reporting, it is also important
to hold providers accountable for outcomes, regardless of social risk.
Overall, the report lays out a comprehensive approach for CMS programs
to move towards incentivizing providers and initiatives to improve
health outcomes by rewarding and supporting better outcomes for
beneficiaries with social risk factors. The report indicates proposed
solutions that address only the measures or programs, without
considering the broader delivery system and policy context, are
unlikely to mitigate the full implications of the relationship between
social risk factors and outcomes.
However, we are ultimately proposing to stratify the Readmission
measure group based on the proportion of dual-eligible patients to
align with HRRP and be responsive to stakeholder feedback, particularly
form health care providers. However, considering inconsistent feedback
received from stakeholders and HHS recommendations for CMS programs, we
also seek comment on an alternative to retain the Readmission measure
group calculation without stratification based on the proportion of
dual-eligible patients.
We invite public comment on our proposals to: (1) Stratify only the
Readmission measure group score based on the proportion of dual-
eligible patients by using peer groups annually designated by the HRRP,
(2) assign hospitals that do not participate in the HRRP, but have
their proportion of dual-eligible patients available, to HRRP
designated peer groups, as they would not have already been assigned to
a peer group through the HRRP, (3) not adjust a hospital's Readmission
measure group score if that hospital has missing dual-eligible patient
data, and (4) codify this policy at Sec. 412.190. We refer readers to
section a. Alternatives Considered where we seek comment on the
alternative to not stratify the Readmission measure group score based
on the proportion of dual-eligible patients.
5. Step 4: Calculation of Hospital Summary Scores as a Weighted Average
of Group Scores
a. Calculation of Hospital Summary Scores Through a Weighted Average of
Measure Group Scores
(1) Current Calculation of Hospital Summary Scores Through a Weighted
Average of Measure Group Scores
In the past, we have calculated hospital summary scores as a
weighted average of measure group scores. That is, each measure group
score is multiplied by the assigned weight for that group, and then the
weighted measure group scores are summed to calculate the hospital
summary score. The measure group weights were determined based on CMS
policy, stakeholder feedback, and similarities to that of the Hospital
VBP Program \251\ in that outcome measures are given more weight than
process measures. Specifically, the Mortality, Safety of Care,
Readmission, and Patient Experience measure groups are each weighted 22
percent and the Effectiveness of Care, Timeliness of Care, and
Efficient Use of Medical Imaging measure groups are each weighted 4
percent. In 2015, CMS' contracted development team engaged stakeholders
for input on the measure group weights through the TEP,\252\ the
Patient & Advocate Work Group, and a public input period.\253\ In
general, stakeholders supported the current measure group weights and
agreed that outcome measures should have more weight since they
represent strong indicators of quality and are most important to
patients in making healthcare decisions. The development contractor
included this topic in several past public input
periods,254 255 wherein some stakeholders suggested
different measure group weightings; however, little consensus has been
reached on an appropriate alternative weighting scheme.
---------------------------------------------------------------------------
\251\ Inpatient Prospective Payment System/Long-Term Care
Hospital (IPPS/LTCH) Final Rule, 80 FR 49567 (Aug 17, 2015) (to be
codified at 42 CFR parts 412).
\252\ Centers for Medicare & Medicaid Services. (2015,
February). Summary of Technical Expert Panel (TEP) Evaluation of
Hospital Quality Star Ratings on Hospital Compare.
\253\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
\254\ Centers for Medicare & Medicaid Services. (2015, June).
Hospital Quality Star Ratings on Hospital Compare Public Comment
Report #2: Methodology of Overall Hospital Quality Star Ratings.
\255\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
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(2) Proposal To Continue Current Calculation of Hospital Summary Scores
Through a Weighted Average of Measure Group Scores
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose to continue to calculate hospital
summary scores through a weighted average of measure group scores with
a similar weighting scheme that continues to assign more weight to the
outcome and patient experience measure groups and less weight to the
process measure group. Specifically, for Overall Star Rating beginning
in CY 2021 and subsequent years, we propose to weight each of the
outcome and patient experience measure groups--Mortality, Safety of
Care, Readmission, and Patient Experience--at 22 percent, and the
proposed combined process measure group, Timely and Effective Care (we
refer readers to section E.3.b. Proposed New Measure Group and
Continuation of Certain Groups of this proposed rule), at 12 percent.
We also propose that hospital summary scores would then be calculated
by multiplying the standardized measure group scores by the assigned
measure group weight and then summed. We refer readers to an example
equation and Table 49. We also propose to codify the measure group
weightings at Sec. 412.190 and summary score calculations at Sec.
412.190.
Example of Weighted Average of Measure Group Scores to Calculate
Summary Scores
Summary score = [(-0.70*0.22) + (0.23*0.22) + (-0.76*0.22) + (-
1.13*0.22) + (-0.25*0.12)] = -0.55
[[Page 49019]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.108
In developing our proposal, we also considered equal measure
weights across all the measure groups, such that each measure group
would be weighted 20 percent. We ultimately chose to propose to weight
outcome measures more, because this was vetted and supported by
stakeholders and is consistent with past and current stakeholder
feedback that outcome measures capture important aspects of quality and
are more important to patients.256 257
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\256\ Centers for Medicare & Medicaid Services. (2015, June).
Hospital Quality Star Ratings on Hospital Compare Public Comment
Report #2: Methodology of Overall Hospital Quality Star Ratings.
\257\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
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We invite public comment on our proposals to: (1) Continue to
calculate hospital summary scores by multiplying the standardized
measure group scores by the assigned measure group weights and then
summing the weighted measure group scores; (2) continue to weight
outcome and patient experience measure groups, (that is, Mortality,
Safety of Care, Readmission, and Patient Experience groups) at 22
percent; (3) weight the proposed Timely and Effective Care process
measure group at 12 percent; and (4) codify these policies at Sec.
412.190.
b. Reweighting Measure Group Scores To Calculate Summary Scores
(1) Current Reweighting Measure Group Scores To Calculate Summary
Scores
In the past, if a hospital did not report or have sufficient
measures for a given measure group under the Overall Star Rating
methodology, the weights of those measure groups would be redistributed
proportionally across the measure groups for which the hospital did
report sufficient measures. Generally, the four outcome measure groups
were weighted at 22 percent each, and the three process measure groups
were weighted at 4 percent each. The approach to proportioning weights
when a hospital did not report enough measures for one or more measure
groups was similar to the Hospital VBP Program where the weighting of
groups is redistributed where one or more groups are not reported,\258\
and was vetted by stakeholders for the Overall Star Rating through TEP
\259\ engagement and a public input period.\260\
---------------------------------------------------------------------------
\258\ Inpatient Prospective Payment System/Long-Term Care
Hospital (IPPS/LTCH) Final Rule, 77 FR 53606 (August 31, 2012) (to
be codified at 42 CFR parts 412, 413, 424 and 476).
\259\ Centers for Medicare & Medicaid Services. (2015,
February). Summary of Technical Expert Panel (TEP) Evaluation of
Hospital Quality Star Ratings on Hospital Compare.
\260\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
---------------------------------------------------------------------------
(2) Proposal to Reweight Measure Group Scores To Calculate Summary
Scores
Moving forward, we propose to continue to reweight measure group
scores. Taking into consideration the proposed new measure grouping (we
refer readers to section 5 E.3.b. Proposed New Measure Group and
Continuation of Certain Groups) and the proposed Timely and Effective
Care process measure group weighting of 12 percent (we refer readers to
section E.5.a. Calculation of Hospital Summary Scores Through a
Weighted Average of Measure Group Scores), for the Overall Star Rating
beginning in CY 2021 and subsequent years, we propose to re-distribute
measure group weights for measure groups which a hospital does not have
sufficient measures within the Overall Star Rating methodology. Once a
hospital meets the reporting threshold to receive a star rating, which
is having at least three measure groups each with at least three
measures, any additional measures and measure groups contribute to
their star rating (we refer readers to section E.6.b. Proposals to
Update the Minimum Reporting Thresholds for Receiving a Star Rating).
In other words, once the reporting thresholds are met, a hospital would
need to report at least one measure in each group and the weight of any
measure group that does not have at least one measure will be re-
distributed amongst the other measure groups. Specifically, we propose
to re-distribute the weights for measure groups which are not reported
proportionally across the remaining measure groups, to ensure the
relative weight between groups is preserved. We would calculate this by
subtracting the standard weight percentage of the group that does not
meet the minimum threshold from 100 percent; the standard weight
percentage of each of the remaining groups would then be divided by the
resulting percentage giving new re-proportioned weights. If a hospital
does not meet the threshold for two groups, then those two groups'
standard weight percentages are added together before subtracting from
100 percent; the standard weight percentage of each of the remaining
groups would then be divided by the resulting percentage giving new re-
proportioned weights. We also propose to codify this at Sec. 412.190.
These calculations are illustrated in the three examples below.
For example, if a hospital does not report at least one measure
within the Timely and Effective Care measure group, the group's 12
percent weight would be subtracted from the total of
[[Page 49020]]
100 (100-12 = 88) and then each of the measure group weights for that
hospital would be determined using the new total of 88 (Mortality
weight: 22/88 = 25 percent, Safety of Care weight: 22/88 = 25 percent,
Readmission weight: 22/88 = 25 percent, and Patient Experience weight:
22/88 = 25 percent). This example is illustrated in Table 50.
[GRAPHIC] [TIFF OMITTED] TP12AU20.109
As another example, if a hospital does not report at least one
measure within the Readmission measure group, the group's 22 percent
weight would be subtracted from the total of 100 (100-22 = 78) and then
each of the measure group weights for that hospital would be determined
using the new total of 78 (Mortality weight: 22/78 = 28.2 percent,
Safety of Care weight: 22/78 = 28.2 percent, Patient Experience weight:
22/78 = 28.2 percent, and Timely and Effective Care weight: 12/78 =
15.4 percent). This example is illustrated in Table 51.
[GRAPHIC] [TIFF OMITTED] TP12AU20.110
This same principle would apply if a hospital did not have at least
one measure reported in two measure groups. We propose that a hospital
must report at least three measure groups, each with at least three
measures, one of which must be Mortality of Safety of Care, in order to
receive a star rating; once both the minimum measure and measure group
thresholds are met, any additional measures a hospital reports would be
included in the Overall Star Rating calculation, including measures
groups with as few as one measure (we refer readers to section E.6.b.
Proposals to Update the Minimum Reporting Thresholds for Receiving a
Star Rating). If a hospital does not report at least one measure within
both the Safety of Care and Timely and Effective Care measure groups,
the groups' 22 and 12 percent weights would be subtracted from the
total of 100 (100-22-12 = 66) and then each of the measure group
weights would be determined using the new total of 66 (Mortality
weight: 22/66 = 33.3 percent, Readmission weight: 22/66 = 33.3, and
Patient Experience weight: 22/66 = 33.3 percent). This example is
illustrated in Table 52.
[[Page 49021]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.111
We invite public comment on our proposals to reweight measure group
scores and codify at Sec. 412.190.
6. Step 5: Application of Minimum Thresholds for Receiving a Star
Rating
a. Current Minimum Measure and Group Thresholds for Receiving a Star
Rating
In the past, in order to receive a star rating, hospitals that
provide acute inpatient and outpatient care had to publicly report
sufficient measures to receive a star rating. Specifically, a minimum
threshold was set to require at least three measure groups (one being
an outcome group--that is, Mortality, Safety of Care, or Readmission),
with at least three measures in each of the three groups. Additionally,
in the past, once a hospital met the minimum measure and measure group
thresholds, any additional measures and groups, including groups with
as few as one measure, the hospital reported were included in the
calculation of their star rating. These reporting thresholds were
applied based on the guiding principle of information inclusivity, in
that it allowed as many hospitals as possible to receive a star rating
while also maintaining face validity and reliability of the Overall
Star Rating methodology, and were vetted through TEP and public comment
stakeholder engagement.261 262
---------------------------------------------------------------------------
\261\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
\262\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
---------------------------------------------------------------------------
In 2017, the CMS' Overall Star Rating development contractor vetted
the minimum reporting thresholds through the TEP and public input.\263\
In December 2017,\264\ we updated the order of steps in the methodology
for which minimum thresholds are applied; instead of applying minimum
thresholds in step 6, after the assignment of hospitals to star
ratings, we applied them in step 5, prior to the assignment of
hospitals to star ratings so only hospitals meeting the threshold were
included in the relative k-means clustering algorithm.\265\ K-means
clustering \266\ is the algorithm used to assign hospital summary
scores to one of five star ratings. An overview of k-means clustering
is provided in section E.8. Step 6: Application of Clustering Algorithm
to Obtain a Star Rating below.
---------------------------------------------------------------------------
\263\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
\264\ Centers for Medicare & Medicaid Services. (2017, December
20). Quarterly Updates and Specifications Report (v2.3). Retrieved
from qualitynet.org: https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab2.
\265\ Huang, Z. Extensions to the k-Means Algorithm for
Clustering Large Data Sets with Categorical Values. Data Mining and
Knowledge Discovery 2, 283-304 (1998) doi:10.1023/A:1009769707641.
\266\ Ibid.
---------------------------------------------------------------------------
b. Proposals To Update the Minimum Reporting Thresholds for Receiving a
Star Rating
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose to continue a similar threshold
as previously used, but with modification. We propose that hospitals
must report at least three measures for three measures groups, however,
one of the groups must specifically be the Mortality or Safety of Care
outcome groups. We believe this would increase the comparability of
hospitals through the requirement of specific measure groups to receive
a star rating. We also believe that this would ensure that, in order to
receive a star rating, hospitals have information available on
important indicators of acute inpatient and outpatient quality of
care--mortality and safety of care--that reflect survival and
preventable complications or infections following care and are,
therefore, important to patients in making healthcare decisions, as
indicated by the Patient & Patient Advocate Work Group. We are also
proposing to codify this minimum measure group threshold at Sec.
412.190.
However, we are aware that a requirement for at least three
measures within the Mortality or Safety of Care groups would
simultaneously limit the number of hospitals eligible to receive a star
rating, particularly reducing the number of small, low volume hospitals
with too few cases to report the individual measures. Furthermore,
certain entities, such as CAHs, are not required to report safety
measures (for example, healthcare-associated infections and PSI-90) as
part of HAC Reduction Program (78 FR 50725 to 50728).\267\ In January
2020, 125 hospitals did not report at least three measures in either
the Mortality or Safety of Care groups. Of those 125 hospitals without
at least three measures in either the Mortality or Safety of Care
groups, 48 were safety-net hospitals, 68 were CAHs, and 16 were
specialty hospitals. However, the TEP still recommended this change
because Mortality and Safety of Care are aspects of quality that are
most important to patients and reflective of performance
[[Page 49022]]
under a hospital's control.\268\ Once both the minimum measure and
measure group thresholds are met, any additional measures a hospital
reports would be included in the star rating calculation.
---------------------------------------------------------------------------
\267\ Inpatient Prospective Payment System/Long-Term Care
Hospital (IPPS/LTCH) Final Rule, 83 FR 50496 (Aug 19, 2013) (to be
codified at 42 CFR parts 412, 413, 414, 419, 424, 482, 485, and
489).
\268\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
---------------------------------------------------------------------------
We invite public comment on our proposals to require that hospitals
must report at least three measures groups, one of which must
specifically be the Mortality or Safety of Care outcome group, each
with at least three measures. Once this reported threshold is met, any
additional measures and measure groups would contribute to hospital
star ratings. We also propose to codify these policies at Sec.
412.190.
7. Proposed Approach to Peer Grouping Hospitals
a. Background
We have not previously grouped hospitals by peers within the
Overall Star Rating methodology. However, as part of our discussion
with stakeholders about the comparability of the Overall Star Rating,
peer grouping and potential peer grouping variables were discussed in
two TEP meetings (March 2018,\269\ and November 2019 \270\), two
Provider Leadership Work Group meetings (February and November 2019),
two Patient & Advocate Work Group meetings (December 2017 and October
2019), and presented during two public comment periods (August 2017
\271\ and March 2019 \272\). Through stakeholder engagement activities,
we presented data on peer grouping variables including number of
measures or measure groups a hospital reports, teaching designation,
specialty designation, critical access designation, and number of beds
at a hospital, among others. While there was no consensus among
stakeholders regarding which hospital characteristic variable would be
most appropriate for peer grouping,\273\ CMS focused on the number of
measure groups reported as a peer grouping variable based on analyses
for many possible variables that assessed similarities among hospitals
within peer groups and predictability of hospitals assignments to peer
groups over time. Larger hospitals, for example, generally submit the
most measures and smaller hospitals submit the fewest. Peer grouping by
number of measure groups provides alignment with hospital size.
---------------------------------------------------------------------------
\269\ Centers for Medicare & Medicaid Services. (2018, June).
Summary of Technical Expert Panel (TEP): Hospital Quality Star
Rating on Hospital Compare.
\270\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
\271\ Centers for Medicare & Medicaid Services. (2018, June).
Summary of Technical Expert Panel (TEP): Hospital Quality Star
Rating on Hospital Compare.
\272\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
\273\ Centers for Medicare & Medicaid Services. (2019, June).
Public Comment Summary Report. Retrieved from www.CMS.gov: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/PC-Updates-on-Previous-Comment-Periods#a0815.
---------------------------------------------------------------------------
b. Proposed Peer Grouping
In this proposed rule, for Overall Star Rating beginning with CY
2021 and subsequent years, we propose to group hospitals that provide
acute inpatient and outpatient care by the number of measure groups for
which they have at least three measures as shown in Figure 2.
Specifically, after the minimum reporting thresholds are applied,
hospitals would be grouped into one of three peer groups based on the
number of measure groups for which they report at least three
measures--three measure groups, four measure groups, and five measure
groups. Once grouped, k-means clustering would be applied within each
peer group to assign hospital summary scores to star ratings. We also
propose to codify this policy at Sec. 412.190.
[[Page 49023]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.112
Peer grouping hospitals based on the number of measure groups for
which they report at least three measures is responsive to stakeholder
concerns about the comparability of hospital star ratings and allows
hospitals to be assigned to star ratings relative only to other similar
hospitals in the same peer group.
[[Page 49024]]
We propose to group hospitals by measure group reporting to capture
key differences that are important to stakeholders, such as differences
in size, patient volume, case mix,\274\ and services provided (service
mix \275\). For example, larger hospitals with more diverse case mix
and service mix, such as large urban teaching hospitals, report a
greater number of measures, and therefore measure groups, and would be
grouped separately from smaller hospitals with less diverse patient
cases and service mix, which tend to report fewer measures and measure
groups.
---------------------------------------------------------------------------
\274\ Centers for Medicare & Medicaid Services. (2019).
Frequently Asked Questions for the Risk-Standardized Outcome and
Payment Measures. Retrieved from qualitynet.org: https://www.qualitynet.org/files/5d0d374c764be766b010136d?filename=2019_IQR_CBMsrs_FAQs.pdf.
\275\ Ibid.
---------------------------------------------------------------------------
Hospital summary scores would be placed into three peer groups
after calculation of the weighted average of measure group scores and
before the assignment of hospitals to star ratings using k-means
clustering.\276\ This proposal is dependent on a sufficient number of
hospitals that provide acute inpatient and outpatient care reporting
three, four, and five measure groups to form the three peer groups. We
simulated effects of this policy based on January 2020 Overall Star
Rating release data (from October 2019 publicly reported measure data
on Hospital Compare): 348 (10 percent) hospitals reported at least 3
measures in 3 groups, 583 (17 percent) reported 4 groups, and 2,509 (73
percent) reported all 5 groups. These group sizes were vetted with the
TEP \277\ and workgroups and considered adequately sized for clustering
into peer grouped star ratings.
---------------------------------------------------------------------------
\276\ Huang, Z. Extensions to the k-Means Algorithm for
Clustering Large Data Sets with Categorical Values. Data Mining and
Knowledge Discovery 2, 283-304 (1998) doi:10.1023/A:1009769707641.
\277\ Centers for Medicare & Medicaid Services. (2019,
November). Summary of Technical Expert Panel (TEP): Overall Hospital
Quality Star Rating on Hospital Compare. Retrieved from: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TEP-Current-Panel#p6.
---------------------------------------------------------------------------
Of note, this proposal is contingent on the participation of CAHs,
as outlined in section B.2. Proposal to Continue to Include Critical
Access Hospitals in the Overall Star Rating, since CAHs make up
approximately half of the hospitals in the three measure group peer
group and their exclusion from the Overall Star Rating would not
produce peer groups with a sufficient amount of hospitals for
comparison. Because many CAHs currently report the minimum three
measure groups required by the reporting threshold, as discussed in
section E.6. Step 5: Application of Minimum Thresholds for Receiving a
Star Rating, and make up approximately half of the hospitals within the
three measure group peer group, there would likely be an insufficient
number of hospitals in the three measure group peer group to produce
adequate variation through k-means clustering \278\ if CAHs were not
included in the calculation. If CAHs were not included, the difference
in summary score between a two-star and three-star hospital may be
modest and not truly reflective of differences in hospital quality.
---------------------------------------------------------------------------
\278\ Huang, Z. Extensions to the k-Means Algorithm for
Clustering Large Data Sets with Categorical Values. Data Mining and
Knowledge Discovery 2, 283-304 (1998) doi:10.1023/A:1009769707641.
---------------------------------------------------------------------------
After peer grouping, we would then assign star ratings using k-
means clustering \279\ (discussed in section E.8. Step 6: Application
of Clustering Algorithm to Obtain a Star Rating of this proposed rule)
among hospitals within a single group, that is, relative only to
hospitals in the same group. Specifically, hospitals would be grouped
based on whether they have at least three measures for three measure
groups, four measure groups, or five measure groups. The approach to
peer grouping would retain the method used for assigning star ratings.
Currently, the Overall Star Rating methodology uses a k-means
clustering algorithm to assign hospitals to one of five star rating
categories based on the distribution of hospital summary scores. This
method aims to make hospital summary scores more similar within one
star rating category and more different than hospital summary scores in
other star rating categories. The proposed approach to peer grouping
would be to also apply k-means clustering \280\ to assign hospitals to
one of five star ratings based only on hospitals in that peer group.
For example, hospitals with three measure groups would be assigned to
star ratings based on their summary score relative to other hospital
summary scores with three measures groups, but not with respect to
hospital summary scores among hospitals with four or five measure
groups. Since hospitals in a peer group are being compared only to each
other and k-means clustering is a comparative approach to assigning
star ratings,\281\ hospitals with the same summary score but different
peer groups could receive different star ratings. In other words, a
hospital with three measure groups could have the same summary score as
a hospital with four measure groups; however, that summary score could
fall within the four-star cluster for the three measure group peer
group and the five-star cluster for the four measure group peer group.
In addition, peer grouping hospitals would increase the comparability
of star ratings within peer groups but decrease the comparability of
star ratings across peer groups for patients. For example, once summary
scores are calculated through the weighted average of measure group
scores, a hospital within the three measure group peer group would not
be assigned to a star rating relative to hospitals within the four or
five measure group peer groups in the same geography or service line to
whom that hospital is being compared by patients and consumers.
---------------------------------------------------------------------------
\279\ Ibid.
\280\ Huang, Z. Extensions to the k-Means Algorithm for
Clustering Large Data Sets with Categorical Values. Data Mining and
Knowledge Discovery 2, 283-304 (1998) doi:10.1023/A:1009769707641.
\281\ Ibid.
---------------------------------------------------------------------------
Applying peer grouping after the calculation of summary scores and
before the assignment of hospitals to star ratings, allows: (1)
Hospital summary scores to be equivalent and comparable among all
hospitals, regardless of peer grouping; (2) transparency and the
ability for stakeholders to review measure group and summary score
results comparable to all other hospitals in the nation for quality
improvement efforts within their confidential hospital-specific reports
during the 30-day confidential preview period or the Hospital Compare
or its successor websites' downloadable database upon public release;
(3) minimal sensitivity of measure-level differences between peer
groups on star ratings; and (4) hospitals' final star ratings to only
be in comparison to ``like'' hospitals that have a similar number of
measure groups.
We have conducted several analyses to inform decision making
regarding peer grouping. To determine whether peer grouping not only
supports CMS efforts to improve the comparability of star ratings, but
also the predictability of hospital assignments to peer groups, we
simulated potential effects of this proposal and assessed the stability
of peer groups over time. Hospitals tend to report the same number of
measure groups over time and therefore are often assigned to the same
peer group each reporting period. Using historical data over five
previous years, hospitals would have been assigned to the same peer
groups of three, four, or five measure groups 96 to 98 percent of the
[[Page 49025]]
time, indicating a high level of consistency over time. Furthermore,
peer grouping hospitals based on the number of measure groups for which
they report at least three measures creates similar within peer group
hospital reporting profiles. Using January 2020 reporting data (from
October 2019 publicly reported measure data on Hospital Compare),
hospitals with three measure groups tend to almost always report at
least three measures in the Mortality (86 percent), Readmission (86
percent), and Timely and Effective Care (96 percent) measure groups but
tend to seldom report at least three measures in the Safety of Care (15
percent) and Patient Experience (17 percent) measures groups. Hospitals
with four measure groups tend to always report at least three measures
in the Readmission (100 percent) measure group, tend to almost always
report at least three measures in the Mortality (92 percent), Patient
Experience (98 percent), and Timely and Effective Care (99 percent)
measure groups, and tend to seldom report at least three measures in
the Safety of Care (11 percent) measure group. Hospitals with five
measure groups report at least three measures in all five measure
groups. Hospitals with three and four measure groups are more likely to
be critical access hospitals (58 percent in the peer group with three
measure groups and 52 percent in the peer group with four measure
groups) while hospitals in the peer group with five measure groups tend
to be safety-net (19 percent of the peer group) and teaching (56
percent of the peer group) hospitals. These results confirm that peer
grouping results in the grouping of hospitals with similar reporting
profiles and characteristics and may address stakeholder concerns about
the comparability of hospital star ratings.
Peer grouping hospitals by the number of measure groups for which
they report at least three measures for the assignment of hospital
summary scores to star ratings addresses stakeholder concerns about the
comparability of hospitals with fundamental differences, such as
measure reporting, hospital size or volume, patient case mix, and
service mix. However, we note that peer grouping hospitals would
decrease the comparability of all hospitals for patients and change the
historical, conceptual comparative nature of the Overall Star Rating.
In developing our proposal, we also considered not peer grouping
and continuing to apply k-means clustering amongst all hospitals
meeting the minimum reporting thresholds to assign hospitals to star
ratings. However, we ultimately decided to propose to peer group
hospitals based on the number of measure groups to be responsive to
stakeholder feedback and increase comparability of hospital star
ratings. Should we not finalize our proposal to include CAHs, we will
not peer group the Overall Star Rating by number of measure groups.
We invite public comment on our proposal to peer group hospitals by
number of measure groups and to codify this policy at Sec. 412.190.
8. Step 6: Application of Clustering Algorithm To Assign Star Rating
a. K-Means Clustering
(1) Current Application of K-Means Clustering
In the past, in order to assign hospitals to star ratings, we used
an approach called k-means clustering to categorize hospitals' summary
scores. K-means clustering is a clustering algorithm that groups
entities, in this case hospitals, into a specified number of
categories,\282\ in this case five star rating categories in which one
star is the lowest and five stars is the highest, by grouping values,
in this case hospital summary scores, so that they are more similar
within groups and more different between groups. In other words, for
each publication of the Overall Star Rating, k-means clustering
establishes cutoffs, or a range of summary scores, for each of the star
rating categories so that summary scores in one star rating category
would be more similar to each other and less similar to summary scores
in other star rating categories.
---------------------------------------------------------------------------
\282\ Ibid.
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We considered multiple approaches to assigning hospitals to star
ratings, including percentiles, statistically significant cutoffs, and
clustering algorithms. Each option was presented to the TEP
283 284 and during a public input period \285\ by the
Overall Star Rating development contractor. While any approach to
assigning hospitals to star ratings will result in some hospitals with
summary scores near the cutoffs of two star rating categories, at that
time, we chose to use k-means clustering because it applied a data-
driven approach to specification of five categories, minimized the
within-category differences and maximized the between-category
differences in summary scores, and was similar to the clustering
algorithm used to calculate the HCAHPS Star Rating.\286\ Stakeholders
have generally supported the use of k-means clustering to assign star
ratings over arbitrary percentiles and statistically significant
cutoffs.287 288 289
---------------------------------------------------------------------------
\283\ Centers for Medicare & Medicaid Services. (2015,
February). Summary of Technical Expert Panel (TEP) Evaluation of
Hospital Quality Star Ratings on Hospital Compare.
\284\ Centers for Medicare & Medicaid Services. (2017, June).
Hospital Quality Star Ratings on Hospital Compare Technical Expert
Panel.
\285\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
\286\ Centers for Medicare and Medicaid Services (2019, April).
Technical Notes for HCAHPS Star Ratings . Retrieved from
www.hcahpsonline.org: https://www.hcahpsonline.org/globalassets/hcahps/star-ratings/tech-notes/april_2019_star-ratings_tech-notes.pdf.
\287\ Centers for Medicare & Medicaid Services. (2015,
February). Summary of Technical Expert Panel (TEP) Evaluation of
Hospital Quality Star Ratings on Hospital Compare.
\288\ Centers for Medicare & Medicaid Services. (2017, October).
Overall Hospital Quality Star Rating on Hospital Compare Public
Input Summary Report.
\289\ Centers for Medicare & Medicaid Services. (2017, June).
Hospital Quality Star Ratings on Hospital Compare Technical Expert
Panel.
---------------------------------------------------------------------------
In December 2017, we applied a minor update to the application of
k-means clustering by running the summary scores through the clustering
algorithm multiple times, a statistical method called complete
convergence,\290\ to provide more reliable and stable star rating
assignments. Prior to December 2017, we performed Winsorization \291\
of hospital summary scores to limit the influence of extreme outliers.
Winsorization is a common strategy used to set extreme outliers to a
specified percentile of the data.\292\ While k-means clustering has
been used within the methodology since implementation in July 2016, the
update to run k-means clustering to complete convergence results in a
broader distribution of star ratings and negates the need for
Winsorization of hospital summary scores.\293\
---------------------------------------------------------------------------
\290\ Hsu, P.L., & Robbins, H. (1947). Complete Convergence and
the Law of Large Numbers. Proceedings of the National Academy of
Sciences of the United States of America, 33(2), 25-31. doi:10.1073/
pnas.33.2.25.
\291\ Kwak, S.K., & Kim, J.H. (2017, July 27). ``Statistical
data preparation: management of missing values and outliers.''
Korean journal of anesthesiology 70.4: 407.
\292\ Ibid.
\293\ Centers for Medicare & Medicaid Services. (2017,
December). Overall Hospital Quality Star Rating on Hospital Compare
Methodology Report (v3.0). Retrieved from www.qualitynet.org:
https://qualitynet.org/inpatient/public-reporting/overall-ratings/resources#tab1.
---------------------------------------------------------------------------
(2) Proposal To Continue K-Means Clustering
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose to continue use k-means
clustering with
[[Page 49026]]
complete convergence without Winsorization of hospital summary scores,
to group hospitals into five clusters to assign star ratings so that
one star is the lowest and five stars is the highest. We also propose
to codify this policy at Sec. 412.190. We believe use of k-means
clustering is most appropriate because it aligns with the clustering
algorithm used for the HCAHPS Star Rating \294\ and maximizes the
within star rating category similarities and between star rating
category differences. We seek public comment on our proposal to
continue to use k-means clustering to complete convergence to assign
hospitals to star ratings, where one star is the lowest and five stars
is the highest, and to codify this policy at Sec. 412.190
---------------------------------------------------------------------------
\294\ Centers for Medicare and Medicaid Services (2019, April).
Technical Notes for HCAHPS Star Ratings. Retrieved from
www.hcahpsonline.org: https://www.hcahpsonline.org/globalassets/hcahps/star-ratings/tech-notes/april_2019_star-ratings_tech-notes.pdf.
---------------------------------------------------------------------------
F. Preview Period
1. Background
In the past, similar to the process in place for multiple CMS
quality programs prior to public reporting of measure scores, hospitals
providing acute inpatient and outpatient care that are included in the
Overall Star Rating had the opportunity to confidentially review their
star rating as well as the measures and measure group scores that
contribute to their star rating during the confidential preview period
a few months prior to the public release of the Overall Star Rating. We
provided hospitals with a confidential report and at least 30 days to
preview their results prior to releasing the Overall Star Rating.
During the confidential preview period, hospitals received a
confidential hospital-specific report (HSR), which detailed their
measure performance and measure group scores with comparisons to the
national average, as well as their summary score and star rating. The
HSRs also provided information about how the measures' scores
contribute to measure group scores, how measure group scores are
weighted to calculate summary scores, and the range of summary scores
for each star rating category. The Overall Star Rating preview period
allowed hospitals to review, understand, and ask CMS questions about
how the star rating was calculated.
2. Proposed Preview Period
In this proposed rule, for Overall Star Rating beginning with the
CY 2021 and subsequent years, we propose to continue our current
process regarding the preview period. Specifically, a few months prior
to public release of the Overall Star Rating, we would issue a
confidential HSR, which would detail measure and measure group scores
as well as their summary score and star rating. The HSRs would also
provide information about how the measures' scores contribute to
measure group scores, how measure group scores are weighted to
calculate summary scores, and the range of summary scores for each star
rating category. During this preview period, hospitals would have at
least 30 days to preview their results, and if necessary, reach out to
CMS via the QualityNet Question and Answer tool, or additional contact
information provided within preview period resources with questions
about the methodology and their star ratings results. We also propose
to codify this policy at Sec. 412.190. This proposal as well as the
proposal to report Overall Star Rating annually using data publicly
reported on Hospital Compare or its successor website from a quarter
within the prior year would allow hospitals more time to review and
understand the methodology and their results, as well as reach out with
questions.
We invite public comment on our proposals to: (1) Establish a 30-
day confidential preview period, and (2) codify the confidential
preview period at Sec. 412.190.
G. Overall Star Rating Suppressions
In this proposed rule, for the Overall Star Rating beginning in CY
2021 and subsequent years, we propose separate suppression policies for
subsection (d) hospitals and CAHs given that subsection (d) hospitals
are subject to CMS quality programs and CAHs voluntarily submit measure
data.
1. Subsection (d) Hospitals
a. Background
In the past, we would have only suppressed Overall Star Rating for
subsection (d) hospitals when there were errors within the Overall Star
Ratings calculation or the calculation for individual measures, which
would first need to be addressed through CMS programs prior to
recalculating Star Ratings. Furthermore, there is currently no specific
corrections process for the Overall Star Rating.
b. Proposed Suppression
In this proposed rule, we propose to continue to allow for
suppression, but only in limited circumstances. Specifically, for the
Overall Star Rating beginning with the CY 2021 and subsequent years, we
propose to consider suppressing Overall Star Rating only under
extenuating circumstances that affect numerous hospitals (as in, not an
individualized or localized issue) as determined by CMS or when CMS is
at fault, including but not limited to when:
There is an Overall Star Rating calculation error by CMS;
There is a systemic error at the CMS quality program level
that substantively affects the Overall Star Rating calculation. For
example, there is a CMS quality program level error for one or more
measures included within the Overall Star Rating due to incorrect data
processing or measure calcualtions that affects a substantial number of
hospitals reporting those measures. We note that we would strive to
first correct systemic errors at the program level per program policies
and then recalculate the Overall Star Rating, if possible; or
A Public Health Emergency substantially affects the
underlying measure data.
We also propose to codify this policy at Sec. 412.190.
As mentioned above, consistent with past practices, we propose that
we would not suppress an individual hospital's Overall Star Rating
because the hospital or one of its agents (for example, authorized
vendors, representatives, or contractors) submitted inaccurate data to
CMS, including inaccurate underlying measure data and claims records.
We note that the Overall Star Rating is calculated using individual
measures publicly reported on Hospital Compare or its successor site
via CMS quality programs. Hospitals can utilize established processes
under each program in order to review and correct individual measure
scores. As policies are specific to each program, we refer readers to
the respective hospital program's policies. We also refer readers to
the QualityNet website: https://qualitynet.org/ for additional program-
related information. We invite public comment on our proposals as
discussed above.
(1) CAHs
(a) Background
As discussed in section B. Critical Access Hospitals in the Overall
Star Rating of this proposed rule, CAHs voluntarily submit measure data
consistent with certain CMS programs. These measure results are then
publicly reported on Hospital Compare or its successor websites. In the
past, since the Overall Star Rating summarizes available measure
information on Hospital Compare or its successor
[[Page 49027]]
website, CAHs with publicly reported measures results on Hospital
Compare that also met the reporting thresholds to receive a star rating
were assigned a star rating.
CAHs that did not want their voluntarily submitted measure data
publicly reported on Hospital Compare could submit a form (``Request
Form for Withholding/Footnoting Data for Public Reporting'' available
on QualityNet) per the forms' instructions during the CMS quality
program-level 30-day confidential preview period for the Hospital
Compare refresh used to calculate the Overall Star Ratings. We note
that this preview period is distinct from the Overall Star Rating
preview period. If the measure data itself was withheld on Hospital
Compare, it subsequently could not be included in the Overall Star
Rating. Generally, upon public release of the Overall Star Rating, we
also provide a public input file containing aggregate hospital measure
scores, measure group scores, and summary scores along with the Overall
Star Rating SAS pack for transparency and to allow stakeholders the
opportunity to replicate the calculation of star ratings. If a CAH
withheld its data from Hospital Compare at this stage, that data was
excluded from both the Overall Star Rating calculation and the public
input file.
Furthermore, because CAHs voluntarily reported measures, CAHs that
would otherwise receive an Overall Star Rating could request to
withhold their star rating during the Overall Star Rating preview
period. However, at this stage, individual measure scores were still
included in the public input file due to time and process constraints.
(b) Proposed Withholding
In this proposed rule, for Overall Star Rating beginning in CY 2021
and subsequent years, we propose to (1) continue to allow CAHs to
withhold their Overall Star Rating; and (2) to codify this at Sec.
412.190. These proposals, discussed in more detail below, align with
the guiding principles of transparency and inclusivity of hospitals, as
outlined within section A. Background, while allowing CAHs to
voluntarily withhold their Overall Star Rating.
i. Withholding Star Ratings
Beginning with CY 2021 and for subsequent years, we propose that
CAHs may request to withhold their Overall Star Rating from public
release on Hospital Compare or its successor website so long as the
request for withholding is made, at the latest, during the Overall Star
Rating preview period as proposed in section F.2. Proposed Preview
Period of this proposed rule. We also propose to codify this policy at
Sec. 412.190. CAHs may make this request by submitting the ``Request
Form for Withholding/Footnoting Data for Public Reporting'' form \295\
available on QualityNet by midnight of the last day of the Overall Star
Rating preview period. This is the same form used for withholding data
from CMS programs. If CAHs request withholding of any of the measures
included within the Overall Star Rating from public reporting on
Hospital Compare or its successor website through completion of this
form, all of their measures scores will be withheld from the Overall
Star Rating calculation. However, individual measure scores would still
be included in the public input file. By the time the Overall Star
Rating preview period begins, there would not be sufficient time for
CMS to remove a CAH's data from the public input file and then
recalculate the Overall Star Rating for all affected hospitals. As an
example, for a January 2021 Overall Star Rating publication based on
data publicly reported on Hospital Compare or its successor website
using October 2020 data, CAHs would need to submit their withholding
request during the Overall Star Rating preview period, which would
occur a few months prior to the January 2021 publication, in order to
withhold their Overall Star Rating (but their data would still remain
in the Public Input File).
---------------------------------------------------------------------------
\295\ The ``Request Form for Withholding/Footnoting Data for
Public Reporting'' form is in the process of being updated for use
in CY21.
---------------------------------------------------------------------------
ii. Withholding Star Ratings and Public Input File Data
In addition, we propose that CAHs may request to have their Overall
Star Rating withheld from public release on Hospital Compare or its
successor website, as well as their data from the public input file,
which is posted upon the public release of the Overall Star Rating and
used by stakeholders to replicate the calculation of star ratings, so
long as the request is made during the CMS quality program-level 30-day
confidential preview period for the Hospital Compare refresh used to
calculate the Overall Star Ratings. We also propose to codify this
policy at Sec. 412.190. As an example, we refer readers to our
discussion in the Hospital IQR Program in the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51608) for more information about this preview period
in one of CMS' quality programs. CAHs may request that CMS withhold
their measure and star rating results from public posting on Hospital
Compare or its successor website and the Overall Star Rating public
input file by submitting a form (``Request Form for Withholding/
Footnoting Data for Public Reporting'' \296\ available on QualityNet)
per the forms' instructions. This is the same form used for withholding
from CMS programs. If CAHs request withholding of any of the measures
included within the Overall Star Rating from public reporting on
Hospital Compare or its successor website through completion of this
form during this stated timeframe, all of their measures scores would
be withheld from the Overall Star Rating calculation and public input
file.
---------------------------------------------------------------------------
\296\ The ``Request Form for Withholding/Footnoting Data for
Public Reporting'' form is in the process of being updated for use
in CY21.
---------------------------------------------------------------------------
As an example, for a January 2021 Overall Star Rating publication
based on data publicly reported on Hospital Compare or its successor
website using October 2020 data, CAHs would need to submit their
withholding request during the CMS quality program-level 30-day
confidential preview period, which would generally occur a few months
prior to the October 2020 Hospital Compare refresh in order to withhold
both their Overall Star Rating and data from the public input file.
We invite public comment on our proposals.
XVII. Addition of New Service Categories for Hospital Outpatient
Department (OPD) Prior Authorization Process
A. Background
In the CY 2020 OPPS/ASC final rule with comment period, we
established a prior authorization process for certain hospital OPD
services using our authority under section 1833(t)(2)(F) of the Social
Security Act (the Act), which allows the Secretary to develop ``a
method for controlling unnecessary increases in the volume of covered
OPD services'' (84 FR 61142, November 12, 2019).\297\ The regulations
governing the prior authorization process are located in subpart I of
42 CFR part 419, specifically at Sec. Sec. 419.80 through 419.89.
---------------------------------------------------------------------------
\297\ See also Correction Notice issued January 3, 2020 (85 FR
224).
---------------------------------------------------------------------------
In addition to codifying the basis and scope of subpart I, Prior
Authorization for Outpatient Department Services, the regulations
include definitions associated with the prior authorization process,
provide that prior authorization must be obtained as a condition of
payment for the listed service categories, and include the process by
[[Page 49028]]
which hospitals must obtain prior authorization. Paragraph (a)(1) of
Sec. 419.83 lists the specific service categories for which prior
authorization must be obtained, which are: (i) Blepharoplasty, (ii)
Botulinum toxin injections, (iii) Panniculectomy, (iv) Rhinoplasty, and
(v) Vein ablation. Paragraph (b) states that CMS will update this list
through formal notice-and-comment rulemaking, paragraph (c) describes
the circumstances under which CMS may elect to exempt a provider from
the prior authorization process, and paragraph (d) states that CMS may
suspend the prior authorization process requirements generally or for a
particular service at any time by issuing a notification on the CMS
website.
B. Controlling Unnecessary Increases in the Volume of Covered OPD
Services
1. Proposed Addition of Two New Service Categories
In accordance with Sec. 419.83(b), we propose to require prior
authorization for two new service categories: Cervical Fusion with Disc
Removal and Implanted Spinal Neurostimulators. We also propose to add
those service categories to Sec. 419.83(a). We propose that the prior
authorization process for these two additional service categories will
be effective for dates of services on or after July 1, 2021. As
explained more fully below, the proposed addition of these service
categories is consistent with our authority under section 1833(t)(2)(F)
and is based upon our determination that there has been an unnecessary
increase in the volume of these services. Based on the different
implementation dates for the original five service categories and the
two proposed service categories, we propose to add a reference to the
July 1, 2020 implementation date to the end of paragraph (a)(1) to
reflect the implementation date for the original five service
categories. Specifically, we propose that paragraph (a)(1) would read,
``[t]he following service categories comprise the list of hospital
outpatient department services requiring prior authorization beginning
for service dates on or after July 1, 2020.'' We also propose to add a
new paragraph (a)(2), which would read: ``[t]he following service
categories comprise the list of hospital outpatient department services
requiring prior authorization beginning for service dates on or after
July 1, 2021.'' We propose that the two proposed service categories
would be added as new subparagraphs to new paragraph (a)(2) as follows:
(i) Cervical Fusion with Disc Removal and (ii) Implanted Spinal
Neurostimulators. We also propose that existing paragraph (a)(2) would
be renumbered as paragraph (a)(3).
We propose that the list of covered OPD services that would require
prior authorization are those identified by the CPT codes in Table 53.
For ease of review, we are only including in Table 53 the CPT codes
that fall into the two proposed service categories in proposed new
Sec. 419.83(a)(2)(i) and (ii). Note that this is the same approach we
took in establishing the initial five service categories in Sec.
419.83(a)(1). For ease of reference, we have included the Final List of
Outpatient Services that Require Prior Authorization for the five
initial service categories in Table 54.\298\ Again, the prior
authorization process for the two proposed additional service
categories would be effective for dates of service on or after July 1,
2021.
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\298\ The table appears on pages 61456 and 61457 of the Final
Rule but contains certain technical errors. The table printed here
is consistent with our January 3, 2020 correction notice. See 85 FR
at 225.
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2. Basis for Proposing To Add Two New Service Categories
As part of our responsibility to protect the Medicare Trust Funds,
we are continuing our routine analysis of data associated with all
facets of the Medicare program. This responsibility includes monitoring
the total amount or types of claims submitted by providers and
suppliers; analyzing the claims data to assess the growth in the number
of claims submitted over time (for example, monthly and annually, among
other intervals); and conducting comparisons of the data with other
relevant data, such as the total number of Medicare beneficiaries
served by providers, to help ensure the continued appropriateness of
payment for services furnished in the hospital OPD setting.
As we noted in the CY 2020 OPPS/ASC proposed rule,\299\ we
recognize the need to establish baseline measures for comparison
purposes, including, but not limited to, the yearly rate-of-increase in
the number of OPD claims submitted and the average annual rate-of-
increase in the Medicare allowed amounts. For this proposed rule, we
updated the analyses undertaken for the CY 2020 OPPS/ASC proposed
rule.\300\ In proposing the addition of these two service categories,
we reviewed over 1.2 billion claims related to OPD services during the
12-year period from 2007 through 2018.\301\ We determined that the
overall rate of OPD claims submitted for payment to the Medicare
program increased each year by an average rate of 2.8 percent. This
equated to an increase from approximately 90 million OPD claims
submitted for payment in 2007 to approximately 117 million claims
submitted for payment in 2018. The 2.8 percent rate reflects a slight
decrease when compared to the 3.2 percent rate identified in the CY
2020 OPPS proposed rule. Our analysis also showed an average annual
rate-of-increase in the Medicare allowed amount (the amount that
Medicare would pay for services regardless of external variables, such
as beneficiary plan differences, deductibles, and appeals) of 7.8
percent. Again, this is a slight decrease when compared to the 8.2
percent rate identified in the CY 2020 OPPS/ASC proposed rule. We found
that the total Medicare allowed amount for the OPD services claims
processed in 2007 was approximately $31 billion and increased to $68
billion in 2018, while during this same 12-year period, the average
annual increase in the number of Medicare beneficiaries per year was
only 0.9 percent.
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\299\ See Hospital Outpatient Prospective System/Ambulatory
Surgical Center Payment System Proposed Rule, 84 FR 39398 at 39603
(August 9, 2019).
\300\ 84 FR 39604.
\301\ The data reviewed are maintained in the CMS Integrated
Data Repository (IDR). The IDR is a high volume data warehouse
integrating Medicare Parts A, B, C, and D, and DME claims,
beneficiary and provider data sources, along with ancillary data
such as contract information and risk scores. Additional information
is available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/IDR/index.html.
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Below we describe what we believe are the unnecessary increases in
volume for each of the categories of services for which we propose to
require prior authorization.
Implanted Spinal Neurostimulators: Our analysis of IDR
data showed that, with regard to Implanted Spinal Neurostimulators,
claims volume for insertion or replacement of spinal neurostimulator
pulse generator or receiver, 63685, increased by 174.6 percent between
2007 and 2018, reflecting a 10.2 percent average annual increase, a
significantly greater annual increase than the 2.8 percent average
annual increase for all OPD services. From 2016 through 2018, the
average annual increase in volume was 17 percent. For 63688, revision
or removal of implanted spinal neurostimulator pulse generator or
receiver, we observed an increase of 149.7 percent between 2007 and
2018, reflecting a 8.8 percent average annual increase, and for 63650,
implantation of spinal neurostimulator electrodes, accessed through the
skin, we observed an increase in volume of 77.9 percent between 2007
and 2018,
[[Page 49029]]
which was an average annual increase of 6.5 percent, these average
annual increases for both codes are higher than the 2.8 percent average
annual increase for all OPD services over the same period. When
analyzing these data, we fully accounted for changes that occurred in
2014 related to electrodes being incorporated into the 63650 code,
which did not show a corresponding claims volume change that would
explain the large increases noted over time when compared to the rates
of change for all OPD services.
Cervical Fusion with Disc Removal: When reviewing CMS data
available through the Integrated Data Repository (IDR), we determined
that claims volume for the initial level of spinal fusion of the
cervical spine with removal of the corresponding intervertebral disc,
CPT[supreg] \302\ code 22551, had increased by 1,538.9 percent between
2012 and 2018, reflecting a 124.9 percent average annual increase, a
substantially greater increase than the 2.8 percent average annual
increase for all OPD services over the same period and the 2.1 percent
average annual increase for all OPD services from 2007 through 2018. In
fact, the increase between 2016 and 2018 for this code was 736 percent.
The add-on code, 22552 (for additional levels), reflected claims volume
increases of 3,779.6 percent between 2012 and 2018, reflecting a 174.9
percent average annual increase, again, far eclipsing the 2.8 percent
average annual increase for all OPD services. Between 2016 and 2018
alone, the claims volume for this code increased 1,020 percent. These
codes were first used in 2011 to better reflect the combination of the
cervical fusion and the disc removal procedures. Accordingly, we use
data from 2012 forward to allow for the start-up statistics to
normalize. Nonetheless, the dramatic increases in volume that we have
identified persisted well after the initial use of these codes.
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\302\ The Current Procedural Technology (CPT) coding system is a
registered trademark of the American Medical Association.
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A rate of increase higher than the expected rate is not always
improper; however, when we considered the data, we believe the
increases in the utilization rate for this service are unnecessary. CPT
22551 began being used in 2011. The use of the code almost tripled in
2012 and significantly increased each year thereafter. The increases
became even more dramatic beginning in 2016, when the ambulatory
payment classification (APC) for CPT 22551 was changed to a higher
level. Effective January 1, 2016, the CY 2016 OPPS/ASC final rule \303\
moved the APC for CPT 22551 from APC 0208 (Laminectomies and
Laminotomies) to APC 0425 (Level II Arthroplasty or Implantation with
Prosthesis). APC 0425 has a higher payment than APC 0280, the group to
which they were originally assigned. APC 0208 had a geometric mean cost
of $4,267, but APC 0425 had a geometric mean cost of $10,606. This
represents a 149 percent increase in allowed amount as a result of the
move to APC 0425, which may have contributed to the unnecessary
increase in volume. Again, this represents a 736 percent increase in
claims volume between 2016 and 2018 when all outpatient department
services demonstrated an 0.4 percent increase overall for the same time
period. We believe that the change in the payment rate likely prompted
the unnecessary volume increases and may have created a financial
motivation to utilize these codes more than may be considered medically
necessary. We believe prior authorization is an appropriate control
method for the unnecessary increase in volume for this service.
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\303\ 79 FR 66769 and 80 FR 70297.
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Our conclusion that the increases in volume for both Cervical
Fusion with Disc Removal and Implanted Spinal Neurostimulators are
unnecessary is based not only on the data specific to each service
category, but also on a comparison of the rate of increase for the
service categories to the overall trends for all OPD services. We
believe that comparing the utilization rate to the baseline growth rate
is an appropriate method for identifying unnecessary increases in
volume, particularly where there are no legitimate clinical or coding
reasons for the changes. For both services categories, we researched
possible causes for the increases in volume that would indicate the
services are increasingly necessary, but we did not find any
explanations that would cause us to believe the increases were
necessary. Moreover, other than the recent changes in the CPT code and
APC assignments described above, CMS has not taken any action that
would explain the significant increases identified. We also conducted
reviews of clinical and industry-related literature and found no
indication of changes that would justify the increases observed. After
reviewing all available data, we found no evidence suggesting other
plausible reasons for the increases, which we believe means financial
motivation is the most likely cause. We believe utilizing codes because
of financial motivations, as opposed to medical necessity reasons, has
resulted in an unnecessary increase in volume. Therefore, comparing the
utilization rate to the baseline growth rate is an appropriate method
for identifying unnecessary increases in volume, and prior
authorization is an appropriate method to control these volume
increases.
We continue to believe prior authorization is an effective
mechanism to ensure Medicare beneficiaries receive medically necessary
care while protecting the Medicare Trust Funds from unnecessary
increases in volume by virtue of improper payments, without adding
onerous new documentation requirements. A broad program integrity
strategy must use a variety of tools to best account for potential
fraud, waste and abuse, including unnecessary increases in volume. We
believe prior authorization for these services will be an effective
method for controlling unnecessary increases in the volume of these
services and expect that it will reduce the instances in which Medicare
pays for services that are determined not to be medically necessary. We
request comments on the addition of these two service categories.
BILLING CODE 4120-01-P
[[Page 49030]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.113
[[Page 49031]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.114
[[Page 49032]]
[GRAPHIC] [TIFF OMITTED] TP12AU20.115
BILLING CODE 4120-01-C
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\304\ Code 21235, ``Obtaining ear cartilage for grafting'' was
removed on June 10, 2020 in accordance with Sec. 419.83(d). See CMS
http://go.cms.gov/OPD_PA.
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XVIII. Clinical Laboratory Fee Schedule: Proposed Revisions to the
Laboratory Date of Service Policy
A. Background on the Medicare Part B Laboratory Date of Service Policy
The date of service (DOS) is a required data field on all Medicare
claims for laboratory services. However, a laboratory service may take
place over a period of time--the date the laboratory test is ordered,
the date the specimen is collected from the patient, the date the
laboratory accesses the specimen, the date the laboratory performs the
test, and the date results are produced may occur on different dates.
In the final rule on coverage and administrative policies for clinical
diagnostic laboratory services published in the Federal Register on
November 23, 2001 (66 FR 58791 through 58792), we adopted a policy
under which the DOS for clinical diagnostic laboratory services
generally is the date the specimen is collected. In that final rule, we
also established a policy that the DOS for laboratory tests that use an
archived specimen is the date the specimen was obtained from storage
(66 FR 58792).
In 2002, we issued Program Memorandum AB-02-134, which permitted
contractors discretion in making determinations regarding the length of
time a specimen must be stored to be considered ``archived.'' In
response to comments requesting that we issue a national standard to
clarify when a stored specimen can be considered ``archived,'' in the
Procedures for Maintaining Code Lists in the Negotiated National
Coverage Determinations for Clinical Diagnostic Laboratory Services
final notice, published in the Federal Register on February 25, 2005
(70 FR 9357), we defined an ``archived'' specimen as a specimen that is
stored for more than 30 calendar days before testing. Specimens stored
for 30 days or less continued to have a DOS of the date the specimen
was collected.
[[Page 49033]]
B. Medicare DOS Policy and the ``14-Day Rule''
In the final rule with comment period entitled, in relevant part,
``Revisions to Payment Policies, Five-Year Review of Work Relative
Value Units, Changes to the Practice Expense Methodology Under the
Physician Fee Schedule, and Other Changes to Payment Under Part B''
published in the Federal Register on December 1, 2006 (December 1, 2006
MPFS final rule) (71 FR 69705 through 69706), we added a new Sec.
414.510 in title 42 of the CFR regarding the clinical laboratory DOS
requirements and revised our DOS policy for stored specimens. We
explained in that MPFS final rule that the DOS of a test may affect
payment for the test, especially in situations in which a specimen that
is collected while the patient is being treated in a hospital setting
(for example, during a surgical procedure) is later used for testing
after the patient has been discharged from the hospital. We noted that
payment for the test is usually bundled with payment for the hospital
service, even when the results of the test did not guide treatment
during the hospital stay. To address concerns raised for tests related
to cancer recurrence and therapeutic interventions, we finalized
modifications to the DOS policy in Sec. 414.510(b)(2)(i) for a test
performed on a specimen stored less than or equal to 30 calendar days
from the date it was collected (a non-archived specimen), so that the
DOS is the date the test was performed (instead of the date of
collection) if the following conditions are met:
The test is ordered by the patient's physician at least 14
days following the date of the patient's discharge from the hospital;
The specimen was collected while the patient was
undergoing a hospital surgical procedure;
It would be medically inappropriate to have collected the
sample other than during the hospital procedure for which the patient
was admitted;
The results of the test do not guide treatment provided
during the hospital stay; and
The test was reasonable and medically necessary for the
treatment of an illness.
As we stated in the December 1, 2006 MPFS final rule, we
established these five criteria, which we refer to as the ``14-day
rule,'' to distinguish laboratory tests performed as part of
posthospital care from the care a beneficiary receives in the hospital.
When the 14-day rule applies, laboratory tests are not bundled into the
hospital stay, but are instead paid separately under Medicare Part B
(as explained in more detail below).
We also revised the DOS requirements for a chemotherapy sensitivity
test performed on live tissue. As discussed in the December 1, 2006
MPFS final rule (71 FR 69706), we agreed with commenters that these
tests, which are primarily used to determine posthospital chemotherapy
care for patients who also require hospital treatment for tumor removal
or resection, appear to be unrelated to the hospital treatment in cases
where it would be medically inappropriate to collect a test specimen
other than at the time of surgery, especially when the specific drugs
to be tested are ordered at least 14 days following hospital discharge.
As a result, we revised the DOS policy for chemotherapy sensitivity
tests, based on our understanding that the results of these tests, even
if they were available immediately, would not typically affect the
treatment regimen at the hospital. Specifically, we modified the DOS
for chemotherapy sensitivity tests performed on live tissue in Sec.
414.510(b)(3) so that the DOS is the date the test was performed if the
following conditions are met:
The decision regarding the specific chemotherapeutic
agents to test is made at least 14 days after discharge;
The specimen was collected while the patient was
undergoing a hospital surgical procedure;
It would be medically inappropriate to have collected the
sample other than during the hospital procedure for which the patient
was admitted;
The results of the test do not guide treatment provided
during the hospital stay; and
The test was reasonable and medically necessary for the
treatment of an illness.
We explained in the December 1, 2006 MPFS final rule that, for
chemotherapy sensitivity tests that meet this DOS policy, Medicare
would allow separate payment under Medicare Part B; that is, separate
from the payment for hospital services.
C. Billing and Payment for Laboratory Services Under the OPPS
As noted previously, the DOS requirements at 42 CFR 414.510 are
used to determine whether a hospital bills Medicare for a clinical
diagnostic laboratory test (CDLT) or whether the laboratory performing
the test bills Medicare directly. Separate regulations at 42 CFR
410.42(a) and 411.15(m) generally provide that Medicare will not pay
for a service furnished to a hospital patient during an encounter by an
entity other than the hospital unless the hospital has an arrangement
(as defined in 42 CFR 409.3) with that entity to furnish that
particular service to its patients, with certain exceptions and
exclusions. These regulations, which we refer to as the ``under
arrangements'' provisions in this discussion, require that if the DOS
falls during an inpatient or outpatient stay, payment for the
laboratory test is usually bundled with the hospital service.
Under our current rules, if a test meets all DOS requirements in
Sec. 414.510(b)(2)(i), (b)(3), or (b)(5), the DOS is the date the test
was performed. In this situation, the laboratory would bill Medicare
directly for the test and would be paid under the Clinical Laboratory
Fee Schedule (CLFS) directly by Medicare. However, if the test does not
meet the DOS requirements in Sec. 414.510(b)(2)(i), (b)(3), or (b)(5),
the DOS would be the date the specimen was collected from the patient.
In that case, the hospital would bill Medicare for the test and then
would pay the laboratory that performed the test, if the laboratory
provided the test under arrangement.
In previous rulemakings, we have reviewed appropriate payment under
the OPPS for certain diagnostic tests that are not commonly performed
by hospitals. In CY 2014, we finalized a policy to package certain
CDLTs under the OPPS (78 FR 74939 through 74942 and 42 CFR 419.2(b)(17)
and 419.22(l)). In CYs 2016 and 2017, we made some modifications to
this policy (80 FR 70348 through 70350 and 81 FR 79592 through 79594).
Under our current policy, certain CDLTs that are listed on the CLFS are
packaged as integral, ancillary, supportive, dependent, or adjunctive
to the primary service or services provided in the hospital outpatient
setting during the same outpatient encounter and billed on the same
claim. Specifically, we package most CDLTs under the OPPS. However,
when a CDLT is listed on the CLFS and meets one of the following four
criteria, we do not pay for the test under the OPPS, but rather, we pay
for it under the CLFS when it is: (1) The only service provided to a
beneficiary on a claim; (2) considered a preventive service; (3) a
molecular pathology test; or (4) an advanced diagnostic laboratory test
(ADLT) that meets the criteria of section 1834A(d)(5)(A) of the Act (78
FR 74939 through 74942; 80 FR 70348 through 70350; and 81 FR 79592
through 79594). In the CY 2016 OPPS/ASC final rule with comment period
(80 FR 70348 through 70350), we excluded all molecular pathology
laboratory tests from packaging because we believed
[[Page 49034]]
these relatively new tests may have a different pattern of clinical
use, which may make them generally less tied to a primary service in
the hospital outpatient setting than the more common and routine
laboratory tests that are packaged.
For similar reasons, in the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79592 through 79594), we extended the exclusion
to also apply to all ADLTs that meet the criteria of section
1834A(d)(5)(A) of the Act. We stated that we will assign status
indicator ``A'' (Separate payment under the CLFS) to ADLTs once a
laboratory test is designated an ADLT under the CLFS. Laboratory tests
that meet one of the four criteria above and that are listed on the
CLFS are paid under the CLFS, rather than being packaged and paid for
under the OPPS.
D. ADLTs Under the New Private Payor Rate-Based CLFS
Section 1834A of the Act, as established by section 216(a) of
Public Law 113-93, the Protecting Access to Medicare Act of 2014
(PAMA), required significant changes to how Medicare pays for CDLTs
under the CLFS. Section 216(a) of PAMA also established a new
subcategory of CDLTs known as ADLTs, with separate reporting and
payment requirements under section 1834A of the Act. In the CLFS final
rule published in the Federal Register on June 23, 2016, entitled
``Medicare Program; Medicare Clinical Diagnostic Laboratory Tests
Payment System Final Rule'' (81 FR 41036), we implemented the
requirements of section 1834A of the Act.
As defined in Sec. 414.502, an ADLT is a CDLT covered under
Medicare Part B that is offered and furnished only by a single
laboratory, and cannot be sold for use by a laboratory other than the
single laboratory that designed the test or a successor owner. Also, an
ADLT must meet either Criterion (A), which implements section
1834A(d)(5)(A) of the Act, or Criterion (B), which implements section
1834A(d)(5)(B) of the Act, as follows:
Criterion (A): The test is an analysis of multiple
biomarkers of deoxyribonucleic acid (DNA), ribonucleic acid (RNA), or
proteins; when combined with an empirically derived algorithm, yields a
result that predicts the probability a specific individual patient will
develop a certain condition(s) or respond to a particular therapy(ies);
provides new clinical diagnostic information that cannot be obtained
from any other test or combination of tests; and may include other
assays.
Or:
Criterion (B): The test is cleared or approved by the Food
and Drug Administration.
Generally, under the revised CLFS, ADLTs are paid using the same
methodology based on the weighted median of private payor rates as
other CDLTs. However, updates to ADLT payment rates occur annually
instead of every 3 years. The payment methodology for ADLTs is detailed
in the June 23, 2016 CLFS final rule (81 FR 41076 through 41083). For
additional information regarding ADLTs, we refer readers to the CMS
website: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/PAMA-regulations.html.
E. Additional Laboratory DOS Policy Exception for the Hospital
Outpatient Setting
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59393
through 59400), we established an additional exception at Sec.
414.510(b)(5) so that the DOS for molecular pathology tests and certain
ADLTs that are excluded from the OPPS packaging policy is the date the
test was performed (instead of the date of specimen collection) if
certain conditions are met. Under the exception that we finalized at
Sec. 414.510(b)(5), in the case of a molecular pathology test or a
test designated by CMS as an ADLT under paragraph (1) of the definition
of an ADLT in Sec. 414.502, the DOS of the test must be the date the
test was performed only if:
The test was performed following a hospital outpatient's
discharge from the hospital outpatient department;
The specimen was collected from a hospital outpatient
during an encounter (as both are defined in 42 CFR 410.2);
It was medically appropriate to have collected the sample
from the hospital outpatient during the hospital outpatient encounter;
The results of the test do not guide treatment provided
during the hospital outpatient encounter; and
The test was reasonable and medically necessary for the
treatment of an illness.
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
59397), we explained that we believed the laboratory DOS policy in
effect prior to CY 2018 created administrative complexities for
hospitals and laboratories with regard to molecular pathology tests and
laboratory tests expected to be designated by CMS as ADLTs that meet
the criteria of section 1834A(d)(5)(A) of the Act. We noted that under
the laboratory DOS policy in effect prior to CY 2018, if the tests were
ordered less than 14 days following a hospital outpatient's discharge
from the hospital outpatient department, laboratories generally could
not bill Medicare directly for the molecular pathology test or ADLT. In
those circumstances, the hospital had to bill Medicare for the test,
and the laboratory had to seek payment from the hospital. We noted that
commenters informed us that because ADLTs are performed by only a
single laboratory and molecular pathology tests are often performed by
only a few laboratories, and because hospitals may not have the
technical ability to perform these complex tests, the hospital may be
reluctant to bill Medicare for a test it would not typically (or never)
perform. The commenters also stated that as a result, the hospital
might delay ordering the test until at least 14 days after the patient
is discharged from the hospital outpatient department, or even cancel
the order to avoid the DOS policy, which may restrict a patient's
timely access to these tests. In addition, we noted that we had heard
from commenters that the laboratory DOS policy in effect prior to CY
2018 may have disproportionately limited access for Medicare
beneficiaries under Medicare Parts A and B, because Medicare Advantage
plans under Medicare Part C and other private payors allow laboratories
to bill directly for tests they perform.
We also recognized that greater consistency between the laboratory
DOS rules and the current OPPS packaging policy would be beneficial and
would address some of the administrative and billing issues created by
the DOS policy in effect prior to CY 2018. We noted that we exclude all
molecular pathology tests and ADLTs under section 1834A(d)(5)(A) of the
Act from the OPPS packaging policy because we believe these tests may
have a different pattern of clinical use, which may make them generally
less tied to a primary service in the hospital outpatient setting than
the more common and routine laboratory tests that are packaged, and we
had already established exceptions to the DOS policy that permit the
DOS to be the date of performance for certain tests that we believe are
not related to the hospital treatment and are used to determine
posthospital care. We stated that we believed a similar exception is
justified for the molecular pathology tests and ADLTs excluded from the
OPPS packaging policy, which we understood are used to guide and manage
the patient's care after the patient is discharged from the hospital
[[Page 49035]]
outpatient department. We noted that we believed that, like the other
tests currently subject to DOS exceptions, these tests can legitimately
be distinguished from the care the patient receives in the hospital,
and thus we would not be unbundling services that are appropriately
associated with hospital treatment. Moreover, we reiterated that these
tests are already paid separately outside of the OPPS at CLFS payment
rates. Therefore, we agreed with the commenters that the laboratory
performing the test should be permitted to bill Medicare directly for
these tests, instead of relying on the hospital to bill Medicare on
behalf of the laboratory under arrangements.
Following publication of the CY 2018 OPPS/ASC final rule with
comment period, we issued Change Request (CR) 10419, Transmittal 4000,
the claims processing instruction implementing the laboratory DOS
exception at Sec. 414.510(b)(5), with an effective date of January 1,
2018 and an implementation date of July 2, 2018. After issuing CR
10419, we heard from stakeholders that many hospitals and laboratories
were having administrative difficulties implementing the DOS exception
set forth at Sec. 414.510(b)(5). On July 3, 2018, we announced that,
for a 6-month period, we would exercise enforcement discretion with
respect to the laboratory DOS exception at Sec. 414.510(b)(5). We
explained that stakeholder feedback suggested many providers and
suppliers would not be able to implement the laboratory DOS exception
by the July 2, 2018 implementation date established by CR 10419, and
that such entities required additional time to develop the systems
changes necessary to enable the performing laboratory to bill for tests
subject to the exception. We noted that this enforcement discretion
would apply to all providers and suppliers with regard to ADLTs and
molecular pathology tests subject to the laboratory DOS exception
policy, and that during the enforcement discretion period, hospitals
may continue to bill for these tests that would otherwise be subject to
the laboratory DOS exception.
We then extended the enforcement discretion period for two
additional, consecutive 6-month periods, after learning that there were
still many entities needing additional time to come into compliance.
The final enforcement discretion announcement as well as CR 10419,
Transmittal 4000 is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/Clinical-Lab-DOS-Policy.html. The enforcement
discretion period ended on January 2, 2020.
During the period of enforcement discretion, we continued to gage
the industry's readiness to implement the laboratory DOS exception at
Sec. 414.510(b)(5). In particular, we heard from stakeholders that
some entities performing molecular pathology testing subject to the
laboratory DOS exception, such as blood banks and blood centers, may
not be enrolled in the Medicare program and may not have established a
mechanism to bill Medicare directly. In the CY 2020 OPPS/ASC proposed
rule (84 FR 39603), we sought comments on excluding blood banks and
blood centers from the laboratory DOS exception at Sec. 414.510(b)(5).
Based on concerns raised by stakeholders, we stated that we believe
blood banks and centers perform molecular pathology testing for
patients to enable hospitals to prevent adverse conditions associated
with blood transfusions, rather than perform molecular pathology
testing for diagnostic purposes. Given the different purpose of
molecular pathology testing performed by the blood banks and centers,
that is, blood compatibility testing, we questioned whether the
molecular pathology testing performed by blood banks and centers is
appropriately separable from the hospital stay, given that it typically
informs the same patient's treatment during a future hospital stay. We
stated that we were concerned that our current policy may unbundle
molecular testing performed by a blood bank or center for a hospital
patient.
For these reasons, and based on the support received from
commenters, in the CY 2020 OPPS/ASC final rule (84 FR 61444), we
finalized a revision to the laboratory DOS policy to exclude molecular
pathology tests when performed by laboratories that are blood banks or
centers from the laboratory DOS exception at 42 CFR 414.510(b)(5). We
also finalized a definition for ``blood bank or center'' at Sec.
414.502 as an entity whose primary function is the performance or
responsibility for the performance of, the collection, processing,
testing, storage and/or distribution of blood or blood components
intended for transfusion and transplantation.
A list of the specific laboratory tests currently subject to the
laboratory DOS exception at Sec. 414.510(b)(5) is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/Clinical-Lab-DOS-Policy.html.
F. Proposed Revision to the Laboratory DOS Policy for Cancer-Related
Protein-Based MAAAs
In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61438
through 61439), we explained that protein-based Multianalyte Assays
with Algorithmic Analyses (MAAAs) that are not considered molecular
pathology tests and are not designated as ADLTs under paragraph (1) of
the definition of ADLT in Sec. 414.502, are packaged under the OPPS at
this time. Though they do not currently qualify for the DOS exception
at Sec. 414.510(b)(5) solely because they are MAAAs, we noted that
several stakeholders have suggested that they believe the pattern of
clinical use of some of these protein-based MAAAs make them relatively
unconnected to the primary hospital outpatient service.
In particular, stakeholders have suggested that certain protein-
based MAAAs, specifically, those described by CPT codes 81490, 81503,
81535, 81536, 81538, and 81539, are generally not performed in the HOPD
setting and have similar clinical patterns of use as other tests that
are not paid under the OPPS and are paid separately under the CLFS, and
so should be treated similarly (82 FR 59299). Consequently, the
stakeholders believed that protein-based MAAAs should be excluded from
OPPS packaging and paid separately under the CLFS. Notably, with one
exception (CPT code 81490), each of those tests described by the CPT
codes identified by stakeholders is a cancer-related protein-based
MAAA. We did not establish an exception to the laboratory DOS policy
for protein-based MAAAs in the CY 2020 OPPS/ASC final rule with comment
period, but we did note that a protein-based MAAA that is designated by
CMS as an ADLT under paragraph (1) of the definition of an ADLT in
Sec. 414.502 would be eligible for the DOS exception at Sec.
414.510(b)(5). We indicated in that rule that we intended to consider
policies regarding the application of the DOS policy to MAAAs for
future rulemaking (84 FR 61439).
After further consideration of this issue, we now believe certain
MAAAs, specifically, cancer-related protein-based MAAAs, which
stakeholders identified, as discussed above, have a pattern of clinical
use that make them relatively unconnected to the primary hospital
outpatient service during which the specimen was collected because the
results of these tests are typically used to determine posthospital
care. As we explain below, we believe these tests are distinguishable
from the care the patient receives in the hospital,
[[Page 49036]]
similar to molecular pathology tests and tests designated as ADLTs
under paragraph (1) of the definition of ADLT in Sec. 414.502, which
are currently excluded from the OPPS packaging policy and subject to
the laboratory DOS exception at Sec. 414.510(b)(5). Therefore, we
propose to exclude cancer-related protein-based MAAAs from the OPPS
packaging policy, as discussed in section II.a.3. of this proposed
rule, and create an exception to the laboratory DOS rule for them.
These proposals, if finalized, would mean that Medicare would pay for
cancer-related protein-based MAAAs under the CLFS instead of the OPPS
and the performing laboratory would bill Medicare directly for the test
if the test meets all the laboratory DOS requirements specified in
Sec. 414.510(b)(5).
We understand that, similar to molecular pathology tests and ADLTs
under paragraph (1) of the definition of an ADLT in Sec. 414.502,
cancer-related protein-based MAAAs are typically used to guide and
manage the patient's care after the patient is discharged from the
hospital outpatient department because the test results are used to
determine potential future oncologic surgical and chemotherapeutic
interventions; they would almost never affect the treatment regimen
during the same hospital outpatient service in which the specimen was
collected, even if the results were available immediately. In other
words, decisions as to particular therapies and/or surgical procedures,
as guided by the results of the test, are not made during the same
hospital outpatient encounter during which the specimen was collected.
For these reasons, we propose to add cancer-related protein-based
MAAAs to our current laboratory DOS exception rule at Sec.
414.510(b)(5). Under this proposed revision, the DOS for a cancer-
related protein-based MAAA would be the date the test was performed if:
(1) The test was performed following a hospital outpatient's discharge
from the hospital outpatient department; (2) the specimen was collected
from a hospital outpatient during an encounter (as both are defined in
Sec. 410.2); (3) it was medically appropriate to have collected the
sample from the hospital outpatient during the hospital outpatient
encounter; (4) the results of the test do not guide treatment provided
during the hospital outpatient encounter; and (5) the test was
reasonable and medically necessary for the treatment of an illness.
This proposed revision to our laboratory DOS policy would require
laboratories performing cancer-related protein-based MAAAs, that are
excluded from the OPPS packaging policy and meet the DOS requirements
at Sec. 414.510(b)(5), to bill Medicare directly for those tests
instead of seeking payment from the hospital. Similar to molecular
pathology tests and ADLTs under paragraph (1) of the definition of ADLT
in Sec. 414.502, we believe that cancer-related protein-based MAAAs
are distinguishable from the care the patient receives during the
primary hospital outpatient encounter because, as noted above, the
results of the test would almost never affect the treatment regimen
during the same hospital outpatient encounter in which the specimen was
collected. Therefore, were we to finalize our proposal, we believe we
would not be unbundling laboratory tests that are appropriately
associated with the primary hospital outpatient service.
As discussed in section II.a.3. of this proposed rule, the AMA CPT
2020 manual describes a MAAA, in part, as ``procedures that utilize
multiple results derived from panels of analyses of various types,
including molecular pathology assays, fluorescent in situ hybridization
assays, and non-nucleic acid based assays (for example, proteins,
polypeptides, lipids, carbohydrates).'' Further, the code descriptors
of MAAAs include several specifics, including but not limited to
disease type (for example, oncology, autoimmune, tissue rejection), and
material(s) analyzed (for example, DNA, RNA, protein, antibody). As the
AMA CPT 2020 manual describes a MAAA, and the code descriptor of each
MAAA distinguishes MAAAs that are cancer-related assays from those that
test for other disease types and provides information regarding the
material(s) analyzed, the AMA CPT manual is a useful tool to identify
cancer-related MAAAs that are ``protein-based''. Accordingly, using the
AMA CPT 2020 manual criteria to identify a MAAA that is cancer-related,
and, of those tests, identifying the ones whose analytes test proteins,
we have determined there are currently six cancer-related protein-based
MAAAs: CPT codes 81500, 81503, 81535, 81536, 81538 and 81539. We note
that CPT code 81538 has been designated as an ADLT under section
1834A(d)(5)(A) of the Act as of December 21, 2018, and therefore, is
currently already subject to the laboratory DOS exception in Sec.
414.510(b)(5). Therefore, the cancer-related protein-based MAAAs that
would be excluded from the OPPS packaging policy and subject to an
exception from the laboratory DOS policy under our proposals are CPT
codes 81500, 81503, 81535, 81536 and 81539. These tests have not been
designated by CMS as ADLTs under paragraph (1) of the definition of
ADLT in Sec. 414.502 and so are not currently subject to the
laboratory DOS exception in Sec. 414.510(b)(5). We would apply this
policy to cancer-related protein-based MAAAs that do not currently
exist, but that are developed in the future.
XIX. Physician-Owned Hospitals
A. Background
Section 1877 of the Social Security Act (the Act), also known as
the physician self-referral law: (1) Prohibits a physician from making
referrals for certain designated health services payable by Medicare to
an entity with which he or she (or an immediate family member) has a
financial relationship, unless an exception applies; and (2) prohibits
the entity from filing claims with Medicare (or billing another
individual, entity, or third party payer) for those referred services.
A financial relationship is an ownership or investment interest in the
entity or a compensation arrangement with the entity. The statute
establishes a number of specific exceptions and grants the Secretary of
the Department of Health and Human Services (the Secretary) the
authority to create regulatory exceptions for financial relationships
that do not pose a risk of program or patient abuse. Section 1903(s) of
the Act extends aspects of the physician self-referral prohibitions to
Medicaid. For additional information about section 1903(s) of the Act,
see 66 FR 857 through 858.
Section 1877(d) of the Act sets forth exceptions related to
ownership or investment interests held by a physician (or an immediate
family member of a physician) in an entity that furnishes designated
health services. Section 1877(d)(2) of the Act provides an exception
for ownership or investment interests in rural providers (the ``rural
provider exception''). In order to qualify for the rural provider
exception, the designated health services must be furnished in a rural
area (as defined in section 1886(d)(2) of the Act), substantially all
of the designated health services furnished by the entity must be
furnished to individuals residing in a rural area, and, in the case
where the entity is a hospital, the hospital meets the requirements of
section 1877(i)(1) of the Act no later than September 23, 2011. Section
1877(d)(3) of the Act provides an exception for ownership or investment
interests in a hospital located outside of Puerto Rico (the ``whole
hospital exception''). In order to qualify for the whole hospital
exception, the referring physician must be authorized to perform
services at the
[[Page 49037]]
hospital, the ownership or investment interest must be in the hospital
itself (and not merely in a subdivision of the hospital), and the
hospital meets the requirements of section 1877(i)(1) of the Act no
later than September 23, 2011.
B. Prohibition on Facility Expansion
Section 6001(a)(3) of the Affordable Care Act amended the rural
provider and whole hospital exceptions to provide that a hospital may
not increase the number of operating rooms, procedure rooms, and beds
beyond that for which the hospital was licensed on March 23, 2010 (or,
in the case of a hospital that did not have a provider agreement in
effect as of this date, but did have a provider agreement in effect on
December 31, 2010, the effective date of such provider agreement).
Section 6001(a)(3) of the Affordable Care Act added new section
1877(i)(3)(A)(i) of the Act, which required the Secretary to establish
and implement an exception process to the prohibition on expansion of
facility capacity for hospitals that qualify as an ``applicable
hospital.'' Section 1106 of the Health Care and Education
Reconciliation Act of 2010 (HCERA) amended section 1877(i)(3)(A)(i) of
the Act to require the Secretary to establish and implement an
exception process to the prohibition on expansion of facility capacity
for hospitals that qualify as either an ``applicable hospital'' or a
``high Medicaid facility.'' These terms are defined at sections
1877(i)(3)(E) and 1877(i)(3)(F) of the Act. The requirements for
qualifying as an applicable hospital are set forth at Sec.
411.362(c)(2) and the requirements for qualifying as a high Medicaid
facility are set forth at Sec. 411.362(c)(3). An applicable hospital
means a hospital: (1) That is located in a county in which the
percentage increase in the population during the most recent 5-year
period (as of the date that the hospital submits its request for an
exception to the prohibition on expansion of facility capacity) is at
least 150 percent of the percentage increase in the population growth
of the State in which the hospital is located during that period, as
estimated by the Bureau of the Census; (2) whose annual percent of
total inpatient admissions under Medicaid is equal to or greater than
the average percent with respect to such admissions for all hospitals
in the county in hospital is located during the most recent 12-month
period for which data are available (as of the date that the hospital
submits its request for an exception to the prohibition on expansion of
facility capacity); (3) that does not discriminate against
beneficiaries of Federal health care programs and does not permit
physicians practicing at the hospital to discriminate against such
beneficiaries; (4) that is located in a State in which the average bed
capacity in the State is less than the national average bed capacity;
and (v) that has an average bed occupancy rate that is greater than the
average bed occupancy rate in the State in which the hospital is
located. CMS has identified in regulation at Sec. 411.362(c)(2)(ii),
(iv), and (v) acceptable data sources for determining whether a
hospital qualifies as an applicable hospital. A ``high Medicaid
facility'' means a hospital that: (1) Is not the sole hospital in a
county; (2) with respect to each of the 3 most recent 12-month periods
for which data are available, has an annual percent of total inpatient
admissions under Medicaid that is estimated to be greater than such
percent with respect to such admissions for any other hospital located
in the county in which the hospital is located; and (3) does not
discriminate against beneficiaries of Federal health care programs and
does not permit physicians practicing at the hospital to discriminate
against such beneficiaries. CMS has identified in regulation at Sec.
411.362(c)(3)(ii) acceptable data sources for determining whether a
hospital qualifies as a high Medicaid facility. In the CY 2012 OPPS/ASC
final rule, we issued regulations setting forth the process for a
hospital to request an exception from the prohibition on facility
expansion (the exception process) and related definitions at Sec.
411.362(c) and Sec. 411.362(a), respectively (76 FR 74122).
Section 1877(i)(3)(B) of the Act provides that the exception
process shall permit an applicable hospital to apply for an exception
to the prohibition on expansion of facility capacity up to once every 2
years. In the CY 2012 OPPS/ASC final rule, we extended this provision
to high Medicaid facilities using our authority under sections 1871 and
1877(i)(3)(A)(1) of the Act (76 FR 74525). We stated that, although the
statute provides that an applicable hospital may request an exception
up to once every 2 years, we believe that providing a high Medicaid
facility the opportunity to request an exception once every 2 years
(while also limiting its total growth) balances the Congress' intent to
prohibit expansion of physician-owned hospitals with the purpose of the
exception to the prohibition on expansion of facility capacity (76 FR
74524). We did not receive any public comments regarding the frequency
of exception requests. Under current Sec. 411.362(c)(1), both
applicable hospitals and high Medicaid facilities may request an
exception to the prohibition on expansion of facility capacity up to
once every 2 years from the date of a CMS decision on the hospital's
most recent request.
Section 1877(i)(3)(C)(ii) of the Act provides that the Secretary
shall not permit an increase in the number of operating rooms,
procedure rooms, and beds for which an applicable hospital is licensed
to the extent such increase would result in the number of operating
rooms, procedure rooms, and beds for which the applicable hospital is
licensed exceeding 200 percent of the baseline number of operating
rooms, procedure rooms, and beds of the applicable hospital. In the CY
2012 OPPS/ASC final rule, using our rulemaking authority under sections
1871 and 1877(i)(3)(A)(i) of the Act, we adopted a parallel limit in
the increase in the number of operating rooms, procedure rooms, and
beds for which a high Medicaid facility may request an exception to the
prohibition on expansion of facility capacity (76 FR 74524). There, we
noted that, in response to our request for comment on whether the 200
percent limit would be sufficient to balance the intent of the general
prohibition on facility expansion with the purpose of the exception
process, which is to provide the opportunity to expand in areas where a
sufficient need for access to high Medicaid facilities is demonstrated,
commenters supported our proposal regarding the amount of permitted
increase and at least one commenter specifically supported the parallel
treatment of high Medicaid facilities (76 FR 74524). Under current
Sec. 411.362(c)(6)(i), a 200 percent limitation applies to both
applicable hospitals and high Medicaid facilities.
Section 1877(i)(3)(D) of the Act provides that any increase in the
number of operating rooms, procedure rooms, and beds for which an
applicable hospital is licensed may occur only in facilities on the
main campus of the applicable hospital. In the CY 2012 OPPS/ASC final
rule, using our rulemaking authority under sections 1871 and
1877(i)(3)(A)(i) of the Act, we extended this limitation on the
location of expanded facility capacity to high Medicaid facilities,
explaining that we believe that applying the same limitation to
applicable hospitals and high Medicaid facilities will result in an
efficient and consistent process (76 FR 74524). We did not receive any
public comments regarding the location of the permitted increase. Under
current Sec. 411.362(c)(6)(ii), expanded facility
[[Page 49038]]
capacity may occur only in facilities on the hospital's main campus.
In 2017, CMS launched the Patients over Paperwork initiative, a
cross-cutting, collaborative process that evaluates and streamlines
regulations with a goal to reduce unnecessary burden, increase
efficiencies, and improve the beneficiary experience. This effort
emphasizes a commitment to removing regulatory obstacles to providers
spending time with patients. As part of this initiative, we reviewed
the regulations at Sec. 411.362(c) as they apply to high Medicaid
facilities. Certain of the statutory provisions regarding expansion of
facility capacity apply only to applicable hospitals and their
extension to high Medicaid facilities was effectuated using the
Secretary's authority under sections 1871 and 1877(i)(3)(A)(i) of the
Act. We continue to believe that our current regulations, for which the
Secretary appropriately used his authority and which treat high
Medicaid facilities the same as applicable hospitals, are consistent
with the Congress' intent to prohibit expansion of physician-owned
hospitals generally. Nevertheless, the Congress did not mandate this
treatment of high Medicaid facilities and, in light of the Patients
over Paperwork initiative, we have reconsidered our policies. We
believe that our current regulations impose unnecessary burden on high
Medicaid facilities which, by definition, serve significant numbers of
Medicaid patients relative to other hospitals in the counties in which
they are located. Because the statute does not apply to high Medicaid
facilities those requirements related to the frequency of permitted
requests for exceptions to the prohibition on expansion of facility
capacity, the total amount of permitted expansion of facility capacity,
or the location of permitted expanded facility capacity, using the
Secretary's authority under sections 1871 and 1877(i)(3)(A)(i) of the
Act, we propose to remove certain regulatory requirements for high
Medicaid facilities that are not included in the statute.
We propose to revise Sec. 411.362(c)(1) to permit a high Medicaid
facility to request an exception to the prohibition on expansion of
facility capacity more frequently than once every 2 years. To preserve
CMS resources and to continue to maintain an orderly and efficient
exception process, we propose that a high Medicaid facility may submit
only one exception request at a time. Under proposed Sec.
411.362(c)(1), a high Medicaid facility could request an exception to
the prohibition on expansion of facility capacity at any time, provided
that it has not submitted another request for an exception to the
prohibition on facility expansion for which CMS has not issued a
decision. We also propose to revise Sec. 411.362(c)(6) with respect to
high Medicaid facilities only to remove the restriction that permitted
expansion of facility capacity may not result in the number of
operating rooms, procedure rooms, and beds for which the hospital is
licensed exceeding 200 percent of the hospital's baseline number of
operating rooms, procedure rooms, and beds and the restriction that
permitted expanded facility capacity must occur only in facilities on
the hospital's main campus. Under proposed Sec. 411.362(c)(6), these
restrictions would apply only to applicable hospitals. We seek comment
regarding our proposals.
Section 1877(i)(3)(A)(ii) requires CMS to provide an opportunity
for community input when an applicable hospital applies for an
exception to the prohibition on expansion of facility capacity. Through
regulation, we made the community input opportunity applicable to
facility expansion requests submitted by high Medicaid facilities (76
FR 74523). However, the statute does not expressly require CMS to
furnish an opportunity for community input when a high Medicaid
facility has applied for such an exception. Therefore, we are
considering whether we should eliminate the opportunity for community
input in the review process with respect to high Medicaid facilities.
We are specifically interested in comments regarding the importance of
community input, which allows for confirmation of (or disagreement
with) the data provided by a high Medicaid facility seeking an
exception to the prohibition on expansion of facility capacity. We are
interested in comments regarding how CMS could obtain independent
confirmation of the data provided by a high Medicaid facility in the
absence of the community input opportunity (see 76 FR 74523). We note
that obtaining independent confirmation of the data furnished by a high
Medicaid facility could delay or add complexity to the review process.
We solicit comments regarding whether the additional delay and
complexity caused by the elimination of the community input opportunity
for requests by high Medicaid facilities would result in greater burden
or cause greater harm to high Medicaid facilities than continuing to
permit community input on the expansion exception requests submitted by
these hospitals.
C. Deference to State Law for Purposes of Determining the Number of
Beds for Which a Hospital Is Licensed
In order to qualify for the rural provider or whole hospital
exception to the physician self-referral law, a hospital may not
increase the aggregate number of operating rooms, procedure rooms, and
beds above that for which the hospital was licensed on March 23, 2010
(or, in the case of a hospital that did not have a provider agreement
in effect as of March 23, 2010, but did have a provider agreement in
effect on December 31, 2010, the effective date of such agreement),
unless the Secretary has granted an exception to the prohibition on
expansion of facility capacity under section 1877(i)(3) of the Act and
Sec. 411.362(c). The statute and our regulations refer to this number
as the hospital's ``baseline number of operating rooms, procedure
rooms, and beds.'' Thus, at the time a hospital wishes to qualify for
the rural provider or whole hospital exception, it may not have an
aggregate number of operating rooms, procedure rooms, and beds that
exceeds its baseline number of operating rooms, procedure rooms, and
beds (unless the Secretary has granted an exception).
Because the availability of the rural provider and whole hospital
exceptions turns on whether a hospital has exceeded its baseline number
of operating rooms, procedure rooms, and beds at the time of a
physician's referral, a clear understanding of how to calculate the
hospital's baseline number of operating rooms, procedure rooms, and
beds is critical. Stakeholders have asked what CMS would consider the
number of operating rooms, procedure rooms, and beds for which the
hospital was licensed on March 23, 2010 (or, in the case of a hospital
that did not have a provider agreement in effect as of this date, but
does have a provider agreement in effect on December 31, 2010, the
effective date of such agreement) under various State licensure
schemes. We responded to formal advisory opinion requests in August
2019 (https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Downloads/CMS-AO-2019-01-Redacted.pdf) and March
2020 (https://www.cms.gov/files/document/cms-ao-2020-01.pdf) regarding
the inclusion of certain operating rooms, procedure rooms, and beds in
a hospital's baseline number of operating rooms, procedure rooms, and
beds. In March 2020, we also published a Frequently Asked Question
addressing stakeholder inquiries regarding the determination of the
number of beds for
[[Page 49039]]
which a hospital was licensed on March 23, 2010 (https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Downloads/FAQs-Physician-Self-Referral-Law.pdf). The March 2020 Frequently Asked
Question states:
Q: If a state's hospital licensure laws and regulations provide
that a hospital may increase its licensed bed complement by a certain
amount without prior approval of the state's licensing agency, what
would CMS consider the number of beds for which the hospital was
licensed on March 23, 2010 for purposes of section 1877(i)(1)(B) of the
Social Security Act (the ``Act'') and 42 CFR 411.362(b)(2)?
A: As a general matter, neither section 1877 of the Act nor the
physician self-referral regulations (42 CFR 411.350 through 411.389)
preempt state licensure laws and regulations. In interpreting and
applying the physician self-referral law, CMS defers to state law with
respect to the determination of whether a bed is licensed as of a
certain date. If the state would consider a bed to be ``licensed'' or
within a hospital's ``bed complement'' on March 23, 2010, CMS would
also consider the bed to be ``licensed'' or within a hospital's ``bed
complement'' as of that date, regardless of the exact number printed on
the hospital's physical license. To illustrate, assume that a state
does not require prior approval from its licensing agency for a
hospital to increase its bed complement by not more than ten beds or 10
percent of the total bed capacity, whichever is less, during a period
of a license. However, the state requires notification of the change
and that the hospital must at all times meet the physical plant,
staffing, and all other requirements set forth in state law and
regulations if additional beds are added. The license issued to the
hospital on January 1, 2009 indicated that the hospital's bed
complement was 100 beds. If the hospital increased its bed complement
by 9 beds (to 109 beds) on January 1, 2010 and made no further changes
to its bed complement prior to March 23, 2010, its baseline number of
licensed beds on March 23, 2010 would be 109 for purposes of section
1877(i)(1)(B) of the Act and 42 CFR 411.362(b)(2), provided that the
hospital made the appropriate notification to the state and the
hospital at all times met the physical plant, staffing, and all other
requirements set forth in state law and regulations after increasing
its bed complement. The same would apply to any beds that a state
considered to be licensed under its specific licensure scheme on March
23, 2010. Section 1877(i)(1)(B) of the Act limits the expansion of
facility capacity of a hospital that wishes to qualify for the rural
provider or hospital exceptions to the law's ownership or investment
prohibition. (See section 1877(d)(2) and (3); 42 CFR 411.356(c)(1) and
(3).) Specifically, section 1877(i)(1)(B) of the Act states that, among
other things, to qualify for the rural provider or hospital exceptions,
the number of operating rooms, procedure rooms, and beds for which the
hospital is licensed at any time on or after March 23, 2010 is no
greater than the number of operating rooms, procedure rooms, and beds
for which the hospital was licensed on March 23, 2010. For purposes of
applying this provision of the physician self-referral law, we refer to
the number of operating rooms, procedure rooms, and beds for which the
hospital was licensed on March 23, 2010 as the hospital's ``baseline.''
As stated above, CMS defers to state law with respect to the
determination of whether a bed is licensed as of a certain date.
However, in extraordinary circumstances, CMS may include additional
beds when determining a hospital's ``baseline'' for purposes of section
1877 of the Act. See, for example, CMS-AO-2020-01 (https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/advisory_opinions). In
order to ensure stakeholders' awareness of our interpretation regarding
the determination of the number of beds for which a hospital was
licensed on March 23, 2010 (or, in the case of a hospital that did not
have a provider agreement in effect as of this date, but does have a
provider agreement in effect on December 31, 2010, the effective date
of such agreement), we propose to revise the definition of ``baseline
number of operating rooms, procedure rooms, and beds'' at Sec.
411.362(a) to include a statement that, for purposes of determining the
number of beds in a hospital's baseline number of operating rooms,
procedure rooms, and beds, a bed is included if the bed is considered
licensed for purposes of State licensure, regardless of the specific
number of beds identified on the physical license issued to the
hospital by the State. We seek comment on our proposal to include this
language in regulation text at Sec. 411.362(a) generally, and
specifically whether the inclusion of this language is necessary or
could be perceived as inadvertently limiting the definition of
``baseline number of operating rooms, procedure rooms, and beds.''
XX. Files Available to the Public via the Internet
The Addenda to the OPPS/ASC proposed rules and the final rules with
comment period are published and available via the internet on the CMS
website. In the CY 2019 OPPS/ASC final rule with comment period (83 FR
59154), for CY 2019, we changed the format of the OPPS Addenda A, B,
and C, by adding a column entitled ``Copayment Capped at the Inpatient
Deductible of $1,364.00'' where we flag, through use of an asterisk,
those items and services with a copayment that is equal to or greater
than the inpatient hospital deductible amount for any given year (the
copayment amount for a procedure performed in a year cannot exceed the
amount of the inpatient hospital deductible established under section
1813(b) of the Act for that year). For CY 2021, we are retaining these
columns, updated to reflect the amount of the 2021 inpatient
deductible. For CY 2021, we propose to add a new column to the OPPS
Addenda, A, B, and C, entitled ``Drug Pass-Through Expiration during
Calendar Year'' where we would flag through the use of an asterisk,
each drug for which pass-through payment is expiring during the
calendar year (that is, on a date other than December 31).
To view the Addenda to this proposed rule pertaining to proposed CY
2021 payments under the OPPS, we refer readers to the CMS website at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html;
select ``CMS-1736-P'' from the list of regulations. All OPPS Addenda to
this proposed rule are contained in the zipped folder entitled ``2021
NPRM OPPS Addenda'' at the bottom of the page. To view the Addenda to
this proposed rule pertaining to CY 2021 payments under the ASC payment
system, we refer readers to the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html; select ``CMS-1736-P'' from the list of regulations.
The ASC Addenda to this proposed rule are contained in a zipped folder
entitled ``Addendum AA, BB, DD1, DD2, and EE.''
XXI. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a
[[Page 49040]]
collection of information requirement is submitted to the Office of
Management and Budget (OMB) for review and approval. In order to fairly
evaluate whether an information collection should be approved by OMB,
section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires
that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
B. ICRs for the Hospital OQR Program
1. Background
The Hospital OQR Program is generally aligned with the CMS quality
reporting program for hospital inpatient services known as the Hospital
IQR Program. We refer readers to the CY 2011 through CY 2020 OPPS/ASC
final rules with comment periods (75 FR 72111 through 72114; 76 FR
74549 through 74554; 77 FR 68527 through 68532; 78 FR 75170 through
75172; 79 FR 67012 through 67015; 80 FR 70580 through 70582; 81 FR
79862 through 79863; 82 FR 59476 through 59479; 83 FR 59155 through
59156; and 84 FR 61468 through 61469, respectively) for detailed
discussions of the Hospital OQR Program information collection
requirements we have previously finalized. The information collection
requirements associated with the Hospital OQR Program are currently
approved under OMB control number 0938-1109 which expires on March 31,
2023.
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
59477), we finalized a proposal to utilize the median hourly wage rate
for Medical Records and Health Information Technicians, in accordance
with the Bureau of Labor Statistics (BLS), to calculate our burden
estimates for the Hospital OQR Program. The BLS describes Medical
Records and Health Information Technicians as those responsible for
organizing and managing health information data; therefore, we believe
it is reasonable to assume that these individuals will be tasked with
abstracting clinical data for submission to the Hospital OQR Program.
The latest data (May 2019) from the BLS reflects a median hourly wage
of $19.40 per hour for a Medical Records and Health Information
Technician professional.\305\ We have finalized a policy to calculate
the cost of overhead, including fringe benefits, at 100 percent of the
mean hourly wage (82 FR 59477). This is necessarily a rough adjustment,
both because fringe benefits and overhead costs can vary significantly
from employer-to-employer and because methods of estimating these costs
vary widely from study-to-study. Nonetheless, we believe that doubling
the hourly wage rate ($19.40 x 2 = $38.80) to estimate the total cost
is a reasonably accurate estimation method and allows for a
conservative estimate of hourly costs.
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\305\ Occupational Employment and Wages, May 2019. Available at:
https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm. Accessed March 30, 2020.
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2. Summary
In this proposed rule, we propose to: (1) Codify the statutory
authority for the Hospital OQR Program; (2) revise and codify the
previously finalized public display of measure data policy that
hospitals sharing the same CCN must combine data collection and
submission across their multiple campuses for all clinical measures for
public reporting purposes; (3) revise existing Sec. 419.46(a)(2) by
replacing the term ``security administrator'' with the term ``security
official'' and codify this language; (4) move all deadlines falling on
nonwork days forward consistent with section 216(j) of the Social
Security Act (the Act), 42 U.S.C. 416(j), ``Periods of Limitation
Ending on Nonwork Days,'' beginning with the effective date of this
rule; (5) revise our policy regarding submission deadlines at existing
Sec. 419.46(c)(2) to reflect the proposed deadlines policy consistent
with section 216(j) of the Act, 42 U.S.C. 416(j); (6) expand the
existing review and corrections policy for chart-abstracted data to
apply to measure data submitted via the CMS web-based tool beginning
with data submitted for the CY 2023 payment determination and
subsequent years; (7) codify at 42 CFR 419.46 the review and
corrections period policy for measure data submitted to the Hospital
OQR Program for chart-abstracted measure data, as well as for the
proposed policy for measure data submitted directly to CMS via the CMS
web-based tool; (8) codify the previously finalized Educational Review
Process and Score Review and Correction Period for Chart-Abstracted
Measures; (9) revise existing Sec. 419.46(b) (proposed redesignated
Sec. 419.46(c)) by removing the phrase ``submit a new participation
form'' to align with previously finalized policy; and (10) update
internal cross-references as a result of the redesignations discussed
in the proposed rule.
We note that if finalized as proposed, our proposals for the CY
2021 OPPS/ASC proposed rule will not yield a change in burden for the
hospitals participating in the Hospital OQR Program as our proposals
seek only to refine existing regulatory text for current processes or
to codify existing processes. As such, we note that the burden hours
for the CY 2023 payment determination will be consistent with the
previously finalized burden for the CY 2022 payment determination. We
refer readers to the information collection request that has been
approved by OMB 0938-1109 (Expiration date March 31, 2023).\306\
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\306\ CY 2020 Final Rule Hospital OQR Program ``Supporting
Statement-A''. Available at: https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201911-0938-015.
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C. ICRs for the ASCQR Program
1. Background
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74554), the FY 2013 IPPS/LTCH PPS final rule (77 FR
53672), and the CY 2013, CY 2014, CY 2015, CY 2016, CY 2017, CY 2018,
CY 2019, and CY 2020 OPPS/ASC final rules with comment period (77 FR
68532 through 68533; 78 FR 75172 through 75174; 79 FR 67015 through
67016; 80 FR 70582 through 70584; 81 FR 79863 through 79865; 82 FR
59479 through 59481; 83 FR 59156 through 59157; and 84 FR 61469,
respectively) for detailed discussions of the ASCQR Program information
collection requirements we have previously finalized. The information
collection requirements associated with the ASCQR Program are currently
approved under OMB control number 0938-1270 which expires on December
31, 2022.
2. Summary
In this proposed rule, we propose to: (1) Use the term ``security
official'' instead of ``security administrator'' and revise Sec.
416.310(c)(1)(i) by replacing the term ``security administrator'' with
the term ``security official;'' (2) remove the phrase ``data collection
time period'' in all instances where it appears in Sec. 416.310,
replace it with the phrase ``data collection period''; (3) move forward
all program deadlines falling on a nonwork day consistent with section
[[Page 49041]]
216(j) of the Act, 42 U.S.C. 416(j) and codify this policy; and (4)
formalize the process by which ASCs identify errors and resubmit data
before the established submission deadline by creating a review and
corrections period in alignment with the Hospital OQR Program as
proposed in section XIV.D.7. that runs concurrent with the existing
data submission period and codify this policy. We note that if
finalized as proposed, our proposals for the CY 2021 OPPS/ASC proposed
rule will not yield a change in burden for the facilities participating
in the ASCQR Program as our proposals seek only to refine existing
regulatory text for current processes or to codify existing processes.
As such, we note that the burden hours for the CY 2023 payment
determination will be consistent with the previously finalized burden
for the CY 2022 payment determination. We refer readers to the
currently approved information collection request.\307\
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\307\ CY 2020 Final Rule Hospital OQR Program ``Supporting
Statement-A''. Available at: https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201911-0938-016.
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D. ICRs for Addition of New Service Categories for Hospital Outpatient
Department (OPD) Prior Authorization Process
In the CY 2020 OPPS/ASC final rule, we established a prior
authorization process for certain hospital OPD services using our
authority under section 1833(t)(2)(F) of the Act, which allows the
Secretary to develop a method for controlling unnecessary increases in
the volume of covered OPD services. See 84 FR 61142 (November 12,
2019).\308\ The regulations governing the prior authorization process
are located in subpart I of 42 CFR part 419, specifically at Sec. Sec.
419.80 through 419.89.
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\308\ See also Correction Notice issued January 3, 2020 (85 FR
224).
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In accordance with paragraph (b) of 42 CFR 419.83, we propose to
add two new service categories to Sec. 419.83(a): Cervical Fusion with
Disc Removal and Implanted Spinal Neurostimulators. The ICR associated
with prior authorization requests for these covered outpatient
department services is the required documentation submitted by
providers. The prior authorization request must include all relevant
documentation necessary to show that the service meets applicable
Medicare coverage, coding, and payment rules and the request must be
submitted before the service is provided to the beneficiary and before
the claim is submitted for processing.
The burden associated with the prior authorization process for the
two new proposed categories, Cervical Fusion with Disc Removal and
Implanted Spinal Neurostimulators, would be the time and effort
necessary for the submitter to locate and obtain the relevant
supporting documentation to show that the service meets applicable
coverage, coding, and payment rules, and to forward the information to
CMS or its contractor (MAC) for review and determination of a
provisional affirmation. We expect that this information would
generally be maintained by providers within the normal course of
business and that this information will be readily available. We
estimate that the average time for office clerical activities
associated with this task would be 30 minutes, which is equivalent to
that for normal prepayment or post payment medical review. We
anticipate that most prior authorization requests would be sent by
means other than mail. However, we estimate a cost of $5 per request
for mailing medical records. Due to the proposed July 1, 2021 start
date, the first year of the prior authorization for the two new service
categories would only include 6 months. Based on CY 2018 data, we
estimate that for those first 6 months at a minimum there would be
6,808 initial requests mailed during the year. In addition, we estimate
there would be 2,234 resubmissions of a request mailed following a non-
affirmed decision. Therefore, the total mailing cost is estimated to be
$45,210 (9,042 mailed requests x $5). Based on CY 2018 data for the two
new proposed service categories, we estimate that annually at a minimum
there would be 13,615 initial requests mailed during a year. In
addition, we estimate there would be 4,468 resubmissions of a request
mailed following a non-affirmed decision. Therefore, the total mailing
cost is estimated to be $90,415 (18,083 mailed requests x $5). We also
estimate that an additional 3 hours would be required for attending
educational meetings and reviewing training documents.
The average labor costs (including 100 percent fringe benefits)
used to estimate the costs were calculated using data available from
the Bureau of Labor Statistics (BLS). Based on the BLS information, we
estimate an average clerical hourly rate of $16.63 with a loaded rate
of $33.26. The proposed prior authorization program for these two
service categories would not create any new documentation or
administrative requirements. Instead, it would just require the
currently needed documents to be submitted earlier in the claim
process. Therefore, the estimate uses the clerical rate since we do not
believe that clinical staff would need to spend more time on completing
the documentation than would be needed in the absence of the proposed
prior authorization policy. The hourly rate reflects the time needed
for the additional clerical work of submitting the prior authorization
request itself. We estimate that the total number of submissions for
the first year (6 months) would be 30,140 (21,098 submissions through
fax or electronic means + 9,042 mailed submissions). Therefore, we
estimate that the total burden for the first year (6 months) for the
two new service categories, allotted across all providers, would be
24,820 hours (.5 hours x 30,140 submissions plus 3 hours x 3,250
providers for education). The burden cost for the first year (6 months)
is $870,723 (24,820 hours x $33.26 plus $45,210 for mailing costs). In
addition, we estimate that the total annual number of submissions would
be 60,277 (42,194 submissions through fax or electronic means + 18,083
mailed submissions). The annual burden hours for the two new service
categories, allotted across all providers, would be 39,889 hours (.5
hours x 60,277 submissions plus 3 hours x 3,250 providers for
education). The annual burden cost would be $1,417,107 (39,889 hours x
$33.26 plus $90,416 for mailing costs). For the total burden and
associated costs for the two new service categories, we estimate the
annualized burden to be 34,866 hours and $1,234,979 million. The
annualized burden is based on an average of 3 years, that is, 1 year at
the 6-month burden and 2 years at the 12-month burden. The ICR approved
under OMB control number 0938-XXXX will be revised and submitted to OMB
for approval.
E. ICRs for the Overall Hospital Quality Star Rating
The Overall Star Rating uses measures that are publicly reported on
Hospital Compare or its successor websites under the public reporting
authority of each individual hospital program furnishing measure data.
We believe the burden associated with measures included in the Overall
Star Rating, including requesting withholding of measures from public
reporting, is already captured in the respective hospital programs'
ICRs and represents no increased information collection burden to
hospitals.
F. ICRs for Physician-Owned Hospitals
As discussed in section XIX. of this proposed rule, we propose to
modify the physician-owned hospital expansion exception process under
the rural provider and hospital ownership
[[Page 49042]]
exceptions to the physician self-referral law. Specifically, we
proposed to modify the frequency of submission such that a high
Medicaid facility could request an exception to the prohibition on
expansion of facility capacity at any time, provided that it has not
submitted another request for an exception to the prohibition on
facility expansion to CMS for which CMS has not issued a decision. We
do not believe this proposal would result in any changes in burden
under the PRA. First, we do not anticipate any changes in the annual
number of respondents. Although a high Medicaid facility would be
permitted to request an expansion exception more frequently than under
current regulations, we believe that removing the cap on the size of an
expansion would make more frequent expansion exception requests
unlikely. Also, we are not changing the information being collected.
Based on our experience with the expansion exception process to
date, we estimate that approximately one physician-owned hospital per
year will request an expansion exception on the grounds that it is a
high Medicaid facility. We estimate that it takes approximately 6 hours
and 45 minutes to prepare an expansion exception request and that a
request is prepared by a lawyer. To estimate the cost to prepare a
request, we use a 2019 wage rate of $69.86 for lawyers from the Bureau
of Labor Statistics,\309\ and we double that wage to account for
overhead and benefits. The total estimated annual cost is $943.11. We
seek comments on these estimates.
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\309\ U.S. Department of Labor, Bureau of Labor Statistics, May
2019 National Occupational Employment and Wage Estimates United
States, https://www.bls.gov/oes/current/oes_nat.htm.
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Summary of All Burden in This Final Rule
Below is a chart reflecting the total burden and associated costs
for the provisions included in this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP12AU20.116
If you comment on these information collection requirements, that
is, reporting, recordkeeping or third-party disclosure requirements,
please submit your comments electronically as specified in the
ADDRESSES section of this proposed rule.
Comments must be received on/by October 13, 2020.
XXII. Waiver of the 60-Day Delayed Effective Date for the Final Rule
We are committed to ensuring that we fulfill our statutory
obligation to update the OPPS as required by law and are working
diligently in that regard. We ordinarily provide a 60-day delay in the
effective date of final rules after the date they are issued in accord
with the Congressional Review Act (CRA) (5 U.S.C. 801(a)(3)). However,
section 808(2) of the CRA provides that, if an agency finds good cause
that notice and public procedure are impracticable, unnecessary, or
contrary to the public interest, the rule shall take effect at such
time as the agency determines.
The United States is responding to an outbreak of respiratory
disease caused by a novel (new) coronavirus that has now been detected
in more than 190 locations internationally, including in all 50 States
and the District of Columbia. The virus has been named ``SARS-CoV-2''
and the disease it causes has been named ``coronavirus disease 2019''
(abbreviated ``COVID-19'').
On January 30, 2020, the International Health Regulations Emergency
Committee of the World Health Organization (WHO) declared the outbreak
a ``Public Health Emergency of international concern'' (PHEIC). On
January 31, 2020, Health and Human Services Secretary, Alex M. Azar II,
declared a PHE for the United States to aid the nation's healthcare
community in responding to COVID-19. On March 11, 2020, the WHO
publicly characterized COVID-19 as a pandemic. On March 13, 2020 the
President of the United States declared the COVID-19 outbreak a
national emergency.
Due to CMS prioritizing efforts in support of containing and
combatting the COVID-19 PHE, and devoting significant resources to that
end, the work needed on the OPPS payment rule will not be completed in
accordance with our usual schedule for this rulemaking, which aims for
a publication date of at least 60 days before the start of the fiscal
year to which it applies. Up to an additional 30 days may be needed to
complete the
[[Page 49043]]
work needed on this payment rule. The OPPS payment rule is necessary to
annually review and update the payment systems, and it is critical to
ensure that the payment policies for these systems are effective on the
first day of the fiscal year to which they are intended to apply.
Therefore, due to CMS prioritizing efforts in support of containing and
combatting the COVID-19 PHE, and devoting significant resources to that
end, we are hereby waiving the 60-day delay in the effective date of
the OPPS final rule; it would be contrary to the public interest for
CMS to do otherwise. However, we do expect to provide a 30-day delay in
the effective date of the final rule in accord with section 5 U.S.C.
553(d) of the Administrative Procedure Act, which ordinarily requires a
30-day delay in the effective date of a final rule from the date of its
public availability in the Federal Register, and section
1871(e)(1)(B)(i) of the Act, which generally prohibits a substantive
rule from taking effect before the end of the 30-day period beginning
on the date of its public availability.
XXIII. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this proposed
rule, and, when we proceed with a subsequent document(s), we will
respond to those comments in the preamble to that document.
XXIV. Economic Analyses
A. Statement of Need
This proposed rule is necessary to make updates to the Medicare
hospital OPPS rates. It is necessary to make changes to the payment
policies and rates for outpatient services furnished by hospitals and
CMHCs in CY 2021. We are required under section 1833(t)(3)(C)(ii) of
the Act to update annually the OPPS conversion factor used to determine
the payment rates for APCs. We also are required under section
1833(t)(9)(A) of the Act 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. We must review
the clinical integrity of payment groups and relative payment weights
at least annually. We propose to revise the APC relative payment
weights using claims data for services furnished on and after January
1, 2019, through and including December 31, 2019, and processed through
December 31, 2019, and updated cost report information.
This proposed rule also is necessary to make updates to the ASC
payment rates for CY 2021, enabling CMS to make changes to payment
policies and payment rates for covered surgical procedures and covered
ancillary services that are performed in an ASC in CY 2021. Because ASC
payment rates are based on the OPPS relative payment weights for most
of the procedures performed in ASCs, the ASC payment rates are updated
annually to reflect annual changes to the OPPS relative payment
weights. In addition, we are required under section 1833(i)(1) of the
Act to review and update the list of surgical procedures that can be
performed in an ASC, not less frequently than every 2 years.
In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075
through 59079), we finalized a policy to update the ASC payment system
rates using the hospital market basket update instead of the CPI-U for
CY 2019 through 2023. We believe that this policy will help stabilize
the differential between OPPS payments and ASC payments, given that the
CPI-U has been generally lower than the hospital market basket, and
encourage the migration of services to lower cost settings as
clinically appropriate.
B. Overall Impact for Provisions of This Proposed Rule
We have examined the impacts of this proposed rule, as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social
Security Act, section 202 of the Unfunded Mandates Reform Act of 1995
(UMRA) (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C.
804(2)), and Executive Order 13771 on Reducing Regulation and
Controlling Regulatory Costs (January 30, 2017). This section of this
proposed rule contains the impact and other economic analyses for the
provisions we propose for CY 2021.
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This proposed rule has been designated as an economically
significant rule under section 3(f)(1) of Executive Order 12866 and a
major rule under the Congressional Review Act. Accordingly, this
proposed rule has been reviewed by the Office of Management and Budget.
We have prepared a regulatory impact analysis that, to the best of our
ability, presents the costs and benefits of the provisions of this
proposed rule. We are soliciting public comments on the regulatory
impact analysis in the proposed rule, and we address any public
comments we received in this proposed rule, as appropriate.
We estimate that the total increase in Federal Government
expenditures under the OPPS for CY 2021, compared to CY 2020, due only
to the changes to the OPPS in this proposed rule, would be
approximately $1.61 billion. Taking into account our estimated changes
in enrollment, utilization, and case-mix for CY 2021, we estimate that
the OPPS expenditures, including beneficiary cost-sharing, for CY 2021
would be approximately $83.9 billion, which is approximately $7.5
billion higher than estimated OPPS expenditures in CY 2020. Because the
provisions of the OPPS are part of a proposed rule that is economically
significant, as measured by the threshold of an additional $100 million
in expenditures in 1 year, we have prepared this regulatory impact
analysis that, to the best of our ability, presents its costs and
benefits. Table 55 of this proposed rule displays the distributional
impact of the CY 2021 changes in OPPS payment to various groups of
hospitals and for CMHCs.
Under our CY 2021 policy, drugs and biologicals that are acquired
under the 340B Program are proposed to be paid at ASP minus 28.7
percent, WAC minus 28.7 percent, or WAC minus 31.7 percent based on our
policy described in V.B.2.b., or 63.90 percent of AWP, as applicable.
We note that in the impact table as displayed in this impact analysis,
we have modeled current and prospective payments as if separately
payable drugs acquired under the 340B program from hospitals not
excepted from the policy are paid in CY 2021 under the OPPS at ASP
minus 28.7 percent. We also propose in the alternative that the agency
could continue the current Medicare payment policy for CY 2021.
We estimate that the proposed update to the conversion factor, the
CY 2021
[[Page 49044]]
frontier wage index adjustment, and other adjustments (not including
the effects of outlier payments, the pass-through payment estimates)
would increase total OPPS payments by 2.8 percent in CY 2021. The
proposed changes to the APC relative payment weights, the changes to
the wage indexes, the continuation of a payment adjustment for rural
SCHs, including EACHs, the proposed changes to separately payable drugs
acquired under the 340B program, and the payment adjustment for cancer
hospitals would not increase OPPS payments because these changes to the
OPPS are budget neutral. However, these updates will change the
distribution of payments within the budget neutral system. We estimate
that the total change in payments between CY 2020 and CY 2021,
considering all proposed budget neutral payment adjustments, changes in
estimated total outlier payments, pass-through payments, and the
application of the frontier State wage adjustment, in addition to the
application of the OPD fee schedule increase factor after all
adjustments required by sections 1833(t)(3)(F), 1833(t)(3)(G), and
1833(t)(17) of the Act, would increase total estimated OPPS payments by
2.5 percent.
We estimate the total increase (from changes to the ASC provisions
in this proposed rule as well as from enrollment, utilization, and
case-mix changes) in Medicare expenditures (not including beneficiary
cost-sharing) under the ASC payment system for CY 2021 compared to CY
2020, to be approximately $130 million. Because the provisions for the
ASC payment system are part of a proposed rule that is economically
significant, as measured by the $100 million threshold, we have
prepared a regulatory impact analysis of the changes to the ASC payment
system that, to the best of our ability, presents the costs and
benefits of this portion of this proposed rule. Tables 56 and 57 of
this proposed rule display the redistributive impact of the CY 2021
changes regarding ASC payments, grouped by specialty area and then
grouped by procedures with the greatest ASC expenditures, respectively.
C. Detailed Economic Analyses
1. Estimated Effects of OPPS Changes in This Proposed Rule
a. Limitations of Our Analysis
The distributional impacts presented here are the projected effects
of the CY 2021 policy changes on various hospital groups. We post on
the CMS website our hospital-specific estimated payments for CY 2021
with the other supporting documentation for this proposed rule. To view
the hospital-specific estimates, we refer readers to the CMS website
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At the website, select ``regulations
and notices'' from the left side of the page and then select ``CMS-
1736-P'' from the list of regulations and notices. The hospital-
specific file layout and the hospital-specific file are listed with the
other supporting documentation for this proposed rule. We show
hospital-specific data only for hospitals whose claims were used for
modeling the impacts shown in Table 57. We do not show hospital-
specific impacts for hospitals whose claims we were unable to use. We
refer readers to section II.A. of this proposed rule for a discussion
of the hospitals whose claims we do not use for ratesetting and impact
purposes.
We estimate the effects of the individual policy changes by
estimating payments per service, while holding all other payment
policies constant. We use the best data available, but do not attempt
to predict behavioral responses to our policy changes in order to
isolate the effects associated with specific policies or updates, but
any policy that changes payment could have a behavioral response. In
addition, we have not made adjustments for future changes in variables,
such as service volume, service-mix, or number of encounters.
b. Estimated Effects of Proposal To Update the 340B Program Payment
Policy
In section X.C. of this proposed rule with comment period, we
discuss our proposal to update the payment percentage for nonpass-
through, separately payable drugs acquired by certain 340B
participating hospitals through the 340B Program. We propose that rural
SCHs, children's hospitals, and PPS-exempt cancer hospitals continue to
be excepted from this payment policy in CY 2021. Specifically, in this
proposed rule for CY 2021, for hospitals paid under the OPPS (other
than those that are excepted for CY 2021), we propose to pay for
separately payable drugs and biologicals that are obtained with a 340B
discount, excluding those on pass-through payment status and vaccines,
at ASP minus 28.7 percent. The difference in total OPPS Part B drug
payment for 340B Program drugs at ASP minus 28.7 percent, relative to
our current policy of paying ASP minus 22.5 percent, is a decrease of
$427 million, which we propose to redistribute through a budget neutral
adjustment to the OPPS conversion factor. We also propose in the
alternative that the agency could continue the current Medicare payment
policy for CY 2021, in which case the 340B policy would not require a
change to the budget neutrality adjustment.
To develop an estimated impact of this proposal, we began with CY
2019 outpatient claims data used in ratesetting for the CY 2021 OPPS.
We then flagged all claim lines that contained modifier ``JG'' because
the presence of this modifier indicates that such claims were subject
to the payment adjustment for separately payable non-pass through drugs
acquired through the 340B Program in the claims year. We also flagged
pass-through drug claim lines with modifier ``TB'' for drugs with pass-
through status that will expire by CY 2021. We further subset this
population by separating all providers that would be excepted from the
policy and then identifying the payment differential between payment at
ASP minus 22.5 percent and payment at ASP minus 28.7 percent, which
results in a $427 million redistribution, or 0.85 percent increase, to
the OPPS conversion factor. This estimate does not include adjustments
for beneficiary enrollment, case-mix, or potential offsetting
behaviors. We note that the estimated effect of the proposed policy
could change in this final rule with comment period based on a number
of factors such as the availability of updated data, changes in the
final payment policy, and/or the method of assessing the payment impact
in the final rule.
c. Estimated Effects of OPPS Changes on Hospitals
Table 55 shows the estimated impact of this proposed rule on
hospitals. Historically, the first line of the impact table, which
estimates the change in payments to all facilities, has always included
cancer and children's hospitals, which are held harmless to their pre-
BBA amount. We also include CMHCs in the first line that includes all
providers. We include a second line for all hospitals, excluding
permanently held harmless hospitals and CMHCs.
We present separate impacts for CMHCs in Table 55, and we discuss
them separately below, because CMHCs are paid only for partial
hospitalization services under the OPPS and are a different provider
type from hospitals. In CY 2021, we propose to continue to pay CMHCs
for partial hospitalization services under APC 5853 (Partial
Hospitalization for CMHCs) and to pay hospitals for partial
hospitalization services under APC 5863 (Partial
[[Page 49045]]
Hospitalization for Hospital-Based PHPs).
The estimated increase in the total payments made under the OPPS is
determined largely by the increase to the conversion factor under the
statutory methodology. The distributional impacts presented do not
include assumptions about changes in volume and service-mix. The
conversion factor is updated annually by the OPD fee schedule increase
factor, as discussed in detail in section II.B. of this proposed rule.
Section 1833(t)(3)(C)(iv) of the Act provides that the OPD fee
schedule increase factor is equal to the market basket percentage
increase applicable under section 1886(b)(3)(B)(iii) of the Act, which
we refer to as the IPPS market basket percentage increase. The IPPS
market basket percentage increase for FY 2021 is 3.0 percent. Section
1833(t)(3)(F)(i) of the Act reduces that 3.0 percent by the multifactor
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act, which is 0.4 percentage point for FY 2021 (which is also the
MFP adjustment for FY 2021 in the FY 2021 IPPS/LTCH PPS final rule (85
FR 32739)), resulting in the OPD fee schedule increase factor of 2.6
percent. We are using the OPD fee schedule increase factor of 2.6
percent in the calculation of the CY 2021 OPPS conversion factor.
Section 10324 of the Affordable Care Act, as amended by HCERA, further
authorized additional expenditures outside budget neutrality for
hospitals in certain frontier States that have a wage index less than
1.0000. The amounts attributable to this frontier State wage index
adjustment are incorporated in the CY 2020 estimates in Table 55 of
this proposed rule.
To illustrate the impact of the CY 2021 changes, our analysis
begins with a baseline simulation model that uses the CY 2020 relative
payment weights, the FY 2020 final IPPS wage indexes that include
reclassifications, and the final CY 2020 conversion factor. Table 55
shows the estimated redistribution of the increase or decrease in
payments for CY 2021 over CY 2020 payments to hospitals and CMHCs as a
result of the following factors: The impact of the APC reconfiguration
and recalibration changes between CY 2020 and CY 2021 (Column 2); the
wage indexes and the provider adjustments (Column 3); the combined
impact of all of the changes described in the preceding columns plus
the 2.6 percent OPD fee schedule increase factor update to the
conversion factor (Column 5); the estimated impact taking into account
all payments for CY 2021 relative to all payments for CY 2020,
including the impact of changes in estimated outlier payments, and
changes to the pass-through payment estimate (Column 6).
We did not model an explicit budget neutrality adjustment for the
rural adjustment for SCHs because we are maintaining the current
adjustment percentage for CY 2021. Because the updates to the
conversion factor (including the update of the OPD fee schedule
increase factor), the estimated cost of the rural adjustment, and the
estimated cost of projected pass-through payment for CY 2021 are
applied uniformly across services, observed redistributions of payments
in the impact table for hospitals largely depend on the mix of services
furnished by a hospital (for example, how the APCs for the hospital's
most frequently furnished services will change), and the impact of the
wage index changes on the hospital. However, total payments made under
this system and the extent to which this proposed rule will
redistribute money during implementation also will depend on changes in
volume, practice patterns, and the mix of services billed between CY
2020 and CY 2021 by various groups of hospitals, which CMS cannot
forecast.
Overall, we estimate that the rates for CY 2021 will increase
Medicare OPPS payments by an estimated 2.5 percent. Removing payments
to cancer and children's hospitals because their payments are held
harmless to the pre-OPPS ratio between payment and cost and removing
payments to CMHCs results in an estimated 2.6 percent increase in
Medicare payments to all other hospitals. These estimated payments will
not significantly impact other providers.
Column 1: Total Number of Hospitals
The first line in Column 1 in Table 55 shows the total number of
facilities (3,628), including designated cancer and children's
hospitals and CMHCs, for which we were able to use CY 2019 hospital
outpatient and CMHC claims data to model CY 2020 and CY 2021 payments,
by classes of hospitals, for CMHCs and for dedicated cancer hospitals.
We excluded all hospitals and CMHCs for which we could not plausibly
estimate CY 2020 or CY 2021 payment and entities that are not paid
under the OPPS. The latter entities include CAHs, all-inclusive
hospitals, and hospitals located in Guam, the U.S. Virgin Islands,
Northern Mariana Islands, American Samoa, and the State of Maryland.
This process is discussed in greater detail in section II.A. of this
proposed rule. At this time, we are unable to calculate a DSH variable
for hospitals that are not also paid under the IPPS because DSH
payments are only made to hospitals paid under the IPPS. Hospitals for
which we do not have a DSH variable are grouped separately and
generally include freestanding psychiatric hospitals, rehabilitation
hospitals, and long-term care hospitals. We show the total number of
OPPS hospitals (3,523), excluding the hold-harmless cancer and
children's hospitals and CMHCs, on the second line of the table. We
excluded cancer and children's hospitals because section 1833(t)(7)(D)
of the Act permanently holds harmless cancer hospitals and children's
hospitals to their ``pre-BBA amount'' as specified under the terms of
the statute, and therefore, we removed them from our impact analyses.
We show the isolated impact on the 38 CMHCs at the bottom of the impact
table (Table 55) and discuss that impact separately below.
Column 2: APC Recalibration--All Changes
Column 2 shows the estimated effect of APC recalibration. Column 2
also reflects any changes in multiple procedure discount patterns or
conditional packaging that occur as a result of the changes in the
relative magnitude of payment weights. As a result of APC
recalibration, we estimate that urban hospitals will experience no
change, with the impact ranging from a decrease of 0.3 percent to an
increase of 0.3 depending on the number of beds. Rural hospitals will
increase 0.1 percent overall. Major teaching hospitals will see an
expected decrease of 0.4 percent.
Column 3: Wage Indexes and the Effect of the Provider Adjustments
Column 3 demonstrates the combined budget neutral impact of the APC
recalibration; the updates for the wage indexes with the FY 2021 IPPS
post-reclassification wage indexes; the rural adjustment; the frontier
adjustment, and the cancer hospital payment adjustment. We modeled the
independent effect of the budget neutrality adjustments and the OPD fee
schedule increase factor by using the relative payment weights and wage
indexes for each year, and using a CY 2020 conversion factor that
included the OPD fee schedule increase and a budget neutrality
adjustment for differences in wage indexes.
Column 3 reflects the independent effects of the proposed updated
wage indexes, including the application of budget neutrality for the
rural floor policy on a nationwide basis, as well as the CY 2021
proposed changes in wage index policy discussed in section II.C. of
this CY 2021 OPPS/ASC proposed rule.
[[Page 49046]]
We did not model a budget neutrality adjustment for the rural
adjustment for SCHs because we propose to continue the rural payment
adjustment of 7.1 percent to rural SCHs for CY 2021, as described in
section II.E. of this proposed rule. We also did not model a budget
neutrality adjustment for the proposed cancer hospital payment
adjustment because the payment-to-cost ratio target for the cancer
hospital payment adjustment in CY 2021 is 0.89, the same as the ratio
that was reported for the CY 2020 OPPS/ASC final rule with comment
period (84 FR 61191). We note that, in accordance with section 16002 of
the 21st Century Cures Act, we are applying a budget neutrality factor
calculated as if the cancer hospital adjustment target payment-to-cost
ratio was 0.90, not the 0.89 target payment-to-cost ratio we propose to
apply in section II.F. of this proposed rule.
We modeled the independent effect of updating the wage indexes by
varying only the wage indexes, holding APC relative payment weights,
service-mix, and the rural adjustment constant and using the CY 2021
scaled weights and a CY 2020 conversion factor that included a budget
neutrality adjustment for the effect of the changes to the wage indexes
between CY 2020 and CY 2021.
Column 4: Effect of the Reduced Payment for 340B Drugs
Column 4 demonstrates the total payment effect of the proposed
reduction in payment for drugs purchased under the 340B Program from
ASP minus 22.5 percent to ASP minus 28.7 percent. This column includes
both the reduced payment for 340B-acquired drugs and the increase to
the conversion factor for budget neutrality purposes, which would
increase payment for all non-drug items and services. For rural sole
community hospitals, this column shows a 0.7 percent increase,
reflecting a 0.0 percent decrease for drugs (because we propose that
these providers would continue to be exempt from these reductions) and
a 0.85 percent increase for non-drug services.
Column 5: All Budget Neutrality Changes Combined With the Market Basket
Update
Column 5 demonstrates the combined impact of all of the changes
previously described and the update to the conversion factor of 2.6
percent. Overall, these changes will increase payments to urban
hospitals by 2.8 percent and to rural hospitals by 3.6 percent. The
increase for classes of rural hospitals will vary with sole community
hospitals receiving a 4.0 percent increase and other rural hospitals
receiving an increase of 2.9 percent.
Column 6: All Proposed Changes for CY 2021
Column 6 depicts the full impact of the proposed CY 2021 policies
on each hospital group by including the effect of all changes for CY
2021 and comparing them to all estimated payments in CY 2020. Column 6
shows the combined budget neutral effects of Columns 2 through 4; the
OPD fee schedule increase; the impact of estimated OPPS outlier
payments, as discussed in section II.G. of this proposed rule; the
change in the Hospital OQR Program payment reduction for the small
number of hospitals in our impact model that failed to meet the
reporting requirements (discussed in section XIV. of this proposed
rule); and the difference in total OPPS payments dedicated to
transitional pass-through payments.
Of those hospitals that failed to meet the Hospital OQR Program
reporting requirements for the full CY 2020 update (and assumed, for
modeling purposes, to be the same number for CY 2021), we included 21
hospitals in our model because they had both CY 2019 claims data and
recent cost report data. We estimate that the cumulative effect of all
proposed changes for CY 2021 will increase payments to all facilities
by 2.5 percent for CY 2021. We modeled the independent effect of all
changes in Column 6 using the final relative payment weights for CY
2020 and the proposed relative payment weights for CY 2021. We used the
final conversion factor for CY 2020 of $80.793 and the proposed CY 2021
conversion factor of $83.697 discussed in section II.B. of this
proposed rule.
Column 6 contains simulated outlier payments for each year. We used
the 1-year charge inflation factor used in the FY 2021 IPPS/LTCH PPS
proposed rule (84 FR 42629) of 6.3 percent (1.06353) to increase
individual costs on the CY 2019 claims, and we used the most recent
overall CCR in the April 2020 Outpatient Provider-Specific File (OPSF)
to estimate outlier payments for CY 2020. Using the CY 2019 claims and
a 6.3 percent charge inflation factor, we currently estimate that
outlier payments for CY 2020, using a multiple threshold of 1.75 and a
fixed-dollar threshold of $5,075, will be approximately 1.01 percent of
total payments. The estimated current outlier payments of 1.01 percent
are incorporated in the comparison in Column 6. We used the same set of
claims and a charge inflation factor of 13.1 percent (1.131096) and the
CCRs in the April 2020 OPSF, with an adjustment of 0.97527, to reflect
relative changes in cost and charge inflation between CY 2019 and CY
2021, to model the final CY 2020 outliers at 1.0 percent of estimated
total payments using a multiple threshold of 1.75 and a fixed-dollar
threshold of $5,300. The charge inflation and CCR inflation factors are
discussed in detail in the FY 2021 IPPS/LTCH PPS proposed rule (84 FR
42629).
Overall, we estimate that facilities will experience an increase of
2.5 percent under this proposed rule in CY 2021 relative to total
spending in CY 2020. This projected increase (shown in Column 6) of
Table 55 reflects the 2.6 percent OPD fee schedule increase factor,
minus 0.05 percent for the change in the pass-through payment estimate
between CY 2020 and CY 2021, minus the difference in estimated outlier
payments between CY 2020 (1.01 percent) and CY 2021 (1.00 percent). We
estimate that the combined effect of all proposed changes for CY 2021
will increase payments to urban hospitals by 2.5 percent. Overall, we
estimate that rural hospitals will experience a 3.2 percent increase as
a result of the combined effects of all the proposed changes for CY
2021.
Among hospitals, by teaching status, we estimate that the impacts
resulting from the combined effects of all changes will include an
increase of 1.4 percent for major teaching hospitals and an increase of
3.2 percent for nonteaching hospitals. Minor teaching hospitals will
experience an estimated increase of 2.8 percent.
In our analysis, we also have categorized hospitals by type of
ownership. Based on this analysis, we estimate that voluntary hospitals
will experience an increase of 2.4 percent, proprietary hospitals will
experience an increase of 4.1 percent, and governmental hospitals will
experience an increase of 2.2 percent.
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d. Estimated Effects of OPPS Changes on CMHCs
The last line of Table 55 demonstrates the isolated impact on
CMHCs, which furnish only partial hospitalization services under the
OPPS. In CY 2020, CMHCs are paid under APC 5853 (Partial
Hospitalization (3 or more services) for CMHCs). We modeled the impact
of this APC policy assuming CMHCs will continue to provide the same
number of days of PHP care as seen in the CY 2019 claims used for
ratesetting in the proposed rule. We excluded days with 1 or 2 services
because our policy only pays a per diem rate for partial
hospitalization when 3 or more qualifying services are provided to the
beneficiary. We estimate that CMHCs will experience an overall 1.3
percent increase in payments from CY 2020 (shown in Column 6). We note
that this includes the trimming methodology as well as the proposed CY
2021 floor on geometric mean costs used for developing the PHP payment
rates described in section VIII.B. of this proposed rule. The CY 2021
proposal to establish a floor based on geometric mean costs, rather
than based on a predetermined payment rate, makes the OPPS budget
neutrality adjustments for both the weight scalar and the conversion
factor applicable.
Column 3 shows that the estimated impact of adopting the proposed
FY 2021 wage index values will result in an increase of 0.1 percent to
CMHCs. Column 5 shows that combining this proposed OPD fee schedule
increase factor, along with proposed changes in APC policy for CY 2021
and the proposed FY 2021 wage index updates, will result in an
estimated increase of 1.5 percent. Column 6 shows that adding the
proposed changes in outlier and pass-through payments will result in a
total 1.3 percent increase in payment for CMHCs. This reflects all
proposed changes for CMHCs for CY 2021.
e. Estimated Effect of OPPS Changes on Beneficiaries
For services for which the beneficiary pays a copayment of 20
percent of the payment rate, the beneficiary's payment would increase
for services for which the OPPS payments will rise and will decrease
for services for which the OPPS payments will fall. For further
discussion on the calculation of the national unadjusted copayments and
minimum unadjusted copayments, we refer readers to section II.I. of
this CY 2021 OPPS/ASC proposed rule. In all cases, section
1833(t)(8)(C)(i) of the Act limits beneficiary liability for copayment
for a procedure performed in a year to the hospital inpatient
deductible for the applicable year.
We estimate that the aggregate beneficiary coinsurance percentage
would be 18.1 percent for all services paid under the OPPS in CY 2020.
The estimated aggregate beneficiary coinsurance reflects general system
adjustments, including the final CY 2020 comprehensive APC payment
policy discussed in section II.A.2.b. of this final rule.
f. Estimated Effects of OPPS Changes on Other Providers
The relative payment weights and payment amounts established under
the OPPS affect the payments made to ASCs, as discussed in section XIII
of the final rule. No types of providers or suppliers other than
hospitals, CMHCs, and ASCs will be affected by the final changes in the
final rule.
g. Estimated Effects of OPPS Changes on the Medicare and Medicaid
Programs
The effect on the Medicare program is expected to be an increase of
$1.61 billion in program payments for OPPS services furnished in CY
2021. The effect on the Medicaid program is expected to be limited to
copayments that Medicaid may make on behalf of Medicaid recipients who
are also Medicare beneficiaries. We estimate that the proposed changes
in the proposed rule would increase these Medicaid beneficiary payments
by approximately $115 million in CY 2021. Currently, there are
approximately 10 million dual-eligible beneficiaries, which represent
approximately thirty percent of Medicare Part B fee-for-service
beneficiaries. The impact on Medicaid was determined by taking thirty
percent of the beneficiary cost-sharing impact. The national average
split of Medicaid payments is 57 percent Federal payments and 43
percent State payments. Therefore, for the estimated $115 million
Medicaid increase, approximately $65 million will be from the Federal
Government and $50 million would be from State government.
h. Alternative OPPS Policies Considered
Alternatives to the OPPS changes we proposed and the reasons for
our selected alternatives are discussed throughout the final rule.
Alternatives Considered for the Payment Adjustment for
Separately Paid Drugs Acquired through the 340B Program
We refer readers to section V.B.6. of this CY 2021 OPPS/ASC
proposed rule for a discussion of our proposed policy to apply a
payment adjustment of ASP minus 28.7 percent for separately paid non-
pass through drugs acquired the 340B Program. We also propose in the
[[Page 49050]]
alternative to maintain the same payment adjustment percentage of ASP
minus 22.5 percent as initially established under the CY 2018 OPPS
policy (82 FR 59350 through 59369). We note that effects of the
proposal and its corresponding budget neutrality adjustment compared to
the alternative considered are provided in Column 4 of table 55.
2. Estimated Effects of CY 2021 ASC Payment System Changes
Most ASC payment rates are calculated by multiplying the ASC
conversion factor by the ASC relative payment weight. As discussed
fully in section XIII. of this proposed rule, we are setting the CY
2021 ASC relative payment weights by scaling the proposed CY 2021 OPPS
relative payment weights by the proposed ASC scalar of 0.8494. The
estimated effects of the proposed updated relative payment weights on
payment rates are varied and are reflected in the estimated payments
displayed in Tables 56 and 57 below.
Beginning in CY 2011, section 3401 of the Affordable Care Act
requires that the annual update to the ASC payment system (which, in CY
2019, we adopted a policy to be the hospital market basket for CY 2019
through CY 2023) after application of any quality reporting reduction
be reduced by a productivity adjustment. The Affordable Care Act
defines the productivity adjustment to be 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). For ASCs that fail to meet
their quality reporting requirements, we propose that the CY 2021
payment determinations would be based on the application of a 2.0
percentage point reduction to the annual update factor, which we
propose would be the hospital market basket for CY 2021. We calculated
the CY 2021 ASC conversion factor by adjusting the CY 2020 ASC
conversion factor by 0.9999 to account for changes in the pre-floor and
pre-reclassified hospital wage indexes between CY 2020 and CY 2021 and
by applying the CY 2021 MFP-adjusted hospital market basket update
factor of 2.6 percent (which is equal to the projected hospital market
basket update of 3.0 percent minus an MFP adjustment of 0.4 percentage
point). The proposed CY 2021 ASC conversion factor is $48.984 for ASCs
that successfully meet the quality reporting requirements.
a. Limitations of Our Analysis
Presented here are the projected effects of the proposed changes
for CY 2021 on Medicare payment to ASCs. A key limitation of our
analysis is our inability to predict changes in ASC service-mix between
CY 2019 and CY 2021 with precision. We believe the net effect on
Medicare expenditures resulting from the proposed CY 2021 changes will
be small in the aggregate for all ASCs. However, such changes may have
differential effects across surgical specialty groups, as ASCs continue
to adjust to the payment rates based on the policies of the revised ASC
payment system. We are unable to accurately project such changes at a
disaggregated level. Clearly, individual ASCs will experience changes
in payment that differ from the aggregated estimated impacts presented
below.
b. Estimated Effects of ASC Payment System Policies on ASCs
Some ASCs are multispecialty facilities that perform a wide range
of surgical procedures from excision of lesions to hernia repair to
cataract extraction; others focus on a single specialty and perform
only a limited range of surgical procedures, such as eye, digestive
system, or orthopedic procedures. The combined effect on an individual
ASC of the proposed update to the CY 2021 payments will depend on a
number of factors, including, but not limited to, the mix of services
the ASC provides, the volume of specific services provided by the ASC,
the percentage of its patients who are Medicare beneficiaries, and the
extent to which an ASC provides different services in the coming year.
The following discussion presents tables that display estimates of the
impact of the proposed CY 2021 updates to the ASC payment system on
Medicare payments to ASCs, assuming the same mix of services, as
reflected in our CY 2019 claims data. Table 57 depicts the estimated
aggregate percent change in payment by surgical specialty or ancillary
items and services group by comparing estimated CY 2020 payments to
estimated proposed CY 2021 payments, and Table 56 shows a comparison of
estimated CY 2020 payments to estimated proposed CY 2021 payments for
procedures that we estimate will receive the most Medicare payment in
CY 2020.
In Table 57, we have aggregated the surgical HCPCS codes by
specialty group, grouped all HCPCS codes for covered ancillary items
and services into a single group, and then estimated the effect on
aggregated payment for surgical specialty and ancillary items and
services groups. The groups are sorted for display in descending order
by estimated Medicare program payment to ASCs. The following is an
explanation of the information presented in Table 57.
Column 1--Surgical Specialty or Ancillary Items and
Services Group indicates the surgical specialty into which ASC
procedures are grouped and the ancillary items and services group which
includes all HCPCS codes for covered ancillary items and services. To
group surgical procedures by surgical specialty, we used the CPT code
range definitions and Level II HCPCS codes and Category III CPT codes,
as appropriate, to account for all surgical procedures to which the
Medicare program payments are attributed.
Column 2--Estimated CY 2020 ASC Payments were calculated
using CY 2019 ASC utilization data (the most recent full year of ASC
utilization) and CY 2020 ASC payment rates. The surgical specialty and
ancillary items and services groups are displayed in descending order
based on estimated CY 2020 ASC payments.
Column 3--Estimated CY 2021 Percent Change is the
aggregate percentage increase or decrease in Medicare program payment
to ASCs for each surgical specialty or ancillary items and services
group that is attributable to proposed updates to ASC payment rates for
CY 2021 compared to CY 2020.
As shown in Table 56, for the six specialty groups that account for
the most ASC utilization and spending, we estimate that the proposed
update to ASC payment rates for CY 2021 will result in a 3-percent
increase in aggregate payment amounts for eye and ocular adnexa
procedures, a 2-percent increase in aggregate payment amounts for
nervous system procedures, 4-percent increase in aggregate payment
amounts for digestive system procedures, a 4-percent increase in
aggregate payment amounts for musculoskeletal system procedures, a 3-
percent increase in aggregate payment amounts for cardiovascular system
procedures, and a 5-percent increase in aggregate payment amounts for
genitourinary system procedures. We note that these changes can be a
result of different factors, including updated data, payment weight
changes, and proposed changes in policy. In general, spending in each
of these categories of services is increasing due to the 2.6 percent
proposed payment rate update. After the payment rate update is
accounted for, aggregate payment increases or decreases for a category
of
[[Page 49051]]
services can be higher or lower than a 2.6-percent increase, depending
on if payment weights in the OPPS APCs that correspond to the
applicable services increased or decreased or if the most recent data
show an increase or a decrease in the volume of services performed in
an ASC for a category. For example, we estimate a 4-percent increase in
proposed aggregate gastrointestinal procedure payments due to an
increase in hospital reported costs for Level 1 and Level 2 upper and
lower gastrointestinal payment categories under the OPPS. The increases
in payment weights for gastrointestinal procedure payments is further
increased by the proposed 2.6 percent ASC rate update for these
procedures. For estimated changes for selected procedures, we refer
readers to Table 57 provided later in this section.
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Table 57 shows the estimated impact of the updates to the revised
ASC payment system on aggregate ASC payments for selected surgical
procedures during CY 2021. The table displays 30 of the procedures
receiving the greatest estimated CY 2020 aggregate Medicare payments to
ASCs. The HCPCS codes are sorted in descending order by estimated CY
2020 program payment.
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\310\ Projected impacts are the same under all proposals for the
ASC Covered Procedures List, given the lack of prior ASC utilization
data for the procedures being added.
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Column 1--CPT/HCPCS code.
Column 2--Short Descriptor of the HCPCS code.
Column 3--Estimated CY 2020 ASC Payments were calculated
using CY 2019 ASC utilization (the most recent full year of ASC
utilization) and the CY 2020 ASC payment rates. The estimated CY 2020
payments are expressed in millions of dollars.
Column 4--Estimated CY 2021 Percent Change reflects the
percent differences between the estimated ASC payment for CY 2020 and
the estimated payment for CY 2021 based on the proposed update.
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c. Estimated Effects of Proposed ASC Payment System Policies on
Beneficiaries
We estimate that the proposed CY 2021 update to the ASC payment
system will be generally positive (that is, result in lower cost-
sharing) for beneficiaries with respect to the new procedures we
propose to add to the ASC list of covered surgical procedures and for
those we propose to designate as office-based for CY 2021. For example,
using 2019 utilization data and proposed CY 2021 OPPS and ASC payment
rates, we estimate that if 10 percent of colpopexy procedures migrate
from the hospital outpatient setting to the ASC setting as a result of
this proposed policy, Medicare payments will be reduced by
approximately $6 million in CY 2021 and total beneficiary copayments
will decline by approximately $1.2 million in CY 2021. First, other
than certain preventive services where coinsurance and the Part B
deductible is waived to comply with sections 1833(a)(1) and (b) of the
Act, the ASC coinsurance rate for all procedures is 20 percent. This
contrasts with procedures performed in HOPDs under the OPPS, where the
beneficiary is responsible for copayments that range from 20 percent to
40 percent of the procedure payment (other than for certain preventive
services), although the majority of HOPD procedures have a 20-percent
copayment. Second, in almost all cases, the ASC payment rates under the
ASC payment system are lower than payment rates for the same procedures
under the OPPS. Therefore, the beneficiary coinsurance amount under the
ASC payment system will almost always be less than the OPPS copayment
amount for the same services. (The only exceptions will be if the ASC
coinsurance amount exceeds the hospital inpatient deductible since the
statute requires that OPPS copayment amounts not exceed the hospital
[[Page 49053]]
inpatient deductible. Therefore, in limited circumstances, the ASC
coinsurance amount may exceed the hospital inpatient deductible and,
therefore, the OPPS copayment amount for similar services.) Beneficiary
coinsurance for services migrating from physicians' offices to ASCs may
decrease or increase under the ASC payment system, depending on the
particular service and the relative payment amounts under the MPFS
compared to the ASC. While the ASC payment system bases most of its
payment rates on hospital cost data used to set OPPS relative payment
weights, services that are performed a majority of the time in a
physician office are generally paid the lesser of the ASC amount
according to the standard ASC ratesetting methodology or at the
nonfacility practice expense based amount payable under the PFS. For
those additional procedures that we propose to designate as office-
based in CY 2021, the beneficiary coinsurance amount under the ASC
payment system generally will be no greater than the beneficiary
coinsurance under the PFS because the coinsurance under both payment
systems generally is 20 percent (except for certain preventive services
where the coinsurance is waived under both payment systems).
3. Accounting Statements and Tables
As required by OMB Circular A-4 (available on the Office of
Management and Budget website at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/assets/OMB/circulars/a004/a-4.html), we have
prepared accounting statements to illustrate the impacts of the OPPS
and ASC changes in this proposed rule. The first accounting statement,
Table 58, illustrates the classification of expenditures for the CY
2021 estimated hospital OPPS incurred benefit impacts associated with
the proposed CY 2021 OPD fee schedule increase. The second accounting
statement, Table 59, illustrates the classification of expenditures
associated with the 2.6 percent CY 2021 update to the ASC payment
system, based on the provisions of the final rule with comment period
and the baseline spending estimates for ASCs. Both tables classify most
estimated impacts as transfers. The estimated costs of ICR Burden and
Regulatory Familiarization are included in Table 60.
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4. Effects of Changes in Requirements for the Hospital OQR Program
a. Background
We refer readers to the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59492 through 59494), for the previously estimated
effects of changes to the Hospital OQR Program for the CY 2018, CY
2019, and CY 2020 payment determinations. Of the 3,144 hospitals that
met eligibility requirements for the CY 2020 payment determination, we
determined that 78 hospitals did not meet the requirements to receive
the full OPD fee schedule increase factor. We do not propose to add any
quality measures to the Hospital OQR Program measure set for the CY
2022 or CY 2023 payment determinations.
b. Impact of CY 2021 Proposals
We do not anticipate that any of the CY 2021 Hospital OQR program
proposals will impact the number of facilities that will receive
payment reductions. In this proposed rule, we propose to: (1) Codify
the statutory authority for the Hospital OQR Program; (2) revise and
codify the previously finalized public display of measure data policy
that hospitals sharing the same CCN must combine data collection and
submission across their multiple campuses for all clinical measures for
public reporting purposes; (3) revise existing Sec. 419.46(a)(2) by
replacing the term ``security administrator'' with the term ``security
official'' and codify this language; (4) move all deadlines falling on
nonwork days forward consistent with section 216(j) of the Social
Security Act (the Act), 42 U.S.C. 416(j) ``Periods of Limitation Ending
on Nonwork Days,'' beginning with the effective date of this rule; (5)
revise our policy regarding submission deadlines at existing Sec.
419.46(c)(2) to reflect the proposed deadlines policy consistent with
section 216(j) of the Act, 42 U.S.C. 416(j); (6) expand the existing
review and corrections policy for chart-abstracted data to apply to
measure data submitted via the CMS web-based tool beginning with data
submitted for the CY 2023 payment determination and subsequent years;
(7) codify at 42 CFR 419.46 the review and corrections period policy
for measure data submitted to the Hospital OQR Program for chart-
abstracted measure data, as well as for the proposed policy for measure
data submitted directly to CMS via the CMS web-based tool; (8) codify
the previously finalized Educational Review Process and Score Review
and Correction Period for Chart-Abstracted Measures; (9) revise
existing Sec. 419.46(b) (proposed redesignated Sec. 419.46(c)) by
removing the phrase ``submit a new participation form'' to align with
previously finalized policy''; and (10) update internal cross-
references as a result of the redesignations discussed in the proposed
rule.''
We do not anticipate that the proposals affecting the Hospital OQR
program in this proposed rule will impact the number of hospitals that
will receive payment reductions.
5. Effects of Requirements for the ASCQR Program
a. Background
In section XV.B. of this proposed rule, we discuss our finalized
policies affecting the ASCQR Program. For the CY 2020 payment
determination, of the 6,651 ASCs that met eligibility requirements for
the ASCQR Program, 195 ASCs did not meet the requirements to receive
the full annual payment update. We do not propose to add or remove any
quality measures to the ASCQR Program measure set for future calendar
year payment determinations.
b. Impact of CY 2021 Proposals
In sections XV.C. and XV.D. of this proposed rule, we propose to:
(1) Use the term ``security official'' instead of ``security
administrator'' and revise Sec. 416.310(c)(1)(i) by replacing the term
``security administrator'' with the term ``security official;'' (2)
remove the phrase ``data collection time period'' in all instances
where it appears in Sec. 416.310, replace it with the phrase ``data
collection period,'' and use the phrase ``data collection period''
wherever the phrase ``data collection time period'' is found in the
preamble of this proposed rule; (3) move forward all program deadlines
falling on a nonwork day consistent with the section 216(j) of the Act,
42 U.S.C. 416(j) and codify this policy; and (4) formalize the process
by which ASCs identify errors and resubmit data before the established
submission deadline by creating a review and corrections period similar
to that in the Hospital OQR Program in section XIV.D.7. that runs
concurrent with the existing data submission period from January 1
through May 15 and codify this policy.
We do not anticipate that the proposals affecting the ASCQR program
in this proposed rule will impact the number of ASCs that will receive
payment reductions.
6. Effects of Addition of New Service Categories for Hospital
Outpatient Department (OPD) Prior Authorization Process
a. Overall Impact
In the CY 2020 OPPS/ASC final rule with comment period, we
established a prior authorization process for certain hospital OPD
services using our authority under section 1833(t)(2)(F) of the Act,
which allows the Secretary to develop ``a method for controlling
unnecessary increases in the volume of covered OPD services'' (84 FR
61142, November 12, 2019).\311\ The regulations governing the prior
authorization process are located in subpart I of 42 CFR part 419,
specifically at Sec. Sec. 419.80 through 419.89.
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\311\ See also Correction Notice issued January 3, 2020 (85 FR
224).
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In accordance with Sec. 419.83(b), we propose to require prior
authorization for two new service categories: Cervical Fusion with Disc
Removal and Implanted Spinal Neurostimulators. We also propose to add
those service categories to Sec. 419.83(a). We propose that the prior
authorization process for these two additional service categories will
be effective for dates of services on or after July 1, 2021. The
proposed addition of these service categories is consistent with our
authority under section 1833(t)(2)(F) of the Act and is based upon our
determination that there has been an unnecessary increase in the volume
of these services.
The overall economic impact on the health care sector of this
proposal to require prior authorization for two additional service
categories is dependent on the number of claims affected. Table 61,
Overall Economic Impact to the Health Sector, lists an estimate for the
overall economic impact to the health sector for the two new service
categories combined. The values populating this table were obtained
from the cost reflected in Table 62, Annual Private Sector Costs, and
Table 63, Estimated Annual Administrative Costs to CMS. Together,
Tables 62 and 63 combine to convey the overall economic impact to the
health sector for the two new service categories, which is illustrated
in Table 61. It should be noted that due to the proposed July start
date for prior authorization for these two new service categories, year
one would include only 6 months of prior authorization requests.
Based on the estimate, the overall economic cost impact of this
proposal is approximately $2.9 million in the first year based on 6
months for the two new
[[Page 49055]]
service categories. The 5-year impact is approximately $22.9 million,
and the 10-year impact is approximately $47.9 million. The 5- and 10-
year impacts account for year one including only 6 months. Additional
administrative paperwork costs to private sector providers and an
increase in Medicare spending to conduct reviews combine to create the
financial impact; however, this impact is offset by Medicare savings.
Annually, we estimate an overall Medicare savings of $31,844,388. We
believe there are likely to be other benefits that result from the
proposed prior authorization requirement for the two new service
categories, though many of those benefits are difficult to quantify.
For instance, we expect to see savings in the form of reduced
unnecessary utilization, fraud, waste, and abuse, including a reduction
in improper Medicare fee-for-service payments (we note that not all
improper payments are fraudulent). We are soliciting public comments on
the potential increased costs and benefits associated with this
proposed provision for the two new service categories.
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According to the RFA's use of the term, most suppliers and
providers are small entities. Likewise, the vast majority of physician
and nurse practitioner (NP) practices are considered small businesses
according to the SBA's size standards of having total revenues of $10
million or less in any 1 year. While the economic costs and benefits of
this proposal are substantial in the aggregate, the economic impact on
individual entities compliant with Medicare program coverage and
utilization rules and regulations will be relatively small. We estimate
that 90 to 95 percent of providers who provide these services are small
entities under the RFA definition. The rationale behind requiring prior
authorization is to control unnecessary increases in the volume of
covered OPD services. The impact on providers not in compliance with
Medicare coverage, coding, and payment rules and regulations could be
significant; if finalized, the proposal will change the billing
practices of those providers. We believe that the purpose of the
statute and this proposal is to avoid unnecessary utilization of OPD
services. Therefore, we do not view decreased revenues from the two
additional OPD services categories subject to unnecessary utilization
by providers to be a condition that we must mitigate. We believe that
the effect will be minimal on providers who are compliant with Medicare
coverage, coding, and payment rules and requirements. This proposal
will offer an additional protection to a provider's cash flow as the
provider will know in advance if the Medicare requirements are met.
b. Anticipated Specific Cost Effects
(1) Private Sector Costs
We do not believe that this proposal will significantly affect the
number of legitimate claims submitted for these new service categories.
However, we do expect a decrease in the overall amount paid for the
services resulting from a reduction in unnecessary utilization of the
services requiring prior authorization.
We estimate that the private sector's per-case time burden
attributed to submitting documentation and associated clerical
activities in support of a prior authorization request for the two
proposed additional service categories is equivalent to that of
submitting documentation and clerical activities associated for
prepayment review, which is 0.5 hours. We apply this time burden
estimate to initial submissions and resubmissions.
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BILLING CODE 4120-01-C
(2) Administrative Costs to CMS
CMS will incur additional costs associated with processing the
proposed prior authorization requests for the two new service
categories. We use the range of potentially affected cases (submissions
and resubmissions) and multiply it by $50, the estimated cost to review
each request. The combined cost also includes other elements such as
appeals, education and outreach, and system changes.
[GRAPHIC] [TIFF OMITTED] TP12AU20.126
(3) Estimated Beneficiary Costs
We expect a reduction in the utilization of the two new Medicare
OPD service categories when such utilization does not comply with one
or more of Medicare's coverage, coding, and payment rules. While there
may be an associated burden on beneficiaries while they wait for the
prior authorization decision, we are unable to quantify that burden.
Although the proposal is designed to permit utilization that is
medically necessary, OPD services that are not medically necessary may
still provide convenience or usefulness for beneficiaries; any rule-
induced loss of such convenience or usefulness constitutes a cost of
the rule that we lack data to quantify. Additionally, beneficiaries may
have out-of-pocket costs for those services that are determined not to
comply with Medicare requirements and thus, are not eligible for
Medicare payment. We lack the data to quantify these costs as well.
c. Estimated Benefits
There will be quantifiable benefits for this proposal because we
expect a reduction in the unnecessary utilization of those two new
Medicare OPD service categories subject to prior authorization. It is
difficult to project the exact decrease in unnecessary utilization;
however, based on other prior authorization programs, we estimate our
savings based on a 50 percent reduction in improper payments, using a
10 percent improper payment rate. We estimate that for the first six
months, there would be savings of $15,922,194 overall. Annually, we
estimate an overall gross savings of $31,844,388. This savings
represents a Medicare benefit from a more efficient use of health care
resources while still maintaining the same health outcomes for
necessary services. We will closely monitor utilization and billing
practices. The expected benefits would also
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include changed billing practices that would also enhance the
coordination of care for the beneficiary. For example, requiring prior
authorization for the two proposed additional OPD services categories
would ensure that the primary care practitioner recommending the
service and the facility collaborate more closely to provide the most
appropriate OPD services to meet the needs of the beneficiary. The
practitioner recommending the service would evaluate the beneficiary to
determine his or her condition and what services are needed and
medically necessary. This would require the facility to collaborate
closely with the practitioner early on in the process to ensure the
services are truly necessary and meet all requirements and the
documentation is complete and correct. Improper payments made because
the practitioner did not evaluate the patient or the patient does not
meet the Medicare requirements would likely be reduced by the
requirement that a provider submit clinical documentation created as
part of its prior authorization request.
7. Effects of Proposed Revision to the Laboratory Date of Service
Policy
In section XVIII. of this proposed rule, we discuss our proposal to
add cancer-related protein-based MAAAs to the laboratory date of
service (DOS) provisions at Sec. 414.510(b)(5). We also propose to
exclude these tests from the OPPS packaging policy, which is discussed
in section II.a.3 of this proposed rule. These proposals, if finalized,
would mean that Medicare would pay for cancer-related protein-based
MAAAs under the CLFS instead of the OPPS and the performing laboratory
would bill Medicare directly for the test if the test meets all the
laboratory DOS requirements specified in Sec. 414.510(b)(5). While
there may be some impact under the hospital OPPS resulting from
additional testing being excluded from OPPS packaging policy and paid
at the CLFS rate instead of the OPPS bundled rate, we expect this
change to be budget neutral for scoring purposes. Accordingly, the
discussion in sections II.a.3. and XVIII. of this proposed rule is not
reflected in Table 55 in the regulatory impact analysis under section
XXIV of this proposed rule.
8. Effects of Requirements for the Overall Hospital Quality Star
Ratings
In section E. Current and Proposed Overall Star Rating Methodology
of the preamble of this proposed rule, we discuss our proposal as it
relates to the Overall Star Rating methodology. The Overall Star Rating
uses measures that are publicly reported on Hospital Compare or its
successor websites under the public reporting authority of each
individual hospital program furnishing measure data. The burden
associated with measures included in the Overall Star Rating, including
forms used to request withholding of publicly reported measure data and
the Overall Star Rating (for CAHs), is already captured in the
respective hospital programs' burden estimates and represents no
increased information collection burden to hospitals.
In this proposed rule, however, we propose that hospitals have the
opportunity to review confidential reports containing their measure,
measure group, and Overall Star Rating results for at least 30 days
prior to publication of the Overall Star Rating. We believe that
reviewing the Overall Star Rating in confidential reports prior to
public reporting represents additional burden to hospitals.
In this CY 2021 OPPS/ASC proposed rule, we are using the most
recent data from the Bureau of Labor Statistics, which reflects a
median hourly wage of $19.40 \312\ per hour for a Medical Records and
Health Information Technician professional. We calculate the cost of
overhead, including fringe benefits, at 100 percent of the hourly wage
estimate, consistent with the previous year. This is necessarily a
rough adjustment, both because fringe benefits and overhead costs vary
significantly from employer-to-employer and because methods of
estimating these costs vary widely from study-to-study. Nonetheless, we
believe that doubling the hourly wage rate ($19.40 x 2 = $38.80) to
estimate total cost is a reasonably accurate estimation method.
Accordingly, we calculate cost burden to hospitals using a wage plus
benefits estimate of $38.80 per hour.
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\312\ Bureau of Labor Statistics. (2019, September 4).
Occupational Outlook Handbook: Medical Records and Health
Information Technicians. Retrieved from www.bls.gov: https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
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We estimate that the non-information collection burden associated
with all non-VHA hospitals reviewing their Overall Star Rating preview
report prior to public reporting to be 2 hours per hospital, which
includes time to review the report and ask any questions about the
calculation necessary to increase comprehension. Estimating that 4,500
hospitals that will receive an Overall Star Rating hospital specific
report (HSR), regardless if they meet the reporting thresholds to be
assigned a star rating, we estimate the overall non-information
collection burden to be $397,710 annually [$38.80 x 2 hours per preview
report x once per year x 4,500 hospitals]. For CAHs specifically, which
are included in the estimate above, we estimate that half of CAHs will
be eligible for an Overall Star Rating (using an estimate of 1,300
total CAHs in the United States), which represents a burden of $100,890
annually [650 CAHs x 2 hours per preview report x once per year x
$38.80].
To simulate the impact of the combined methodology updates, we used
January 2020 Overall Star Rating publication data (using October 2019
publicly reported measure data on Hospital Compare) to conduct analyses
that describe the overall distribution of star ratings,
reclassification of star ratings, and distribution of star ratings
across different types of hospitals. We conducted these analyses
following three proposals (referred to as combined methodology
proposals): (1) Grouping measures into five, rather than seven, measure
groups; (2) using a simple average of measure scores to calculate
measure group scores; and (3) updating the reporting thresholds to
require at least three measure groups, one of which must be Mortality
or Safety of Care, with at least three measures in each group to
receive a star rating. We also conducted these analyses separately with
the combined methodology proposals and the additional proposal of peer
grouping hospitals by number of measure groups for which the hospital
reports at least three measures, with the combined methodology proposal
and the additional proposal of Readmission measure group stratification
by dual-eligible peer groups, and with the combined methodology
proposals and the additional proposals of both peer grouping by number
of measure groups and Readmission measure group stratification by dual-
eligible peer groups to specifically solicit further comment on these
proposals. Please note that the ultimate star ratings distribution and
reclassification with the proposed methodology updates in CY 2021 will
differ depending on measure additions and removals from CMS quality
programs, and therefore public reporting, and changes in hospital
measure performance.
The combined methodology proposals of (1) grouping measures into
five measure groups, (2) using a simple average of measure scores to
calculate measure group scores, and (3) updating the reporting
thresholds to require at least three measure groups, one of which must
be Mortality or Safety of Care, with at least three measures in
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each group to receive a star rating, would result in a similar percent
of hospitals that would and would not receive a star rating, regardless
of peer grouping by number of measure groups or Readmission measure
group stratification by dual-eligibility groups. However, slightly
fewer safety-net and critical access hospitals (CAHs), would receive a
star rating with the new methodology due to the proposal to update the
reporting thresholds to require at least three measure groups, one of
which must be Mortality or Safety of Care, with at least three measures
in each group. Specifically, approximately 30 percent of specialty, 90
percent of teaching, 60 percent of safety-net, and 40 percent of CAHs
meet the proposed reporting thresholds of three measure groups, one of
which must be Mortality or Safety of Care, with at least three measures
in each group.
The combined methodology proposals of grouping measures into five,
rather than seven, measure groups, using a simple average of measure
scores to calculate measure group scores, and updating the reporting
thresholds to require at least three measure groups, one of which must
be Mortality or Safety of Care, with at least three measures in each
group to receive a star rating results in the below distribution of
star ratings, reclassification of star ratings, and distribution of
star ratings across hospital characteristics:
With the combined methodology proposals, there would be a
similar distribution of star ratings with more three (23 percent) and
four (23 percent) star ratings and fewer one (4 percent), two (13
percent), and five (13 percent) star ratings (Table 64).
Given the substantial change in the proposed methods,
particularly using a simple average of measure scores to calculate
measure groups scores, we would expect there to be considerable changes
in hospital star ratings from the current methodology to the proposed
methodology. With the combined proposed methodology, 1,796 (53 percent)
hospitals would receive the same star rating, 1,468 (43 percent)
hospitals would shift up or down one star, 135 (4 percent) hospitals
would shift up or down two stars, 9 (0.3 percent) hospitals would shift
up or down three stars, and 1 (0.03 percent) hospital would shift up or
down four stars (Table 65).
With the combined methodology proposals, most hospital
characteristics have a similar distribution of star ratings to that of
all hospitals. A few notable differences in the distribution of star
ratings across hospital characteristics compared to all hospitals are
listed in Table 72.
[cir] More specialty hospitals with three (4 percent), four (7
percent), and five (19 percent) stars than one (0 percent) or two (0
percent) stars.
[cir] More DSH hospitals with one (6 percent), two (19 percent),
and three (31 percent) stars and fewer DSH hospitals with five stars
(11 percent). Also, there would be more DSH hospitals with one (3
percent for DSH quintiles 1 and 2 to 17 percent for DSH quintile 5) and
two stars (14 percent for DSH quintile 1 to 25 percent for DSH quintile
5) and fewer DSH hospitals with four (36 percent for DSH quintile 1 to
16 percent for DSH quintile 5) and five (18 percent for DSH quintile 1
to 5 percent for DSH quintile 5) stars with increasing DSH quintile.
[cir] More CAHs with five (13 percent) and four (14 percent) stars
than one (1 percent), two (3 percent), and three (8 percent) stars.
[cir] More hospitals with one (2 percent for hospitals with 1-99
beds to 9 percent for hospitals with 400 or more beds) and two stars (9
percent for hospitals with 1-99 beds to 26 percent for hospitals with
300-399 beds and 24 percent for hospitals with 400 or more beds) with
increasing bed size.
[cir] Slightly larger urban hospitals with one (8 percent) and two
(19 percent) stars than other urban hospitals with one (4 percent) and
two (17 percent) stars or rural hospitals with one (3 percent) and two
(15 percent) stars. There would also be slightly fewer large urban
hospitals with four (24 percent) stars than other urban hospitals with
four (27 percent) stars or rural hospitals with four (30 percent)
stars.
The combined methodology proposals with the additional proposal of
peer grouping by number of measure groups would result in the below
distribution of star ratings, reclassification of star ratings, and
distribution of star ratings across hospital characteristics. With the
combined methodology proposals and the additional proposal of peer
grouping:
There would be a similar distribution of star ratings with
more three (22 percent) and four (23 percent) star ratings and fewer
one (4 percent), two (14 percent), and five (12 percent) star ratings
(Table 64).
Approximately 2,676 (78 percent), 1,692 (50 percent)
hospitals would receive the same star rating, 1,482 (43 percent)
hospitals would shift up or down one star, 184 (5 percent) hospitals
would shift up or down two stars, 10 (0.3 percent) hospitals would
shift up or down three stars, and one (0.03 percent) hospital would
shift up or down four stars (Table 66).
Most hospital characteristics have a similar distribution
of star ratings to that of all hospitals. A few notable differences in
the distribution of star ratings across hospital characteristics
compared to all hospitals are listed below (Table 73).
[cir] More specialty hospitals with three (5 percent), four (7
percent), and five (17 percent) stars than one (0 percent) and two (1
percent) stars.
[cir] More DSH hospitals with two stars (13 percent for DSH
quintile 1 to 25 percent for DSH quintile 5) and fewer DSH hospitals
with four (34 percent for DSH quintile 1 to 18 percent for DSH quintile
5) and five (23 percent for DSH quintile 1 to 5 percent for DSH
quintile 5) stars with increased DSH quintiles.
[cir] Slightly larger urban hospitals with one star (8 percent)
than other urban hospitals with one star (4 percent) or rural hospitals
with one star (3 percent). There would also be slightly fewer large
urban hospitals with four stars (24 percent) than other urban hospitals
with four stars (29 percent) or rural hospitals with four stars (29
percent).
The combined methodology proposal with the addition of stratifying
Readmission measure group scores by dual-eligibility peer groups, using
peer group quintiles assigned by the HRRP annually, would result in the
below distribution of star ratings, reclassification of star ratings,
and distribution of star ratings across hospital characteristics. With
the combined methodology proposals and the additional proposal of
Readmission stratification by dual-eligibility groups:
There is a similar distribution of star ratings with more
three (24 percent) and four (24 percent) star ratings and fewer one (3
percent), two (12 percent), and five (13 percent) star ratings (Table
64).